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 – 27.50% × 69,754 = -13,556
The financial trajectory between 2021 and 2025 indicates a significant decline in economic value creation. While the period began with negative economic profit, a temporary recovery occurred in 2022, followed by a consistent and accelerating deterioration in economic profit through 2025.
- Net Operating Profit After Taxes (NOPAT)
- A peak in operating profitability was reached in 2022 at 14,874 million US$, followed by a sustained downward trend. By 2025, NOPAT decreased to 5,629 million US$, representing a substantial contraction from its peak levels.
- Invested Capital
- A continuous upward trajectory in invested capital is observed, rising from 40,247 million US$ in 2021 to 69,754 million US$ in 2025. This reflects a steady and consistent expansion of the capital base over the five-year period.
- Cost of Capital
- The cost of capital remained remarkably stable, fluctuating within a very narrow range between 27.36% and 27.50%. This indicates a consistently high hurdle rate that the company was required to exceed to generate economic value.
- Economic Profit
- Economic profit exhibited a severe downward trend after a brief positive outlier in 2022. From a peak of 1,240 million US$, the figures plummeted to a deficit of 13,556 million US$ by 2025. This decline is the result of the divergence between increasing capital expenditures and decreasing operating returns.
The analysis reveals a widening gap between the cost of financing the invested capital and the actual operating returns generated. The combination of a steadily growing capital base and shrinking NOPAT, set against a high and static cost of capital, has resulted in systemic value destruction, with the economic profit deficit expanding rapidly in the latter half of the period.
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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$69,754). While the percentage change is relatively small, the increasing absolute value of debt suggests a growing reliance on debt financing, particularly in the later years of the observed period. Equity consistently represented the majority of invested capital, increasing its share slightly over the period.
The company’s increasing invested capital, coupled with the recent rise in debt, warrants further investigation into the efficiency of capital allocation and the associated financial risks.
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Cost of Capital
Tesla Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,563,113) | 1,563,113) | ÷ | 1,577,832) | = | 0.99 | 0.99 | × | 27.73% | = | 27.47% | ||
| Debt and finance leases3 | 8,376) | 8,376) | ÷ | 1,577,832) | = | 0.01 | 0.01 | × | 4.21% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 6,343) | 6,343) | ÷ | 1,577,832) | = | 0.00 | 0.00 | × | 5.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 1,577,832) | 1.00 | 27.50% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 27.73% | = | 27.44% | ||
| 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 | 27.48% | ||||||||||
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 | × | 27.73% | = | 27.28% | ||
| 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 | 27.36% | ||||||||||
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 | × | 27.73% | = | 27.43% | ||
| 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 | 27.48% | ||||||||||
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 | × | 27.73% | = | 27.41% | ||
| 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 | 27.46% | ||||||||||
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 | (13,556) | (9,735) | (4,957) | 1,240) | (3,839) | |
| Invested capital2 | 69,754) | 67,545) | 59,453) | 49,621) | 40,247) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -19.43% | -14.41% | -8.34% | 2.50% | -9.54% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Ford Motor Co. | -15.31% | -4.13% | -7.41% | -7.44% | -2.63% | |
| General Motors Co. | -5.82% | -3.26% | -2.12% | -3.13% | -1.59% | |
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 × -13,556 ÷ 69,754 = -19.43%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 indicates a period of significant value erosion, characterized by a deepening negative economic spread despite a consistent expansion of the invested capital base. While a brief instance of positive economic value creation occurred in 2022, the subsequent years show an accelerating trend of economic losses.
- Economic Spread Ratio
- The economic spread ratio exhibits high volatility with a severe downward trend following a peak in 2022. After starting at -9.54% in 2021, the ratio improved to 2.50% in 2022, signifying that the return on invested capital exceeded the cost of capital. However, this trend reversed sharply, declining to -8.34% in 2023, -14.41% in 2024, and reaching a low of -19.43% by 2025. This suggests a widening gap between the actual returns generated and the required rate of return.
- Invested Capital Growth
- Invested capital has grown steadily and monotonically throughout the analyzed period. The capital base increased from 40,247 million USD in 2021 to 69,754 million USD in 2025. This represents a substantial increase in the resources deployed into the business, indicating continuous investment in growth or infrastructure.
- Economic Profit Performance
- Economic profit demonstrates a strong correlation with the economic spread ratio. The only positive result was recorded in 2022 at 1,240 million USD. Outside of this window, the losses have intensified significantly, moving from -3,839 million USD in 2021 to -13,556 million USD in 2025. The fact that losses are increasing while invested capital also rises suggests that recent capital allocations are failing to generate sufficient returns to cover their cost, thereby destroying shareholder value.
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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 | (13,556) | (9,735) | (4,957) | 1,240) | (3,839) | |
| 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 | -14.21% | -9.93% | -5.04% | 1.50% | -7.03% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Ford Motor Co. | -15.65% | -4.45% | -7.76% | -8.18% | -3.32% | |
| General Motors Co. | -6.72% | -3.66% | -2.42% | -3.73% | -2.34% | |
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 × -13,556 ÷ 95,397 = -14.21%
3 Click competitor name to see calculations.
The financial trajectory over the analyzed five-year period reveals a significant deterioration in economic value creation. After a brief period of positive economic profit in 2022, there is a consistent and accelerating downward trend in both absolute economic profit and the corresponding profit margin, suggesting that the cost of capital has increasingly exceeded the operating returns.
- Economic Profit Trends
- A volatile pattern is observed in the initial years, with a transition from a loss of 3,839 million US$ in 2021 to a peak gain of 1,240 million US$ in 2022. However, this recovery was short-lived, as economic profit entered a steep decline thereafter. The losses expanded to 4,957 million US$ in 2023, 9,735 million US$ in 2024, and reached a period low of 13,556 million US$ by December 31, 2025.
- Adjusted Revenue Performance
- Revenues experienced rapid growth between 2021 and 2023, increasing from 54,580 million US$ to a peak of 98,337 million US$. Following this peak, revenue growth stagnated in 2024 at 98,060 million US$ and subsequently contracted to 95,397 million US$ in 2025. This indicates a decoupling where revenue stabilization or decline coincided with an intensification of economic losses.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the trend of absolute economic profit, reflecting a severe erosion of value. The margin improved from -7.03% in 2021 to a positive 1.50% in 2022, marking the only year of positive economic value added. Subsequently, the margin deteriorated sharply, falling to -5.04% in 2023, -9.93% in 2024, and ending at -14.21% in 2025. This downward trajectory suggests a diminishing ability to generate returns above the required cost of capital relative to the scale of operations.
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