Tesla Motors Annual Report

2014

“Energy cannot be created or destroyed, it can only be changed from one form to another.”

Albert Einstein

Under

The

Hood

10 Letter from the CEO

22 Changing the world

30 Get to know the team

32 Subsidary Info

18 Financial highlights

56

87

78

We may be young but we can kick your ass.

109

To my fellow Tesla activists,

Elon Musk

We can confidently say that Tesla Motors continues to operate from a position of balance and strength. We are the second-largest car and battery business in the world, and the largest car and battery business in the North America region area.

Tesla Motors is increasingly global. More than 45 percent of our revenue comes from outside the United States, with approximately 30 percent coming from emerging and developing markets, where we have tremendous growth opportunities. Globally, Tesla Motors operates more than 100,000 routes, serves approximately 10 million outlets almost every week and generates more than $300 million in retail sales almost every day. We are performing today to deliver top-tier financial performance, while

investing to ensure that our performance levels can be sustained in the long term. For example, in 2010 we stepped up our investments in brand building, R&D, emerging markets infrastructure and our people.

In 2013, in recognition of the importance of sustainability to Tesla’s Innovation strategy, we transitioned our Sustainable Business & Innovation organization into Tesla’s core Innovation function, signaling the enterprise-wide role sustainable innovation will play in Tesla’s future. Our future is a bright one because we are the leading electric car company. The cars we produce are awesome. We hope Tesla’s experience as one of the first brands to respond to the challenges of responsibility positively.

“We have reached another epic point in human history in which the ability to change will determine our future existense.”

910

1211

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define who you are

Don’t let the past

in the present.

1413

Gigafactory to open in Reno, NV.

3.

Tesla wins Motor Trend Car of the Year award.

Model S sets Guinness World Record.

Gigafactory to open in Reno, NV.

Model S wins the 2013 Motor Trend Car of the Year award and the best possible US National Highway Traffic Safety Administration rating.

Model S sets fastest charge time for any electric vehicle, with a 40 minute record.

Plans to build gigafactory in Reno will cut battery prices down 30 percent, lowering the price of Tesla vehicles.

13 14

4.

100 Supercharger stations

Model S is released in Hong Kong.

Tesla announces 100 Supercharger stations open in the U.S. We predict another 100 Superchargers to open next year as well.

Tesla expands Supercharger stations, stores, and vehicles into the city of Hong Kong, China. This is a huge opportunity for growth in the company.

2014 Company H

ighlights

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1817

2014 Financial Highlights

Car Sales 2012-2014

2012

2013

2014

543,000

704,000

1,221,200

17 18

2012

2013

2014

NASDAQ Shareholders

543,000 50,135

704,000 125,400

1,221,200 157,320

2019

19 20

The road most traveled by

has a dead end.

2221

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2423

My name is Li.

I live in one of the most polluted cities in China, Baoding. Every day I must wear a mask and eyewear to protect myself from the

smog that covers the city. I choose to drive a Tesla because I know that if everyone else drove one the air would be clean again. Now that there are more supercharger stations in China I think that we can start to reverse our effects on air quality. It is very important that we drive electric cars in China.

Every day I must wear a mask and eyewear to protect myself from the smog that covers the city. I choose to drive a Tesla because I know that if everyone else drove one the air would be clean again. This is a filler sentence isn’t it awesome.I live in one of the most polluted cities in China, Baoding. Every day I must wear a mask and eyewear to protect myself from the smog that covers the city. The 273-to-156 vote was over a narrow military measure with no money attached, but it took on outsize importance and was infused with drama. Speaker John A. Boehner of Ohio and Representative Nancy Pelosi of California, the minority leader, actively and strongly backed the legislation, and both sought to portray it as

a modest measure. The Senate hopes to pass it as soon as Thursday. “The American forces that have been deployed to Iraq do not and will not have a combat mission,” Opponents in both parties framed the vote as a step toward a wider war in a region.

The fields here are among a handful of places in the world where researchers are trying to mimic the growing conditions expected to arise decades in the future as the air fills with heat-trapping gases and other pollutants from human activity. A network of pipes sprays extra carbon dioxide and a corrosive pollutant, ozone, into the air. Lamps and other equipment mimic future droughts and heat waves.

At the same time, the panel pointed out the enormous potential for agriculture to adapt to climatic change, with shifts in farming practices and with improved crop varieties. The Illinois scientists aim to test that potential.

23 24

“My country has some of the most polluted cities in the world. I would be a fool to buy a gasoline car when I can get an electric car that is just as good”

2625

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2827

“Students need real life examples of proper change in the world. My Model S is a tool of inspiration for young minds.”

27 28

As an earth science teacher at preparatory school I value my students opinions on the environment. I began to realize

that I could not possibly lecture my students about preserving the planet if I drove to school everyday in a gasoline car. After I got my Model S I could show my class that there are alternatives to the dangerous energy sources we use today. I can feel confident knowing that the example I set will make a positive change to the environment.

Now the tree faces a new threat: a swiftly changing climate. Temperatures are rising, and Forest Service researchers estimate that 97 percent of the white bark pine’s natural range will disappear from the United States by 2100.

Traditionally, conservation biologists have sought to protect endangered plants and animals where they live, creating refuges where species can be shielded from threats like hunting and pollution.

But a refuge won’t help the white bark pine, and so now scientists are pondering a simple but radical new idea: moving the trees to where they will be more comfortable in the future. Their plan calls for rebuilding white bark pine populations by planting seedlings and setting

controlled fires. Healthy forests of white bark pine, they argue, should be better able to withstand climate change. The trees may even spread northward as higher latitudes develop a suitable climate. But in 2007, Sally N. Aitken, a geneticist at the University of British Columbia, realized that she could test the idea.

One recent day, as the summer sun beat down, Dr. Leakey led a tour through 80 acres of corn, soybeans and millet. Pipes, hoses and electrical cables snaked through the plots, and high-technology equipment hummed inside garden sheds that cause earthquakes.

Hello, I’m Molly.

3029

JB StraubelChief Technical Officer

Jerome GuillanVice President, Sales

Gilbert PassinVice President, Manufacturing

The story of JB’s career started at a junkyard in Wisconsin, where, at the age of 14, he discovered a discarded electric golf cart and decided to rebuild it. Thus began a lifelong fascination with energy work and electric vehicles.

Jerome leads sales and service worldwide for Tesla. Jerome is focused on providing a delight-ful sales, delivery, and service experience which the Tesla cus-tomers are proud to recommend.

Gilbert brings 23 years of interna-tional automotive experience to Tesla. He has led some of the most high-profile divisions at Toyota, Volvo, Mack and Renault across North America and Europe.

29 30

Meet the Tesla Team

3231

Franz Von HolzhausenChief Designer

Jay VijayanChief Info Officer

Franz is responsible for driving the overall design direction of Tesla, and is charged with establishing a world class design com-petency for all future Tesla design concepts and production vehicles.

Jay champions IT as an enabler for Tesla and works with all the company’s groups to identify opportunities, structure, develop and deliver systems and solutions.

Last

Year

Kicked

Ass

Did I make mistakes? You betcha! What I wouldn’t give to have my 30-year-old self to be able to give my 20-year-old some valuable financial tips and advice on animals.

Millennials are sometimes seen as the unfortunate generation. It often seems that the baby boomers took always standing in line for what’s left just ahead of us.

But there’s nothing to be gained from moping about circumstances beyond your control -- those things just mean you’ll have to change tactics and work a bit harder. ahead faster than you thought

This is our 2014 Financial summary. We can’t wait to show you.

In my 20s, I knew everything. Scratch that. I thought I knew everything. My parents did their best to pass some of their wisdom on to me, but I was too proud to listen. And frankly, I thought I could handle adult life on my own.

Did I make mistakes? You betcha! What I wouldn’t give to have my 30-year-old self to be able to give my 20-year-old some valuable finan-cial tips and advice on animals.

Millennials are sometimes seen as the unfor-tunate generation. It often seems that the baby boomers took the best of everything, and Gen X is always standing in line for what’s left just ahead of us.

But there’s nothing to be gained from moping about circumstances beyond your control -- those things just mean you’ll have to change tactics and work a bit harder. My advice: Start with this agenda of 29 financial tips. If you make enough of them part

At their center, the people said, the investiga-tions are examining whether dealerships are in-flating borrowers’ income or falsifying employ-ment information on loan applications to ensure that anyone, no matter what their credit quality, can buy a car.

Some of the same dynamics — the seemingly insatiable demand for loans as the market heats up and the dwindling pool of qualified borrow-ers — that helped precipitate the 2008 mortgage crisis are now playing out, albeit on a smaller scale, in the auto loan market. Under pressure to generate more and more loans, salesman at some used-car dealers are suspected of getting inventive with cars.

If loan applications are falsified, leading borrowers to ultimately fall behind on their bills, that could spell trouble for investors, which include insurance compa-nies and public pension funds.

Here’s how 2014 stacks up .

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3635

For the yearNet salesPercent increaseOperating incomeIncome from uncosolidated operationsNet income

Per Common ShareEarning per share-dilutedEarnings per share-basicCommon dividends declaredClosing price, non-votiong shares-end of yearBook Value per share

At Year-EndTotal assetsCurrent debtLong-term debtShareholders equity

Other Financial MeasuresPercentage of net sales

Gross profitOperating income

Capital expendituresDepreciation and amortization

2014 2013 2012 2011 2010

$4,123.42.7%

550.5523.2

389.4

$ 2.912.941.39

69.0014.85

$4,449.5214.141,019.01,947.7

40.4%13.4%

$ 99.9106.0177.4

4,014.28.6%578.321.5

407.8

$ 3.043.071.27

64.5612.83

$4,165.4392.6779.2

1,700.2

40.3%14.4%

$ 110.3102.8132.2

$3,697.810.8%540.325.4

374.2

$ 2.792.821.15

48.7012.17

$4,087.8222.4

1,029.71,618.5

41.2%14.6%

$ 96.798.389.3

$3,336.84.5%509.825.5

370.2

$ 2.752.791.06

44.0111.00

$3,419.7100.4779.9

1,462.7

42.5%15.3%

$ 89.095.182.5

$3,192.10.5%466.916.3

299.8

$ 2.272.290.98

35.6810.19

$3,387.8116.1875.0

1,343.5

41.6%14.6%

$ 82.494.3

80.54

CONSOLIDATED INCOME STATEMENTfor the year ended November 30 (millions except per share data)

Net salesCost of goods sold

Gross profitSelling, general and administrative expenseSpecial chargesLoss on voluntary pension settlement

Operationg incomeInterest expenseOther income, net

Income from consolidated operations before income taxesIncome taxes

Net income from consolidated operationsIncome from unconsolidated operations

Net incomeEarnings per share —basicEarnings per share—diluted

35 36

3837

$4,123.42,457.6

1,665.51,075.0

25.015.3

550.553.32.2

499.4133.6

365.823.2

$ 389.0$ 2.94$ 2.91

2014 2013 2012

$4,014.22,396.4

1,617.81,039.5

——

578.354.62.4

526.1139.8

386.321.5

$ 407.8$ 3.07$ 3.04

$3,697.62,175.1

1,522.5982.2

——

540.351.22.3

491.4142.6

348.825.4

$ 374.2$ 2.82$ 2.79

Our

Contacts

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4039

Tesla Motors, Inc3500 Deer Creek Rd

45500 Fremont Blvd.Fremont, CA 94538

Phone: (650) 681-5000Fax: (650) 681-5101

www.teslamotors.com

ITO Tower, 11th Floor,Gustav Mahlerplein 76A,1082 MA, AmsterdamNetherlands+31 20 258 3916

2-23-8, Minami AoyamaTokyo, JapanTel: +81 3 6890 7700

Tesla Headquarters

Tesla Factory

Contact Tesla Motors

Website

Tesla Europe

Tesla Asia/Pacific

This book was printed on 100% recycled paper.