How much of Tesla’s revenue comes from haram?

Tesla earns its revenue from the following revenue sources:

  • Automotive Sales:

Primarily composed of Tesla’s electric vehicle sales. 

This segment also includes regulatory credits paid to Tesla by competitor automotive manufacturers for not meeting their required number of electric vehicle sales by state and federal governments. 

  • Automotive Leasing:

Tesla offers up to 48-month rental contracts for their vehicles.

Qualifying Tesla customers are given the option to purchase their vehicle after their lease has ended. 

  • Energy Generation and Storage:

Includes installation and sales of solar energy generation and storage products. 

These products include Tesla Solar Roof, Solar Panels, Powerwall, and Megapacks/Powerpacks.

  • Services and Other:

Includes sales of used vehicles, retail merchandise, vehicle insurance, repair and maintenance services, and access to Tesla’s Supercharging network.

From time to time, Tesla sells gimmick merchandise such as Tesla shorts and Tequila. 

Tesla has not mentioned the contributions these limited-time items make to Tesla’s overall revenue on any of its SEC filings. We think this is likely because gimmick products contribute only a trivial amount to overall revenue. Considering all the other contributors to Tesla’s “Services and Other” segment, Practical Islamic Finance estimates gimmick products to contribute less than 1% of Tesla’s overall revenue. 

The contributions from each of Tesla’s revenue segments in their Q1 2021 report were as follows:

Tesla Revenue Breakdown

Practical Islamic Finance concludes:

Only a non-material portion of Tesla’s revenue comes from haram. 

Does Tesla rely on interest to operate?

For the Trailing Twelve Months as of March 31, 2021 (Numbers in thousands, U.S. Dollars):

Interest Income: $30,000

Total Revenue: $35,940,000

Interest Expense: $678,000

Total Expenses: $33,736,000

Interest Income / Revenue: 0.08%

Interest Expense / Total Expense: 2.01%

The following table depicts the declining percentages of Tesla’s interest income and expenses relative to total revenues and expenses from 2017 to 2021. 

20172018201920202021 (TTM)
Interest Income0.17%0.11%0.18%0.10%0.08%
Interest Expense3.52%3.05%2.80%2.53%2.01%

Practical Islamic Finance concludes:

Tesla is not reliant on interest for its operations. 

What is Tesla’s Environmental, Social, and Governance (ESG) impact?

Environment

Tesla’s website has a live count of the amount of CO2 Tesla vehicles have saved. 

As of current, Tesla vehicles have saved 17,779,409.30 tons of CO2 from polluting the environment.

According to the World Health Organization, “air pollution kills an estimated seven million people worldwide every year.”

Social

According to Tesla’s Q1 2021 safety report, Tesla vehicles registered 1 accident for every 4.19 million miles driven with their Autopilot system engaged. 

Drivers using only Tesla’s safety features without using their Autopilot system registered 1 accident for every 2.05 million miles driven. 

Tesla compares their accident data with the NHTSA stating 1 accident occurs for every 484,000 miles in the United States.

As a result, riding in one of Tesla’s vehicles is about 4-10x safer compared to the average non-Tesla vehicle.

In addition, Tesla has a relatively high Glassdoor rating of 3.8 out of 5.0 from over 9,000 current and previous employees compared to a 3.3 average for all other Glassdoor rated companies.

Governance

No notable governance highlights.

Comfort Rating

From Tesla’s business, financial and ESG reviews, Practical Islamic Finance rates Tesla stock as:

Comfortable to invest in from a Halal perspective.

Sources

Tesla Vehicle Safety Report 

Tesla Carbon Impact Live Count 

WHO Air pollution 

Lease-End Options 

Form 10-Q