Tesla Motors (TSLA) Last Update 5/24/22
Related: DDAIF F HMC GM
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
Tesla Motors
$1.10Mil
Yours
Trefis Price
N/A
$699
Market
 
Top Drivers for Period
Key Drivers
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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

Tesla Motors Company

VALUATION HIGHLIGHTS

  1. Automotive constitutes 98% of the Trefis price estimate for Tesla Motors's stock.

WHAT HAS CHANGED?

Tesla's Q1 2022 Earnings

Tesla posted a better-than-expected set of Q1 2022 results, with revenues growing by 81% year-over-year to $18.76 billion, and adjusted earnings per share more than tripling to $3.22. While revenue growth was led primarily by surging deliveries of the Model 3 and Y vehicles, Tesla also boosted its average selling price per vehicle by 10% year-over-year to around $54,000 as it prioritized deliveries of more premium trims and ramped up production of refreshed versions of its more expensive Model S and X vehicles. Tesla's margins performance was also solid, with automotive gross margins, excluding regulatory credit sales, coming in at 30%, up from 22% a year ago and around 29% in Q4.

Tesla Battery Updates

During its Battery Day event held in mid-September 2020, Tesla outlined a host of improvements to its battery technology including the way batteries are designed, manufactured, and integrated into its vehicles. While these enhancements could take about three years to fully materialize, Tesla expects them to help cut the cost per kilowatt-hour of batteries by about 56% per kilowatt-hour. Tesla is also betting big on manufacturing its own batteries and targeting 100-gigawatt hours (1 gigawatt-hour is 1 million kilowatt-hours) of internally produced battery capacity by 2022. For perspective, that’s about 3x the battery production capacity that it has at Gigafactory 1, in collaboration with Panasonic.

BUSINESS SUMMARY

Tesla is focused on the design, manufacture, and sale of electric vehicles and related technologies. The company's current model line-up includes the Model S luxury sedan, the Model X luxury SUV, the Model 3 sedan, and the Model Y compact SUV. Tesla also sells renewable energy products such as solar panels and battery technology. The company's upcoming products (likely due in 2023 or later) include the Cyber Truck electric pick-up, the Semi truck, and the second-generation Roadster sports car.

SOURCES OF VALUE

The majority of Tesla's value comes from its Mass Market vehicles such as its Model 3 and Model Y.

Future model launches

Tesla currently offers four vehicles, namely the Model 3, Model Y, Model S, and Model X. The company's upcoming vehicles include the Cybertruck pickup truck, which is likely to go on sale sometime in 2023. Tesla is expected to take its first step away from the luxury passenger vehicle market into the commercial space, with plans to launch an all-electric semi-truck.

Transition to EVs should go quicker than expected

President Joe Biden committed that the United States would reduce its greenhouse gas emissions by between 50% to 52% below its 2005 emissions levels by the year 2030. The U.S. has also pledged to achieve carbon neutrality by 2050. We are seeing similar commitments from other developed countries across the world. This means that the process of decarbonizing the transportation space will have to speed up, with gasoline-powered vehicles being replaced with cleaner EVs and hybrids. This should bode well for Tesla, which is the market leader in the premium EV space.

KEY TRENDS

Falling battery costs to speed up the adoption of electric cars

According to Bloomberg New Energy Finance (BNEF), the industry average battery costs (cell + packaging) have declined from $288 per kilowatt-hour to $132 between 2016 and 2021, driven by higher volumes and improved technologies. Tesla's battery costs are likely to be lower than the broader industry, considering the company is one of the largest EV players, giving it better scale.

The electric car space is getting increasingly competitive

Mainstream automotive manufacturers are getting more serious about their electric vehicle programs, as they look to take advantage of the performance and cost advantages offered by all-electric drive-trains. General Motors now offers the Chevy Bolt, an all-electric vehicle with a range of over 200 miles, while Nissan launched the second generation of its popular Leaf with an improved 150-mile range. Volkswagen announced that it would invest as much as 70 billion euros (~$84 billion USD) to bring around 300 electric models to market by 2030.

Government incentives for the electric vehicle industry

In order to reduce dependence on oil, governments across the world are providing incentives to both consumers and manufacturers for the adoption of electric cars. In the U.S., for example, the federal government offers tax credits of up to $7,500 for the purchase of "advanced technology vehicles" (this includes EVs although Tesla vehicles no longer qualify for this credit). There are several other regulations, such as corporate average fuel economy (CAFE) regulations, the Zero Emission Vehicle program (ZEV), and subsidized loans for battery research and the manufacture of electric cars that can accelerate the pace of adoption.