Tesla Motors – First Quarter 2015 Shareholder Letter
•
•
•
•
•
•

Produced 11,160 vehicles, exceeding plan while improving efficiency
Record quarterly deliveries of 10,045 vehicles
Achieved gross margin target, despite strong dollar
Launched All-Wheel Drive Model S 85D and 70D
Introduced Tesla Energy products
Model X on track for start of deliveries in late Q3

May 6, 2015
Dear Fellow Shareholders:
In 2015, we have already expanded our product portfolio with exciting new products and features while continuing to execute on
our long-term plans. We ramped the manufacturing and availability of All-Wheel Drive Model S 85D, introduced 70D, and arebuilding release candidate prototypes of Model X. Last week, we also launched our new Tesla Energy business, introducing asuite of energy storage products with a vision that we believe will help to eventually transform the global energy paradigm. Bothour vehicle and Tesla Energy businesses will benefit from our Gigafactory project, which should start producing initial quantities
of battery packs in 2016.
We also significantly improved manufacturing efficiency and reduced per unit vehicle costs while achieving a higher average
weekly production rate during Q1. These efforts, combined with a favorable product mix, helped us reach our Q1 non-GAAP
automotive gross margin target, despite the significant negative impact of a strong dollar. We were also able to accelerate yearover-year revenue growth in Q1, while improving operational efficiency as reflected in lower than expected growth of operating
expenses. Overall, these achievements represent a strong start to a very big year at Tesla.

Expanding the Market for Model S
We continue to see growing Model S demand. In Q1, both North American and European orders were much higher than Q1 lastyear, despite limited availability of 85D and before the announcement of 70D. While we still have work to do in China, we saw
encouraging signs of a return to growth in orders there as well.
Recently, order rates have accelerated even further with greater availability of 85D and the launch of 70D. This is especiallyencouraging as potential customers in many markets have yet to experience these products first hand. 70D has only beenshown in North America, and our all-wheel drive cars will not be available in right hand drive markets until Q3. We remain
confident in our ability to deliver approximately 55,000 Model S and Model X vehicles combined in 2015, as increased availabilityof all our Model S variants continue to drive demand. To sustainably scale for increased deliveries, our inventory of in-transit
customer-configured cars must increase, and in Q1 we added 1,100 such vehicles to the pipeline.
Our ability to continually innovate and reduce costs enabled us torecently launch the new Model S 70D. As a very compelling value
in the premium sedan segment, the All-Wheel Drive 70D expands
the market for Model S. 70D has 240 miles of EPA-rated range,
superior all-weather performance, and a 0-60 mph time of 5.2
seconds. It also includes a comprehensive list of standard
features such as Autopilot safety technology, access to our
Supercharger network, and turn-by-turn navigation for $75,000,
before tax credits and fuel cost savings. So far we are pleased
with the increased demand that has been created by the 70D andthe little effect it has had on the demand for our other Model S
variants.

All-Wheel Drive Model S 85D

Model S customers benefit from our free data connectivity and unique over-the-air software updates, which allow us to improvecustomer cars over time. In March, we introduced our second significant software update of Q1, enabling new active safety
capabilities, adding intelligent range and charge management features, and boosting performance by increasing accelerationand top speed. Additional software updates are scheduled in Q2 that will include more Autopilot safety and conveniencefeatures for appropriately equipped cars.
The expansion of our customer support network continues at a rapid pace. With 425 Supercharger locations and 100 service
locations globally, driving a Model S is becoming more compelling every day. So far, our customers have Supercharged 111
million miles globally.

Improving Production Capabilities
In Q1, we manufactured 11,160 vehicles, 10% better than guidance, as we averaged more than 1,000 cars per production week.
We successfully increased production on our new small drive unit line, which was critical to meeting the demand for our all-wheel
drive cars. Our production launches of 85D and 70D proceeded more smoothly than our prior launches, highlighting theflexibility and increasing maturity of our manufacturing capabilities. With a more stable production cadence in Q1, we
implemented efficiency improvements and reduced labor hours by more than 20% per car by the end of the quarter.
During the quarter, we also made significant progress on the installation of a new body shop, paint shop and stamping presses
that will establish extra capacity for both Model X and Model S. We are now building and testing release candidate Model X
prototypes with increasing design maturity, and are pleased with the progress of this program.
These developments, along with our maturing production capabilities, boost our confidence in the launch and production ramp ofModel X, which is on track for start of deliveries in late Q3.
In addition, steady construction progress continues at the Gigafactory, and together with Panasonic, we now expect to startcomplete battery manufacturing, from cells to modules to battery packs, in 2016.

Tesla Energynd

In Q1, we made substantial progress on our 2 generation Tesla Energythgrid battery products. This led to our April 30 launch of the $250/kWh
industrial Powerpack and the $350/kWh residential Powerwall, and these
attractive prices include controls, cooling and DC/DC power electronics.
The customer response to these products and the Tesla Energy vision
broadly has been extremely positive.
We are now preparing our supply chain and production teams to start
volume builds on these new products in Q3. Production will begin at theTesla Factory in Fremont, and in Q1 2016 will expand into theGigafactory and accelerate significantly.
The total addressable market size for Tesla Energy products is enormousand much easier to scale globally than vehicle sales. We are pursuing
product certification in multiple markets simultaneously and plan to ramp
deliveries in the US, EU and Australia in Q4. When combined with low
cost renewable energy, Tesla Energy batteries provide an achievable
pathway to a 100% zero carbon energy system.

Tesla Powerwall

Q1 Results
Starting this quarter, our income statement reflects the new classifications of revenues and costs of revenues to segregate our
new vehicle business from our other business activities. “Automotive” revenue and related costs now reflect activities related tothe sale or lease of new vehicles including regulatory credits, data connectivity and Supercharging. “Services and other”
revenues and related costs include activities such as powertrain sales, service revenue, Tesla Energy and pre-owned Tesla
vehicle sales. As usual, we have presented both GAAP and non-GAAP financial information in this letter. A full explanation of
our non-GAAP information and reconciliation to GAAP are included in the tables and accompanying footnotes.
Total non-GAAP revenue was $1.10 billion for the quarter, up 55% from a year ago, while GAAP revenue was $940 million. We
achieved a Q1 total company gross margin of 28.2% on a non-GAAP basis and 27.7% on a GAAP basis.
Automotive revenue was $1.06 billion on a non-GAAP basis, and is comprised of GAAP Automotive revenue of $893.3 million
plus a net increase of $163.7 million in deferred revenue and other long-term liabilities as a result of lease accounting. 10,045
Model S vehicles were delivered in Q1, in line with our April announcement of approximately 10,030 deliveries. The average
selling price of Model S increased slightly during the quarter, reflecting a full quarter of sales of P85D and the introduction of 85D.
This mix improvement was partially offset by the effect of the strong dollar, which negatively impacted both our average selling
price and thus revenue by slightly more than 3% from the prior quarter. As in previous quarters, we offered small discounts
when selling vehicles used for either marketing or as service loaners. These discounts were consistent with last quarter. Q1
Automotive revenue included $66 million of total regulatory credit revenue, of which $51 million came from the sale of ZEVcredits. In Q1, Tesla directly leased 592 cars to customers, which was worth $63 million of aggregate retail value.
Q1 Automotive gross margin excluding ZEV credits was on plan at 26.0% on a non-GAAP basis, and 25.0% on a GAAP
basis. The 330 basis points of sequential improvement in non-GAAP gross margin was driven by lower manufacturing costs andricher mix, offset partially by the strong dollar, expedited shipping costs related to port delays and an increase in warranty
reserves of about $200 per car.
Q1 Services and other revenue was $46.6 million, up 47% from a year ago. This includes $22 million of powertrain sales toDaimler and $20 million of service revenue. Q1 Services and other gross margin was negative 3.2%, as compared to 12.1% lastquarter. This sequential reduction in gross margin was primarily driven by a planned price reduction for powertrain sales toDaimler.
We improved our operational efficiency in Q1, achieving record deliveries and developing new products while managing to growoperating expenses at a slower rate than expected. Our operating expenses in Q1 were $324 million on a non-GAAP basis, up
9.1% from Q4, and $363 million on a GAAP basis.
Our Q1 non-GAAP net loss was $45 million, or a loss of $0.36 per basic share based on 125.9 million basic shares, while our Q1
GAAP net loss was $154 million or a loss of $1.22 per basic share. Both figures include a $22 million loss, or $0.17 per basic
share, related to mostly unrealized losses from revaluation of our foreign currency holdings due to the strong dollar.
Cash and cash equivalents were $1.51 billion at the end of thequarter, down $396 million sequentially, as capital expenditures
were $426 million in the quarter. Capital expenditures wereprimarily for the capacity expansion and tooling associated with
Model X and all-wheel drive vehicles, as well as the Gigafactory.
Our Q1 GAAP net cash outflow from operations was $132
million primarily due to the $78 million in cash inflows fromvehicle sales to our bank leasing partners which we are required
to classify as a financing activity, and a $63 million increase ininventory from customer-configured cars that were in transit fordeliveries in Q2.

Gigafactory Construction Progress

During the quarter, we closed on a $100 million warehouse line
in connection with our direct leasing program, and drew down
$78 million of the line by quarter end. We anticipate closing on
additional financing lines in the coming months.

Outlook
In Q2, we expect to produce about 12,500 vehicles, representing a 12% sequential increase. We plan to deliver 10,000 to
11,000 vehicles in Q2, and we are still on track to deliver approximately 55,000 Model S and X cars in 2015. As part of ourstrategy to optimize operational efficiency while scaling for higher deliveries, we are shipping cars using less expensive rail,
rather than by truck, to more regions in the United States and Canada. Also, we are now producing cars based on a uniform
regional production mix throughout the quarter. This enables a more stable cadence of deliveries and in turn improves customer
satisfaction while reducing cost. Both of these actions should lead to an increase of in-transit customer-configured finishedgoods inventory.
In Q2, we expect to directly lease about the same percentage of cars that we did in Q1. As always, we will use lease accounting
for these cars leased directly through Tesla even in our non-GAAP financial results, as such treatment is consistent with the cash
collected on these transactions. We expect to sell about $15 million of our regulatory credits in Q2, including about $5 million of
ZEV credit sales.
We expect the Model S average transaction price to decline in Q2 as the dollar has strengthened by about 4% against the euro
from the time we last adjusted Model S pricing. This will impact our Q2 gross margin by slightly more than 100 basis points. As
a result, we expect non-GAAP automotive gross margin, excluding ZEV credits, to be just under 25% for the quarter at current
exchange rates. We also expect some average price pressure from a less rich product mix, but our continuing efforts to improve
efficiency and reduce manufacturing costs should offset this impact on gross margin.
In response to the continued strength of the dollar, we have just announced a price increase of about 5% in most European
markets. Since this price increase applies to new orders to be delivered in Q3 and beyond, it will not impact our Q2 results.
We expect Services and other gross margin to be slightly better than breakeven in Q2, and continue to improve to about 5% by
Q4. The improvement will come from cost reductions on Daimler powertrains as well as increased sales of Tesla Energy andpre-owned Model S vehicles.
Our operating leverage is expected to improve this year, with revenue and gross profit both growing more quickly than operating
expenses. Operating expenses should grow roughly 10% sequentially in Q2, and 45-50% for the full year as we invest in
product development, including the Model 3, and expand our sales capability.
We still plan to invest about $1.5 billion in capital expenditures this year as we expand production capacity, purchase Model X
tooling, continue to build the Gigafactory, and expand our stores, service centers and the Supercharger network.
2015 is off to a strong start, and we are excited about the many opportunities ahead. We expect to continue to develop many
more innovative and exciting products in the coming years.

Elon Musk, Chairman & CEO

Deepak Ahuja, Chief Financial OfficerWebcast Information
Tesla will provide a live webcast of its first quarter 2015 financial results conference call beginning at 2:30 p.m. PT on May 6,
2015, at ir.teslamotors.com. This webcast will also be available for replay for approximately one year thereafter.

Forward-Looking Statements
Certain statements in this shareholder letter, including statements in “Outlook” section; statements regarding gross margin andprofitability, 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 centerand Supercharger locations; statements relating to the production and delivery of Tesla Energy products, as well as future
products; growth in demand and orders for Tesla vehicles and the catalysts for that growth; the ability to achieve vehicle demand,
volume, production, delivery, revenue, leasing, gross margin, spending, capital expenditure and profitability targets; productivity
improvements and capacity expansion plans; Tesla Gigafactory timing, partnerships, plans and output expectations, including
those related to cell and battery pack production; and our ability to secure additional financing lines for our leasing programs 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 fromthose projected. The following important factors, without limitation, could cause actual results to differ materially from those in theforward-looking statements: Tesla’s future success depends on its ability to design and achieve market acceptance of Model S
and its variants, as well as new vehicle models, specifically Model X and Model 3; the risk of delays in the manufacture,
production and delivery of Model S and Model X vehicles, and production and delivery of Model 3 vehicles; adverse foreignexchange movements; the ability of suppliers to meet quality and part delivery expectations at increasing volumes; any failures by
Tesla vehicles to perform as expected or if product recalls occur; Tesla’s ability to continue to reduce or control manufacturing
and other costs; consumers’ willingness to adopt electric vehicles; competition in the automotive market generally and thealternative 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 and strengthen 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 terms with technology,
materials and other partners for Gigafactory, and maintaining Gigafactory implementation schedules, output and costs estimates;
and Tesla’s ability to execute on its retail strategy and for new store, service center and Tesla Supercharger openings. Moreinformation on potential factors that could affect our financial results is included from time to time in our Securities and Exchange
Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on
Form 10-K filed with the SEC on February 26, 2015. Tesla disclaims any obligation to update information contained in theseforward-looking statements whether as a result of 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 Statem ents of Operations(Unaudited)(In thousands, except per share data)

Mar 31,
2015
Revenues
Automotive (1A)
Services and otherTotal revenues
Cost of revenues
Automotive (1B)
Services and otherTotal 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
Loss before income taxes
Provision for income taxes
Net loss
Net loss per common share, basic and diluted$

Three Months Ended
Dec 31,Mar 31,
2014
2014

893,320
46,560939,880$

890,396
66,265
956,661$

588,871
31,671
620,542

631,745
48,062
679,807
260,073

636,698
58,266694,964
261,697436,254
29,160465,414155,128$

167,154
195,365
362,519(102,446)
184(26,574)(22,305)(151,141)
3,040(154,181) $139,565
196,970
336,535(74,838)219(28,703)(588)(103,910)
3,719(107,629) $81,544
117,551
199,095(43,967)
141(11,883)
6,718(48,991)809(49,800)$(1.22) $(0.86) $(0.40)

Shares used in per share calculation, basic and diluted

125,947

125,497

123,473

Notes:(1) Due to the application of lease accounting for Model S vehicles w ith the resale value guarantee or similar buyback terms, the follow ing is supplemental information for the periods presented:(A) Net increase in deferred revenue and other long-term
liabilities as a result of lease accounting and therefore notrecognized in automotive sales$

163,676$

138,973$

92,506(B) Net increase in operating lease vehicles as a result oflease accounting and therefore not recognized in
automotive cost of sales$

113,823$

110,234$

69,743

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

$

$

4,601
19,792
18,63343,026$$

5,053
17,595
21,86944,517$$3,106
13,545
20,38737,038

Tesla Motors, Inc.
Condensed Consolidated Balance Sheets(Unaudited)(In thousands)
Mar 31,
2015
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 31,2014

1,510,076
20,693200,052
1,054,840
135,756
912,061
2,224,191
13,846
48,515
6,120,030$

1,086,099
539,324
249,476
20,8862,509,383
834,5885,239,756
54,277
825,997
6,120,030$$$

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

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

689,689
103,022$376,979
69,74368,752
63,981
110,234$

792,711$

689,689$

81,63635,687$$

117,323$

11,21423,824
46,59881,636(2) Includes the follow ing increase in deferred revenue related to deliveries of Model S w ith the resale value guarantee orsimilar buy-back terms and subject to lease accounting, net of revenue amortized to automotive sales, for the follow ing
periods:
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

376,471
45,334$

227,868
38,18833,58627,993
48,836

Ending balance$

421,805$

376,471(3) Includes the follow ing increase in other long-term liabilities related to deliveries of Model S w ith the resale value
guarantee or similar buy-back terms and subject to lease accounting for the follow ing periods:
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

487,879
118,341$

236,298
54,31854,57552,55190,137

Ending balance$

606,220$

487,879(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 second quarterof 2015. As such, the carrying value of the 2018 Notes w as classified as a current liability as of March 31, 2015 andthe difference betw een the principal amount and the carrying value of the 2018 Notes w as reflected as convertible
debt in mezzanine equity on our condensed consolidated balance sheet as of March 31, 2015.

Tesla Motors, Inc.
Supplem ental Consolidated Financial Inform ation(Unaudited)(In thousands)

Mar 31,
2015
Selected Cash Flow Inform ation
Cash flow s provided by (used in) operating activities (1)Cash flow s used in investing activities
Cash flow s provided by financing activities
Other Selected Financial Inform ation
Cash flow s 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
Dec 31,Mar 31,
2014
2014

$

(131,794) $(432,344)
186,156(86,402) $(372,231)
11,32558,723(329,180)
1,816,559$(131,794) $(426,060)(86,402) $(368,661)

58,723(141,364)$(557,854) $(455,063) $(82,641)$

77,112

67,97644,268$

Mar 31,
2015
Cash and Investm ents
Cash and cash equivalents
Short-term marketable securities
Restricted cash and marketable securities - current
Restricted cash - noncurrent$$

1,510,076
20,693
13,846$

Dec 31,2014$$

1,905,713
17,947
11,374

Mar 31,2014$$

2,393,908
189,111
1,049
7,102

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

Supplem ental Model S Direct Leasing Program Inform ation(in thousands, except for vehicle deliveries)

Vehicles delivered
Average per unit price of vehicles delivered
Aggregate value of vehicles delivered (1)Three Months Ended
Mar 31,
Dec 31,
2015
2014
592
647
$
107 $
101
$
63,359 $65,246

Direct leasing revenue recognized

$

6,469

$

2,993

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

Non-GAAP Financial Information
This letter includes non-GAAP financial information because we plan and manage our business using such information. Our non-GAAP
measures align the recognition of revenues and costs related to a vehicle sale with the time when the customer take delivery of the car
and cash is received or owed to us. This contrasts with 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
finance lease 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 purchase priceof the car in cash. For cars leased directly by Tesla, we recognize lease revenue and related costs over the lease term and the sameway for both GAAP and non-GAAP purposes. Our non-GAAP expense and per share information also exclude non-cash interest
expense and stock-based compensation.

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

Mar 31,
2015
Net loss (GAAP)
Stock-based compensation expense
Non-cash interest expense related to convertible notes and other borrow ing
Net loss (Non-GAAP) including lease accounting
Model S gross profit deferred due to lease accounting (1)(2)$

Net incom e (loss) (Non-GAAP)$Net loss per share, basic (GAAP)
Stock-based compensation expense
Non-cash interest expense related to convertible notes and other borrow ing$

Model S gross profit deferred due to lease accounting (1)(2)
Net incom e (loss) per share, basic (Non-GAAP)$

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

Three Months Ended
Dec 31,Mar 31,
2014
2014(154,181) $43,026
19,510(91,645)(107,629) $44,517
20,826(42,286)(49,800)
37,038
8,393(4,369)46,396(45,249) $26,072(16,214) $21,38417,015(1.22) $0.34(0.86) $0.35(0.40)
0.30

0.15

0.17

0.07

0.37
(0.36) $0.21(0.13) $

0.17
0.14

125,947

Net loss per share, diluted (GAAP)
Stock-based compensation expense
Non-cash interest expense related to convertible notes and other borrow ing
Net loss (Non-GAAP) including lease accounting
Model S gross profit deferred due to lease accounting (1)(2)$

Net incom e (loss) per share, diluted (Non-GAAP)
Shares used in per share calculation, diluted (Non-GAAP)$

125,497

123,473(1.22) $0.34
0.15(0.73)(0.86) $0.35
0.17(0.34)(0.36)
0.26
0.07(0.03)

0.37(0.36) $0.21(0.13) $

0.15
0.12

125,947

125,497

140,221(1) Includes deliveries of Model S w ith the resale value guarantee or similar buy-back terms and not deliveries under the Model S leasing
program.
(2) Under GAAP, w arranty costs are expensed as incurred for Model S vehicle deliveries w ith the resale value guarantee or similar buyback terms and subject to lease accounting. For Non-GAAP purposes, an estimated incremental w arranty reserve of $6.8 million, $5.5
million and $2.1 million is included for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.
Additionally, stock-based compensation of $1.7 million, $1.0 million and $0.7 million is excluded for non-GAAP purposes for the threemonths ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.

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

Mar 31,
2015
Revenues (GAAP)
Model S revenue deferred due to lease accounting (1)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
Dec 31,Mar 31,
2014
2014
$

$

939,880
163,676
1,103,556$

260,073$

46,396
4,601
311,070

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

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

$

$

$

$

$

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

620,542
92,506
713,048$

261,697$

155,128$

26,072
5,053
292,822$

21,384
3,106
179,617

167,154 $(19,792)
147,362 $

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

81,544(13,545)
67,999195,365 $(18,633)
176,732 $

196,970 $(21,869)
175,101 $117,551(20,387)
97,164(1) Includes deliveries of Model S w ith the resale value guarantee or similar buy-back terms and not deliveries under the Model
S leasing program.
(2) Under GAAP, w arranty costs are expensed as incurred for Model S vehicle deliveries w ith the resale value guarantee orsimilar buy-back terms and subject to lease accounting. For Non-GAAP purposes, an estimated incremental w arranty reserveof $6.8 million, $5.5 million and $2.1 million is included for the three months ended March 31, 2015, December 31, 2014 andMarch 31, 2014, respectively. Additionally, stock-based compensation of $1.7 million, $1.0 million and $0.7 million is excluded for
non-GAAP purposes for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.