201 8I M P A C T

R E P O R T

TA B L E O F C O N T E N T S

INTRODUCTION

03

MISSION04

0 1 / P R O D U C T I M PAC T

06

E N V I R O N M E N TA L I M PA C T
RESILIENCE OF THE GRIDA C C E S S T O S U S TA I N A B L E E N E R G Y
BUILDING THE SAFEST CARS FROM THE GROUND UP

0 2 / O P E R AT I O N A L I M PA C T

15GREENHOUSE GAS INVENTORY
ENERGY EFFICIENCYS U S TA I N A B L E E N E R G Y
FA C T O R Y P R O F I L E S A N D G R I D M I X E SSUPERCHARGERSC A S E S T U DY : F R E M O N T FA C T O R Y
C A S E S T U DY : G I G A FA C T O R Y 1

0 3 / S U P P LY C H A I N

31RESPONSIBLE SOURCINGC O B A LT
CONFLICT MINERALS
Certain statements in this report,

SUPPLIER DIVERSITY

including statements regarding
future development plans, areforward-looking statements that are

0 4 / E M P L O Y E E S A N D C U LT U R E

35subject to risks and uncertainties.
These forward-looking statements

B E C O M I N G T H E S A F E S T C A R FA C T O R Y I N T H E W O R L D

are based on management’s current

T H E S A F E S T C A R S F O R C U S TO M E R S A N D E M P LOY E E S

expectations. Various importantfactors could cause actual results

R E WA R D I N G T H E I N D I V I D U A L

to differ materially, including the

DIVERSITY AND INCLUSION

risks identified in our U.S. Securities

E M P L OY E E M O B I L I T Y A N D T R A N S P O R TAT I O N P R O G R A M S

and Exchange Commission filings.
Tesla disclaims any obligation
to update any forward-looking
statement contained in this report.

E D U C AT I O N
C O R P O R AT E G O V E R N A N C E
D R I V E N B Y S U S TA I N A B I L I T Y

02INTRODUCTION

Tesla was founded in 2003 by a group of engineers who wanted toprove that people didn’t need to compromise to drive electric – thatelectric vehicles could be better, quicker and more fun to drive thangasoline cars. Today, we build not only all-electric vehicles but also
infinitely scalable clean energy generation and storage products.

We believe the faster the world stops relying on fossil fuels and moves
towards a zero-emissions future, the better. Tesla’s products offer acomplete solution – sustainable generation, storage and usage – allcapable of being powered by the sun. We envision a world powered bysolar energy, running on batteries and transported by all-electric cars.

By design, Tesla’s products are sustainable, and we’re working hardto build them in a sustainable way too. We’re publishing our very first
Impact Report measuring the impacts of our products and operations
on the environment and our communities. We recognize there’s stillmuch to be done.

As we grow and prove to the world that a business rooted insustainability can also be successful, we will continue to improve
our processes and report on our progress in future Impact Reports.
THE TESLA TEAMI M PAC T R E P O R T

03

MISSION

Tesla’s mission is to accelerate the world’s transition to sustainable energy.

G LO B A L G R E E N H O U S E

Climate change is reaching alarming levels – in large part due to

GAS (GHG) EMISSIONS

emissions from burning fossil fuels for transportation and electricity

BY ECONOMIC SECTOR

generation. In 2016, carbon dioxide (CO2) concentration levels

Global GHG emissions are increasingat an accelerating rate. Annual GHG

permanently exceeded the 400 parts per million threshold, a levelemissions have approximately doubled

that many climate scientists believe will have a catastrophic impact

over the past 50 years to over 35

on the environment. Worse, global CO2 emissions are increasing at an

gigatons per year. Energy use throughelectricity and heat production (25%)

accelerating rate. Annual CO2 emissions have approximately doubled

and transportation (14%) together

over the past 50 years to over 35 gigatons per year. The path that thedrive these GHG emissions.

world currently is on is unsustainable and unwise.

The world cannot reduce CO2 emissions without addressing energy
generation and consumption. And the world cannot address its energy
Electricity &25%

habits without directly reducing emissions in the transportation andpower sectors. This issue is Tesla’s entire reason for existing. We are

Heat Production*

focused on creating a complete power and transportation ecosystem
Agriculture, Forestry

24%& Other Land Use

Industry

21%

Transportation*

14%

Other Energy

10%from solar generation and energy storage to all-electric vehicles.

The first step in our Master Plan was to build an all-electric sports car(the Tesla Roadster) to prove that people didn’t need to compromise
performance, speed or comfort to drive all-electric. From there, we
designed the world’s first-ever premium all-electric sedan from theground up, Model S, our Model X SUV, and an affordable vehicle for

Buildings*Tesla-related sectors

6%

the mass market, Model 3. As part of Master Plan, Part Deux, we
introduced Tesla Semi, an all-electric truck that delivers massive
savings in energy costs, performance, efficiency and reliability.

04

MISSION

We recognize that we cannot achieve our mission alone, so we decided
to open source Tesla patents, making them accessible to anyone whowants to design and build electric vehicles.

To create an entire sustainable energy ecosystem, Tesla also manufacturesa unique set of energy products that enable homeowners, businesses andutilities to produce and manage renewable energy generation, storage
and consumption. Homeowners can install solar panels or Solar Roof topower their home using 100% renewable energy and store that energy
in Powerwall, which makes electricity available during peak energy-use
periods to help them save money and provides power during grid outages.
Meanwhile, utilities and businesses can use Powerpack – an infinitely
scalable energy storage system that provides greater control, efficiency
and reliability across the electric grid.
Combined with a 13 MW photovoltaic
array, the 52 MWh Powerpack system
in Kaua’i stores solar energy captured

Renewable energy generation and storage are critical components ofduring the day and feeds it to the grid todeveloping microgrids — an increasingly important means of delivering

help reduce the amount of diesel power

reliable and sustainable electricity around the world. As deployment ofgeneration needed to meet the island’s
electricity demand. This system is helping
the Kaua’i Island Utility Cooperative meetits goal of using renewable resources
to generate at least half of the island’s
electricity by the end of 2019.

I M PAC T R E P O R T

Tesla’s products continues to accelerate, we can scale the adoption ofrenewable energy, cost-effectively modernize our aging infrastructure(and become less reliant on it) and improve the resilience of the electric
grid to benefit everyone.

05

01

P R O D U C T

I M P A C T

06

S U S TA I N A B L E A N D

The foundation of Tesla’s mission rests first and foremost on our products.

SUPERIOR PRODUCTS

Our focus from the beginning has been to develop products that are not

F O R E V E R YO N E

only sustainable, but superior to fossil-fuel alternatives, as many believethat choosing sustainable products requires consumers to compromise
on price or performance. Tesla’s all-electric vehicles combine performance,
safety and efficiency, making them the best cars in the world, while
Tesla’s energy generation and storage products power both urban andremote communities with reliable, affordable energy.

E N V I R O N M E N TA L

Transportation and electricity production are two of the largest sources

I M PA C T

of GHG emissions, making up more than half of all U.S. emissions.
Tesla’s ecosystem (solar, batteries and vehicles) aims to reduce theenvironmental impacts of transportation, electricity production andenergy use by people, homes, businesses and the grid.

In 2006, prior to the launch of the Tesla Roadster, there was no viable
all-electric vehicle option on the market. Now, 12 years later, there areover 3M electric vehicles on the road globally, with more being produced
Powerwall is a rechargeable lithium-ion
battery that integrates with solar to

every day. The auto industry is moving towards electrification, andstore excess energy generated during

governments around the world have recognized the harmful impact ofthe day and make electricity available

internal combustion engine (ICE) vehicle emissions and have started

when homeowners need it — forexample, during grid outages andwhen the sun is not shining.

I M PAC T R E P O R T

to take concrete steps towards making the future more environmentallyfriendly and sustainable.

07

E N V I R O N M E N TA L

Over 550K Tesla vehicles have been sold, and they have driven overI M PA C T

10B miles to date, resulting in a combined savings of over 4M metrictons of CO2. This is the equivalent of saving emissions from being
released into the environment from over 500K ICE vehicles with afuel economy of 22 miles per gallon (MPG).

Tesla’s Supercharger network — the fastest and most extensive
charging network in the world — has delivered over 595 Gigawatt-

550,000+
Tesla vehicles soldhours (GWhs) of energy, saving the equivalent of over 75M gallons ofgasoline. That’s enough gasoline for the average ICE vehicle witha fuel economy of 22 MPG to travel round trip from Los Angeles

10,000,000,000+

to New York City over 290K times.

Miles driven

As of February 2019, Tesla Energy has installed over 3.5 Gigawatts of

4,000,000+
Metric tons of CO2 saved
Tesla began delivering its first mass-solar installations and has cumulatively generated over 13 Terawatthours (TWhs) of 100% clean, emissions-free electricity. To put 13 TWhs
in perspective, this amount of energy could supply the annual residential

market vehicle, Model 3, in July 2017.

electricity consumption for the entire state of Connecticut. Over their

Like every Tesla, Model 3 combines

entire expected use life of 35+ years, these solar installations arerange, performance, safety andtechnology — accelerating from
0-60 mph in a mere 3.2 seconds.

expected to generate 86.5 TWh of energy, which is enough electricity
to power all of Washington D.C. for almost a decade.

08

E N V I R O N M E N TA LI M PA C T

A L L -T I M E T E S L A E N E R G Y C O N S U M P T I O N V S . G E N E R AT I O N
Telsa’s solar electricity generation has far exceeded the amount of energy the entire Tesla
vehicle fleet on the road has consumed to date.

MODEL S, X

5.26 TWh

AND 3 ENERGYCONSUMPTION

TESLA

13.25 TWh

SOLAR ENERGYG E N E R AT I O N

TWh

0

1

2

3

4

5

6

7

8

9

10

11

12

13

The World Health Organization estimates greenhouse gases and harmful
air pollutants, such as particulate matter, ozone, nitrogen dioxide andsulfur dioxide, cause over 7M premature deaths around the globe eachyear. Reducing the use of fossil fuels for transportation and electricity
generation decreases the risk of cardiovascular disease, respiratory
disease and stroke in both developed and undeveloped countries.

While many recognize the impact that power generation has on CO2emissions, power generation’s impact on water consumption is lessappreciated. Power generation is one of the leading causes of water
withdrawal in the U.S., as water for thermoelectric power is used ingenerating electricity with steam-driven turbine generators and also
to cool the power-producing equipment. So every kilowatt-hour (kWh)of clean solar energy produced not only lowers CO2 emissions, but also
lowers water consumption.

I M PAC T R E P O R T

09

RESILIENCE

Solar and energy storage systems don’t just provide clean, zero-

OF THE GRID

emission energy, they also improve the reliability and resilience ofthe electric grid. For example, in the event of an electric grid outage,energy storage systems can immediately provide power to homes,
communities and businesses.

When Hurricane Maria struck Puerto Rico in September 2017, destroying
thousands of homes and cutting electric grid power on the island,
the initial emergency response was focused on deploying diesel
generators to provide temporary electricity. In addition to releasing
harmful emissions and requiring constant refueling and maintenance,these generators were extremely loud and not designed to run forlong periods, so many failed. In response, Tesla provided over 1K battery
Tesla batteries combined with existing
solar arrays on the island of Culebra in
Puerto Rico provide clean energy forcommunities nearby.

storage systems paired with solar panels to deliver reliable andemissions-free electricity to over 660 locations throughout Puerto Rico,such as the Hospital del Niño Children’s Hospital in San Juan.

10

RESILIENCE

In addition to providing back-up power during an electric grid outage,

OF THE GRID

the combination of solar and energy storage systems provides
communities the flexibility of using the solar power when needed.
Battery energy storage systems also smooth out the variable peaks
and valleys in electricity demand, thus reducing both peak demandcosts and the operational costs for utilities of generating power
during peak periods. This solution is also offsetting the need tooverbuild infrastructure, such as peaker power plants — some of
the world’s dirtiest and least stable polluting energy generators —to meet the highest demand hours of the year.

In December 2017, Tesla turned on the world’s largest lithium-ion
battery in South Australia. A 50-year storm had damaged criticalinfrastructure in this region, causing a statewide blackout and leaving
1.7M residents without electricity. As a result, the local government
looked for a sustainable solution to ensure energy security for all
residents, and Tesla, with the developer, Neoen, were selected to workon this project. Tesla provided a 100 MW / 129 MWh Powerpack system
Powerpacks in South Australia

to be paired with Neoen’s Hornsdale Wind Farm near Jamestown andcharge using wind energy from thecompleted the project in less than 100 days. Just a few weeks after,

Hornsdale Wind Farm — providing

when a major coal-fired power plant failed, Tesla’s battery system

not only a sustainable solution to theregion’s energy needs, but also

was activated in mere milliseconds to help stabilize the electric grid.

helping to solve power shortages,

This grid scale energy storage project is an example of a zero-emissions

reduce intermittencies and manage
summer electricity peak load to
improve the infrastructure’s reliability.

I M PAC T R E P O R T

solution that is helping to reduce power outages and improving thereliability of South Australia’s electrical infrastructure.

11

ACC E S S TO

More than 1B people worldwide do not have access to electricity, andS U S TA I N A B L E

many that do get their electricity from polluting sources such as coal

ENERGYor fossil fuels. Tesla is bringing sustainable and affordable energy
solutions to communities around the world. On the island of Ta’u inAmerican Samoa, Tesla created a microgrid consisting of over 5.3K
solar panels and 60 Powerpack systems, which is capable of poweringTa’u Island in American Samoa used

100% of the island on clean energy for 3 full days without sun. Today,

diesel generators as their main source

instead of burning almost 110K gallons of diesel per year, paying forof power for many years, leaving therising fuel and related transportation costs and having to face negative

residents vulnerable to blackouts whendiesel supplies were low. To solve this,Tesla paired solar with Powerpacks

health impacts, nearly 900 residents of Ta’u benefit from clean,affordable and reliable energy year round.

to power homes, schools, the local
hospital and other facilities to deliver
100% clean energy around the clock

1.4 MW

3 days100%

to the entire community.

of solar generationof energy without the suncoverage of the island

12

BUILDING THE

Improving occupant safety has always been key to our mission,

SAFEST CARS FROM

because vehicle safety is essential to mass all-electric vehicle adoption.

THE GROUND UP

When we set out to build our first full-sized vehicle, Model S, wepositioned the battery pack and electric motors beneath the floorof the vehicle to give it an extremely low center of gravity, greatly
reducing the risk of rollover while enhancing handling and performance.
Today, all Tesla vehicles feature this same battery placement.

MODEL 3 SPOTLIGHT
The National Highway Traffic Safety
Administration awarded Model 3 a
5-star safety rating in every category
and sub- category, making it one of
the safest cars on the road.

Another benefit of Tesla vehicles is improved frontal impact safety
due to our vehicles’ front trunk. The entire front end of the vehicle
becomes a superior crumple zone since there is no gasoline engine
block. This design improves impact absorption in the event of a crash,and the area doubles as an extra storage space. Beneath our vehicles,

F R O N TA L C R A S H

the titanium underbody shield consists of a ¼-inch ballistic grade
aluminum armor plate that protects the battery pack.

SIDE CRASH

Based on the advanced architecture of Model S and Model X, we
R O L LOV E R

engineered Model 3 to be the safest car built to date. In addition to
its near 50/50 weight distribution, Model 3 was also designed withan extremely low polar moment of inertia, meaning its heaviest

O V E R A L L R AT I N G

components are located closer to the car’s center of gravity. Even
though Model 3 has no engine, its performance is similar to a “midF R O N T- I M PA C T

engine car” due to its centered battery pack and the fact that Model

PROTECTION

3’s rear motor is placed slightly in front of the rear axle rather thanS I D E - I M PA C T
PROTECTION

LOW E STR O L LOV E R R I S K

behind it. Not only does this architecture add to the overall agility
and handling of the car, it also improves the capability of stability
control by minimizing rotational kinetic energy. After testing Model 3
as part of its New Car Assessment Program through a series ofcrash tests used to calculate the likelihood of serious bodily injury
for front, side and rollover crashes, the National Highway Traffic
Safety Administration (NHTSA) awarded Model 3 a perfect 5-starsafety rating in every category and sub-category.

I M PAC T R E P O R T

13

BUILDING THE

Our commitment to safety is why all Tesla vehicles built since October

SAFEST CARS FROM

2016 come with a suite of external cameras, sensors and onboard

THE GROUND UP

computing that enable advanced safety features like Automatic
Emergency Braking, Lane Departure Warning, Forward and Side
Collision Warning, Obstacle-Aware Acceleration, blind spot warnings
and more. These features are made possible by our Autopilot hardware
and software system, which is an advanced driver assistance tool thatprovides an additional layer of safety that two eyes alone would nothave and helps make highway driving more enjoyable. We believe thatAll new Tesla vehicles have the hardware

the unique combination of passive safety, active safety, and automatedneeded for full self-driving capability at

driving is crucial for keeping not just Tesla drivers and passengers

a safety level substantially greater thansafe, but all drivers on the road.

that of a human driver. Eight surroundcameras provide 360° visibility aroundthe car, complemented by 12 ultrasonicsensors. A 250-meter forward-facing
radar with enhanced processing provides
additional data about the car’s
surroundings on a redundant wavelengththat is able to see through heavy rain,fog, dust and even the car ahead.

In Q1 2019, we registered one accident for every 2.87M miles driven
in which drivers had Autopilot engaged. For those driving without
Autopilot, we registered one accident for every 1.76M miles driven.
By comparison, NHTSA’s most recent data shows that in the UnitedStates there is an automobile crash every 436K miles.

14

02

O P E R A T I O N A L

I M PAC T R E P O R T

I M P A C T

15

BUILDING A

While the everyday use of Tesla products by consumers has by far theS U S TA I N A B L E

biggest environmental impact, we also care deeply about operating

FUTURE IN AS U S TA I N A B L E WAY

our business and manufacturing our products in a sustainable way.
Tesla has expanded its global manufacturing, charging, sales andservice footprint rapidly in recent years. Keeping track of our various
operational impacts allows us to implement efficiency improvementsthat simultaneously reduce our impact on the environment and lower
operational costs.

GREENHOUSE GASGlobal CO2 levels in the atmosphere are higher than ever. It is an(GHG) INVENTORY

unsustainable trend that drives Tesla’s mission to accelerate theworld’s transition to sustainable energy.

In 2017, Tesla established a baseline global carbon impact footprint
across manufacturing, retail, distribution, sales, Supercharger, energy,
warehouse and office facilities. For this baseline year, Tesla focused on
tracking electricity and natural gas usage for our sites. Moving forward,
we will continue to build out this data, which will help us set specifictargets with the goal of driving down our GHG footprint on a perproduct basis as we continue to grow our business.
2 0 1 7 G L O B A L C A R B O N I M PA C T
Direct Emissions

Indirect Emissions

Emissions from sources owned

Emissions that are a consequence of Tesla activities, butor controlled by Tesla

occur at sources owned or controlled by other entities.

SUPERCHARGER64

N E T WO R K

SALES, SERVICE

39& DELIVERY33

ENERGYO P E R AT I O N S

146

FA C I L I T I E S

THOUSAND METRICTONS (CO2e)

0

20

40

60

80

100

120

140

16

ENERGY EFFICIENCYEnergy efficiency plays an important role in Tesla’s long-term sustainableenergy goal, and through active retrofitting of our existing facilities andthe construction of new, more efficient facilities, we are working to
reduce our energy use every day.

In our Fremont Factory, the installation of LED lighting, as well as
efficiency improvements to manufacturing systems such as compressed
air, castings, injection molding, water test booth and cooling towers,
combined with a new energy-efficient paint shop, have resulted in over
10 GWhs of energy savings over the last 5 years. These savings are theequivalent of the annual electricity consumption of almost 1K U.S.
households. As a result of many improvements, the energy usage at
the Fremont Factory per vehicle manufactured has decreased by 19%
compared to 2016.

In 2017, we established our energy-use baseline for the Fremont Factory.
We have started the process of gathering energy intensity data for all of
our main manufacturing locations and plan to add that information to
the Impact Report in the future.

S U S TA I N A B L E E N E R G Y

Sustainability is at the heart of everything we do. In the same way ourcustomers are adopting zero-emissions lifestyles by using solar energy
systems, battery storage and all-electric vehicles, Tesla is also installing
sustainable energy systems at our own facilities to utilize renewableenergy generation and storage where possible.

As we continue to ramp production of Tesla products, we are committed
to making significant progress towards our goal of operating global
Tesla manufacturing, vehicle charging and other operations using 100%
renewable energy.

I M PAC T R E P O R T

17

F R E M O N T FA C T O R Y

Tesla purchased the Fremont plant in 2010 and completed a significant$3 billion modernization of the site to create one of the most advanced

PRODUCT

1 MW / 2 MWh
Powerpack Battery

manufacturing facilities in the world. Originally built in the 1960s, theFremont Factory contains 5.3M sq ft of manufacturing and officespace — the equivalent of over 90 American football fields. The originalA P P L I C AT I O NPeak Shaving

roof layout and building infrastructure make solar deployment on-sitechallenging, but our long-term plan is to install rooftop solar panels at
this site where possible. The Fremont Factory is also home to one of
our first battery installations, originally commissioned in 2015. The

Tesla builds every Model S, Model X andModel 3 at its factory in Fremont, wheresome vehicle components are also
manufactured. In addition to the 10K+
employees at this factory, hundreds ofrobots are located throughout the facility,
including on the Model 3 production line.

Fremont Factory battery pack system monitors the facility’s energy
use throughout the day and cuts back the amount of electricity takenfrom the grid during peak hours. This also helps to decrease demandon the local electric grid in addition to reducing the facility’s energy
costs, as electricity purchased during peak hours is priced at a premium.

18

L AT H R O P FA C T O R Y

With 431K sq ft of manufacturing space, Tesla’s Lathrop facility in
California hosts computer numerical control (CNC) operations,

PRODUCT

2 MW / 4 MWh
Powerpack Battery

machining and castings manufacturing. Located 50 miles from our
Fremont Factory, the Lathrop facility features an installed battery
operation that helps reduce peak energy consumption, alleviating

A P P L I C AT I O NPeak Shaving

T I L B U R G FA C T O R Y
PRODUCT

3.4 MW
Solar Array

stress on the electricity grid during heavy-use times and minimizing
the dependence on peaker power plants.

Tesla’s Tilburg Factory in the Netherlands serves as the local assembly,
quality testing and distribution point for Model S and Model X vehicles
sold in the European Union (EU). The Tilburg Factory houses a 3.4 MW
solar array that consists of almost 10.5K solar modules. This solar
system generates enough electricity to meet the Tilburg Factory’s

A P P L I C AT I O N

Facility’s Energy Needs

energy needs throughout most of the year. To put the magnitude of
the installation in perspective, it is the size of almost 3 European
football fields and between July 2017 to June 2018 generated anamount of electricity that would have been sufficient to power 942

Opened in 2013, Tesla’s Tilburg Factory

households in the region. In other words, the solar power captured

in the Netherlands spans 11-acres, housesby this system from that same time period would be sufficient toa rooftop solar array and features anindoor driving track, quality control
stations and several assembly lines.

I M PAC T R E P O R T

meet the energy needs for electric vehicles to drive a combined
total of over 16.7M km (10.4M miles).

19

G I G A FA C T O R Y 1

Unlike our Fremont Factory which was purchased and renovated, Tesla
designed and built from the ground up our Gigafactory 1, a battery and

PRODUCT

Solar Array
Under construction

motor manufacturing facility in Sparks, Nevada, allowing us to design
and implement sustainable solutions throughout the site from the
beginning. Gigafactory 1 began mass production of lithium-ion battery

A P P L I C AT I O N

Facility’s Energy Needs

cells in January 2017 and started manufacturing Model 3 battery packs
and drive units in mid-2018. At 15M sq ft, Gigafactory 1 will be theworld's largest building by footprint when completed and will eventually
be powered by 100% renewable energy sources. Tesla built Gigafactory
1 with an efficient lighting design utilizing high-efficiency LED light
fixtures combined with an optimized layout that reduces the facility’s
overall electrical load. Gigafactory 1’s current lighting power density is
0.45 watts per sq ft, which is 65% less than the American Society ofHeating, Refrigerating and Air-Conditioning Engineers (ASHRAE)
lighting design allowance of 1.3 watts per sq ft for a manufacturing
facility. In the course of 30 days, the facility’s lighting system can save
144 MWhs of energy – enough energy for a Model S to drive 480K
miles. Designed to be a net-zero energy factory upon completion,
the facility will have the largest rooftop solar array in the world, withroughly 200K solar panels. Solar installation is already underway,
in addition to a microgrid R&D facility.

G I G A FA C T O R Y 2

Tesla’s Gigafactory 2 in Buffalo, New York, is located on the remediatedRiverBend brownfield site that was previously home to Republic Steeluntil its closure in 1984. As an abandoned heavy industrial site, the landsuffered from a long history of extensive environmental contamination
and required significant rehabilitation before being put to its new use.
During Gigafactory 2’s construction, old steel manufacturing debris
removed from the site included everything from old rail boxcars tocontaminated slag in the soil. Now, the brownfield is restored andhome to a new 1.2M sq ft clean energy manufacturing complex where
Tesla’s solar energy products are made. The facility is symbolic of thecomprehensive clean up and transformation of the adjacent Buffalo
River, which is now valued as an environmental, economic andcommunity resource.

20

G I G A FA C T O R Y 2

The facility’s sustainability efforts include recycling 100% of any recyclable
wood that comes into the plant, as well as reusing or recycling 90% of
the plastic pallets provided by suppliers. Tesla is also working with local
recyclers to develop a more robust recycling program that will continue
to be implemented as the facility’s production grows.

FA C T O R Y P R O F I L E S

Tesla’s manufacturing facilities in California (Fremont Factory), Nevada

AND GRID MIXES(Gigafactory 1) and New York (Gigafactory 2) are located within someof the cleanest electricity grid mixes and most aggressive Renewable
Portfolio Standard (RPS) Policies in the U.S. In states such as Nevada,which derives 11% of its energy from solar, or New York, which generates
18% of its energy from hydropower, Tesla is able to purchase electricity
with a low-carbon footprint.
S TAT E R E N E WA B L E P O R T F O L I O S TA N DA R D S
By 2030

By 2045

60%

100%

CALIFORNIA RPS
Currently ~30%

0
By 2025

N E VA D A R P S
Currently ~18%

0

100%

25%
By 2030

Gigafactory 2 currently produces solar

N E W YO R K R P S

cells and modules.

Currently ~20%

I M PAC T R E P O R T

0

50%

100%

21

SUPERCHARGERS

Building a charging system that enables quick, convenient and longdistance travel is critical to the mass adoption of electric vehicles.
In 2012, we opened our very first Supercharger station and havesince deployed over 12K Superchargers, building out the world’s
fastest and most extensive charging network for Tesla vehicle owners.
Superchargers are strategically placed to allow owners to take longroad trips with minimal stops and are located near restaurants, coffee
shops, markets and other convenient amenities. With charging speeds
up to 120 kW, the typical driver charges for about 30 minutes before
continuing their journey.

12,800+

While the electricity grid varies from region to region, charging electricSuperchargers globally

vehicles is cleaner than ever. In the U.S., coal has historically been thedominant energy source for generating electricity, but in the last

1,400+
Supercharger Stations

decade, coal power has declined significantly. Instead, energy
generated by sustainable sources has grown rapidly, accounting foran estimated 70% of new electric generation capacity in 2017. Many

36
Countries with Superchargers

U.S. states have been making significant investments in new renewableenergy resources now that they are competitively priced with fossil
fuel resources. For example, California generated approximately 30%

99%
U.S. population within
150 miles of a Supercharger

of its electricity needs from renewable energy sources in 2017, up from
12% in 2009, and the state is targeting 60% by 2030. To put this inperspective, GHG emissions from charging an average all-electricvehicle in the U.S. is equivalent to the emissions that would be

40-stall Supercharger station in
Kettleman City, California withsolar panels.

produced by a conventional ICE vehicle that gets a fuel economy of
80 MPG. Keep in mind, the average ICE vehicle gets around 22 MPG.

22

Even when electric vehicles are charged in regions that derive much ofSUPERCHARGERS

their electricity from the burning of fossil fuels, the electricity productionneeded to charge electric vehicles is still considerably less harmful to theS TAT E O F T E X A S A N N U A L
EMISSIONS PER VEHICLE( L B S O F C 0 2 E Q U I VA L E N T )environment than filling up an ICE vehicle gas tank. For example, as ofJuly 2018, according to the U.S. Department of Energy’s Alternative Fuels
Data Center, even in Texas — one of the states with the highest amount

10K

of electricity coming from fossil fuels at 75% — emissions related to the
production of electricity used in electric vehicles are still over 22% lower

5K

than gasoline cars and almost 5% lower than plug-in hybrid vehicles.
0

In states with a much higher proportion of electricity generated from
Gasoline

12K

Plug-in Hybrid

7K

renewable energy generation, such as California, the effect of lower
emissions from driving electric vehicles as compared to gasoline orHybrid

6.5K

plug-in hybrid vehicles is far greater. The reality is that while burning
gasoline won’t get cleaner, driving on electricity continues to get cleaner— all while delivering immediate health and environmental benefits.

All Electric

Tesla’s Supercharger station in
Arlington, Texas.

5K

Governments around the world are recognizing the harmful impact
of ICE vehicle emissions, with Norway, India, France and others aiming
to ban sales of ICE vehicles as soon as the next decade.

As more regions adopt sustainable energy solutions, emissions related toelectric vehicle charging will decrease even further. All Tesla vehicles
produce significantly less CO2 than any gasoline-powered competitor –and if an electric vehicle is powered by solar energy, essentially no CO2
is produced at all. In the EU, where Tesla has the option to select local
energy providers, over 85% of energy delivered by our Superchargers is
produced by clean, low-carbon energy sources, including solar, wind andhydropower. In the future, as we continue to expand our global charging
network, our goal is to strategically pair solar and battery storage at as
many Supercharger stations as possible.

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23

C A S E S T U DY :As a manufacturing company, minimizing waste at Tesla goes beyond

SPOTLIGHT ON

recycling office and café consumables. Whether via reuse, recycling or

F R E M O N T FA C T O R Y

compost, efforts to divert material waste from ending up in a landfill or awaste-to-energy facility are found throughout all Tesla manufacturing,
service and office facilities.

In 2016, the Fremont Factory was certified as a “Zero Waste” facility, andwas recognized for our commitment to recycling and product reuse. In
2017, the Fremont Factory diverted over 93% of waste from landfills torecycling or to a waste-to-energy facility. Our on-site recycling center
allows the “commoditization” of different recyclable materials.

M AT E R I A L S R E C YC L I N G

1.9M
Pounds of organics sent for compost

2,900 tons
Plastic recycled at Fremont in 2017,
a 9% year-over-year increase

Balers enable us to generate recycling revenue from cardboard andto turn loose films and bubble wrap into recyclable commodities.
Styrofoam densifiers convert a small room’s worth of foam into a
dense brick of hard plastic the size of a briefcase. This 50:1 densification
ratio converts a commodity we previously had to pay to get rid of
into a revenue-generating recyclable.

despite challenges in the global
market for recycled plastics.

We streamlined the recycling process for metal scraps from our stamping
presses that create metal parts for Model S, Model X and Model 3 by

The Fremont Factory was originallyusing an online bidding platform to provide local and international

home to General Motors (GM) fromrecyclers easier access to our scrap metals. Decommissioned and1962-82, and then GM and Toyota’s

scrapped materials, such as charging equipment, motor components,

partnership, New United Motor
Manufacturing, Inc. (NUMMI), fromwiring, metal casings, wheel rims and more, are also recycled through

1984-2009, when the partnership

this platform. This systematic categorization of scrapped materials

ended. Tesla purchased the facility
in 2010 and is working to nearly
double its size to almost 10M sq ft.

enables significant economic recovery for Tesla from parts otherwise
destined for the landfill or a scrapyard.

24

ON-SITE PRODUCTWhen we first opened the Fremont Factory in 2010, Tesla operations

RE-USE STORE

were a fraction of the total footprint. As areas within the facility expand,
we send parts that are no longer needed to an onsite “store” where these
items can be used by other Tesla teams. For example, surplus eye-washstation signs from the Fremont Factory were made available to a newarea opening within our Lathrop facility. This reuse effort has resulted inmillions of dollars in avoided costs, and contributes significantly to ourefforts to divert as much waste as possible from landfills.

WAT E R

Through efficiency improvements and water reuse systems, we work
to lower the per-product water usage in our manufacturing process.
In addition, water reduction efforts are included in our sales, service
and delivery facilities. Where possible, our service technicians use awaterless car wash method to maintain Tesla vehicles while minimizing
environmental impacts.

Throughout the Fremont Factory, water use per vehicle manufactured
dropped by 9% from 2016 to 2017. In 2017, we established a water-use
baseline for our manufacturing and support operations. During thesame period, global water use was 8.77 m3 per vehicle. As we increase
production in coming years, we expect water use per vehicle todecrease significantly.

Our main manufacturing facilities are not only looking to increasewater-use efficiencies, but also to improve wastewater and stormwater
management. These projects include reverse osmosis and distilled water
system installations to improve water quality and to allow existing water
sources to be recycled and reused in other processing areas such as
the closed-loop system of our facilities’ cooling towers. Projects indevelopment include water mapping to identify opportunities for either
recycling or increased passes in our closed-loop systems as well as
leak identification. At Gigafactory 2, Tesla is dedicated to making our
production activities supportive of the comprehensive cleanup andtransformation of the Buffalo River and to ensure the waterway remains
a rich environmental, economic and community resource.

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25

B AT T E R Y R E C YC L I N G

A common question we hear is, “What happens to Tesla vehicle battery
packs once they reach their end of life?” An important distinction
between fossil fuels and lithium-ion batteries as an energy source isthat while fossil fuels are extracted and used once, the materials in alithium-ion battery are recyclable. When petroleum is pumped out of
the ground, chemically refined and then burned, it releases harmful
emissions into the atmosphere that are not recovered for reuse. Battery
materials, in contrast, are refined and put into a cell, and will still remain
at the end of their life, when they can be recycled to recover its valuable
materials for reuse over and over again.

Since Tesla battery packs are made to last many years, we are only juststarting to receive these batteries back from the field. Currently, mostof the batteries for recycling come to us through R&D, manufacturing,
quality control and service operations.

Today, we work with third-party recyclers around the world to process all
scrap and end-of-life batteries to recover valuable metals. Our recycling
partners work with us to ensure that non-valuable or non-recoverable
materials from the batteries are disposed of responsibly. At Gigafactory
1, Tesla is developing a unique battery recycling system that will process
both battery manufacturing scrap and end-of-life batteries. Throughthis system, the recovery of critical minerals such as lithium and cobalt
will be maximized along with the recovery of all metals used in thebattery cell, such as copper, aluminum and steel. All of these materials
will be recovered in forms optimized for new battery material production.

The closed-loop battery recycling process at Gigafactory 1 presents
a compelling solution to move energy supply away from the fossil-fuelbased practice of take, make and burn, to a more circular model ofrecycling end-of-life batteries for reuse over and over again. From an
economic perspective, we expect to recognize significant savings overthe long term, as the costs associated with large-scale battery material
recovery and recycling will be far lower than purchasing andtransporting new materials.

26

C A S E S T U DY :Tesla first broke ground on Gigafactory 1 in 2014, providing theG I G A FA C T O R Y 1 —opportunity to build a truly sustainable facility from the ground up.

S U S TA I N A B L E
BY DESIGN

Located in Sparks, Nevada, the facility is being built in phases so that
Tesla and our partners can manufacture inside the finished sections as
we continue to expand. This phased approach allows us to learn andcontinuously improve our construction and operational techniques as
we drive down the cost of battery production. As with many of ourmanufacturing processes, Tesla applies first-principles thinking to2014 rendering of Gigafactory 1,

achieve efficiencies across all areas of Gigafactory 1, translating into

prior to Tesla beginning construction

lower operating costs. Since batteries remain the costliest part ofon the 3.2K-acre site. Tesla is currently
building a solar array on the rooftop
to power the factory with sunlight.

electric vehicles, these efficiencies are ultimately reflected in the costof the final product, allowing us to get more vehicles to consumers.

R O O F T O P S O L A R A R R AY

WAT E R S T O R A G E
A N D R E - U S E SYST E M

I M PAC T R E P O R T

27

E L I M I N AT I N G N AT U R A L

One unique aspect of Gigafactory 1 is that there is no natural gas

GAS LINES: MAXIMIZING

line within the factory. Tesla made this decision at the design stage

H E AT R E C O V E R Y

because we wanted a sustainably-powered facility with no on-sitecombustion of fossil fuels. While challenging to achieve from a design
perspective due to manufacturing processes that require high levelsof energy or heat (like high-temperature ovens), Tesla engineered
thermal systems to maximize heat recovery resulting in significant
energy efficiency gains compared to standard industrial designs.
This included using heat pumps to upgrade low-temperature waste
heat from manufacturing, thus reducing the energy used to heat thefacility by over 80% compared to traditional electric heaters and is
expected to save over 16K MWh in the winter season. The facility
also has a heat exchanger system to recover more than 60% of theheat from the exhaust of industrial ovens.

BRINGING THE OUTSIDE

Several battery manufacturing areas throughout the facility require very

I N : O U R N AT U R A L

low levels of humidity during production (<300 ppmm), and creating

A I R SYST E M

dry air for these areas can be costly and require a lot of energy. Because
Gigafactory 1 is located in the high desert of Nevada, Tesla was able toturn to nature itself and pull in outside air that starts with much lessmoisture. Tesla also configured its compressors and dehumidifier to takethe heat rejected by the compressor to supply over 50% of the heatrequired to be dehumidified. The facility’s unique system dramaticallyreduces the energy and cost required to produce dry air compared to
manufacturing facilities located in more humid regions.

T H E P E R F E C T SYST E M :Tesla designed the Gigafactory 1 roof with a white reflective surface and

DESIGNING FOR SOLAR

no obstructions, so that it is a perfect fit for solar panels. Designed to
be a net-zero energy facility upon completion, Gigafactory 1 will be
powered primarily by solar from the rooftop solar installation that iscurrently underway.

28

COLD DESERT

Traditional cell manufacturing is energy intensive, resulting in large

NIGHTS: THERMAL

amounts of heat dissipated from manufacturing equipment that

WAT E R S T O R A G E

must be removed from the building. This heat removal is achievedby pumping chilled water throughout the entire factory. Conventional
chilled water generation consumes an enormous amount of electric
power and water, even with high-efficiency chillers. To reduce theeconomic and energy costs of generating this chilled water, Tesla
designed and built a one-of-a-kind chilled water plant precisely tuned
to take advantage of the vast daily temperature swings and dry desert
air by equipping Gigafactory 1 with a 10M gallon concrete thermalenergy storage reservoir. At night, when the ambient air is cool anddry and the factory operates efficiently, it intentionally generates morechilled water than is needed for the manufacturing processes and theexcess is stored in the reservoir. Then, during the daytime when the
hot desert sun is beaming and causing the factory to operate at low
efficiency, the stored cold water is sent throughout the factory toprovide all cooling needs. By shifting the generation of chilled water
to the night time, the factory is able to operate in “dry mode” so thatno water evaporation is required for a greater percentage of time andthere is no consumption of water during these periods. This improved
design is expected to reduce the factory’s chilled water electricalconsumption by as much as 40% and water consumption up to 60%,

Aerial view of Gigafactory 1 in the winter.

I M PAC T R E P O R T

pushing Gigafactory 1 toward its net-zero emissions goals.

29

Z E R O WA S T E : S O LV E N T

To manufacture lithium-ion batteries, a solvent is used to coat

R E COV E RY SYST E M

metal electrodes inside the cell. During manufacturing, this solvent
evaporates and is carried away with warm air, leaving behind powders
coated evenly on the metal foil. The solvent vapor is then condensed
out of the air, and the used solvent is collected as a waste liquid.

In conventional battery factories, this used-solvent liquid is trucked
offsite to third-party processing centers. To avoid the high financial
and energy costs of this offsite treatment, Tesla designed our own
dedicated solvent refining process to convert waste solvent back into
reusable solvent in a closed-loop fashion. This solvent refining system
was constructed onsite and has been operating since the end of 2017,
demonstrating a greater than 95% conversion of waste solvent. Thissystem has also eliminated the need for more than 30 tanker trucks
per week that previously would have transported this material to andfrom an outside refiner. Due to our onsite refining system that was
designed specifically for this application, the purity of this refinedsolvent has shown to be even higher than solvent purchased fromthird-party suppliers.

The solvent refining process is typically very energy intensive, so Tesla
developed a custom heat pumping system to minimize total energy
consumption. Waste heat that is usually sent to a cooling tower isinstead captured as recovered heat. The implementation of this closedloop steam-water vapor compression heat pump system resulted in an
approximately 85% reduction in energy consumption when compared
to a standard system. This heat pump system was the first patentapplication filed for any Gigafactory 1-related operation and was
granted by the U.S. Patent and Trademarks Office in November 2017.

30

03

S U P P LY

I M PAC T R E P O R T

C H A I N

31

RESPONSIBLE

Tesla is committed to only sourcing responsibly produced materials.

SOURCING

The Tesla Supplier Code of Conduct (Code) and our Human Rights
and Conflict Minerals Policy outline our expectations of all suppliers
and partners who work with us. Tesla is committed to making working
conditions in our supply chain safe and humane, ensuring that workers
are treated with respect and dignity and that manufacturing processes
are environmentally responsible. Tesla suppliers are required toprovide evidence of management systems that ensure social,environmental and sustainability best practices in their own
operations, as well as to demonstrate a commitment to responsible
sourcing into their supply chains.

Our complex supply chain is a unique hybrid of the traditional
automotive and high-tech industries and encompasses suppliers fromaround the world. Many of our Tier 1 suppliers (i.e. direct suppliers)
do not purchase all of their raw materials directly and instead obtainthem from their suppliers and sub-suppliers. Therefore, reliably
determining the origin is a difficult task, but the due diligence practices
required of our suppliers adds transparency to help us and our
suppliers adhere to the responsible sourcing principles of our Code.

Our Tier 1 suppliers are required to register and complete thedomestic and international material compliance requirements in
the International Material Data System (IMDS) to meet EU and otherinternational material and environmental related regulations. Thisrequirement is mandated for all suppliers who supply their products
or raw materials to us as part of our production-parts approval
process. Tesla, along with our partners and independent third parties,
conducts audits to observe these principles in action. If there is areasonable basis to believe a supplier partner is in violation of theCode, Tesla will transition away from that relationship unless theviolation is cured in a satisfactory manner.

330
2

C O B A LT

While Tesla’s responsible sourcing practices apply to all materials andsupply chain partners, we recognize the conditions associated withselect artisanal mining (ASM) of cobalt in the Democratic Republic of
the Congo (DRC). To assure the cobalt in Tesla’s supply chain does notcome from ASM sites, we have implemented targeted due diligenceprocedures for cobalt sourcing.

We have visited many cobalt mines and processing plants that
support Tesla’s main supply chain, as well as potential future suppliers
throughout the world. We discuss with these suppliers the major risks
they face and the practices they have implemented to mitigate theserisks. Safeguards include chain of custody controls and iterative
checks performed from mining through customer delivery to combat
illegal or artisanal ore use; on-site security and access control; hiring
practices and management engagement to protect against child labor
onsite; internal and third-party audit practices; and engagement withlocal communities to maintain a positive social license to operate.

It is important to note that there is very little cobalt in Tesla’s battery
cells. On a relative basis, cobalt is not that significant to the compositionof Tesla’s battery cells, as we mainly use batteries based on a nickelcobalt-aluminum oxide (NCA) chemistry, which contain substantiallyless cobalt than the industry standard batteries based on a nickelmanganese-cobalt oxide (NMC) chemistry. Cells used in Model 3
production are the highest energy density cells used in any electricvehicle. We have achieved this by significantly reducing cobalt content
per battery pack while increasing nickel content and still maintaining
superior thermal stability. The cobalt content of NCA cathode chemistry
is already lower than next-generation cathodes that will be made bytraditional battery cell producers with an NMC ratio of 8:1:1. Thus,
Tesla not only uses far less cobalt per vehicle than the rest of theelectric vehicle industry but also plans to recycle and reuse thecobalt at these batteries’ end of life. Tesla continues to look for ways
to reduce the amount of cobalt used in our battery cells with a goalof eliminating it entirely.

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33

CONFLICT MINERALS

Tesla has a zero-tolerance policy towards human rights abuses inour supply chain. Many Tesla products, like most electronics, containminerals such as tin, tungsten, tantalum and gold, often referred to as“3TG”. While these minerals can be found in deposits all around theworld, they also exist in the Democratic Republic of Congo (DRC) andsurrounding areas. Tesla’s Human Rights and Conflict Minerals Policy
is in place to ensure that Tesla's products do not directly or indirectly
finance or benefit armed groups through mining or mineral tradingin the DRC and its adjoining countries.

D O W N L O A D T E S L A’ S 2 0 1 7 C O N F L I C T M I N E R A L S R E P O R T

SUPPLIER DIVERSITY

At Tesla, we strive to have a diverse supply chain and provide themaximum practical opportunities to provide goods and services as apart of the corporate procurement process. The use of diverse suppliers
is an integral part of Tesla’s purchasing plans, just as equal opportunity
employment is central to our personnel policies and procedures. Tesla
recognizes that supplier diversity creates a competitive advantage
for the company and has a positive impact on the global community.
Tesla believes that the success of our company and society depends
on enabling diverse businesses to share and grow in the global market.

34

04

E M P L O Y E E S

I M PAC T R E P O R T

A N D

C U LT U R E

35

INTRODUCTION

We’re on a mission to accelerate the world’s transition to sustainableenergy. Along the way, we’re building a culture that is safe, fair andexciting for all of our employees. It is incredibly important to Tesla thateveryone looks forward to coming to work every day. We are proud tohave built a company filled with employees of all backgrounds who
possess the energy and drive to accelerate our vision forward.

BECOMING THE SAFEST

Our goal is to have the safest car factory in the world. Car manufacturers

C A R FA C T O R Y I N

have historically built cars by relying heavily on physical activity thatT H E WO R L D

could cause stress or harm to the body. We seek to create new methodsof manufacturing that will result in as close to zero injuries as possible.

To achieve this goal, Tesla’s Global Environmental, Health and Safety(EHS) team has built a strategy based on three pillars:

1. DO THE BASICS RIGHT

Active Health & Safety Committees and implementation of standardized
reporting and trending for all sites globally have led to increased visibilityof corrective actions and the application of learnings in all regions.

2 . E N G A G E O U R S TA K E H O L D E R S

We are implementing change management processes to design EHS into
our products, while our employees continuously help identify issues andsuggest process improvements.

3. REDUCE RISK

We launched a “Find It-Fix It” campaign globally and are implementing
a global document control and communications process, as well as
creating a life-saving and life-altering risk control system.

36

BECOMING THE SAFEST

While injury and illness rates are useful indicators of a company’s safety

C A R FA C T O R Y I N

and health environment, reliance on lagging indicators can sometimes

T H E WO R L D

lead to the wrong conclusion. Thus, we also focus on leading indicators,
such as safety training, ergonomic opportunities and our global “Find-it;
Fix-it” improvement campaign that was kicked off globally in 2017.
We ended 2018 with over 60K improvements, which were the result ofengagement at all levels, including employee suggestions, leadershipwalkthroughs, safety team meetings, as well as audits and inspections.
T O TA L R E C O R DA B L E I N C I D E N T R AT E ( T R I R )The average TRIR for the Fremont Factory is lower than when the facility was operated as
NUMMI prior to Tesla’s acquisition in 2010.

12

12.6
10

8

6

6.2

4

2

0

N U M M I ( AV E R A G E 2 0 0 3 - 2 0 0 9 )T E S L A FA C T O R Y ( 2 0 1 8 )THE SAFEST CARS

Our commitment is to design and build the best possible products for

FOR CUSTOMERS

both our customers and our employees. Safety is a core value for our

A N D E M P L OY E E S

operations at Tesla, and we have made significant strides since thedays of ramping production of our first models. We’ve taken ourlearnings from building Model S and Model X and applied them todesigning the manufacturing process for Model 3. Tesla’s ergonomics
team was heavily involved in the development of Model 3 assemblylines by using a virtual reality program to study the exact movementsthat would be used by our employees when building the car. Thiseffort significantly improved ergonomics on the Model 3 assembly line
by reducing potential stresses and strains.

I M PAC T R E P O R T

37

THE SAFEST CARS

Our employees have provided safety solutions through active

FOR CUSTOMERS

safety teams and transparent reporting of incidents. Based on a

A N D E M P L OY E E S

company-wide 360-survey in January 2018, of the 88% of employees
who responded, 83% agreed that Tesla cares about their safety
and well-being.

We proactively started an industrial athlete early symptom intervention
program at our Fremont Factory to identify and act upon opportunities
for improvement. We are committed to engaging with our workforce
on safety issues. For example, our leaders conduct walkthroughs andTesla employees working on the Model 3line at the Fremont factory.

events so our employees have a voice to continuously improve ourwork environment.

38

R E WA R D I N G T H E

We believe it is important for everyone to be an owner of the company.

INDIVIDUAL

That is why, unlike other car companies, everyone who works at Tesla isawarded shares of Tesla stock and can buy additional Tesla stock at a
discount through the employee stock purchase program. The value ofTesla’s shares has increased significantly since our IPO in 2010. The
importance of equity awards cannot be ignored, especially in Silicon Valley.

Tesla offers competitive wages and benefits in every market in which
we operate. In addition, we periodically review each employee’s totalcompensation and make adjustments as necessary. We also believe in
pay-for-performance and in providing ample opportunities for individuals
to receive incremental base-pay increases and equity awards as theybuild their Tesla careers. We proactively examine whether pay parity
issues exist to help ensure our employees are paid consistently
regardless of gender, race or ethnicity.

Tesla’s entry-level wages for production employees at our Fremont
Factory are higher than those of other automakers, and that is before
equity and benefits are factored in, which are equivalent to an additional
60% of base pay. One-fourth of Tesla’s entry-level production employees
in Fremont are promoted within a year, at which point they earn an hourly
wage that is 14% higher than comparable positions at Ford, GM and FiatChrysler. Tesla maintains the flexibility to regularly increase wages and has
done so 3 times in the past 2 years. In comparison, union-represented
facilities’ wage increases are typically fixed for 4-year periods.

DIVERSITY AND

At Tesla, we strive to hire the best and brightest employees, regardless

INCLUSIONof race, color, religion, sex, sexual orientation, age, national origin,disability, protected veteran status, gender expression or gender
identity, and any other protected status under applicable law. We work
hard to create a diverse and inclusive workforce composed of talented
individuals not just because it’s the right thing to do, but because ourdifferences are what make us stronger and smarter as a company.
Focusing on hiring outstanding talent, we also work to ensure that
we have a diverse pipeline of candidates by completing outreach inthe communities where we operate.

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39

AMPLIFY — TO BUILD A

One of the many ways Tesla amplifies diversity and inclusion is through

DIVERSE, INCLUSIVE AND

employee resource groups led by fellow employees to encourage peers

SAFE ENVIRONMENT

to share ideas, build relationships and take advantage of mentorship
opportunities. Our employee resource groups include: Black@Tesla,Intersectionality@Tesla, LGBTQ@Tesla, Teslatinos, Veterans Taskforce
and Women In Tesla. They serve as a resource regarding employee andcommunity issues, ideas and policies and promote a company cultureof inclusion, respect and support for everyone.

Tesla is absolutely against any form of discrimination, harassment
or unfair treatment of any kind. We hold each other accountable forour actions and provide a structure by which employees can suggest
improvements or report issues. This includes anti-discrimination andEvery year, Tesla employees participate
in Pride parades across the country,
including the most recent Los Angeles
Pride Festival.

anti-sexual harassment training courses for employees and mandatory
training for managers and executives to understand and discuss theirrole as leaders to continually improve our work environment.

40

I N T E G R AT E — T O C O N N E C T

Diversity and inclusion is integrated into our business, recruiting and the

DIVERSITY AND INCLUSION

communities in which we work. Our leaders review their demographics

TO THE BUSINESS AND
E M P L OY E E S

and create business action plans in order to continue to lead an inclusive
workforce. We require a diverse interview panel to reflect the diversityof our candidates, and provide our recruiting team with unconscious bias
training to uncover and mitigate their biases when reviewing potential
Tesla candidates. We also partner with the Public Workforce Systems,
a network of U.S. federal, state and local offices that support economic
expansion and development of the U.S.’s workforce, to train and recruit
diverse talent.

These partners include the Department of Veteran’s Affairs, Department
of Social Services, Department of Labor, Department of Education andvarious government agencies and community resources. Tesla also has
collaborative partnerships with organizations utilizing The Workforce
Innovation and Opportunity Act (WIOA), an initiative that provides
employment services, develops career pathways, training programs andtalent pipelines. WIOA provides U.S. federal funds to eligible communitybased organizations to help job seekers, workers and businesses withcareer services, job training and education.

Our production leads reflect the diversity of the Fremont Factory, withover two-thirds identifying as Asian, Hispanic/Latino, African Americanor Other. Having a diverse workforce is only one piece of our impact
as an organization. We know that our suppliers and those that we dobusiness with also impact the communities that we serve. We have
many diverse suppliers in our portfolio, and we require all vendors toabide by our Code and to understand our commitment to diversity. We
also participate in outreach events with certified diverse suppliers tocontinue to broaden the range of our vendor base, such as the California
Public Utilities Commission’s Small and Diverse Business Expo.

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41

E XC E L L E N C E —We connect with industry leadership, external partners, government

T H E PA S S I N G G R A D E

agencies and universities to push the envelope in technology,
manufacturing and the overall business of Tesla. For example, Tesla
partners with Watermark, AnitaB.Org, National Society of Black Engineers,
Society of Women Engineers, Women in Automotive, Lesbians Who
Tech + Allies, Wounded Warrior Project and more. These partnerships
provide us with numerous opportunities to recruit diverse talent andprovide valuable leadership development and networking communities
for our employees.

As we work to achieve our mission, we look to our employees andexternal experts to help review our practices and provide us withfeedback so that we can continue to improve. As one example, the
Human Rights Campaign’s Corporate Equality Index is the national
benchmarking tool on corporate policies and practices pertinent tolesbian, gay, bisexual, transgender and queer employees. Tesla is proud
to have received a score of 100/100 on the Corporate Equality Index
for 5 years in a row, and has been named in the “Best Places to Work
for LGBTQ Equality” from the Human Rights Campaign.

As a Military Friendly Employer, we are proud to have one of the largest
veteran groups in the state of California and over 1.8K veterans in our
workforce globally. We support numerous organizations that sponsor
veteran hiring including CA State Employment Development Department
offices, The Work for Warriors program, the U.S. Army PaYS program
and the U.S. Army Reserve’s Private Public Partnership Program. Tesla
Energy is also the founding recruiting partner of the U.S. Departmentof Energy’s Solar Ready Vets program, providing accelerated training
to help place transitioning veterans into the solar industry.

42

E M P L OY E E

To reduce our employees’ carbon impact on the environment, Tesla

MOBILITY AND

offers alternative transportation programs to provide them with a more

T R A N S P O R TAT I O N
PROGRAMS

sustainable way of commuting, like Tesla’s bike-to-work program in the
U.S. Tesla also encourages ride sharing through a variety of carpooling
services. We operate a network of commuter shuttles to and from work
to reduce not only vehicle emissions, but also time spent in traffic too.
In the Bay Area, almost 4K employees take shuttles to work a day andin Nevada, roughly 2K employees ride shuttles to Gigafactory a day,lowering commuting costs for our employees. Several hundred of ourTesla’s Veterans Task Force participatedin Reno’s annual Veterans Day Parade.
We’re proud of the veterans working at
Tesla, and their dedication, commitment
and work ethic to helping transition theworld to sustainable energy.

I M PAC T R E P O R T

employees also carpool daily, and Tesla encourages all employees totake public transportation to work, subsidizing these costs in selectmarkets. Naturally, Tesla also has hundreds of electric vehicle charging
stations at our facilities to encourage Tesla employees to go electric.

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E D U C AT I O N

Tesla partners with local high schools, universities and nonprofits
to accelerate the world’s transition to sustainable energy and address
the growing demand for science, technology, engineering andmathematics (STEM) jobs. Utilizing student grade-specific activities,
Tesla has increased access for students in California to early professional
experiences by providing career exposure workshops, STEM/STEAM
hands-on activities, factory tours, and speaking opportunities atfacilities and local community events, including at the Community
Youth Center of San Francisco.

In Nevada, growth in STEM jobs is projected to be 40% higher thanin non-STEM jobs between 2014-2024. To prepare students for
manufacturing and engineering careers at Tesla and other companies,
Tesla is investing $37.5M in Nevada K-12 education over the next 5 years– a commitment we made in 2014 when we finalized plans to locate
Gigafactory 1 in Sparks. As part of our workforce development,
Nevada high school students tour
Gigafactory 1 as part of Tesla’s new
Manufacturing Development Program —an apprenticeship designed to acceleratehigh school graduates’ careers by giving
them full-time employment at Tesla andopportunities to receive credits froma nearby community college.

Tesla also launched a high school graduate apprenticeship, theManufacturing Development Program, to educate and recruit talentfrom diverse high schools across the state to become Production
Associates at Gigafactory 1. In the last two years, we hosted over
250 educational tours of Gigafactory 1 for more than 3K students,
teachers and administrators.

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E D U C AT I O NNear Gigafactory 2 in Buffalo, Tesla partners with Erie Community
College and local high schools for the Solar Pathways Program, which
exposes students to careers in the energy sector and creates a pipeline
for local jobs.

To put students at the forefront of the electric vehicle revolution, in
2018, we introduced Tesla START, an intensive 12-week training program
designed to provide students with the skills necessary to jump start a
career at a Tesla Service Center. The program is currently running in the
San Jose, Los Angeles, Seattle, Charlotte, and Miami regions, where
dozens of students are developing technical expertise and earning
certificates through a blended approach of in-class theory, hands-on labs
and self-paced learning.

C O R P O R AT E

Our Board of Directors sets high standards for our employees, officers

G OV E R N A N C E

and directors, and we periodically add new, highly qualified directors
to the Board, such as Larry Ellison and Kathleen Wilson-Thompson
in 2018, Linda Johnson Rice and James Murdoch in 2017 and Robyn
Denholm in 2014. Implicit in this philosophy is the importance of soundcorporate governance to help us achieve our goals. We are committed
to establishing an operating framework that exercises appropriate
oversight of responsibilities at all levels throughout the company andmanages its affairs consistent with high principles of business ethics. As
detailed on our Investor Relations website, we have a number of policies
that set the high standards we hold ourselves to, including our Code ofBusiness Conduct and Ethics and our Corporate Governance Guidelines.

I M PAC T R E P O R T

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C O R P O R AT E

We also train our personnel on other corporate governance policies,

G OV E R N A N C E

such as our Worldwide Bribery & Anti-Corruption Policy. This policy
boils down to: “Don’t offer any bribe to anybody, anytime, for any
reason (and when in doubt, please consult with the General Counsel
or the Legal Department).” Additionally, we maintain and enforce an
OFAC compliance policy, which allows us to make sure that we don’t
participate in transactions with sanctioned countries, legal entities orindividuals, such as terrorists or narcotics traffickers.

We believe in regular and transparent communication with employees.
We encourage Tesla employees to share their feedback openly (andanonymously if they prefer), and the company provides easy methods
to do so. We regularly conduct employee surveys to identify strengths
and opportunities for improvement. We have a robust action planning
process to ensure we proactively address the concerns or feedback.
As a result of recent feedback, we have invested additional resourcesin our performance and leadership training.

We also have a whistleblower hotline through which employees canreport concerns at any time. The company keeps information reported
by employees in confidence, whether through the hotline or anotherchannel. Our policies prohibit retaliatory actions against employees forraising concerns or making complaints. We are committed to maintaining
an open and transparent culture where it is safe and acceptable for all
employees to raise concerns about policy violations by their manager
or colleagues or about the workplace overall.

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DRIVEN BY

Sustainability is what drives us at Tesla, and it’s not just about ourS U S TA I N A B I L I T Y

products — it’s the values, manufacturing and mission of our business.
It’s at the core of everything we do and what drives us in the work that
we do. To achieve a zero-emissions future, we’ve implemented several
programs and initiatives at our manufacturing facilities and in thecommunities in which we operate, providing clean energy, partneringwith local schools and nonprofits and everything in between. We’re acompany of sustainability ambassadors — looking for ways to continue
to set concrete sustainability goals and the paths we intend to take toachieve them — which will be shared in future Tesla Impact Reports.

We are proud of the work we have done thus far and look forward to
In July 2018, Tesla employees celebrated
achieving an incredible Company milestoneof producing 5K Model 3s per week.

I M PAC T R E P O R T

sharing how our continued sustainability efforts make a difference in theworld and to accelerate the world’s transition to sustainable energy.

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ENERGY UNITS OF MEASUREMENTSYMBOLUNIT OF ENERGY

E Q U I VA L E N T C O N S U M P T I O N

A M O U N T E Q U I VA L E N T T O 1 T W hkWhkilowatt-hour

1 kWh = Ten 100-watt light bulbs on for 1 hour

1,000,000,000 kWhs

MWhmegawatt-hour

1 MWh = Avg. U.S. household for 1 month

1,000,000 MWhs

GWh

gigawatt-hour

1 GWh =
˜ 100 avg. U.S. households for 1 year

1,000 GWhs

TWh

terawatt-hour

1 TWh =
˜ 100,000 avg. U.S. households for 1 year

1 TWhs48