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Analysis: Tesla Has Much Less Debt Than Ford & GM, & Much Higher Gross Margin

By Johnna Crider and Daryl Elliott

I was recently given some detailed research by Daryl Elliott, who discovered that Tesla has less debt than Ford or GM. All three are American automakers and last year, Tesla went on to have the largest market cap out of those two as well as all other global automakers.

Before I dive into the analysis, I want to quickly define some terms that are used.

  • Long-term debt: portion of a company’s debt which is due in more than 1 year,
  • Current debt: portion of a company’s debt which is due within 1 year,
  • Net debt: determines how well a company can pay all of its debts if they were due immediately
  • Cash-equivalents: include cash and any liquid securities with maturity periods of 90 days or less.

Given the fact that we are now in Q2 of 2021 and all three of these companies will be announcing updated financial data, the numbers below are subject to change. For now and for the sake of the article, I’ll use what I have and paint a rough sketch.

On another note, I’m including the market caps for each of the companies as they are today (July 19 as I’m writing this). By the time this is published, those numbers will have changed due to the day-to-day performances of the markets.

Tesla

  • Long-term debt: $9.56 billion
  • Current debt: $2.13 billion
  • Total debt: $11.69 billion

In February 2021, Benzinga published an overview of Tesla’s debt, citing a balance sheet published on February 8, 2021. That debt was at a total of $11.69 billion, with $9.56 billion in long-term debt and $2.13 billion in current debt. Given that we are mere days away from Tesla’s Q2 earnings call, those numbers are likely to change.

As of July 22, 2021 (before opening), Tesla’s market cap was $631.26 billion, making it the 9th most valuable company by market cap. That number also fluctuates due to Tesla’s performance in the market. In 2020, Tesla’s market cap jumped up 783.42%, compared to its 31.82% jump in 2019, which is clearly a signal that the company is growing. So far this year, Tesla’s down 5.39%.

In 2020, Tesla’s gross revenue was $31.5 billion and its net revenue was $721 million. Its 2020 gross margin was 21%.

General Motors

  • Long-term debt: $72.98 billion
  • Current debt: $36.91 billion
  • Total debt: $108.89 billion

Yahoo! Finance noted that GM’s most recent financial statement reported on February 10, 2021, showed a total debt of $109.89 billion, with $72.98 billion in long-term debt and the remaining $26.91 billion in current debt. Adjusting for $19.99 billion in cash equivalents, GM has a net debt of $89.90 billion.

GM’s market cap on July 22 (pre-market opening) was $82.76 billion. Its gross revenue for 2020 was $122 billion and its net revenues earnings before interest and taxes (EBIT) were $9.7 billion. Its gross margin was 11.2%.

Ford

  • Long-term debt: $103.20 billion
  • Current debt: $49.47 billion
  • Total debt: $152.67 billion

Benzinga noted that Ford’s financial statement released on April 29, 2021, showed that its long-term debt is at $103.20 billion and current debt is at $49.47 billion, with a total debt of $152.67 billion. When adjusting for $21.83 billion in cash equivalents, Ford’s net debt is at $130.83 billion.

As of July 22 (pre-market opening), Ford’s market cap was at $55.64 billion, making it the 344th most valuable company by market cap. Ford’s 2020 gross revenues totaled just over $127 billion, which Statista noted represented a decline of 22% year on year. Ford’s 2020 net revenues EBIT were $2.8 billion and its 2020 gross margin were 11.3%.

Tesla’s Debt Is The Least Of The 3

And that’s not all. Not only do Ford and GM have more debt than Tesla, but Tesla’s market cap is much larger than both of theirs combined. As we go deeper into the decade and eventually look back to this point — just past the entrance — I think we will see just how far Tesla is able to go and how fast it truly is growing.

In April of this year, I wrote an article detailing that Tesla was growing so fast that it was leaving a few analysts lost. Most analysts look at Tesla’s financial data from years past while trying to predict its future but don’t take into consideration many outside factors. This may work for most companies, but not so much for Tesla. When analyzing Tesla, one needs to look at the company through both a standard financial lens and that of the its mission while taking into consideration that Tesla is in its growth stage.

Keeping this in mind, Tesla is literally pouring all of its extra money into its growth. In addition to that, it’s had a record 2021. It sold out of cars towards the middle of Q2 and it’s had the highest sales and deliveries yet in the first half of the year. In Q1, it had its highest sales/deliveries in a single quarter, in a quarter that is normally low in both. In Q2, it beat that.

When you compare the data for a company that is new and growing at incredible speeds to data from two other companies in the same field that have at least 100 years on the new company, it shows that Tesla is conserving its funds for growth and operations while the other two are having to spend billions on paying back debts.

 
 
 
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Written By

Johnna owns less than one share of $TSLA currently and supports Tesla's mission. She also gardens, collects interesting minerals and can be found on TikTok

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