Tesla

    Multinational cooperation is a business with production facilities and branches in more than one country. Tesla Inc. is an American electric vehicle manufacturing company. The corporation was founded in 2003 by Martin Eberhard and Marc Tarpenning, who were specialists in engineering. They named it Tesla motors in honour of Nikola Tesla, an electrical engineer and an inventor. The firm's goal was to speed up the world's switch to electric vehicles with a broad range of progressively inexpensive electric automobiles. The corporation was formed to produce pure electric vehicles because of the positive survey reaction in the markets done by General Motors (GM). General Motors Company was a company that ran a program from 1996 to 1999 that produced a limited number of vehicles that were never made available to the public in response to the public's reaction to EV. From the standpoint of engineering, this was deemed a success. Martin and Marc wanted to build on their previous success. Elon Musk, who is currently the majority shareholder and the company's CEO, joined the company in the year 2004 and invested $30m. Musk became the largest shareholder and also the chairman of the board of directors of Tesla Motors. For the company to fund its operations, it raised $7.5million in February 2004 from several fundings, of which $6.5m was funded by Elon Musk, who had acquired $100m from his sale of PayPal two years earlier. The company discovered the sample for their Tesla Roadster in 2006, and its production officially started in 2008.                                                          

    The Roadster was produced a decade after General Motors launched the EV-1, a two-seat electric sports car that GM finally pulled from the market due to its 100-mile range on a single charge. With their new discovered vehicle, the company accomplished something that had not been accomplished there before. They manufactured a completely electric car with applied specifications that could meet consumer expectations. Previously in the same field, experiments had failed because corporations had a hard time producing a powerful battery to keep vehicles on the road and an economical motor that could suitably fit inside a consumer car and significantly raise its speed to highway levels. Luckily Roadster met all the requirements

In 2009 Eberhard and Tesla agreed to a lawsuit settlement which allowed Musk to call himself co-founder. As CEO, he oversaw the production of Roadster and maintained the company's long-term goal of making affordable electric cars. The original Model had a mileage of about 250 miles on a single charge. Customers could recharge the Roadster using a standard lithium-ion battery structure found in many electronic devices, and the car could be charged using a wall outlet. However, it did not become a widely available product since Roadster was a little more than $100000and many people considered this to be a high price when the car first came out. On a regular household plug, the original Roadster may take anywhere from 24 to 48 hours. Charging time is one of the most major roadblocks to the widespread adoption of electric cars. Even though Tesla's tech in this field has vastly improved, Even under ideal conditions, it takes more than an hour to charge one of the electric vehicles fully. When compared to the minutes it takes to refill an automobile, and this is a significant disadvantage.   

   In 2009 and once in 2010, Tesla faced safety issues concerning rear hub, which was "under-torqued" and could come loose. The rear hub issue was of serious concern since it may cause the vehicle to lose control and cause an accident. Tesla was forced to recall Roadsters manufactured between 2008 and 2009. In 2010 Tesla recalled 439 of its roadsters due to a problem with the 12V auxiliary wire. It was stated that the issue raised from the Lotus assembly line. Tesla handled the issue by sending its experts to the owners' houses to fix the problem. Despite the challenges, Tesla's revenue from Roadster sales grew from $73,000 in 2007 to $148.5 million in 2011.

   Despite the popularity of the Roadster, Tesla had major monetary issues in 2009. The firm had less than $20 million in cash on hand, which was unlikely to be enough to meet the demand for the cars it had initially sold. Tesla stopped the manufacture of the Roadster in January 2012, and in June, the firm unveiled its second car, the Tesla Model S sedan. Since then, the company faced some major financial crises, which almost led to the enterprises collapse. As the company struggled to raise the needed capital, Tesla motors were considering cutting about 24 percent of its staff to reduce expenses. In 2009 Tesla was able to get $465m a low-interest loan from the department of energy in the United States. More than half of the money was used to develop the Tesla Model S, and the rest was used to build a powertrain manufacturing facility. The company relocated to its current headquarters in Palo Alto in June. After going public in 2010, the company found a solution to its short-term financial concerns. Tesla raised $226 million in its initial public offering, which was introduced on the NASDAQ at $17 per share (IPO). The corporation also publicized its first attempt to reduce the price of its products to increase sales.

 After Tesla announced the lowering of its products, it also unveiled the prototype of their new vehicle, the Model S sedan, which was supposed to retail for $76000, which was a bit lower than the Roadster. The Model S sedan was the company's first step away from sports car drivers and towards the mainstream consumer market. The company started its full manufacture in 2012. The Model S Sedan was a success, It was recognized and rewarded by various automotive and environmental publications, and the sedan S, like the Roadster, set new standards for what an electric vehicle should look like. Unlike the Roadster, the Model S took a shorter time to charge and had a range of 300 miles. The company had to stop the Roadster production from focusing on the Sedan S. It also opened its first self-supporting charging stations in 2012 and named their superchargers. The company started with six locations all around California, but the operation has expanded up to 1000 stations worldwide by this time. The stations are meant to offer free charging to all Tesla owners. After the company made their first quarterly profit it announced its Gigafactory in Nevada. The gigafactory is vital to their entire business model because it is where the company manufactures the batteries that power the company's devices.                                                                                                                                                Tesla's initial efforts into the global market was opening a showroom in London on June 25, 2009, and an outlet in Munich in September 2009. In Shanghai, China, Tesla established its first manufacturing outside of the United States in 2019. Tesla has also begun building on two additional factories in Berlin, Germany, and Texas, USA. Tesla is lowering the prices of its automobiles in China to capture market share. According to speculations, the company plans to restructure its retail approach to focus on online sales.

Strategies Tesla Employed to become a Multinational company.

Direct selling: Tesla sells electric vehicles directly to customers through its shops and showrooms, enhancing customer service and cutting dealer costs such as inventory finance, insurance, and advertising. Tesla believes that by owning the distribution network, it will be able to accelerate research and development. More importantly, it enhances the purchasing experience of clients. Tesla showrooms, unlike automotive dealerships, have little or no conflicts of interest. Clients solely deal with Tesla's sales and service agents. As of 2021, Tesla had 438 locations worldwide, including showrooms, Service Plus centres and service facilities.   Tesla has also embraced the Internet for commerce, enabling customers to customize and order a Tesla online.

Certified Pre-Owned program: This market strategy is used by Tesla in countries such as Canada, Germany, France, and Sweden. With this program, a Tesla EV is sold to a consumer with the option to return it to the firm after three years for a refund of 40% to 50% of the purchase price. The firm then examines and refurbishes the vehicle before selling it for 62% of the EV's new car price. With this technique, Tesla receives resale profits and draws less-affluent clients by selling at a lower price.

 

Strategic positioning of stores and galleries: Tesla's worldwide market strategy involves bringing its stores and displays to high-traffic, high-contact retail areas like malls and shopping centres, where customers are more likely to be open-minded buyers.

Diversification: Tesla uses a related diversification strategy to operate globally through strategic relationships with proven foreign vehicle and battery producers. On the research, development, and manufacture of better EV equipment's. Diversification was the case between Tesla and Toyota. Tesla built the Lithium Oxide battery and other components for the Toyota RAV4 EV second-generation model.

The global adoption rate of electric cars increases year after year, resulting in significant growth in the electric vehicle (EV) industry. The influence of the COVID-19 epidemic on the electric car business is unavoidable, just as it was on practically every other industry. Despite this, the industry is expected to increase activity throughout the projected period. In the coming five years, Tesla intends to release several new automobiles. Elon Musk's company works on a truck, tractor-trailer, supercar, and a $25,000 electric vehicle. Tesla is also working on a vehicle that might be used to carry passengers via Musk's future Boeing underground road network, which aims to reduce road traffic.

TESLA CAPITAL STRUCTURE

Tesla's capital structure has been a major key of concern for both the investors and analysts. Historical financial records make the company look as if it is in serious trouble. Tesla's stock price per share has kept climbing over the past few years, jumping from $20 in 2013 to more than $ 1000 in 2021. Most investors are still concerned if the stock will continue to rise and hit the astronomical highs it once held. The explanation is found in the actual capital structure of the company.

The mix of various external income sources used to support a business is known as capital structure in accounting and finance. It is recorded on the firm’s balance sheet and consist of stakeholders' equity, debt, and preferred stock. The debt-to-equity ratio of Tesla is used to compare the company's debt to its equity. Tesla's equity is defined as the company's net worth or book value. The debt-to-equity ratio rises as Tesla accumulates more debt. Let's look at this in a perspective that Tesla has $2 in equity and $20 in debt, its debt to equity ratio is 20 to 2 or 20X, implying that Tesla is leveraging 20 times its net worth. Aside from debt leverage, the debt to equity ratio might reveal information about Tesla's financial structure.

 

 

 

 

In 2015 Tesla's total debt to equity ratio recorded the highest. As seen in the graph, the total debt to equity ratio averaged over 4.0X, indicating that the business is moderately leveraged in terms of equity. The company’s debt-to-equity ratio has been steadily decreasing over time, reaching only 0.5X in the first quarter of 2021. Tesla's leverage was minimal at this ratio, as its debt was less than its equity. Tesla's debt leverage is decreasing for a variety of reasons. For starters, Tesla has reduced part of its debt. Recently, Tesla has also taken on fewer loans than previous years to support its expansion, resulting in a lower debt-to-equity ratio.

 

The total liabilities to total assets ratio may be used to determine Tesla's capital structure.  Before 2020, Tesla was in bad shape. Tesla's capital structure was largely debt and liabilities, as seen in the figure above. For example, between 2015 and 2019, Tesla's total liabilities to assets ratio was above 70%, suggesting that liabilities entirely funded the firm. However, the ratio has dropped substantially in the latest quarter, reaching only 55% in 2021 Q1, a low record for Tesla. Tesla's capital structure was 55 per cent liabilities and 45 % equity at this ratio. In 2020, Tesla's overall liabilities to assets ratio dropped significantly. In this scenario, Tesla's equity issuance rose exponentially in 2020, resulting in a decreasing ratio. Tesla's stock price has been skyrocketing to new heights recently, with the organizations share price hitting 1 trillion. Even though Tesla is relying less on debt to facilitate its development, its capital structure must still be made up of liabilities at this ratio.  Tesla, on the other hand, is now utilizing more equity to fund its development.  Tesla's debt leverage was fairly low in Q1 2021, as noted in the graph above. The debt to equity ratio is used to measure a company's financial status. A debt-equity ratio of less than 1 shows that a company has a good capital structure meaning that the company relies twice as much on equity to drive growth as it does on debt and that investors, therefore, own two-thirds of the company's assets. Tesla has enough resources to run its operation and invest in research and development as it has experienced in the past years. Thus Tesla has the capability of funding its future projects.

Tesla Company has a set of strategies put in place to minimize risk. The company has business risk managers who manage risk and generate reliable results from investments. When a project fails to deliver quantitative requirements, the managers evaluate the business's sustainable growth and decide whether to reorganize or exit. Tesla's goal to repeat this investment cycle is to assign organizational resources efficiently and improve capital efficiency. All of the Group's business entities. Tesla is decreasing the risk of environmental degradation in existing business units by statistically assessing the degree of ecological pollution threat for each asset and the management level of professional sites.

There is no doubt that Tesla has changed the entire automotive industry. The company is inventing ways to integrate the car and technology, such as Tesla autopilot and Shared Autonomous Vehicles (SAV). SAV is a rob taxi service that uses Tesla cars from different owners when not using it. This service does not require a human driver since Tesla's SAV service is designed to use the vehicle's autonomous driving mode. According to research, EV can be the solution to the global warming crisis. Tesla is an enthralling corporation with one-of-a-kind items. If Tesla wants to maintain its position as the world's most valuable vehicle brand, it must address its inventory and supply chain challenges.