“Is Tesla Stock Halal? ” is one of the most frequently asked questions among Muslim Investors. But with complex standards set out by a number of Islamic bodies, it is not easy for observant Muslims to decide whether or not an investment is halal (shariah-compliant).
Tesla Business Activities
Tesla was founded in 2003, and it currently designs, develops, manufactures, and sells fully electric vehicles, energy storage systems. Moreover, it installs, operates, and maintains solar and energy storage products. Its mission is to accelerate the world’s transition to sustainable energy. Tesla vehicles are the world’s best, highest-selling pure electric cars as well as they are the safest and highest-rated cars on the road in the world. Presently, the company produces and distributes two fully electric vehicles, the Model S sedan and Model X sport utility vehicle (SUV). It also offers Model 3, a sedan designed for the mass market. It develops energy storage products for use in homes, commercial facilities, and utility sites.
Tesla is on top of the investors’ list at the moment. Of course, President Bidens’ target to increase the sales of electric vehicles by 2030 made investors more interested in Tesla stock.
Is Tesla Stock Halal?
Let’s begin to screen based on the criteria and find out if Tesla stocks are halal.
Business Activity Screening
Tesla successfully passes from business activity screening. Its revenue derived from non-Islamic business activities accounts for 0.09% of total revenue, and 2.81% of its revenue comes from questionable segments. So, we can see that Tesla’s non-shariah compliant business activities do not exceed 5% of total revenue, and it is found to be halal.
Financial Screening
It also successfully passes financial screening like interest-bearing debt and interest-bearing securities. Debt that generates interest constitute 2.62% of Tesla’s market cap. It is far below than allowed 30% of the market cap.
| Total Debt | $8.15B |
| 36 Months Average Market Cap | $311.43B |
Deposits, investments that generate interest, account for only 5.57% of its market cap. Consequently, Tesla passes the third criteria, proving that its interest-bearing securities do not exceed 30% of its market cap.
| Cash & Equivalents | $17.36B |
| 36 Months Average Market Cap | $311.43B |
Based on the data we found, we believe Tesla stock is halal (Shariah-compliant) because it passes all the criteria for the stock to be halal.
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