Tesla Motors – Fourth Quarter & Full Year 2014 Shareholder Letter
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Introduced All-Wheel Drive Dual Motor Model S & Autopilot in Q4
Record quarterly production of 11,627 vehicles
Delivered 9,834 vehicles, as P85D production delays pushed some to Q1
Expanded Supercharger network to cover US coast to coast & most of Europe
Expecting over 70% growth in vehicle deliveries in 2015
Model X to begin shipping in six months

February 11, 2015
Dear Fellow Shareholders:Tesla continues to drive the global transition to sustainable transport, with more pure electric car revenue than all othercompanies combined in 2014. From 2012 to 2014, Tesla non-GAAP revenue grew by almost 800% and GAAP revenue grew byalmost 700% while gross margin simultaneously increased to unusually high levels by automotive standards. Moreover, as
implied by the graph below, both vehicle production and demand are expected to accelerate in 2015.

Revenue & Gross Margin Expansion

In 2014, we also increased our number ofstores and service centers by over 40%,
expanded our Supercharger network by 400%,
started construction of the Gigafactory andintroduced numerous advances on Model S.
As a result of this progress, we entered 2015
with over 10,000 orders for Model S andalmost 20,000 reservations for Model X.

(excluding ZEV credit revenue)
660%
5
Non-GAAP - solid line!
GAAP- dashed line!

50%

4
40%
3

30%

2

Gross Margin

Revenue ($ billions)

We built 11,627 vehicles in Q4, thus achieving
our production target of 35,000 Model S
vehicles in 2014. This required a herculean
effort, because we held back release of our
Performance All-Wheel Drive Dual Motor car(P85D) to ensure it would be a truly great
experience for owners. While we were able torecover the lost production by end of thequarter, delivering those cars was physically
impossible due to a combination of customers
being on vacation, severe winter weather andshipping problems (with actual ships). As aresult, about 1,400 vehicles slipped December
and were delivered in Q1.

Since Model S Introduction20%

Non-GAAP - solid line
GAAP
- dashed line
1

10%

-

0%
2012

2013

2014

2015 Guidance

Our Q4 financials reflect this delivery shortfall, one-time manufacturing inefficiencies related to the introduction of P85D andAutopilot functionality, and the impact of the strong dollar. Even though the dollar has continued to strengthen by over 7% versus
the euro in 2015, we believe we will be able to sustain a non-GAAP automotive gross margin of about 26% in Q1 by stabilizing
production to improve manufacturing efficiencies. Without the sharp increase in dollar strength, Q1 gross margin would be about
28%. Tesla serves an international market and has a global supply chain, but most of the Model S is built in North America, so astrong dollar has a slightly negative net effect on profitability.

Vehicle Enhancements & Market Expansion
We launched the P85D in November to the enthusiastic receptionof automotive reporters and car buyers. Motor Trend called theModel S P85D the “quickest sedan in the world” and a YouTube
video of thrilled passengers went viral. Customers responded byplacing a record number of Model S orders in the quarter. Whilethe level of Q4 orders likely reflects some pent up demand from
customers who had been waiting for an all-wheel drive Model S,
we also note very few customers have had an opportunity to see,or even test drive, our most innovative car yet. As our All-Wheel
Drive Dual Motor cars become available in Q1 for customer testdrives worldwide, we expect this hands on experience will be acatalyst to even more orders.
Autopilot equipped cars now have traffic aware cruise control,
forward collision alert, and automatic high beam dimming. Several
P85D: Great Handing in All Conditions
additional autopilot features will be introduced in Q1 and Q2. Withsoftware enhancements, appropriately equipped cars are even faster and more efficient, can predict trip range based onelevation data, automatically learn a driver’s unique commuting pattern and prepare the cabin temperature for daily trips, andprovide greater parking assistance with improved feedback. Our customers are delighted to find these new features added totheir cars overnight, with just a finger touch on the center console of their Model S. We are also continuously improving Model S
with hardware enhancements such as our optional next generation front seats, executive second row seats and a second row
center console.
Our Q4 entry into Australia capped a year of international expansion, in which we launched Model S in five countries anddoubled our number of sales and service locations internationally. This year, we intend to continue to grow our sales and service
locations in all our existing markets. Despite initial challenges in China, we remain convinced of the vast potential of this market
and are concentrating our efforts on the cities we are in currently, before launching into new cities. Our China initiatives include
simplifying the buying process there by having Tesla personnel install charging points at customer homes or businesses wellbefore vehicle delivery. We now offer a turn-by-turn navigation option in China that we provided retroactively through a remote
software upgrade to all our customers with appropriately optioned cars, and we believe our new executive seats and second row
center console will be quite popular with new China customers.
Our charging solutions are becoming even more widespread,helping our customers to conveniently travel much further awayfrom home. In Q4, we installed a quarterly record of 125
Supercharger stations, and now have 380 Supercharger stations
energized globally. As an extension of our Supercharger
network, hotels and popular destinations have been installing our
high-powered wall connectors at such a rapid pace that we are
now coordinating these efforts as a Destination Charging
program. Almost 900 locations in Asia and North America
currently have 1,600 Tesla connectors installed. We plan toexpand the Destination Charging program into Europe in Q2 ofthis year.
Model X development remains on plan for initial customer
deliveries starting in Q3. Over 30 Beta Model X vehicles havebeen
built and are undergoing extensive testing. The results ofModel S – Sydney, Australia
initial Beta phase crash testing have given us confidence that
Model X will live up to the very high safety standard set by Model S. In March, we will start building and testing a small fleet of
Release Candidate Model X vehicles that will be very close to the final production-intent design. Finally, since Model S andModel X will share the same dual motor powertrain, the introduction of All-Wheel Drive Dual Motor Model S helps reduce someof the risk that would otherwise have been associated with the launch and production ramp of Model X.

Productivity Improvements and Capacity Expansion
Ahead of the Model X launch in Q3, we plan toexpand capacity in several areas. In ourLathrop manufacturing facility in central
California, we are installing a state of the art,
highly automated casting and machining
operation for various aluminum components
used on both Model S and Model X. We arealso increasing production on our new drive unit
line to meet All-Wheel Drive Dual Motordemand.
In late summer, we plan to begin Model X body
production in our new robotic body assembly
shop that will run in parallel with our current
Model S body shop. Shortly thereafter, we plan
to start painting Model S and Model X vehicles
in our new paint facility in Fremont. Should weachieve our design targets, this new paint shop
will set new standards for high volume paint shops
Gigafactory Construction Continues
worldwide in terms of paint quality, labor andenergy efficiency, and low environmental impact. It will also be flexible enough and have the capacity to paint Model 3 in the
future. These and other investments should provide us with sufficient capacity to increase our production to 2,000 vehicles per
week by year-end.
Construction activity is proceeding to plan at our Gigafactory near Reno, Nevada. Significant steel fabrication of the structure
started about two months ago. We remain on plan to begin equipment installation later this year and for the start of battery packproduction in 2016, in partnership with Panasonic.

Q4 & Full Year Results
As always, this letter includes non-GAAP financial information because we plan and manage our business using suchinformation. Our non-GAAP measures align the recognition of revenues and costs related to a vehicle sale with the time when
the customer actually gets the car and we receive cash.
Note that this differs from the approach of other automotive manufacturers who under GAAP accounting recognize revenue
when the vehicle is sold into dealership inventory rather than to end customers, even though in the case of a captive financelease they may not collect cash for several years on a consolidated basis.
Our non-GAAP revenue and gross profit is determined by adding back the deferred revenue and related costs for cars sold withresidual value guarantee and where we have collected, or will collect from a bank intermediary in a matter of days, the purchaseprice of the car in cash. For cars leased directly by Tesla, we recognize lease revenue and related costs over the lease term andthe same way for both GAAP and non-GAAP purposes. In Q4, Tesla directly leased 647 cars to customers with $65 million oftransaction value. Our non-GAAP expense and per share information also exclude non-cash stock-based compensation andinterest expense.
Non-GAAP revenue was $1.1 billion for the quarter, up 44% from a year ago, while GAAP revenue was $957 million.
Automotive revenue for Q4 includes $42 million of powertrain sales primarily to Daimler. It also includes $86 million of total
regulatory credit revenue, of which $66 million came from the sale of ZEV credits.
In 2014, about 55% of new Model S vehicles were delivered into North America. While North American Model S orders grew
year-on-year, deliveries were about flat as we directed vehicles into Asia/Pacific (APAC) markets to support our first year ofdeliveries there. The APAC region represented about 15% of our deliveries for the year, and the remaining 30% of deliveries
were to Europe, where delivery volume more than doubled from a year ago. Since we remain production constrained, wemanage regional deliveries to balance customer wait times globally.

The average selling price of Model S increased during the quarter, but not as much as expected given the late introduction of
P85D, the effect of the strong dollar on foreign sales, and the deferral of revenue related to additional Autopilot functionality thatwill be implemented in future software releases. Moreover, we offered small discounts when selling our remaining marketing andservice loaner vehicles that did not have the desired Autopilot capability, which was recently introduced.
We achieved a Q4 total company gross margin of 26.7% on a
non-GAAP basis and 27.4% on a GAAP basis. Q4 automotive
gross margin excluding ZEV credits was 22.0%, on both a
non-GAAP and GAAP basis. Our quarterly average grossmargin was pressured roughly half by revenue factors
resulting in lower than expected average selling price (asexplained above) and half from cost of goods sold factors.
Our vehicle warranty reserves were generally consistent withlast quarter.
Our operating expenses in Q4 were $297 million on a nonGAAP basis and $337 million on a GAAP basis. Non-GAAP
operating expenses were up 15% from Q3 mainly because
this was a record quarter of global expansion for us. We
opened a record 21 new sales and service locations and 125
Superchargers locations during the quarter. Engineering work
also continued on Model X and All-Wheel Drive Dual Motor.

Edinburgh Airport Gets Its First Supercharger

Our Q4 non-GAAP net loss was $16 million, or a loss of $0.13 pershare based on 125.5 million basic shares, while the Q4 GAAP net loss was $108 million or a loss of $0.86 per basic share. For
full year 2014, our net income was $0.14 per share on a non-GAAP basis and a loss of $2.36 per share on a GAAP basis.
We had a $86 million net cash outflow from operations in Q4 primarily due to a $143 million increase in finished goods inventory
primarily for cars in transit, $74 million of growth in accounts receivable related mainly to deliveries late in the quarter and $60
million of cash used for directly leasing vehicles. Capital expenditures in the quarter totaled $369 million, and cash at quarter
end, including cash equivalents was $1.9 billion.

2015 Outlook
In 2015, we expect to deliver about 55,000 Model S and X vehicles, representing more than a 70% increase over 2014deliveries. About 40% of these deliveries are planned for the first half of the year. First quarter production is expected to beabout 10,000 vehicles due to it being a shorter quarter than in Q4 and approximately a week of factory downtime to allow the
workforce to rest and tooling upgrades. Cars in transit to Europe and Asia must grow to support those markets, so we plan todeliver approximately 9,500 vehicles in Q1, an increase of over 47% from Q1 last year. In Q1, we expect to directly lease about
the same percentage of cars that we did in Q4.
We expect that Q1 non-GAAP automotive gross margin should be about 26%, assuming no further strengthening of the US
dollar in the latter half of Q1. Given that the euro has weakened another 7% since the beginning of the year, this impacts ourgross margin by about 2 percentage points. We also expect GHG/CAFE credits to contribute one less percentage point to our
non-GAAP automotive gross margin in 2015, than in Q4. Hence, our gross margin expectation of 26% in Q1 represents asignificant improvement resulting from our efforts to increase manufacturing efficiency and deliver a richer mix of products.
In markets where the local currency has declined significantly versus the US dollar, we recently increased prices by only about
half that decline. The benefit of this price increase generally begins in Q2 as it applies only to new orders and is not retroactive
to the existing book of orders.
Our goal is to continue to improve Model S profitability and we believe we can achieve a 30% gross margin on Model S for Q4 of
2015, even with foreign currency rates at current levels. We expect these gross margin improvements will be partially offset
during the introduction of Model X, as Model X gross margin will be suppressed for a few quarters from supply chain andproduction inefficiencies that are typical of a new product introduction. Eventually we should be able to grow Model X grossmargin to a similar level as Model S.

As we continue to invest in the long term growth of Tesla, 2015 capital spending and operating expenses will increase, but at amore moderate pace than last year. Capital expenditures are expected to be about $1.5 billion as we expand production
capacity, complete Model X development, and invest in the Gigafactory, our stores and service centers. We also plan to growour Supercharger network by over 50% this year as well as continue other product development programs, including Model 3.
Operating expenses are expected to grow roughly 12% to 15% sequentially in Q1, driven mainly by increased engineering anddesign efforts. Growth of sales, general and administrative expenses in Q1 will be more modest as we will be particularly
focused on increasing operational efficiency. In total, our operating expense growth should slow significantly. We expect 2015
operating expenses to grow 45% to 50% annually, as compared to doubling in 2014. Overall we expect to achieve a significantly
higher level of non-GAAP profitability this year than the prior year, despite a significant increase in Tesla direct leasing, which
reduces both our non-GAAP and GAAP profitability.
Starting in 2015, we plan to reorganize the revenue and cost of revenue subsections of our income statement so that automotive
revenue and gross margin reflect only new car sales activities, including regulatory credits. Revenues and gross margin for all of
our other businesses such as powertrain sales, services, trade-in sales and stationary storage will be captured in the “Services
and Other” section of the income statement. This should provide clearer disclosure of our core business of new car production
and deliveries.
In total, our customers have now driven their Tesla vehicles over 750 million miles. We are looking forward to achieving
significant milestones in 2015, in addition to seeing our customers reach the billion miles driven mark.

Elon Musk, Chairman & CEO

Deepak Ahuja, Chief Financial OfficerWebcast Information
Tesla will provide a live webcast of its fourth quarter and full year 2014 financial results conference call beginning at 4:30 p.m. PT
on February 11, 2015, at ir.teslamotors.com. This webcast will also be available for replay for approximately one year thereafter.

Non-GAAP Financial Information
Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis. On a nonGAAP basis, financial measures exclude non-cash items such as stock-based compensation, the change in fair value related toTesla’s warrant liability, non-cash interest expense related to Tesla's convertible senior notes as well as one-time expenses
associated with the early repayment of the Department of Energy Loan. Non-GAAP financial measures also exclude the impactof lease accounting on related revenues and cost of revenues associated with Model S deliveries with the resale value guarantee
and similar buy-back terms, as this perspective is useful in understanding the underlying cash flow activity and timing of vehicledeliveries. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information
because management uses such information internally for its operating, budgeting and financial planning purposes. These nonGAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well ascomparisons to the operating results of other companies. Non-GAAP information is not prepared under a comprehensive set ofaccounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when
understanding Tesla's operating performance. A reconciliation between GAAP and non-GAAP financial information is provided
below.

Forward-Looking Statements
Certain statements in this shareholder letter, including statements in the “Revenue & Gross Margin Expansion Since Model S
Introduction” graph and “2015 Outlook” section; statements regarding gross margin expansion and profitability, statements
relating to the progress Tesla is making with respect to product development, including future Autopilot features and Model X
development and launch plans; statements regarding growth in the number of Tesla store, service center, Supercharger and
Destination Charging locations; the timing, order catalysts, pace of production and international delivery expansion for Tesla
vehicles, including the production volume, rate, and ramp expectation of our new production lines; growth in demand and orders
for Tesla vehicles; the ability to achieve vehicle demand, volume, production, delivery, revenue, leasing, gross margin, spending,capital expenditure and profitability targets; productivity improvments and capacity expansion plans; and Tesla Gigafactory timing,
partnerships, plans and output expectations, including those related to cell and battery pack production, are “forward-looking
statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current
expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The
following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking
statements: Tesla’s future success depends on its ability to design and achieve market acceptance of Model S and its variants, aswell as new vehicle models, specifically Model X and Model 3; the risk of delays in the manufacture, production and delivery ofModel S vehicles, including All-Wheel Drive Dual Motor Model S, or the development, production and delivery of Model X andModel 3 vehicles; adverse foreign exchange movements; the ability of suppliers to meet quality and part delivery expectations atincreasing volumes; any failures by Tesla vehicles to perform as expected or if product recalls occur; Tesla’s ability to continue toreduce or control manufacturing and other costs; consumers’ willingness to adopt electric vehicles; competition in the automotive
market generally and the alternative fuel vehicle market in particular; Tesla’s ability to establish, maintain and strengthen the
Tesla brand; Tesla’s ability to manage future growth effectively as we rapidly grow, especially internationally; the unavailability,
reduction or elimination of government and economic incentives for electric vehicles; Tesla’s ability to establish, maintain andstrengthen its relationships with strategic partners such as Panasonic; potential difficulties in finalizing, performing and realizing
potential benefits under definitive agreements for the Tesla Gigafactory site, obtaining permits and incentives, negotiating termswith technology, materials and other partners for Gigafactory, and maintaining Gigafactory implementation schedules, output andcosts estimates; and Tesla’s ability to execute on its retail strategy and for new store, service center and Tesla Supercharger
openings. More information on potential factors that could affect our financial results is included from time to time in our Securities
and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in ourquarterly report on Form 10-Q filed with the SEC on November 7, 2014. Tesla disclaims any obligation to update information
contained in these forward-looking statements whether as a resultof new information, future events, or otherwise.

Investor Relations Contact:
Jeff Evanson
Investor Relations – Tesla
ir@teslamotors.com

Press Contact:
Khobi Brooklyn
Communications – Teslapress@teslamotors.com

Tesla Motors, Inc.
Condensed Consolidated Statements of Operations(Unaudited)(In thousands, except per share data)

Dec 31,
2014
Revenues
Automotive sales (1A)
Development services
Total revenues
Cost of revenues
Automotive sales (1B)
Development services
Total cost of revenues (2)Gross profit
Operating expenses
Research and development (2)Selling, general and administrative (2)Total operating expenses
Loss from operations
Interest income
Interest expense
Other income (expense), net (3)Loss before income taxes
Provision for income taxes
Net loss
Net loss per common share, basic and diluted$

Three Months Ended
Sep 30,2014

956,661
956,661$

849,009
2,795
851,804

Year Ended
Dec 31,
Dec 31,
2014
2013

Dec 31,
2013$

610,851
4,368
615,219$

3,192,723
5,633
3,198,356$

1,997,786
15,7102,013,496

694,964
694,964
261,697

598,472
1,481
599,953
251,851

453,578
5,051
458,629
156,590

2,310,011
6,674
2,316,685
881,671

1,543,878
13,356
1,557,234
456,262$

139,565
196,970
336,535(74,838)219(28,703)(588)(103,910)
3,719(107,629)$

135,873
155,107
290,980(39,129)300(29,062)(3,090)(70,981)
3,727(74,708)$

68,454
101,489
169,943(13,353)92(6,229)4,584(14,906)
1,358(16,264)$

464,700
603,660
1,068,360(186,689)
1,126(100,886)
1,813(284,636)
9,404(294,040)$

231,976
285,569
517,545(61,283)
189(32,934)
22,602(71,426)
2,588(74,014)$(0.86)$(0.60)$(0.13)$(2.36)$

Shares used in per share calculation, basic and diluted

125,497

124,911

122,802124,573(0.62)
119,421

Notes:(1) Due to the application of lease accounting for Model S vehicles with the resale value guarantee or similar buy-back terms, the following is supplemental information forthe periods presented:(A) Net increase in deferred revenue and other long-term liabilities
as a result of lease accounting and therefore not recognized in
automotive sales$

138,973$

80,544$

146,125$

400,185$

464,166(B) Net increase in operating lease vehicles as a result of leaseaccounting and therefore not recognized in automotive cost of
sales

$

110,234$

63,981$

114,221$

312,710$

376,979$

3,455
10,57814,05628,089$17,45462,601
76,441
156,496$

9,071
35,49439,09083,655

Under lease accounting, warranty costs are expensed as incurred instead of accrued at the time of sale.
(2) Includes stock-based compensation expense of the following for the periods presented:
Cost of revenues
Research and development
Selling, general and administrative
Total stock-based compensation expense

$

$

5,053
17,595
21,86944,517$$

5,383
16,63917,13639,158$$$(3) Other income, net, for the year ended December 31, 2013 includes the gain from the elimination of the $10.7 million Department of Energy (DoE) common stock warrant
liability.

Tesla Motors, Inc.
Condensed Consolidated Balance Sheets(Unaudited)(In thousands)
Dec 31,
2014
AssetsCash and cash equivalents
Restricted cash and marketable securities - current
Accounts receivable
Inventory
Prepaid expenses and other current assets
Operating lease vehicles, net (1)Property and equipment, net
Restricted cash - noncurrent
Other assets
Total assets
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities
Deferred revenue (2)Customer deposits
Capital lease obligations
Long-term debt
Other long-term liabilities (3)Total liabilities
Mezzanine equity (4)Stockholders' equity
Total liabilities and stockholders' equity

$

$

$

$

Dec 31,2013

1,905,713
17,947
226,604
953,675
94,718766,744
1,829,267
11,374
43,2095,849,251$

1,046,830
483,922
257,587
21,7992,408,084
661,123
4,879,345
58,196
911,710
5,849,251$$$845,889
3,012
49,109340,355
27,574382,425
738,494
6,435
23,6372,416,930

412,221273,062
163,153
20,577586,301
294,495
1,749,809
667,1212,416,930

Notes:(1) Includes the following increase in operating lease vehicles related to deliveries of Model S and subject to lease accounting, net of
depreciation recognized in automotive cost of sales, for the following periods:
Resale value guarantee program (and other vehicles with similar buy-back terms)
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter
Ending balance
Model S leasing program
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter
Ending balance$

376,979
69,74368,752
63,981
110,234$

123,919
138,839
114,221$689,689$

376,979$

11,21423,824
46,59881,636$(2) Includes the following increase in deferred revenue related to deliveries of Model S with the resale value guarantee or similar buy-backterms and subject to lease accounting, net of revenue amortized to automotive sales, for the following periods:

Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

227,868
38,18833,58627,993
48,836$74,45584,577
68,836

Ending balance$

376,471$

227,868(3) Includes the following increase in other long-term liabilities related to deliveries of Model S with the resale value guarantee or similar buyback terms and subject to lease accounting for the following periods:
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

236,298
54,31854,57552,55190,137$72,35786,65277,289Ending balance$

487,879$

236,298(4) Our common stock price exceeded the conversion threshold price of our convertible senior notes due 2018 (2018 Notes) issued in May
2013; therefore, the 2018 Notes are convertible at the holder’s option during the first quarter of 2015. As such, the carrying value of the2018 Notes was classified as a current liability as of December 31, 2014 and the difference between the principal amount and thecarrying value of the 2018 Notes was reflected as convertible debt in mezzanine equity on our condensed consolidated balance sheet
as of December 31, 2014.

Tesla Motors, Inc.
Supplemental Consolidated Financial Information(Unaudited)(In thousands)

Dec 31,
2014
Selected Cash Flow Information
Cash flows provided by (used in) operating activities (1)Cash flows used in investing activities
Cash flows provided by financing activities
Other Selected Financial Information
Cash flows provided by (used in) operating activities (1)Capital expenditures
Free cash flow (cash flow from operations plus capital
expenditures) (1)Depreciation and amortization

Three Months Ended
Sep 30,2014$(86,402)(372,231)
11,325$(27,996)(291,643)
33,755$

133,987(89,507)
10,517$(57,337)(990,444)
2,143,130$

264,804(249,417)
635,422$(86,402)(368,661)$(27,996)(284,175)$

133,987(89,435)$(57,337)(969,885)$

264,804(264,224)$(455,063)$(312,171)$

44,552$(1,027,222)

$

580

$

67,976$64,972$37,585$

231,931$

106,083

Dec 31,
2014
Cash and Investments
Cash and cash equivalents
Restricted cash and marketable securities - current
Restricted cash - noncurrent

Year Ended
Dec 31,
Dec 31,
2014
2013

Dec 31,2013$

1,905,713
17,947
11,374

Sep 30,2014$

2,370,735
17,331
9,090

Dec 31,
2013$

845,889
3,012
6,435

(1) During the three months ended June 30, 2014, we began separately presenting the effect of exchange rate changes on our cash and cash
equivalents in our condensed consolidated statement of cash flows due to our growing operations in foreign currency environments.
Prior period amounts have been reclassified to conform to the current period presentation.

Supplemental Model S Leasing Program Information(in thousands, except for vehicle deliveries)

Vehicles delivered
Average per unit price of vehicles delivered
Aggregate value of vehicles delivered (1)$$Leasing revenue recognized$

Three Months Ended
Dec 31,
Sep 30,
2014
2014
647
347
101 $
99
65,246 $34,353
2,993

$

1,117

(1) Aggregate value is the product of multiplying vehicles delivered by the average per unit price of vehicles delivered

Twelve Months
Ended
Dec 31,
2014
1,152
$
101
$
115,782$

4,280

Tesla Motors, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information(Unaudited)(In thousands, except per share data)

Dec 31,2014
Net loss (GAAP)
Stock-based compensation expense
Change in fair value of warrant liability
Non-cash interest expense related to convertible notes$(107,629)
44,517-$

20,826(42,286)

Early extinguishment of DoE loans
Net income (loss) (Non-GAAP) including lease accounting
Model S gross profit deferred due to lease accounting (1)(2)
Net income (loss) (Non-GAAP)$Net loss per share, basic (GAAP)
Stock-based compensation expense
Change in fair value of warrant liability
Non-cash interest expense related to convertible notes$

26,072(16,214)(0.86)
0.35-$

Shares used in per share calculation, basic (GAAP and Non-GAAP)

0.21(0.13)$$$Net income (loss) per share, diluted (Non-GAAP)
Shares used in per share calculation, diluted (Non-GAAP)$(0.86)
0.35
0.17(0.34)
0.21(0.13)
125,497$

16,5643,174(0.60)
0.31
-

$

0.13
0.02

$
$

$

(0.52)
0.27
0.15(0.10)
0.12
0.02
142,747(16,264)
28,089-$29,79645,920(0.13)
0.23
-

$

0.24
0.37

$
$

$

(0.12)
0.20
0.03
0.11
0.22
0.33
137,784$

82,626
20,101(2.36)
1.26
-

$

0.66
0.16

$
$

$

(2.07)
1.10
0.53(0.44)
0.58
0.14
142,22177,878103,563(0.62)
0.70(0.09)
0.09
0.14

$

124,573$(74,014)83,655(10,692)
10,35016,386
25,6850.60-

122,802$(294,040)
156,496
75,019(62,525)

0.03-

124,911$

Year Ended
Dec 31,
Dec 31,
2014
2013

Dec 31,
2013

4,299
16,1240.18-

125,497

Net loss per share, diluted (GAAP)
Stock-based compensation expense
Change in fair value of warrant liability
Non-cash interest expense related to convertible notes
Early extinguishment of DoE loans
Net income (loss) (Non-GAAP) including lease accounting
Model S gross profit deferred due to lease accounting (1)(2)(74,708)
39,15822,160(13,390)

0.17-

Early extinguishment of DoE loans
Model S gross profit deferred due to lease accounting (1)(2)
Net income (loss) per share, basic (Non-GAAP)

Three Months Ended
Sep 30,
2014

0.65
0.87
119,421$$(0.55)
0.63(0.08)
0.08
0.12
0.20
0.58
0.78
133,546(1) Under GAAP, warranty costs are expensed as incurred for Model S vehicle deliveries with the resale value guarantee or similar buy-back terms and subject to lease accounting. For
Non-GAAP purposes, an estimated incremental warranty reserve of $5.5 million, $3.6 million and $3.2 million is included for the three months ended December 31, 2014, September 30,
2014 and December 31, 2013, respectively. For the year ended December 31, 2014 and 2013, an estimated incremental warranty reserve of $14.6 million and $12.2 million is included,
respectively. Additionally, stock-based compensation of $1.0 million, $1.0 million and $1.1 million is excluded for non-GAAP purposes for the three months ended December 31, 2014,
September 30, 2014 and December 31, 2013, respectively. For the year ended December 31, 2014 and 2013, stock-based compensation of $3.4 million and $2.9 million is excluded,
respectively.

(2) Includes deliveries of Model S with the resale value guarantee or similar buy-back terms and not deliveries under the Model S leasing program.

Tesla Motors, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information(Unaudited)(In thousands, except per share data)

Dec 31,
2014
Revenues (GAAP)
Model S revenue deferred due to lease accounting (2)Revenues (Non-GAAP)$

Gross profit (GAAP)
Model S gross profit deferred due to lease accounting (1)(2)
Stock-based compensation expense
Gross profit (Non-GAAP)

Three Months Ended
Sep 30,2014$$

956,661
138,973
1,095,634$

261,697$

26,072
5,053
292,822

Research and development expenses (GAAP)
Stock-based compensation expense
Research and development expenses (Non-GAAP)$

Selling, general and administrative expenses (GAAP)
Stock-based compensation expense
Selling, general and administrative expenses (Non-GAAP)

$

$

$

$

$

851,804
80,544
932,348$

251,851$

16,564
5,383
273,798

139,565(17,595)
121,970$

196,970(21,869)
175,101$$$

Year Ended
Dec 31,
Dec 31,
2014
2013

Dec 31,
2013$$

615,219
146,125
761,344$

156,590$

29,796
3,455
189,841

135,873(16,639)
119,234$

155,107(17,136)
137,971

$

$

$

$

$

3,198,356
400,1853,598,541$

2,013,496
464,166
2,477,662$

881,671$456,262$

82,626
17,455
981,752$

77,8789,071
543,21168,454(10,578)
57,876$

101,489(14,056)
87,433$$$464,700(62,601)
402,099$603,660(76,441)
527,219$$$

231,976(35,494)
196,482
285,569(39,090)
246,479(1) Under GAAP, warranty costs are expensed as incurred for Model S vehicle deliveries with the resale value guarantee or similar buy-back terms and subject to lease accounting. For
Non-GAAP purposes, an estimated incremental warranty reserve of $5.5 million, $3.6 million and $3.2 million is included for the three months ended December 31, 2014, September 30,
2014 and December 31, 2013, respectively. For the year ended December 31, 2014 and 2013, an estimated incremental warranty reserve of $14.6 million and $12.2 million is included,
respectively. Additionally, stock-based compensation of $1.0 million, $1.0 million and $1.1 million is excluded for non-GAAP purposes for the three months ended December 31, 2014,
September 30, 2014 and December 31, 2013, respectively. For the year ended December 31, 2014 and 2013, stock-based compensation of $3.4 million and $2.9 million is excluded,
respectively.

(2) Includes deliveries of Model S with the resale value guarantee or similar buy-back terms and not deliveries under the Model S leasing program.