| Ticker | TSLA |
| Company Name | Tesla Inc. |
| Shariah Compliance | Compliant |
| DP Ratio | 1.85% |
Business Sector Screening:
We have conducted a comprehensive review on Tesla, Inc. from a Shariah point of view and analyzed its sources of income to know whether they are complying with Shariah principles.
Tesla, Inc. is an American multinational automotive and clean energy company headquartered in Austin, Texas, which designs and manufactures electric vehicles (cars and trucks), stationary battery energy storage devices from home to grid-scale, solar panels and solar shingles, and related products and services.
It operates as two reportable segments: (i) automotive and (ii) energy generation and storage.
The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment also includes services and other, which includes non-warranty after-sales vehicle services and parts, sales of used vehicles, retail merchandise, paid Supercharging and vehicle insurance revenue.
The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.
Its subsidiary Tesla Energy develops and is a major installer of photovoltaic systems in the United States and is one of the largest global suppliers of battery energy storage systems with 6.5 gigawatt-hours (GWh) installed in 2022.
Let’s have a look at the operating segments from which the company derives its revenue and apply the Shariah screens to them:
Segment Breakup: (In millions of USD)
for year ended 31std December 2022
| Segment | Revenue | Non-Permissible Revenue | % Non-Permissible Revenue | Non-Permissible Segment Classification | Comments |
| Automotive Sales | $67,210 | – | – | – | – |
| Automotive Regulatory Credits | $1,776 | – | – | – | – |
| Automotive Leasing | $2,476 | $683 | 27.58% | – | – |
| Energy Generation and Storage | $3,909 | – | – | – | – |
| Services and others | $6,091 | $1,218.2 | 20% | – | – |
| Total | $81,462 | $1,901.2 | 2.33% | – | – |
Tricky Areas from a Shariah perspective
Looking into their Revenue streams, the tricky areas that can be observed from a Shariah perspective are the “Services and Others” segment, which is part of their operating revenue.
Services and others: This Revenue consists of non-warranty after-sales vehicle services and parts, paid Supercharging, sales of used vehicles, retail merchandise and vehicle insurance revenue. Since no break-up of this segment could be found in the annual report, 20% of the revenue is assumed to be BNPI from vehicle insurance revenue.
Another area of concern could be the sales of Tequila by the company previously, however the revenue from the same would be considered negligible as it was sold in a very limited quantity. Moreover, since this was more of a one-time event, it hasn’t been considered in their operating revenue.
Based on the above information, it is safe to assume that the business operations of Tesla, Inc., would be Shariah Compliant.
Let’s have a look at the non-operating income of the company
Non-operating Revenue: (In millions of USD) for year ended 31std December 2022
| Segment Description | Revenue | Non-Permissible Revenue | % Non-Permissible Revenue | Non-Permissible Classification | Comments |
| Interest income | $297 | $297 | 100% | Interest Income | – |
| Total Other Income | $297 | $297 | 100% | – | – |
It is clear from the table above that the non-operating income of the company includes interest income which is Shariah not compliant. This amount is included for the calculation of the Sector Compliance and Dividend Purification.
Sector Compliance Calculation:
| Total Revenue | $81,759 |
| Non-permissible operating revenue | $1.901.2 |
| Interest Income | $297 |
| % of non-permissible revenue | 2.69% |
| Sector Compliance | PASS |
Dividend Purification Calculation:
| Revenue Description | Non permissible Revenue (millions of USD) |
| Non-permissible operating revenue | $1,901.2 |
| Non-permissible non-operating revenue | $297 |
| Total Non-permissible revenue | $2,198.2 |
| Total Revenue Of The Company | $81,759 |
| Dividend Purification Ratio | 2.69% |
Financial Ratio Screen: (All figures in millions of USD for the Quarter ended 30th September 2023)
| Particulars | Amount | Remarks |
| 3 years Average Market | 749,351.1771 | |
| Total Debt | 4,393 | |
| Islamic Debt | 0 | |
| Adjusted Debts | 4,393 | |
| LC1 Ratio | 0.59% |
Source: All the above information is based on the website of the company and the latest Quarterly Report for the period ended 30th September 2023.
Conclusion
Given the above information, we at Islamicly believe that Tesla, Inc. is a Shariah-compliant company as per the Shariah screening criteria.
