Tesla PPT, Sec focused accounting, Pierce McManus
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Understanding Corporate Annual Reports
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GENERAL INFORMATIONLeo Tjakralaksana
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Battery Operated Car
• Uses Lithium-Ion2012 super charge
network being providedDesign
• ElegantComfort
• Tablet as command screen
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Model S
Sedan
Starting price (69,900)
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Roadster
• Sport car-discontinued
• Starting price (59,900)
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Model X
• To be released• SUV
• Price is to be announced
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ACCOUNTING AND FINANCENick Shmelev
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Tesla follows Generally Accepted Accounting Principles.Tesla is audited by Pricewaterhouse Coopers LLC.Tesla uses the straight-line method for :
•Calculating depreciation
•revenues on lease vehicles
• stock based compensations
•development compensation and
costs
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• Tesla uses LIFO method to value inventories, which are valued at lower cost of market.
• At the beginning (2007-2008), Tesla had negative stockholders equity.
• However, in 2009 Tesla had positive stock holders equity.
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Financial Performance
• Tesla began earning revenue in 2007, selling $73000
worth of powertrains.
• Tesla also earns revenue by selling Zero Emission Vehicle
Credits to other companies.
• Tesla is famous for their electric vehicles, the Tesla
Roadster, Model S, and the soon to be Model X
• However, Tesla had negative operating margins for the
first 3 years.
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Financial Disclosures
• Tesla started selling developmental services it provides
to other companies
• Tesla also has future contractual liabilities which are not
noted on the financial statements (Purchase of a facility
and a contract with Lotus)
• Tesla does not pay dividends, and has no intention to do
so in the future
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Financial Health
• We have a positive look for Tesla's future.
• Their cars are popular, safe, and are becoming mainstream electric cars
• In 2012 Tesla started to finally generate positive cash flow,
but the company was also increasing it's debt to a projected
$392.5M in 2013.
• The Model S is quickly becoming one the most popular
car on the streets, and is the best electric vehicle out there.
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Capital Stock Mie Takahashi
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Tesla’s Stock• The Nasdaq Stock
Market LLC since June 29, 2010
• The initial price per stock was 17 dollars.
• It has been increasing since 2012.
• It reached highest price: $252.94 at 3/6/2014
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Stock information
It is worth seven times as much as last yearIts total value was over $30 billion (2/25/14)
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Preferred Stock
• Authorized: 100,000,000
• Issued outstanding: None
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Common Stock• Authorized : 2,000,000.000
• Issued and outstanding: 123,191,938 (January 31, 2014)
• $0.001 par value
• Treasury stocks: None
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Strategic or Commercial Relationships
• Daimler AG
Blackstar lnvestco LLC, an affiliate of Daimler, owned 4,867,929 shares of CS
• Toyota
2,941,176 shares of CSat $17.00 per share in July 2010 .
• Panasonic
1,418,573 shares of CS to an entity affiliated with Panasonic at $21.15 per share in November 2010.
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Dividends and stock split
• Tesla is not a dividend-paying company.
• No stock split since June 29, 2010
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SWOT AnalysisPierce McManus
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• Battery Technology
• Proven Sales
• Current monopoly
• Production value/design
Strengths
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Weaknesses
• Failing sales model
• Unreliable production
• Limited current growth
• Increasing costs of production
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Opportunities
• Acquisition of a lower cost market
• Focus upon foreign sales
• Marketing/Advertising
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Threats
• Competition in the market
• State legislation
• Public perception
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MARKETINGValeria Gomez
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Market description
Tesla can fall under three specific markets:Luxury vehicles
All-electric vehiclesSport cars
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Product Review
Model S-Three main options:
•60 kWh
•85 kWh
•85 kWh Performance
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Channels & Logistics
• Tesla streamlines the buying process for consumers
• Test drives are “delivered” to customers
• “Tesla Store” marketing platform: 30 stores nationwide
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In United States
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In Europe
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In Asia
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Positioning
• Different driving experiences
• Environmentally responsible,
sustainable energy future.
• Fully electric cars at a price affordable to the
average consumer
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Product
• The model S as a revolutionary luxury sedan that does not compromise technology, efficiency, style, performance or the environment.
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Pricing
• Buying system is unique because it all happens through their website; sells expensive vehicles now with mainstream ambitions
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Distribution
• Tesla has changed the dreaded experience of buying a car:
• Galleries in highly populated shopping centers
• Buying experience tailored to costumer’s life schedule
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INVEST IN TESLA? Reiner Bennardo Riatan
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In 2012:
• Net Loss: $396.213 M
• Cash: ($53.376 M)
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“Tesla announced that it achieved profitability in the first quarter of 2013
for the first time in history”- Mashable, April 1 ,2013 -
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Tesla’s stock price 2012-2014
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$35,000 – 200 miles E Model will come within 3-4 years
How?Why do investors care?
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Nasdaq’s recommendation
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NEWS & CURRENT EVENTS
Brad Nicholl
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Future Factory Plans
• Production numbers of electric vehicles:• 2013: 22,300 units
• 2014 estimate: 40,000 units
• 2020 desired output: 500,000 units
• Lithium-Ion Battery-Supply Shortage• Limited supply of batteries causes limitations:• Sales of Toyota Prius (2009, 2011)
• Preventing expansion
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“The Gigafactory” Plan
• A factory to produce lithium-ion batteries will:• Overcome the shortage of lithium-ion batteries
• Reduce costs of batteries by more than 30%
• Costs of the factory:• Between $4 billion to $5 billion• $2 billion from Tesla Motors
• $3 billion from partners
(Panasonic & material suppliers)
through 2020
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Factory details and requirements:
• Facility Area: 10 million square feet
• Total Land Area: 500 acres to 1000 acres
• Total Factory Employees: 6500
• Powered by: Solar & wind power
• Transportation (to California) by: Freight train
Possible & ideal locations:
Arizona, Nevada, New Mexico, or Texas
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Issuance of Convertible Bonds
What is a convertible bond?• Ability to convert the bond to stock shared• Potential to benefit from an increase in share price
• Share price must be above conversion premium/price• Conversion rate, price, & premium are all directly related
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Issuance of Convertible Bonds
• Additional stock issued will dilute the share price
• No interest payments received after conversion
• No maturity (principal) value received if converted
• Allows corporations to offer lower interest rates
• Bonds converted reduce the corporation’s liabilities
• Callable: Corp. generally has power to force conversion
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Issuance of Convertible
Bonds• Tesla needed to raise funds to finance the massive
battery factory and expand operations
• Planned to raise $1.6 billion
• Raised $2 billion due to excess demand, issuing:
• $800 million convertible bonds issued @ 0.25% due 2019
• $1.2 billion convertible bonds issued @ 1.25% due 2021
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• Details of the convertible bonds:
• Conversion Premium: 42.5% above last reported share price on pricing date (2/27/14 = $252.54)
• Conversion Price: $359.87/share ($252.54 x 1.425)
• Conversion Rate: 2.7788 shares/$1000 bond (1000/359.87)
• Senior Note status: Takes precedence over other debt
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Issue With Direct-Sales Method
Direct-sales method• Selling Tesla vehicles
directly to costumers through Tesla dealerships
• Skips the “middleman,” independent dealerships
• Creates a better experience and increased understanding of the Tesla electric vehicles
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Issue With Direct-Sales Method
States that have banned Tesla’s direct-sales method:
• Arizona, Texas, & recently New Jersey, with others possibly to join in the future
Why ban direct-sales method?
• Hurts established, independent dealerships
• Fear of similar tactics from foreign automakers
• Campaign money received
from a dealers association
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• Solutions to bans on direct-sales method
• Display rooms only
• Limit to cars displayed depending on state law on ban
• Ability to test-drive depends on state law on ban
• Purchasing information cannot be provided
• Customers must purchase via online
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QUESTIONS
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Prize: Bluetooth
• Which Tesla’s car has been discontinued?
a)Model S
b)Model X
c)Roadster
d)Model E
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Prize: Key Finder
• What Type of bonds is Tesla planning to sell?
a)Convertible
b)Debenture
c)Callable
d)Treasury
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