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FROM:
DATE:
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Elon Musk, CEO

Vivian Lin, Junior Analyst
December 9, 2015
Comparative Financial Analysis for Tesla Motor Inc.

After completed a comparative financial analysis between Tesla Motor Inc. and Ford Motor
Company. I found that TSLA is in a good financial position, and although Ford is far stronger
financially than TSLA, TSLA is growing quickly and has excellent potential to be where Ford is,
in a few years. Our firm selected Ford as a competitor because it is one of largest U.S.-based
automaker. Ford also offers a wide range of products, including trucks, SUV, hybrids and
automotive components. In this memo, the five indices of financial strength will be used to make
a comparison: stock price, sales/revenue, net income, P/E ratio and EPS.
Higher Stock Prices Indicates Companys Worth

Stock Price
300
250
200
150
100
50
0
2014 Dec.

2015 June
Tesla Motor

2015 Dec.
Ford Motor

Figure 1. Stock Price Comparison

Note: Stock price was obtained from Yahoo Finance, December 5, 2015.

Both companies stock prices were slightly changed over one year. However, TSLA stock price
is about 16 times higher than Ford. This means the investors are willing to pay more on TSLA
stock and also indicates higher Company worth compare to Ford. The high stock price is due to
companys promise of innovation of automobiles. From Dec.1 2014 to Jun. 1 2015, TSLA stock
price has increased from $230.38 to $249.45, which is about 8.27% increase. This shows that
there is more demand than supply in the market, because when stock is rising, investors are eager

to buy; if it is falling, investors are eager to sell. However, the stock price is back to $230.38
today. Compared to TSLA, Ford stock is more stable in the last year, stable stock price reduce
investors risk. This stock is a particularly advantageous option during economic recession.
Despite the companies stock price, the companies total sales/revenue is also very significant.
Consistently Increasing Sales and Revenue
Table 1. Sales & Revenue Comparison

Tesla Motor

2012
December. 31
413,256

2013
December. 31
2,013,496

2014
December. 31
3,198,356

Ford Motor

133,599,000

146,917,000

144,077,000

Note: Sale & Revenue data was obtained from Yahoo Finance (Income statement)
Even though the overall sales and revenue for TSLA is much lower than Ford in the past three
years, TSLAs total sales and revenue is consistently increase while Fords total sales and
revenue only slightly changed. Consistently increasing sales and revenue is a common sign of
financial health in a company. However, as a new company, TSLA makes impressive sale gain
compare to Ford. Between 2013 and 2014, TSLAs revenue increase 387% and 58.84%
respectively while Ford increase 9.97% and decrease 1.93% respectively. These shows that both
of two companies had a good sale revenue growth, but as an auto company that has long history,
Ford is facing competition challenges currently. In addition, a companys net income has an
inseparable relationship with sales and revenue.

Negative Net Income

Table 2. Net Income for Tesla Motor & Ford Motor

Tesla Motor
Ford Motor

2012
December. 31
(396,213)
5,613,000

2013
December. 31
(74,014)
7,182,000

2014
December. 31
(294,040)
294,040

Note: Net income information was obtained from Yahoo Finance (Income statement)

The table above shows how net income for both companies have increased or decreased over
past three year. The negative net income for TSLA means the company is losing money right
now. However, as a new company, it's normal to have negative net income. When compare
TSLA current income to 2012s net income, we can find out the company is losing less. This
shows TSLA is aiming to be more profitable. Moreover, Fords net income is much more than
TSLA, which indicates greater profits as well. Besides net income, the P/E ratio will reveal the
future worth of the company.

Negative P/E Ratio

Table 3. P/E Ratio Comparison
Tesla Motor
Ford Motor

P/E Ratio
(78.16)
11.88

Note: P/E ratio was obtained from Nasdaq, December 5, 2015.

Generally higher P/E ratio shows a promising future growth of the company. Since TSLA is new
company with high risk, the P/E ratio of 2015 is estimated at negative 87.16. However, the ratio
will become steady as a company matures. A P/E ratio in itself is not a very good indicator if a
stock would be a good investment or not. Other financial data have to be studied to see the true
value of a stock, such as a companys earning per share (EPS).
Lower EPS as Lower Profitability
Table 4. EPS Comparison

Tesla Motor
Ford Motor

EPS
(5.33)
1.20

Note: EPS was obtained from Yahoo Finance, December 5, 2015.

Fords EPS is higher when compare to TSLA which is key in measuring a companys success.
The higher the earnings per share, the better, because it means the company is generating more
profit for its shareholders. On the other hand, the negative EPS for TSLA means the company is
losing money right now. Based on table 4, TSLA may take a while to reach the level of Ford and
to be able to offer dividends to its shareholders. The negative EPS may due to large number of
shares outstanding as a result of issuing more shares to cover the debt of the business.

Conclusion
In comparison with Ford, TSLAs financial performance is lower as all the above information
shows. Therefore, Ford is in a stronger financial position. However, based on TSLA overall
market trend, TSLA is expected to grow much faster than Ford. Since TSLA is an innovative,
unique and exciting company that is not only changing the way automobile are made but the way
they are sold. It is clear that people are investing in such a high-growth company has shown great
potential to do much more in the future.

References
Ford Motor Co. (n.d.). Retrieved December 5, 2015, from http://finance.yahoo.com/q?
s=F&fr=uh3_finance_web&uhb=uhb2
Tesla Motors, Inc. (n.d.). Retrieved December 5, 2015, from http://finance.yahoo.com/q?
s=TSLA&fr=uh3_finance_web&uhb=uhb2
Tesla Motors, Inc. (TSLA) PE Ratio. (n.d.). Retrieved December 5, 2015, from
http://www.nasdaq.com/symbol/tsla/pe-ratio