Tesla: The Automobile Company
- Prisha Saraf
- Jul 18
- 2 min read
It designs, manufactures, and sells battery electric vehicles, stationary battery energy storage devices (from home to grid scale), solar panels and solar shingles, and related products and services. Its main source of income is selling and creating models like the Model Y, Cybertruck, and Model 3. It supplements this core business through clean energy storage and generation, high-margin software subscriptions, vehicle servicing, and a global charging network. Its main costs are manufacturing materials (like lithium, nickel, and steel), factory production labor, and heavy investments in AI, Autopilot R&D, and global logistics networks.
My data shows actual revenues were $97.64 billion for FY24 and $94.83 billion for FY25, but my forecasts project it dropping to $92.05 billion in FY26 and $89.36 billion in FY27. Sadly, the net profit margins are also slipping from 6.2% and 4.0% down to a predicted 3.7% and 3.4%. So no, the company definitely isn't growing right now; it's shrinking.
For my forecast, I chose a growth rate assumption of -2.93%. I picked this because it's the exact rate Tesla dropped by last year, so I figured it made sense to assume that trend would just keep going.
The coolest number I found was the crazy 1,918% net profit growth in FY24! It blew my mind because it immediately crashed by 37% the next year. Seeing a massive thousands-of-percent jump like that right before a huge drop really showed me how wild the stock market and big business financials can be.
Based on my model, Tesla looks like a struggling business because its revenue is shrinking annually, production costs consume 82% of sales, and net profit margins are decaying toward 3%. The biggest risk to my forecast is the rigid -2.93% growth assumption, which assumes the company will blindly repeat its past bad year without any market changes. To do better than I predicted, Tesla needs to launch cheaper models to boost volume or cut its massive production costs. Conversely, it could do worse if a brutal price war with competitors forces more discounts, completely wiping out that tiny remaining 3% profit margin. While this giant still generates billions, it is currently a struggling business locked in a downward spiral of shrinking sales and collapsing profitability.
The one thing I'm unsure about is using that exact -2.93% drop for the FY27 growth rate. It matters so much because it basically assumes Tesla will just keep having bad years back-to-back without changing anything. But since they're a huge tech and car company, a lot can happen in two years. If they finally launch a super cheap electric car or if everyone suddenly buys their self-driving software by 2027, their revenue could totally explode instead of dropping. By keeping that number stuck in the negatives, my model might be way too dramatic and completely wrong about their future.
