on 25-Oct-2021 (Mon)

Specifically, we used Tesla's financial statements from 2018 to 2020 and compared the financial performance with other competitors in the industry.

the current issues of Tesla is pointed out, which have a negative impact on financial performance

Firstly, the economic value as well as impacts of a listed company are constantly improving with the vigorous development of the whole industry. In addition, the competitiveness analysis of the listed companies will find out the encountered problems in the development. In this case, it will better promote the development of the whole industry and achieve the ultimate goal of energy saving and emission reduction and environmental protection.

Xiujuan Luo made some suggestions to the listed auto companies in China through the competitiveness analysis in order to better develop the national electric vehicle industry and economy [1]. Yue Xu found that analysing the competitiveness of the electric vehicle industry helped to determine the current development stage of the industry in China [2]

However, most studies focus on analysing the competitiveness of the whole environment of electric vehicle industry, while few of them use a specific company or case to analysis the competitiveness.

First, we analysed the current condition of the industry to determine the main competitors and research priorities of Tesla. Then we calculated Tesla’s financial indicators in recent year and analysed its main

competitiveness based on these financial indicators. Finally, the main existing problems are discussed and corresponding strategies are proposed to improve the state of operation.

In conclusion, the enhanced profitability, strong solvency and growth ability of Tesla have been discovered. In order to support the statements, the evaluations are presented based on profitability, solvency, operating management and growth ability by financial ratios from 2018 to 2020 in Tesla as well as the comparison with its main competitor.

Besides, it is find that the operating management needed to be improved especially in three aspects: strong bargaining power of suppliers, high employee turnover and overcapitalisation.

Specifically, the company can find alternative suppliers and improve its technology to enhance their vertical integration for the first problem. As for the second problem, they can improve their employees’ salaries, equity-based award and other benefit to stop layoffs and provide more jobs to erase the negative impression. With regard to the third issue, Tesla can repay some long-term debts, restructure debts and repurchase some shares to control overcapitalisation.

Firstly, it only compares three years financial result in the financial analysis, which may be not accurate and sufficient. The intrinsic is analysing three years financial result may not be able to see the trends of the company performance.

Secondly, the study only selects other four companies in the industry in order to assess the performance of Tesla by comparison. There is a risk that the four companies cannot represent the whole industry appropriately.

Tesla’s whole financing statements are chosen to measure its competitiveness in the study. However, it has the energy storage business except for selling electric vehicle, i.e., it is not accurate enough to assess its performance in the electric vehicles industry via whole business.

In order to improve Tesla's profitability, we believe that Tesla needs to pay more attention to their cost control.

Tesla's suppliers have higher bargaining power, which may be the cause of their perennial high costs

It is worth mentioning that Tesla has low dependency on its suppliers as they work as original equipment manufacturer in China. Therefore, it may be a good choice to enlarge Chinese market and establish more factories. Tesla can set up a new supply chain in China that select more local manufacturer to produce components for them

Tesla also needs to further improve its technological innovation capabilities and masters the production technology of its core components (e.g., battery), which can effectively reduce the reliance on their suppliers like Panasonic.

Tesla stated in its 2020 annual report that none of their key employees is bound by an employment agreement for any specific term and they may not be able to successfully attract and retain senior leadership.

Tesla disclosed in its financial report due to COVID-19, which fired many temporary workers and lowered the basic wages of their employee in April 2020. The reduction in employee wages may trigger their dissatisfaction and result in their resigning from Tesla.

Tesla needs to stop layoffs in order to reduce the negative publicity related to its employee recruitment.

The main reason for the sharp decline in this indicator is the dramatic growth of Tesla's capital.

Tesla's overcapitalisation has brought enough funds to the company to expand its business, but it may bring higher risks to Tesla. Tesla should reduce its capital from both long-term debt and shares.

If possible, Tesla can consider repurchasing some shares appropriately.