Stock Analysis on Net

Tesla Inc. (NASDAQ:TSLA)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 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), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes demonstrates a significant increase from 2020 to 2022, rising from $2,291 million to $14,874 million. However, a decline is observed thereafter, with NOPAT decreasing to $11,309 million in 2023 and further to $8,828 million in 2024. The initial upward trend suggests improved operational efficiency or revenue growth, while the subsequent decline indicates potential challenges affecting profitability.
Cost of Capital
The cost of capital remains relatively stable over the five-year period, fluctuating slightly between 26.62% and 27.32%. This consistency implies that the company’s financing risks or market conditions have not changed materially, maintaining a steady required return on invested capital.
Invested Capital
Invested capital shows a continuous upward trend, increasing from $39,217 million in 2020 to $67,545 million in 2024. This consistent growth in capital investment indicates ongoing expansion, asset acquisition, or reinvestment efforts which could support future growth initiatives.
Economic Profit
Economic profit is negative for most years, with a large negative figure of -$8,150 million in 2020, improving significantly to a positive $1,317 million in 2022, and then declining sharply again to -$9,629 million by 2024. This pattern indicates that while the company briefly generated returns above its cost of capital in 2022, it generally operates below the required profitability threshold, suggesting potential inefficiencies or high capital costs relative to earnings.
Summary
The data depicts a period of growth in profitability and capital investment until 2022, followed by a decline in profitability and economic value in subsequent years. The stable cost of capital highlights consistent financial risk conditions, but the negative economic profits in most years raise concerns about value creation. The company’s expanding invested capital base coupled with fluctuating returns emphasizes the importance of improving operational effectiveness to enhance shareholder value.

Net Operating Profit after Taxes (NOPAT)

Tesla Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to common stockholders
Deferred income tax expense (benefit)1
Increase (decrease) in deferred revenue2
Increase (decrease) in accrued warranty reserve3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 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), 10-K (reporting date: 2020-12-31).

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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income attributable to common stockholders.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.


The financial data reveals notable fluctuations in key profitability metrics over the five-year period.

Net Income Attributable to Common Stockholders

Net income shows an overall increasing trend from 2020 to 2023, rising from $721 million in 2020 to a peak of $14,997 million in 2023. This represents a substantial growth in profitability over the first four years. However, in 2024, net income experiences a significant decline to $7,091 million, falling to less than half of the previous year's figure. This sudden drop interrupts the prior growth trajectory and suggests potential challenges or changes affecting net profitability in the most recent year.

Net Operating Profit After Taxes (NOPAT)

NOPAT follows a broadly upward movement from 2020 through 2022, increasing from $2,291 million to $14,874 million. This rapid growth underscores enhanced operating efficiency or higher operational earnings during this phase. Contrary to net income, NOPAT declines more moderately in 2023 and 2024, decreasing to $11,309 million and then to $8,828 million respectively. Despite the decline after 2022, NOPAT remains significantly above the 2020 base level over the entire period, indicating sustained operational profitability.

Comparatively, net income's volatility is more pronounced than that of NOPAT, especially in the latest year where net income dropped sharply relative to NOPAT. This could point to increased non-operating expenses, tax effects, or other one-time items impacting net income beyond operational performance. Overall, the company exhibited strong growth in profitability metrics until 2022, followed by a period of contraction in both net income and NOPAT through 2024.


Cash Operating Taxes

Tesla Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for (benefit from) income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 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), 10-K (reporting date: 2020-12-31).


Provision for (benefit from) income taxes
There is a notable increase in the provision for income taxes from 292 million US dollars in 2020 to 1,132 million US dollars in 2022, indicating a rising tax expense over this period. However, in 2023, the provision shifts dramatically to a benefit of -5,001 million US dollars, representing a significant tax benefit or reversal. In 2024, the provision returns to a positive amount of 1,837 million US dollars, suggesting a reinstatement of tax expenses though at a higher level than in previous years except for 2023.
Cash operating taxes
Cash operating taxes demonstrate a consistent upward trend from 422 million US dollars in 2020 to 1,335 million US dollars in 2022. However, in 2023 and 2024, cash taxes slightly decrease to 1,208 million and 1,164 million US dollars respectively. Despite this slight decline, the cash tax payments remain significantly higher than the 2020 level.
Overall Analysis
The data shows a divergence between the provision for income taxes and the cash operating taxes particularly in 2023, where the provision indicates a substantial tax benefit while cash taxes remain relatively stable and elevated. This pattern may suggest the influence of deferred tax accounting, tax credits, or other temporary differences affecting book income tax expense but not cash payments in that year. The fluctuations in the provision for income taxes reflect variability likely driven by changes in profitability, tax planning strategies, or legislative impacts. Meanwhile, cash taxes show a more stable yet gradually increasing pattern over the observed period.

Invested Capital

Tesla Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current portion of debt and finance leases
Debt and finance leases, net of current portion
Operating lease liability1
Total reported debt & leases
Stockholders’ equity
Net deferred tax (assets) liabilities2
Deferred revenue3
Accrued warranty reserve4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Redeemable noncontrolling interests in subsidiaries
Noncontrolling interests in subsidiaries
Adjusted stockholders’ equity
Construction in progress7
Short-term investments8
Invested capital

Based on: 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), 10-K (reporting date: 2020-12-31).

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.


Total Reported Debt & Leases

The total reported debt and leases exhibit a declining trend from 2020 through 2022, decreasing substantially from 13,228 million US dollars in 2020 to 5,748 million US dollars in 2022. However, this decreasing pattern reverses starting in 2023, where debt rises sharply to 9,573 million US dollars, followed by a further increase to 13,623 million US dollars in 2024, nearly returning to the 2020 level.

Stockholders’ Equity

Stockholders’ equity shows a consistent and strong growth trajectory over the five-year period. Starting at 22,225 million US dollars at the end of 2020, equity increases each year, reaching 72,913 million US dollars by the end of 2024. This steady rise reflects an accumulation of retained earnings and potentially increased capital contributions.

Invested Capital

Invested capital also demonstrates a continuous upward trend from 39,217 million US dollars in 2020 to 67,545 million US dollars in 2024. The increase is gradual with moderate growth between 2020 and 2021, followed by more pronounced growth in the subsequent years. This pattern suggests ongoing investments in the company’s operations and assets.

Summary of Trends

Over the period analyzed, there is evidence of a strategic shift in the company's financial structure. Initially, debt levels are reduced significantly until 2022, indicating efforts to deleverage the balance sheet. However, from 2023 to 2024, debt increases substantially, possibly to finance expansion or capital expenditures as reflected in the rising invested capital. Concurrently, stockholders' equity consistently grows, highlighting strong equity financing or retained earnings accumulation, enhancing the company's capital base. The simultaneous increase in invested capital and equity suggests robust reinvestment and capital strengthening, while the fluctuation in debt indicates a dynamic approach to leveraging.


Cost of Capital

Tesla Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance leases3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

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 ÷ = × =
Debt and finance leases3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

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 ÷ = × =
Debt and finance leases3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

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 ÷ = × =
Debt and finance leases3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

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 »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance leases3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

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

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Ford Motor Co.
General Motors Co.

Based on: 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), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


The financial data reveals significant fluctuations in key performance indicators over the five-year period. Economic profit exhibited a volatile pattern, starting with a substantial loss of -8,150 million US dollars in 2020 and improving to a positive value of 1,317 million US dollars in 2022. However, the company experienced subsequent declines, with economic profit turning negative again in 2023 and further worsening in 2024, reaching -9,629 million US dollars.

Invested capital demonstrated a steady and continuous increase throughout the period, rising from 39,217 million US dollars at the end of 2020 to 67,545 million US dollars by the end of 2024. This growth suggests ongoing capital deployment or expansion activities.

The economic spread ratio, which reflects the company's return relative to its cost of capital, followed a trajectory similar to economic profit. Initially, there was a significant negative spread of -20.78% in 2020, improving to a positive 2.65% in 2022. However, the trend reversed in the last two years, with the ratio turning negative again and deteriorating to -14.26% by 2024. This pattern indicates challenges in generating returns above the cost of capital during the most recent years.

Economic Profit
Initially highly negative, improving to a positive peak in 2022, followed by a decline to its lowest point in 2024.
Invested Capital
Consistent upward trend, indicating increased capital investment or asset base expansion.
Economic Spread Ratio
Mirrored economic profit trends, shifting from negative to positive in 2022 before declining into negative territory again in 2023 and 2024.

Overall, while invested capital expanded steadily, the company struggled to sustain positive economic profitability and economic spread beyond 2022. The resurgence of negative economic profit and spread in recent years raises concerns about the efficiency and profitability of capital utilization during that timeframe.


Economic Profit Margin

Tesla Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
 
Revenues
Add: Increase (decrease) in deferred revenue
Adjusted revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Ford Motor Co.
General Motors Co.

Based on: 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), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =

3 Click competitor name to see calculations.


Adjusted Revenues
The adjusted revenues demonstrate a continuous upward trend from 31,908 million US dollars in 2020 to a peak of 98,337 million US dollars in 2023. However, there is a slight decrease in 2024 to 98,060 million US dollars, indicating a marginal decline after several years of growth.
Economic Profit
Economic profit exhibits significant volatility over the observed period. It started with a substantial loss of 8,150 million US dollars in 2020, improved considerably to a loss of 3,776 million US dollars in 2021, and turned positive to 1,317 million US dollars in 2022. Nonetheless, the economic profit declined again in 2023 and 2024, recording losses of 4,864 million and 9,629 million US dollars, respectively, indicating fluctuating profitability with increasing losses toward the end of the period.
Economic Profit Margin
The economic profit margin follows a pattern consistent with economic profit. Beginning at a negative margin of -25.54% in 2020, it improved substantially to -6.92% in 2021, turned positive at 1.6% in 2022, but then deteriorated again to -4.95% in 2023 and further to -9.82% in 2024. This reflects an initial recovery in profitability margin followed by subsequent declines.
Overall Analysis
The data suggests that while the company has managed to increase its revenue substantially over the years, this growth has not consistently translated into economic profit. The period shows a brief improvement in economic profitability around 2022, but this was not sustained, with subsequent years showing renewed losses both in absolute economic profit and in profit margins. The trend points to challenges in converting revenue growth into sustained profitability, particularly in the latter years of the dataset.