Risk Factors and Financial Risk Rating for Tesla

TESLA

Answer1-
Risk factors for Tesla
In last few years, it had experienced delay of Model 3 in design, launch, and production of
vehicles. The cost and volume for Model 3 could harm the business, poor financial
conditions, and prospects. The problem was caused due to growing production and delivery
plans. The risk was operational and financial as there was insufficient working capital.
Moreover, there is no assurance to replace high-customised products. Further delays in
delivering and expanding can reflect negative productivity. In addition to this, the company is
also facing credit risk, as it do not have enough cash to pay interest on loans. Apart from this
investment and operational problem, tesla has been continuously facing challenges such as
account payable as much higher as tesla owns a good sum of money from suppliers. It
increased from $2.4 billion to 3.6 billion dollars. Tesla has built a reputation of squeezing
suppliers and on the other side; it demands tesla to pay bills. The problems of company has
still not reduced and stopped as it has faced phasing out of electric tax credit in US.
Moreover, The Company rose its customer deposits by 167.8 million dollars to 853.9 million
dollars. Tesla sells its products by directly approaching customers without relying much on
dealership business. Initially, it was assisted by interest free loans as customer deposits made
payment in cash that served it as finance through interest free loan (Christofi et al).
Answer2-
The accident of car crashing was an IT risk but the autopilots claimed that a driver should
keep changes in lanes, self-park and it requires the drivers to keep an eye on roads. It claims
that autopilot were not at guilty but it is less safe that would lead to severity (Tesla Risk
Analysis).

The company seek for stockholder approval for 10 years CEO performance for Elon musk
while vesting the liabilities to achieve market capitalisation. If the shareholder approve the
award, that it would incur additional stock-based compensation expense. It acknowledged
greater accountability for the shareholders while considering the conflicts. To the resolutions
of the company, CEO performance form will be approved if total votes of shares is not
owned. CEO has to consider forward-looking statement that includes the development of
ramp, delivery hub, and increase in number of retail stores of Tesla. He has to consider other
statements such as storage capacity; volume, supercharger, and destination charge location
that has service and repair capability.
Answer-4
Negative cash flow of Tesla
Negative cash flows indicate inefficiency of business to generate maximum cash that can
support its operations. Overall, negative cash flow indicates net negative balance from
operating, financing, and investing activities (Ball, Ray, 40).