To some it makes fancy cars for the ultrarich. To others it’s set to save the world from fossil fuels. Either way, one thing is for certain – Tesla has been an innovator like no other, a game-changer in the automotive industry, leading the revolution to a more sustainable future on the road with its electric cars. In the nearly two decades it has been around, the company has not only changed our perception of electric vehicles for good, but it has also managed to create a new car brand competing head on with other motoring giants.
From its acclaimed vehicles like the Model S and X to battery energy storage from home to grid scale, solar products and related services, Tesla is not one to rest on its laurels. As it continues to make its products more accessible and affordable to the public, boosting the advent of clean transport and clean energy production, there’s no stopping it. The carmaker delivered 367,500 cars in 2019, 50% more than the previous year and more than triple that sold in 2017, while from July 2019 to June 2020, it recorded four profitable quarters in a row for the first time, making it eligible for inclusion in the S&P 500.
A brief history of Tesla
Notorious Elon Musk may be the face of Tesla today, yet what was originally known as Tesla Motors was founded in 2003 by a group of Silicon Valley engineers who wanted to prove that people didn’t need to compromise when it came to purchasing and driving electric cars. In fact, the electric car enthusiasts believed that these vehicles could be better, quicker and more fun to drive than their traditional gasoline counterparts.
When General Motors’ EV1 programme was scrapped together with the vehicles, the cars were considered a great success from an engineering point of view and this inspired founders Martin Eberhard and Marc Tarpenning to establish and fund their startup Tesla Motors.
Musk entered the picture when he joined the company a year later after investing $6.3 million in Tesla stocks during a Series A round of investment and was appointed chairman of its board of directors, while he was also named company co-founder. Right from the onset, Musk pushed for the strategic goal of creating affordable mass market electric cars, starting off by producing a premium sports car and then moving into more mainstream vehicles including sedans at affordable prices.
With the unveiling of the Roadster’s first prototype in 2006, Tesla was well on its way to disrupting the automotive industry. Launched in 2008, this was an entirely electric car that showcased the company’s cutting-edge battery technology and electric powertrain. Although boasting a price tag few could afford, the car met consumers’ needs for everyday driving, while its cost-effective motor could accelerate to highway speeds.
With the help of a $465 million loan from the US Department of Energy, Tesla moved on to design the first-ever premium all-electric sedan from the ground up. The Model S, had the longest range of any commercial electric car at the time, software updates that increasingly improved its performance and a record 0-60 mph acceleration time of 3.2 seconds. The vehicle was widely praised and received a number of awards from both automotive and environmental publications.
At the same time, Tesla’s supercharger network of fast-charging stations was spread across North America, Europe and China and as of March 2020, the company operates over 17,000 superchargers in 1,942 stations worldwide. The following years it expanded its product line with the model X, a luxury SUV and the Model 3, Tesla’s first mass-market car. At just over $35,000, a week following Model 3’s launch global reservations reached 325,000 units. The company also rolled out its autopilot, a suite of advanced driver-assistance system features, whereas other cars it has unveiled include the Tesla Semi and the Model Y.
The automaker has also ventured in the sustainable energy sector by manufacturing a unique set of energy solutions like the Powerwall, Powerpack and Solar Roof, enabling homeowners and businesses to manage renewable energy generation, storage and consumption.
After 17 years in the market, Tesla has become the world’s best-seller plug-in and battery electric passenger car manufacturer in 2019, with a market share of 17% of the plug-in segment and 23% of the battery electric segment. By 2019, global sales increased by 50% from 245,240 units the previous year to 367,849 units. In 2020, the company surpassed producing 1 million electric cars, with the Model 3 in particular ranking as the all-time best-selling plug-in electric car around the globe.
Fun fact:
The company took its name after celebrated inventor, electrical and mechanical engineer and futurist best known for his contributions to the design of the modern alternating current (AC) electricity supply system, Nikola Tesla. As one of the major pioneers of electricity, Tesla was chosen as the most fitting name that best captured what the company was trying to achieve.
Tesla goes public
The company went public in 2010, opening on the Nasdaq with 13,300,000 shares at $17 each, becoming the first US company to do so since Ford Motor Company’s initial public offering (IPO) in 1956. The IPO raised $226 million with shares surging that day by around 41% to close at $23.89. Since then, it has been a bumpy and at times, a controversial ride like when most notably in 2018 the stock dropped at 30% following Musk’s infamous tweet that he had ‘funding secured’ at $420 per share to take the company private. Despite sparking a year marked by lawsuits and executive departures, the stock managed to outperform other major tech and auto giants like Amazon and Apple since its IPO.
So how much would you have earned in return for investing $1000 in the IPO before Tesla’s announcement of its stock split? If with that amount you would have purchased 58 shares and bearing in mind the electric car maker’s share prices of July 31, 2020 at $1,430.76, those 58 shares would be worth $82,984,08, marking a 8,198% increase in value.
Capturing the public’s imagination as it keeps on rolling out new features and car models, Tesla’s stock has kept on soaring and has continued to rally even in 2020 with shares going up by more than 140% this year at a time when the company was forced to close its doors and temporarily halt production in its California factory due to the COVID-19 pandemic.
Tesla’s shares split
On August 31, 2020 Tesla’s shares split into a 5-for-1 split, which means that the value of investors’ total holding of the company will not change, but the split will grow the number of shares making up their portfolios. So for instance, stockholders who held 100 shares trading at $1500 per share will now own 500 shares valued at $300 per share. The split means that Tesla shares are now much cheaper, making them much more affordable to the average investor.
From what was considered a pipe dream to becoming the world’s second-largest automaker by market capitalisation in the decade since its IPO, Tesla has experienced a roller-coaster ride to the top, but investing in a disruptive growth company with a highly invested individual at the helm has the potential to pay off big time.
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Figures quoted relate to past performance and are not indicative of future performance. Performance figures are indicative as sourced from Bloomberg. Moneybase Invest is brought to you by Calamatta Cuschieri and is licensed by the MFSA. C13729. Moneybase Invest offers direct market access and speed of execution and is intended for knowledgeable and experienced individuals taking their own investment decisions. The value of investments may go up and down and currency fluctuations may also affect investment performance.
