by I can’t think of a better way to learn about a company and its finances than by reading its 10-K annual report. Here are 14 interesting facts about Tesla that I learned after reviewing its most recent 10-K.
Contents
Reportable Segments
Tesla operates as two reportable segments: (i) automotive and (ii) energy generation and storage.
“The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment is also comprised of services and other, which includes non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, sales by our acquired subsidiaries to third party customers and vehicle insurance revenue. The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.“
Manufacturing factories
Tesla has six manufacturing factories, two of which are under construction (Germany, Texas).
Tesla’s Business Model
Tesla has a vertically integrated business model.
Develop technology -> Manufacturing -> Sales -> Vehicle service
Technology:
Tesla develops:
- Vehicle Control and Infotainment Software, including most of the user interfaces, internally and update our vehicles’ software regularly through over-the-air updates.
- Technologies, systems and software to enable self-driving vehicles using primarily vision and radar-based sensors.
Tesla is developing:
- An autonomous Tesla ride-hailing network, which we expect would also allow us to access a new customer base even as modes of transportation evolve.
- A new proprietary lithium-ion battery cell and improved manufacturing processes.
Direct sales:
“We believe this infrastructure enables us to better control costs of inventory, manage warranty service and pricing, educate consumers about electric vehicles, maintain and strengthen the Tesla brand and obtain rapid customer feedback.”
Service:
“Performing vehicle service ourselves provides us with the capability to identify problems and implement solutions and improvements faster, and optimize logistics and inventory better, than traditional automobile manufacturers and their dealer networks.”
Number of employees
Tesla has 70,757 employees.
“As of December 31, 2020, our full-time count for our and our subsidiaries’ employees worldwide was 70,757.”
Investment in Bitcoin
Tesla invested $1.50 billion in bitcoin.
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long- term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
Stock Performance
Tesla has outperformed the NASDAQ Composite over the last 5 years.
Tesla made it clear that such returns are based on historical results and are not intended to suggest future performance.
Stance on Dividends
Tesla does not pay dividends.
“We have never declared or paid cash dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future.”
I would imagine this is because Tesla is a growth business and would rather reinvest any profits into the company.
Increased Revenues
In 2020, Tesla recognized total revenues of $31.54 billion, representing an increase of $6.96 billion compared to the prior year.
Liquidity
Tesla increased its liquidity by selling stock.
“We also opportunistically strengthened our liquidity further through an at-the-market offering of common stock in December 2020, with net proceeds to us of approximately $4.99 billion.”
Stock offerings
Tesla had 3 stock offerings in 2020.
“On February 19, 2020, we completed a public offering of our common stock and issued a total of 15.2 million shares (as adjusted to give effect to the Stock Split, as described in the paragraph below), for total cash proceeds of $2.31 billion, net of underwriting discounts and offering costs of $28 million.”
“On September 1, 2020, we entered into an Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by September 4, 2020 and settled by September 9, 2020, with the sale of 11,141,562 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.97 billion, net of sales agents’ commissions of $25 million and other offering costs of $1 million.”
“On December 8, 2020, we entered into a separate Equity Distribution Agreement with certain sales agents to sell $5.00 billion in shares of our common stock from time to time through an “at-the-market” offering program. Such sales were completed by December 9, 2020 and settled by December 11, 2020, with the sale of 7,915,589 shares of common stock resulting in gross proceeds of $5.00 billion and net proceeds of $4.99 billion, net of sales agents’ commissions of $13 million and other offering costs of $1 million.”
Stock Split
Tesla had a 5 for 1 stock split.
“On August 10, 2020, our Board of Directors declared a five-for-one split of the Company’s common stock effected in the form of a stock dividend (the “Stock Split”). Each stockholder of record on August 21, 2020 received a dividend of four additional shares of common stock for each then-held share, distributed after close of trading on August 28, 2020. All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the Stock Split.”
Automotive Regulatory Credits
Tesla made $1.58 billion in automotive regulatory credits.
“We earn tradable credits in the operation of our automotive business under various regulations related to zero-emission vehicles, greenhouse gas, fuel economy and clean fuel. We sell these credits to other regulated entities who can use the credits to comply with emission standards and other regulatory requirements.”
“Payments for automotive regulatory credits are typically received at the point control transfers to the customer, or in accordance with payment terms customary to the business. We recognize revenue on the sale of automotive regulatory credits at the time control of the regulatory credits is transferred to the purchasing party as automotive sales revenue in the consolidated statements of operations. Revenue from the sale of automotive regulatory credits totaled $1.58 billion, $594 million and $419 million for the years ended December 31, 2020, 2019 and 2018, respectively. Deferred revenue related to sales of automotive regulatory credits was $21 million and $140 million as of December 31, 2020 and 2019, respectively. We expect to recognize the majority of the deferred revenue as of December 31, 2020 in the next 12 months.”
Equity Incentive Plan
Tesla has an equity incentive plan for its employees, directors, and consultants.
“In June 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants.”
ESPP
Tesla employees can purchase stock at a discount.
“Our employees are eligible to purchase our common stock through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The purchase price would be 85% of the lower of the fair market value on the first and last trading days of each six-month offering period. During the years ended December 31, 2020, 2019 and 2018, we issued 1.8 million, 2.5 million and 2.0 million shares under the ESPP, as adjusted to give effect to the Stock Split. There were 34.3 million shares available for issuance under the ESPP as of December 31, 2020.”
Let me know your thoughts!
Which of these 14 facts about Tesla surprised you the most? What facts about Tesla did I forget to include?
As always, invest in growing your knowledge if you’re serious about increasing your net worth!
