Tesla Motors Case Study

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Corporate Finance SS 2014 Case Study : “Tesla Motors” by Univ. Prof. Dr. D. Hess Universität zu Köln Maite Barreneche Matrikelnummer : Mónica Cabello Mera Matrikelnummer : 5760380 Irene García Cutillas Matrikelnummer : 5758718 Fernanda Sottil De Aguinaga Matrikelnummer : 5760828 TABLE OF CONTENTS 1. Tesla´s business model 3 2. Percentage of sales method 4 3. Valuation 5 i. Growth rate determination for the terminal value period 6 ii. Payout determination for the terminal value period 6 iii. Market risk premium and risk free rate determination 6 iv. Equity beta determination 6 v. Required rate of return determination 7 vi. Flow to Equity 8 vii. Company valuation 8 4. Robustness check 8 5. Reflection 1. Tesla’s business model Tesla Motors Inc. is a company that focuses on designing, developing and manufacturing fully electric cars and advanced electric vehicle powertrain components. The enterprise also provides development services for the powertrain systems and components it produces by selling them afterwards to other automotive manufacturers. Among the products Tesla offers the market are the sedan Model S, the Tesla Roadster sports car, the Model X minivan and other stationary energy storage products the company has developed. Because of environmental consciousness, the impact of rising oil and gasoline prices, the new government regulations and the shifting consumer needs, the electric-based vehicle industry is intense and evolving. Tesla Motors is facing a strong competition nowadays and expects to deal with even a stronger one in the future. The company finds itself to be placed in an unfavourable market position regarding its competitors, who all present significantly greater financial, technical, manufacturing and
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