Tesla Inc., formerly known as Tesla Motors, is an American automaker and energy storage company that specializes in producing electric vehicles (Evs), energy devices and photovoltaic panels. It was founded in 2003 by Martin Ebarhard and Marc Tarpenning, with Elon Musk as its chairman. With Palo Alto (California) as its headquarters, Tesla operates multiple production and assembly plants and large factories, with its main vehicle manufacturing facility in Fermont, Valifornia. Additionally, in 2016 Tesla acquired SolarCity with the aim of creating a company fully committed to sustainable energy, from energy generation and storage transportation. Current product portfolio of EV vehicles includes Model S, Model X, Model 3, Tesla Roadster, and Tesla Semi, while its energy storage devices include Tesla Powerwall, Tesla Powerpack, solar panels and soalr roofs.
In this report, Tesla will be analyzed based on the environmental, social and governance (ESG) factors. Next, the issues with the highest materiality will be benchmarked against its closest competitors. Finally, impacts for Tesla’s valuation will be identified and strategic implications will be discussed.
Table of Contents
1. Introduction
2. Stakeholder Analysis
3. Current ESG situation
3.1. Environment
3.2. Employees
3.3. Customer
3.4. Community
3.5. Supply Chain
3.6. Corporate Governance
4. Materiality Analysis
5. Peer Group analysis and identification of industry leaders
5.1. CO2 emissions
5.2. Labor relations
5.3. Consumer privacy
5.4. Product safety
6. ESG’ s impact on Tesla’ s Value
6.1. CO2 emissions
6.2. Labor relations
6.3. Customer Privacy
6.4. Product Safety
6.5. Overall impact
7. Strategic Implications
8. Conclusion
Research Objectives and Topics
The primary objective of this report is to analyze Tesla, Inc. through the lens of environmental, social, and governance (ESG) factors, benchmark these materiality issues against industry competitors, and evaluate their specific impact on the company's valuation to derive strategic implications.
- ESG factor evaluation and materiality assessment
- Stakeholder power and influence analysis
- Benchmarking against automotive industry leaders
- Financial impact analysis of ESG issues on valuation
- Strategic recommendations for long-term sustainability
Excerpt from the Book
3.1. Environment
Musk emphasizes that Tesla manufactures EVs, solar panels as well as energy storage in order to accelerate the transition to sustainable energy (Tesla, 2017c). It will be assessed what impact Tesla’ s products have on the environment throughout their lifecycle.
Production: The production of Tesla’ s EV and its batteries starts with the mining of raw materials, such as lithium. The sourcing from South America is prone to water-intensive (0.5mn gallons of water per ton of lithium) and water-polluting activities (Frankel and Whoriskey, 2016), while sourcing from Australia is problematic due to the energy-intensive (thus CO2-intensive) hard-rock mining technique (Foehringer Merchant, 2017). Further, raw materials, such as nickel, cobalt, aluminum and graphite, are prone to deforestation and water contamination (Foehringer Merchant, 2017). This environmental pollution takes place, because the excavation is treated with chemicals and approximately 99.8% is returned to the environment (Wade, 2016).
The Union of Concerned Scientists found that manufacturing conventional cars generates approximately equal amounts of CO2 as manufacturing EVs. However, manufacturing batteries adds about 15% CO2 emissions on top (Nealer, Reichmuth & Anair, 2015). Tesla’ s Gigafactory itself, which is used for the production of batteries, aims at net energy consumption of zero, by installing solar panels on its roof (Tesla, 2017c). Moreover, Tesla is taking steps to redesign its supply chains to be near its manufacturing unit in order to decrease transportation and latency costs (Lopez and McKevitt, 2017). Additionally, Tesla has taken steps to reduce CO2 emissions, generated by leather seats, by using synthetic, vegan material instead (Gilboy, 2017).
Summary of Chapters
1. Introduction: Outlines the corporate background of Tesla, Inc. and defines the scope of the ESG-based analytical framework used in the report.
2. Stakeholder Analysis: Examines key stakeholders like the environment, employees, management, and investors based on their power, legitimacy, and urgency.
3. Current ESG situation: Provides a comprehensive overview of Tesla's performance across six critical areas: environment, employees, customers, community, supply chain, and corporate governance.
4. Materiality Analysis: Identifies and categorizes the most critical ESG factors based on their degree of impact and likelihood of occurrence to focus the valuation model.
5. Peer Group analysis and identification of industry leaders: Compares Tesla’s ESG performance against industry peers like GM and Ford to identify relative strengths and weaknesses.
6. ESG’ s impact on Tesla’ s Value: Quantifies how the identified critical ESG factors affect Tesla's financial valuation through various value drivers.
7. Strategic Implications: Offers actionable recommendations to mitigate negative impacts and leverage positive ESG outcomes for future corporate health.
8. Conclusion: Summarizes the key findings, confirming that ESG factors significantly influence Tesla's long-term valuation.
Keywords
Tesla, ESG, Sustainability, Electric Vehicles, Materiality Analysis, Stakeholder Analysis, CO2 Emissions, Labor Relations, Corporate Governance, Valuation, Financial Impact, Renewable Energy, Supply Chain, Consumer Privacy, Battery Efficiency
Frequently Asked Questions
What is the primary focus of this report?
This report provides an analytical assessment of Tesla, Inc. by evaluating its performance and impact through environmental, social, and governance (ESG) criteria.
What are the central themes discussed in the analysis?
The central themes include environmental impacts of battery production, labor relations, consumer privacy, product safety, supply chain integrity, and corporate governance.
What is the core objective of the study?
The goal is to determine how ESG factors influence Tesla's valuation and to provide strategic recommendations to address identified risks and inefficiencies.
Which scientific methodology is applied?
The report utilizes a qualitative analysis for ESG identification, followed by a materiality analysis and a quantitative financial impact assessment based on RobecoSAM criteria.
What is the focus of the main content chapters?
The main chapters detail specific ESG issues, perform comparative benchmarking against industry leaders like GM and Ford, and map these factors to specific financial value drivers.
Which keywords define this work?
The work is defined by terms such as Tesla, ESG, Materiality Analysis, Sustainability, Valuation, and Stakeholder Analysis.
How does Tesla compare to GM and Ford regarding ESG reporting?
The analysis indicates that Tesla currently lags in certain ESG reporting and management areas, such as labor relations and consumer privacy, compared to established leaders like GM.
What role does the 'Customer Privacy' issue play in Tesla's valuation?
Customer privacy is identified as a critical risk factor, with the analysis estimating that it has the potential to negatively impact Tesla's value significantly due to data-related controversies.
Why is battery production considered an environmental challenge?
Battery production is energy-intensive and requires raw material mining that often involves high water usage and potential pollution, which Tesla must manage to maintain its sustainable image.
What strategic advice does the report provide for labor relations?
The report recommends that Tesla adopts best-in-class labor practices, improves open communication channels, and fosters constructive dialogue to reduce turnover and litigation risks.
- Quote paper
- Anonym (Author), 2017, Tesla Valuation based on ESG factors, Munich, GRIN Verlag, https://www.grin.com/document/417956
