1. automotive and vehicles
2. electric vehicles

April 18, 2013
Consumer Goods
Tesla Motors, Inc.
Ticker: TSLA
Recommendation: Buy
Current Price: $43.75
Implied Price: $50.88
Investment Thesis

Tesla offers a competitive product that takes advantage of the current global
“green” trend in an industry of heavy concern

Tesla is expanding in the United States and overseas while simultaneously
offering new products that are already in high demand

Management has a proven history of success and is passionate about
making Tesla a respected brand in the automobile industry

Tesla is beginning to become profitable and expand margins while growing
at the same time
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Tesla’s strategic partnerships with Daimler AG and Toyota position the
firm for future success
Key Statistics
52 Week Price Range
25.52-46.68
50-Day Moving Average
38.29
200-Day Moving Average
34.35
Beta
Market Capitalization
3-Year Revenue CAGR
1.49
5,010.16M
52.40%
Trading Statistics
Diluted Shares Outstanding
107.35M
Three-Year Stock Chart
Average Volume (3-Month)
2,212,250
Institutional Ownership
69.60%
Insider Ownership
38.46%
EV/Revenue (LTM)
9.96X
Margins and Ratios
Gross Margin (LTM)
Cash Ratio (LTM)
Current Ratio (LTM)
Debt to Enterprise Value
7.28%
$50.00
20,000,000
$45.00
18,000,000
$40.00
16,000,000
$35.00
14,000,000
$30.00
12,000,000
$25.00
10,000,000
$20.00
8,000,000
$15.00
6,000,000
$10.00
4,000,000
$5.00
2,000,000
0.86
0.97
$0.00
Jun-10
0
Oct-10
Feb-11
Volume
0.11X
Jun-11
Oct-11
Adjusted Close
Feb-12
Jun-12
50-Day Avg
Oct-12
Feb-13
200-Day Avg
Covering Analysts: Cameron Schwartz & Cecilia Xia
Emails: [email protected]
[email protected]
1
University of Oregon Investment Group
April 18, 2013
University of Oregon Investment Group
Business Overview
Tesla Motors, Inc. is a Silicon Valley based company that designs, manufactures
and sells electric cars and electric vehicle powertrain components.
Entrepreneur/Inventor Elon Musk and four other associates founded Tesla in
2003. The company held its initial public offering on January 29 th of 2010. The
firm became cash flow positive for the first time in history in Q4 of FY2012.
The business is broken into two separate segments; automotive sales and
development services. Automotive sales are the main revenue driver making up
nearly 90% of the firms revenue. Automotive Sales is broken into two subsections, Vehicle, Options and Related Sales and Powertrain Component and
Related Sales.
Vehicle, Options and Related Sales consists of sales from their automobiles. The
company currently has two products; the Tesla Roadster and the Model S. The
Tesla Roadster, which was considered the first fully electric sports car, is not
produced by the company anymore but is still sold in the market. In 2012 the
company released the Model S, which is considered a luxury sedan. The Model
S is Tesla’s main revenue driver and is expected to set record sales in FY2013.
Recently Tesla announced the release of the Model X, a fully electric crossover
vehicle. Management has spoken about working on bringing a new and cheaper
Model S to the market after they deliver the Model X. We predict that this
model will be released to the market sometime around 2017-2018.
Powertrain Component and Related Sales is the sale of Tesla designed and
produced fully electric powertrain systems to other car manufacturers. Tesla has
strategic partnerships with Toyota and Daimler AG through which they develop
and sell electric powertrain systems to both firms. Tesla was contracted by
Toyota in 2010 to develop and produce the electric powertrain for the Toyota
RAV4. Currently, the firms are negotiating a deal for the shipment of the
powertrain systems. Additionally, Tesla has an ongoing relationship with
Daimler AG in which Tesla produces the powertrain system for Daimler’s
subsidiaries, Mercedes-Benz and Smart, all electric cars. Specifically, Tesla
produces the powertrain systems for the Smart fortwo (the bestselling electric
car in Europe), Mercedes-Benz A-Class (Europe) and the B-Class (United
States). Tesla is in the process of completing the shipments of powertrain system
for the Mercedes-Benz B-Class.
The second segment of Tesla’s business is development services. This segment
consists of developing electric powertrain systems for other automobile
manufacturers. As mentioned before, Tesla has strategic partnerships with
Toyota and Daimler where they develop and sell electric powertrain systems for
the two automobile manufacturers. Currently, Tesla has completed development
of their projects for both firms.
Strategic Positioning
Tesla is strategically positioned in the electric vehicle market as a high end
manufacturer and dealer. Tesla gains competitive advantage over other
incumbents because of their direct-to-consumer sales, stores and service centers,
innovative consumer financing options, and technological innovations.
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Tesla’s direct-to-consumer car sales are a strong strategic position and
advantage they hold over typical automobile manufacturers. Most automobile
manufacturers are required by state law to sell their vehicles their franchised car
dealerships. Tesla is able to sell their cars directly to consumers because it has
no franchised dealers. Tesla sells its cars to customers through its stores which it
fully owns and operates. Tesla stores and galleries “are highly visible, premium
outlets in major metropolitan markets some of which combine retail sales and
service”. Tesla’s sales strategy is similar to Apple’s as their stores are both
aesthetically pleasing and allow for the firm to create a unique buying
experience. Tesla’s stores change the entire car buying experience and take
away the incentive of both the buyer and seller to compete on price.
Furthermore, Tesla’s stores allow the firm to achieve operating efficiencies as
well as capture sales and services revenues that typical automobile
manufacturers do not.
Currently, Tesla has stores in California, Canada, Colorado, District of
Columbia, Florida, Illinois, New Jersey, New York, Oregon, Pennsylvania,
Virginia and Washington. Tesla recently won a victory in New York where car
dealers were trying to stop Tesla from selling their own cars. Additionally, Tesla
has galleries in Arizona, Massachusetts, and Texas. Tesla is currently fighting a
legal battle in Texas to allow the firm to sell cars directly to customers. Outside
of the United States, Tesla has 10 stores in 10 countries in Europe and
Asia/Pacific. Tesla plans to open 10 new stores in 2013.
Recently, Tesla announced a new financing option for customers that aim to
bring down the monthly cost of owning a Model S. The new financing option
allows customers to enter into a hybrid 5.5 year lease/3 year loan contract with
Tesla through Wells Fargo and US Bank. The finance option allows customers
to enter into a 5.5 year loan for around $500-$600 per month. Essentially, the
customer does not have to put down any money up front because all Tesla
customers receive a federal tax credit. The federal tax credit is an incentive from
the government for consumers to purchase electric vehicles. Furthermore, a
customer using the financing option is allowed, but not obligated, to return the
car to Tesla at the end of three years for either 43% of the residual value or the
book value of an equally depreciated Mercedes-Benz S-Class sedan. If the
consumer wishes to keep their vehicle they must pay the monthly payments for
2 and half years at which point they will own the car. The finance option
combines the best features of a lease and a loan and makes the car affordable to
more consumers.
Currently, Tesla has not moved all the way down the cost curve in regards to
their supply chain but they do anticipate reaching these milestones in the near
future. This will allow the firm to experience greater margins going into the
future.
Research and development is a large part of Tesla’s business because it will
need to continually stay ahead of new clean technologies and incorporate or
overcome the introduction of such new technologies. Luckily for Tesla it’s
CEO, Elon Musk, is an extremely successful inventor and will be able to keep
Tesla current and competitive.
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Business Growth Strategies
Tesla plans to grow organically in the future through expanding its product
offering, making its products more affordable, creating more attractive products,
and expanding globally.
Tesla has produced two products over its lifetime, the Tesla Roadster and the
Model S. Tesla plans to begin production of the Model X, an electric cross-over,
in 2014 and to bring it to the market by 2015. Furthermore, Tesla management
has mentioned that they intend to bring a much cheaper version of the Model S
to the market. This will allow the company to gain greater market share in all
geographic regions. Going forward, the firm will need to continue to bring
innovative products to the market.
Model X
Tesla is a leader in bringing innovative products to the car market. Outside of
the fact that they have created an all-electric car which accelerates from 0-60 in
4.2 seconds, the technology inside the car is spectacular. In the future the
company plans to continue to improve their product offering by creating
innovative cars that incrementally change the automobile industry. One such
change will be to increase the range that their cars can go in a single charge.
In 2013 Tesla plans to open stores in Europe and Asia/Pacific. Expanding the
business overseas will increase business significantly. Currently the firm does
not have any Model S cars displayed in any stores overseas, yet 25% of
reservations for Model S’ are from outside of North America.
Industry
Overview
Tesla falls into Car & Automobile Manufacturing Industry. The industry overall
generated $87 billion revenue and $2.1 billion profit in the last year. IBIS
World projects an industry annual growth rate of 3.5% for the years 2013 to
2018. The major market share holders are Toyota Motor Corporation (15.6%),
General Motors Corporation (15.3%), Ford Motor Company (12.0%), HyundaiKia Automotive Group (11.4%) and Honda Motor Co. Ltd. (8.5%).
As the chart on the left shows, midsize and full-size sedans are the most popular
car segmentation, which holds 44.1% of the total market, followed by compact
and subcompact cars, which holds 36.2% of the total market.
Competition
Petroleum is still the dominant energy source in the U.S. and it has significant
implications for the economy, environment and energy security. We are in
demand of advantaged technologies that can help us reduce our reliance on
petroleum and cut emissions.
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In today’s market, auto manufactures offer hundreds of vehicles models that
using alternative fuels and other advantaged technologies. These light-duty
vehicles exist for the purpose of helping drivers and fleets reduce petroleum use,
cut emissions, and save money on fuel costs. In 2013, many vehicles set to
arrive including Compressed Natural Gas Vehicles, Propane Vehicles, Allelectric Vehicles, Plug-In Hybrid Electric Vehicles, Hybrid Electric Vehicles,
Ethanol Flex-Fuel Vehicles and Biodiesel Vehicles. Next, we will briefly
discuss the advantages and disadvantages of each group of vehicles.
Compressed Natural Gas Vehicles
The same fuel used for cooking and heating in many homes powers compressed
Natural Gas (CNG) Vehicles. In the U.S., we have plenty natural gas supplies
and we are currently developing more ways to generate natural gas. For
example, some producers capture renewable natural gas from landfills, sewage
treatment facilities, or agricultural waste. Thus, CNG costs less than gasoline in
most cases and the resulting savings can offset the higher purchase price of
CNG Vehicles.
Honda Civic Natural Gas
In 2013, three dedicated CNG Vehicles are available, including Honda Civic
Natural Gas, the natural gas General Motors Chevrolet Express/ GMC Savana,
and the Vehicle Production Group (VPG) MV-1. Two CNG-gasoline hybrid
vehicles, including GMC Sierra 2500 HD and the Ram 2500 CNG, that can
operate on natural gas and then switch to gasoline operation when the CNG
cylinders are empty. CNG Vehicles drivers need to consider fueling
infrastructure. Up until February 2013, there were 500 publicly accessible CNG
fueling stations across the country., while there were 121446 (June 2012 data)
gasoline stations in the U.S.
Propane Vehicles
Ford Super Duty F-250
Propane, also known as liquefied petroleum gas, which is a clean-burning
gaseous fuel that’s been used in transportation for decades. Propane is the most
commonly used alternative motor fuel in the world and it is nontoxic, safe to
handle and presents no threat to soil, groundwater, or surface water when spilled
or leaked. There were 2500 stations that serve propane throughout the country.
Almost all the Propane Vehicles are heavy-duty pickups or vans.
Plug-In Hybrid Electric Vehicles
Plug-In Hybrid Electric Vehicles (PHEVs) use batteries to power an electric
motor and use another fuel to power an internal combustion engine. Normally,
the other fuel can be gasoline or diesel. The batteries can be charged from an
off-board electrical power source, through regenerative braking, or by the
internal combustion engine. PHEVS can be fueled solely with gasoline, so they
don’t have to be plugged in before driving. However, they will not achieve
maximum fuel economy without charging.
Toyota Prius Plug-In Hybrid
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Hybrid Electric Vehicles
An Internal combustion engine and an electric motor that uses energy stored in a
battery power the Hybrid Electric Vehicles (HEVs). HEVS cannot be plugged
in to recharge the battery, instead, the battery is charged by the internal
combustion engine and through regenerative braking. The extra power provided
by the electric motor allows for better fuel economy. Some hybrids can run on
battery power alone at idle and low speeds. When speeds increase, both of the
motors will work together to provide power. Thus, Full hybrids are 25%-40%
more efficient than the conventional vehicles.
Lexus RX 450 FWD
Ethanol Flex-Fuel Vehicles
Flex-Fuel Vehicles (FFVs) are powered by gasoline, E85, or any combination of
the two. E85 is a blend of gasoline and ethanol with the ethanol content ranging
between 51% and 83%. E85 is a high-octane fuel, so driver will experience
better power and performance, but FFVs usually have less fuel economy,
because ethanol contains less energy per gallon than gasoline. Today E85 is
accessible at more than 2,200 locations.
Biodiesel
Ford Focus FFV
Biodiesel is produced from vegetable oils and animal fats and it is renewable.
Consumers typically buy biodiesel blends ranging from 5% biodiesel, 95%
diesel fuel to 20% biodiesel, 80%diesel fuel. Biodiesel vehicles can reduce
tailpipe emissions more than half when comparing to the conventional cars.
Currently, more than 300 publicly accessible fueling stations across the country
offer biodiesel. Biodiesel vehicles are mainly pickups and vans.
Management and Employee Relations
Elon Musk
Co-founder, CEO, and Product Architect
GMC Sierra 2500 Pickups
Mr. Musk is Chairman of the Board, Chief Executive Officer and Product
Architect of Tesla Motors. He has served as CEO since October 2008 and as
Chairman of the board of directors since April 2004. Mr. Musk has also served
as Chief Executive Officer, Chief Technology Officer of Space Exploration
Technologies Corporation (“SpaceX”), which is a company that developing and
launching advanced rockets for satellite and eventually human transportation,
since May 2002. Mr. Musk has also served as non-executive Chairman and
principal shareholder of SolarCity, a leading provider of solar power systems in
the United States, since July 2006.
Prior to joining SpaceX, Mr. Musk co-founded and served as Chairman and
CEO of PayPal, the world’s leading Internet payment system, which was
acquired by eBay in October 2002. Before PayPal, Mr. Musk co-founded Zip2
Corporation, a provider of Internet enterprise software and services, which was
acquired by Compaq in March 1999. Mr. Musk holds a B.A. in physics from the
University of Pennsylvania and a B.S. in business from the Wharton School of
the University of Pennsylvania.
In 2011, Mr. Musk received $33,280 as his compensation.
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Deepak Ahuja
Chief Financial Officer
Mr. Ahuja has served as Chief Financial Officer of Tesla Motors since 2010.
Prior to joining the company, Mr. Ahuja served as the Vehicle Line Controller
of Small Cars Product Development from 2006 to July 2008 at Ford and served
as Chief Financial Officer for Ford of Southern Africa from February 2003 to
June 2006. Previously, Mr. Ahuja served as the Chief Financial Officer for Auto
Alliance International, a joint venture between Ford and Mazda, from September
2000 to February 2003. Mr. Ahuja holds an M.S.I.A. from Carnegie Mellon
University, a M.S. in materials engineering from Northwestern University and a
Bachelor degree in ceramic engineering from Banaras Hindu University in
India.
Model S Performance
In 2011, Mr. Ahuja received $869,464 as his compensation.
Jeffrey Straubel
Co-founder, Chief Technology Officer
17’’ Touchscreen Main Features:
Mr. Straubel has served as Chief Technology Officer of Tesla Motors since
2005. Prior to joining the company, he was the CTO and co-founder of the
aerospace firm, Volacom, which designed a specialized high-altitude electric
aircraft platform using a novel power plant. At Volacom, he invented and
patented a new long-endurance hybrid electric propulsion concept that was later
licensed to Boeing. Previously, Mr. Straubel worked at Rosen Motors as a
propulsion engineer developing a new hybrid electric vehicle drivetrain based on
a micro turbine and a high-speed flywheel. Mr. Straubel was also part of the
early team at Pentadyne, where he designed and built a first-generation 150kW
power inverter, motor-generator controls, and magnetic bearing systems. Mr.
Straubel also built an electric Porsche 944 that held a world EV racing record
and he is also an accomplished pilot.
In 2011, Mr. Straubel received $1,169,531 as his compensation.
Management Guidance
Management guidance has typically been conservative. Elon Musk, CEO,
promised three things at the beginning of 2012:
1. Model S production would start before July 2012 (Production began June)
2. Deliver 20,000 units in 2013
3. Exceed 25% gross margin in 2013 without out regulatory benefits
Tesla has already completed one of the promises and Musk is extremely
confident that Model S deliveries will reach 20,000 units in 2013. So confident
that he proclaimed that the firm could shut down all the stores and fire the sales
team and still reach the 20,000 delivery mark. As for gross margin, the firm is
on its way. Last quarter was the first time the firm ever had a cash flow positive
quarter. Furthermore, as economies of scale are reached and better relations with
suppliers develop the firm will be able to decrease its costs of revenue. I am
confident that the firm will be able to reach these milestones in the 2013 fiscal
year.
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For Q1Y13 the management gave the following guidance:
- 4,500 deliveries
- Mid teen gross margins
- 15% reduction in R&D versus 4Q
- SG&A increase moderately
Given managements history we are confident in their ability to deliver and
potentially exceed guidance. In particular, given Musk’s extreme confidence in
being able to deliver 20,000 units we believe deliveries will exceed.
Portfolio Strategy
The University of Oregon Investment Group does not currently hold Tesla in
any of the portfolios. Due to Tesla’s expected high growth rate and the upside
catalysts, we believe Tesla is a good fit for DADCO portfolio.
Recent News
“Tesla CEO takes dealer fight to Texas, says he can sell more cars”
-
April 10th, 2013, LA Times
“In the latest chapter of an ongoing battle against traditional dealer networks,
Tesla Motors Inc. Chief Executive Elon Musk has taken his fight to Texas,
telling lawmakers his company could sell as many as 2,000 cars next year if
allowed to open its own stores.”
Elon Musk is currently fighting the Texas court system in a battle to get
permission to sell Tesla cars directly to customers in the state of Texas. Based
on current law, Tesla cannot sell cars directly to customers because it has no
franchised dealer relationships. In other states, some individual auto dealers and
regional associations have already filed lawsuits attempting to block Tesla from
selling in their states. Tesla recently won a trial in New York.
“2013 Motor Trend Car of the Year: Tesla Model S”
-
January 2013, MotorTrend.com
“The 2013 Motor Trend Car of the Year is one of the quickest American fourdoors ever built. It drives like a sports car, eager and agile and instantly
responsive. But it's also as smoothly effortless as a Rolls-Royce, can carry
almost as much stuff as a Chevy Equinox, and is more efficient than a Toyota
Prius. Oh, and it'll sashay up to the valet at a luxury hotel like a supermodel
working a Paris catwalk. By any measure, the Tesla Model S is a truly
remarkable automobile, perhaps the most accomplished all-new luxury car since
the original Lexus LS 400. That's why it's our 2013 Car of the Year.”
Tesla’s Model S was crowned the 2013 Motor Trend car of the year which is a
huge achievement in the automobile industry. The motor trend car of the year is
evaluated based on advancement in design, engineering excellence, efficiency,
safety, and value. The Tesla Model S is now in an elite class along with all time
great selling cars such as the Volkswagen Passat, Ford Fusion, Honda Civic,
Ford Mustang, Nissan GT-R, and Chevrolet Camero to name a few.
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Catalysts
Upside
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Tesla earns profit
Tesla is able to sell their cars directly to customers in more states
allowing for greater exposure
Tesla’s upcoming frequent news announcements are received well and
the stock moves accordingly so
Mercedes-Benz B-Class and Toyota RAV4 are of high demand so
Daimler and Toyota contract more with Tesla
Tesla exceeds 25% gross margin and 20,000 unit sales
Tesla creates strategic partnership with new company
Tesla sales overseas exceed expectations
Tesla sees consistent stable growth and decreasing margins
Record new Model S reservations
Tesla plans to open 15 to 20 more stores and galleries this year with
about half the openings in Europe and Asia
Tesla plans to expand superchargers coverage on the U.S. West and
East Coasts and around the rest of the country
Model S unanimously named Motor Trend Car of the Year○R
Downside
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Daimler and Toyota are unhappy with Tesla service and product
Courts rule against Tesla being able to sell cars directly to customers
Material problems with Model S or Model S supply chain
Majority of customers using finance option return car after three years
Material problems with Toyota RAV4 or Mercedes-Benz B-Class
Comparable Analysis
Implied Price Weighting
Industry Comp
18.26
40.00%
Growth Comp
70.13
60.00%
Final Comp Implied Price
Current Price
Undervaluation
49.38
43.75
12.87%
Tesla has unique business structure. Its competitors in its industry are highly
mature as oppose to Tesla’s newly developed business model, thus finding
comparable companies was very difficult. Given Tesla’s uniqueness, we decided
to form two comparable analyses. One comparable analysis will capture Tesla’s
industry competitors and one comparable analysis will capture Tesla’s high
growth rate. For the industry comparable analysis, we chose to use seven
companies to get the industry average EV/Revenue and EV/Gross Profit levels.
We weighted EV/Revenue and EV/Gross Profit both 50%, as we believe the top
line and the gross profit of the industry will be Tesla’s future target level. When
screening for comparable for the growth rates we attempted to find the
companies that have relative high revenue growth rate for 2013 and 2014. We
then weighted EV/Revenue 70% and EV/Gross Profit 30%, as the top line is the
most important measurement for the high growth company. Finally, we
weighted Industry comparable Analysis 40% and Growth Comparable Analysis
60%.
Industry Comparable Analysis – 40%
We believe Tesla is still in its growth stage and it will not be stabilized like the
other industry companies until 2014, therefore we use the 2014 data (Revenue,
Gross Profit, EBIT, EBITDA, Net Income, Capital Expenditures) for Tesla and
its comparable companies when we conducted the comparable analysis.
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General Motors Company – 15%
“General Motors Company (GM), incorporated in on September 16, 1908,
designs, builds and sells cars, trucks and automobile parts worldwide. The
Company also provides automotive financing services through General Motors
Financial Company, Inc. (GM Financial). It operates in four automotive
segments: GM North America (GMNA), GM Europe (GME), GM International
Operations (GMIO) and GM South America (GMSA). GM’s total worldwide
vehicle sales were nine million during the year ended December 31, 2011.” –
Reuters.com
General Motors was chose to be one of the comparable companies because it is
an American car manufactory. GM faces the same risk and competition as
Tesla. We chose to weight this company 15% due to its similarities of Beta,
geographic sales.
Toyota Motor Corporation – 10%
“Toyota Motor Corporation is a Japan-based company mainly engaged in the
automobile business and financial business. The Company operates through
three business segments. The Automobile segment is engaged in the design,
manufacture and sale of car products including passenger cars, minivans and
trucks, as well as the related parts and accessories. The Finance segment is
involved in the provision of financial services related to the sale of the
Company's products, as well as the leasing of vehicles and equipment. The
others segment is involved in the design, manufacture and sale of housings, as
well as information and communication business.” – Reuters.com
Toyota Motor Corporation was weighted as 10% for the valuation because it is a
Japan-based company. It faces different growth risks and it has a negative
revenue growth rate in 2013.
Ford Motor Company – 15%
Ford Motor Company (Ford), incorporated in 1919, is a producer of cars and
trucks. The Company and its subsidiaries also engage in other businesses,
including financing vehicles. The Company operates in two sectors: Automotive
and Financial Services. Its Automotive Sector includes Ford North America,
Ford South America, Ford Europe and Ford Asia Pacific Africa. Financial
Services includes Ford Motor Credit Company and Other Financial Services.” –
Reuters.com
Ford Motor Company was chosen as a comparable company due to its similar
beta to Tesla. More importantly, Ford is an America-based company, thus we
weighted this company 15%.
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Nissan Motor Co., Ltd. – 10%
“Nissan Motor Co., Ltd. is engaged in the manufacturing, sales and related
business of automotive products, industrial machinery and marine equipment.
The Company has two business segments: automobile and sales financing. The
automobile segment is engaged in the passenger cars, trucks, buses, forklifts,
manufacturing parts for oversea production. The sales financing segment is
engaged in credit, lease. The Sales financing segment consists of Nissan
Financial Services Co., Ltd. (Japan), Nissan Motor Acceptance Corporation
(USA), NR Finance Mexico S.A. de C.V. SOFOM E.N.R (Mexico) and other
seven companies, totaling 10 companies, and sales finance operations of Nissan
Canada Inc. (Canada).” – Reuters.com
Nissan Motor was chosen as a comparable company due to its similar product
offering. We weighted the company 10%, because it has a lower beta and a
negative growth rate in 2013.
Honda Motor Co., - 10%
“Honda Motor Co., Ltd. (Honda), incorporated on September 24, 1948,
develops, produces and manufactures a variety of motor products, ranging from
small general-purpose engines and scooters to specialty sports cars. The
Company’s business segments are the motorcycle business, automobile
business, financial services business, and power product and other businesses.
Honda conducts its operations in Japan and worldwide, including North
America, Europe and Asia. On March 22, 2011, the Company completed the
selling of all its stake in Hero Honda Motors Limited to Bahadur Chand
Investments Pvt.Ltd. and Hero Investments Pvt. Ltd. In August 2012, the
Company acquired Usha International Ltd” – Reuters.com
Honda Motor Co. was chosen as a comparable company because its similar
product offering. It was weighted 10%, because the company is a non U.S.based company and it has a slightly smaller beta.
Tata Motors Limited – 20%
“Tata Motors Limited, incorporated on September 1, 1945, is an automobile
company. Through its other subsidiary, the Company is engaged in providing
engineering and automotive solutions, construction equipment manufacturing,
automotive vehicle components manufacturing and supply chain activities,
machine tools and factory automation solutions, high-precision tooling and
plastic and electronic components for automotive and computer applications,
and automotive retailing and service operations. It operates in two segments:
automotive operations and all other operations. Its automotive operations
include all activities relating to development, design, manufacture, assembly and
sale of vehicles, including financing thereof, as well as sale of related parts and
accessories. Its other operations business segment includes information
technology (IT) services and machine tools and factory automation solutions.” –
Reuters.com
Tata Motors was chosen and weighted 20% due to its higher revenue growth
rate in 2013 and 2014 comparing to the other major car companies. Tata also
shares a similar beta, similar Gross Margin, EBIT Margin, EBITDA Margin
with Tesla.
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Volkswagen AG – 20%
“Volkswagen AG is a Germany-based automobile manufacturer. The Company
develops vehicles and components, and also produces and sells vehicles, in
particular Volkswagen brand passenger cars and commercial vehicles. The
Company consists of two divisions: Automotive and Financial Services division.
The Automotive division is responsible for the development of vehicles and
engines, the production and sale of passenger cars, commercial vehicles, trucks
and buses, and the genuine parts business. The Financial services division's
portfolio of services includes dealer and customer services in the field of
financing, leasing, direct bank, insurance and fleet business. The Company's
brands include Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT,
Skoda, Scania and Volkswagen Commercial Vehicles and each brand offers a
product range from low-consumption small cars to luxury class vehicles, as well
as pick-ups, busses and heavy trucks in the commercial vehicle sector.” –
Reuters.com
Volkswagen AG was chosen and weighted 20% as our comparable company
due to its similar product offering and similar growth competition, similar EBIT
Margin and similar EBITDA Margin.
Growth Comparable Analysis – 60%
Tesla is a high growth stock and people are willing to pay higher multiples for it
because of its potential growth. We use the 2013 data (Revenue, Gross Profit,
EBIT, EBITDA, Net Income, Capital Expenditures) for Tesla and its
comparable companies when we conducted the comparable analysis, so that we
can capture the growth nature of this stock.
Geospace Technologies Corporation – 10%
“Geospace Technologies Corporation, formerly OYO Geospace Corporation,
incorporated on September 13, 1997, designs and manufactures instruments and
equipment used in the acquisition and processing of seismic data, as well as in
the characterization and monitoring of producing oil and gas reservoirs. The
Company also manufactures and distributes thermal imaging equipment and dry
thermal film products to a variety of markets including the screenprint, point of
sale, signage and textile markets.”- Reuters.com
Geospace Technologies Corporation was chosen as a comparable company due
to its high revenue growth rate in 2013.
Acorn Energy, Inc. – 15%
“Acorn Energy, Inc. (Acorn), incorporated in 1986, is a holding company. The
Company is engaged in providing energy infrastructure asset management. The
Company operates in three segments: Energy & Security Sonar Solutions
(through its DSIT subsidiary), GridSense and USSI. In addition, its other
segment represents information technology (IT) and consulting activities at its
DSIT subsidiary.” – Reuters.com
Acorn Energy Inc. was chosen as a comparable company due to its high revenue
growth rate in both 2013 and 2014.
UOIG 12
April 18, 2013
University of Oregon Investment Group
Tri Pointe Homes, Inc. – 15%
“Tri Pointe Homes, Inc., formerly TRI Pointe Homes, LLC, incorporated on
August 5, 2010, is engaged in the design, construction and sale of single-family
homes in planned communities in metropolitan areas located throughout
Southern and Northern California. During the year ended December 31, 2012,
the Company’s operations consist of 13 communities, eight of which are
actively selling, containing 695 lots under various stages of development in
Southern and Northern California.” – Reuters.com
We chose to weight this company 15% due to its highest growth rate among all
the comparable companies. However, this company has a lower beta.
Cornerstone OnDemand, Inc. – 15%
“Cornerstone OnDemand, Inc., incorporated on May 24, 1999, is a provider of
talent management solutions delivered as Software-as-a-Service (SaaS). As of
December 31, 2012, 1,237 clients used the Company's core solution to empower
more than 10.5 million users across 189 countries and 38 languages. The
Company's suite consists of four clouds that address all stages of the employee
lifecycle. These clouds include the Company's Recruiting Cloud, Learning
Cloud, Performance Cloud, and Extended Enterprise Cloud. The Company
support smultiple client deployments of over 150,000 users, including one client
with over 350,000 users. In addition to the Company's core solution, the
Company offers Cornerstone for Small Business (CSB), and Cornerstone for
Salesforce.” – Reuters.com
We weighted Cornerstone OnDemand 15% because it has high Revenue Growth
rate and similar EBIT Margin and Net Margin when comparing to Tesla.
Palo Alto Networks, Inc. – 15%
“Palo Alto Networks, Inc., incorporated in March 2005, offers a network
security platform that allows enterprises, service providers, and government
entities to secure their networks. The core of its platform is the Company’s
firewall that delivers natively integrated application, user, and content visibility
and control through its operating system, hardware, and software architecture.
The Company primarily sells its products and services to end-customers through
distributors, resellers, and partners, and directly to end-customers (collectively
partners), who are supported by its sales and marketing organization, in the
Americas, in Europe, the Middle East, and Africa (EMEA), and in Asia Pacific
and Japan (APAC).” – Reuters.com
Palo Alto Networks was weighted 15% due to its high growth rate in 2013 and
2014. Even though it has a lower beta, Palo Alto maintains a similar Market
Cap to Tesla.
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University of Oregon Investment Group
Scorpio Tankers Inc. – 15%
“Scorpio Tankers Inc., incorporated on July 1, 2009, is engaged in seaborne
transportation of crude oil and refined petroleum products in the international
shipping markets. The Company’s subsidiaries include Noemi Shipping
Company Limited, Senatore Shipping Company Limited, Venice Shipping
Company Limited and Sting LLC. The Company’s vessels are technically
managed by Scorpio Commercial Management S.A.M. (SCM). The Company’s
vessels are technically managed by Scorpio Ship Management S.A.M. (SSM).”
– Reuters.com
Scorpio Tankers Inc. was chosen as Tesla’s comparable company due to its high
revenue growth rate in both 2013 and 2014.
ServiceNow, Inc. – 15%
“ServiceNow, Inc., incorporated in June 2004, is a provider of cloud-based
services to automate enterprise information technology (IT) operations. The
Company’s service includes a suite of applications built on its platform that
automates workflow and integrates related business processes. It focuses on
transforming enterprise IT by automating and standardizing business processes
and consolidating IT across the global enterprise. Organizations deploy its
service to create a single system of record for enterprise IT. It helps transform IT
organizations from reactive, manual and task-oriented, to pro-active, automated
and service-oriented organizations. Its on-demand service enables organizations
to define their IT strategy, design the systems and infrastructure. It provides a
set of integrated applications that are configurable and can be implemented and
upgraded.” – Reuters.com
ServiceNow, Inc. was chosen as one of our comparable companies due to its
high growth rate, similar market cap, similar EBITDA growth rate in 2014 and
similar EBIT margin.
Annual Revenue
Discounted Cash Flow Analysis
4,500,000.00
We used the Discounted Cash Flow (DCF) Analysis to arrive at an implied price
of Tesla Motor’s. In order to accurately predict the DCF model we built a
Revenue Model and Working Capital Model. This section will explain how the
assumptions and methods used to predict the Revenue, Working Capital, and
Discounted Cash Flow Analysis Model’s.
4,000,000.00
3,500,000.00
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
Revenue Model
500,000.00
2009A2010A2011A2012A 2013E 2014E 2015E 2016E 2017E 2018E
In order to project revenue we used a combination of historical trends, estimated
growth going forward and management guidance. The Revenue Model is broken
into two segments, Automotive Sales and Development Services.
Automotive Sales
Automotive Sales is broken into two sub-sections, Vehicle, Options and Related
Sales and Powertrain Component and Related Sales.
UOIG 14
April 18, 2013
University of Oregon Investment Group
Vehicle, Options and Related Sales
Model
Large Battery
Price (In Thousands)
% of Sales
100.00
33%
Medium battery
85.00
57%
Low Battery
70.00
10%
Median Price
88.45
2013 Model S Unit Sales
Q1
Q2
Q3
Q4
Total
Units
4.50
4.75
5.75
7.00
22.00
Median Price (In Thousands)
88.45
88.45
88.45
88.45
88.45
Revenue
398.03
420.14
508.59
619.15
1,945.90
Vehicle, Options and Related Sales consists of revenue earned from the sales of
Tesla’s Model S, Tesla Roadster, vehicle service, and vehicle options,
accessories and destination charges as well as sales of regulatory credit. This
segment is the firm’s largest revenue driver. For the year 2013 we estimated
sales in this category based on management guidance of 20,000 Model S unit
sales. Given management’s strong confidence in their ability to reach 20,000
unit sales even if they were to close all shops and fire their sales team led us to
believe that they would exceed the guidance. Therefore, we estimated that the
firm would sell 22,000 units in 2013.
In the year 2014 we grew Model S sales by 35% given the amount of stores the
firm will open. The firm currently has 32 stores opened and throughout the 2013
year the company will open 10 new stores in the United States, Europe, and
Asia/Pacific. We believe that by the end of 2014 the stores will have influenced
the firm’s sales growth proportionate to their percentage of existing stores,
31.25%. We included an additional increase of 3.75% to include the growth the
firm will experience from their existing stores.
In 2015 the firm will begin to sell the Model X. Due to the fact that Tesla will
release the Model X in 2015 we believe that cannibalization of the Model S will
occur and therefore predicted that the company would sell 85% of the units sold
in the prior year. Management has given guidance that the Model X will see
sales of roughly 70% that of the Model S. We decided to trend this percentage of
sales up from 50% in 2015 to 70% in 2017. For the year 2016 we grew Model S
sales by 3% in anticipation of an updated Model S. Model X sales were equal to
65% of the Model S unit sales. In 2017 we grew Model S sales by 4% and
Model X sales were equal to 70% of the Model S unit sales. In 2018 we
projected that Model S sales would grow by 5% and that Model X sales equal
70% of the Model S sales.
Powertrain Component and Related Sales
Powertrain Component and Related Sales are the sale of Tesla designed and
produced fully electric powertrain systems to other car manufacturers. In 2010
Tesla entered into a contract with Toyota to develop a powertrain system for the
fully electric RAV4. Under this contract Tesla would receive payments totaling
$100 million by 2014 from Toyota as certain milestones were reached. In 2012
Tesla had received a total of $29.1 million. Tesla’s relationship with Toyota is
an important factor in the future growth of Tesla. If the powertrain systems on
the RAV4 perform well and the car is in high demand it is likely that Toyota
will continue to demand powertrain systems from Tesla.
Tesla fulfilled the development agreement from the Smart fortwo and the AClass in 2010 but still has yet to fully complete the B-Class agreement. Tesla
has received the initial purchase order for the development of a full electric
powertrain for the B-class and is negotiating the agreement for the production of
the parts.
UOIG 15
April 18, 2013
University of Oregon Investment Group
Based on the information available to us we projected quarterly sales
($8,862.50) as equal percentages (12.5%) of the remaining payments for 2013
and 2014 from the Toyota agreement. Given our lack of insight into the details
of the deal we took a conservative approach and did not project any additional
revenue from this deal in 2013. We do believe that this contract will be agreed
upon and will add value to the firm. However, we do not know the extent.
Therefore, to model our beliefs going forward we applied a 5% annual growth
rate to the sales of powertrain system to account for new production agreements.
We believe this is a conservative approach that accounts for the Daimler
agreement that will be reached in 2013 and possible new agreements.
Development Services
Revenue from development services consists of revenue earned from the
development of electric vehicle powertrain systems for other automobile
companies and manufacturers. Historically the main source of revenue from this
segment has been the development services provided to Daimler and Toyota.
Currently, the firm has a development service agreement contracts in progress
with each firm. The Daimler agreement is for the development of the powertrain
system for the Mercedes-Benz B-class electric vehicle, which is going to be sold
in United States in 2013. This contract has a total value of $33.2 million of
which Tesla has already received $15.9 million. We anticipate that the
remaining payments will be made in 2013 given that the car will be released this
year. When projecting 2013 sales we allocated an equal portion of the remaining
value of the contract over the four quarters.
Additionally, we included the remaining value of the Toyota contract. The
Toyota contract consists of a total valued $60 million agreement that Toyota
would pay Tesla for the development of the powertrain for the RAV4. To date,
Tesla has received payments of $47.4 million and $3.3 million. We allocated the
remaining payments equally over the four quarters of 2013 and added the value
to the payments from the Daimler contract.
Going forward, we applied a conservative 5% growth rate to account for new
contracts that will arise between Tesla and other car manufacturers. It is likely
that Daimler and Toyota will continue to contract Tesla as long as their services
and products perform well. Based on the precedence that Tesla has provided
products for two Daimler cars in the past and Daimler continues to contract
Tesla, the future looks promising.
Costs of Goods Sold (COGS)
Management gave guidance that the firm would achieve 25% Gross Margin by
the end of fiscal year 2013. Based off of this guidance we projected the firm to
slightly exceed this margin in 2013 and exceed to a greater extent in 2014. In
2015 we projected slimmer margins because of the introduction of the Model X.
We believe that the introduction of the new product will adversely affect
margins until economies of scale take place. In 2016 we projected a decrease in
UOIG 16
April 18, 2013
University of Oregon Investment Group
COGS as they move down the cost curve of production with Model X. In 2017
we increase margins slightly because we project that the firm will introduce the
cheaper version of the Model S. In 2018 we set the gross margin at 25.5% which
we believe is a conservative and reasonable margin for the firm to maintain into
perpetuity given managements guidance.
Selling General and Administrative Expense (SG&A)
One-Year Stock Chart
16000000
$50.00
$45.00
14000000
$40.00
12000000
$35.00
10000000
$30.00
8000000
$25.00
$20.00
6000000
$15.00
4000000
$10.00
2000000
$5.00
$0.00
Oct-11
0
Dec-11
Feb-12
Volume
Apr-12
Jun-12
Adjusted Close
Aug-12
Oct-12
50-Day Avg
Dec-12
Feb-13
200-Day Avg
SG&A consist primarily of personnel and facilities cost related to Tesla stores,
employment of corporate and retail personnel, and litigation settlements and fees
for professional contract services. Going forward we projected that SG&A
would increase nominally but decrease as a percentage of revenue. In the
coming year the firm plans to open up 10 new stores, which will bring higher
SG&A costs. We projected that the firms SG&A cost would increase by roughly
30% from the prior year because the firm is opening up approximately 30%
more stores. The nominal value and percentage of revenue seemed reasonable to
both Cecilia and I so began to trend down the SG&A as a percentage of revenue.
We believe that as sales grow this line item will continue to increase nominally
but decrease marginally as a percentage of revenue.
Depreciation and Amortization (D&A)
In order to project D&A we used a depreciation table that depreciated historical
Property, Plant, and Equipment and accumulated acquisitions and capital
expenditures. We used straight-line depreciation over 20 years. Although the
group normally depreciates assets over 10 years, we believe our applied length
to be a more accurate assessment of the firms operations. Our belief is rooted in
the fact that the majority of capital expenditures that will be made in 2013 and
going forward are for machinery, factory, and stores. All three of the
aforementioned assets typically have longer depreciation schedules than 10
years. According to the US Treasury, machinery has an average durability 39
years and should therefore be depreciated over 20 years. Furthermore, buildings
such as stores or factories are also included in the 20-year category.
Research and Development (R&D)
Research and development consists of primarily payroll, benefits, stock based
compensation as well as costs related to development services. R&D was
predicted to increase according to Tesla management. After following guidance,
we decreased the projected R&D expense as a percentage of revenue while
recognizing nominal increase until 2016. At this point we believe the firms
R&D costs will decrease nominally due to the large expenditures in the prior
years.
UOIG 17
April 18, 2013
University of Oregon Investment Group
Other Expenses
Other expenses include stock based compensation from the warrants that have
been issued to the Department on Energy. The warrants will become exercisable
on December 15th, 2018 and again on December 14th 2022. The shares are
accounted for and carried at fair value. In order to project the value of Other
Expenses going forward we took a weighted average of the historical nominal
value and attempted to keep this expense consistent with this value going
forward.
Implied Price
Undervalued/(Overvalued)
Tax Rate
Terminal Growth Rate
Terminal Growth Rate
52
2.0%
2.5%
3.0%
3.5%
4.0%
6.24%
48.71
50.00
51.46
53.10
54.99
11.24%
48.74
50.03
51.49
53.14
55.03
16.24%
48.77
50.07
51.52
53.18
55.06
26.24%
48.83
50.13
51.59
53.25
55.14
36.24%
48.89
50.19
51.66
53.32
55.22
Undervalued/(Overvalued)
Tax Rate
Since Tesla has not been profitable yet, the company’s historical tax rate is not
a good indicator of its future tax rate. In order to project future tax rates we
decided to trend the tax rate up to the industry average of 16.24% in the terminal
year. For the first year of projections we decided to use the weighted average of
the past four years. Going forward, we trended the tax rate up to 15.00% in
2018. From 2019 – 2023 we continued to use the 15.00% tax rate and then
applied a 16.24% tax rate in the terminal year. The effective tax rate for each
year was used to calculate the corresponding years Weighted Average Cost of
Capital.
Tax Rate
Terminal Growth Rate
0
2.0%
2.5%
3.0%
3.5%
4.0%
6.24%
11.3%
14.3%
17.6%
21.4%
25.7%
11.24%
11.4%
14.4%
17.7%
21.5%
25.8%
16.24%
11.5%
14.4%
17.8%
21.5%
25.9%
26.24%
11.6%
14.6%
17.9%
21.7%
26.0%
36.24%
11.7%
14.7%
18.1%
21.9%
26.2%
Accounting for New Financing Option
Recently, Tesla announced a new financing option for customers that were
intended to allow consumers with lower income than the typical Tesla customer
to purchase a Tesla. The finance option allows customers to get a new Tesla by
essentially taking out a 66-month loan, with 10% down. Management claims
that the monthly payments with the new financing plan range from $500-600 per
month. At the end of year 3, the Tesla owner has the option, but not the
obligation, to return the car to Tesla for a guaranteed 43% of residual value or
the equivalent residual value of a Mercedes-Benz S Class (whichever is higher).
In order to account for the 43% residual value guarantee we created a new line
item on the Working Capital Model, Current Portion of Residual Value. To
calculate we took 50% of total sales (managements guidance on percent of new
sales using finance option) and multiplied this number by 43%. This liability
becomes current and is included into the working capital model 2 years after the
sale when the customer has the option to return the car.
After accounting for the 43% guaranteed residual value, the firm must also
account for 57% of sale that goes to deferred revenue over the length the loan.
To account for this took half of each quarters/years revenue and multiplied it by
57%. We then took this value and raised it the power of (Length Remaining on
Loan / Total Length of Loan). This way we could accurately depict the how the
balance depletes as the loan gets paid off over time.
UOIG 18
April 18, 2013
University of Oregon Investment Group
Net Working Capital
Accounting for the new financing option creates a large increase in liabilities
and has no effect on current assets because the firm receives cash when the car
is originally sold. Due to this large relative increase in current liabilities the
change in net working capital year to year is large and negative.
Other line items in the Working Capital Model were calculated based off of
historical percentage of revenue and historical trends.
Restricted Cash is cash reserved for repayments to the Department of Energy
(DOE) for the loan Tesla received. The DOE loan matures in 2017 so we
gradually trended the value in restricted cash down to zero.
We projected that Accounts Payable would decrease as a percentage of revenue.
In the year 2012 the large increase was in relation to the pushing back of
payments for their factory. The company pushed back payments because the
firm was aiming to become cash flow positive for the first time since inception.
Going forward we projected this line item to stay around the level of the prior
three years because the firm will become profitable and will be able to pay its
liabilities quicker.
Capital Expenditures
Capital Expenditures consist of investments in on the Tesla factory and tooling
for their products machinery as well as the building of service and store
networks. In 2013 the firm plans to spend significantly less on capital
expenditures because the majority of the investment in the Tesla factory and
Model S tooling machinery have concluded. The decrease in spending on the
Tesla factory and Model S tooling machinery will be slightly offset by their
increase in service centers and stores.
In 2013 Tesla plans to open 10 new stores and 23 new service centers. Based on
this information we projected 2013 CAPEX based on a nominal value that we
believed to be consistent with management guidance. Going forward, we
projected CAPEX as a percent of revenue relative to the 2013 projection. We
increased the percent of revenue in 2014 because the firm will begin production
of the Model X. Although the Model X will be built on a similar platform as the
Model S, there are significant differences that will force Tesla to incur higher
CAPEX. After 2014 we trended CAPEX down as a percent of revenue until
2017 when we increased CAPEX to represent our projection that Tesla will
begin production of the cheaper Model S. In 2018 we trended down CAPEX to
what we believe is a reasonable terminal percentage of revenue.
UOIG 19
April 18, 2013
University of Oregon Investment Group
Acquisitions
Historically, Tesla has made only one acquisition, which was the purchase of the
Tesla factory in Fremont, California from New United Motor Manufacturing
Inc. (NUMMI). This acquisition was completed in October of 2010. Going
forward we do not believe Tesla will make any acquisitions and our projections
model this assumption.
Intermediate Growth
2019E
2020E
2021E
2022E
2023E
490,286.26
524,606.30
556,082.68
583,886.81
607,242.28
253,332.49
246,665.90
237,930.12
227,338.60
215,149.81
Intermediate Growth Rate
Free Cash Flow Growth Rate in Year 2018E is 9% so we decided to use an
intermediate growth rate to create a smooth transition into the 3% terminal
growth rate used by the University of Oregon Investment Group. Accordingly,
we stepped down the growth rate from 9.0% to 4% by equal increments of 1.0%
per year until it reached 4.0% in year 2023E.
Undervalued/(Overvalued)
Adjusted Beta
Terminal Growth Rate
0
2.0%
2.5%
3.0%
3.5%
4.0%
1.29
27.02%
31.64%
36.96%
43.13%
50.39%
1.39
20.08%
23.92%
28.30%
33.33%
39.17%
1.54
11.47%
14.43%
17.77%
21.54%
25.86%
1.64
6.69%
9.20%
12.01%
15.17%
18.75%
1.74
2.52%
4.67%
7.06%
9.72%
12.72%
DCF Assumptions
Beta
Beta was calculated using regressions against the S&P 500 over time lengths 1year weekly, 3-year daily, and 5-year monthly. We also calculated Vasicek and
Hamada betas based on our two comparable groups, Industry and Growth. We
decided to weigh the Growth Beta 75% and the Industry Beta 25% because we
believe our risks going forward are most similar to that of the growth
companies. Based on our multiple regression tests we came up with an implied
Beta of 1.54. We believe that this implied Beta captures all of the relevant risks
of Tesla going into the future.
Undervalued/(Overvalued)
Market Risk
Premium
Terminal Growth Rate
0
2.0%
2.5%
3.0%
3.5%
4.0%
3.79%
54.2%
62.5%
72.4%
84.3%
99.1%
4.79%
28.2%
33.0%
38.5%
44.9%
52.4%
5.79%
11.5%
14.4%
17.8%
21.5%
25.9%
6.79%
0.1%
2.0%
4.2%
6.5%
9.2%
7.79%
-8.0%
-6.7%
-5.2%
-3.6%
-1.9%
Market Risk Premium
We decided to apply a market risk premium of 5.79% based on Aswath
Damadoran’s, a professor of Finance at NYU’s Stern School of Business, most
recent estimation. We believe that this fairly represents the difference between
the market portfolio and the risk free rate now and going into perpetuity.
Cost of Debt
Undervalued/(Overvalued)
Cost of Debt
Terminal Growth Rate
0
2.0%
2.5%
3.0%
3.5%
4.0%
1.26%
12.2%
15.2%
18.6%
22.4%
26.8%
2.26%
11.8%
14.8%
18.2%
22.0%
26.3%
3.26%
11.5%
14.4%
17.8%
21.5%
25.9%
4.26%
11.1%
14.1%
17.4%
21.1%
25.4%
5.26%
10.8%
13.7%
17.0%
20.7%
25.0%
Current debt held by Tesla comes from a loan from the Department of Energy
from the Federal Financing Bank as a result of the Advanced Technology
Vehicles Manufacturing Incentive Program. Given that this incentive program is
backed by the Federal Government to induce advanced clean tech vehicle
manufacturing, the effective interest rate is approximately 1%. However, it is a
floating interest rate that has ranged from 0.9% to 3.4%. Given that we are
unable to accurately estimate where interest rates will move in the future we
used an incremental step up of 0.45% per year starting in 2014. The cost of debt
goes from 1% in 2014 to 3.26%, the industry average, in 2018 and into
perpetuity. The effective cost of debt for each year was used in calculating the
corresponding years Weighted Average Cost of Capital.
UOIG 20
April 18, 2013
University of Oregon Investment Group
Weighted Average Cost of Capital (WACC)
Undervalued/(Overvalued)
WACC
Terminal Growth Rate
0
2.0%
2.5%
3.0%
3.5%
4.0%
8.75%
23.26%
26.98%
31.16%
35.90%
41.31%
9.75%
17.69%
21.05%
24.83%
29.12%
34.01%
11.01%
11.47%
14.43%
17.77%
21.54%
25.86%
11.75%
8.22%
10.97%
14.07%
17.59%
21.60%
12.75%
4.20%
6.69%
9.50%
12.69%
16.33%
Since we used varying Cost of Debt and Tax Rates year to year, we applied
various WACC’s to each year’s free cash flow. The corresponding WACC’s for
each year free cash flow, as well as the components included the calculation, can
be seen in WACC Exhibit.
Terminal Growth Rate
We assumed a 3.0% terminal growth rate, which is consistent with University of
Oregon Investment Group practice, because this is the rate at which we believe
the economy will grow into perpetuity.
Recommendation
Implied Price Weighting
Comparable Analysis
49.38
30.00%
DCF Analysis
51.52
70.00%
Final Implied Price
Current Price
Undervaluation
50.88
43.75
16.30%
Based on our valuation and implied price of $50.88 we believe that Tesla is a
buy for the DADCO portfolio. The company will do frequent announcements
that will create buzz about the company in the markets. In such a news driven
market, announcements that are seen in a positive light will have correlated
price movements in the stock. Tesla is beginning to become profitable and
increase margins while expanding globally. Tesla’s management team has a
proven history of success and will help bring Tesla to the top of the electric
vehicle industry. The Tesla Model S is already in high demand and has been
received extremely well in the automobile market. As Tesla begins to innovate
and produce new vehicles the company will prosper.
UOIG 21
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University of Oregon Investment Group
Appendix 1 (A)– Forward Comparables Analysis – Industry
Comparables Analysis - 2014
($ in thousands)
Stock Characteristics
Current Price
Beta
Size
Short-Term Debt
Long-Term Debt
Cash and Cash Equivalent
Diluted Basic Shares
Market Capitalization
Enterprise Value
Growth Expectations
Max
$140.40
1.47
Min
$13.53
0.78
Median
$29.62
1.35
Weight Avg.
$55.75
1.21
TSLA
GM
Tesla Motors Inc.
General Motors
$43.75
1.24
15.00%
$29.62
1.35
TM
Toyota Motor
Corpation
10.00%
$113.10
0.78
F
Ford Motor
Company
15.00%
$13.53
1.36
NSANY
HMC
Nissan Motor Co. Honda Motor Co.,
Ltd.
Ltd
10.00%
$21.31
1.47
10.00%
$39.84
0.90
TTM
Tata Motors
Limited
20.00%
$25.22
1.38
VOW-DE
Volkswagen AG
20.00%
$140.40
1.04
72,453,718.35
85,927,000.00
35,943,000.00
4,521,000.00
179,086,113.68
305,070,805.85
3,766,306.02
5,489,034.82
5,057,532.09
467,569.89
13,659,357.85
19,682,917.78
19,131,000.00
30,345,147.45
28,096,000.00
1,675,000.00
53,068,010.93
113,371,895.68
30,146,764.89
44,526,353.77
24,222,473.66
2,093,661.62
76,572,658.11
136,947,486.01
55,206.00
411,460.00
220,984.00
107,349.19
5,010,161.32
4,942,208.98
5,518,000.00
10,532,000.00
28,096,000.00
1,675,000.00
40,474,050.43
48,714,500.00
72,453,718.35
73,413,665.55
35,727,937.65
1,571,735.00
179,086,113.68
305,070,805.85
19,131,000.00
85,927,000.00
35,943,000.00
4,015,000.00
53,068,010.93
123,801,950.00
16,167,701.25
30,345,147.45
10,241,222.85
4,521,000.00
44,656,101.64
95,528,052.37
22,796,352.45
27,155,262.15
15,197,803.20
1,802,300.72
71,803,572.88
113,371,895.68
3,766,306.02
5,489,034.82
5,057,532.09
664,974.88
13,659,357.85
19,682,917.78
54,060,000.00
63,603,000.00
29,016,000.00
467,569.89
65,318,656.48
158,603,811.85
% Revenue Growth 2013E
% Revenue Growth 2014E
% EBITDA Growth 2013E
% EBITDA Growth 2014E
% EPS Growth 2013E
% EPS Growth 2014E
Profitability Margins
15.94%
12.67%
35.24%
15.64%
37.59%
29.78%
-1.60%
4.99%
1.26%
8.96%
-0.17%
12.73%
3.88%
5.92%
10.30%
12.31%
26.32%
16.16%
3.92%
6.37%
18.10%
12.19%
20.37%
17.50%
369.36%
29.85%
-113.18%
451.71%
-102.86%
1374.54%
3.88%
5.92%
10.30%
15.64%
3.41%
29.78%
-0.20%
5.06%
26.55%
8.96%
37.59%
14.35%
6.31%
5.12%
9.01%
13.24%
-0.17%
19.53%
-1.60%
6.06%
1.26%
9.93%
26.32%
16.16%
1.88%
6.65%
35.24%
11.87%
33.47%
12.73%
15.94%
12.67%
20.58%
14.70%
26.41%
14.60%
6.24%
4.99%
6.67%
12.31%
3.97%
16.16%
Gross Margin
EBIT Margin
EBITDA Margin
Net Margin
Credit Metrics
29.14%
9.32%
13.75%
6.11%
13.69%
5.75%
8.90%
4.08%
19.49%
7.57%
12.46%
5.47%
20.23%
7.40%
11.59%
5.30%
23.56%
5.68%
9.99%
4.78%
14.48%
5.92%
9.58%
4.08%
18.60%
8.65%
12.49%
6.11%
13.69%
5.75%
8.90%
4.75%
19.60%
7.89%
12.85%
4.88%
27.29%
7.57%
12.08%
5.62%
29.14%
9.32%
13.75%
5.91%
19.49%
6.83%
12.46%
5.47%
1127340.00
0.85
8.34
121.84
123859.52
0.33
1.00
9.58
489800.00
0.48
3.31
32.75
459349.11
0.53
3.84
64.31
3800.00
0.09
1.85
66.22
489800.00
0.33
1.00
32.75
285932.60
0.48
4.36
116.89
670800.00
0.85
8.34
18.78
270239.30
0.49
3.13
55.06
123859.52
0.44
3.31
121.84
635427.60
0.47
1.52
9.58
1127340.00
0.74
4.40
23.75
$267,564,100.00
$49,768,140.00
$23,153,480.00
$33,423,950.00
$16,355,529.00
$3,095,192.00
$44,239,750.00
$12,889,672.00
$4,121,221.00
$6,084,291.00
$2,614,094.00
$13,113.14
$141,483,100.00
$24,254,670.00
$9,453,285.00
$15,090,503.00
$6,827,242.00
$1,841,203.00
$162,343,260.00
$31,064,263.70
$12,023,949.70
$18,771,840.85
$8,708,735.90
$1,816,738.94
$2,518,681.00
$593,441.80
$143,074.80
$251,642.80
$120,490.34
$18,146.67
$167,529,100.00
$24,254,670.00
$9,920,259.00
$16,041,451.00
$6,827,242.00
$2,726,667.00
$267,564,100.00
$49,768,140.00
$23,153,480.00
$33,423,950.00
$16,355,529.00
$3,095,192.00
$141,483,100.00
$19,368,000.00
$8,141,423.00
$12,596,416.00
$6,715,554.00
$2,391,250.00
$115,828,710.00
$22,707,160.00
$9,137,239.00
$14,878,981.00
$5,649,937.00
$1,841,203.00
$124,906,620.00
$34,091,040.00
$9,453,285.00
$15,090,503.00
$7,019,584.00
$13,113.14
$44,239,750.00
$12,889,672.00
$4,121,221.00
$6,084,291.00
$2,614,094.00
$640,320.60
$214,904,400.00
$41,893,440.00
$14,674,984.00
$26,769,430.00
$11,758,908.00
$1,792,380.00
1.14x
6.39x
15.21x
9.83x
12.13x
10.95x
0.29x
1.53x
4.78x
3.04x
3.62x
5.23x
0.82x
3.79x
10.81x
6.42x
7.33x
7.90x
0.79x
4.10x
10.66x
6.82x
7.61x
8.18x
1.96x
8.33x
34.54x
19.64x
21.17x
41.58x
0.29x
2.01x
4.91x
3.04x
3.66x
5.93x
1.14x
6.13x
13.18x
9.13x
10.06x
10.95x
0.88x
6.39x
15.21x
9.83x
12.13x
7.90x
0.82x
4.21x
10.45x
6.42x
7.33x
7.90x
0.91x
3.33x
11.99x
7.51x
7.52x
10.23x
0.44x
1.53x
4.78x
3.24x
3.62x
5.23x
0.74x
3.79x
10.81x
5.92x
6.35x
5.55x
Interest Expense
Debt/EV
Leverage Ratio
Interest Coverage Ratio
Operating Results
Revenue
Gross Profit
EBIT
EBITDA
Net Income
Capital Expenditures
Multiples
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/(EBITDA-Capex)
Market Cap/Net Income = P/E
Multiple
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/(EBITDA-Capex)
Market Cap/Net Income = P/E
Price Target
Current Price
Overvalued
Implied Price
Weight
$16.13
50.00%
$20.39
50.00%
$11.91
0.00%
$13.69
0.00%
$14.27
0.00%
$9.18
0.00%
$18.26
43.75
(58.26%)
UOIG 22
April 18, 2013
University of Oregon Investment Group
Appendix 1(B) – Forward Comparables Analysis – Growth
Comparables Analysis -2013
TSLA
Tesla Motors Inc.
($ in thousands)
Stock Characteristics
Current Price
Beta
Size
Short-Term Debt
Long-Term Debt
Cash and Cash Equivalent
Diluted Basic Shares
Market Capitalization
Enterprise Value
Growth Expectations
% Revenue Growth 2013E
% Revenue Growth 2014E
% EBITDA Growth 2013E
% EBITDA Growth 2014E
% EPS Growth 2013E
% EPS Growth 2014E
Profitability Margins
Gross Margin
EBIT Margin
EBITDA Margin
Net Margin
Credit Metrics
Interest Expense
Debt/EV
Leverage Ratio
Interest Coverage Ratio
Operating Results
Revenue
Gross Profit
EBIT
EBITDA
Net Income
Capital Expenditures
Multiples
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/(EBITDA-Capex)
Market Cap/Net Income = P/E
Max
$94.93
1.71
Min
$6.90
0.52
Median
Weight Avg.
$33.32
$32.94
1.13
1.02
52,493.0
134,984.0
322,642.0
73,908.6
4,641,561.0
3,258,206.7
0.0
0.0
19,824.0
12,836.2
124,693.8
96,928.9
153.0
0.0
76,442.0
21,597.9
1,220,630.4
1,162,564.5
167.21%
51.76%
138.74%
507.14%
413.10%
387.54%
310.42%
1.83%
-96.90%
-3371.93%
-149.12%
-4800.54%
73.61%
38.40%
42.94%
26.02%
11,279.33
0.35
3.37
518.69
GEOS
Geospace
Technologies
ACFN
Acorn Energy
Inc.
TPH
TRI Pointe
Homes
CSOD
Cornerstone
OnDemand
PANW
Palo Alto
Networks
STNG
Scorpio Tankers
Inc.
NOW
ServiceNow
Inc.
$43.75
1.24
10.00%
$94.93
1.71
15.00%
$6.90
0.83
15.00%
$19.25
0.52
15.00%
$33.32
1.13
15.00%
$53.15
0.65
15.00%
$8.49
1.36
15.00%
$35.19
1.19
9,402.0
21,438.3
134,233.4
34,930.0
1,814,748.9
1,330,397.6
55,206.0
411,460.0
220,984.0
107,349.2
5,010,161.3
4,942,209.0
0.0
0.0
70,712.0
12,836.2
1,220,630.4
1,162,564.5
153.0
0.0
26,958.0
17,891.0
124,693.8
96,928.9
52,493.0
4,875.0
19,824.0
21,597.9
608,259.7
453,303.7
2,559.0
3,063.0
76,442.0
49,929.0
1,693,812.3
1,592,814.3
0.0
0.0
322,642.0
19,569.0
3,674,347.4
3,258,206.7
7,475.0
134,984.0
87,191.0
41,413.3
541,898.4
406,867.3
0.0
0.0
314,691.0
73,908.6
4,641,561.0
2,286,153.7
62.00%
85.2%
369.36%
68.08%
62.00%
167.21%
51.76%
56.56%
125.04%
60.18%
45.70%
125.29%
122.01%
-25.81%
3.58%
54.7%
215.3%
-364.1%
31.3%
-637.2%
29.85%
-113.18%
451.71%
-102.86%
1374.54%
1.83%
125.29%
5.09%
133.94%
3.58%
47.67%
-38.23%
N/A
-25.81%
-55.80%
138.74%
507.14%
284.12%
387.54%
310.42%
40.21%
-96.90%
-3371.93%
-47.40%
-102.70%
38.41%
67.32%
78.78%
50.63%
108.75%
52.57%
506.20%
165.24%
-149.12%
289.28%
45.70%
406.56%
413.10%
-96.80%
-4800.54%
17.76%
50.37%
49.90%
21.39%
50.37%
40.65%
17.76%
73.61%
72.42%
32.30%
62.33%
(48.18%)
-37.75%
-41.66%
6.32%
8.10%
3.84%
(.65%)
5.53%
-4.39%
-0.69%
2.35%
-1.00%
38.40%
42.94%
26.02%
-48.18%
-37.75%
-41.66%
6.32%
8.10%
3.84%
-4.89%
-0.16%
-9.47%
6.81%
9.06%
4.15%
9.74%
23.00%
5.69%
0.24%
5.99%
-9.16%
5,000.00
266.67
0.00
0.00
600.00
207.00
11,279.33
0.00
0.09
10.23
9.12
0.00
0.00
518.69
0.00
(0.01)
0.00
0.13
3.37
0.00
0.00
(19.19)
(0.49)
0.00
0.00
174.82
0.35
2.94
4.30
0.00
0.00
0.00
1,939,658.00
322,150.00
399,455.60
0.00
207.00
0.00
(19.19)
(0.49)
0.00
0.00
89.56
210,721.40
1,839.62
0.07
(1.93)
78.66
$399,455.6
31,458.33
$289,267.6
$123,699.7
$138,317.7
$83,810.2
$664,982.2
$12,789.3
($15,157.7)
($11,877.0)
($35,747.9)
$0.0
$133,328.1
$13,260.9
$23,365.3
$8,054.2
$1,357.0
$133,834.55
$18,061.17
$30,758.22
$3,974.34
$150,815.86
245,672.58
8.79x
1.93x
3.61x
12.16x
2396.98x
97.84x
93.13x
221.53x
5.98x
(179.85x)
(5435.95x)
(5435.95x)
(129.84x)
9.40x
19.82x
8.41x
(1.57x)
14.56x
31,458.33
209,896.30
$414,975.3
($13,459.0)
$45,611.2
($19,487.1)
$51,480.0
$162,282.6
$123,699.7
$138,317.7
$83,810.2
$0.0
$12,789.3
($15,157.7)
($11,877.0)
($13,106.7)
$1,357.0
4.86x
2.55x
3.61x
3.08x
2.16x
9.47x
358.61x
(782.33x)
(843.66x)
17.08x
11.91x
(367.21x)
108.36x
(842.11x)
(257.10x)
7.16x
9.40x
8.41x
8.41x
14.56x
7.58x
(6.39x)
(8.16x)
(7.32x)
(9.51x)
12.16x
34.18x
26.66x
(1.57x)
75.52x
Multiple
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/(EBITDA-Capex)
Market Cap/Net Income = P/E
Price Target
Current Price
Undervalued
$37,272.7
$13,260.9
$17,000.0
$8,054.2
$306,300.0
181,132.60
$210,721.4
$390,386.3
$289,267.6
$27,212.6
$36,186.9
$16,586.5
$1,199.9
$68,057.0
$20,527.9
$48,460.9
$11,991.8
$664,982.2
$243,327.2
$953.8
$23,365.3
($35,747.9)
$31,600.0
8.79x
8.16x
1.93x
5.86x
11.95x
(179.85x)
(5435.95x)
(5435.95x)
(98.73x)
11.26x
119.73x
90.04x
93.13x
221.53x
5.98x
19.82x
8.40x
(0.66x)
45.19x
9.40x
2396.98x
97.84x
(277.62x)
(129.84x)
$133,328.1
($8,856.1)
($293.0)
($17,155.7)
$0.0
Implied Price
Weight
$85.48
70.00%
34.30
30.00%
(47.25)
0.00%
(334.69)
0.00%
43.83
0.00%
(3.10)
0.00%
$70.13
43.75
60.29%
UOIG 23
April 18, 2013
University of Oregon Investment Group
Appendix 2 – Discounted Cash Flows Analysis
Discounted Cash Flow Analysis
($ in thousands)
Total Revenue
% YoY Growth
Cost of Goods Sold
% Revenue
Gross Profit
Gross Margin
2009A
2010A
111,943.00
659.35%
102,408.00
91.48%
116,744.00
86.72%
86,013.00
73.68%
2011A
Q1
03/31/2013E
2012A
204,242.00
53.04%
142,647.00
69.84%
Q2
06/30/2013E
Q3
09/30/2013E
Q4
12/31/2013E
Q1
03/31/2014E
2013E
Q2
06/30/2014E
Q3
09/30/2014E
Q4
12/31/2014E
2014E
2015E
2016E
2017E
2018E
413,256.00
159.61%
383,189.00
92.72%
413,537.50
N/A
351,506.88
85.00%
435,650.00
N/A
348,520.00
80.00%
524,100.00
N/A
393,075.00
75.00%
634,662.50
N/A
472,823.56
74.50%
2,007,950.00
413.70%
1,565,925.44
77.99%
505,884.41
22.34%
376,883.89
74.50%
533,022.48
22.36%
397,101.75
74.50%
641,574.76
22.42%
477,973.19
74.50%
777,265.10
22.48%
579,062.50
74.50%
2,457,746.75
22.41%
1,831,021.33
74.50%
3,219,464.21
31.34%
2,430,695.48
75.50%
3,662,495.85
13.85%
2,746,871.89
75.00%
3,929,358.20
7.31%
2,966,665.44
75.50%
4,125,826.11
5.00%
3,073,740.45
74.50%
9,535.00
8.52%
30,731.00
26.32%
61,595.00
30.16%
30,067.00
7.28%
62,030.63
15.00%
87,130.00
20.00%
131,025.00
25.00%
161,838.94
25.50%
442,024.56
22.01%
129,000.53
25.50%
135,920.73
25.50%
163,601.56
25.50%
198,202.60
25.50%
626,725.42
25.50%
788,768.73
24.50%
915,623.96
25.00%
962,692.76
24.50%
1,052,085.66
25.50%
42,150.00
37.65%
6,940.00
6.20%
19,282.00
17.22%
1,445.00
1.29%
84,573.00
75.55%
10,623.00
9.49%
92,996.00
83.07%
6,583.00
5.88%
104,102.00
93.00%
16,919.00
15.11%
208,981.00
186.69%
2,646.00
2.36%
150,372.00
134.33%
28,825.00
25.75%
273,978.00
244.75%
1,828.00
1.63%
41,353.75
10.00%
7,419.78
1.79%
49,624.50
12.00%
1,033.84
0.25%
43,565.00
10.00%
7,964.35
1.83%
52,278.00
12.00%
1,089.13
0.25%
52,410.00
10.00%
8,619.47
1.64%
62,892.00
12.00%
1,310.25
0.25%
63,466.25
10.00%
9,412.80
1.48%
76,159.50
12.00%
1,586.66
0.25%
200,795.00
10.00%
33,416.40
1.66%
240,954.00
12.00%
5,019.88
0.25%
48,059.02
9.50%
10,171.63
2.01%
50,223.16
9.93%
1,264.71
0.25%
50,637.14
9.50%
10,971.16
2.06%
52,917.37
9.93%
1,332.56
0.25%
60,949.60
9.50%
11,933.52
1.86%
63,694.21
9.93%
1,603.94
0.25%
73,840.18
9.50%
13,099.42
1.69%
77,165.27
9.93%
1,943.16
0.25%
233,485.94
9.50%
46,175.73
1.88%
244,000.00
10.00%
6,144.37
0.25%
289,751.78
9.00%
66,885.27
2.08%
289,751.78
9.00%
8,048.66
0.25%
311,312.15
8.50%
83,366.50
2.28%
292,999.67
8.00%
9,156.24
0.25%
314,348.66
8.00%
108,907.33
2.77%
275,055.07
7.00%
9,823.40
0.25%
288,807.83
7.00%
127,473.55
3.09%
247,549.57
6.00%
10,314.57
0.25%
Earnings Before Interest & Taxes
% Revenue
-60,282.00
-53.85%
-164,044.00
-140.52%
-271,053.00
-132.71%
-424,936.00
-102.83%
-37,401.25
-9.04%
-17,766.47
-4.08%
5,793.28
1.11%
11,213.73
1.77%
-38,160.72
-1.90%
19,282.01
3.81%
20,062.51
3.76%
25,420.29
3.96%
32,154.57
4.14%
96,919.38
3.94%
134,331.24
4.17%
218,789.41
5.97%
254,558.30
6.48%
377,940.15
9.16%
Interest Expense
% Revenue
Net Interest (Income)
% Revenue
Earnings Before Taxes
% Revenue
Less Taxes (Benefits)
Tax Rate
2,531.00
2.26%
-159.00
-0.14%
-62,654.00
-55.97%
26.00
-0.04%
992.00
0.89%
-258.00
-0.23%
-164,778.00
-147.20%
173.00
-0.10%
43.00
0.04%
-255.00
-0.23%
-270,841.00
-241.95%
489.00
-0.18%
254.00
0.23%
-288.00
-0.26%
-424,902.00
-379.57%
136.00
-0.03%
0.00
0.00%
0.00
0.00%
-37,401.25
-9.04%
51.50
-0.14%
0.00
0.00%
0.00
0.00%
-17,766.47
-4.08%
51.50
-0.29%
0.00
0.00%
0.00
0.00%
5,793.28
1.11%
65.75
1.14%
0.00
0.00%
0.00
0.00%
11,213.73
1.77%
151.39
1.35%
0.00
0.00%
0.00
0.00%
-38,160.72
-1.90%
206.00
-0.54%
0.00
0.00%
0.00
0.00%
19,282.01
3.81%
964.10
5.00%
0.00
0.00%
0.00
0.00%
20,062.51
3.76%
1,003.13
5.00%
0.00
0.00%
0.00
0.00%
25,420.29
3.96%
1,271.01
5.00%
0.00
0.00%
0.00
0.00%
32,154.57
4.14%
1,607.73
5.00%
0.00
0.00%
0.00
0.00%
96,919.38
3.94%
4,845.97
5.00%
0.00
0.00%
0.00
0.00%
134,331.24
4.17%
13,433.12
10.00%
0.00
0.00%
0.00
0.00%
218,789.41
5.97%
32,818.41
15.00%
0.00
0.00%
0.00
0.00%
254,558.30
6.48%
50,911.66
20.00%
0.00
0.00%
0.00
0.00%
377,940.15
9.16%
94,485.04
25.00%
Net Income
Net Margin
-62,680.00
-55.99%
-164,951.00
-141.29%
-271,330.00
-132.85%
-425,038.00
-102.85%
-37,452.75
-9.06%
-17,817.97
-4.09%
5,727.52
1.09%
11,062.35
1.74%
-38,366.72
-1.91%
18,317.91
3.62%
19,059.39
3.58%
24,149.28
3.76%
30,546.84
3.93%
92,073.41
3.75%
120,898.12
3.76%
185,971.00
5.08%
203,646.64
5.18%
283,455.11
6.87%
6,940.00
2,532.05
10,623.00
993.04
16,919.00
43.08
28,825.00
254.08
7,419.78
0.00
7,964.35
0.00
8,619.47
0.00
9,412.80
0.00
33,416.40
0.00
10,171.63
0.00
10,971.16
0.00
11,933.52
0.00
13,099.42
0.00
46,175.73
0.00
66,885.27
0.00
83,366.50
0.00
108,907.33
0.00
127,473.55
0.00
-53,207.95
-47.53%
-153,334.96
-131.34%
-254,367.92
-124.54%
-395,958.92
-95.81%
-30,032.97
-7.26%
-9,853.63
-2.26%
14,347.00
2.74%
20,475.15
3.23%
-4,950.31
-0.25%
28,489.54
5.63%
30,030.55
5.63%
36,082.80
5.62%
43,646.26
5.62%
138,249.14
5.63%
187,783.39
5.83%
269,337.50
7.35%
312,553.97
7.95%
410,928.66
9.96%
30,932.00
27.63%
57,043.00
50.96%
62,731.00
53.73%
85,286.00
73.05%
69,035.00
33.80%
182,356.00
89.28%
303,784.00
73.51%
483,902.00
117.09%
719,594.18
174.01%
1,046,536.64
253.07%
758,072.01
174.01%
1,211,013.89
277.98%
911,983.34
174.01%
1,544,939.60
294.78%
1,104,372.50
174.01%
1,953,137.43
307.74%
1,104,372.50
55.00%
1,953,137.43
97.27%
923,785.74
182.61%
1,675,407.78
331.18%
973,342.04
182.61%
1,846,601.72
346.44%
1,171,567.24
182.61%
2,241,850.04
349.43%
1,419,348.75
182.61%
2,698,167.72
347.14%
1,419,348.75
57.75%
2,698,167.72
109.78%
1,786,802.64
55.50%
4,174,633.22
129.67%
1,931,966.56
52.75%
4,974,735.60
135.83%
1,964,679.10
50.00%
5,619,225.22
143.01%
1,949,452.83
47.25%
6,018,363.41
145.87%
-26,111.00
-23.33%
-22,555.00
-19.32%
-113,321.00
-55.48%
-180,118.00
-43.59%
-326,942.46
-79.06%
-452,941.88
-103.97%
-632,956.26
-120.77%
-848,764.93
-133.73%
-848,764.93
-42.27%
-751,622.04
-148.58%
-873,259.68
-163.83%
-1,070,282.80
-166.82%
-1,278,818.97
-164.53%
-1,278,818.97
-52.03%
-2,387,830.58
-74.17%
-3,042,769.04
-83.08%
-3,654,546.12
-93.01%
-4,068,910.57
-98.62%
11,884.00
10.62%
3,556.00
40,203.00
34.44%
(90,766.00)
184,226.00
90.20%
(66,797.00)
239,228.00
57.89%
(146,824.46)
41,353.75
10.00%
(125,999.42)
43,565.00
10.00%
(180,014.38)
52,410.00
10.00%
(215,808.67)
63,466.25
10.00%
(668,646.93)
200,795.00
10.00%
97,142.89
60,706.13
12.00%
(121,637.64)
63,962.70
12.00%
(197,023.12)
76,988.97
12.00%
(208,536.18)
93,271.81
12.00%
(430,054.04)
294,929.61
12.00%
(1,109,011.61)
289,751.78
9.00%
(654,938.46)
329,624.63
9.00%
(611,777.09)
510,816.57
13.00%
(414,364.45)
371,324.35
9.00%
Selling General and Administrative Expense
% Revenue
Depreciation and Amortization
% Revenue
Research and Development
% Revenue
Other Expense
% Revenue
Add Back: Depreciation and Amortization
Add Back: Interest Expense*(1-Tax Rate)
Operating Cash Flow
% Revenue
Current Assets
% Revenue
Current Liabilities
% Revenue
Net Working Capital
% Revenue
Change in Working Capital
Capital Expenditures
% Revenue
Acquisitions
% Revenue
Unlevered Free Cash Flow
Discounted Free Cash Flow
EBITDA
EBITDA Margin
EBITDA Growth
0.00
65,210.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00%
55.86%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-65,091.95
-262,303.96
-347,827.92
-568,389.92
75,437.74
73,700.79
72,580.80
69,276.93
141,951.37
132,370.12
172,817.57
157,442.40
462,901.62
-129,359.48
-115,141.86
87,705.49
76,269.12
156,116.94
132,635.26
158,910.62
131,901.24
273,373.57
1,007,043.22
760,867.95
594,651.33
408,660.18
413,514.49
258,433.78
453,968.76
257,770.18
(53,342.00)
-47.65%
(153,421.00)
-131.42%
187.62%
(254,134.00)
-124.43%
65.64%
(396,111.00)
-95.85%
55.87%
(29,981.47)
-7.25%
-92.43%
(9,802.13)
-2.25%
-67.31%
14,412.75
2.75%
-247.04%
20,626.53
3.25%
43.11%
(4,744.31)
-0.24%
-123.00%
29,453.64
5.82%
-720.82%
31,033.67
5.82%
5.36%
37,353.81
5.82%
20.37%
45,253.99
5.82%
21.15%
143,095.11
5.82%
216.20%
201,216.51
6.25%
40.62%
302,155.91
8.25%
50.16%
363,465.63
9.25%
20.29%
505,413.70
12.25%
39.05%
UOIG 24
April 18, 2013
University of Oregon Investment Group
Appendix 3 – Revenue Model
Product Revenue Model
($ in thousands)
Q1
Q2
Q3
Q4
06/30/2013E
09/30/2013E
12/31/2013E
406,887.50
429,000.00
517,450.00
628,012.50
N/A
98.73%
2010A
2011A
111,943.00
97,078.00
148,568.00
385,699.00
% Growth
659.35%
86.72%
53.04%
159.61%
N/A
N/A
% of Total Revenue
100.00%
83.15%
72.74%
93.33%
98.39%
98.47%
Automotive Sales
Development Services
Q1
Q2
Q3
Q4
03/31/2014E
06/30/2014E
09/30/2014E
12/31/2014E
1,981,350.00
497,790.85
524,928.92
633,481.19
769,171.53
2,425,372.50
3,185,471.25
3,626,803.24
N/A
413.70%
22.34%
22.36%
22.42%
22.48%
22.41%
31.34%
13.85%
7.31%
5.00%
98.95%
98.68%
98.40%
98.48%
98.74%
98.96%
98.68%
98.94%
99.03%
99.05%
99.05%
2013E
2014E
2015E
2016E
2017E
3,891,880.95
2018E
4,086,475.00
19,666.00
55,674.00
27,557.00
6,650.00
6,650.00
6,650.00
6,650.00
26,600.00
8,093.56
8,093.56
8,093.56
8,093.56
32,374.25
33,992.96
35,692.61
37,477.24
39,351.10
% Growth
0.00%
100.00%
183.10%
-50.50%
N/A
N/A
N/A
N/A
-3.47%
21.71%
21.71%
21.71%
21.71%
21.71%
5.00%
5.00%
5.00%
5.00%
% of Total Revenue
0.00%
16.85%
27.26%
6.67%
1.61%
1.53%
1.27%
1.05%
1.32%
1.60%
1.52%
1.26%
1.04%
1.32%
1.06%
0.97%
0.95%
0.95%
111,943.00
116,744.00
204,242.00
413,256.00
413,537.50
435,650.00
524,100.00
634,662.50
2,007,950.00
505,884.41
533,022.48
641,574.76
777,265.10
2,457,746.75
3,219,464.21
3,662,495.85
3,929,358.20
4,125,826.11
N/A
4.29%
74.95%
102.34%
N/A
N/A
N/A
N/A
385.89%
22.33%
22.35%
22.41%
22.47%
22.40%
30.99%
13.76%
7.29%
5.00%
Total Revenue
% Growth
-
2012A
03/31/2013E
2009A
Automotive Sales
($ in thousands)
Vehicle, Options and Related Sales
% Growth
% of Total Revenue
Powertrain component and related sales
% Growth
% of Total Revenue
Total Revenue
% Growth
2012A
Q1
Q2
Q3
Q4
03/31/2013E
06/30/2013E
09/30/2013E
12/31/2013E
398,025.00
420,137.50
508,587.50
619,150.00
N/A
98.29%
2009A
2010A
2011A
111,555.00
75,459.00
101,708.00
354,344.00
656.72%
67.64%
34.79%
248.39%
N/A
N/A
99.65%
77.73%
68.46%
91.87%
97.82%
97.93%
Q1
Q2
Q3
Q4
03/31/2014E
06/30/2014E
09/30/2014E
12/31/2014E
1,945,900.00
488,485.23
515,623.30
624,175.57
759,865.91
2,388,150.00
3,146,387.63
3,585,765.43
N/A
449.16%
22.73%
22.73%
22.73%
22.73%
22.73%
31.75%
13.96%
7.34%
5.00%
98.59%
98.21%
98.13%
98.23%
98.53%
98.79%
98.47%
98.77%
98.87%
98.89%
98.89%
2013E
2014E
2015E
2016E
2017E
3,848,791.26
2018E
4,041,230.82
388.00
21,619.00
46,860.00
31,355.00
8,862.50
8,862.50
8,862.50
8,862.50
35,450.00
9,305.63
9,305.63
9,305.63
9,305.63
37,222.50
39,083.63
41,037.81
43,089.70
45,244.18
100.00%
5471.91%
116.75%
-33.09%
N/A
N/A
N/A
N/A
13.06%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
0.35%
22.27%
31.54%
8.13%
2.18%
2.07%
1.71%
1.41%
1.79%
1.87%
1.77%
1.47%
1.21%
1.53%
1.23%
1.13%
1.11%
1.11%
111,943.00
97,078.00
148,568.00
385,699.00
406,887.50
429,000.00
517,450.00
628,012.50
1,981,350.00
497,790.85
524,928.92
633,481.19
769,171.53
2,425,372.50
3,185,471.25
3,626,803.24
3,891,880.95
4,086,475.00
N/A
-13.28%
53.04%
159.61%
N/A
N/A
N/A
N/A
413.70%
22.34%
22.36%
22.42%
22.48%
22.41%
31.34%
13.85%
7.31%
5.00%
UOIG 25
April 18, 2013
University of Oregon Investment Group
Appendix 4 – Working Capital Model
Working Capital Model
Q1
Q2
Q3
Q4
03/31/2013E
06/30/2013E
09/30/2013E
12/31/2013E
Q1
Q2
Q3
Q4
06/30/2014E
09/30/2014E
12/31/2014E
2009A
2010A
2011A
2012A
Total Revenue
111,943.00
116,744.00
204,242.00
413,256.00
413,537.50
435,650.00
524,100.00
634,662.50
2,007,950.00
505,884.41
533,022.48
641,574.76
777,265.10
2,457,746.75
3,219,464.21
3,662,495.85
3,929,358.20
4,125,826.11
3,488.00
11.37
3.12%
23,222.00
82.77
20.74%
4,222.00
3.77%
30,932.00
27.63%
6,710.00
20.98
5.75%
45,182.00
191.73
38.70%
10,839.00
9.28%
62,731.00
53.73%
9,539.00
17.05
4.67%
50,082.00
128.15
24.52%
9,414.00
4.61%
69,035.00
33.80%
26,842.00
23.77
6.50%
268,504.00
256.46
64.97%
8,438.00
2.04%
303,784.00
73.51%
104,668.24
22.78
25.31%
588,758.88
150.75
142.37%
26,167.06
6.33%
719,594.18
174.01%
110,265.02
23.03
25.31%
620,240.74
161.95
142.37%
27,566.26
6.33%
758,072.01
174.01%
132,652.12
23.29
25.31%
746,168.19
174.64
142.37%
33,163.03
6.33%
911,983.34
174.01%
160,636.00
23.29
25.31%
903,577.50
175.81
142.37%
40,159.00
6.33%
1,104,372.50
174.01%
160,636.00
8.00%
903,577.50
210.61
45.00%
40,159.00
2.00%
1,104,372.50
55.00%
131,969.39
23.48
26.09%
759,823.77
181.45
150.20%
31,992.58
6.32%
923,785.74
182.61%
139,048.86
23.74
26.09%
800,584.36
183.46
150.20%
33,708.82
6.32%
973,342.04
182.61%
167,366.75
24.00
26.09%
963,626.74
185.48
150.20%
40,573.76
6.32%
1,171,567.24
182.61%
202,764.11
24.00
26.09%
1,167,429.71
185.48
150.20%
49,154.94
6.32%
1,419,348.75
182.61%
202,764.11
30.11
8.25%
1,167,429.71
232.72
47.50%
49,154.94
2.00%
1,419,348.75
57.75%
273,654.46
31.11
8.50%
1,448,758.90
218.15
45.00%
64,389.28
2.00%
1,786,802.64
55.50%
320,468.39
31.94
8.75%
1,538,248.26
204.40
42.00%
73,249.92
2.00%
1,931,966.56
52.75%
353,642.24
32.85
9.00%
1,532,449.70
188.54
39.00%
78,587.16
2.00%
1,964,679.10
50.00%
381,638.91
33.76
9.25%
1,485,297.40
176.38
36.00%
82,516.52
2.00%
1,949,452.83
47.25%
4,711.00
11,884.00
0.00
-6,940.00
23,535.00
54,467.00
21%
23,535.00
40,203.00
65,210.00
-10,623.00
114,636.00
177,367.00
98%
114,636.00
184,226.00
0.00
-16,919.00
298,414.00
367,449.00
146%
298,414.00
239,228.00
0.00
-28,825.00
552,229.00
856,013.00
134%
552,229.00
41,353.75
0.00
-7,419.78
586,162.97
1,305,757.15
142%
586,162.97
43,565.00
0.00
-7,964.35
621,763.62
1,379,835.63
143%
621,763.62
52,410.00
0.00
-8,619.47
665,554.15
1,577,537.49
127%
665,554.15
63,466.25
0.00
-9,412.80
719,607.60
1,823,980.10
113%
552,229.00
200,795.00
0.00
-33,416.40
719,607.60
1,823,980.10
36%
719,607.60
60,706.13
0.00
-10,171.63
770,142.10
1,693,927.84
152%
770,142.10
63,962.70
0.00
-10,971.16
823,133.64
1,796,475.68
154%
823,133.64
76,988.97
0.00
-11,933.52
888,189.09
2,059,756.33
138%
888,189.09
93,271.81
0.00
-13,099.42
968,361.48
2,387,710.23
125%
719,607.60
294,929.61
0.00
-46,175.73
968,361.48
2,387,710.23
39%
968,361.48
289,751.78
0.00
-66,885.27
1,191,227.99
2,978,030.62
37%
1,191,227.99
329,624.63
0.00
-83,366.50
1,437,486.11
3,369,452.67
39%
1,437,486.11
510,816.57
0.00
-108,907.33
1,839,395.35
3,804,074.45
47%
1,839,395.35
371,324.35
0.00
-127,473.55
2,083,246.15
4,032,698.99
50%
15,086.00
53.77
13.48%
14,532.00
12.98%
0.00
0.00%
1,377.00
1.23%
26,048.00
23.27%
57,043.00
50.96%
28,951.00
122.85
24.80%
20,945.00
17.94%
0.00
0.00%
4,635.00
3.97%
30,755.00
26.34%
85,286.00
73.05%
56,141.00
143.65
27.49%
32,109.00
15.72%
0.00
0.00%
2,345.00
1.15%
91,761.00
44.93%
182,356.00
89.28%
303,382.00
289.77
73.41%
39,798.00
9.63%
0.00
0.00%
1,905.00
0.46%
138,817.00
33.59%
483,902.00
117.09%
392,505.92
100.50
94.91%
118,106.21
28.56%
0.00
0.00%
143,418.59
34.68%
392,505.92
94.91%
1,046,536.64
253.07%
413,493.83
107.96
94.91%
124,421.54
28.56%
0.00
0.00%
259,604.70
59.59%
413,493.83
94.91%
1,211,013.89
277.98%
497,445.46
116.43
94.91%
149,682.84
28.56%
0.00
0.00%
400,365.84
76.39%
497,445.46
94.91%
1,544,939.60
294.78%
602,385.00
117.21
94.91%
180,715.50
28.47%
0.00
0.00%
567,651.93
89.44%
602,385.00
94.91%
1,953,137.43
307.74%
602,385.00
140.41
30.00%
180,715.50
9.00%
0.00
0.00%
567,651.93
28.27%
602,385.00
30.00%
1,953,137.43
97.27%
463,892.41
110.78
91.70%
127,970.32
25.30%
0.00
0.00%
635,648.94
125.65%
447,896.12
88.54%
1,675,407.78
331.18%
488,777.82
112.01
91.70%
134,835.26
25.30%
0.00
0.00%
751,065.23
140.91%
471,923.41
88.54%
1,846,601.72
346.44%
588,319.48
113.24
91.70%
162,295.03
25.30%
0.00
0.00%
923,202.93
143.90%
568,032.60
88.54%
2,241,850.04
349.43%
712,746.56
113.24
91.70%
196,619.74
25.30%
0.00
0.00%
1,100,632.33
141.60%
688,169.09
88.54%
2,698,167.72
347.14%
712,746.56
142.08
29.00%
196,619.74
8.00%
0.00
0.00%
1,100,632.33
44.78%
688,169.09
28.00%
2,698,167.72
109.78%
901,449.98
135.74
28.00%
241,459.82
7.50%
579,004.50
17.98%
1,615,658.23
50.18%
837,060.70
26.00%
4,174,633.22
129.67%
988,873.88
131.40
27.00%
274,687.19
7.50%
685,494.52
18.72%
2,110,056.04
57.61%
915,623.96
25.00%
4,974,735.60
135.83%
1,021,633.13
125.70
26.00%
284,878.47
7.25%
869,641.19
22.13%
2,460,732.88
62.62%
982,339.55
25.00%
5,619,225.22
143.01%
1,031,456.53
122.48
25.00%
299,122.39
7.25%
954,064.36
23.12%
2,702,263.60
65.50%
1,031,456.53
25.00%
6,018,363.41
145.87%
Current Assets
Accounts Receivable
Days Sales Outstanding A/R
% of Revenue
Inventory
Days Inventory Outstanding
% of Revenue
Prepaid Expenses
% of Revenue
Total Current Assets
% of Revenue
Long Term Assets
Net PP&E Beginning
Capital Expenditures
Acquisitions
Depreciation and Amortization
Net PP&E Ending
Total Current Assets & Net PP&E
% of Revenue
Current Liabilities
Accounts Payable
Days Payable Outstanding
% of Revenue
Accrued Liabilities
% of Revenue
Current Portion of Residual Value Commitment
% of Revenue
Deferred Revenue
% of Revenue
Reservation payments
% of Revenue
Total Current Liabilities
% of Revenue
2013E
03/31/2014E
($ in thousands)
29.20
UOIG 26
2014E
2015E
2016E
2017E
2018E
April 18, 2013
University of Oregon Investment Group
Appendix 5 – Discounted Cash Flows Analysis Assumptions
Discounted Free Cash Flow Assumptions (Terminal)
Tax Rate
Considerations
16.24% Terminal Growth Rate
Risk Free Rate
3.00%
2.92% Terminal Value
Beta
7,805,007
1.54 PV of Terminal Value
Market Risk Premium
2,473,071
5.79% Sum of PV Free Cash Flows
% Equity
3,524,603
90.96% Firm Value
5,997,674
% Debt
9.04% Total Debt
466,666
Cost of Debt
3.26% Cash & Cash Equivalents
CAPM
11.84% Market Capitalization
WACC
11.01% Fully Diluted Shares
220,984
5,531,008
107,349
Implied Price
Beta
1.54
2014
1.54
2015
1.54
2016
1.54
2017
1.54
2018-2023 1.54
Terminal 1.54
2013
Growth Beta
Risk Free Rate
1.72%
1.72%
1.72%
1.72%
1.72%
1.72%
2.92%
Beta
CAPM
10.64%
10.64%
10.64%
10.64%
10.64%
10.64%
11.84%
MRP
5.79%
5.79%
5.79%
5.79%
5.79%
5.79%
5.79%
SD
0.53
0.81
0.00%
3 Year Weekly
1 Year Weekly
Vasicek Beta 5 Year Monthly
Vasicek Beta 3 Year Weekly
Vasicek Beta 1 Year Weekly
Hamada Beta 5 Year Monthly
1.22
1.19
1.22
1.20
1.31
4.02
0.10
0.46
0.81
0.07
0.55
0.32
30.00%
3.33%
0.00%
30.00%
3.33%
0.00%
Hamada Beta 3 Year Weekly
2.32
0.10
30.00%
Hamada Beta 1 Year Weekly
3.67
0.37
3.33%
1.63
43.75
Undervalued
17.77%
WACC
2.81%
Tax Rate
1.04%
5.00%
10.00%
10.00%
15.00%
15.00%
3.26%
16.24%
11.01%
% Equity
% Debt
Cost of Debt
90.96%
90.96%
90.96%
90.96%
90.96%
90.96%
90.96%
9.04%
9.04%
9.04%
9.04%
9.04%
9.04%
9.04%
1.00%
1.00%
1.45%
1.90%
2.36%
9.77%
9.76%
9.79%
9.83%
9.86%
9.89%
Weighting
5 Year Monthly
Tesla Beta
51.52
Current Price
Industry Beta
3 Year Weekly
1 Year Weekly
Vasicek Beta 3 Year Weekly
Vasicek Beta 1 Year Weekly
Hamada Beta 3 Year Weekly
Hamada Beta 1 Year Weekly
Tesla Beta
Beta
1.22
1.19
1.35
0.99
1.03
1.59
1.28
SD
0.10
0.46
0.01
0.25
0.10
0.17
Weighting
20.00%
0.00%
50.00%
0.00%
20.00%
10.00%
Final Beta
Tesla Growth Beta
Tesla Industry Beta
Tesla Beta
UOIG 27
Beta
1.63
1.28
1.54
Weighting
75.00%
25.00%
April 18, 2013
University of Oregon Investment Group
Appendix 6 –Sensitivity Analysis
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
52
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
1.34
53.99
55.83
57.94
60.38
63.22
1.29
27.02%
31.64%
36.96%
43.13%
50.39%
1.44
51.18
52.72
54.47
56.46
58.76
1.39
20.08%
23.92%
28.30%
33.33%
39.17%
1.54
48.77
50.07
51.52
53.18
55.06
1.54
11.47%
14.43%
17.77%
21.54%
25.86%
1.64
46.68
47.78
49.01
50.39
51.95
1.64
6.69%
9.20%
12.01%
15.17%
18.75%
1.74
44.85
45.79
46.84
48.00
49.31
1.74
2.52%
4.67%
7.06%
9.72%
12.72%
Adjusted Beta
Adjusted Beta
Terminal Growth Rate
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
52
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
9.01%
53.26
54.84
56.62
58.64
60.95
8.75%
23.26%
26.98%
31.16%
35.90%
41.31%
10.01%
50.89
52.32
53.93
55.76
57.85
11.01%
48.77
50.07
51.52
53.18
55.06
12.01%
46.86
48.04
49.36
50.86
52.57
13.01%
45.15
46.22
47.42
48.77
50.32
WACC
WACC
Terminal Growth Rate
9.75%
17.69%
21.05%
24.83%
29.12%
34.01%
11.01%
11.47%
14.43%
17.77%
21.54%
25.86%
11.75%
8.22%
10.97%
14.07%
17.59%
21.60%
12.75%
4.20%
6.69%
9.50%
12.69%
16.33%
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
6.24%
48.71
50.00
51.46
53.10
54.99
6.24%
11.3%
14.3%
17.6%
21.4%
25.7%
11.24%
48.74
50.03
51.49
53.14
55.03
11.24%
11.4%
14.4%
17.7%
21.5%
25.8%
16.24%
48.77
50.07
51.52
53.18
55.06
16.24%
11.5%
14.4%
17.8%
21.5%
25.9%
26.24%
48.83
50.13
51.59
53.25
55.14
26.24%
11.6%
14.6%
17.9%
21.7%
26.0%
36.24%
48.89
50.19
51.66
53.32
55.22
36.24%
11.7%
14.7%
18.1%
21.9%
26.2%
Tax Rate
Tax Rate
Terminal Growth Rate
52
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
52
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
1.26%
49.08
50.39
51.87
53.55
55.47
1.26%
12.2%
15.2%
18.6%
22.4%
26.8%
2.26%
48.92
50.23
51.70
53.36
55.26
2.26%
11.8%
14.8%
18.2%
22.0%
26.3%
3.26%
48.77
50.07
51.52
53.18
55.06
3.26%
11.5%
14.4%
17.8%
21.5%
25.9%
4.26%
48.62
49.90
51.35
52.99
54.87
4.26%
11.1%
14.1%
17.4%
21.1%
25.4%
5.26%
48.47
49.74
51.18
52.81
54.67
5.26%
10.8%
13.7%
17.0%
20.7%
25.0%
Cost of Debt
Cost of Debt
Terminal Growth Rate
Implied Price
Undervalued/(Overvalued)
Terminal Growth Rate
52
2.0%
2.5%
3.0%
3.5%
4.0%
0
2.0%
2.5%
3.0%
3.5%
4.0%
3.79%
67.47
71.09
75.41
80.64
87.11
3.79%
54.2%
62.5%
72.4%
84.3%
99.1%
4.79%
56.10
58.19
60.59
63.38
66.68
4.79%
28.2%
33.0%
38.5%
44.9%
52.4%
5.79%
48.77
50.07
51.52
53.18
55.06
5.79%
11.5%
14.4%
17.8%
21.5%
25.9%
6.79%
43.78
44.63
45.57
46.61
47.78
6.79%
0.1%
2.0%
4.2%
6.5%
9.2%
7.79%
40.25
40.83
41.46
42.16
42.92
7.79%
-8.0%
-6.7%
-5.2%
-3.6%
-1.9%
Market Risk
Premium
Market Risk
Premium
Terminal Growth Rate
UOIG 28
April 18, 2013
University of Oregon Investment Group
Appendix 7 – Deferred Revenue
2013
Q1 Sales
Q2 Sales
Q3 Sales
Q4 Sales
2014
Q1 Sales
03/31/2013E
06/30/2013E
09/30/2013E
12/31/2013E
100.00%
95.45%
90.91%
86.36%
113,437.13
108,280.89
103,124.66
97,968.43
100.00%
95.45%
90.91%
119,739.19
114,296.50
108,853.81
100.00%
95.45%
144,947.44
138,358.92
100.00%
176,457.75
2013E
97,968.43
108,853.81
138,358.92
176,457.75
Q2 Sales
Q3 Sales
Q4 Sales
03/31/2014E
06/30/2014E
09/30/2014E
12/31/2014E
81.82%
77.27%
72.73%
68.18%
92,812.19
87,655.96
82,499.73
77,343.49
86.36%
81.82%
77.27%
72.73%
103,411.12
97,968.43
92,525.74
87,083.05
90.91%
86.36%
81.82%
77.27%
131,770.40
125,181.88
118,593.36
112,004.84
95.45%
90.91%
86.36%
81.82%
168,436.94
160,416.14
152,395.33
144,374.52
100.00%
95.45%
90.91%
86.36%
139,218.29
132,890.19
126,562.08
120,233.98
100.00%
95.45%
90.91%
146,952.64
140,272.97
133,896.93
100.00%
95.45%
177,890.04
169,804.13
100.00%
216,561.78
2015
2014E
216,561.78
2015E
50.00%
56,718.56
54.55%
65,312.28
59.09%
85,650.76
63.64%
112,291.30
68.18%
94,921.56
72.73%
127,810.71
77.27%
162,085.76
81.82%
177,186.91
2016E
31.82%
36,093.63
36.36%
43,541.52
40.91%
59,296.68
45.45%
80,208.07
50.00%
69,609.14
54.55%
122,001.13
59.09%
154,718.22
63.64%
137,812.04
2017E
13.64%
15,468.70
18.18%
21,770.76
9.04%
13,097.66
27.27%
48,124.84
31.82%
44,296.73
36.36%
116,455.62
40.91%
147,685.58
45.45%
98,437.17
896,720.47
81.82%
733,680.39
63.64%
570,640.30
81.82%
836,135.30
45.45%
407,600.22
63.64%
650,327.46
81.82%
897,468.14
77,343.49
87,083.05
112,004.84
144,374.52
120,233.98
133,896.93
169,804.13
2016
1,021,943.15
2017
1,096,905.51
2018
Total
1,151,750.78
113,437.13
228,020.08
362,368.59
521,638.90
521,638.90
635,648.94
751,065.23
890,739.24
1,061,302.72
1,958,023.19
1,615,658.23
UOIG 29
2,110,056.04
2,460,732.88
2018E
0.00%
0.00%
4.55%
6,588.52
9.09%
16,041.61
13.64%
18,984.31
18.18%
111,162.18
22.73%
140,972.60
27.27%
59,062.30
27.27%
244,560.13
45.45%
464,519.61
63.64%
698,030.78
81.82%
942,341.55
2,702,263.60
University of Oregon Investment Group
April 18, 2013
Appendix 8 – Sources
SEC Filings
Tesla Investor Relations page
Tesla presentations
Press releases
Earnings call transcripts
MorningStar
IBIS World
S&P Net Advantage
Factset
Reuters.com
Yahoo! Finance
U.S. Department of Energy
Ben Schuman (Pacific Crest)
UOIG 30