1. automotive and vehicles
2. electric vehicles

TESLA
TOMORROW
THE FUTURE OF TESLA MOTORS
December 14, 2010
University of Wisconsin - Madison
Wisconsin School of Business - MBA
Team A6
Danielle Boyke
Jia Cheng
Jared Clevers
Michael Schroeder
Karen Strupp
“On my honor, I have neither given nor received unauthorized aid in completing this academic work.”
TABLE OF CONTENTS
EXECUTIVE SUMMARY
COMPANY OVERVIEW
History
Strategic Partnerships
Management
Manufacturing Infrastructure
INDUSTRY ANALYSIS
Plug-in EV Market
ACCOUNTING AND FINANCE
Accounting Practices and Reporting
Capital Structure
Financial Performance
Financial Disclosures
Financial Health
MARKETING 8
Competitive Analysis and Positions
Target Market
Product
Promotion
Price
Distribution Channels
Service and Repair
RECOMMENDATIONS
FINAL COMMENTS
APPENDICES
Appendix A: SWOT Analysis
Appendix B: Tesla Company History
Appendix C: Strategic Partnerships
Appendix D: Tesla Executive Team
Appendix E: Manufacturing Infrastructure
Appendix F: SWOT Analysis of Model S Manufacturing Model
Appendix G: Industry analysis
Appendix H: Market Penetration Forecasts
Appendix I: The EV and PHEV Market
Appendix J: Historic Income Statement Information
Appendix K: Historic Balance Sheet Information
Appendix L: Historic Cash Flow Information
Appendix M: Comparable Companies Used in Financial Analysis
Appendix N: Ratio Analysis
Appendix O: Department of Energy (DOE) Loan Facility
Appendix P: ZEV Credits
Appendix Q: Future Contractual Obligations
Appendix R: Historical Stock Performance and Wall Street Analysis
Appendix S: Capital Structure Summary
Appendix T: Wall Street Consensus (Implied Cost of Equity)
Appendix U: Cost of Capital Calculations
Appendix V: Stock Price Sensitivity Analysis for Bullish and Bearish Outlooks
Appendix W: Financial Statement Forecasts
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TABLE OF CONTENTS (CONTINUED)
Appendix X: Capital Expenditure Summary
Appendix Y: Model S Sales Forecasts
Appendix Z: Competitor Analysis
Appendix AA: Tesla Roadster and Model S Images
Appendix AB: The Tesla Brand Community
Appendix AC: Model S Battery Technology
Appendix AD: Fuel/ Energy Costs/Mile of Luxury Sedans vs. Roadster and Model S
Appendix AE: Range, Battery Pack Costs, and Price/ Mile for EVs
Appendix AF: Luxury Models $50-70,000 and Tesla Luxury Model Sales Projections
Appendix AG: Pricing Model
Appendix AH: Tesla Store Locations
Appendix AI: Recommended Model S Marketing Strategy
Appendix AJ: Citations for Written Report
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EXECUTIVE SUMMARY
Tesla Motors (Tesla) develops, manufactures, and sells fully electric high-performance vehicles (EVs) as
well as electric powertrains. The company‘s primary sources of revenue have been sales of the Telsa
Roadster and the electric powertrain development services it provides to other automobile manufacturers.
Tesla had its initial public offering (IPO) on July 2, 2010 and is now traded on the NASDAQ Exchange as
TSLA. The company is developing a new vehicle, the Model S, which will go into production in mid-2012.
After a thorough analysis of the company, we have determined that the future of Tesla Motors depends
primarily on the success of the Model S. Based on this conclusion, we recommend:

Tesla must implement a marketing campaign around the Model S launch.

If battery pack prices fall, eliminate the Model S 160-mile option and reduce the prices of the 230and 300-mile options to increase Tesla‘s competitive advantage.

Expand service and repair infrastructure by negotiating a service agreement with Toyota.

Tesla should develop additional models on the Model S powertrain and secure the EV niche in the
luxury vehicle market before committing resources to develop and manufacture economy EVs.
COMPANY OVERVIEW
History. Tesla was founded in 20031 with the idea that the same lithium-ion technology used in laptops
could be used to create a fully electric vehicle that is not only eco-friendly but also attractive and fun to
drive. The company began raising venture capital in the spring of 2004 and by the end of that year had
designed its first vehicle.2 Tesla produced the first Roadster in 2008 and has sold approximately 1,350 of
these vehicles as of September 30, 2010.3 In January 2010, Tesla secured a long-term Department of Energy
(DOE) Loan Facility to finance development of EVs, powertrains, and manufacturing facilities. The DOE
loan facility, along with cash generated from the IPO has allowed for the continuing development of the
Model S, the purchase and retooling of a manufacturing facility in Fremont, CA, and the expansion of the
powertrain facility in Palo Alto, CA.4 (Appendix B)
Strategic Partnerships. In March 2008 Tesla entered into a relationship with Daimler AG to develop battery
packs and chargers for Daimler‘s Smart Fortwo EV program. Subsequently, Tesla entered into an additional
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development agreement with Daimler for the Class-A EVs, as well as agreements with Toyota to develop a
powertrain system for an electric RAV4 prototype. Tesla also maintains a relationship with Panasonic for
joint development of battery packs. Panasonic, Toyota, and Blackstar Investco (an affiliate of Daimler) all
have stock ownership in Tesla.5 (Appendix C)
Management. Tesla‘s management team is led by Chairman, Product Architect, and CEO Elon Musk and an
upper management team selected from top automotive and technology firms. Musk is a visible champion for
the company and is almost a symbol of the brand, as well as being a primary shareholder. Tesla‘s strategic
partnerships and their DOE Loan Facility are dependent on Musk remaining in his role at Tesla and retaining
a percentage of ownership in the company until at least a year after the conclusion of the Model S Facility
Project.6 (Appendix D).
Manufacturing Infrastructure. Tesla has more than 150 suppliers around the world, many of which are
single source suppliers. Those suppliers, 30% located in North America, 40% percent in Europe and 30% in
Asia, provide over 2000 parts to Tesla. For the production of the Roadster, the company uses a multi-site
manufacturing process. 7 In mid-2010, Tesla purchased a factory in Fremont, CA from New United Motor
Manufacturing, Inc. (NUMMI), which was a joint venture between Toyota and General Motors. Tesla is
retrofitting the new facility to initially manufacture approximately 20,000 Model S vehicles each year, which
would be approximately 5% of the plant‘s manufacturing capacity. With production of the Model S and
future Roadster models scheduled for mid-2012, Tesla will use a highly integrated manufacturing approach,
even negotiating with suppliers to manufacture products on site to use the excess capacity. The integrated
approach may alleviate Tesla‘s dependence on supplier performance. 8 (Appendices E-F)
INDUSTRY ANALYSIS
Plug-in EV Market. Global automobile sales forecasts project divergent market penetration rates of
approximately 0.6 – 0.9% for PHEVs, by 20159 10, 9% by 202011, and 22% by 203012 for EVs and plug-in
hybrid electric vehicles (PHEV). (Appendix I) Market penetration will depend on battery pack costs,
charging infrastructure, competing technologies, oil prices, manufacturer investments in EV and PHEVs, and
consumer skepticism of EVs and PHEVs. To facilitate growth, the U.S. government has invested $5 billion
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through the American Recovery and Reinvestment Act and the DOE‘s Advanced Technology Vehicle
Manufacturing (ATVM) Loan Program. 13 The DOE aims to increase the public accelerated charging stations
from 500 to 20,500 in 2012 and reduce battery pack costs by 70% by December 2015. Two predominant
inhibitors of EV/PHEV market penetration are battery pack costs and range anxiety. 14 15 16 Recent reported
battery pack costs are as much as 30% lower than 2009/early-2010 17projections, potentially reducing the
costs of EV/PHEVs.18 Reduced battery pack costs may enable EV/PHEV manufacturers to produce vehicles
with increased all-electric range, increasing EV/PHEV market penetration by making EV/PHEV all-electric
ranges more competitive with ranges for internal combustion engine (ICE) vehicles. (Appendix G) The
increased capital invested in EV/PHEV technology and infrastructure has made electricity a more viable
alternative fuel for vehicles in the near-term.19 However, even with the projection that battery pack costs will
decrease rapidly and thereby enable manufacturers to develop EV/PHEVs with greater all-electric ranges,
reports suggest EV/PHEVs will likely be a ―second‖ car until 2015.20 21(Appendices G-I)
ACCOUNTING AND FINANCE
Accounting Practices and Reporting. Tesla follows Generally Accepted Accounting Principles for
financial reporting and has received unqualified opinions on its annual reports from Pricewaterhouse Coopers
LLC. We have analyzed audited financial information from 2007-2009, as well as non-audited information
from the nine months ending September 30, 2010 as reported in Tesla‘s 10-Q. We think that the quality of
the financial reporting is adequate and transparent and that, due to the extensive changes in the company
during 2010, it is important to include the non-audited data for comparison.22 (Appendices J-L) Tesla uses
the straight-line method for calculating depreciation, revenues on lease vehicles, stock based compensation,
and development compensation and costs. The company uses the first-in, first-out (FIFO) method to account
for inventories, which are valued at lower of cost or market. Audi 23, BMW24 and Quantum25 also use the
FIFO method, whereas Toyota26 uses the LIFO method for valuing inventories. Tesla offers leasing options
on its vehicles, but does not offer credit sales, thus all accounts receivables are trade receivables from their
development services. Tesla maintains warranty reserves to fund potential manufacturer covered warranty
repairs on its vehicles, which is consistent with the other automotive companies.27 (Appendix M)
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Capital Structure. Tesla‘s capital structure has changed over the past three years. At the end of 2007 and
2008, the company had a negative stockholders‘ equity balance; but by paying off notes payable and issuing
preferred stock in 2009, the company posted a positive total stockholders‘ equity in that year. Its current
capital structure is 29.14% debt to total equity and 22.57% debt to total capital. This structure most closely
mirrors battery manufacturing company Ener1 (28.62%), but falls far below BMW (308.13%), Toyota
(120.79%), and Quantum (93.71%). (Appendix N) Tesla‘s primary source of debt is the $465M DOE Loan
Facility, of which is $56.6M has been drawn out by Tesla. Interest payments on the DOE loans will begin in
2012. Clauses within the DOE Loan facility require Tesla to maintain certain levels of restricted cash.28
(Appendix O)
Financial Performance. Tesla began earning revenue in 2007, posting $73,000 of powertrain sales. It began
selling vehicles in 2008, increasing sales revenue to $14.74M in that year. Tesla also earns revenues by
selling their Zero Emission Vehicle (ZEV) Credits to other companies. (Appendix P) In 2009 Tesla earned a
gross margin on its sales of 9.7%, and this has increased to 24.12% in the first nine months of 2010. On the
other hand, their operating margin has been volatile over the past three years, at -427.64% in 2008, -46.36%
in 2009, and -118.31% in the first three months of 2010. The 2009 high margin was due to recognizing
revenues of Roadster sales that were reserved in 2008. The company posted a net loss in each of these years.
Negative operating margins are consistent with the battery companies we analyzed, but not with the
automotive companies. Negative operating margins are not sustainable over time and Tesla will need to
increase future sales revenues to cover operating costs without additional financing.29
Financial Disclosures. In March 2010, Tesla changed how it recognizes the development services it
provides to other companies and now shows this income as sales revenues, instead of as an offset to R&D.
This shows an increased focus on accounting for development services as a separate source of revenue for
the company. Tesla also has future contractual liabilities which are not noted on the financial statements,
including the purchase of the NUMMI facility and a purchase agreement with Lotus (Appendix Q). Tesla
does not pay dividends and has disclosed in the financial statements that it has no intention to do so in the
near future30.
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Financial Health We have a reserved but positive outlook pertaining to the solvency and future financial
performance of Tesla that should translate into positive earnings and stock prices. As Tesla is a start-up with
a significant cash burn rate, the $188.8M it raised in its IPO, the $50M raised from the private stock
placement with Toyota, conversion of preferred equity to common equity, and the $30M recent investment
from Panasonic31 were vital for the company‘s continued operations. In addition, the $465M DOE loan
facility is essential to Tesla‘s capital structure as it allows access to a large amount of inexpensive funds until
the company starts generating positive cash flow from operations in 2012. Although Tesla will have a
comfortable debt to equity ratio of 32.0% at the end of 2010, it will burn through $67.2M of cash in 2011 and
increase its outstanding debt from $91.5M to a projected peak of $392.5M in 2013. The years 2011 and 2012
are critical for the company financially, but we expect Tesla will likely avoid needing to raise additional
equity because cash and restricted cash ($116M at year end 2011) and working capital are all adequate, even
if the company has a short delay in Model S sales. If the company cannot begin to manufacture and sell the
Model S until 2013, the $129M in gross profit projected in 2012 will need to be covered by a combination of
the $116M in cash and raising additional equity. We calculated the weighted average cost of capital by first
backing into the cost of equity (Ke) based on Wall Street consensus expected free cash flows to equity, as
well as the current stock price, to get an implied cost of equity of 10.87% and resulting beta of 0.98. This
beta makes sense as the stock should co-vary with the market, but the cost of equity is too low in our opinion
because of the execution and technology risks going forward. We believe that current investors are more
bullish than the Wall Street consensus, which we based on only two firms, so we increased the expected cash
flows and again backed into the Ke and arrived at 12.22%. This gave us a WACC of 9.00% based on our
target capital structure in 2015. Revenues and capital expenditures were derived using Wall Street estimates
and our expectations. We computed bullish and bearish cases on the company and arrived at a ten year target
stock price of $78 and $46, respectively, both of which are above the current $32 price. Overall, the company
is well capitalized with large institutional equity holders and with the safety net of the DOE Loan Facility. If
the company needs to raise more capital in 2011 we find it highly probable that the common stock equity
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proceeds will be at or higher than the current share price given the companies expected future cash flows.
(Appendices R-Y).
MARKETING
Competitive Analysis and Position. Tesla is currently positioned as a high-tech automaker that sells luxury
EVs and electric powertrains. The company‘s competitive differentiation is that it delivers the most
environmentally responsible vehicles on the market with all of the benefits of a premium car: speed,
handling, comfort, and fun. Furthermore, Tesla‘s Silicon Valley culture and Apple retail approach have
helped position the company as innovative, independent, and hip.32 Tesla competes within the overall
automobile market and within the ―green‖ car market, which includes EVs, PHEVs, and hybrid vehicles. Our
marketing analysis and recommendations focus on the launch of the Model S, and we have identified Audi
and BMW as Tesla‘s primary competitors in the luxury category. We have also included the Toyota Prius in
our analysis because it is the most popular vehicle in the hybrid market and has set the standard for green
vehicles. Finally, it is important to note that almost all major automakers are launching or preparing to launch
electric and/or hybrid vehicles in a wide-range of price categories, and we expect the EV market to become
very competitive in the next five years. (Appendices A and Z)
Target Market. Because of the high cost of the Roadster, Tesla‘s target market has been rather small.
Owners are often referred to as ―eco-hipsters,‖33 ―affluent environmentalists‖34 or ―rich early adopters.‖35
With the goal of selling 20,000 Model S vehicles per year initially, Tesla must target a larger segment of
consumers who are both interested in functionality and performance and are also environmentally and
politically conscious.36 According to the IPO, Tesla believes that the ―combination of functionality,
performance, style, energy efficiency and overall cost of ownership of the planned Model S will draw buyers
from several market segments, including the lower, medium and upper premium sedan classes.‖ 37 According
to a GE consumer survey,38 the EV market can be divided into three segments: 1) drivers who see EVs as
symbolizing their commitment to the environment, 2) drivers who ―see the technology as simply ‗cool‘‖ —
representing cutting edge innovation that puts them ahead of the pack,‖39 and 3) frugal drivers who see EVs
as a way to reduce travel costs. The ideal target market for the Model S will include consumers from segment
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one and/or two who can afford luxury vehicles. Furthermore, the Model S will also appeal to consumers who
use brands for self-enhancement, self-verification, and/or self-construal purposes,40 presenting an
environmental but also hip, trendy, and independent image to themselves and others. Finally, the ideal Model
S consumer is someone who will embrace the role as a member of a brand community41 and will become a
Tesla Enthusiast. (Appendix AB)
Product. Tesla‘s battery pack technology is critical to the company‘s positioning and competitive
differentiation. The low cost of the battery pack allows Tesla to not only design cars with battery ranges
greater than the competition but also place equal emphasis on design, performance, and energy efficiency.
(Appendix AC) The Model S is a premium electric sedan offering more cargo space than typical sedans with
seating for five adults and two children and a second cargo area under the hood. (Appendix AA) Consumers
can choose a battery pack that provides 160, 230, or 300 miles per charge, and the Model S can be plugged
into nearly any outlet for recharging. The car takes less than 6 hours to recharge from empty or 45 minutes
with a QuickCharge.42 While this sedan offers comfort, safety, utility, and zero emissions, its performance
(0-60 in 5.6 seconds), delivers on Tesla‘s promise that EVs are fun to drive. Compared to the competition,
the Model S is the only luxury EV that can be classified as a full-sized sedan. The Model S fills a void in the
luxury EV market, appealing to consumers who want a stylish, efficient, fun-to-drive sedan.
Promotion. To date, Tesla has relied primarily on the internet, word of mouth, and trade shows to promote
the Roadster.43 Tesla acknowledges that, ―To further promote our brand, we may be required to change our
marketing practices, which could result in substantially increased advertising expenses, including the need to
use traditional media such as television, radio and print.‖44
Product Endorsements: While Tesla does not have any formal endorsement contracts with celebrities, Jay
Leno, Matt Damon, and Leonardo DiCaprio are just a few who have purchased a Roadster. Roadster owners
also include prominent, entrepreneurial businesspeople including Sergey Brin (Co-founder of Google, owns
two Roadsters), Michael Dell (founder and CEO of Dell), Jay Adelson (Chairman of digg), and Dean Kamen
(Segway investor).45 The Roadster was also featured in the movie Iron Man.
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The Tesla Brand Community: One of the greatest strengths of the Tesla brand is the community of
enthusiasts who directly and indirectly promote the brand. Tesla brand enthusiasts include both Roadster
owners in 30 countries and consumers who aspire to own a Tesla car. These enthusiasts connect with each
other electronically and in person at Tesla events around the world. (See Appendix AB)
Product Reviews and Publicity: Since launching the Roadster, Tesla has received over 650 significant press
mentions,46 which have been overwhelmingly positive. Tesla has been featured in mainstream media such as
Car and Driver and The Wall Street Journal, as well as in high-tech and design-focused publications such as
Wired, Wallpaper*, and Fast Company, contributing to Tesla‘s hip, innovative, Silicon Valley image.
Price. The Tesla Roadster currently sells for $109,000. Tesla has announced that the base Model S will sell
for $49,500 (after a $7,500 federal government subsidy.) The two Model S vehicles with extended battery
packs will likely cost $60,000 and $70,000 after federal subsidies. Thus, the Model S price range of $50,000
- $70,000 will be competitive with Audi and BMW EVs and non-EVs. Tesla‘s strategy to compete in the
luxury market may buffer the Model S from the potentially slow EV/PHEV market penetration rate because
these consumers can absorb the higher initial costs of an EV. If battery pack costs reduce to the estimated
low range of $200/kWh, Tesla could use a pricing strategy for ―Model S 2.0‖ similar to Apple, either
reducing sales prices of all models or eliminating base models and reducing each of the higher models to the
price tier below. (Appendices AC- AG)
Distribution Channels. Unlike other automobile manufacturers, Tesla sells vehicles over the internet and at
Tesla-owned stores in 31 cities worldwide. Tesla plans to have a total of 50 stores, opening the additional
stores to coincide with the Model S rollout. (Appendix AH) In 2010, Tesla hired George Blankenship,
formerly of Apple, as its vice president of design and store development. "This is about technology,
innovation, and a great pipeline of products that need to be explained to the customer" he told
Fastcompany.com.47 Blankenship‘s strategy is to put Tesla showrooms in the middle of popular retail
districts, mimicking the strategy of high-tech companies like Apple, and completely revolutionizing the
typical dealership model. This retail model will allow Tesla to control the customer experience in each of its
stores, providing the necessary customer service for a high involvement purchase such as an EV.
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Furthermore, the in-store experience can confirm the emotional appeal of a Tesla vehicle, making customers
already feel part of a cool, hip, and exclusive brand community. However, this unproven model is not risk
free. Tesla will not be able to utilize existing franchise sales systems from dealers, and this model will make
it more costly and time-consuming for Tesla to expand distribution.
Service and Repair. Tesla will also face difficulties with post-sale customer service as it increases sales
volume. Currently Tesla sends mobile service technicians, known as Tesla Rangers, to individual customers
to service vehicles if they are not located near one of Tesla‘s stores, which also serve as repair facilities. This
model will become much more costly with the increase of Tesla vehicles in circulation and as vehicle
ownership spreads away from their store locations. Even though EVs require much less maintenance than
ICEs, customers may hesitate to buy a Model S if they are not confident in the pre-sales service provided at
Tesla stores. The process for repair and service may be a deterrent for consumers when deciding if they
would like to purchase a Tesla vehicle.
RECOMMENDATIONS
Tesla must implement a marketing campaign around the Model S launch. Until the Model S is available
to test drive out of showrooms, we recommend that Tesla continue with the word-of-mouth strategy
described in our marketing analysis. However, based on our evaluation of the Model S target market and
competitive differentiators, we recommended that Tesla implement a full-scale marketing campaign to
launch the Model S when it is in full production. Our four-step approach includes 1) Promotional Campaign
(TV and print advertising), 2) Utilizing the Tesla Brand Community to Engage New Consumers, 3) In-Store
Experience, and 4) Welcoming New Owners to the Tesla Community. (Appendix AI)
If battery pack prices fall, eliminate the Model S 160-mile option and reduce the prices of the 230- and
300-mile options to increase Tesla’s competitive advantage. Tesla already has a competitive advantage in
range and cost, which are ultimately related. Even if Tesla‘s Model S battery pack cost reduces to $200/kWh,
Tesla should resist reducing the sales price of the base model. The Model S base model provides less
competitive advantage in range over economy EVs and will still cost 72% more than the least expensive
economy EVs. Employing a pricing strategy similar to Apple, eliminating the base model and reducing the
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230-mile model to $49,500 and the 300-mile model to $59,500 will 1) maintain the luxury positioning of the
Model S and 2) provide a product with range superior to other EVs, equal to PHEV extended ranges, and
competitive with non-EV and non-PHEV automobiles. (See appendix AG)
Expand service and repair infrastructure by negotiating a service agreement with Toyota. We believe
that consumers may view the ―Tesla Rangers‖ and the in-store service strategy as a reason not to purchase a
Tesla car. We propose that Tesla negotiate an agreement with Toyota to allow customers to bring their Tesla
vehicles to Toyota repair facilities that are set up to service the electric RAV4, which uses a Tesla
powertrain.
Tesla should develop additional models on the Model S powertrain and secure the EV niche in the
luxury vehicle market before committing resources to develop and manufacture economy EVs. Tesla
has announced it intends to expand top-hat manufacturing on the Model S powertrain to potentially 50,000
units each year instead of developing and manufacturing an economy or ―Gen-III‖ EV for sale in 2015. Tophat manufacturing will expand Tesla‘s products in the luxury vehicle market, potentially securing the luxury
EV niche. In addition, developing top-hat models for the Model S powertrain will likely 1) cost less in R&D
expenses than developing an entirely new powertrain for an economy EV and 2) lower costs of future
manufacturing expansions, since expanding the Model S manufacturing line will be less costly than retooling
the line to produce an entirely new vehicle. Postponing R&D and capital expenditures for production of the
―Gen-III‖ economy EV model will ease the burden on cash flows Tesla is likely to incur in the next few
years.
FINAL COMMENTS
Tesla is still a young emerging company, but it has created strategic partnerships that have ensured its
survival thus far, brought in top leaders from the automotive and technology industries to run its operations,
and given itself a competitive advantage through its superior battery technology and product design. If it can
see its way through a successful Model S launch, meet projected sales, and increase its operating margin,
Tesla will be well on its way to its mission of increasing the number and variety of electric cars available to
mainstream consumers by creating cars that are fun to drive and environmentally responsible.48
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Appendix A: SWOT Analysis
The company’s IPO and recent 10-Q discuss many of Tesla’s strengths, weaknesses, opportunities, and
threats to the company. Our SWOT analysis includes those that we have deemed most critical to the
company’s success and particularly the success of the Model S.
Strengths
First-to-market: Tesla’s Roadster was the first federally-compliant highway-capable electric vehicle
launched in both the U.S. and Europe, setting Tesla up to be known as the electric vehicle company.
Partnerships: Tesla’s partnerships with Toyota, Daimler AG, and Panasonic have allowed the company the
opportunity to support their battery technology research and development. Additionally, Tesla believes
that cooperation with other car manufacturers advances the electric vehicle cause.
Focus on design, performance, and efficiency: Tesla is the only automaker that places equal emphasis on
zero emissions and the performance and aesthetics of the car. This allows Tesla’s cars to appeal to a large
segment of consumers.
Battery Technology: Tesla has superior battery technology to other manufacturers in the industry.
Weaknesses
Model S will not launch until 2012: There is currently a lot of hype surrounding EVs, and other than
Roadster sales and the Model S waiting list, Tesla is unable to turn this hype into sales. Additionally, the
delay of the Model S allows competitors to launch more affordable EVs before Tesla.
Lack of Brand Name Recognition: Compared to most of its competitors, Tesla is a not a well-known brand in
the auto industry. As Tesla attempts to sell EVs to a more mainstream target market, name recognition will
become more important.
Consumer behavior changes required for EV purchase: EVs require greater consumer behavior changes than
hybrid or plug-in hybrid vehicles. For instance, it can take several hours to recharge an EV battery, whereas
it only takes a few minutes to fill a car with gas.
Opportunities
Sales outside of the U.S., particularly Europe, Asia, and Canada: Tesla has been very successful in European
markets, particularly Germany, and the company sees great potential in Asian and Canadian markets.
Government regulations and economic incentives: Since 2008, the DOE has invested $5B in EV/PHEV
technologies. The DOE objectives include reducing battery pack costs 70% by 2015 (this estimate assumes
average battery pack cost of $600 - $700/kWh around 2008/2009), improving the public charging
infrastructure from 550 level 2 or level 3 charging stations (of which 426 are in California) to 20,550
nationwide by December 2011, and reducing the retail price to consumers by offering a $7,500 subsidy to
consumers purchasing EV/PHEV s. The government intends to accelerate consumer adoption of EVs/PHEVs
by reducing prices and making owning EVs/PHEVs more convenient to consumers.
Source: United States Department of Energy. The Recovery Act: Transforming America’s
Transportation Sector Batteries and Electric Vehicles. July 14, 2010
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The Tesla Brand Community: Tesla has a strong and established brand community of owners and hopeful
owners who are very enthusiastic about the brand. Tesla should manage and leverage this community to
drive sales of the Model S.
Innovative Sales Channel Model: If implemented properly Tesla’s “Apple store model” will provide a unique
and differentiating customer experience. Tesla has the opportunity to reframe the car buying experience.
Threats
Continued economic downturn: If the economy does not improve, Tesla will have difficulty selling the Model
S which could severely impact the success of the entire company.
Delays in the launch of the Model S: Any further delay of the Model S could erode consumer confidence and
allow more competitors to enter the market before Tesla.
Consumer preference for hybrids and plug-in hybrids: Tesla only sells electric vehicles. If consumers prefer
hybrid technology rather than EV technology, Tesla is likely to fail.
Termination of strategic partnerships or inability to establish new partnerships: Tesla’s R&D has depended
on revenue provided by strategic partnerships. Without this revenue, Tesla may not be able to fund future
R&D.
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Appendix B: Tesla Company History
Financing Milestones
Company Milestones
2003
2003
July 2003: Tesla Motors incorporated; Martin
Eberhard CEO
2004
Spring 2004: Receives venture capital funding,
including $6.3M from Elon Musk
2005
2004
Spring 2004: Elon Musk becomes Chairman of the
Board
December 2004: Design for “Dark Star” (ie Roadster)
is chosen; Designed by Barney Hatt of Lotus
2005
July 2005: Supply agreement with Lotus: Lotus will
assist with design and manufacture of Roadster
through end of 2011
2006
2006
2006: Had raised $60 M in venture capital
2007
Summer 2007: Had raised 100M in Venture Capital
2007: Elon Musk invests another $20M
2008
October 2008: $40M in emergency funds is raised
from investors, including Elon Musk, to continue
operations
2009
May 2009: Sale of preferred stock to Blackstar
Investoco (an affiliate of Daimler) for $50M
December 2009: Agreement with California
Alternative Energy and Advanced Transportation
Financing Authority: Allows exemption from CA state
sales and use taxes for up to $320M in purchases of
manufacturing equipment (an expected value of
$31M over a three year period)
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August 2007: Martin Eberhard leaves company;
Michael Marks becomes Interm CEO
December 2007: Ze’er Drori becomes CEO
2008
February 2008: Roadster production begins
March 2008: Begins relationship with Daimler: Tesla
will develop battery packs and chargers for Daimler’s
Smart Fortwo electric drive
May 2008: Opens first store, in LA, California
October 2008: Economic climate and cash shortfalls
cause layoffs; planned Model S release is pushed
back
October 2008: Musk becomes CEO
2009
January 2009: Daimler agrees to purchase battery
packs from Tesla
March 2009: Model S Prototype revealed
May 2009: Recalls Roadsters for service to fix rear
inner hub flange bolt (346 cars serviced)
May 2009: Formal Agreement with Daimler: Tesla
will continue to develop Smart Fortwo Electric Drive
June 2009: Agreement with Toyota: Telsa will
develop electric powertrain for Toyota’s RAV4
prototype
July 2009: Introduces Roadster 2.0 and Roadster
Sport
November 2009: Recognized as one of “America’s
hottest brands” by Advertising Age
November 2009: Begins shipment of battery packs
to Daimler
15
Financing Milestones (continued)
2010
January 2010: Long-term DOE Loan Facility
agreement for $465M: includes $101.2M Powertrain
Facility (for build out of Palo Alto facility for the
manufacturing of battery packs, electric motors, and
components) and a $363.9M Model S Facility (to
finance the development of the Model S and the
integrated Fremont manufacturing facility for the
Model S)
March 2010: Accounting change: Begins recording
powertrain component development contract
revenue as Development Services Revenue
(previously recorded as an offset to R&D)
May 2010: 1 for 3 reverse stock split for outstanding
common stock
July 2, 2010: Closes IPO and receives $188.8M, net
of underwriting discounts and commissions
July 2, 2010: Closes private placement transaction
for sale of common stock, at IPO price, to Toyota
for $50M
July 2, 2010: All convertible preferred stock is
converted into common stock
November 2, 2010: Closes private placement
transaction for sale of common stock to Panasonic
for $30M
FUTURE
Dec 15, 2012 DOE loan payments begin (loan to be
paid off by September 15, 2022)
Company Milestones (continued)
2010
January 2010: Introduces Right-Hand Model
Roadster
February 2010: Begins offering a leasing option for
the Roadster
March 2010: Named one of the top 50 most
innovative companies in the world by Technology
Review
May 2010: Formal Agreement with Daimler: Tesla
will Develop and Produce Battery Pack and Charger
for A-Class EV
May 2010: Announces intent to build a third
generation EV at the NUMMI Facility, to be released
a few years after the Model S
May 2010: Announces intent to work with Toyota on
development of EVs.
May 2010: Toyota announces it will support Tesla
with sourcing of parts, production and engineering
expertise for Model S
May 2010: Purchase Agreement for NUMMI: Tesla
will purchase manufacturing facility for $42M
July 1, 2010: Introduces Roadster 2.5
July 2010: Formal Phase 0 Agreement with Toyota:
Tesla will Develop Electric Powertrain for RAV4
Electric Prototype
August, 2010: Amended purchase agreement for
NUMMI: Tesla will purchase certain equipment and
spare parts located at the facility for $17M
Oct 1, 2010: Opens Fremont Plant (formally NUMMI)
October, 2010: Amended purchase agreement for
NUMMI: Tesla to purchase certain operating permits
for $6.5M
October 2010: Formal Phase 1 Agreement with
Toyota: Tesla will develop full powertrain system for
RAV4 electric prototype
Finish in 2010: Transition of motor manufacturing,
battery pack assembly, and gearbox manufacturing
for Roadster (formally outsourced) to the Palo Alto
facility
FUTURE
2012: Model S expected launch
Next Several Years: Goal to have 50 total stores
Sources:
Davis, Joshua. (2006, August). Batteries Included. Wired Magazine. Retrieved from http://www.wired.com/wired/archive/14.08/tesla.html
Davis, Joshua. (2010, September 27). Supercharged. Wired Magazine. Retrieved from
http://www.wired.com/magazine/2010/09/ff_tesla/Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from
http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
16
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
White, Joseph B. (2007, November 28). Tesla Taps Ze‘ev Drori as CEO. The Wall Street Journal. Retrieved from
http://online.wsj.com/article/SB119628993620007072.html
Welch, David. (2008, October 23). Electric Carmaker Tesla Downshifts. Bloomberg Businessweek. Retrieved from
http://www.businessweek.com/magazine/content/08_44/b4106080144482.htm?chan=magazine+channel_what%27s+next
Kane, Will. (2010, October 28). Tesla reopens Fremont‘s former NUMMI Plant. San Francisco Chronicle. Retrieved from
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/10/27/MN871G2V0F.DTL
Appendix C: Strategic Partnerships
Strategic Partnerships
Partner
Daimler AG
Toyota Motor
Corporation
Panasonic
Corporation
Dates
Agreements
Estimated
Worth
$50M
May 2009
Blackstar Investco (an affiliate of Daimler) purchases 19,901,290
shares of Series E convertible preferred stock for $50M
March 2008
Tesla begins development of a battery pack and charger for
Daimler's Smart fortwo electric drive
May 2009-November
2009
Official Agreement for Smart fortwo development
November 2009
Daimler agrees to purchase 1,500 battery packs and chargers to
support European trial
May 2010-Present
Agreement for Tesla to develop and manufacture a battery pack
and charger for Daimler’s A-Class electric vehicles
$14.1M
July 2, 2010
Toyota purchases 2,941,176 common shares (price/share = IPO
price) in a private placement
$50M
July 2010-2010
Toyota RAV4 Program Phase 0 Agreement: Tesla to develop
electric powertrain for RAV4 prototype
$9M
October 2010Through 2012
Toyota RAV4 Program Phase 1 Agreement: Tesla to develop
validated powertrain system, including battery, power electronics
module, motor, gearbox, and software for RAV4 prototype
$60M
2008-Present
Tesla uses Panasonic battery cells in its advanced battery packs
and has collaborates with Panasonic on the development of next
generation battery cells for electric vehicles
N/A
November 2, 2010
Panasonic purchases 1,418,573 common shares ($21.15/Share) in
a private placement
$30M
$23.3M
Sources:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
17
Tesla Motors Inc. (2010, November 3). Panasonic Invests $30 Million in Tesla, Companies Strengthen Collaborative Relationship [Press
Release]. Retrieved from http://www.teslamotors.com/about/press/releases/panasonic-invests-30-million-tesla
Appendix D: Tesla Executive Team
Tesla's Executive Team
Executive and
Position
Elon Musk;
Chairman, Product
Architect, and CEO
Education
Former Positions
Bachelors in Economics
and Physics; University of
Pennsylvania
Pinnacle Research; Started Zip2 and
PayPal; Currently CEO and CTO of
SpaceX and Chairman of SolarCity
JB Straubel;
Chief Technical
Officer
Bachelors in Energy
Systems; Stanford
University
Masters in Energy
Engineering; Stanford
University
Propulsion engineer at Rosen Motors;
Team member at Pentadyne; CTO and
Co-founder of Volacom
Deepak Ahuja;
Chief Financial
Officer
Bachelors in Materials
Engineering; Banaras
Hindu University
Master's Materials
Engineering; Northwestern
University
Masters in Business
Administration; Carnegie
Mellon University
Bachelors in
Transportation Design; Art
Center College of Design
Engineer for Kennametal, Inc.; CFO for
Auto Alliance International; CFO for
Ford of Southern Africa; Controller of
Small Cars Product Development at
Ford
Unavailable
Vice President, Retail Strategy for Gap
Inc.; Vice President of Real Estate and
a chief strategist for retail stores at
Apple
Degree in Engineering;
Ecole Centrale de Paris
High Profile Positions at Volvo, Mack
and Renault; Vice President of
Manufacturing at Toyota's plant in
Cambridge, ON; General Manager of
Production Engineering for Toyota in
North America
Franz von
Holzhausen;
Chief Designer
George
Blankenship;
Vice President,
Design and Store
Development
Gilbert Passin;
Vice President,
Manufacturing
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Assistant Chief Designer at
Volkswagen; Design Director at
General Motors; Director of Design at
Mazda North American Design Center
Responsibilities
at Tesla
Co-founder; Oversees daily
operations, product strategy
and development; Secures
strategic partnerships
Co-founder; Oversees
technical and engineering
design of vehicles; Evaluates
new technology; Manages
vehicle systems testing;
Handles technical interface
with key vendors
Spearheads financial
initiatives
Drives overall design
direction of Tesla;
Establishes design
competency for future
design concepts and
production vehicles
Designs and develops retail
stores
Leads vehicle manufacturing
operations
18
Peter Rawlinson;
Vice President &
Chief Engineer for
Vehicle Engineering
Mechanical Engineering;
Imperial College, London
Jim Dunlay;
Vice President,
Powertrain
Hardware
Engineering
Bachelors in Electrical
Engineering and Computer
Science; MIT
Diarmuid O'Connell;
Vice President of
Business
Development
Bachelors; Dartmouth
College
Masters in Foreign Policy;
University of Virginia;
Masters in Business
Administration; Kellogg
Senior Executive with McCann
Erickson Worldwide; Senior Executive
at Young and Rubicam; Management
Consultant for Accenture; Chief of
Staff for Political Military Affairs at the
US State Department
John Walker;
Vice President Sales
North America
Unavailable
General Motors BMW in South Africa;
General Manager of Sales for Audi
Australia; Director of Sales for Audi
Canada; General Manager of Sales
Operations for Audi of America
Is responsible for all sales in
the US and Canada, as well
as and coast-to-coast retail
expansion and opening of
new stores
Christiano Carlutti;
Vice President of
European Sales and
Operations
Degree in Business
Administration; University
Luigi Bocconi, Milan
Oversees European
operations from the EU
headquarters in Windsor, UK
Ricardo Reyes;
Vice President of
Communications
Bachelors; Rice University
CEO of Autocontact Italia; Managing
Director of Media Operations and
Member of the Management
Committee for the XX Winter Olympic
Games; Vice President at Fiat
Deputy Assistant US Trade
Representative for Public and Media
Affairs; Managing Editor of Regulation
Magazine; Public Policy and
Communications at Bracewell and
Fiuliani LLC; Handled litigation,
competition and policy
communications for Google, Inc.; Head
of Communications and Public Affairs
at YouTube
TESLA MOTORS
Principal Engineer at Jaguar; Manager
for Advanced Drivetrain and
Suspension Systems at GKN
Technology; Chief Engineer of
Advanced Engineering at Lotus; Led
vehicle engineering at Corus
Automotive
Manufactured test equipment at
Tandem Computers; Worked on
electronic instrumentation at HP;
Developed computer systems for
SunMicrosystems
Is responsible for the
technical execution and
delivery of the Model S
Leads power electronics
team from prototype to
production; Has design
engineering and
manufacturing duties for
Daimler and Roadster
battery packs; Has
development responsibility
for Tesla's motor and
transmission
Manages commercial
relationships and
government affairs
Leads global communications
and public relations;
Oversees media relations,
product, corporate, online,
and internal communications
19
Eric Whitaker;
General Counsel
Bachelors in Politics;
Princeton
Juris Doctorate; Stanford
Law School
Handled intellectual property and
antitrust litigation at Latham &
Watkins; Executive Vice President of
Corporate Strategy and General
Counsel at Lexar Media; Executive Vice
President and General Counsel at
Avalanche Technology
Acts as General Counsel
Arnnon Geshuri;
Vice President,
Human Resources
Bachelors in Psychology;
University of California at
Irvine
Masters in Industrial/
Organizational Psychology;
San Jose State University
Responsible for driving HR
operations and global
recruitment efforts
Mike Taylor;
Vice President of
Finance
Bachelors Degree;
University of California,
Berkeley
Juris Doctorate/
Masters in Business
Administration; Stanford
University
Organizational effectiveness
consultant for NUMMI; Managed
corporate-wide staffing operations at
Applied Materials; Vice President of
Human Resources and Director of
Global Staffing for E*Trade Financial;
Director of Staffing Operations at
Google, Inc.
Goldman Sachs & Co.; McKinsey and
Company; Wilson Sonsini Goodrich &
Rosati; Managed IPO for Scopus
Technology; Vice President of Finance
for Micromuse; CFO for Benchmark
Capital; Vice President and CFO at
Tropos Networks
Evelyn Chiang;
Vice President of
Supply Chain and IT
Bachelors in Aeronautics
and Astronautics; MIT
Director of Professional Services at
SAP AG; Senior Vice President of
Operations of the Product and
Technology Group at SAP AG
Oversees supply chain and
information technology
Oversees Tesla’s finances
Sources:
About/Executive Bios. (n.d) Retrieved from http://www.teslamotors.com/about/executive-bios
Tesla Motors Inc. (2010, February 3). Tesla Hires Toyota Manufacturing Expert. [Press Release]. Retrieved from
http://www.teslamotors.com/about/press/releases/tesla-hires-toyota-manufacturing-expert
Tesla Motors Inc. (2009, October 1). Tesla Motors Announces Senior Engineering and Manufacturing Executives. [Press Release].
Retrieved from http://www.teslamotors.com/about/press/releases/tesla-motors-announces-senior-engineering-and-manufacturingexecutives
TESLA MOTORS
20
Appendix E: Manufacturing Infrastructure
-Tesla has more than 150 suppliers around the world, many of whom are single source suppliers.
-Suppliers provide over 2000 parts to Tesla
-Suppliers are located in North America (30%), Europe (40%) and Asia (30%).
Multi-site Manufacturing Process for Tesla Roadster
European
Suppliers
North
American
Suppliers
Asian
Suppliers
Lotus
Facility
Hethel ,UK
Tesla Assembly
Facility
Menlo Park, California,
US
US & Asian
Customers
European
Customers
Integrated Site for Model S
Other Suppliers
Palo Alto Factory
-Interior console
-Powertrain
Manufacturing
-Seats
NUMMI Facility
-Body assembly
-Paint operation
-Battery pack mfctr.
Customers
-Final vehicle assembly
-End of line testing
Source:
Tesla Motors Inc. (2010, November 3). Panasonic Invests $30 Million in Tesla, Companies Strengthen Collaborative Relationship [Press
Release]. Retrieved from http://www.teslamotors.com/about/press/releases/panasonic-invests-30-million-tesla
TESLA MOTORS
21
Appendix F: SWOT Analysis of Model S Manufacturing Model
Model S Manufacturing Model
Suppliers
Strength
-Less reliant on the
performance of
suppliers
-Reduces the cost of
managing supplier
relationships
Weakness
-Lose relationships with
suppliers who may be
needed if NUMMI’s
capacity can’t meet
demand
Opportunities
-Being able to focus on
building close
relationship with most
important suppliers
-Harder to find capable
suppliers when facing a
shortage of internally
manufactured
components
Threats
TESLA MOTORS
Production &
Manufacturing
-Easy to control quality
and enhance product
-Relatively easy to
enlarge manufacturing
capacity by further
investments
-Improve production
efficiency by allowing
engineers and the
manufacturing team to
work closely
Information
Management
-Easy access to
reliable inventory,
demand, and other
important
information
-The production of the
Model S will be
dramatically impacted
by NUMMI’s
manufacturing ability
-May lose capable
engineers who now are
working in the Lotus
facility located in
England
-Largely improve quality
and manufacturing
efficiency
-Merger of two
different ERP
system will require
tremendous
investments of
time, labor and
money
-The loss knowledge
from talented
employees who are
working for suppliers Fail to complete
necessary training for
employees without
delaying the launch of
Model S
-Largely improve
inventory
management to
reduce cost
-Failure to merge
the two ERP
systems successfully
-Ability to complete
the ERP merger
without delaying
the launch of the
Model S
Finance
-Cuts the shipping
cost of ordering most
components from
around the world
-Reduce the risk of
loss from foreign
currency exchanges
-Will be able to
reduce the cost of
Model S when
reaching economies
of scale
-Have to hold more
inventory and
present it on the
balance sheet
-Have to bear more
inevitable
obsolescence of
inventory
-Reduce cost of
Model S
-Make Model S more
price appealing
-Possible tremendous
future investments
are needed to
develop NUMMI
facility
22
Appendix G: Industry Analysis
Battery Pack Costs Projections. Electric battery manufacturers rarely release exact battery pack costs, but most
estimates range from $500 - $1200/kWh ($33,000 for 100-mile range) depending on chemistry and cell-form
factor.1 However battery pack costs have decreased faster than expected. In November 2009, Deutsche Bank
analysts projected average battery pack costs reducing from $675/kWh to $500/kWh by 2015 and $325/kWh by
2020; but in March 2010 it cited industry reports of battery pack bids in the mid-$400/kWh for 2011/2012.2
Further evidence is Nissan reporting the battery pack in its economy EV Leaf costs only $375/kWh. In addition,
Tesla CEO Elon Musk stated that the Model S battery pack will cost less than the Leaf’s pack 3, a statement
corroborated by calculations of battery pack costs given information in Tesla’s IPO. (See Appendices AD-AE)
In 2008, the United States Advanced Battery Consortium, an umbrella organization of Chrysler LLC, Ford Motor
Company, and General Motors, projected a reduction in price to $500/kWh by 2012, $300/kWh by 2014,
$250/kWh by 2020.4 and $100/kWh in an undefined “long-term”.5 The DOE projects industry-wide battery pack
costs to reduce approximately 70% (likely from an average of $700/kWh or $33,000/pack) by December 2015.6
Charging Infrastructure. In addition, the DOE is funding the development of the infrastructure for charging
stations or electric vehicle supply equipment (EVSEs), with the goal of increasing the number of level 2 (400V) or
level 3 (500V) EVSEs, which reduce charge times from approximately from 8 – 16 hours to 30 minutes to 4 hours,
from approximately 550 to 20,550 by 2012.7For example, Telsa’s Quick Charge system is a level 3 charging
system that can be installed at home. It can fully charge a battery in less than 45 minutes. The federal
government offers subsidies for charging stations, covering half the cost of the home charging system.
Cost of Ownership. If battery pack costs reduce as the DOE projects, consumers will have further incentive to
own EVs and PHEVs since costs are $0.02 - $0.04/mile to operate whereas a 25-MPH gasoline vehicle costs $0.12
- $0.15/mile to operate. In addition, maintenance costs will likely be lower for EVs and PHEVs.
Consumer Skepticism. EV and PHEV manufacturers must still overcome consumer skepticism, especially
regarding range (for EV) and infrastructure anxiety. The DOE’s significant investment in EVSE infrastructure
should help ease infrastructure anxiety for consumers. Only Tesla’s most expensive Model S (300 mile range at a
projected cost of $70,000) will compete with ICE vehicle range of 300 – 400 miles/tank. PHEVs, which use
electricity only to run the powertrain for a limited range (i.e., 33 – 50 miles) and then a reserve gasoline tank to
regenerate the electric powertrain beyond the all electric-only range, effectively provide ranges up to 300 miles
per charge and gasoline tank. However, because of the greater percentage of electricity produced from coal,
PHEVs emit nearly as many carbon emissions as ICE vehicles, including energy necessary to recharge battery
packs and transmit energy. Thus, the PHEVs do not eliminate emissions and will continue reliance on gasoline,
albeit reduced, and longer commutes increase the cost of PHEV ownership more than EV ownership.
Sources:
1 Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html, p.25
2 Deutsche Bank. Vehicle Electrification: More Rapid Growth; Steeper Price Declines For Batteries. March 7 2010, p.3.
3 Garthwaite J. Retrieved from http://gigaom.com/cleantech/tesla-ceo-nissans-leaf-battery-is-primitive/
4 Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html, p. 26.
5 United States Advanced Battery Consortium. Design News: Plug-in Hybrids Are Still Today’s Best Bet.
http://www.uscar.org/guest/article_view.php?articles_id=265
TESLA MOTORS
23
6 United States Department of Energy. The Recovery Act: Transforming America’s Transportation Sector Batteries and Electric Vehicles.
July 14, 2010, p.1, 6.
7 Ibid, p. 5-6.
Appendix H: Market Penetration Forecasts
Forecasted Global Automobile Market Penetration (% of Global Market Penetration)
(In Thousands)
Vehicle
2010
2011
2012
2013
2014
2015
EV/PHEV
30 (0.0%)
103 (0.1%)
223 (0.3%)
375 (0.5%)
438 (0.5%)
482 (0.6%)
HEV
4,891 (7.6%)
8,785 (12.7%)
11,667 (16.0%)
15,127 (18.9%)
17,440 (20.9%)
18,835 (22.1%)
ICE
59,433 (92.4%)
60,334 (87.2%)
62,233 (83.7%)
64,472 (80.6%)
65,482 (78.6%)
65,859 (77.3%)
Source:
Data From CSM Auto (Global Insight), Sourced From JP Morgan Report
Divergent Forecasts of 2015 Global EV/PHEV Market Penetration
(In Thousands)
Source
Vehicles
% Global Market
MIT/Nissan Study (2009)
10,000
11.70%
Battery Pack Manufacturers
500 – 800
0.6% - 0.9%
CSM Auto (Global Insight)
482
0.60%
J.D. Power & Associates
400
0.50%
Sources:
Anson M. Retrieved from http://www.examiner.com/auto-in-los-angeles/estimates-vary-on-electric-vehicle-sales
Data From CSM Auto (Global Insight), Sourced From JP Morgan Report
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24
Appendix I: The EV and PHEV Market
Luxury or High-End Electric Vehicles and Plug-in Hybrid Electric Vehicles
OEM
Audi
E-Tron
EV
42
All-Electric
Range
(miles/charge)
154
Fisker
Karma
PHEV
20
50
9/10
$88,000
Nissan
GT-R
EV
N/A
N/A
N/A
$70,000
Mercedes
SLS AMG E-Cell
EV
48
N/A
N/A
N/A
Tesla
Roadster
EV
53
244
2008
$109,000
Model S
EV
42
160
2012
$49,500
Model S
EV
66
230
2012
Model S
EV
90
300
2012
$60,000
(Projected)
$70,000
(Projected)
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Model
Make
Energy Density
(kWh)
Launch Date
Price
2012
N/A
25
Appendix J: Historic Income Statement Information
Tesla Motors Inc
Annual Income Statement (Audited)
[Standardized in USD Thousands]
Report Date
Period Length
PricewaterhouseCoopers, LLP
Revenues
Automotive and Powertrain Sales
Zero Emission Vehicle Sales
Development Services
Total Revenue
Cost of Revenue
Automotive Sales
Development Services
Total Cost of Revenue
Gross Profit
30-Sep-10
9 Months
(Unaudited)
31-Dec-2008
12 Months
(Audited)
31-Dec-2007
12 Months
(Audited)
103,791
8,152
11,284
3,458
73
111,943
14,742
73
56,581
4,467
61,048
19,410
101,008
15,283
9
101,008
10,935
15,283
-541
9
64
Operating Expenses
Selling/General/Administrative Expense
Research and Development
Unusual Expense (Income)
Total Operating Expense
Loss From Operations
59,224
55,379
0
114,603
-95,193
42,150
19,282
1,400
163,840
-51,897
23,649
50,014
4,300
93,246
-78,504
17,244
61,953
800
80,006
-79,933
Interest Expense - Non-Operating
Interest Income - Non-Operating
Other Non-Operating Income (Expense)
Loss Before Income Taxes
-992
195
-6,770
-102,760
-2,531
159
-1,445
-55,714
-3,747
529
-963
-82,685
0
1,749
137
-78,047
Provision for (Benefit From) Income Taxes
Net Loss After Tax
210
-102,970
26
-55,740
97
-82,782
110
-78,157
36
7
6.6
3.4
-2.86
-7.94
-12.46
-22.69
Basic/Primary Weighted Average Shares
Net Loss Per Share of Common Stock, Basic and
Diluted
67,906
31-Dec-2009
12 Months
(Audited)
12,552
80,458
Sources:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
26
Appendix K: Historic Balance Sheet Information
Tesla Motors Inc
Annual Balance Sheet
[Standardized in USD Thousands]
Report Date
Period Length
PricewaterhouseCoopers, LLP
Assets
Current Assets
Cash and Equivalents
Restricted Cash- Current
Trade Accounts Receivable - Net
Inventory
Inventories - Finished Goods
Inventories - Work In Progress
Inventories - Raw Materials
Inventories - Other
Total Inventory
Prepaid Expenses and other Current Assets
Total Current Assets
Long Term Assets
Operating Lease Vehicles, Net
Property/Plant/Equipment
Buildings
Machinery/Equipment
Construction in Progress
Property/Plant/Equipment - Gross
Accumulated Depreciation
Property/Plant/Equipment - Net
Restricted Cash - Long Term
Other Long Term Assets
Total Long Term Assets
Total Assets
Liabilities
Current Liabilities
Accounts Payable
Accrued Expenses
Accrued Liabilitis
Refundable Reservation Payments
Total Accrued Expenses
Current Portion - Long Term Debt/Capital Leases
Notes Payable/Short Term Debt
Deffered Revenue- Customer Advances, Current
Other Current Liabilities
Total Current Liabilities
Long Term Debt
TESLA MOTORS
30-Sep-10
9 Months
(Unaudited)
31-Dec-2009
12 Months
(Audited)
31-Dec-2008
12 Months
(Audited)
31-Dec-2007
12 Months
(Audited)
96,563
88,130
8,062
69,627
9,277
17,211
3,488
3,320
59
16,520
3,281
15,518
4,189
39,508
8,870
241,133
7,038
3,403
10,001
2,780
23,222
4,222
100,559
7,518
4,372
4,646
114
16,650
2,180
31,427
0
100
2,008
0
2,108
2,930
22,308
12,016
35,311
9,115
56,442
-19,289
37,153
57,492
20,100
120,388
361,621
5,325
28,321
2,619
36,265
-12,730
23,535
3,580
2,750
29,865
130,424
3,881
21,738
0
25,619
-6,826
18,793
1,220
259
20,272
51,699
1,793
13,403
0
15,196
-3,198
11,998
260
271
12,529
34,837
26,990
15,086
14,184
5,369
10,701
27,869
38,570
291
0
3,477
0
69,328
14,532
26,048
40,128
290
0
1,377
156
57,489
11,145
48,019
59,164
341
0
4,073
10,173
87,935
NA
NA
45,694
80
0
0
0
51,296
5,743
27
Warrant Liabilities
Convertible Notes Payable
Long Term Debt
Capital Lease Obligations
Total Long Term Debt
Deffered Revenue, Less Current Portion
Other Long Term Liabilities
Total Liabilities
6,675
0
56,557
566
63,798
2,514
6,058
141,698
1,734
0
0
800
2,534
1,240
3,459
64,722
2,074
54,528
0
888
57,490
0
4,810
150,235
0
0
191
18
209
0
0
51,505
Shareholders' Equity
Preferred Stock - Non Redeemable, Net
Common Stock
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Total Shareholders' Equity
0
93
583,454
-363,624
219,923
319,225
7
7,124
-260,654
65,702
101,178
7
5,193
-204,914
-98,536
101,178
18
4,268
-122,132
-16,668
Total Liabilities and Shareholders' Equity
361,621
130,424
51,699
34,837
93.3
0
7.3
0
7
0
7
0
Total Common Shares Outstanding
Treasury Shares - Common Stock Primary Issue
Sources:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
28
Appendix L: Historic Cash Flow Information
Tesla Motors Inc
Annual Cash Flows
[Standardized in USD Thousands]
Report Date
Period Length
PricewaterhouseCoopers, LLP
Cash Flows From Operating Activities
Net loss
Adjustments to Reconcile Net Loss to Net Cash Used In
Operating Activities
Depreciation and Amortization
Change in Fair Value of Convertible Preferred Stock Warrant
Liability
Gain on Extinguishment of Convertible Notes and Warrants
Stock-based Compensation
Loss on Abandonment of Fixed Assets
Inventory Write-Downs
Interest on Convertible Notes
Changes in Operating Assets and Liabilities
Accounts Receivable
Inventory
Prepaid Expenses and Other Current Assets
Operating Lease Assets
Other Assets
Accounts Payable
Accrued Liabilities
Deferred Development Compensation
Deferred Revenue
Refundable Reservation Payments
Other Long-term Liabilities
Net Cash Used in Operating Activities
30-Sep-10
9 Months
(Unaudited)
31-Dec-2009
12 Months
(Audited)
31-Dec-2008
12 Months
(Audited)
31-Dec-2007
12 Months
(Audited)
-102,970
-55,740
-82,782
-78,157
7,733
5,610
6,940
1,128
4,157
2,800
2,895
-36
0
13,313
-1,468
1,434
385
1,353
2,686
-1,245
437
0
4,297
3,692
0
198
2,421
0
0
-4,575
-16,937
-3,109
-5,932
-818
7,993
-168
-7,925
-2,042
-3,261
-18,839
750
-59
-2,108
-1,884
-445
902
12
8,815
-64
523
-2,131
-156
3,374
1,821
2,599
3,387
-10,017
-1,456
-21,971
2,192
2,633
10,173
4,073
10,684
1,192
7,572
0
0
15,230
0
-93,533
-80,825
-52,412
-53,469
-11,884
-2,360
-10,630
-960
-9,802
40
-14,244
-11,590
-9,762
652
0
Cash Flows From Investing Activities
Payments Related to Acquisition of Fremont Manufacturing
Facility and Related Assets
-58,710
Purchases of Property and Equipment Excluding Capital Leases
Decrease (Increase) In Restricted Cash in Dedicated DOE
Account
Increase In Other Restricted Cash
-23,055
-88,130
Net Cash Used in Investing Activities
-1,852
-171,747
Cash Flows From Financing Activities
TESLA MOTORS
29
Proceeds fromIssuance of Common Stock in Initial Public
Offering
Proceeds fromIssuance of Common Stock in Private Placement
Proceeds From Issuance of Series F Convertible Preferred
Stock, Net of Issuance Costs of $122
188,842
50,000
82,378
0
0
Proceeds From Issuance of Series E Convertible Preferred
Stock, Net of Issuance Costs of $556
49,444
0
0
Proceeds From Issuance of Series D Convertible Preferred
Stock, Net of Issuance Costs of $59
0
0
44,941
-233
56,557
-322
0
-191
1,000
0
0
0
25,468
54,782
0
741
497
477
100
-3,691
-2,046
0
0
Principal Payments on Capital Leases and Other Debt
Proceeds From Long-term Debt and Other Long-term
Liabilities
Proceeds From Issuance of Convertible Notes and Warrants
Proceeds From Exercise of Stock Options
Deferred Common Stock and Loan Facility Issuance Costs
Net Cash Provided by Financing Activities
292,216
155,419
56,068
45,041
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
26,936
69,627
60,350
9,277
-7,934
17,211
-18,190
35,401
Cash and Cash Equivalents at End of Period
96,563
69,627
9,277
17,211
843
-19
70
171
41
0
9
0
0
0
0
86,225
0
0
0
0
3,936
19,073
1,791
183
16,751
1,328
322
0
0
0
Supplemental Disclosures
Interest Paid
Income Taxes Paid (Refunded)
Supplemental Noncash Investing and Financing Activities
Conversion of Preferred Stock to Common Stock
Issuance of Common Stock Upon Net Exercise of Warrants
Issuance of Convertible Preferred Stock Warrants
Issuance of Common Stock Warrants
Conversion of Notes Payble to Series E Convertible Preferred
Stock
Conversion of Series A Convertible Preferred Stock to
Common Stock
Exchange of Convertible Notes Payable
Exchange of Accrued Interest for Convertible Notes Payable
Property and Equipment Acquired Under Capital Lease
319,225
6,962
6,293
1,700
0
0
0
Sources:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
30
Appendix M: Comparable Companies Used in Financial Analysis
A123 Systems, Inc. designs, develops, manufactures and sells rechargeable lithium-ion batteries and battery
systems, and provides research and development services to government agencies and commercial customers.
The Company works with global automotive manufacturers and tier 1 suppliers to develop batteries and battery
systems for hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and electric vehicles, (EVs).
The Company’s cylindrical batteries are available for use in automotive and heavy duty vehicles.
Audi AG is a Germany-based inventor and producer of automobiles. The Company operates worldwide through
its fully consolidated and non-consolidated subsidiaries.
Bayerische Motoren Werke AG (BMW) is a German automobile manufacturer that focuses on the worldwide
automobile and motorcycle markets. The Company divides its activities into the segment Automobiles,
Motorcycles and Financial Services segments. It owns three brands: BMW, MINI and Rolls-Royce.
Toyota Motor Corporation is a Japan-based company mainly engaged in the automobile business and financial
business. The Company operates through three business segments: the Automobile segment, the Finance
segment, and the Others segment.
Quantum Fuel Systems Technologies Worldwide, Inc. (Quantum) is an integrated alternative energy company
engaged in the development and production of advanced clean propulsion systems, and renewable energy
generation systems and services. The Company’s products include hybrid electric and plug-in hybrid electric
powertrain systems, advanced battery control systems, electronic vehicle control systems and software, fuel
storage and fuel delivery products, and control systems for use in alternative fuel vehicles. The Company
classifies its business operations into two segments: Fuel Systems, Renewable Energy, and Corporate.
 Fisker Automotive is a sports car company developing a range of environmentally friendly cars that
make environmental sense without compromise. The company is a joint venture of Fisker Coachbuild,
LLC and Quantum Technologies. Fisker Coachbuild will provide exclusive design services for Fisker
Automotive while Quantum Technologies will provide technological advancements.
Ener1, Inc. is engaged in the business of designing, developing and manufacturing rechargeable lithium-ion
batteries and battery systems for energy storage. Its end markets include transportation, stationary power (for
utilities and renewable energy), military applications and small cell markets. The company is developing systems
to power the next generation of hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and
electric vehicles (EVs). This technology is also developed for other transportation markets, including buses and
trucks, as well as alternative transportation vehicles. The Company has three operating segments: battery, fuel
cell, and nanotechnology.
Source:
Data sourced from Onesource. Retrieved from www.onesource.com
TESLA MOTORS
31
-41.85%
-72.10%
24.12%
-118.31%
-127.72%
-127.98%
-117.12%
-126.73%
-217.88%
-0.42x
1.95x
182.90x
0.47x
3.48
2.91
1.39
-1.48
-0.91
-127.93
29.14%
29.01%
22.57%
22.46%
39.18%
Margin Analysis
Gross Margin %
Operating Margin %
Pretax Margin %
Net Profit Margin %
EBITDA Margin %
EBIT Margin %
Free Cash Flow Margin %
Efficiency
Total Asset Turnover
Inventory Turnover
Days in Inventory
Working Capital Turnover
Liquidity and Solvency
Current Ratio
Quick Ratio
Cash Ratio
Cur. Cash Debt Coverage Ratio
Cash Debt Coverage Ratio
Times Interest Earned Ratio
Capital Structure
Debt to Total Equity
LT Debt to Equity
Debt to Total Capital
LT Debt to Capital
Debt to Total Assets
30-Sept-2010
9 Months
(Unaudited)
Report Date
Period Length
PricewaterhouseCoopers, LLP
Profitabiliity
Return on Assets %
Return on Equity %
TESLA MOTORS
4.30%
3.86%
4.12%
3.70%
49.62%
1.75
1.35
1.21
-1.11
-0.75
-22.49
-0.61x
5.07x
70.26x
2.60x
9.77%
-46.36%
-49.77%
-49.79%
-41.45%
-47.65%
-82.82%
-61.21%
339.53%
-58.69%
-58.34%
-142.07%
-141.24%
290.60%
0.36
0.17
0.11
-0.75
-0.52
-24.69
-1.91x
1.63x
218.47x
-0.26x
-3.67%
-532.52%
-560.88%
-561.54%
-510.85%
-539.05%
-427.64%
-191.32%
143.71%
Tesla Motors Inc
31-Dec-2009
31-Dec-2008
12 Months
12 Months
(Audited)
(Audited)
-1.73%
-1.25%
-1.76%
-1.28%
147.85%
0.43
0.39
0.34
Unavailable
Unavailable
45.62
Unavailable
Unavailable
Unavailable
0.00x
87.67%
-109497.26%
-106913.70%
-107064.38%
-105343.84%
-109309.59%
-86672.60%
Unavailable
Unavailable
31-Dec-2007
12 Months
(Audited)
5.66%
0.02%
5.36%
0.02%
61.50%
1.78
1.51
0.68
0.42
0.25
11.78
0.05x
8.58x
41.50x
3.90x
14.04%
5.38%
6.46%
4.36%
11.99%
6.08%
7.79%
4.87%
12.68%
Audi
31-Dec-2009
12 Months
(Audited)
308.13%
172.80%
75.50%
42.34%
80.48%
1.08
0.90
0.21
0.26
0.12
0.62
120.79%
67.72%
54.71%
30.67%
65.87%
1.22
1.09
0.21
0.25
0.14
-2.24
0.01x
11.97x
29.75x
7.98x
8.41%
0.94%
5.91%
8.68%
1.57%
13.42%
0.00x
6.46x
55.14x
16.24x
11.96%
0.78%
1.54%
0.73%
2.12%
Toyota
31-Mar-2010
12 Months
(Audited)
10.51%
0.56%
0.81%
0.20%
1.00%
BMW
31-Dec-2009
12 Months
(Audited)
Ratio Analysis (Data Standardized using Average Exchange Rate for Reporting Period)
93.71%
91.46%
48.38%
47.22%
68.35%
0.46
0.38
0.19
-0.52
-0.28
-0.42
-0.70x
0.65x
545.00x
-0.86x
-200.29%
-213.67%
-158.05%
83.62%
-213.47%
-481.91%
-69.67%
-327.87%
Quantum
30-Apr-2010
12 Months
(Audited)
4.26%
1.44%
4.09%
1.39%
14.54%
9.96
9.25
8.71
-1.30
-0.79
-41.08
-0.21x
2.56x
138.92x
0.19x
-79.31%
-93.84%
-124.05%
-2.96%
-93.84%
-94.80%
-20.74%
-26.74%
A123 Systems
31-Dec-2009
12 Months
(Audited)
28.62%
6.34%
22.25%
4.93%
33.38%
0.91
0.65
0.35
-1.19
-0.84
-6.03
-0.32x
2.98x
119.41x
-9.36x
-119.18%
-141.21%
-158.84%
11.69%
-142.06%
-147.95%
-32.27%
-46.56%
Ener1
31-Dec-2009
12 Months
(Audited)
Appendix N: Ratio Analysis
Sources:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
Non-Tesla Data Sourced from: OneSource. Retrieved from www.onesource.com
32
Appendix O: Department of Energy (DOE) Loan Facility
The DOE Loan Facility is comprised of two multi-draw term loan facilities in an aggregate principal amount of up
to $465 million.
A first term loan facility up to $101.2 million to finance up to 80% of the costs eligible for funding for the power
train engineering and build out of the facility to design and manufacture lithium-ion battery packs, electric
motors, and electric components.
A second term loan facility up to $363.9 million to finance up to 91.5% of the costs eligible for funding for the
development of and build out of the facility for the Model S sedan
Advances accrue interest at a per annum rate based on the treasury yield curve. Advances on the first facility are
repayable in 28 equal quarterly installments commencing on December 15, 2012, or 26 equal quarterly
installments commencing on June 15, 2013. All outstanding amounts will be due and payable on the maturity
Advances accrue interest at a per annum rate based on the treasury yield curve. Advances on the first facility
are repayable in 28 equal quarterly installments commencing on December 15, 2012, or 26 equal quarterly
installments commencing on June 15, 2013. All outstanding amounts will be due and payable on the maturity
date of September 15, 2019.
Advances on the second facility "Model S Facility" are repayable commencing December 15, 2012 or June 15,
2013 in 40 or 38 equal quarterly installments, respectively. All amounts under the Model S Facility will be due
and payable on the maturity date of September 15, 2022.
Tesla was required to set aside 50% of the net proceeds from an initial public offering and any subsequent
offerings of stock occurring before the completion of the projects, up to an aggregate of $100 million to fund
cost overruns for Tesla's model S and powertrain projects.
The DOE has a warrant to purchase up to 3,090,111 shares of common stock at an exercise price of $7.54 per
share. Beginning on December 15, 2018 and until December 14, 2022, the shares under the warrant will vest
and become exercisable. As of September 30, 2010, $88.1 million remained in the dedicated account.
Source:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
33
Appendix P: ZEV Credits
Automotive sales consist primarily of revenue earned from the sales of the Tesla Roadster, vehicle service, and
vehicle options, accessories and destination charges as well as sales of ZEV credits. Automotive sales also consist
of revenue earned from the sales of electric vehicle powertrain components, such as battery packs and battery
chargers, to other automotive manufacturers.
California and certain other states have laws in place requiring vehicle manufacturers to ensure that a portion of
the vehicles delivered for sale in that state during each model year are zero emission vehicles. These laws
provide that a manufacturer of zero emission vehicles may earn credits, referred to as ZEV credits, and may sell
excess credits to other manufacturers who apply such credits to comply with these regulatory requirements. As
a manufacturer of solely of zero emission vehicles, Tesla has earned ZEV credits on vehicles sold in such states,
and it expects to continue to earn these credits in the future and accordingly sell them to other vehicle
manufacturers
In order to facilitate the sale of these credits, Tesla enters into contractual agreements with third parties
requiring them to purchase ZEV credits at pre-determined prices.
Tesla recognizes revenue on the sale of these credits at the time legal title to the credits is transferred to the
purchasing party by the governmental agency issuing the credits. Revenue from the sale of ZEV credits totaled
$0.9 million, $2.0 million, $2.0 million and $7.6 million for the three and nine months ended September 30, 2010
and the three and nine months ended September 30, 2009, respectively.
Source:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
34
Appendix Q: Future Contractual Obligations
Tesla's Future Contractual Obligations
Commitment
Time Frame
Potential Costs
Explaination
In Financial
Statements
as of 9/30/10
No
Operating Leases
Varioius expiration
dates through
January 2020
Estimated $38.3M
Leased office space
Capital Leases
Various expiration
dates through 2013
$0.9M
Computer equipment and software,
office equipment and furniture
Yes
Purchase Agreement
with Lotus
Through December
2011
Estimated $19.7M
(as of 9/30/10)
Required to purchase a minimum
of 2,400 partially assembled
Roadster vehicles or gliders
No
Purchase
Agreements with
NUMMI (jointly
owned by Toyota
and Motors
Liquidation
Company)
Transfer of Title in
October 2010
$65.5M
Purchase of NUMMI facility in
Fremont, CA, equipment and spare
parts, certain operating permits
No
Environmental
Condition
Agreement with
NUMMI
Through Oct 2020
or until $30M has
been spent,
whichever comes
first (after this Tesla
is responsible for
any additional costs)
Up to $15M, but
unpredictable at
this time; NUMMI
will pay any
subsequent costs
up to $15M
Potential governmentally- required
remediation activities for
contamination (known or unknown)
of soil and groundwater existing
prior to purchase of NUMMI.
(NUMMI will pay for first four years
costs on behalf of Tesla, with Tesla
repaying that amount in Oct 2014)
No
Source:
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
TESLA MOTORS
35
Appendix R: Historical Stock Performance and Wall Street Analysis
Wall Street Consensus Target Prices
*JP Morgan and Goldman Sachs are the primary investment companies covering TSLA. Their research was the
most in-depth so we used them to compute market expectations. Their current price targets are $29 and $30
per share; however, we believe most investors are expecting higher cashflows given the stock is trading at $32.
TESLA MOTORS
36
Appendix S: Capital Structure Summary
$ in Thousands
Debt
Equity
Total
% Equity
% Debt
Cash
Restricted Cash
Total Assets
Total Liabilities
Equity
Working Capital
2010
$91,557
$194,193
$285,750
68.0%
32.0%
$95,107
$88,130
$369,782
$175,589
$194,193
$165,289
Capital Structure Summary
2011
2012
2013
$291,557
$366,557
$392,495
-$19,648
-$144,734
$66,447
$271,909
$221,823
$458,942
-7.2%
-65.2%
14.5%
107.2%
165.2%
85.5%
$27,914
$341,819
$704,562
$88,130
$88,130
$88,130
$371,810
$1,416,797
$2,560,752
$391,458
$1,561,531
$2,494,305
-$19,648
-$144,734
$66,447
$87,262
$192,216
$637,115
2014
$356,433
$220,397
$576,830
38.2%
61.8%
$812,568
$88,130
$2,954,027
$2,733,630
$220,397
$743,905
2015
$317,371
$841,982
$1,159,354
72.6%
27.4%
$1,559,104
$88,130
$5,162,654
$4,320,672
$841,982
$1,623,802
*Cash burn rate of $67.1 million in 2011. Model S sales are forecasted to begin in mid-2012. Heavy capital
expenditures are primarily the cause for the increases in debt and in 2010 and 2011.
**Our base case believes that Tesla will not need to raise additional capital in 2011 and 2012 as they still have
$116 million of cash and restricted cash even though equity is negative.
***If the Model S production and sales gets pushed back to the beginning of 2013, Tesla may have to raise
additional equity. However, we believe that they would be able to raise the equity at higher stock prices than the
present price of $32 given the company’s expected future cash flows.
Appendix T: Wall Street Consensus (Implied Cost of Equity)
Wall Street Consensus
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$8,420.0
Revenue
$147.0
$671.4
$1,846.0
$2,173.0
$3,672.0
$4,971.0
$6,590.0
$7,209.0
$8,346.0
Growth
33.9%
356.7%
174.9%
17.7%
69.0%
35.4%
32.6%
9.4%
15.8%
0.9%
EBITDA
-$159.1
-$53.1
$196.0
$149.0
$472.0
$610.0
$686.0
$619.0
$749.0
$748.0
Net Income
-$198.3
-$125.4
$140.0
$93.0
$318.0
$420.0
$479.0
$433.0
$531.0
$530.0
+D&A*
$16.0
$35.0
$43.0
$45.0
$45.0
$50.0
$50.0
$50.0
$50.0
$50.0
+Stock Comp*
$14.0
$16.0
$19.0
$20.0
$22.0
$24.0
$26.0
$28.0
$30.0
$30.0
Change in WC*
$17.0
$25.0
$87.0
$35.0
$101.0
$96.0
$117.0
$59.0
$91.0
$27.4
-$94.5
-$136.0
-$180.0
-$360.0
-$100.0
-$138.0
-$158.0
-$195.0
-$212.6
-$2,988.7
-$132.5
$283.8
-$143.9
$153.0
$13.0
$126.0
$490.0
$534.0
$412.0
$507.0
$424.8
-$2,988.7
$283.8
Cap Ex
Free CF to Equity
Terminal Value
Discounted CF's
NPV
Current Stock Price
Current Mkt Cap ($ Mil)
Implied Cost of
Equity
TESLA MOTORS
$5,919.0
-$143.9
$153.0
$13.0
$126.0
$490.0
$534.0
$412.0
$507.0
$6,343.8
$0
$32.05
$2,988.7
10.87%
37
*Used only JP Morgan Estimates for these categories.
**Wall Street Consensus only through 2012. Used JP Morgan for all future years.
***Terminal Value calculated using a 14 times free cash flow to equity multiple $425 million x 14 = $5.919 billion
(Wall Street Forecast).
Wall Street Consensus - Adjusted
Revenue
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$147.0
$671.4
$1,846.0
$2,173.0
$3,672.0
$5,468.1
$7,249.0
$7,929.9
$9,180.6
$9,262.0
-192.8%
356.7%
174.9%
17.7%
69.0%
48.9%
32.6%
9.4%
15.8%
0.9%
EBITDA
-$159.1
-$53.1
$196.0
$149.0
$472.0
$610.0
$686.0
$619.0
$749.0
$748.0
Net Income
-$198.3
-$125.4
$140.0
$93.0
$318.0
$462.0
$526.9
$476.3
$584.1
$583.0
+D&A*
$16.0
$35.0
$43.0
$45.0
$45.0
$50.0
$50.0
$50.0
$50.0
$50.0
+Stock Comp*
$14.0
$16.0
$19.0
$20.0
$22.0
$24.0
$26.0
$28.0
$30.0
$30.0
Change in WC*
$17.0
$25.0
$87.0
$35.0
$101.0
$96.0
$117.0
$59.0
$91.0
$27.4
Cap Ex
Free CF to Equity
-$132.5
-$94.5
-$136.0
-$180.0
-$360.0
-$100.0
-$138.0
-$158.0
-$195.0
-$212.6
-$2,988.7
-$283.8
-$143.9
$153.0
$13.0
$126.0
$532.0
$581.9
$455.3
$560.1
$477.8
$6,689.2
0
-$2,988.7
-$283.8
-$143.9
$153.0
$13.0
$126.0
$532.0
$581.9
$455.3
$560.1
$7,167.0
Terminal Value
Discounted CF's
NPV
$0
Current Stock Price
Current Market Cap
($ mil)
$32.05
$2,988.7
Implied Cost of
Equity
12.22%
*Increased Revenue & Net Income by 10% between 2016 to 2020, which increased Free Cash Flow to Equity by
10%
**Completed this analysis as current Wall Street Consensus only consists of primarily JPM and GS forecasts
which is not enough coverage for accurate calculation.
***By backing into the ROE of 10.87% using JPM and GS forecasts resulting in a beta of .98, we feel that the beta
is close to accurately measured
****Ultimately the beta (market risk) is lower than other automakers & intuition because TSLA is a new
technology company that should be less sensitive to market fluctuations. We feel that the company has more
company-specific risk, and therefore, the ROE should be higher than only the implied rate of 10.87%. The
implied ROE is likely too low because investor cash flow expectations are higher and so those higher cashflows
discounted back to $32 results in a higher ROE that makes more sense for a riskier company. We think the total
risk (systematic & unsystematic risk) is more like 12.22% as Wall Street Consensus computed by only GS & JPM
understates future cash flows.
TESLA MOTORS
38
Appendix U: Cost of Capital Calculations
Betas
Betas (6/28/2010-12/6/2010)
Covariance(TSLA,SPY)
Variance(SPY)
Beta TSLA
Covariance(A123,SPY)
Variance(SPY)
Beta A123
Covariance(Ener1,SPY)
Variance(SPY)
Beta Ener1
Weight
0.00009
0.00010
0.87
0.00021
0.00010
2.04
Beta Toyota
25.0%
0.00015
0.00010
1.45
0.00007
0.00010
0.71
30.0%
Covariance(Ford,SPY)
Variance(SPY)
Beta Ford
0.00014
0.00010
1.33
20.0%
1.35
Betas (2003 - Present)
Covariance(Ford,SPY)
Variance(SPY)
Beta Ford
Weight
0.90
40.0%
0.000232
0.00018
1.29
40.0%
Since Inception '11/17/2006
25.0%
Covariance(Toyota,SPY)
Variance(SPY)
Beta Toyota
Weighted Average Beta
Betas
Betas (2003 - Present)
Covariance(Toyota,SPY) 0.000162
Variance(SPY)
0.00018
Covariance(FSLR,SPY)
Variance(SPY)
Beta FSLR
Weighted Average Beta
0.000409
0.000294
1.39
20.0%
1.16
100.0%
100.0%
*Overall, the betas of car manufacturers will likely be slightly over 1.00. Therefore, if the stock market increases
by 1% then car manufacturers will likely achieve returns slightly above 1%. If the market returns drop by 1% then
it is likely car manufacturers will experience returns slightly worse than 1%. This is a result of auto
manufacturers cash flows being positively or negatively directly associated with the economy, which likely
dictates stock prices. Betas computed using average daily returns versus the S&P500.
TESLA MOTORS
39
Cost of Debt
Company
Loan Amount
Ford Motor Co
Maturity
Index
Index
Rate
Spread
Rate
After Tax
$360,000,000
8/1/2018
10-Yr Treasury
3.32%
2.66%
5.98%
3.89%
$1,250,000,000
1/15/2020
10-Yr Treasury
3.32%
2.49%
5.81%
3.78%
Ford Holding LLC
$133,471,000
3/1/2020
10-Yr Treasury
3.32%
3.97%
7.29%
4.74%
Toyota Motor Co
$750,000,000
6/17/2020
10-Yr Treasury
3.32%
0.49%
3.81%
2.48%
Toyota Motor Co
$70,000,000
6/20/2019
Jap. Govt Bond
1.30%
0.14%
1.44%
0.94%
3.32%
1.95%
5.27%
3.43%
3.32%
1.48%
4.80%
3.12%
3.32%
0.00%
3.32%
2.16%
Ford Motor Credit
Average
FINRA/Bloomberg Investment Grade
U.S. Corporate Bond Index*
DOE Loans
$465.1 million
9/2019, 9/2022
*Average Duration 4.67.
**WACC used for terminal value: 8.83%
***Weight for WACC used for capital structure in 2015: 72.6% equity & 27.4% debt
WACC Summary - Current
Ke
Kd
Beta
WACC
Derived using Wall Street Consensus
Rate
After Tax Rate
Tax Rate
10.87%
3.32%
2.2%
35.0%
0.98
8.08%
Ke
Kd
Beta
WACC
Derived using Adjusted Wall Street Consensus
12.22%
3.32%
2.2%
35.0%
0.98
9.00%
68.0%
32.0%
100.0%
Ke
Kd
Beta
WACC
WACC Summary - 2020 (Perpetuity Calculation)
Rate
After Tax Rate
Tax Rate
10.87%
5.27%
3.43%
35.0%
0.98
8.83%
Weight
72.6%
27.4%
100.0%
Weight
68.0%
32.0%
100.0%
Conclusions:
1) Investors have much higher return expectations than Consensus meaning that the cost of equity is really
higher b/c cash flows will be higher.
2) The systematic risk of TSLA as measured by beta is currently less than traditional automakers, which have an
average of slightly over 1.0. Battery producers we evaluated had betas of over 1.5.
TESLA MOTORS
40
Appendix V: Stock Price Sensitivity Analysis for Bullish and Bearish Outlooks
Stock Price Projections - Bullish Case
$ in Millions
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
147
1,019
2,192
2,495
4,488
5,834
7,584
8,343
9,177
10,095
% Growth
34%
593%
115%
14%
80%
30%
30%
10%
10%
10%
EBITDA
-198
-101
236
175
641
865
1125
1349
1484
1633
% Growth
38%
-49%
-333%
-26%
266%
35%
30%
20%
10%
10%
EBIT
-208
1,610
Revenue
% Growth
EBIT(1-.35)
-208
-115
223
165
632
853
1,109
1,330
1,464
-45%
-293%
-26%
282%
35%
30%
20%
10%
10%
-115
145
107
411
554
721
865
951
1,046
+D&A
17.5
22
24
27
29
32
35
39
43
47
Cap Ex
-136
-86
-75
-125
-160
-108
-138
-165
-183
-200
0
0
-49
-49
-49
-49
-49
-49
-49
-49
-327
-179
45
-40
231
430
570
690
763
Principal Paydown**
Free CF to Firm
Terminal Value
FCF to Firm
Discounted
PV (in Mil)
845
14,916
-327
-179
45
-40
231
430
570
690
763
15761
$7,632.0
Shares (in Mil)
97.8
Intrinsic Value
$78.04
*Terminal value in 2020 is computed using a perpetuity growth rate of 3% and using a WACC of 8.83%.
**WACC of 8.83% calculated using the target capital structure in 2015 and cost of capital in the Cost of Debt
Chart for the terminal value. Cash flows between 2011 and 2020 are discounted using a WACC of 9.00%.
***Principal paydown of DOE loan to achieve desired capital structure. Remaining debt assumed to be taken on
by new debt investors in 2020.
****Bullish case consists of scrapping the Generation III concept and adding more products using existing
technology that will lower capital expenditure costs from significantly less R&D and production costs. This also
keeps Tesla positioned in the market towards the high-end more effectively.
TESLA MOTORS
41
Stock Price Projections - Bearish Case
Revenue
% Growth
EBITDA
% Growth
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$147.0
$628.0
$1,846.0
$2,173.0
$3,672.0
$4,773.6
$6,205.7
$6,826.2
$7,508.9
$8,259.8
34%
327%
194%
18%
69%
30%
30%
10%
10%
10%
-$198.0
-$154.0
$153.0
$104.0
$427.0
$576.5
$749.4
$899.3
$989.2
$1,088.1
-346%
-22%
-199%
-32%
311%
35%
30%
20%
10%
10%
-$208.0
-$168.0
$140.0
$94.0
$418.0
$564.3
$733.6
$880.3
$968.3
$1,065.2
-19%
-183%
-33%
345%
35%
30%
20%
10%
10%
-$208.0
-$168.0
$91.0
$61.1
$271.7
$366.8
$476.8
$572.2
$629.4
$692.4
$17.5
$22.0
$24.2
$26.7
$29.3
$32.3
$35.5
$39.0
$42.9
$47.2
Cap Ex
-$136.0
-$85.5
-$130.0
-$180.0
-$365.0
-$107.5
-$137.5
-$165.0
-$182.5
-$200.0
Free CF to Firm
-$326.6
-$231.5
-$14.8
-$92.2
-$64.0
$291.6
$374.8
$446.2
$489.9
EBIT
% Growth
EBIT(1-.35)
+D&A
Terminal Value
FCF to Firm
PV
Shares
Intrinsic Value
$539.6
$9,533.0
-$326.6
-$231.5
-$14.8
-$92.2
-$64.0
$291.6
$374.8
$446.2
$489.9
$10,072.6
$4,470.4
97.8
$45.71
*Terminal value in 2020 is computed using a perpetuity growth rate of 3% and using a WACC of 8.83%.
**WACC of 8.83% calculated using the target capital structure in 2015 and cost of capital in the Cost of Debt Chart.
***WACC 9.00% used for discounting CF’s through 2020 using DOE debt costs and ROE of 12.22%.
TESLA MOTORS
42
TESLA MOTORS
7.02
7.02
Wei ghted Avera ge Sha res , Ba s i c
Weighted Average Shares, Diluted
-55,944
NET INCOME
-7.97
-7.97
-1,331
-53,228
-47.5%
159
-2,690
-55,918
26
Ba s i c EPS
Diluted EPS
-25,998
-51,897
7.30
7.30
-4.04
-4.04
7.64
7.64
-5.04
-5.04
-38,517
47
-464
-38,508
9
0
-182
-29,401
118
-29,519
-6,729
-38,091
-3,221
-29,219
-31,362
37,623
29,850
OPERATING INCOME
22,207
16,585
Non-Opera ting Income /
EBIT
EBIT Margin %
Ineres t Income
Interes t Expens e
EBT
Total Ta xes
15,416
6,261
22.0%
20,266
1,878
22,144
23,971
4,434
28,405
Q2 2010A
13,265
19,282
17.2%
42,150
37.7%
61,432
Res ea rch a nd Devel opment
% of Revenue
SG&A
% of Revenue
Total Operating Expenses
3,852
18.5%
16,858
102
16,960
9,535
8.5%
102,408
0
102,408
Cos t of Products
Cos t of Servi ces
Total Cost of Revenues
20,585
227
20,812
Q1 2010A
GROSS PROFIT
Gross Margin
111,943
0
111,943
659%
2009A
Product Revenues
Servi ce Revenues
Total Revenues
% Increase (Y o Y)
Revenues (in 000's)
92.27
92.27
-0.38
-0.38
-34,935
100
-298
-34,852
83
3,180
-34,654
-37,834
47,130
20,432
26,698
9,296
29.8%
19,457
2,488
21,945
23,350
7,891
31,241
Q3 2010A
97.8
94.2
-0.57
-0.57
-55,637
100
-555
-55,628
9
-6,729
-55,172
-48,443
55,800
30,800
25,000
7,357
25.1%
21,658
348
22,006
28,574
789
29,363
Q4 2010E
97.8
94.2
-1.68
-1.62
-158,608
-13,499
-157,136
-143.1%
247
-1,499
-158,389
219
-143,637
80,379
73.2%
90,024
82.0%
170,403
26,766
24.4%
78,239
4,816
83,055
96,480
13,341
109,821
-1.9%
2010E
98.0
94.6
-0.37
-0.37
-36,361
50
-874
-36,243
118
-3,221
-35,418
-32,197
36,000
16,000
20,000
3,803
21.5%
9,893
4,019
13,911
12,691
5,023
17,714
Q1 2011E
98.6
94.8
-0.50
-0.50
-48,809
50
-1,249
-48,800
9
-5,000
-47,601
-42,601
52,000
22,000
30,000
9,399
21.8%
29,678
4,019
33,696
38,073
5,023
43,095
Q2 2011E
Forecasted Income Statement
99.2
95.5
-0.51
-0.51
-50,315
50
-1,624
-50,197
118
3,180
-48,623
-51,803
64,000
25,000
39,000
12,197
21.9%
39,570
4,019
43,589
50,763
5,023
55,786
Q3 2011E
101.5
98.9
-0.77
-0.77
-78,357
50
-1,999
-78,348
9
-5,000
-76,399
-71,399
78,000
28,000
50,000
6,601
21.7%
19,785
4,019
23,804
25,382
5,023
30,405
Q4 2011E
101.5
98.9
-2.16
-2.11
-213,842
-10,041
-208,041
-141.5%
200
-5,747
-213,588
254
-198,000
139,000
94.6%
91,000
61.9%
230,000
32,000
21.8%
98,926
16,074
115,000
126,908
20,092
147,000
33.9%
2011E
103.0
95.4
-1.21
-1.21
-125,086
-14,000
-115,160
-11.3%
200
-9,872
-124,832
254
-101,160
150,000.00
14.7%
112,000.00
11.0%
262,000
160,840
15.8%
841,179
16,514
857,694
997,725
20,808
1,018,534
592.9%
2012E
105.0
96.3
2.01
2.01
211,180
-13,000
222,620
10.2%
200
-11,386
211,434
254
235,620
161,000.00
7.3%
135,000.00
6.2%
296,000
531,620
24.2%
1,643,777
16,924
1,660,701
2,170,846
21,475
2,192,321
115.2%
2013E
106.0
97.3
1.45
1.45
153,950
-10,000
165,238
6.6%
200
-11,234
154,204
254
175,238
267,000.00
10.7%
148,000.00
5.9%
415,000
590,238
23.7%
1,887,739
17,199
1,904,938
2,473,681
21,495
2,495,176
13.8%
2014E
107.0
98.3
5.81
5.81
621,586
-9,000
631,747
14.1%
200
-10,107
621,840
254
640,747
177,000.00
3.9%
240,000.00
5.3%
417,000
1,057,747
23.6%
3,411,604
18,389
3,429,993
4,464,890
22,849
4,487,740
79.9%
2015E
Appendix W: Financial Statement Forecasts
43
*Selling, general and administrative expenses- consist primarily of personnel and facilities costs related to our
Tesla stores, marketing, sales, executive, finance, human resources, information technology and legal
organizations, as well as litigation settlements and fees for professional and contract services.
**Research and development expenses- consist primarily of personnel costs for our teams in engineering and
research, supply chain, quality, manufacturing engineering and manufacturing test organizations, prototyping
expense, contract and professional services and amortized equipment expense. Also included in research and
development expenses are development services costs that we incur, if any, prior to the finalization of
agreements with our development services customers as reaching a final agreement and revenue recognition is
not assured. Development services costs incurred after the finalization of an agreement are recorded in cost of
revenues.
Demand Drivers
Segment
2009A
2010
Roadster
2011E
2012E
2013E
2014E
2015E
1,050
100.0%
U.S. Volume
630
308
280
278
750
875
Europe & Other Volume
200
252
280
93
750
875
900
Total Volume
830
560
560
371
1,500
1,750
1,950
74,814
Base Price
112,545
112,816
112,350
110,680
77,305
77,305
D&D (Destination & Delivery)
1,849
1,726
1,690
1,820
1,690
1,690
1,710
Options
26,099
25,586
25,350
25,674
17,442
17,442
16,953
ZEV Credit
6,831
4,675
3,750
3,747
2,000
1,500
1,077
Average Selling Price
147,323
144,803
143,140
141,920
98,438
97,938
94,553
Cogs of Goods Sold per Unit
113,590
119,100
114,042
111,532
67,704
67,704
65,837
Gross Profit per Unit
33,733
25,703
29,099
30,388
30,734
30,234
28,716
Revenues
122,278,300
81,089,624
80,158,400
52,652,290
147,656,700
171,391,150
184,378,590
COGS
94,280,000
66,696,000
63,863,240
41,378,369
101,555,250
118,481,125
128,382,450
Gross Profit
27,998,300
14,393,624
16,295,160
11,273,921
46,101,450
52,910,025
55,996,140
Gross Margin on ASP
22.9%
17.8%
20.3%
21.4%
31.2%
30.9%
30.4%
Gross Margin on ASP less ZEV
Credit Revenue
18.3%
14.5%
17.7%
18.8%
29.2%
29.3%
29.2%
U.S. Volume
6,000
13,500
16,000
23,000
Europe & Other Volume
4,000
9,000
10,000
18,500
Total Volume
10,000
22,500
26,000
41,500
Target Market
946,251
905,482
870,772
831,546
1.1%
2.5%
3.0%
5.0%
Model-S
ICA Projections
% of Target Market
Wall Street Consensus
Total Volume
5,500
18,500
22,000
37,500
Target Market
946,251
905,482
870,772
831,546
% of Target Market
0.6%
2.0%
2.5%
4.5%
Base Price - 160 mile range % of Sales
20%
20%
20%
20%
TESLA MOTORS
44
Base Price - 230 mile range % of Sales
50%
50%
60%
60%
Base Price - 300 mile range % of Sales
30%
30%
20%
20%
Base price - 160 mile range
61,012
61,012
60,873
59,285
Base price - 230 mile range
73,874
73,874
73,705
72,234
Base price - 300 mile range
82,270
82,270
82,083
80,688
Base price - Blended
73,820
73,820
72,814
71,335
D&D (Destination & Delivery)
1,157
1,157
1,150
1,178
Options
9,480
9,480
9,316
9,262
ZEV Credit
3,000
2,400
1,846
1,108
Average Selling Price - ICA
Projected
Average Selling Price Consensus
87,457
86,857
85,127
82,883
88,007
86,917
85,960
83,144
Cogs of Goods Sold per Unit
74,552
66,093
65,276
63,854
Gross Profit per Unit
12,906
20,764
19,851
19,029
Revenues - ICA
874,573,200
1,954,289,700
2,213,290,000
3,439,647,800
COGS - ICA
745,516,000
1,487,101,500
1,697,168,000
2,649,941,500
Gross Profit - ICA
129,057,200
467,188,200
516,122,000
789,706,300
Gross Margin on ASP
14.8%
23.9%
23.3%
23.0%
Gross Margin on ASP less ZEV
Credit Revenue
11.3%
21.1%
21.2%
21.6%
Revenues - Consensus
484,039,500
1,607,968,500
1,891,114,000
3,117,899,000
COGS - Consenus
407,822,500
1,223,400,500
1,446,236,000
2,399,472,500
Gross Profit - Consensus
76,217,000
384,568,000
444,878,000
718,426,500
Gross Margin on ASP
15.7%
23.9%
23.5%
23.0%
Gross Margin on ASP less ZEV
Credit Revenue
12.6%
21.2%
21.6%
21.8%
Gross Profit % Difference vs
Consensus
40.9%
17.7%
13.8%
9.0%
U.S. Volume
4,000
8,000
Europe & Other Volume
1,500
3,000
Total Volume
5,500
11,000
Base Price
59,863
59,863
D&D (Destination & Delivery)
1,108
1,108
Options
4,327
4,327
ZEV Credit
2,909
2,909
Average Selling Price
68,207
68,207
Cogs of Goods Sold per Unit
50,818
50,818
Gross Profit per Unit
17,389
17,389
375,139,500
750,279,000
ICA - Projections
Consensus - Projections
Top Hat (Don't go ahead w/
Gen III)
Revenues
TESLA MOTORS
45
COGS
279,500,000
559,000,000
Gross Profit
95,639,500
191,279,000
Gross Margin on ASP
25.5%
25.5%
Gross Margin on ASP less ZEV
Credit Revenue
21.2%
21.2%
10,065
Power-Train Business
(Battery Packs & Chargers)
Consumer Vehicles
Volume
30
855
2,750
4,700
5,300
8,900
Average Selling Price
20,000
18,000
17,000
15,000
13,000
10,000
9,000
Revenues
600,000
15,390,000
46,750,000
70,500,000
68,900,000
89,000,000
90,585,000
Volume
0
0
0
0
0
0
0
Average Selling Price
0
0
0
0
0
0
0
Revenues
0
0
0
0
0
0
0
Revenues
600,000
15,390,000
46,750,000
70,500,000
68,900,000
89,000,000
90,585,000
COGS
450,000
11,542,500
35,062,500
54,285,000
55,120,000
72,090,000
74,279,700
Gross Profit
150,000
3,847,500
11,687,500
16,215,000
13,780,000
16,910,000
16,305,300
25.0%
25.0%
25.0%
23.0%
20.0%
19.0%
18.0%
Commercial Vehicles
Total Power Train Business
Gross Margin
Development Services Prototypes
Revenues
100.0%
13,341,100
20,091,600
20,808,210
21,474,800
21,494,850
22,849,410
COGS
4,816,320
16,074,260
16,514,131
16,924,250
17,198,875
18,389,350
Gross Profit
8,524,780
4,017,340
4,294,079
4,550,550
4,295,975
4,460,060
63.9%
20.0%
20.6%
21.2%
20.0%
19.5%
Gross Margin
Total Revenue
122,878,300
109,820,724
147,000,000
1,018,533,700
2,192,321,200
2,870,315,500
4,487,739,800
COGS
94,730,000
83,054,820
115,000,000
857,693,500
1,660,701,000
2,184,438,000
3,429,993,000
Gross Profit
28,148,300
26,765,904
32,000,000
160,840,200
531,620,200
685,877,500
1,057,746,800
TESLA MOTORS
46
TESLA MOTORS
47
51,699
7
5,193
-204,914
-199,714
Shareholders' Equity
Common Stock
Addi ti ona l Pa i d-In Ca pi ta l
Reta i ned Ea rni ngs
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
101,178
0
56,602
0
888
Common Stock Wa rra nt Li a bi l i ty
Long-Term Debt
Converti bl e Preferred Stock Wa rra nty Li a bi l i ty
Ca pi ta l Lea s e Obl i ga ti ons
Total Convertible Preferred Stock
48,019
87,935
Res erva ti on Pa yments
Total Current Liabilities
0
4,810
62,300
150,235
24,357
341
11,145
4,073
Liabilities
Accounts Pa ya bl e
Current Porti on of Ca pi ta l Lea s es
Accrued Expens es
Current Deferred / Unea rned Revenue
Long-Term Deferred / Unea rned Revenue
Other Long-Term Li a bi l i ti es (Wa rra nti es )
Total Non-Current Liabilities
Total Liabilities
9,277
0
3,320
16,650
2,180
31,427
0
18,793
1,220
259
0
20,272
51,699
Q4 2008A
Assets
Ca s h a nd Ca s h Equi va l ents
Res tri cted Ca s h
Recei va bl es
Inventory
Prepa i d Expens e
Total Current Assets
Opera ti ng Lea s e Vehi cl es , Net
Property, Pl a nt, a nd Equi pment, Net
Res tri cted Ca s h
Other Non-Current As s ets
Other As s ets Adjus tments
Total Non-Current Assets
Total Assets
In (000's)
130,424
7
7,124
-260,654
-253,523
319,225
1,240
3,459
7,233
64,722
0
0
1,734
800
26,048
57,489
15,242
290
14,532
1,377
69,627
0
3,488
23,222
4,222
100,559
0
23,535
3,580
2,750
0
29,865
130,424
Q4 2009A
145,320
8
10,868
-290,173
-279,297
319,225
1,427
3,862
46,287
105,392
0
29,920
10,359
719
25,989
59,105
18,190
293
7,922
6,711
61,546
0
5,931
28,588
4,537
100,602
0
26,866
7,487
10,365
0
44,718
145,320
Q1 2010A
147,974
8
18,906
-328,689
-309,775
319,225
2,116
5,007
69,890
138,524
0
45,419
16,709
639
26,246
68,634
25,634
296
8,359
8,099
47,304
0
6,467
29,518
6,745
90,034
0
33,156
5,361
19,423
0
57,940
147,974
361,621
93
583,454
-363,624
219,923
0
2,514
6,058
72,370
141,698
6,675
56,557
0
566
27,869
69,328
26,990
291
10,701
3,477
96,563
88,130
8,062
39,508
8,870
241,133
5,743
91,892
10,753
12,100
0
120,488
361,621
Q3 2010A
369,782
94
613,360
-419,261
194,193
0
1,468
5,873
106,139
175,589
6,675
91,557
0
566
26,426
69,450
27,900
294
8,370
6,460
95,107
88,130
14,681
27,507
9,314
234,739
5,743
116,460
10,753
13,310
-11,223
135,043
369,782
354,596
94
613,360
-455,621
157,833
0
886
3,543
153,226
196,763
6,675
141,557
0
566
15,942
43,536
18,000
297
5,400
3,897
74,842
88,130
8,857
17,389
9,779
198,997
5,743
147,896
10,753
14,641
-23,434
155,599
354,596
394,498
94
613,360
-504,430
109,024
0
2,155
8,619
209,572
285,474
6,675
191,557
0
566
32,322
75,902
26,000
300
7,800
9,481
57,769
88,130
21,548
42,120
10,268
219,835
5,743
177,758
10,753
16,105
-35,696
174,663
394,498
423,048
94
613,360
-554,745
58,709
0
2,789
11,157
262,745
364,339
6,675
241,557
0
566
47,418
101,594
32,000
303
9,600
12,273
52,033
88,130
27,893
54,486
10,782
233,324
5,743
207,206
10,753
17,716
-51,694
189,724
423,048
371,810
94
613,360
-633,102
-19,648
0
1,520
6,081
306,399
391,458
6,675
291,557
0
566
27,364
85,059
39,000
306
11,700
6,689
27,914
88,130
15,202
29,755
11,321
172,321
5,743
236,199
10,753
19,487
-72,694
199,488
371,810
Q4 2010E Q1 2011E Q2 2011E Q3 2011E Q4 2011E
Forecasted Balance Sheet
Q2 2010A
1,416,797
94
613,360
-758,188
-144,734
0
50,927
203,707
628,431
1,561,531
6,675
366,557
0
566
407,413
933,100
262,000
309
39,300
224,077
341,819
88,130
254,633
428,847
11,887
1,125,316
5,743
299,668
10,753
21,436
-46,118
291,482
1,416,797
2012E
2,560,752
94
613,360
-547,007
66,447
0
109,616
438,464
947,816
2,494,305
6,675
392,495
0
566
723,466
1,546,489
296,000
312
44,400
482,311
704,562
88,130
548,080
830,351
12,481
2,183,603
5,743
350,434
10,753
23,579
-13,361
377,148
2,560,752
2013E
2,954,027
94
613,360
-393,057
220,397
0
124,759
499,035
987,468
2,733,630
6,675
356,433
0
566
823,408
1,746,162
311,250
315
62,250
548,939
812,568
88,130
623,794
952,469
13,105
2,490,066
5,743
448,776
10,753
25,937
-27,249
463,960
2,954,027
2014E
5,162,654
94
613,360
228,528
841,982
0
224,387
897,548
1,446,547
4,320,672
6,675
317,371
0
566
1,480,954
2,874,124
342,999
318
62,550
987,303
1,559,104
88,130
1,121,935
1,714,997
13,760
4,497,926
5,743
579,453
10,753
28,531
40,248
664,728
5,162,654
2015E
TESLA MOTORS
48
-2,046.0
-53.5
41,189.0
216.0
40,328.5
9,463.5
60,163.5
69,627.0
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Period
Cash and Cash Equivalents, End of Period
--
--
-4,227.5
0.0
-389.5
-4,617.0
-17,846.5
-26,248.0
-688.5
1,449.0
714.0
529.0
419.0
41.0
-14,428.5
1,941.5
595.5
319.0
-385.0
515.0
Q4 2009A
Cash Flow From Financing Activities
Long-Term Debt Proceeds
Long-Term Debt Repayment
Total Debt
Common Stock Proceeds
Debt / Equity Issuance Costs
Capital Leases
Preferred Stock Sale or Repurchase
Stock Options, Rights, Warrants, and Restricted Stock
Net Cash From Financing Activities
Cash Flow From Investing Activities
Payments related to acquistion of Manufacturing Facility
Purchase of P P& E
Increase in Restricted cash in DOE Account
Other Investing Activities
Net Cash From Investing Activities
Accounts Payable
Accrued Expenses and Accrued Liabilities
Deferred Revenue / Expenses & Deferred Dev Comp
Reservation Payments
Other Long Term Liabilities
Net Cash From Operating Activities
(In 000's)
Cash Flow From Operating Activities
Net Income / Income from Continuing Operations
Depreciation / Amortization / Accretion
Stock Based Compensation
Provision for Inventory Obsolescence
Infrequent / Unusual Items
Fixed / Intangible Assets Gain or Loss
Change in Fair Value of Convertible Pref stock warrants
Changes in Assets and Liabilities
Receivables
Inventory
Prepaid Expenses
Operating Lease Assets
Other Assets
5,824.5 -12,690.8 -6,345.4
10,118.4 -24,731.4 -12,365.7
-465.7
-489.0
-513.4
0.0
0.0
0.0
-1,331.0 -1,464.1 -1,610.5
50,000.0
0.0
50,000.0
0.0
0.0
-78.0
-200.0
50,122.0
50,000.0
0.0
50,000.0
0.0
0.0
-78.0
-200.0
50,122.0
25,480.0 -20,265.2 -17,072.8
69,627.0 95,107.0 74,841.9
95,107.0 74,841.9 57,769.1
91,557.0
0.0
91,557.0
268,842.0
-3,691.0
-310.0
-941.0
357,339.0
-5,736.0
57,769.1
52,033.0
50,000.0
0.0
50,000.0
0.0
0.0
-77.0
-200.0
50,123.0
-107,000.0 -34,000.0 -34,000.0 -34,000.0
-88,130.0
0.0
0.0
0.0
-1,852.0
0.0
0.0
0.0
-196,982.0 -34,000.0 -34,000.0 -34,000.0
8,903.0 -9,900.0
8,000.0
6,000.0
-4,462.0 -2,970.0
2,400.0
1,800.0
6,200.8 -2,562.8
5,584.0
2,792.0
378.5 -10,484.1 16,379.2 15,096.8
2,413.5 -2,329.8
5,076.3
2,538.2
-134,877.0 -36,387.2 -33,194.8 -21,859.0
-11,194.4
-4,936.3
-3,552.5
-5,932.0
-2,028.0
-158,607.5 -36,360.6 -48,809.0 -50,314.8
11,152.9
3,761.9
4,138.1
4,551.9
20,124.0
9,811.0 12,811.0 15,811.0
1,053.0
501.0
601.0
701.0
--------5,610.0
0.0
0.0
0.0
2011E
-520.9
-2,247.4
-2,007.1
0.0
-6,177.2
-24,119.1
52,033.0
27,913.9
-67,193.1
95,107.0
27,913.9
50,000.0 200,000.0
0.0
0.0
50,000.0 200,000.0
0.0
0.0
0.0
0.0
-78.0
-311.0
--200.0
800.0
50,122.0 200,489.0
-34,000.0 -136,000.0
0.0
0.0
0.0
0.0
-34,000.0 -136,000.0
7,000.0 11,100.0
2,100.0
3,330.0
-5,584.0
229.2
-20,054.2
937.7
-5,076.3
208.4
-40,241.1 -131,682.1
12,690.8
24,731.4
-539.1
0.0
-1,771.6
-78,357.3 -213,841.7
5,007.1 17,458.9
18,811.0 57,244.0
801.0
2,604.0
----0.0
0.0
Forecasted Statement of Cash Flows
2010E Q1 2011E Q2 2011E Q3 2011E Q4 2011E
313,905.2
27,913.9
341,819.1
75,000.0
0.0
75,000.0
0.0
0.0
-78.0
-200.0
75,122.0
-85,500.0
0.0
0.0
-85,500.0
223,000.0
27,600.0
217,388.4
380,049.4
197,625.8
324,283.2
-239,431.1
-399,092.1
-566.0
0.0
-1,948.7
-125,085.5
22,031.1
21,811.0
901.0
--0.0
2012E
362,742.5
341,819.1
704,561.6
75,000.0
-49,061.9
25,938.1
0.0
0.0
-77.0
-200.0
26,061.1
-75,000.0
0.0
0.0
-75,000.0
34,000.0
5,100.0
258,233.3
316,052.5
234,757.5
411,681.4
-293,446.9
-401,503.8
-594.3
0.0
-2,143.6
211,180.4
24,234.2
24,811.0
1,001.0
--0.0
2013E
10,000.0
-49,061.9
-39,061.9
0.0
0.0
-78.0
-200.0
-38,939.9
-160,000.0
0.0
0.0
-160,000.0
31,749.3
300.0
438,364.0
657,546.1
398,512.8
945,475.9
-498,141.0
-762,527.5
-655.3
0.0
-2,593.7
621,585.7
29,323.4
30,811.0
1,201.0
--0.0
2015E
108,006.8
746,536.0
704,561.6
812,568.4
812,568.4 1,559,104.4
13,000.0
-49,061.9
-36,061.9
0.0
0.0
-78.0
-200.0
-35,939.9
-125,000.0
0.0
0.0
-125,000.0
15,250.0
17,850.0
66,628.1
99,942.1
60,571.0
268,946.6
-75,713.7
-122,118.5
-624.0
0.0
-2,357.9
153,950.1
26,657.7
27,811.0
1,101.0
--0.0
2014E
Appendix X: Capital Expenditure Summary
Capital Expenditure Summary
2009A
Beginning PP&E Gross
Adjustments
Purchases
Ending PP&E Gross
Depreciation
Adjustment
Accumulated Depreciation
Net PP&E
2010
24,381
2011E
2012E
2013E
2014E
2015E
11,884
36,265
6,940
0
-12,730
36,265
-2,898
107,000
140,367
11,153
1,174
-22,709
140,367
0
136,000
276,367
17,459
0
-40,168
276,367
0
85,500
361,867
22,031
0
-62,199
361,867
0
75,000
436,867
24,234
0
-86,433
436,867
0
125,000
561,867
26,658
0
-113,091
561,867
0
160,000
721,867
29,323
0
-142,414
23,535
116,460
236,199
299,668
350,434
448,776
579,453
Capital Expenditures Detail ($ in Mil's)
Store Count
Capital Required to
Open Stores
Incremental Capital
Required
Total Volume
(Including Powertrain)
Total Powertrain
Capacity
Capital Required to
Build 10k of Capacity
Incremental Capital
Required
Total Vehicle Assembly
Capacity
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
10
32
44
65
75
85
105
140
175
225
250
250
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
11.0
6.0
10.5
5.0
5.0
10.0
17.5
17.5
25.0
12.5
0.0
1,731
4,060
11,270
32,400
33,150
56,260
87,441
126,230
150,792
172,396
179,151
30,000
30,000
30,000
30,000
30,000
60,000
60,000
90,000
120,000
180,000
180,000
10
10
10
10
10
10
10
10
10
10
10
0
0
0
0
30
0
30
30
60
0
30,000
30,000
30,000
50,000
50,000
150,000
250,000
250,000
250,000
250,000
50
50
50
50
30,000
Incremental Capital
Required
Incremental Capital to
Develop Top-Hat
Total Incremental
Capital Required
Maintenance CapEx
Total Incremental
Capital Required
% of Total Revenues
TESLA MOTORS
0
0
0
0
50
50
50
50
50
50
11
6
11
55
105
140
68
98
105
123
50
96
130
75
20
20
20
40
40
60
60
150
107
136
86
75
125
160
108
138
165
183
200
97.4%
92.5%
8.4%
3.4%
5.0%
3.6%
2.0%
2.1%
2.1%
2.0%
1.8%
49
*We estimated capital expenditures to be lower in 2013, 2014, and 2015 as we recommended to not go ahead
with the Generation III cars since buyers of those cars would not likely be in our higher-end target market. In
addition, those cars would require a different powertrain and other components that would require additional
investment in vehicle assembly capacity. We kept expense of $50k per year because we believe Tesla should
expand into other types of cars like min-vans, etc but that still use the same powertrain and other technology.
Therefore, new assembly capacity would be required, but would be much less than Gen III assembly.
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Appendix Y: Model S Sales Forecasts
*Tables included for purposes of comparison between our predictions and those of the industry.
**Our bullish case assumes that Tesla is able to achieve sales 0.5% above Wall Street consensus expectations.
***0.5% increase in reasonable expectations for Tesla given its stated initial sales objective of 20,000 sales per
year and objective of reaching 30,000 Model S units (vehicle totals, not including Model S powertrains) sold per
year.
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Appendix Z: Competitor Analysis
The Model S will face competition from existing and future automobile manufacturers in the luxury
category, including Audi, BMW, Lexus, and Mercedes. While most automakers (Nissan, General Motors, Ford,
Honda, and Volkswagen to name a few) are planning to enter the EV market in the next few years, we believe
that the most significant competition for the Model S will be from the luxury category. Additionally, the Model S
target market is already purchasing hybrid and plug-in hybrids vehicles1, and we believe that Tesla will see
particular competition from the Toyota Prius, a car that does not require dramatic consumer behavior change
and is established as a significant status symbol among “affluent environmentalists.”
BMW
BMW has recently been ramping up its EV capabilities and announced that it will hire 2,600 new employees by
the end of 2011 to focus on electric and hybrid technology. 2 BMW plans to launch two fully electric vehicles –
the ActiveE (2011) and the MegaCity Vehicle (2013). The ActiveE (pictured below) is based on the BMW 1 Series
Coupé. It will have seating for four people and go 0-60 mph in approximately 8.5 seconds. The MegaCity Vehicle
will be a compact, urban hatchback with a carbon fiber passenger cell and aluminum chassis components. It is
expected to have about 100 miles of range.3
BMW ActiveE Concept, Source: www.bmw.com
Audi
Franciscus van Meel, Audi’s manager for electric mobility strategy recently stated, "By 2020, we want to be the
leading premium seller of electric vehicles. We will successively bring out a variety of hybrid models and electric
vehicles…Today we're assuming that our sales of Audi e-tron electric cars will rise to a six-figure volume by
2020(4)." Audi plans to launch their first e-tron EV (pictured below) by 2012. Audi recently opened a $90M,
14,000-square-meter electric-drive development and test center at its headquarters and plans to hire 840
people to help develop electric powertrains and batteries. 5 The Audi e-tron is a high-performance electric sports
car that will likely compete with the Roadster. This two-seater car will accelerate from 0 to 100 km/h (0 – 62.14
mph) in 4.8 seconds, and from 60 to 120 km/h (37.28 – 74.56 mph) in 4.1 seconds. The lithium-ion battery will
have a range of approximately 50 – 150 miles.
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Audi e-tron Concept | October 06, 2009 | Source: Audi
Toyota
The Toyota Prius is “the unofficial greenmobile for Toyota and the world.”(6) Toyota is expected to launch its
first plug-in hybrid Prius – the Prius PHV – in 2012. The car is essentially identical to the Prius, except for the
plug-in technology. It is much slower than the Tesla, Audi, and BMW cars, with a 0-to-60-mph time of 11.3
seconds. However, as Car and Driver points out, “the Prius never has been and never will be about driving
delight, but rather is about maximum fuel economy.”(7) With a full charge, the Prius PHV can travel up to 13
miles with on electric power. The expected cost $47.5k.
Toyota Prius PHV. Source: Toyota
Source:
1 ―Given the premium that must be paid for a hybrid like the Toyota Prius or Lexus RX Hybrid, it‘s no surprise the people who buy them
are affluent – 42 percent of households with a hybrid in the driveway have an annual income exceeding $100,000. That‘s more than
twice the national median. Hybrid owners are two to three times more likely to practice yoga, ski, hike or belong to a gym. They are
twice as likely to hold a college degree and three times more likely to have post-graduate degrees. Thirty-eight percent identify
themselves as Democrats, 14 percent as Republicans and 34 percent said they are independents. The rest of them didn‘t say how they
vote.‖ http://www.wired.com/autopia/2007/12/hybrid-owners-w/
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2 Reiters C. Retrieved from http://www.bloomberg.com/news/2010-12-06/bmw-seeks-2-600-new-employees-by-end-of-2011-on-electrichybrid-systems.html
3 Tingwall E. Retrieved from http://www.automobilemag.com/green/news/1007_2013_bmw_megacity_vehicle/index.html
4 The Motor Report. Retrieved from http://www.themotorreport.com.au/51099/audi-looking-to-dominate-premium-ev-mar
5 Krix P. Retrieved from http://www.autonews.com/apps/pbcs.dll/article?AID=/20101123/ANE/311239980/1193
6 Siler S. Retrieved from http://www.caranddriver.com/reviews/car/10q2/2012_toyota_prius_plug-in_hybrid-first_drive_review
7 Ibid Siler S.
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Appendix AA: Tesla Roadster and Model S Images
The Tesla Roadster
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(Image source: Tesla Motors)
The Tesla Model S
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(Image Source: Tesla Motors)
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Appendix AB: The Tesla Brand Community
A key differentiator and strength for Tesla is the community that has developed around the Tesla brand. These
community members are called Tesla Enthusiasts and they connect with each other online and in person to
share their enthusiasm for the cars and the company. The community conversation is in some cases organic and
in other cases guided and managed by Tesla.
Tesla Website
The Tesla website include a section titled “Enthusiasts,” which includes a blog (written by both Tesla employees
and Tesla owners), picture gallery with owners and their cars, forums where Enthusiasts can “talk Tesla,” and an
accessories shop where Enthusiasts can purchase Tesla gear. While Tesla manages the content of the website,
they appear to allow conversation to flow organically in the forums, although users must register on the website
in order to post comments.
Photo gallery of owners with their Roadsters
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Tesla Enthusiasts who have reserved a Model S often include their personal
reservation number as part of their signature in the Enthusiast Forums.
Facebook:
Tesla manages a Facebook page that has nearly 25,000 fans. The company posts several times a week with each
post typically generating between 100 and 400 “likes” and in some cases over 100 comments from fans. While
Tesla provides the initial content for each post, the conversation between Enthusiasts usually unfolds
organically.
Tesla stories from owners are called “Teslamonials.”
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Tesla posts pictures owners with their cars. (This post received 162 “likes”
from other Tesla fans).
Tesla owners never tire of “talking Tesla.”
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YouTube:
Tesla has posted over 25 videos on YouTube, generating thousands of views. Tesla Enthusiasts also often post
their own videos about their Tesla car. Several Enthusiasts have created their own Tesla commercials.
Tesla’s video introducing the Model S has received almost 300,000 views.
This Tesla Enthusiast’s commercial has generated nearly 40,000 views.
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Fan Websites:
Tesla fans have also created their own websites and forums for connecting with other fans and discussing their
cars.
Events:
Tesla Enthusiasts come together at Tesla sponsored events (Roadster Rallies, electric vehicle conference) and
other events organized by owners.
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TUESDAY, APRIL 20, 2010
Northern California Roadster Record!
By Dan Myggen, Customer Advocate
TAGS: EVENTS / ROADSTER /
8 COMMENTS
Roadster owners are a fascinating group of people with varied backgrounds and great stories to tell. I’ve had the
pleasure of getting to know many of them over the past year delivering cars from our Menlo Park store. After
rejoining our headquarters Customer Service team, it’s the daily interaction with our owners I miss most. When
asked to help host the March 21st Road Rally for local customers, I didn’t hesitate.
We kicked off the event at the Tesla Store Menlo Park. Once everyone had assembled in the parking lot and
enjoyed some coffee and snacks, we had a quick drivers’ meeting and were off. Up Sand Hill Road we went,
passing some of the very VCs whose investments made these cars possible in the first place. We hopped on
Highway 280, where Roadsters are becoming a familiar sight, then took the 92 towards the coast. Highway 92 is
made for the Roadster – its a fun little twisty road that courses over Crystal Springs Reservoir and up into the
coastal hills which greet the Pacific fog each evening. From the crest, we made our way down into the sleepy
hamlet of Half Moon Bay. We cruised down the coast as the morning fog dissipated, exposing some of the best
scenery the Pacific has to offer. After a dozen breathtaking miles on PCH, we stopped at Pomponio State Beach
to line up the Roadsters for their photo shoot.
As we pulled in, I tallied up the Roadsters. There were thirty customer cars and four cars from our company fleet.
A few of our earliest customers were there touting odometers that read over 20,000 miles. I was driving
Validation Prototype 11 which had the highest mileage of any Roadster present, with roughly 67,000 miles on the
odometer. Not bad for a car just over two years old! Leading the pack was our beloved VIN 750, the car we
watched drive across the country to Detroit for NAIAS in January.
In the parking lot of Pomponio State Beach, we checked out the cars (a great opportunity to see color combos
and customizations), and owners traded stories of how they came to be Roadster Owners. We took a group
photo to commemorate the largest rally of Roadsters to date (beat that, LA!).
We were able to keep a tight grouping as we motored back up the hills to Skyline Boulevard, the famous ribbon
of blacktop running along the hilltop crest of the peninsula south of San Francisco. This crossroads is home to
Alice’s Restaurant, a local favorite for anyone who likes to tackle twisty roads on two or four wheels. This was the
site of some of our earliest test drives, so this hilltop intersection is certainly a special place for Tesla. As we piled
up for the stop sign, we could see restaurant patrons pouring out to have a look and give us a wave. While
Roadsters may have become a regular sight in the Bay Area, seeing 34 of them in a row is certainly a spectacle!
After we slid down the hill and made our way into Palo Alto, we pulled into the parking lot of our new
Headquarters where lunch was waiting. Since most of the building is still a hardhat zone while we prepare to
build electric powertrain components, we ate in the sunshine, discussing the merits of solar power, electric drive,
and the special feeling of being a member of the Roadster Owner Community.
I can’t think of a better way of spending a Sunday morning with a Roadster. If you can, let us know, we’re
listening.
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Appendix AC. Model S Battery Technology
Battery Cell Form Factor, Chemistry, and Safety.
Battery packs can differ in cell-form factor (small cylindrical vs. large flat prismatic) and chemistry. Tesla uses
small cylindrical cell, lithium-ion batteries, similar to those used in laptops. The packs are organized in multiple
cells, each cell containing multiple batteries. The complexity of the more than 5,000 cells in Tesla’s battery packs
(compared to less the hundreds in prismatic battery packs) is potentially a concern about safety, but Tesla uses a
thermal-liquid cooling system that in theory isolates overheating of any individual batteries, preventing failure
between cells and overall battery pack failure.1 To date there have been no overheating incidents with Tesla’s
battery packs in the Roadster models.
Battery Packs and Range.
The battery pack of Tesla’s Roadster provides unparalleled range (244 miles/charge) for less or comparable cost
to competitor battery packs ($679/kWh for Roadster 1.0, estimated $469/kWh for Roadster 2.5). 2 Musk has
stated the Model S battery pack will be approximately 44% ($299/kWh) the cost of the Roadster 1.0 battery
pack.3 In addition, some industry engineers and analysts have stated that battery packs using small-cell
cylindrical form factor batteries like those used by Tesla may cost only $200/kWh.4 In November, Panasonic
purchased a $30 million stake in Tesla, entering into a strategic partnership with Tesla to supply the lithium-ion
cells for the Model S. Whereas Roadster models use lithium cobalt-oxide batteries, Panasonic is supplying
lithium nickel-cobalt-aluminum batteries, a less expensive and likely safer chemistry designed for EV and PHEV
batteries.
Battery Pack Total Cost.
The lower costs (per KWh) of Tesla’s battery packs enable Tesla to develop EVs with greater range than other EV
manufacturers. Potential range capacity (independent of automobile design) results predominantly from the
energy density (kWh) of the battery pack. For example, the Roadster battery pack has an energy density of 53
kWh and a range of 244 miles, the Nissan Leaf an energy density of 24 kWh and a range of 100 miles. The total
cost of the battery pack is the product of the energy density and cost/kWh. Nissan Leaf’s battery packs costs
approximately $9,000 (24 kWh x $375/kWh) but it provides only a 100-mile range. Model S battery packs will
cost between $8,400 and $12,558 ($200 - $300/kWh) for the 160-mile range pack, the higher ranges being most
supported by Tesla’s IPO and Musk’s statements.5,6 In addition, the 300-mile range battery pack is 90 kWh,
which will cost $18,000 - $26,910. Tesla has already priced the 160-mile range Model S at $49,500 after federal
subsidy. If Tesla reduces battery pack costs as rapidly as other battery pack manufacturers, it could reduce the
battery pack costs from approximately 26% to 17% of the $49,500 sales price of the base model.
Benefits of Battery Pack Costs.
Tesla’s battery pack cost advantage enables it to provide superior range without sacrificing design. Thus, it is
able to design for aesthetics and performance, position the Model S as a luxury sedan, and still provide an EV
with better range than the current economy models such as the Leaf. Rapid reductions in battery pack costs
would enable Tesla to choose between increased margins on the Model S or reducing the sales price. Reducing
prices would possibly increase the available market, especially with the 300-mile range; however, reductions
may not be large enough for the 160-mile and 230-mile models to compete with non-luxury EVs and PHEVs like
the Leaf and Volt. In addition, sales price reductions could compromise the Model S positioning as a luxury
sedan.
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Sources:
1 JP Morgan. Tesla Motors: Electrifying Luxury; Initiate With Overweight. August 9, 2010
2 Ibid
3 Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
4 Yasu M, Ohnsman A. http://www.bloomberg.com/news/2010-12-07/toyota-adopts-tesla-s-laptop-battery-strategy-for-electric-cars.html
5 Ibid Tesla IPO
6 Garthwaite J. Retrieved from http://gigaom.com/cleantech/tesla-ceo-nissans-leaf-battery-is-primitive/
Appendix AD: Fuel/ Energy Costs per Mile of Luxury Sedans vs. Tesla‘s Roadster and
Model S
Fuel/Energy Costs per Mile
MPG
$/Gallon Gasoline
$ Energy/Mile
BMW 550ix
ICE
23
$2.96
$0.13
Lexus 460 L AWD
18
$2.96
$0.16
Audi A8
21
$2.96
$0.14
Miles/kW
$/kWh
$ Energy/Mile
Roadster 2.5
4.6
$0.12
$0.03
Model S (160-mile)
3.8
$0.12
$0.03
Model S (230-mile)
3.5
$0.12
$0.03
Model S (300-mile)
3.3
$0.12
$0.04
EV
Notes
The table demonstrates the cost of fuel or energy used per mile operated of three ICE luxury sedans and Tesla’s
Roadster and Model S. Using the average cost of gasoline and the average cost of electricity per kWh in the
United States as of December 11, 2010 ($2.96/gallon), Tesla’s EVs are 20 – 25% as expensive per mile in energy
used.
Source:
U.S. Energy Information Administration. Retrieved from http://www.eia.doe.gov/oog/info/gdu/gasdiesel.asp
U.S. Energy Information Administration. Retrieved from http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
U.S. Department of Energy. Retrieved from http://www.fueleconomy.gov/feg/findacar.htm (for each respective vehicle)
Calculated from EV range and kWh per battery (Miles/kWh, e.g., 300 miles/90 kWh = 3.3)
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Appendix AE: Range, Battery Pack Costs, and Price/Mile For EVs (with information
available)
Range, Battery Pack Costs, and Price per Mile
Manufacturer
Tesla
Nissan
Model
Range
$/kWh
Total Price
Price/Mile
244
Energy Density
(kWh)
53
Roadster 1.0
$679
$35,987
$147.49
Roadster 2.5
244
53
$468
$24,804
$101.66
Model S
160
42
$299
$12,558
$78.49
Model S
230
66
$299
$19,734
$85.80
Model S
300
90
$299
$26,910
$89.70
Leaf
100
24
$375
$9,000
$90.00
Notes
Tesla has reduced its battery pack costs ($/kWh) 56% from the Roadster 1.0 to the Model S. Energy density is a
prominent factor determining the range of an EV. However, factors such as automobile design influence range.
For example, Tesla likely sacrifices range for aesthetics with the Roadster and Model S. An economy car design
would potentially extend the range of a powertrain driven by the Tesla battery packs, however, Tesla has stated
that they are manufacturing EVs people actually want to drive.
In addition, since the Model S uses the same chassis for each battery pack model but the price/mile is not
constant, an increasing margin in price for additional mileage may complicate designing EVs with greater range.
Thus, Tesla is exploiting its advantage in battery pack technology and automobile design to produce aesthetic,
luxury and sport EVs with 60 – 200% greater range at prices other manufacturers cannot likely meet.
Sources:
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
Nissan. Retrieved from http://www.nissanusa.com/leaf-electric-car/index?dcp=ppn.39666654.&dcc=0.216878497#/leaf-electric-car/index
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Appendix AF: Luxury Models $50,000 - $70,000 and Tesla Luxury Model Sales
Projections
Luxury Car Sales Projections
(by Units Sold)
Manufacturer
Acura
BMW
Audi
Model
Price
2012
2013
2014
2015
RL
$46,640
8,486
7,399
8,677
9,437
MDX
$47,993
67,515
71,018
71,331
70,059
5-Series
$54,925
266,428
252,166
245,753
238,304
X6
$72,750
25,792
27,277
26,466
39,191
Z4
$53,525
22,230
21,071
19,990
31,336
X5
$66,450
107,096
113,476
115,466
114,349
Q7
$53,950
27,339
27,451
42,121
48,311
A6
$53,075
270,974
266,554
252,531
241,230
Cadillac
CTS
$45,175
71,974
67,125
61,481
58,838
Infiniti
M-Series
$57,550
22,236
21,836
25,256
28,416
Jaguar
XF
$65,150
35,154
20,040
28,561
49,040
GS460
$54,070
30,218
30,210
31,984
33,448
GX460
$51,970
22,649
24,682
26,079
28,654
ML-Class
$68,375
105,404
106,264
107,812
106,923
E-Class
$66,900
275,935
260,192
245,090
221,873
R-Class
$50,050
12,992
10,506
0
0
Cayman
$56,450
6,329
9,987
10,057
9,615
Cayenne
N/A
38,155
37,300
38,132
38,843
Boxster
$52,800
10,212
10,575
10,499
10,499
1,427,118
1,385,129
1,367,286
1,375,205
10,000
16,925
23,761
30,637
0.70%
1.21%
1.70%
2.17%
0
0
5,000
8,438
0
1,437,118
0
1,402,054
0.36%
1,396,047
0.60%
1,414,280
Lexus
Mercedes-Benz
Porsche
Total
Model S
Tesla
Top-Hat
Models
$50,000 - $70,000
$50,000
Total (Including Model S and Top-Hat Models)
Sources:
Luxury Market Data From CSM Auto (Global Insight), Sourced From JP Morgan Report
Tesla Projections From Our Calculations (0.5% increase non-Tesla total/year for Model S, 0.25% increase on non-Tesla total/year for TopHat Models)
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Appendix AG: Pricing Model
Model S Pricing Model
“Model S 1.0” Battery Pack
Options
160-Mile Range (42kWh)
Price After Federal
Subsidy
$49,500
Estimated Battery
Pack Cost ($/kWh)
$299
Estimated Total
Battery Pack Cost
$12,558
Price Less Total
Battery Cost
$36,942
230-Mile Range (66kWh)
$59,500*
$299
$19,734
$39,766
300-Mile Range (90kWh)
$69,500*
$299
$26,910
$42,590
Projected “Model S 2.0”
Battery Pack Options
230-Mile Range (66kWh)
Price After Federal
Subsidy
$49,500
Estimated Battery
Pack Cost ($/kWh)
$200
Estimated Total
Battery Pack Cost
$13,200
Price Less Total
Battery Cost
$36,300
300-Mile Range (90kWh)
$59,500
$200
$18,000
$41,500
Total battery pack cost = Energy Density (kWh) x Estimated Battery Pack Cost $/kWh
*Estimated price
Sources:
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
JP Morgan Report
Pricing Strategy for Model S 2.0
If Tesla’s battery pack costs reduce to the lowest suggested estimate of $200/kWh, Tesla could eliminate the
160-mile range option, which does not provide as much of an advantage over economy EVs and PHEVs already
in the market and has only approximately half the range of luxury ICE sedans. Tesla’s marketing strategy with
the Model S has to date focused on the 300-mile range of the Model S, but initially the 300-mile option may be
more cost prohibitive to consumers since it will likely cost $20,000 more than the base 160-mile option. For the
elimination of the 160-mile option and price reduction of the greater-range options to be profitable, sales must
increase to offset the reduction.
For example, if Tesla sells 20,000 Model S units in 2013 at its company suggested percentages of 20/50/30% of
160-, 230-, and 300-mile range options, respectively, then it will earn $1.36B in revenues ($57,000; $67,000;
$77,000 per option because revenues will not include subsidies). If the pricing reduction strategy increases sales
25% (independent of additional sales for factors such as increased customer acceptability of EVs, increased
number of stores and hence availability, etc.), it will record revenues of $1.55B (50/50% sales split of options.)
After subtracting battery pack costs (assuming other costs are constant), it would earn $801MM for Model S 1.0
and $972.5MM for Model S 2.0. The break-even point (assuming no increase in fixed overhead costs) using a
50% split of Model S 2.0 sales provides a contribution margin (only sales price less total battery pack cost) of
$38,900. To earn $801B (Model S 1.0) in sales price less total battery pack cost margin, it must sell 20,592 Model
S 2.0 vehicles. It is reasonable to expect an increase of merely 592 (an increase of only 3%) Model S 2.0 units.
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Appendix AH: Tesla Store Locations
Tesla Store Locations
Store
Tesla Chicago
City
Chicago
State
IL
Country
US
Area
North America
Status
Open
Tesla Menlo Park
Tesla Phoenix
Tesla Atlanta
Tesla Las Vegas
Tesla New York
Tesla San Diego
Tesla Washington DC
Menlo Park
Phoenix
Atlanta
Las Vegas
New York
San Diego
Washington DC
CA
AZ
GA
NV
NY
CA
DC
US
US
US
US
US
US
US
North America
North America
North America
North America
North America
North America
North America
Tesla Boston
Tesla Los Angeles
Tesla Newport Beach
Tesla Seattle
Tesla Boulder
Tesla Marin
Tesla North Florida
Boston
West Los Angeles
Newport Beach
Seattle
Boulder
Marin
Tampa
MA
CA
CA
WA
CO
CA
FL
US
US
US
US
US
US
US
North America
North America
North America
North America
North America
North America
North America
Open
Open
Open
Open
Open
Open
Opening
soon
Open
Open
Open
Open
Open
Open
Open
Tesla South Florida
Tesla Toronto
Tesla Austria
Tesla London
Tesla Spain
Tesla Benelux
Tesla Copenhagen
Tesla Italy
Tesla Monaco
Tesla München
Tesla Paris
Tesla Zürich
Tesla Australia
Tesla Hong Kong
Dania Beach
Toronto
Hong Kong
London
Mardrid
FL
ON
US
Canada
Austria
England
Spain
Neatherlands
Denmark
Italy
Monaco
Germany
France
Switzerland
Australia
Hong Kong S.A.R., China
North America
North America
Europe
Europe
Europe
Europe
Europe
Europe
Europe
Europe
Europe
Europe
Asia/Pacific
Asia/Pacific
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Singapore
Japan
Asia/Pacific
Asia/Pacific
Open
Open
Tesla Singapore
Tesla Tokyo
Kobenhavn
Milan
Monte Carlo
München
Paris
Zürich
Tokyo
Source:
Tesla Motors Inc. www.teslamotors.com
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Appendix AI: Recommended Model S Marketing Strategy
STEP 1
STEP 2
Promotional
Campaign
STEP 3
Step 4
Online Engagement
The In-Store
Experience
Brand Community
Member
•Objective: Drive
consumers to
website or store
•Selected Media: TV
& print, supplement
wiith online media
(YouTube)
•Message: Tesla is
FUN to drive
•Green
•Hip
•Utilize the Tesla
brand community to
educate potential
Models S consumers
("Teslamonials") via
•Tesla Website
•Facebook
•Other Tesla forums
•Sales staff:
Educators, techsavvy but cool,
trendy, hip
•Model S Test Drive:
Reinforces the
original message:
Tesla is FUN to
drive.
Purchase a
Model S
•Customer becomes
a Tesla Enthusiast
and engages with
potential consumers
at Step 3
Step 1: Promotional Campaign.
The objective of the promotional campaign is to generate brand name recognition and spark consumers’
interest, motivating them to research Tesla online or to visit a Tesla store. The promotional message should
have both an emotional (cool, hip, status symbol) and rational (technically superior, zero emissions) appeal, but
the unifying theme (fun to drive) should remain constant. We recommend magazine and television advertising
supplemented by online media.
Step 2: Utilize the Tesla Brand Community to Engage New Consumers:
Current Tesla owners will make great salespeople. They want the company to survive and are passionate about
the Tesla brand. For instance, Dave Severns, a Tesla owner, wrote in a blog entry on the Tesla website that his
and his wife’s “Tesla goes with the person who will either drive it the most miles in a given day or who will be
promoting it (promoting takes precedence).” Tesla should continue to leverage this enthusiasm, connecting
their established community members with potential consumers via online forums, blogs, Facebook, etc. The
Tesla website and product reviews will confirm the rational appeal of a Model S, but the brand community can
confirm the emotional appeal – consumers will have a taste of what it is like to be “in-the-know” and part of a
cool, hip community. The objective of this online engagement is to motivate consumers to visit a Tesla store.
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Step 3: The In-Store Experience.
It is critical for the in-store experience to confirm the promotional message, and we support Tesla’s “Apple
store” approach. Store salespeople should be able to educate consumers on all technical aspects of the Model S,
and they should be passionate about the brand. Finally, we believe that a test drive of the Model S completes
the sale and confirms the “fun to drive” message.
Step 4: Welcome New Owners to the Tesla Community:
New owners will become Tesla’s brand champions and it will be important to involve them in Step 2 of this
marketing process in the future.
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Appendix J: Citations for Written Report
1
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
Davis, Joshua. (2006, August). Batteries Included. Wired Magazine. Retrieved from
http://www.wired.com/wired/archive/14.08/tesla.html
3
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
4
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
5
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
6
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
7
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
8
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
9
JP Morgan. Tesla Motors: Electrifying Luxury; Initiate With Overweight. August 9, 2010
10
http://www.examiner.com/auto-in-los-angeles/estimates-vary-on-electric-vehicle-sales
11
Bloomberg New Energy Finance. Plug-in Vehicles May Make Up 22% of U.S. Auto Sales by 2030. November 1,
2010.
12
Bloomberg New Energy Finance. Plug-in Vehicles May Make Up 22% of U.S. Auto Sales by 2030. November 1,
2010.
13
United States Department of Energy. The Recovery Act: Transforming America’s Transportation Sector
Batteries and Electric Vehicles. July 14, 2010
14
Ibid
15
Bloomberg New Energy Finance. Plug-in Vehicles May Make Up 22% of U.S. Auto Sales by 2030. November 1,
2010.
16
JP Morgan. Tesla Motors: Electrifying Luxury; Initiate With Overweight. August 9, 2010
17
Deutsche Bank. Vehicle Electrification: More Rapid Growth; Steeper Price Declines For Batteries. March 7
2010
18
Ibid
19
United States Department of Energy. The Recovery Act: Transforming America’s Transportation Sector
Batteries and Electric Vehicles. July 14, 2010
20
Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p61696011.html, p. 26.
21
JP Morgan. Tesla Motors: Electrifying Luxury; Initiate With Overweight. August 9, 2010
22
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
23
Audi (2009, December 31). Annual Report. Retrieved from
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audi.com/com/brand/en/company/investor_relations/financial_reports/annual_reports.html&container=page
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BMW Group (2009, December 31). Annual Report. Retrieved from
http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/corporate_events/hauptversam
mlung/2010/_pdf/BMW_AG_Jahresabschluss_engl.pdf
25
Quantum Fuel Systems Technologies Worldwide. (2010 April 30). 10-K. Retrieved from
http://www.sec.gov/Archives/edgar/data/1166380/000119312510157610/d10k.htm
26
Toyota Motor Corporation (2009, March 31). FORM 20-F. Retrieved from
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27
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
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Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
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Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
2
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30
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
Tesla Motors Inc. (2010, September 30). 10-Q. Retrieved from http://ir.teslamotors.com/sec.cfm
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Schwartz A. Retrieved from http://www.fastcompany.com/1668777/former-apple-retail-guru-wants-tospread-his-magic-to-tesla
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Car and Driver. Retrieved from http://buyersguide.caranddriver.com/tesla/roadster/2011/tesla-roadster
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Larsen J. Retrieved from http://www.azcentral.com/news/articles/2009/03/27/20090327sr-tesla0328.html
35
Fehrenbacher K. Retrieved from http://gigaom.com/cleantech/how-tesla-will-compete-with-and-become-bigauto/
36
Tesla Motors, Inc. Tesla IPO, pages 119 - 120
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Tesla Motors, Inc. Tesla IPO, page 119 -120
38
GE Reports. Retrieved from http://www.gereports.com/ges-consumer-survey-whos-most-likely-to-buy-an-ev/
39
Ibid
40
Escales, Jennifer Edison and James R. Bettman (2010), “Self-Brand Connections: The Role of Reference Groups
and Celebrity Endorsers in the Creation of Brand Meaning,” in Deborah J. MacInnis, C. Whan Park and Joseph R.
Priester (eds.), Handbook of Brand Relations, Armonk, New York and London: M.E. Sharpe, 107-123.
41
Muniz, Albert M. and Thomas C. O’Guinn, “Marketing Communications in a World of Consumption and Brand
Communities,” in Allan J. Kimmel (ed.), Marketing Communication: New Approaches, Technologies, and Styles,
London: Oxford University Press 2005, 63-85.
42
Tesla Motors, Inc. Retrieved from www.teslamotors.com
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Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
44
Tesla Motors Inc. (2010, June 29). Form 424B4. Retrieved from http://ir.teslamotors.com/sec.cfm
45
Trend Hunter. Retrieved from http://www.trendhunter.com/trends/green-celebrity-dream-cars-tesla-roadster
46
Tesla Motors, Inc. www.teslamotors.com
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Schwartz A. Retrieved from http://www.fastcompany.com/1668777/former-apple-retail-guru-wants-tospread-his-magic-to-tesla
48
Tesla Motors, Inc. www.teslamotors.com
31
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University of Wisconsin - Madison
Wisconsin School of Business - MBA
Team A6
Danielle Boyke, Arts Administration, dsboyke@wisc.edu
Jia Cheng, Supply Chain Management, jcheng23@wisc.edu
Jared Clevers, Applied Securities Analysis, jrclevers@wisc.edu
Michael Schroeder, Operations and Technology Management, meschroeder@wisc.edu
Karen Strupp, Brand and Product Management, kstrupp@wisc.edu
Image Credit: Tesla Motors