tsla-8k_20200129.htm
false 0001318605 0001318605 2020-01-29 2020-01-29

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549 

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 29, 2020 

 

Tesla, Inc.

(Exact Name of Registrant as Specified in Charter) 

 

  

 

 

 

 

Delaware

 

001-34756

 

91-2197729

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

 

 

3500 Deer Creek Road

Palo Alto, California 94304

(Address of Principal Executive Offices, and Zip Code)

 

(650) 681-5000

Registrant’s Telephone Number, Including Area Code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock

TSLA

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 


 

Item 2.02Results of Operations and Financial Condition.

 

On January 29, 2020, Tesla, Inc. released its financial results for the fiscal quarter and year ended December 31, 2019 by posting its Fourth Quarter and Full Year 2019 Update on its website. The full text of the update is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.

 

Description

 

 

99.1

 

Tesla, Inc. Fourth Quarter and Full Year 2019 Update, dated January 29, 2020.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 


 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

TESLA, INC.

 

 

 

By:

 

/s/ Zachary J. Kirkhorn

 

 

Zachary J. Kirkhorn

Chief Financial Officer

Date: January 29, 2020

 

 

tsla-ex991_340.pptx.htm

Slide 1

Q4 and FY2019 Update Exhibit 99.1

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Highlights 03 Financial Summary04 Operational Summary06 Vehicle Capacity 07 Core Technology08 Other Highlights09 Outlook10 Photos & Charts11 Financial Statements20 Additional Information25

Slide 3

2019 was a turning point for Tesla.  We demonstrated strong organic demand for Model 3, returned to GAAP profitability in 2H19 and generated $1.1B of free cash flow for the year. We achieved strong cash generation through persistent cost control across the business. Our pace of execution has also improved significantly, as we have incorporated many learnings from our experience launching Model 3 in the United States.  As a result, we were able to start Model 3 production in Gigafactory Shanghai in less than 10 months from breaking ground and have already begun the production ramp for Model Y in Fremont. None of this would be possible without strong demand for our products.  For most of 2019, nearly all orders came from new buyers that did not hold a prior reservation, demonstrating significant reach beyond those who showed early interest. Amazingly, this was accomplished without any spend on advertising.  As more people drive our cars and as the industry rapidly validates electrification, interest in our products will continue to grow. Higher volumes driven by Model Y and Gigafactory Shanghai, continued improvements in operating leverage, and further cost efficiencies should allow Tesla to ultimately reach an industry-leading operating margin.  $930M increase in our cash and cash equivalents in Q4 to $6.3B $1.0B operating cash flow less capex ("free cash flow") in Q4 Cash Model Y production ramp started in January 2020, ahead of schedule Increased Model Y all-wheel drive EPA range to 315 miles from 280 miles Record vehicle deliveries of 112,095 in Q4 Record Q4 storage deployment of 530 MWh; 26% solar growth QoQ Profitability $359M GAAP operating income; 4.9% operating margin in Q4 $105M GAAP net income; $386M non-GAAP net income (ex-SBC) in Q4 Operations S U M M A R Y H I G H L I G H T S 3 SBC = stock-based compensation expense

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F I N A N C I A L   S U M M A R Y (Unaudited) 4 ($ in millions, except percentages and per share data) Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 QoQ YoY Automotive revenues 6,323  3,724  5,376  5,353  6,368 19% 1%    of which regulatory credits 95  216  111  134  133 -1% 40% Automotive gross profit 1,537  751  1,016  1,222  1,434 17% -7% Automotive gross margin 24.3% 20.2% 18.9% 22.8% 22.5%      -31 bp    -179 bp Total revenues 7,226  4,541  6,350  6,303  7,384 17% 2% Total gross profit 1,443  566  921  1,191  1,391 17% -4% Total GAAP gross margin 20.0% 12.5% 14.5% 18.9% 18.8%        -6 bp     -113 bp Operating expenses 1,029  1,088  1,088  930  1,032  11% 0% Income (loss) from operations 414  (522) (167) 261  359  38% -13% Operating margin 5.7% -11.5% -2.6% 4.1% 4.9%   72 bp     -87 bp Adjusted EBITDA 1,039  155  572  1,083  1,175  8% 13% Adjusted EBITDA margin 14.4% 3.4% 9.0% 17.2% 15.9%    -127 bp   153 bp Net income (loss) attributable to common stockholders (GAAP) 140  (702) (408) 143  105 -27% -25% Net income (loss) attributable to common stockholders (non-GAAP) 345  (494) (198) 342  386 13% 12% EPS attributable to common stockholders, basic (GAAP) 0.81  (4.10) (2.31) 0.80  0.58 -28% -28% EPS attributable to common stockholders, basic (non-GAAP) 2.00  (2.90) (1.12) 1.91  2.14  12% 7% Net cash provided by (used in) operating activities 1,235  (640) 864  756       1,425  88% 15% Capital expenditures (325) (280) (250) (385)       (412) 7% 27% Free cash flow 910  (920) 614  371        1,013  173% 11% Cash and cash equivalents 3,686  2,198  4,955  5,338       6,268  17% 70% EPS = Earnings per share

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F I N A N C I A L   S U M M A R Y Revenue Profitability Cash In 2019, our revenue growth was positively impacted by a strong increase in vehicle deliveries.  Revenue growth was offset by higher lease mix*, Model 3 becoming a larger part of our mix, introduction of the Standard Range trims of Model 3, and adjustments to vehicle pricing.  These changes have resulted in a reduction to the average selling price (ASP) relative to 2018.  We do not expect ASP to change significantly in the near term, which means volume growth and revenue growth should correlate more closely this year.  We are positioned to accelerate our revenue growth further through increasing build rates in Gigafactory Shanghai and our Model Y production line in Fremont.  These production increases will allow for higher total vehicle deliveries and associated revenue.  GAAP gross profit of $4.1B remained essentially flat in 2019 compared to 2018.  Volume growth and successful cost reduction efforts were offset by normalization of ASP, mix shift towards Model 3 and a higher lease mix.   Sequentially, GAAP gross margin remained relatively flat in Q4 compared to Q3, while we ramped Model 3 production at Gigafactory Shanghai. While we saw an increase in operating expenses in Q4 (driven mostly by $72M of non-cash SBC expense related to one more 2018 CEO award operational milestone becoming probable), higher gross profit resulted in a 72bp sequential improvement of GAAP operating margin to 4.9% in Q4. Quarter-end cash and cash equivalents increased by $930M QoQ to $6.3B, driven by positive quarterly free cash flow of $1.0B. Capital expenditures increased sequentially due to investments in Gigafactory Shanghai and Model Y preparations in Fremont.  5 * Revenue on leased vehicles is recognized on monthly lease payments, and thus contribute less to total revenues in the quarter of delivery than sold vehicles

Slide 6

In Q4, the annualized total vehicle production rate in Fremont was just over 415,000 units, about the same rate as the factory under NUMMI reached in its peak year of 2006.  We achieved this production rate in spite of Model S/X running on a single shift and before the start of Model Y production.   Our finished vehicle inventory levels reached just 11 days of sales(1) at the end of Q4, the lowest level in the past 4 years.  Our Mobile Service fleet almost doubled in 2019 to 743 vehicles, and we continue to open new service locations globally. As customers are increasingly buying their Tesla vehicles online, vehicle deliveries grew 50% while our retail footprint remained unchanged with a stable total store count across 2019. Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 QoQ YoY  Model S/X production 25,161 14,163 14,517 16,318 17,933 10% -29% Model 3 production 61,394 62,975 72,531 79,837 86,958 9% 42%               Model S/X deliveries 27,607 12,091 17,722 17,483 19,475 11% -29%    of which subject to lease accounting 3,639 1,363 1,820 2,588 2,807 8% -23% Model 3 deliveries 63,359 50,928 77,634 79,703 92,620 16% 46%    of which subject to lease accounting — — 4,322 6,498 6,041 -7%   Global inventory (days of sales)(1) 19 30 18 17 11 -35% -42%               Solar deployed (MW) 73 47 29 43 54 26% -26% Storage deployed (MWh) 225 229 415 477 530 11% 136%               Store and Service locations 378 377 402 413 429 4% 13% Mobile service fleet 411 550 651 719 743 3% 81%               Supercharger stations 1,421 1,490 1,587 1,653 1,821 10% 28% Supercharger connectors 12,002 12,767 13,881 14,658 16,104 10% 34% 1 The industry reference for days of sales is calculated by dividing new car inventory by the trailing four quarters of deliveries and using 261 working days (source: Automotive News). 6 O P E R A T I O N A L     S U M M A R Y (Unaudited)

Slide 7

Model 3 deliveries by region V E H I C L E C A P A C I T Y Fremont The production ramp of Model Y started in January 2020.  Together with Model 3, our combined installed production capacity for these vehicles is now 400,000 units per year.  The ramp of Model Y will be gradual as we will be adding additional machinery in various production shops.  After such expansions are done by mid-2020, installed combined Model 3 and Model Y capacity should reach 500,000 units per year. We will start delivering Model Y vehicles by the end of Q1 2020.   Shanghai We have been gradually ramping local production of battery packs since late Q4 2019.  The rest of the Model 3 manufacturing processes are running as expected.  Due to strong initial customer response in China, our goal is to increase Model 3 capacity even further using existing facilities.   We have already broken ground on the next phase of Gigafactory Shanghai. Given the popularity of the SUV vehicle segment, we are planning for Model Y capacity to be at least equivalent to Model 3 capacity. Berlin-Brandenburg We are moving forward with our preparations near Berlin, which we have selected as the right place to build vehicles for the European market due to a strong manufacturing and engineering presence in Germany. The first deliveries from this factory are expected in 2021. Installed Annual Capacity Current Status Fremont Model S / Model X        90,000 Production Model 3 / Model Y   * 400,000 Production Shanghai Model 3       150,000 Production Model Y - Construction Berlin Model 3 - In development Model Y - In development North America Tesla Semi - In development Roadster - In development Cybertruck - In development * Model 3/ Model Y installed capacity in Fremont will extend to 500,000 by mid-2020 7

Slide 8

C O R E   T E C H N O L O G Y Autopilot & Full Self Driving (FSD) To date, Tesla vehicles have driven over 3 billion miles in Autopilot mode. As our fleet grows, Autopilot miles increase exponentially, adding yet more data to our neural net. All Tesla vehicles with our FSD computer have been updated with new software that can better detect new details in their environments, allowing us to show various lane markings, traffic lights, stop signs, cones as well as other vehicles and road users. Understanding the environment around a Tesla is key to enabling our cars to react to traffic lights and stop signs and take intersections through city streets.  We are currently validating this functionality before releasing to customers, and we look forward to its gradual deployment. Vehicle Software In Q4, we launched premium vehicle connectivity in the US for $9.99 (plus tax) per month. This enables our customers to stream music or videos, browse internet or see live traffic through an embedded connection.  We also introduced in-app purchases, where our customers can buy various software updates, such as basic Autopilot, FSD, acceleration boost and additional premium features.  Software will continue to play a growing role in our business model.  Battery & Powertrain Due to continued engineering progress of the Model Y all-wheel drive (AWD), we have been able to increase its maximum EPA range to 315 miles, compared to our previous estimate of 280 miles. This extends Model Y's lead as the most energy-efficient electric SUV in the world. In app purchases Electric SUV energy efficiency (EPA miles per kWh) 8 *Tesla estimate

Slide 9

O T H E R H I G H L I G H T S Energy Business  Energy storage deployment reached an all-time high of 530 MWh in Q4, which included the first deployments of Megapack, our new commercial-scale 3 MWh integrated storage system that is preassembled at Gigafactory Nevada as a single unit.  Since the introduction of this product, the level of interest and orders from various global project developers and utilities has surpassed our expectations.  In 2019, we deployed 1.65 GWh of energy storage, more than we deployed in all prior years combined.  In Q4, we deployed 54 MW of solar, 26% more than in the prior quarter. Where offered, subscription solar has grown significantly in Q4.  With a monthly subscription that can generate income from the first month of usage, there is no reason not to have solar panels installed.  Solarglass Roof In Q4, we continued to ramp both Solarglass Roof production as well as installations. In addition to Tesla installers, we have also partnered with several roofing companies to support installations to fulfill demand for Solarglass Roof.  After organizing several roofing company training days at our training homes in Fremont, we already demonstrated dramatically shorter installation times versus previous versions of this product. Solarglass tiles are made in our Gigafactory New York, and we are hiring hundreds of employees at this facility.  Solarglass Roof installation Energy storage deployed (in MWh) 9

Slide 10

O U T L O O K Volume Production ramp of Model Y in Fremont has begun, ahead of schedule. Model 3 production in Shanghai is continuing to ramp while Model Y production in Shanghai will begin in 2021. We are planning to produce limited volumes of Tesla Semi this year. Cash Flow Profitability Product For full year 2020, vehicle deliveries should comfortably exceed 500,000 units. Due to ramp of Model 3 in Shanghai and Model Y in Fremont, production will likely outpace deliveries this year. Both solar and storage deployments should grow at least 50% in 2020. We expect positive quarterly free cash flow going forward, with possible temporary exceptions, particularly around the launch and ramp of new products. We continue to believe our business has grown to the point of being self-funding. We expect positive GAAP net income going forward, with possible temporary exceptions, particularly around the launch and ramp of new products.  Continuous volume growth, capacity expansion, and cash generation remain the main focus. 10

Slide 11

P H O T O S & C H A R T S

Slide 12

F R E M O N T F A C T O R Y - M O D E L Y B O D Y S H O P 12

Slide 13

F R E M O N T F A C T O R Y - M O D E L Y B O D Y S H O P 13

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F R E M O N T F A C T O R Y - M O D E L Y B O D Y S H O P 14

Slide 15

March 2019 Prototype January 2020 Production vehicle M O D E L Y - 1 0 M O N T H S F R O M P R O T O T Y P E T O P R O D U C T I O N S T A R T 15

Slide 16

Model 3 in Fremont, CA Model 3 in Gigafactory Shanghai F R E M O N T   F A C T O R Y   L A Y O U T   V S .   G I G A F A C T O R Y   S H A N G H A I   L A Y O U T 16 Stamping Body in white (welding) Paint shop General Assembly (GA4) General Assembly (GA3) Stamping Body in white (welding) Paint shop General Assembly

Slide 17

Vehicle Deliveries (units) Net Income ($B)* K E Y   M E T R I C S   Q U A R T E R L Y  (Unaudited) 17 Operating cash flow ($B) Free cash flow ($B) * Attributable to Common Stockholders

Slide 18

K E Y   M E T R I C S   T R A I L I N G   1 2   M O N T H S   ( T T M ) (Unaudited) Vehicle Deliveries (units) Operating cash flow ($B) Free cash flow ($B) Net Income ($B)* 18 * Attributable to Common Stockholders

Slide 19

V E H I C L E   D E L I V E R I E S   &   F R E E   C A S H   F L O W (Unaudited) Model 3 ramped to 5,000/week (250,000/year run rate) at the end of Q2-2018 Operating cash flow ($B) Free cash flow ($B) Vehicle deliveries 19

Slide 20

F I N A N C I A L S T A T E M E N T S

Slide 21

Three months ending Year ending In millions of USD or shares as applicable, except per share data 31-Dec-18 30-Sep-19 31-Dec-19 31-Dec-18 31-Dec-19 REVENUES Automotive sales 6,074 5,132 6,143 17,632 19,952 Automotive leasing 249 221 225 883 869 Total automotive revenue 6,323 5,353 6,368 18,515 20,821 Energy generation and storage 372 402 436 1,555 1,531 Services and other 531 548 580 1,391 2,226 Total revenues 7,226 6,303 7,384 21,461 24,578 COST OF REVENUES           Automotive sales 4,659 4,014 4,815 13,686 15,939 Automotive leasing 127 117 119 488 459 Total automotive cost of revenues 4,786 4,131 4,934 14,174 16,398 Energy generation and storage 329 314 385 1,365 1,341 Services and other 668 667 674 1,880 2,770 Total cost of revenues 5,783 5,112 5,993 17,419 20,509 Gross profit 1,443 1,191 1,391 4,042 4,069 OPERATING EXPENSES           Research and development 356 334 345 1,460 1,343 Selling, general and administrative 668 596 699 2,835 2,646 Restructuring and other 5 — (12) 135 149 Total operating expenses 1,029 930 1,032 4,430 4,138 INCOME (LOSS) FROM OPERATIONS 414 261 359 (388) (69) Interest income 7 15 10 24 44 Interest expense (175) (185) (170) (663) (685) Other (expense) income, net (14) 85 (25) 22 45 INCOME (LOSS) BEFORE INCOME TAXES 232 176 174 (1,005) (665) Provision for income taxes 22 26 42 58 110 NET INCOME (LOSS) 210 150 132 (1,063) (775) Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 70 7 27 (87) 87 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS 140 143 105 (976) (862) Net income (loss) per share of common stock attributable to common stockholders           Basic 0.81 0.80 0.58 (5.72) (4.92) Diluted 0.78 0.78 0.56 (5.72) (4.92) Weighted average shares used in computing net income (loss) per share of common stock           Basic 172 179 180 171 177 Diluted 179 184 187 171 177 S T A T E M E N T O F O P E R A T I O N S (Unaudited) 21

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B A L A N C E   S H E E T (Unaudited) In millions of USD 31-Dec-18 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 ASSETS Current assets Cash and cash equivalents 3,686 2,198 4,955 5,338 6,268 Restricted cash  193 131 128 233 246 Accounts receivable, net 949 1,047 1,147 1,128 1,324 Inventory 3,113 3,837 3,382 3,581 3,552 Prepaid expenses and other current assets 366 465 570 660 713 Total current assets 8,307 7,678 10,182 10,940 12,103 Operating lease vehicles, net 2,090 1,973 2,070 2,253 2,447 Solar energy systems, net 6,271 6,242 6,201 6,168 6,138 Property, plant and equipment, net 11,330 9,851 10,082 10,190 10,396 Operating lease right-of-use assets — 1,253 1,248 1,234 1,218 Goodwill and intangible assets, net 350 348 481 537 537 MyPower customer notes receivable, net of current portion 422 413 400 398 393 Restricted cash, net of current portion 398 354 366 255 269 Other assets 572 801 843 820 808 Total assets 29,740 28,913 31,873 32,795 34,309           LIABILITIES AND EQUITY           Current liabilities           Accounts payable 3,405 3,249 3,134 3,468 3,771 Accrued liabilities and other 2,094 2,277 2,623 2,497 2,905 Deferred revenue 630 763 884 1,045 1,163 Resale value guarantees 503 480 527 441 317 Customer deposits 793 768 631 665 726 Current portion of debt and finance leases (1) 2,568 1,706 1,791 2,030 1,785 Total current liabilities 9,993 9,243 9,590 10,146 10,667 Debt and finance leases, net of current portion (1) 9,404 9,788 11,235 11,313 11,634 Deferred revenue, net of current portion 991 1,157 1,182 1,140 1,207 Resale value guarantees, net of current portion 329 211 61 38 36 Other long-term liabilities 2,710 2,476 2,656 2,676 2,655 Total liabilities 23,427 22,875 24,724 25,313 26,199 Redeemable noncontrolling interests in subsidiaries 556 570 580 600 643 Total stockholders' equity 4,923 4,606 5,715 6,040 6,618 Noncontrolling interests in subsidiaries 834 862 854 842 849 Total liabilities and equity 29,740 28,913 31,873 32,795 34,309           (1) Breakdown of our debt is as follows:           Recourse debt 7,081 6,517 7,813 7,882 7,263 Non-recourse debt 3,552 3,486 3,553 3,857 4,538 22

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Three months ending         Year ending In millions of USD 31-Dec-18 30-Sep-19 31-Dec-19 31-Dec-18 31-Dec-19 Cash Flows from Operating Activities Net income (loss) 210 150 132 (1,063) (775) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and impairment 497 530 577 1,901 2,154 Stock-based compensation 205 199 281 749 898 Operating cash flow related to repayment of discounted convertible notes — — — — (188) Other 124 68 204 453 665 Changes in operating assets and liabilities, net of effect of business combinations 199 (191) 231 58 (349) Net cash provided by operating activities 1,235 756 1,425 2,098 2,405 Cash Flows from Investing Activities Capital expenditures (325) (385) (412) (2,101) (1,327) Payments for the cost of solar energy systems, net (29) (25) (37) (218) (105) Purchase of intangible assets — — — — (5) Receipt of government grants — — 46 — 46 Business combinations, net of cash acquired (11) (76) — (18) (45) Net cash used in investing activities (365) (486) (403) (2,337) (1,436) Cash Flows from Financing Activities Net cash flows from debt activities (185) (19) (434) 37 378 Collateralized lease repayments (216) (83) (87) (559) (389) Net borrowings under Warehouse Agreements and automotive asset-backed notes 193 148 321 596 470 Net cash flows from noncontrolling interests - Auto 38 30 19 112 35 Net cash flows from noncontrolling interests - Solar (18) (28) 6 92 (76) Proceeds from issuances of common stock in public offerings — — — — 848 Other 76 71 96 296 263 Net cash (used in) provided by financing activities (112) 119 (79) 574 1,529 Effect of exchange rate changes on cash and cash equivalents and restricted cash (4) (12) 14 (23) 8 Net increase in cash and cash equivalents and restricted cash 754 377 957 312 2,506 Cash and cash equivalents and restricted cash at beginning of period 3,523 5,449 5,826 3,965 4,277 Cash and cash equivalents and restricted cash at end of period 4,277 5,826 6,783 4,277 6,783 S T A T E M E N T   O F   C A S H   F L O W S  (Unaudited) 23

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In millions of USD or shares as applicable, except per share data Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Net income (loss) attributable to common stockholders (GAAP) 140 (702) (408) 143 105 Stock-based compensation expense 205 208 210 199 281 Net income (loss) attributable to common stockholders (non-GAAP) 345 (494) (198) 342 386           Net income (loss) per share attributable to common stockholders, basic (GAAP) 0.81 (4.10) (2.31) 0.80 0.58 Stock-based compensation expense 1.19 1.20 1.19 1.11 1.56 Net income (loss) per share attributable to common stockholders, basic (non-GAAP) 2.00 (2.90) (1.12) 1.91 2.14 Shares used in per share calculation, basic (GAAP and non-GAAP) 172 173 177 179 180           Net income (loss) attributable to common stockholders (GAAP) 140 (702) (408) 143 105 Interest expense  175 158 172 185 170 Provision for income taxes 22 23 19 26 42 Depreciation, amortization and impairment 497 468 579 530 577 Stock-based compensation expense 205 208 210 199 281 Adjusted EBITDA (non-GAAP) 1,039 155 572 1,083 1,175 Total revenues 7,226 4,541 6,350 6,303 7,384 Adjusted EBITDA margin (non-GAAP) (1) 14.4% 3.4% 9.0% 17.2% 15.9%           Automotive gross margin (GAAP) 24.3% 20.2% 18.9% 22.8% 22.5% Total regulatory credit revenue recognized -1.1% -4.9% -1.7% -2.0% -1.6% Automotive gross margin excluding regulatory credits (non-GAAP) 23.2% 15.3% 17.2% 20.8% 20.9% R e c o n c I l I a t I o n   o f   G A A P   t o   N o n – G A A P   F I n a n c I a l   I n f o r m a t I o n (Unaudited) (1) Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Total revenues 1 24 In millions of USD 1Q-2013 2Q-2013 3Q-2013 4Q-2013 1Q-2014 2Q-2014 3Q-2014 4Q-2014 1Q-2015 2Q-2015 3Q-2015 4Q-2015 1Q-2016 2Q-2016 3Q-2016 4Q-2016 Net cash provided by (used in) operating activities (GAAP) 64 (38) 102 130 60 (2) (28) (86) (132) (160) (203) (30) (250) 150 424 (448) Capital expenditures (58) (41) (76) (90) (141) (175) (284) (369) (426) (405) (393) (411) (217) (294) (248) (522) Free cash flow (non-GAAP) 6 (79) 26 40 (81) (177) (312) (455) (558) (565) (596) (441) (467) (144) 176 (970) In millions of USD 1Q-2017 2Q-2017 3Q-2017 4Q-2017 1Q-2018 2Q-2018 3Q-2018 4Q-2018 1Q-2019 2Q-2019 3Q-2019 4Q-2019 Net cash (used in) provided by operating activities (GAAP) (70) (200) (301) 510 (398) (130) 1,391 1,235 (640) 864 756 1,425 Capital expenditures (553) (959) (1,116) (787) (656) (610) (510) (325) (280) (250) (385) (412) Free cash flow (non-GAAP) (623) (1,159) (1,417) (277) (1,054) (740) 881 910 (920) 614 371 1,013                           In millions of USD 1Q-2017 2Q-2017 3Q-2017 4Q-2017 1Q-2018 2Q-2018 3Q-2018 4Q-2018 1Q-2019 2Q-2019 3Q-2019 4Q-2019 Net cash provided by (used in) operating activities - TTM (GAAP) 56 (294) (1,019) (61) (389) (319) 1,373 2,098 1,856 2,850 2,215 2,405 Capital expenditures – TTM (1,618) (2,282) (3,150) (3,415) (3,518) (3,169) (2,563) (2,101) (1,725) (1,365) (1,240) (1,327) Free cash flow - TTM (non-GAAP) (1,562) (2,576) (4,169) (3,476) (3,907) (3,488) (1,190) (3) 131 1,485 975 1,078

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A D D I T I O N A L   I N F O R M A T I O N WEBCAST INFORMATION Tesla will provide a live webcast of its fourth quarter and full year 2019 financial results conference call beginning at 3:30 p.m. PT on January 29, 2020, at ir.tesla.com. This webcast will also be available for replay for approximately one year thereafter.   CERTAIN TERMS When used in this update, certain terms have the following meanings. Our vehicle deliveries include only vehicles that have been transferred to end customers with all paperwork correctly completed. Our energy product deployment volume includes both customer units installed and equipment sales; we report installations at time of commissioning for storage projects or inspection for solar projects, and equipment sales at time of delivery. "Adjusted EBITDA" is equal to (i) net income (loss) attributable to common stockholders before (ii) interest expense, (iii) (benefit) provision for income taxes, (iv) depreciation, amortization and impairment and (v) stock-based compensation, which is the same measurement for this term pursuant to the performance-based stock option award granted to our CEO in 2018. NON-GAAP FINANCIAL INFORMATION Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis to supplement our consolidated financial results. Our non-GAAP financial measures include non-GAAP net income (loss) attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders on a basic per share basis, Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and non-GAAP automotive gross margin. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well as comparisons to the operating results of other companies. Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations because it allows investors greater transparency to the information used by Tesla management in its financial and operational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided above.   FORWARD-LOOKING STATEMENTS Certain statements in this update, including statements in the “Outlook” section; statements relating to the development, production, volumes, demand, deliveries, pricing, features and/or timing of existing and future Tesla products and technologies such as Model 3, Model Y, Tesla Semi, Cybertruck, Tesla Roadster, Autopilot and Full Self Driving features, in-vehicle software features, and our energy products such as Megapack, Solarglass Roof and subscription solar; statements regarding market opportunities for Tesla products and services; statements regarding growth in service and repair capabilities; statements regarding revenue, expenses, cash availability and generation, cash flow, gross and operating margin, spending, and profitability targets; statements regarding productivity improvements, cost reductions and capacity expansion plans; statements regarding construction, expansion, ramp and/or hiring at the Fremont Factory, Gigafactory Shanghai, Gigafactory New York and a planned Gigafactory in Berlin, Germany, including cost, timing and output expectations, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the risk of delays in the manufacture, production, delivery and/or completion of our vehicles and energy products and product features, including Model 3 and our autonomous driving features; our ability to grow our production, sales, delivery and servicing capabilities, and manage future growth effectively, especially internationally; consumers’ willingness to adopt electric vehicles generally and our ability to design and grow simultaneous and separate market acceptance of and demand for our vehicles, including future vehicle models such as Model Y; the ability of suppliers to meet quality and part delivery expectations at increasing volumes, especially with respect to our high-volume models; our ability to sustain and further grow our ramp of battery cell, energy product and product component production at Gigafactory Nevada; our ability to ramp Gigafactory Shanghai in accordance with our plans; any failures by Tesla products to perform as expected or if product recalls occur; our ability to continue to reduce or control manufacturing and other costs; competition in the automotive and energy product markets generally and the alternative fuel vehicle market and the premium vehicle markets in particular; our ability to execute on our evolving strategy for product sales, service, charging and other customer infrastructure; the unavailability, reduction or elimination of government and economic incentives for electric vehicles and energy products; potential difficulties in performing and realizing potential benefits under definitive agreements for our existing and future manufacturing facilities; our ability to attract and retain key employees and qualified personnel; our ability to maintain the security of our information and product systems; our compliance with various regulations and laws applicable to our operations and products, which may evolve from time to time; risks relating to our indebtedness and financing strategies; and adverse foreign exchange movements. More information on potential factors that could affect our financial results is included from time to time in our Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the SEC on October 29, 2019. Tesla disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise. 25

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