TDNet Discover

The purpose of this case study is to investigate the impact of increased R&D expenditure on Tesla's profitability and financial sustainability. For the utility of this study, the R&D expenditure will be generally defined as costs incurred for creating new products or improving existing ones in a firm. The theory guiding this study is the Research-based view, as it defines R&D as an internal resource that is Valuable, rare, inimitable, and non-substitutable, giving the company a competitive advantage. Stakeholder theory is the complementary theory that argues that stakeholders influence R&D decisions. The research adopts a quantitative research design with the financial data collected from online secondary resources. The research focuses on the period from 2015 to 2024 and is grounded in the positivist paradigm. The data collection approach will be online documentation analysis, while the data analysis methods will include descriptive analysis, correlation analysis, and regression analysis. Data will be triangulated and benchmarked to strengthen the credibility of findings. The research is feasible because data is available online. Potential challenges that might arise in the study are data availability and reliability challenges, sensitivity to macroeconomic conditions, interpretation bias in financial modelling, and generalizability to other firms. The research is vital to Tesla and other innovative firms for optimizing R&D investment, communicating R&D outcomes, risk management, and policy implications. The research results are expected to align with stakeholder and resource based review theories. The research findings are expected to show a positive relation between R&D expenditure and profitability, and financial sustainability metrics, and show a lagged effect.