Tesla motors: Evaluating strategic options

Abstract

Within a decade of incorporating, Tesla Motors Inc, has become a leading Electric Vehicle (EV) manufacturer in US outperforming many EVs. Tesla motors designs, manufactures and sells electric cars and electric vehicle powertrain components. Tesla has unique business model with its own network of sales and service centers and a Supercharging stations across US. Tesla’s decade existence had its share of delays, leadership overhauls, verged on bankruptcy multiple times and was a favorite target for short sellers. Yet, Tesla’s success story is startling and is no small achievement. In 2010, Tesla took a $465 M loan from Department of Energy as a part of Advanced Technology Vehicle Manufacturing program. And by 2013, Tesla repaid this loan some 9 years earlier to the government along with interest becoming the only American car company to repay the government loan. From its IPO in 2010 to 2014, Tesla’s stock price has increased more than 1200%. While GM raked in sales of $155 billion by selling 9.7 vehicles globally and has a market cap worth $55 billion. Contrast this with Tesla’s $2 billion revenues from just 22,000+ cars with market capitalization of $35 billion.