Is Tesla Stock Halal? A Comprehensive Assessment for Muslim Investors

Is Tesla Stock Halal?

Tesla, the famous American company known for making electric cars and clean energy solutions, has become popular since it started in 2003. They’ve made cool cars like the Model S, Model 3, Model X, and Model Y, which have become a big deal in the electric car world. However, Muslim investors must stick to their personal beliefs and religious values, leading to the question: ‘Is Tesla stock halal?’ 

Tesla Inc.,

Tesla, headquartered in Palo Alto, California, is an American electric vehicle and sustainable energy firm that was established in 2003. The Model S, Model 3, Model X, and Model Y are just a few of the company’s innovative electric vehicles.

Along with solar panels and rooftops, Tesla also provides renewable energy options like the Powerwall for energy storage. The business’s objective is to hasten the transition to renewable energy. 

Tesla has developed into a dominant power in the electric vehicle market and a major force in the global promotion of sustainable energy solutions under the direction of CEO Elon Musk.

Is Tesla Stock Halal?

Is Tesla Stock Halal?

To be considered a halal investment, a company’s stock should steer clear of haram activities, including alcohol, gambling, pork, pornography, and weapons. It should also avoid uncertainty or questionable dealings (Gharar), such as fraud or illegal activities. Additionally, it should maintain a strong financial standing as Islamic finance discourages investment in companies that heavily depend on debt for their operations. In this context, we will assess Tesla’s business activities, financial position, and impact on society and the environment to determine if its stock qualifies as a suitable investment.

Tesla Business Activities

Tesla’s main business activities are divided into five segments, which are automotive sales, automotive leasing, after-sales support and other related services, energy generation and storage, and tequila.

  • Automotive Sales: Electric vehicles like the Model S, Model 3, Model X, Model Y, Cybertruck, and Roadster are just a few of the company’s innovative electric vehicles that are designed, created, manufactured, and sold by Tesla.
  • Energy Generation and Storage: Tesla manufactures solar panels, solar roofs, the Powerwall, Powerpack, and Megapack.
  • Automotive Leasing: Tesla offers long-term leases, which can extend up to 48 months, and provides a lease-to-own option with potential interest charges. However, this revenue from Tesla’s leasing contracts contributes little to its revenue.
  • After-Sales Support and Related Services: This segment encompasses a range of services and activities, including repair and maintenance services, extended service plans, sales of merchandise, sales of used Tesla vehicles, sales of electrical vehicle components to other manufacturers, and trade-ins of non-Tesla vehicles.
  • Tequila: Tequila is produced by Tesla and offered for sale online. Tesla’s tequila is largely a novelty alcoholic drink. Muslim investors, however, believe that the sale of Tesla Tequila represents less than 1% of Tesla’s total revenue.

Based on our analysis, Tesla primarily generates its revenue from halal sources through its core business operations. Only a small portion of its income comes from haram activities, such as interest from car leasing and the sale of alcoholic beverages like Tequila. Following the 5% rule, which allows investing in stocks with less than 5% of income from interest-related activities, Tesla stock can generally be considered halal. 

Is Tesla Stock Halal?

Tesla Financial Status

The financial stability of a business is a priority in Islamic finance. Excessive debt is seen as risky and is in contrast with Sharia principles; therefore, Muslim investors should consider a business’s financial strength before investing in it, as companies with a high debt ratio in Islamic finance are frequently regarded as breaching Sharia law. 

An online platform, the Wall Street Journal (WSJ), which publishes financial and business news, estimates Tesla’s long-term debt to total assets to be 0.05. This indicates that 5% of the company’s assets are financed by long-term debt.

Justice Mufti Muhammad Taqi Usmani, Chairman of the Shariah Board of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), claims that a company’s long-term debt should not exceed one-third (33%) of its assets, and based on this standard, with Tesla’s long-term debt-to-total assets ratio of 5%, its stock can be considered halal.


For Muslim investors seeking a definitive answer to the question, “Is Tesla stock halal?” The jury is now out. Tesla, the renowned technology company leading the electric vehicle revolution, aligns remarkably well with Islamic finance principles.

With a close examination of Tesla’s business activities, financial strength, and societal and environmental contributions, it becomes evident that Tesla’s stock is generally considered halal. This conclusion is reached by adhering to the rigorous standards set by Shariah guidelines.

Tesla’s core business operations predominantly embrace halal practices, with only a marginal portion of its income being associated with potentially haram activities. In adherence to the widely accepted 5% rule within Islamic finance, Tesla’s stock meets the criteria, making it compliant with Shariah law. 

Financially, Tesla maintains a strong position, with its long-term debt-to-total assets ratio well below the one-third limit stipulated by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Therefore, from a debt perspective, Tesla’s stock is also deemed halal.

Moreover, Tesla’s commendable impact on society and the environment reinforces its halal status. The company’s commitment to reducing greenhouse gas emissions, promoting green energy, and enhancing safety aligns harmoniously with the principles of Sharia.

To sum it up, Tesla stock is seen as acceptable by Islamic finance standards. However, if you’re thinking about investing, it’s a good idea to do thorough research, get advice from Islamic scholars and financial experts, and make decisions that match your personal beliefs. Tesla’s work in electric vehicles and renewable energy aligns well with Islamic values and financial goals, making it a notable choice for halal-conscious investors.


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