Analysis of Debt
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Total Debt (Carrying Amount)
Tesla Inc., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The carrying amount of total debt exhibited significant fluctuations over the five-year period. Initially, a substantial decrease in total debt is observed, followed by a period of increase. The current portion of debt and finance leases also demonstrates variability, while the net debt, excluding the current portion, shows a distinct pattern of decline and subsequent growth.
- Total Debt Trend
- Total debt decreased considerably from US$6,834 million in 2021 to US$3,099 million in 2022, representing a reduction of approximately 55%. This was followed by an increase to US$5,230 million in 2023. The upward trend continued into 2024, with total debt reaching US$8,213 million, and remained relatively stable in 2025 at US$8,376 million.
- Current vs. Non-Current Debt
- The current portion of debt and finance leases decreased from US$1,589 million in 2021 to US$1,502 million in 2022, then increased to US$2,373 million in 2023 and US$2,456 million in 2024 before decreasing to US$1,640 million in 2025. The debt and finance leases, net of the current portion, decreased significantly from US$5,245 million in 2021 to US$1,597 million in 2022. It then rose to US$2,857 million in 2023, and continued to increase to US$5,757 million in 2024, reaching US$6,736 million in 2025.
- Debt Composition Shift
- The composition of total debt shifted over the period. In 2021, the current portion represented approximately 23% of total debt. By 2022, this proportion increased to nearly 49%. While it decreased in subsequent years, the non-current portion of debt became increasingly dominant in 2024 and 2025, indicating a potential shift towards longer-term financing.
The observed increases in total debt in 2024 and 2025 suggest increased reliance on debt financing, potentially to fund expansion or other strategic initiatives. The fluctuations in the current portion of debt may reflect short-term financing strategies or changes in debt maturity schedules.
Total Debt (Fair Value)
| Dec 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Convertible Senior Notes | |
| Other debt | |
| Finance lease liabilities | |
| Total debt and finance leases (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2025-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt and finance leases:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Tesla Inc., interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Capitalized interest | |||||||||||
| Interest costs incurred |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Interest costs incurred exhibited fluctuating behavior over the five-year period. Initial values decreased significantly before increasing again in later years. A closer examination of the components reveals insights into these changes.
- Overall Interest Costs
- Interest costs incurred totaled US$424 million in 2021. This figure decreased substantially to US$191 million in 2022 and continued to decline to US$156 million in 2023. However, a significant increase was observed in 2024, with interest costs rising to US$350 million, and remained relatively stable at US$338 million in 2025.
- Interest Expense
- Interest expense followed a similar pattern to overall interest costs. It began at US$371 million in 2021, decreased to US$191 million in 2022, and further decreased to US$156 million in 2023. The expense then increased to US$350 million in 2024 and held at US$338 million in 2025.
- Capitalized Interest
- Capitalized interest was reported as US$53 million in 2021. No capitalized interest was reported for 2022, 2023, 2024, or 2025. This suggests a change in project financing or accounting practices related to qualifying assets.
The decrease in interest costs from 2021 to 2023 likely reflects a reduction in outstanding debt, favorable interest rate adjustments, or a combination of both. The subsequent increase in 2024 and 2025 suggests increased borrowing, less favorable interest rates, or the completion of projects that previously benefited from interest capitalization. The absence of capitalized interest after 2021 warrants further investigation to understand the underlying reasons for this change.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
The observed interest coverage ratios demonstrate significant fluctuation over the five-year period. Both the interest coverage ratio (without capitalized interest) and the adjusted interest coverage ratio (with capitalized interest) initially exhibit substantial improvement, followed by a marked decline.
- Initial Improvement (2021-2022)
- A dramatic increase in both ratios is evident from 2021 to 2022. The interest coverage ratio (without capitalized interest) rose from 18.10 to 72.83, while the adjusted interest coverage ratio also increased from 15.83 to 72.83. This suggests a considerable strengthening of the company’s ability to meet its interest obligations during this period.
- Stabilization and Subsequent Decline (2022-2025)
- Following the peak in 2022, both ratios remained consistent between 2022 and 2023, holding at 72.83 and 64.93 respectively. However, a consistent downward trend is then observed from 2023 through 2025. The interest coverage ratio (without capitalized interest) decreased from 64.93 in 2023 to 16.62 in 2025. The adjusted interest coverage ratio mirrors this decline, moving from 64.93 to 16.62 over the same timeframe.
- Ratio Convergence
- The interest coverage ratio (without capitalized interest) and the adjusted interest coverage ratio are identical in each year presented. This indicates that capitalized interest has no material impact on the reported interest coverage during the analyzed period.
- Overall Trend
- The overall trend reveals a shift from a position of strong interest coverage to a progressively weakening ability to cover interest expenses. While coverage remains positive throughout the period, the declining ratios warrant further investigation into the underlying factors contributing to this trend, such as changes in earnings, interest expense, or debt levels.