To: Elon Musk, CEO

From: Kelly McQuilkin, Junior Analyst

Date: Monday, December 14, 2015
Subject: Comparative Financial Analysis of Tesla Motors and Toyota Motor Corporation
Tesla Motors is Weaker Than Its Competitor
Tesla Motors Inc. and Toyota Motor Corporation are both very popular companies in the
automobile industry. Each company is constantly working to provide consumers with
fashionable, safe and fuel efficient automobiles. When compared to its competitor, Tesla Motors
Inc. is in a weaker position than Toyota Motors.
Consistent Growth in Total Revenue
Over the past three years, Tesla Motors has grown in total revenue each year. Between 2012 and
2013 the total sales increased from $413,000,000 to $2,013,496,000, respectively. In 2014, the
total sales increased to $3,198,000,000. Toyota Motors had a slight decrease in revenue from
2012 to 2013 from $235,556,000,000 to $234,289,000,000. In 2014, Toyota Motors increased
total sales significantly to $249,472,000,000.
Although Tesla Motors has increased in revenue each year, its competitor is selling much more
than Tesla is. In 2014, Toyota sold 10.23 million cars and Tesla sold 35,000. Tesla is on the right
track with increasing sales each year, but is far behind reaching its competitors sales volume.
Teslas model S automobile sells for $71,000. A similar model at Toyota sells for $32,000.
Teslas product is one of a kind; however, Toyotas market is much bigger than Teslas because of
the price of the automobiles.

Revenue

235,556,000,000

413,300,000

234,289,000,000

2,013,496,000
TSLA
TM 2

249,472,000,000

3,198,000,000

*Source: Yahoo Finance and NetAdvantage Standard & Poor

Year 1 = 2012
Year 2 = 2013
Year 3 = 2014

Negative Net Income

Although revenue has increased each year, it is not enough to cover the operating costs and
liabilities. In years 2012, 2013 and 2014, Tesla Motors has been operating at a negative net
income. In 2012, Teslas net income was -$396,000,000. In 2013, Teslas net income decreased
due to the 3.87% increase in sales. 2013s net income was -$74,000,000. In 2014, Teslas
negative net income increased to -$294,000,000.
Toyota Motors net income has steadily increased each year. Starting in 2012, TMs net income
was $4,668,000,000, then increasing to $10,217,000,000 in 2013. In year 2014, TMs net income
reached $17,703,000,000.
Teslas sales growth over the past three years can be contributed to development and sales of the
Model S automobile. Although sales increased, the costs that Tesla must pay are very high and
total sales are not enough to mask them. The company spent over $400,000 on research alone in
2014. If Tesla could cut down production and research costs, net income would increase.

Net Income
Year 1 = 2012
Year 2 = 2013
Year 3 = 2014

TSLA

TM

*Source: Yahoo Finance and NetAdvantage Standard & Poor

Earnings Per Share is Much Less Than Competitor
Due to its negative net income, Tesla Motors earnings per share is -5.33 and Toyota Motors
earnings per share is 11.87. Having a negative earnings per share shows that Tesla is not
profitable. Teslas competitor, Toyota Motors has a very profitable EPS.
Teslas EPS should break even and become positive when the net profit is a positive number.
Higher Stock Price

Unlike EPS, Tesla Motors has had a consistently higher stock price than Toyota Motors over the
past year. Looking at both the daily and yearly ranges, Teslas stock price remains higher than
Toyota., showing investors that stock in the company is valuable. On December 14, 2015 Tesla
Motors stock price was 218.58 and Toyota Motors was 122.50.
The stock price may appear valuable to investors; however, Tesla needs to have a positive P/E
ratio and EPS to back up its stock.
Daily Range

Yearly Range (52 weeks)

TSLA

214.89-220.92

181.40-286.65

TM

121.67-123.68

109.07-145.80

*Source: Yahoo Finance and NetAdvantage Standard & Poor

P/E Ratio is Not Available
Tesla Motors is operating at a loss, therefore there is no available P/E ratio. Teslas competitor,
Toyota Motors, has a P/E ratio of 10.42, which is consistent with other competitors in the
industry. Toyotas P/E ratio resembles a stable and growing company.
Tesla Motors P/E ratio is displaying N/A because it is negative. Due to the negative net income
and EPS, displaying a negative P/E ratio to investors would show that the company is not
growing.
Teslas Bright Future
Tesla Motors may be in a weaker position than its competitor Toyota Motors, but there is a lot of
potential for Tesla to grow in the future. Teslas Model S received the Highest Safety Rating in
America and was reported the Best Car Ever Tested by Consumer Reports (Tesla Motors).
There is a big market for an electric car like the Model S; however, there is small market of
people who can afford to pay Teslas price. Teslas competitor, Toyota, offers many options and
sells a high volume of cars for a price that a large number of people can afford.
Teslas sales have increased each year which shows a lot of promise for the company. If Tesla
Motors can cut costs and continue to increase their revenue each year, the company will be in a
better financial position.

Works Cited
Huddleston, T. (2015, May 6). Tesla motors to big sales, but widening losses. Retrieved
December 14, 2015, from http://fortune.com/2015/05/06/tesla-revenue-losses/
NetAdvantage Standard & Poor
Ohnsman, A. (2014, February 20). Tesla's Musk Accelerating Vehicle Output Through 2014.
Retrieved December 14, 2015, from http://www.bloomberg.com/news/articles/2014-02-19/teslaquarterly-results-beat-analyst-estimates-on-model-s-growth
Pfanner, E., & Stoll, J. (2015). Toyota Expects Vehicle Sales to Slip This Year. Retrieved
December 14, 2015, from
http://www.wsj.com/articles/toyota-expects-vehicle-sales-to-slip-this-year-1421818849
TeslaMotors.com
Yahoo Finance