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Business Operations Business Models

How Does Tesla Make Money (Business and Revenue Model)

The Tesla business model

How Does Tesla Make Money?
Here’s what you should know:
  • What is Tesla, and how does Tesla work?
  • How does Tesla make money?
  • Automotive Sales
  • Energy Generation and Storage Revenue
  • Automotive Leasing
  • Services and Other
  • Tesla’s Subsidiaries, Acquisitions, and Exits
  • Tesla’s profit and revenue
  • What is the Tesla business and revenue model?
  • Tesla’s funding and market cap

How does Tesla make money? Here is a full, in-depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Tesla business model, their year-over-year revenue, and how Tesla works.

What is Tesla, and how does Tesla work?

Tesla is an American electric vehicle manufacturer that produces, sells, and leases vehicles.

Founded in 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors. Tesla later recognized Elon Musk, JB Straubel, and Ian Wright as additional co-founders as well following a 2009 settled lawsuit. Since then, Tesla now has a US market share of roughly 3.66 percent but has a market cap that is more than the 9 largest automakers combined.

How Tesla works is: Customers can go directly to Tesla’s website and customize the model they are interested in. Once done, they can choose to purchase or lease it from Tesla directly.

Some of Tesla’s competitors include General Motors and other vehicle manufacturing companies.

Tesla App in Apple App Store | Tesla Business Model | How Does Tesla Make Money?
Source: Apple App Store | Tesla

How does Tesla make money?

According to page 31 of Tesla’s 2020 Form 10-K, Tesla produced 509,737 vehicles and delivered 499,647 of them to customers in 2020. As well as deploying 3.02 GWh of energy storage products and 205 megawatts of solar energy systems.

So how does Tesla make money off of all those sold vehicles, energy storage products, and solar energy systems?

Below is a breakdown of how much money Tesla makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 4 ways of how Tesla makes money (in 2021):

Tesla has a revenue model that makes money in four (4) ways – automotive sales, energy generation and storage revenue, automotive leasing, and services and other.

#1. Automotive Sales

To no surprise, vehicle manufacturer Tesla makes almost all of its money from selling vehicles. In fact, $26.2 billion or 83.1% of Tesla’s total revenue came from car sales in 2020.

As noted above, Tesla produced and delivered just under half a million vehicles to customers in 2020.

Tesla Car Prices:

  • $39,990 to $129,990+ (additional upgrades available)
Tesla Car Cost | Tesla Business Model | How Does Tesla Make Money?
Source: Tesla

Note: 83.1% of Tesla’s total revenue came from car sales in 2020.

#2. Energy Generation and Storage Revenue

Tesla is an electric vehicle manufacture, so it makes sense that Tesla also makes money by selling and leasing solar energy and energy storage products, which resulted in $1.99 billion of revenue for Tesla in 2020.

According to page 41 of Tesla’s 2020 Form 10-K, energy generation and storage revenue come from the “sales and leasing of solar energy generation and energy storage products, services related to such products and sales of solar energy systems incentives.”

Note: Tesla deployed 3.02 GWh of energy storage products and 205 megawatts of solar energy systems that totaled $1.99 billion of revenue for Tesla in 2020.

#3. Automotive Leasing

In addition to selling vehicles, Tesla also leases their vehicles, which brought in a bit over $1 billion of revenue for Tesla in 2020.

If we add up Q1, Q2, Q3, and Q4 of Tesla’s Vehicle Production & Delivery Press Releases, we can determine roughly 6.75% or 33,719 of Tesla’s half a million sold vehicles in 2020 were leases.

Note: Roughly 6.75% of Tesla’s delivered vehicles in 2020 were leases.

#4. Services and Other

The remaining $2.3 billion of Tesla’s revenue came from their “services and other” revenue which consists of “non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, sales by our acquired subsidiaries to third party customers, and vehicle insurance revenue”, according to page 64 of Tesla’s 2020 Form 10-K.

Tesla’s Subsidiaries, Acquisitions, and Exits

To date, Tesla, Inc. has made a total of 9 acquisitions and 1 investment.

Tesla Acquisitions
Source: Crunchbase

Tesla’s profit and revenue

In 2020, Tesla reported $31.5 billion in revenue.

Note: Because Tesla, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Tesla’s publicly released financial reports, including annual reports, through Tesla’s investor section on their website.

What is the Tesla business and revenue model?

Tesla makes money through a few revenue models that they combine within their company, they are:

  • Transaction based business model
  • Fee-for-service (FFS) business model
  • B2B2C (partnerships) business model
  • Interest revenue model
  • Mergers & acquisitions (M&A) business model

Tesla’s funding and market cap

According to Tesla’s Crunchbase profile, Tesla has raised $20.2 billion over 35 rounds and has a market cap of $738.57 billion as of September 2021.