BMW And Tesla — A Detailed Comparison

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Tesla (NASDAQ: TSLA) has been a pioneer in the luxury electric vehicle market, posting robust growth over the last few years. In this analysis, we compare Tesla’s financial and operating metrics with the automotive business of the BMW Group, which is one of the largest luxury vehicle manufacturers in the world. We break-up our analysis into revenue metrics, margins, and cost metrics and valuation metrics.

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1. Key Revenue Metrics

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1.1 Tesla’s Total Deliveries Stood At 245k Units In 2018, Compared To About 2.5 Million Units For The BMW Group

  • Tesla’s deliveries have grown from about 32k units in 2014 to 245k units in 2018, driven by the launch of the Model X in 2015 and Model 3 in 2017.
  • BMW, on the other hand, has seen its total deliveries (including Mini and Rolls Royce) grow from 2.1 million units to 2.5 million in the same period.

1.2 Model 3 Deliveries About A Third Of BMW’s Comparable Model Deliveries In 2018, With Model S &X Deliveries Also Standing At Less Than Half BMW’s Comparable Models

  • Tesla shipped about 146k Model 3’s in 2018, compared to 476k units of BMW’s 3 and 4 Series vehicles.
  • Model S&X deliveries came in at 99k in 2018, compared to 247k  units for BMW’s 7 Series luxury sedan and X5 and X6 premium SUVs.

1.3 Tesla’s Average Selling Price Stood At About $75k in 2018, Compared To $41k For BMW

  • Tesla’s ASPs have declined from $95k in 2014 to $75k in 2018 and it’s likely that the number will fall further as sales mix of Model 3’s rises.
  • BMW’s ASPs have fallen from $47k in 2014 to $41k in 2018.

1.4 Tesla’s Automotive Revenues Stood At $19 Billion In 2018, While BMW’s Stood At $101 Billion.

  • Tesla’s Automotive Revenues have grown from $3 billion in 2014 to $19 billion in 2018.
  • In comparison, BMW’s revenues remained almost flat in the same period, falling from $100 billion in 2014 to $96 billion in 2016 and recovering to $101 billion in 2018.

2.Cost And Margin Metrics

2.1 Tesla’s Gross Margins Stood At Over 23% In 2018, Versus ~16% For BMW

 

  • Tesla’s gross margins are slightly higher than BMW’s coming in at 23.4% in 2018 versus 22.4% for BMW, likely due to its focus on more premium vehicles and the relatively lower complexity of electric drivetrains vs. internal combustion engines. Note that we are adding back R&D expenses to BMW’s reported gross margins, as the company considers R&D a part of direct costs.

2.2 Tesla Still Manufacturers Fewer Vehicles Per Employee Compared To BMW

  • We estimate that Tesla produces under 7 vehicles per year, per full-time employee, compared to 20 vehicles per employee for BMW.
  • However, greater automation on the Model 3 has helped Tesla improve this metric over 2018 and it is likely to rise significantly over 2019 as well.
  • Note: We estimate full-time employees for Tesla’s automotive operation by reducing an estimated 12k employees who worked in its solar business (as of 2016).

2.3 Tesla’s SG&A And R&D Expenses As % Revenues Remain Higher Than BMWs But Are Falling Fast

  • Tesla’s SG&A expenses as a % of revenues stood at 13% in 2018, down from 19% in 2014.
  • The metric for BMW has remained in the 8% to 9% range.

  • Tesla has significantly scaled back on its R&D expenses, with the metric falling from 15% in 2014 to 7% in 2018, bringing them almost in line with BMW’s.

3. Comparing Tesla And BMW’s Valuations

3.1 Both Companies Currently Have A Similar Market Cap

  • Tesla’s market cap stands at $41 billion, compared to about $45 billion for the BMW Group.

3.2 Tesla’s P/S Multiple Is Almost 5x BMW’s

  • Tesla trades at a P/S multiple that is almost 5x BMW’s on account of its higher growth rates and potential to improve its margins.
  • Moreover, Tesla is also an earlier stage company.

 

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