Strategic and Financial Assessment of Green Bonds vs. Conventional Bonds: A Case Study of Tesla, Inc.
Objective:
The purpose of this individual project is to evaluate two financing options for a large-scale green investment by
Tesla, Inc., a leading U.S. electric vehicle and clean energy company. You are required to assess and compare:
• Green Bonds
• Conventional Corporate Bonds
Your task is to provide a data-driven recommendation on which instrument Tesla should use to fund a new
hypothetical project aligned with its sustainability strategy.
Project Context:
Tesla is planning to finance a battery recycling and energy efficiency facility in the U.S. with an estimated cost
of $1 billion. As part of your project, assume you are acting as an individual financial analyst evaluating how
Tesla should raise funds through debt capital markets.
Your Responsibilities:
You are expected to complete the following:
A. Strategie and Market Analysis
• Review Tesla’s ESG goals and funding history
• Examine U.S. and global trends in green bond issuance
• Assess how investors perceive green bonds vs. conventional bonds
B. Bond Structuring
Design and justify both funding options:
Structure Element
Green Bonds
Conventional Bonds
Maturity (e.g., 7 years)
Coupon rate
Estimate with Greenium Estimate with market avg
Issuance costs
Include verification fees Regular fees only
Reporting & compliance Green bond standards
Standard bond rules
C. Financial Analysis
• Calculate total cost of each option (NPV of payments + fees)
• Perform scenario analysis: What happens if interest rates or credit rating change?
• Conduct sensitivity analysis on key inputs (coupon, issuance fees, tax impact if relevant)
D. Strategic Considerations
Discuss implications for Tesla’s:
• ESG positioning
• Access to global ESG-focused investors
• Inclusion in green bond indices
• Disclosure obligations and reputation
E. Recommendation
Based on your findings, which option is more suitable? Provide clear reasoning, supported by data, charts, or
financial metrics.
Deliverables (Required):
professionally formatted, including all analysis and visuals
Submission Guidelines:
• Language: English
• Format: PDF (report), Excel (financial model)
• Academic Integrity: Work must be original; cite all sources used
• Writing Style: APA or Chicago
• Deadline: Monday, May 5th, 2025 (11:59pm)
Suggested Data Sources:
• Tesla Investor Relations: Annual/ESG reports
• Bloomberg or Refinitiv (for bond yield benchmarks)
• Climate Bonds Initiative (CBI)
• ICMA Green Bond Principles
• Moody’s or S&P ESG-related publications
• U.S. SEC regulations on corporate bonds
Component
Description
Analytical Report (Main)
Financial Model (Excel) Includes assumptions, formulas, and comparison of both options