Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Tesla Inc., economic profit calculation
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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,629 – 27.05% × 69,754 = -13,237
An analysis of the financial trajectory from 2021 to 2025 reveals a widening gap between capital deployment and operating returns, resulting in a significant deterioration of economic profit. While there was a brief period of value creation in 2022, the subsequent years show a consistent trend of value destruction.
- Net Operating Profit After Taxes (NOPAT)
- A peak in operating performance occurred in 2022, with NOPAT reaching 14,874 million US$. However, a sustained downward trend followed, with profit levels declining to 5,629 million US$ by 2025. This represents a substantial reduction in the company's ability to generate operating earnings from its asset base over the final three years of the period.
- Invested Capital and Cost of Capital
- Invested capital exhibited consistent annual growth, increasing from 40,247 million US$ in 2021 to 69,754 million US$ in 2025. Throughout this expansion, the cost of capital remained remarkably stable, fluctuating narrowly around 27%. This indicates that the hurdle rate required to generate economic value remained high and constant while the total capital at risk increased.
- Economic Profit Trends
- Economic profit transitioned from a deficit of 3,655 million US$ in 2021 to a brief positive position of 1,466 million US$ in 2022. Following this peak, economic profit entered a period of rapid decline, falling to -4,687 million US$ in 2023 and accelerating to -13,237 million US$ by 2025. The convergence of declining NOPAT and increasing invested capital against a static, high cost of capital has led to an intensifying erosion of economic value.
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Net Operating Profit after Taxes (NOPAT)
Tesla Inc., NOPAT calculation
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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in accrued warranty reserve.
4 Addition of increase (decrease) in equity equivalents to net income attributable to common stockholders.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 6,343 × 5.00% = 317
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 655 × 21.00% = 138
7 Addition of after taxes interest expense to net income attributable to common stockholders.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1,680 × 21.00% = 353
9 Elimination of after taxes investment income.
Net income attributable to common stockholders and net operating profit after taxes (NOPAT) both demonstrate significant fluctuations over the five-year period. NOPAT exhibits a more pronounced growth trajectory initially, followed by a decline, while net income mirrors this pattern but with differing magnitudes.
- NOPAT Trend
- NOPAT increased substantially from $7,214 million in 2021 to $14,874 million in 2022, representing a growth of over 106%. This growth slowed in 2023, with NOPAT reaching $11,309 million, a decrease of approximately 24% from the prior year. The decline continued into 2024, with NOPAT at $8,828 million, and further decreased to $5,629 million in 2025. This represents a cumulative decrease of approximately 62% from the peak in 2022.
- Net Income Trend
- Net income attributable to common stockholders also increased significantly from $5,519 million in 2021 to $12,556 million in 2022, a growth of approximately 128%. It continued to rise in 2023, reaching $14,997 million. However, a substantial decrease is observed in 2024, with net income falling to $7,091 million. This downward trend persisted in 2025, with net income reported at $3,794 million, representing a decrease of approximately 75% from its peak in 2023.
- Relationship between NOPAT and Net Income
- While both metrics generally move in the same direction, the magnitude of change differs. The increase in net income from 2021 to 2023 was more substantial than the increase in NOPAT over the same period. Conversely, the decline in net income from 2023 to 2025 was more pronounced than the decline in NOPAT. This suggests that factors beyond core operating profitability, such as financing costs or non-operating items, are influencing net income to a greater extent than NOPAT.
The observed declines in both NOPAT and net income in the later years of the period warrant further investigation to determine the underlying causes. Potential factors could include increased competition, rising input costs, changes in pricing strategy, or macroeconomic conditions.
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Cash Operating Taxes
Tesla Inc., cash operating taxes calculation
US$ 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 provision for (benefit from) income taxes exhibits significant volatility over the observed period. Beginning at US$699 million in 2021, it increased to US$1,132 million in 2022 before experiencing a substantial negative swing to a benefit of negative US$5,001 million in 2023. This was followed by a return to a provision of US$1,837 million in 2024 and a slight decrease to US$1,423 million in 2025.
Cash operating taxes demonstrate a more stable, though declining, trend. An initial value of US$936 million in 2021 rose to US$1,335 million in 2022. Subsequent years show a gradual decrease, with values of US$1,208 million, US$1,164 million, and US$1,085 million reported for 2023, 2024, and 2025 respectively.
- Provision for Income Taxes Trend
- The large negative provision in 2023 suggests a significant impact from tax credits, changes in deferred tax assets/liabilities, or alterations in tax laws. Further investigation would be required to determine the specific drivers behind this substantial shift. The return to a positive provision in 2024 and 2025 indicates a normalization of the tax expense, though it remains below the levels seen in 2021 and 2022.
- Cash Taxes vs. Provision for Taxes
- A consistent difference exists between the provision for income taxes and cash operating taxes throughout the period. This discrepancy suggests the presence of non-cash tax items, such as deferred taxes, impacting the reported provision. The magnitude of this difference is particularly pronounced in 2023, correlating with the negative provision for income taxes.
- Cash Operating Taxes Trend
- The observed decline in cash operating taxes from 2022 to 2025, while gradual, warrants attention. This could be attributable to changes in tax rates, increased tax deductions, or shifts in the geographic distribution of taxable income. The consistent decrease suggests a potentially evolving tax strategy or external factors influencing the company’s tax obligations.
The divergence between the provision for income taxes and cash operating taxes highlights the importance of analyzing both figures when assessing a company’s tax position and its impact on economic value added. The volatility in the provision for income taxes necessitates a deeper understanding of the underlying accounting and tax-related events driving these fluctuations.
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Invested Capital
Tesla Inc., invested capital calculation (financing approach)
US$ 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of accrued warranty reserve.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of short-term investments.
The invested capital of the company demonstrates a consistent upward trend over the five-year period. Simultaneously, changes are observed in the composition of that capital, specifically regarding debt and equity financing.
- Invested Capital Trend
- Invested capital increased from US$40,247 million in 2021 to US$69,754 million in 2025. This represents a cumulative growth of 73.1% over the period. The rate of increase slowed between 2024 and 2025, with an increase of only 3.3% compared to a 12.1% increase between 2023 and 2024.
- Debt & Leases
- Total reported debt and leases decreased significantly from US$8,873 million in 2021 to US$5,748 million in 2022, a reduction of 35.3%. However, debt levels then began to rise, reaching US$14,719 million by 2025. This represents a 156.6% increase from the 2022 low. The most substantial increase in debt occurred between 2023 and 2024, growing by 42.3%.
- Stockholders’ Equity
- Stockholders’ equity exhibited consistent growth throughout the period, increasing from US$30,189 million in 2021 to US$82,137 million in 2025. This represents a 172.1% increase. The rate of growth in equity slowed slightly from 2024 to 2025, but remained positive.
- Capital Structure Shift
- In 2021, debt constituted approximately 22.1% of invested capital (US$8,873 / US$40,247). By 2025, this proportion had risen to approximately 21.1% (US$14,719 / US$69,754). While the percentage change is relatively small, the increasing absolute value of debt suggests a growing reliance on debt financing, particularly in the later years of the observed period. Equity consistently represented the majority of invested capital, increasing its share slightly over the period.
The company’s increasing invested capital, coupled with the recent rise in debt, warrants further investigation into the efficiency of capital allocation and the associated financial risks.
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Cost of Capital
Tesla Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,563,113) | 1,563,113) | ÷ | 1,577,832) | = | 0.99 | 0.99 | × | 27.27% | = | 27.01% | ||
| Debt and finance leases3 | 8,376) | 8,376) | ÷ | 1,577,832) | = | 0.01 | 0.01 | × | 4.21% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 6,343) | 6,343) | ÷ | 1,577,832) | = | 0.00 | 0.00 | × | 5.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 1,577,832) | 1.00 | 27.05% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,287,507) | 1,287,507) | ÷ | 1,301,130) | = | 0.99 | 0.99 | × | 27.27% | = | 26.98% | ||
| Debt and finance leases3 | 8,213) | 8,213) | ÷ | 1,301,130) | = | 0.01 | 0.01 | × | 4.90% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 5,410) | 5,410) | ÷ | 1,301,130) | = | 0.00 | 0.00 | × | 5.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 1,301,130) | 1.00 | 27.02% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 608,072) | 608,072) | ÷ | 618,051) | = | 0.98 | 0.98 | × | 27.27% | = | 26.83% | ||
| Debt and finance leases3 | 5,636) | 5,636) | ÷ | 618,051) | = | 0.01 | 0.01 | × | 6.41% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 4,343) | 4,343) | ÷ | 618,051) | = | 0.01 | 0.01 | × | 5.60% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 618,051) | 1.00 | 26.90% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 548,086) | 548,086) | ÷ | 554,020) | = | 0.99 | 0.99 | × | 27.27% | = | 26.98% | ||
| Debt and finance leases3 | 3,285) | 3,285) | ÷ | 554,020) | = | 0.01 | 0.01 | × | 5.20% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 2,649) | 2,649) | ÷ | 554,020) | = | 0.00 | 0.00 | × | 5.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 554,020) | 1.00 | 27.02% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 937,753) | 937,753) | ÷ | 948,530) | = | 0.99 | 0.99 | × | 27.27% | = | 26.96% | ||
| Debt and finance leases3 | 8,738) | 8,738) | ÷ | 948,530) | = | 0.01 | 0.01 | × | 5.50% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 2,039) | 2,039) | ÷ | 948,530) | = | 0.00 | 0.00 | × | 5.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 948,530) | 1.00 | 27.01% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Tesla Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (13,237) | (9,426) | (4,687) | 1,466) | (3,655) | |
| Invested capital2 | 69,754) | 67,545) | 59,453) | 49,621) | 40,247) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -18.98% | -13.96% | -7.88% | 2.96% | -9.08% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Ford Motor Co. | -15.23% | -4.08% | -7.34% | -7.35% | -2.52% | |
| General Motors Co. | -5.77% | -3.22% | -2.08% | -3.08% | -1.53% | |
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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -13,237 ÷ 69,754 = -18.98%
4 Click competitor name to see calculations.
The analysis of economic value generation reveals a significant downward trend in profitability relative to the cost of capital. Despite a consistent expansion of the capital base, the ability to generate positive economic profit has diminished substantially over the five-year period from 2021 to 2025.
- Invested Capital Trends
- A steady upward trajectory is observed in invested capital, which increased from 40,247 million US dollars in 2021 to 69,754 million US dollars by 2025. This indicates a sustained and continuous deployment of additional resources into the business operations.
- Economic Profit Performance
- Economic profit exhibited notable volatility, characterized by a brief transition into positive territory in 2022 with a value of 1,466 million US dollars. However, this recovery was short-lived, followed by a severe and accelerating decline that resulted in a deficit of 13,237 million US dollars by the end of 2025.
- Economic Spread Ratio Analysis
- The economic spread ratio closely mirrors the trend of economic profit, moving from -9.08% in 2021 to a peak of 2.96% in 2022, before declining sharply to -18.98% by 2025. This widening negative spread indicates a growing discrepancy between the actual return on invested capital and the required cost of capital.
The correlation between increasing invested capital and a rapidly deteriorating economic spread suggests a decline in capital efficiency. The expansion of the asset base has not translated into value creation; instead, the gap between returns and capital costs has widened, indicating that subsequent investments have failed to yield returns sufficient to cover their own costs.
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Economic Profit Margin
Tesla Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (13,237) | (9,426) | (4,687) | 1,466) | (3,655) | |
| Revenues | 94,827) | 97,690) | 96,773) | 81,462) | 53,823) | |
| Add: Increase (decrease) in deferred revenue | 570) | 370) | 1,564) | 1,052) | 757) | |
| Adjusted revenues | 95,397) | 98,060) | 98,337) | 82,514) | 54,580) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -13.88% | -9.61% | -4.77% | 1.78% | -6.70% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Ford Motor Co. | -15.57% | -4.39% | -7.68% | -8.09% | -3.19% | |
| General Motors Co. | -6.66% | -3.62% | -2.38% | -3.67% | -2.26% | |
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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -13,237 ÷ 95,397 = -13.88%
3 Click competitor name to see calculations.
The financial trajectory regarding economic value creation shows a significant deterioration from 2021 through 2025. While there was a brief period of positive economic value generation in 2022, the subsequent years demonstrate an accelerating decline in economic profit, which coincides with a plateau and eventual contraction in adjusted revenues.
- Economic Profit Trends
- A volatile pattern is observed, beginning with a deficit of US$ 3,655 million in 2021, recovering to a surplus of US$ 1,466 million in 2022, and then entering a period of steep decline. Economic profit fell to negative US$ 4,687 million in 2023 and further deteriorated to negative US$ 13,237 million by 2025, indicating that the returns on invested capital failed to cover the cost of capital by an increasing margin over the final three years.
- Adjusted Revenue Performance
- Revenues exhibited strong growth between 2021 and 2023, rising from US$ 54,580 million to a peak of US$ 98,337 million. However, this growth trend ceased after 2023, with revenues stagnating in 2024 at US$ 98,060 million and declining to US$ 95,397 million by 2025, suggesting a ceiling in revenue expansion.
- Economic Profit Margin Analysis
- The economic profit margin reflects a severe erosion of capital efficiency. After reaching a peak of 1.78% in 2022, the margin declined consistently, reaching -4.77% in 2023, -9.61% in 2024, and culminating in -13.88% in 2025. The acceleration of this negative margin suggests that the cost of capital is increasing relative to operating gains, or that operating efficiency is declining sharply despite the scale of revenues.
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