Tesla Motors is a relatively new company in the auto industry, founded in 2003. They have been able to work their way into an industry that is known to be extremely competitive and difficult to break into because of the amount of competition in the industry. Tesla Motors has been able to get into the industry because they were able to revolutionize the electric car that was still thought to be very far out by larger auto makers. Today Tesla Motors has three models of cars that they are selling, they are also selling their batteries to other large car manufactures, including Toyota, for use in their electric cars.
Unfortunately, due to the large cost of the barrier to entry into the auto industry, Tesla Motors have not been able to produce any profitable years so far in their first 10 years. With a fourth model set to release in the near future, many of the company building strategies that they have employed do seem to be paying off as they posted their ...view middle of the document...
This is a completely instantiable trend that they will have to work on lowering in future years. In 2012, Tesla Motors was only retaining 1% of their total revenues before factoring in any operating expenses. When including Tesla Motor’s operating expenses, there are more operating expenses than the total revenue that they made before any selling costs in 2012. Much of the money for operating expenses is in research and development, probably linked to the new model of vehicle that is about to be released, unfortunately though it is obvious that Tesla had to get a handle on their expenses if they want to stay in business.
It appears that Tesla Motors has been investing much of what they have out of their current assets into more long term assets. This can be seen by the large dip in both the current liquidity ratio along with the drop in the acid test value from 2011 to 2012. It isn’t too difficult to find where all of their assets have moved too, from 2011 to 2012 their inventory more than quintupled while their plant property and equipment almost doubled making these two categories account for almost 75% of all of their total assets. Hopefully the investment that they have made into having inventory on hand and the upgrade in plant property and equipment will be enough to lead Tesla Motors into their first of many profitable years.
There is a reason why we have not seen many new automakers, the barrier to entry is astronomical and the competition is incredibly fierce. Tesla Motors was able to come into the industry because they found a niche in the market that the big automakers thought was too far out to be a viable concern in the here and now and they have revolutionized the electric car industry. Next year their sales are projected to be huge with the release of the first all-electric SUV that is going to be sold not only here but largely in Europe and parts of Asia as well. Even though they have not made any year end profits at this point, this is a company that you will need to watch out for. They have proven their staying power and they have built this business from the ground up so that they are finally going to be able to have some profits to show for all of their hard work.