How does Tesla make money? – Tesla’s Business Model

Tesla is an American multinational corporation that specializes in electric cars and solar panel manufacturing. If you are wondering how Tesla generates revenue, then you have come to the right place. In this article, we explain the business model of Tesla and how does Tesla make money. Let’s dive in!

What is Tesla?

Tesla is the world’s most recognizable electric car manufacturer. And while it specializes in solar panels and wireless power, Tesla is best known for its electric cars.

Tesla started out as a small company following the 2008 release of the Tesla Roadster, the world’s first electric sports car. This was followed by the Tesla Model S, a sedan. The Model S is now one of the world’s best-selling plug-in electric cars.

FoundedJuly 1, 2003
HeadquartersPalo Alto, California, US
PeopleMartin Eberhard
Marc Tarpenning
IndustryAutomotive, Battery energy storage, Photovoltaic systems
Business TypePublic

What does Tesla do?

Tesla provides revenue and gross profit metrics for its Automotive and Energy Generation and Storage segments. As you can see in the graph, the company’s revenues come from two main sources: the Automotive and the Energy Generation and Storage segments.


Tesla’s Automotive segment is responsible for designing, manufacturing, and selling electric vehicles as well as parts. In the second fiscal quarter of the year, Tesla earned a gross profit of $2.9 billion, which accounts for 93% of total revenue and nearly 99% of total gross profit. The number is up 129.9% from last year’s numbers. Revenue grew by $11.2 billion, or 96.9%, as compared to last year.

how does tesla make money

Energy Generation and Storage

The Energy Generation and Storage segment includes solar energy generation and energy storage products. In the second fiscal quarter of 2021, this segment’s gross profits amounted to $20 million – down 4.8% from last year’s quarter. Revenue for this segment went up 116.5%.

how does tesla make money

How does Tesla make money?

Tesla’s core business is selling electric vehicles. They make up the bulk of their revenue, with about $8.5 billion coming from automotive sales. However, Tesla also makes money from other sources, like solar panels and power walls, which brought in a total of around $1.9 billion in revenue in its latest quarter in 2021.

The largest segment of Tesla’s revenue is servicing old cars. Tesla’s revenue from this service is expected to grow as the company sells more cars. Yet another source of Tesla’s revenue is emissions credits. The money from these credits has helped Tesla tremendously and may not be sustainable for the long term.

Tesla’s $494 million came from what it calls “energy generation and storage.” It sells solar panels, power walls, and other home charging solutions. This is the most often-cited department when discussions about “Tesla being so much more than a car company” crop up.

Tesla also booked $101m in Bitcoin profits. Earlier in 2021, they purchased Bitcoin for $72.5m. Although it can be hard to tell how Bitcoin fits into the company’s operational scheme, it has so far proved to be a smart move.

What is the Business Model of Tesla?

how does tesla make money
Source: Chartr

Tesla offers a wide range of products and services:

  • Tesla Motor Vehicles
  • Auto Services
  • Financial Services
  • Energy Storage
  • Solar panels
  • Lifestyle products
  • Retail merchandise

These are some things you can get from Tesla. In this article, let me get into the details of these Tesla products and services for you.

  1. State of the Art Electric Vehicles – Tesla wants to make better electric cars. They want to make cars that are energy-efficient, easy-to-use, and high-performance. 
  1. Systems powered by solar energy – The business model of Tesla also includes solar energy systems for residential and commercial projects. The manufacturing of solar panels is one of the more prolific segments in this strategy.
  1. Advanced Technology for Electric Vehicles – Tesla’s advanced technology will give you options that include:
  • Battery swap
  • Low-cost recharge
  • Autopilot
  • Recharge stations
  • Dual motor
  • Software updates
  • All-wheel drive

The business strategy for Tesla is quite different from other companies in the tech industry. The company initially targeted affluent buyers and then began to make products that were more affordable. Tesla’s production strategy is an example of vertical integration, which includes manufacturing its own charging stations and components. It also focuses on selling its vehicles through company-owned showrooms and the internet.

Tesla uses a business model that focuses on pure-electric propulsion technology to widen its reach in the customer segments. The company also lets anyone with good faith use its patents in order to help break boundaries in the technology industry. By using these strategies, Tesla’s product strategy is multifaceted.

How much is Tesla worth? (Valuation and Revenue)

In 2003, Tesla was incorporated as an electric vehicle manufacturer. In the early years, developing prototypes was a difficult task, as well as scaling manufacturing. In 2004, Elon Musk became chairman of Tesla. Early on, he said that the company had a 10% chance of success.

Tesla has overcome many hurdles to achieve a major milestone: its one-millionth car. But the company is still going strong. Tesla is currently delivering more than 200,000 vehicles to customers each quarter and plans to increase production in the future.

Tesla is selling 1,917,450 electric vehicles to date. Tesla is a company that experienced rapid growth over the last few years. In 2019, the company’s revenue increased by 28.31% to $31.54 billion, and it already made $22.35 billion in just six months of the year 2021.

Tesla sells more EVs than any other company, to the point that they are outselling their closest competitor by nearly 100%. They have sold 473,136 cars, which is almost equal to their total sales in 2020.

2016$0.4 Billion
2017$11.76 Billion
2018$21.46 Billion
2019$24.58 Billion
2020$31.54 Billion

What is the founding history of Tesla?

Tesla is the world’s most recognized electric vehicle company. Founded in 2003, the company originally sold electric vehicle motors primarily for use in other manufacturers’ electric cars. However, the company has grown to be an automotive manufacturer with a portfolio of products that includes electric cars, battery products, solar panels, and residential energy storage. 

Nikola Tesla, an inventor, a 19th-century scientist, is the company’s namesake due to his discoveries of rotating electromagnetic fields. Nikola Tesla is best known for his contributions to electrical engineering and science and is often considered a pop culture icon among engineers. He contributed to what we call “alternating current,” which is still used today.

Tesla was founded by two people who had important roles in the company. Elon Musk served as the CEO and JB Straubel served as their CFO. They believed in an electric car, so they started the company with the intent of producing one. Tesla was based in part on GM’s earlier work on the electric car, EV1. GM had a small program of cars from 1996-1999. Although they were never released to the public, they were generally successful from an engineering standpoint.

Key Statistics of Tesla

  • Tesla has sold more than 473,136 electric cars in the first 8 months of 2021. That’s more electric cars than any other company in the world has sold during the same time period.
  • 1.91 million cars have been manufactured by Tesla since 2009.
  • Tesla has made 386,759 vehicles in the first two quarters of this year.
  • Tesla generated $22.35 billion in revenue in the last two quarters of 2021.

If you liked reading this article, make sure to check out our article on how does PayPal makes money!