To: Elon Musk CEO Tesla Motors

From: Khoi Dao

Date: 12/14/2015
Subject: Comparative Financial Analysis of Tesla Motors versus General
Motors Company

As our company is reviewing how we do business in the current market, one

of the most important things is to determine our position in the industry,
compared to our main competitors. For the comparative financial
analysis of our company versus a competing company, General
Motors Company (GM) is selected. The rationale for selecting GM as a
measure for the analysis is that both of the automotive companies
manufacture and distribute electric cars, electric powertrain components in
the United States, and internationally.
Based on the two companies financial strength comparison, Tesla
Motors (TSLA) is in a much weaker position than our competitor,
General Motors Company. The table 1 below demonstrates this finding.
Table 1. Five key indices of financial strength between TSLA and GM
INDEX
Stock Price
(12/03/2015)
Sales / Revenue
(in thousands)
P/E Ratio
Net Income
(in thousands)
EPS

TSLA

GM

$232.71

$35.47

$3,198,356 (2014)

$155,929,000 (2014)

$2,013,496 (2013)

$155,427,000 (2013)

$413,256 (2012)

$152,256,000 (2012)

43.66

13.01

-$294,040 (2014)

$3,949,000 (2014)

-$74,014 (2013)

$5,346,000 (2013)

-$396,213 (2012)

$6,188,000 (2012)

-5.33

2.73

*Note: All financial information was obtained from Yahoo! Finance.

1. Stock Price Difference Explanation

When looking at the stock price, we can see there is a much disparity
between TSLA and GM ($232.71 compared to $35.47). The main reason for
this is General Motors is a mature firm in the market. It has issued a large
number of shares in the stock market, therefore, GM stock price is low due to
the inverse relationship between stock price and shares outstanding.
Meanwhile, Tesla Motors was established just about a decade ago. TSLA
stock price is higher because of smaller number of shares outstanding.
2. Revenues and Net Incomes Comparison
By comparing revenue growth, both companies revenues went up in the last
three years. However, TSLA outperformed GM because our companys
revenue increased nearly six times from $413,256,000 in 2012 to
$3,198,356,000 in 2014. Meanwhile, GM revenue only increase by 2.41%
between 2012 and 2014 (Figure 1). As mentioned above, GM is a mature
firm, it has passed the stage of rapid growth and tend to grow at the same
rate as the overall economy.

Figure 1. Revenue Comparison

TSLA is in a financially much weaker position when comparing net

incomes. There was a decline in GM net income due to price competition,
however, the company is still profitable. For TSLA net income, although there
was a sharp increase in our companys revenue, but the losses also
increased year over year (Figure 2). This is because of high operating
expenses, such as costs for research and development, marketing costs, etc.

Figure 2. Net Income Comparison

3. Price to Earnings Ratios and Earnings Per Share

The price to ratios for TSLA and GM are 43.66 and 13.01 respectively. The
earnings per shares for TSLA is -5.33, while the earnings per share for GM is
2.73 (Yahoo! Finance). Tesla Motors (TSLA) higher P/E ratio and lower
EPS also indicate that our company is in a financially weaker
position when compared to General Motor Company (GM).

References
TSLA Historical Prices. Tesla Motors, Inc. Stock. Yahoo! Finance. Retrieved
December 03, 2015, from https://finance.yahoo.com/q/hp?
s=TSLA+Historical+Prices
GM Historical Prices. General Motors Company. Stock. Yahoo! Finance.
Retrieved December 03, 2015, from https://finance.yahoo.com/q/hp?
s=GM+Historical+Prices
TSLA Income Statement. Tesla Motors, Inc. Yahoo! Finance. Retrieved
December 03, 2015, from https://finance.yahoo.com/q/is?
s=TSLA+Income+Statement&annual
GM Income Statement. General Motors Company. Stock. Yahoo! Finance.
Retrieved December 03, 2015, from https://finance.yahoo.com/q/is?
s=GM+Income+Statement&annual
TSLA Summary for Tesla Motors, Inc. Stock. Yahoo! Finance. Retrieved
December 03, 2015, from https://finance.yahoo.com/q?s=TSLA
GM Summary for General Motors Company. Stock. Yahoo! Finance. Retrieved
December 03, 2015, from https://finance.yahoo.com/q?s=GM