Tesla Fourth Quarter & Full Year 2017 Update

Record Model S and Model X deliveries in Q4 2017

Cash balance of $3.4B entering Q1 2018

2017 revenue of $11.8B, up 55% y-o-y from organic growth2018 revenue growth expected to significantly exceed 2017 growthContinuing to target Model 3 production rate of 5,000/wk by Q2 end

2017 was an important year in Tesla’s history. Among other things, we started delivering Model 3 to customers, unveiled the Semi andthe next-generation Roadster, installed the world’s largest battery in Australia, and had record vehicle production and deliveries ofModel S and Model X. We also learned many lessons from the slower than planned production ramp of Model 3. All of this sets thestage for 2018 to be a transformative year for us.
At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis. With the planned rampof both Model 3 and our energy storage products, our rate of revenue growth this year is poised to significantly exceed last year’s
growth rate. The launch of Model 3 is what Tesla had been building towards from day one. We incorporated all the learnings from thedevelopment and production of Roadster, Model S, and Model X to create the world’s first mass market electric vehicle that is priced on
par with its gasoline-powered equivalents – even without incentives. Now we are ramping up production significantly, and as we lookahead in 2018, we are on the cusp of a step change in the world’s transition to sustainability.
ADVANCING SUSTAINABLE TRANSPORT
We continue to target weekly Model 3 production rates of 2,500 by
the end of Q1 and 5,000 by the end of Q2. It is important to notethat while these are the levels we are focused on hitting and wehave plans in place to achieve them, our prior experience on the
Model 3 ramp has demonstrated the difficulty of accurately
forecasting specific production rates at specific points in time.
What we can say with confidence is that we are taking manyactions to systematically address bottlenecks and add capacity inplaces like the battery module line where we have experienced
constraints, and these actions should result in our production rate
significantly increasing during the rest of Q1 and through Q2.
Our goal is to become the best manufacturer in the automotive
industry, and having cutting edge robotic expertise in-house is at
the core of that goal. Our recent acquisitions of advanced
automation companies have added to our talent base and are
helping us increase Model 3 production rates more effectively. We
don’t want to simply replicate what we have built previously while
designing additional capacity. We want to continuously push theboundaries of mass manufacturing.
As we shared previously, in order to incorporate our learnings and be capital efficient, we intend to start adding enough capacity to get
to a 10,000 unit weekly rate for Model 3 once we have first hit the 5,000 per week milestone.
Despite the delays that we experienced in our production ramp, Model 3 net reservations remained stable in Q4. In recent weeks, they
have continued to grow as Model 3 has arrived in select Tesla stores and received numerous positive reviews, including Automobile
Magazine’s 2018 Design of the Year award. We want to thank both our Model 3 suppliers and our customers, who have continued tobe such great partners and advocates, while patiently waiting as the ramp continues to accelerate.
In Q4, we delivered 28,425 Model S and Model X vehicles and 1,542 Model 3 vehicles, totaling 29,967 deliveries. Combined Model S
and Model X deliveries in Q4 grew 10% globally compared to our prior record in Q3, and they grew 28% compared to Q4 2016. As we
indicated heading into Q4, production of Model S and Model X during the quarter was limited to 22,137 vehicles due to reallocation ofsome of the manufacturing resources to Model 3 production. This enabled us to reduce our finished-goods inventory to the lowest levelin about 18 months.

Combined Model S and Model X net orders in Q4 were just shy of
Q3’s all-time high. Importantly, combined orders for Model S andModel X grew significantly in 2017 compared to 2016. There had
initially been concerns about whether Model 3 would cannibalize
Model S and Model X. It seems the opposite is true. In stores
where Model 3 is on display, customer foot traffic has increased
considerably and orders for Model S and Model X have in factincreased. There has been an even bigger increase in solar andPowerwall sales.
The upcoming autonomous coast-to-coast drive will showcase amajor leap forward for our self-driving technology. Additionally, an
extensive overhaul of the underlying architecture of our software
has now been completed, which has enabled a step-change
improvement in the collection and analysis of data andfundamentally enhanced its machine learning capabilities. Our
neural net, which expands as our customer fleet grows, is able tocollect and analyze more high-quality data than ever before,
enabling us to rollout a series of new Autopilot features in 2018 andbeyond.
During Q4, we opened 12 new store and service locations resulting in 330 total locations worldwide at the end of the year. Service
capacity more than doubled in 2017, partially due to new locations, but also through a 50% increase in productivity of existing service
locations, as well as the significant expansion of our Mobile Service fleet, which now has 230 vehicles. We strive to create the best car
ownership experience on the planet, and a big part of that is through not requiring customers to come in to service their vehicle. In
North America alone, Mobile Service is now completing 30% of all service jobs, allowing those customers to never have to leave theirhome or office to get their cars serviced. Not surprisingly, Mobile Service has achieved customer satisfaction that averages 98%. In
addition, the cost of servicing with our Mobile Service fleet is significantly lower than from our service centers. It now covers all of North
America and provides a level of convenience and a speed for scaling that is unique and unprecedented in the industry. In 2018, we willcontinue to increase our service capacity with the goal of always remaining ahead of the Model 3 ramp.
Our Supercharger network has seen the most significant growth yet. In 2017, 338 new locations opened for a total of 1,128
Supercharger stations globally. Between Supercharger and Destination Charging, we increased capacity by over 90%. In preparation
for Model 3, we opened several large Supercharger stations along our most popular corridors, including between Los Angeles and San
Francisco and between Los Angeles and Las Vegas, both of which have a customer lounge, a café, a display of our energy products
and 40 charging stalls. With continued emphasis on convenient, reliable, and ubiquitous charging, 2018 will be another big year for
Tesla charging infrastructure.
The unveiling of Tesla Semi on November 16 launched Tesla into a
new product category that will have a transformative impact due toa total cost of ownership that is superior to diesel trucks. Tesla
Semi combines a real-world range of up to 500 miles with
unprecedented performance while pulling a standard payload. Itsdistinctive torque enables smooth acceleration to highway speed
even when fully loaded with cargo. Moreover, it has been
designed to dramatically improve safety not only for the driver andcargo, but also for pedestrians and other cars on the road.
Tesla will be the first Semi customer. We plan to use the Tesla
Semi for our own logistics by transporting Model 3 components
from Gigafactory 1 to Fremont. Additionally, our initial fleet
customers who placed reservations for the Tesla Semi have been
helping us develop the best possible truck.
Also, after developing it in stealth with a very small team, we were
thrilled to surprise everyone with the next-generation Roadster.
Roadster was at the genesis of Tesla, a car that proved electricvehicles can be fast, exciting and here to stay. The new Roadster
takes this concept to the next level. With 0-60 mph acceleration of
1.9 seconds and maximum speed of more than 250 mph, it will be
the fastest car in the world. When that performance is combinedwith its 620 miles (1,000 km) of range, this supercar puts to restany debate about the limitations of electric vehicles.

ADVANCING SUSTAINABLE ENERGY
2018 will see major growth in Tesla energy storage deployments, as the production ramp of our storage products is just as steep aswith Model 3. This year, we aim to deploy at least three times the storage capacity we deployed in 2017.
On December 1, 2017, installation of the largest battery in the world was completed ahead of schedule in South Australia. This projectis already generating substantial benefit by meeting high summer demand when supply is limited and by instantaneously responding to
unplanned interruptions or frequency drops in the grid. Due to the success of this project, we're seeing an increase in demand forPowerpack, our commercial energy storage product. With more electric utilities and governments around the world recognizing thereliability, environmental, and economic benefits of this product, it’s clear that there is a huge opportunity for us in large scale energy
storage.
Powerwall demand for home energy storage remains exceptionally high, with orders consistently above production levels. We are
increasingly promoting our energy products in Tesla stores and in non-Tesla retail locations. There is a significant cross-selling
potential between Powerwall and our solar products, as evidenced by the fact that a vast majority of the customers who have ordered
Solar Roof have also ordered at least one Powerwall.
In Q4, we deployed 143 MWh of energy storage products, growing
45% from Q4 2016. Deployment of 129 MWh of energy storage inSouth Australia will be recognized in Q1 2018 based on commercial
transfer of the site to the customer.
We also deployed 87 MW of energy generation systems in Q4,
which is 20% less than Q3 2017. Solar MW deployed declined asvolumes continue to be impacted by our decision to close certain
sales channels earlier this year and to focus on projects with better
margins. In addition, solar deployments were affected by the short
supply of Powerwalls for customers who wanted solar plus
Powerwall in their house. While volumes may continue to be
impacted by these factors over the near-term, we expect growth toresume later this year.
We continue to ramp energy sales in Tesla retail stores and are
expanding our presence in partner locations. The mix of ourresidential solar sales continues to shift towards cash and loan ascompared to leasing, reaching 54% of total residential solar sales in
Q4, up from 25% in Q4 2016. This has contributed to improved
cash performance of this business.

Initial production of Solar Roof at the Gigafactory 2 in Buffalo started in Q4, and we are ahead of schedule with the hiring targets we’ve
agreed to with the state of New York. As Solar Roof is truly the first-of-its-kind and there is significant complexity in both its
manufacturing and installation, we are deliberately ramping production at a gradual pace. When fully scaled, Gigafactory 2 will be able
to produce enough solar cells to add more than 150,000 new residential solar installations every year. As we ramp production, a
portion of the output will be dedicated for Solar Roof tiles with the balance used in our proprietary high-efficiency retrofit solar panels.
With demand outpacing production, we expect our backlog to remain in excess of one year for the next several quarters.
Q4 2017 RESULTS
Revenue & Gross Margin

Automotive revenue ($000)
Automotive gross margin – GAAP
Automotive gross margin excluding SBC
and ZEV credit – non-GAAP

Three Months Ended
ChangeDecember 31, September 30, December 31,
2017
2017
2016
QoQ
YoY
$ 2,702,195 $2,362,889 $ 1,994,123
14 %
36 %
18.9 %
18.3 %
22.6 %
63 bp -364 bp
13.8 %

18.7 %

22.2 %-490 bp -841 bp

Automotive revenue in Q4 increased by 36% over Q4 2016, mainly due to 35% growth in vehicle deliveries. For 2017, Automotive
revenue was up 52% from 2016. ZEV credit sales in Q4 were $179 million as compared to $20 million in Q4 2016.
Approximately 23% of Q4 deliveries were subject to lease accounting, which was slightly higher than in Q3. Last week, we closed
a $546 million asset backed securitization (ABS) of our Model S and X lease portfolio, which was our first such offering. Thistransaction and future ones like it will free up significant leasing capacity for long-term growth.

GAAP Automotive gross margin improved slightly compared to Q3 to 18.9%. Non-GAAP Automotive gross margin declined to13.8% in Q4, which was below our expectations. This is more than fully explained by the slower than expected ramp of Model 3.
Since Model 3 production was in the early stages of the ramp, allocation of full operating costs and depreciation made its grossmargin negative. We are expecting a negative Model 3 gross margin in Q1, while generating positive operating cash flows.
Model S and Model X gross margin in Q4 declined very slightly compared to Q3. This was primarily due to significant reserves
booked for fixed assets that are no longer in service. We expect Model S and Model X gross margins to increase in 2018 withimproved trim mix and option content, lower cost of acquisition and lower manufacturing costs.

Energy generation and storage revenue ($000)
Energy generation and storage gross marginThree Months Ended
ChangeDecember 31, September 30, December 31,
2017
2017
2016
QoQ
YoY
$
298,037 $
317,505 $131,385-6 % 127 %5.5 %25.3 %
2.7 % -1,979 bp 273 bp

Energy generation and storage revenue in Q4 decreased by 6% compared to Q3. This was mainly driven by seasonal decline insolar deployment and by our continued focus on more profitable, cash sales.
GAAP gross margin in Q4 declined significantly as compared to Q3, due largely to several one-time factors and a higher mix ofstorage products. Q4 gross margin was impacted by the typical seasonal decline in solar energy production and correspondingly
lower lease revenue in the winter months. We also booked one-time air freight costs for the South Australian battery project andtook write-downs related to legacy commercial & industrial projects that we had committed to prior to the acquisition of SolarCity.
We expect gross margin to improve significantly in 2018 from higher operational and manufacturing cost efficiencies as well as
deployment of higher-quality commercial projects.

Other HighlightsService and Other revenue decreased by 5% compared to Q3 but increased by 81% compared to Q4 2016. Used car sales was
the main driver of this year-over-year growth.
Service and Other gross loss increased to $89 million due to the significant growth of our service network in Q4 that has not been
fully utilized yet as the Model 3 production ramp works to catch up, reserves for settlements with former customers of Grohmann
and a one-time warranty true-up for used car sales. Gross margin on used cars sales was close to breakeven.
Operating expenses increased by 5% sequentially to a total of $1.04 billion in spite of significant revenue growth. We continue tofocus on keeping tight control over operating expenses even as we ramp production.
Basic shares outstanding at the end of Q4 were approximately 168 million.

Cash Flow and Liquidity($000)Cash flows from operating activities
Collateralized lease borrowings
Operating cash flows plus collateralized lease borrowings

Three Months Ended
December 31, September 30, December 31,
2017
2017
2016
$
509,891 $(300,562 ) $(448,209 )
94,89480,752
212,040$
604,785 $(219,810 ) $(236,169 )Change
QoQ
YoY
270 %
214 %
18 %
-55 %
375 %
356 %

Cash flow from operating activities reached $510 million in Q4, achieving a new quarterly record. This was achieved mainly by
improved collection of receivables, inventory reduction of finished vehicles, improved working capital from the ramp of Model 3, andgrowth in customer deposits. Cash flow from operating activities in 2017 was close to breakeven.
The definition of operating cash flow includes cash outflow consumed by vehicle leasing. In order to show our cash flow fromoperations before leasing activities, proceeds from collateralized lease borrowing need to be added back. When that is done, ouroperating cash flow was $605 million in Q4. Additional $149 million of net funding was received in Q4 through our vehicle lease
warehouse line and tax equity fund to help our cash flows.
Capital expenditures reached $787 million in Q4. The majority was attributable to Model 3 and Gigafactory 1 production capacity
increases. We are continuing to proactively manage capex spending. Additionally, some capex payments for Model 3 have beendeferred to Q1.

OUTLOOK
2018 will be a transformative year for Tesla, with a high level of operational scaling. As we ramp production of both Model 3 and ourenergy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive atsome point in 2018.
We expect Model S and Model X deliveries to be approximately 100,000 in total, constrained by the supply of cells with the old 18650
form factor. As our sales network continues to expand to new markets in 2018, we believe orders should continue to grow. With
demand outpacing production, we plan to optimize the options mix in order to maximize gross margin. As stated above, we continue totarget a weekly Model 3 production rate of 2,500 by the end of Q1 and 5,000 by the end of Q2. Also, we are focused on achieving ourtarget of 25% gross margin for Model 3 after our production stabilizes at 5,000 cars per week.
We expect energy storage products to experience significant growth, with our aim to at least triple our sales this year. We expect
energy generation and storage gross margin to improve significantly in 2018 as we enter the year with a backlog of higher-margincommercial solar projects and a more profitable energy storage business due to manufacturing efficiencies from scaling.
Service and Other gross margin should improve in each subsequent quarter in 2018. This will be achieved mainly through improved
service productivity via Mobile Service and better remote diagnostics for Model 3. Diagnostics architecture has been substantiallyredesigned for Model 3 in order to reduce physical service visits by more than 50%. Additionally, Superchargers will start generating
revenue in 2018 with pay per use charging primarily by Model 3 customers.
Capital expenditures in 2018 are projected to be slightly more than 2017. The majority of the spending will be to support increases in
production capacity at Gigafactory 1 and Fremont, and for building stores, service centers, and Superchargers.
This year, we are starting a new chapter of our journey. Hundreds of thousands of people will switch to our EVs and many others willturn their houses into near self-sufficient energy generators. This is the year when we believe we can achieve true cost parity producing a premium EV like the Model 3 will be no more expensive than producing an ICE vehicle, something that many believe is not
yet possible. We’ll continue to work as hard as we can to bring sustainable energy generation, storage and consumption into themainstream.

Elon Musk, Chairman & CEO

Deepak Ahuja, Chief Financial Officer

WEBCAST INFORMATION
Tesla will provide a live webcast of its fourth quarter and full year 2017 financial results conference call beginning at 2:30 p.m. PT on
February 7, 2018, at ir.tesla.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 to supplement ourconsolidated financial results. Our non-GAAP financial measures include non-GAAP gross margin, non-GAAP net income (loss)
attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders on a per share basis, andoperating cash flows plus change in collateralized lease borrowing. 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, budgetingand financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s
historical performance as well as comparisons to the operating results of other companies. Management also believes that presentationof the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results ofoperations because it allows investors greater transparency to the information used by Tesla management in its financial andoperational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that
Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. Non-GAAP
information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction withfinancial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAPand non-GAAP financial information is provided below.

FORWARD-LOOKING STATEMENTS
Certain statements in this shareholder letter, including statements in the “Outlook” section; statements relating to the progress Tesla ismaking with respect to product and software development, such as Model 3, Solar Roof and Autopilot; statements regarding growth in
the number of Tesla store, service center, delivery hub, Supercharger and destination charger locations and in other service and repair
capabilities; statements relating to the production, production rate and delivery timing of products such as Model 3, energy storage andSolar Roof; statements regarding growth of our energy generation and storage business and means to achieve such growth; growth indemand and orders for Tesla products and the catalysts for that growth; the ability to achieve product demand, volume, production,delivery, inventory, deployment, revenue, cash generation, cash flow, leasing, gross margin, spending, capital expenditure andprofitability targets; productivity improvements and capacity expansion plans, such as for Gigafactory 1; and statements regarding
Gigafactory 1 and Gigafactory 2 timing, plans and output expectations, including those related to battery and photovoltaic cell and otherproduction, 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 thoseprojected. The following important factors, without limitation, could cause actual results to differ materially from those in the forwardlooking statements: the risk of delays in the manufacture, production, delivery and/or completion of our vehicles and energy products,
particularly Model 3; the ability to design and achieve and grow simultaneous and separate market acceptance of Model S, Model X
and their variants, as well as new vehicle models, specifically Model 3; the ability of suppliers to meet quality and part delivery
expectations at increasing volumes, especially with respect to Model 3 parts; any failures by Tesla products 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 and energy product markets generally and the alternative fuel vehicle market and thepremium sedan, premium SUV and small to medium-sized sedan markets in particular; Tesla’s ability to establish, maintain andstrengthen the Tesla brand; Tesla’s ability to manage future growth effectively as we rapidly grow, especially internationally; theunavailability, reduction or elimination of government and economic incentives for electric vehicles and energy products; 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 Gigafactory 1 and Gigafactory 2, maintaining Gigafactory 1
and Gigafactory 2 implementation schedules, output and cost estimates; Tesla’s ability to execute on its strategy for new store, delivery
hub, service center, Supercharger and other locations and capabilities; and adverse foreign exchange movements. More information on
potential factors that could affect our financial results is included from time to time in our Securities and Exchange Commission filings
and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the
SEC on November 3, 2017. Tesla disclaims any obligation to update information contained in these forward-looking statements whether
as a result of new information, future events, or otherwise.

Investor Relations Contact:
Martin Viecha
Investor Relations
ir@tesla.com

Press Contact:
Dave Arnold
Communications
press@tesla.com

Tesla, Inc.
Consolidated Statements of Operations(Unaudited)(In thousands, except per share data)
Year Ended
Three Months Ended
December 31, September 30, December 31, December 31, December 31,
2017
2017
2016
2017
2016
Revenues
Automotive sales
Automotive leasing
Total automotive revenue
Energy generation and storage
Services and otherTotal revenues
Cost of revenues
Automotive sales
Automotive leasing
Total automotive cost of revenues
Energy generation and storage
Services and otherTotal cost of revenues (1)Gross profit
Operating expenses
Research and development (1)Selling, general and administrative (1)Total operating expenses
Loss from operations
Interest income
Interest expense (2)(3)
Other (expense) income, net
Loss before income taxes(Benefit) provision for income taxes
Net loss
Net loss attributable to noncontrolling interests
and redeemable noncontrolling interests
Net loss attributable to common
stockholders
Net loss per share of common stock
attributable to common stockholders –basic and diluted
Weighted average shares used in computing
net loss per share of common stock –basic and diluted
Notes:(1) Includes stock-based compensation
expense of the following for the periods
presented:
Cost of revenue
Research and development
Selling, general and administrative
Total stock-based compensation
expense(2) Interest expense includes non-cash interest
expense related to convertible notes andother borrowing for the periods presented:(3) Interest expense includes the following asa result of the assumed debt from SolarCity:
Interest expense (excluding amortization ofdebt discount and fees) – recourse debt
Interest expense (excluding amortization ofdebt discount and fees) – non-recourse debt
Total

$

2,409,109 $
293,086
2,702,195
298,037
288,017
3,288,249

2,076,731 $
286,158
2,362,889
317,505
304,2812,984,675

1,739,449 $ 8,534,752 $
254,674
1,106,548
1,994,123
9,641,300
131,385
1,116,266
159,123
1,001,185
2,284,631
11,758,751

5,589,007
761,759
6,350,766
181,394
467,972
7,000,132

1,999,631
191,541
2,191,172
281,715
376,576
2,849,463
438,786

1,755,622
175,224
1,930,846
237,288
367,401
2,535,535
449,140

1,372,604
171,818
1,544,422
127,779
177,152
1,849,353
435,278

6,724,480
708,224
7,432,704
874,538
1,229,022
9,536,264
2,222,487

4,268,087
481,994
4,750,081
178,332
472,4625,400,875
1,599,257

354,637
682,290
1,036,927(598,141 )
6,280(146,363 )(41,677 )(779,901 )(9,094 )(770,807 )

331,622652,998
984,620(535,480 )
5,531(117,109 )(24,390 )(671,448 )(285 )(671,163 )

245,960
456,016
701,976(266,698 )
2,179(65,104 )121,224(208,399 )
11,070(219,469 )

1,378,073
2,476,500
3,854,573(1,632,086 )
19,686(471,259 )(125,373 )(2,209,032 )
31,546(2,240,578 )

834,408
1,432,189
2,266,597(667,340 )
8,530(198,810 )
111,272(746,348 )
26,698(773,046 )(95,457 )(51,787 )(98,132 )(279,178 )(98,132 )$(675,350 ) $(619,376 ) $(121,337 ) $(1,961,400 ) $(674,914 )$(4.01 ) $(3.70 ) $(0.78 ) $(11.83 ) $(4.68 )

168,314167,294

155,024

165,758

144,212$

16,182 $59,56458,602

10,166 $51,066
51,4218,562 $
41,30437,84543,845 $217,616
205,299

30,400154,632
149,193$

134,348 $112,653 $

87,711 $466,760 $

334,225$

71,597 $

62,731 $39,915 $251,206 $133,815$

6,129 $

8,943 $

5,476 $

39,348 $

5,476$

25,581
31,710 $24,50833,451 $10,007
15,483 $97,867137,215 $10,007
15,483

Tesla, Inc.
Condensed Consolidated Balance Sheets(Unaudited)(In thousands)
December 31,
2017
AssetsCurrent assets
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Inventory
Prepaid expenses and other current assets
Total current assets
Operating lease vehicles, net
Solar energy systems, leased and to be leased, net
Property, plant and equipment, net
Goodwill and intangible assets, net
MyPower customer notes receivable, net of current portion
Restricted cash, net of current portion
Other assets
Total assets
Liabilities and Equity
Current liabilities
Accounts payable
Accrued liabilities and other
Deferred revenue
Resale value guarantees
Customer deposits
Current portion of long-term debt and capital leases (1)Total current liabilities
Long-term debt and capital leases, net of current portion (1)Deferred revenue, net of current portion
Resale value guarantees, net of current portion
Other long-term liabilities
Total liabilities
Redeemable noncontrolling interests in subsidiaries
Convertible senior notes (1)(2)
Total stockholders' equity
Noncontrolling interests in subsidiaries
Total liabilities and equity(1) Breakdown of our debt is as follows:
Recourse debt
Non-recourse debt$

December 31,
2016

3,367,914 $
155,323
515,3812,263,537
268,365
6,570,520
4,116,604
6,347,490
10,027,522
421,739456,652
441,722
273,123
28,655,372 $

3,393,216
105,519
499,1422,067,454
194,4656,259,796
3,134,080
5,919,880
5,982,957
376,145506,302
268,165
216,751
22,664,076$

2,390,250 $
1,731,366
1,015,253
787,333
853,919858,026
7,636,147
9,456,842
1,177,799
2,309,222
2,442,970
23,022,980
397,73470
4,237,242
997,346
28,655,372 $

1,860,341
1,210,028
763,126
179,504
663,859
1,150,147
5,827,005
5,969,500
851,790
2,210,423
1,891,449
16,750,167
367,039
8,784
4,752,911
785,175
22,664,076$$

6,755,376 $
2,873,458 $

4,630,886
2,375,782$$(2) As of December 31, 2017, our common stock price exceeded the conversion threshold price of our convertible senior notes due in2018 (2018 Notes) issued in May 2013; therefore, the 2018 Notes were convertible at the holder’s option. As such, the carrying
value of the 2018 Notes was classified as a current liability and the difference between the principal amount and the carrying valueof the 2018 Notes was reflected as convertible debt in mezzanine equity, on our condensed consolidated balance sheet as ofDecember 31, 2017.

Tesla, Inc.
Condensed Consolidated Statement of Cash Flows(Unaudited)(In thousands)
Year Ended
Three Months Ended
December 31, September 30, December 31, December 31, December 31,
2017
2017
2016
2017
2016
Cash Flows from Operating Activities
Net loss
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
Stock-based compensation
Losses (gains) related to the SolarCity
acquisition
Other
Changes in operating assets and liabilities,
net of effect of business combinations
Net cash provided by (used in)operating activities
Cash Flows from Investing Activities
Capital expenditures
Payments for the cost of solar energy systems,leased and to be leased
Business combinations, net of cash acquired
Maturities of short-term marketable securities
Changes in restricted cash and otherNet cash used in investing activities
Cash Flows from Financing Activities
Net cash flows from debt activities
Collateralized lease borrowings
Net borrowings under warehouse facilities
Net cash flows from noncontrolling interests
Proceeds from issuances of common stockin public offerings
Other
Net cash provided byfinancing activities
Effect of exchange rate changes oncash and cash equivalents
Net (decrease) increase in cash andcash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period$$(770,807 ) $(671,163 ) $(219,469 ) $(2,240,578 ) $(773,046 )469,606
134,348

400,624
112,653

326,939
87,711

1,636,003
466,760

947,099334,225

27,950151,756

18,22588,867(88,727 )(8,068 )

57,746
516,018(88,727 )
150,481

497,038(249,768 )(546,595 )(496,603 )(693,861 )

509,891(300,562 )(448,209 )(60,654 )(123,829 )(786,688 )(1,116,434 )(521,612 )(3,414,814 )(1,280,802 )(119,455 )(5,376 )—(50,357 )(961,876 )(128,293 )——(70,205 )(1,314,932 )(159,669 )
213,523—(126,993 )(594,751 )(666,540 )(114,523 )—(223,090 )(4,418,967 )(159,669 )
213,523
16,667(206,149 )(1,416,430 )

28,056
94,894
116,820
26,284

1,820,399
80,75278,29741,643880,154
212,040
90,000180,277

2,414,896
511,321283,811
527,487

538,439769,709
390,000
180,277—
19,788—80,415—
10,356400,175
277,174

1,701,734
163,817285,842

2,101,506

1,372,827

4,414,864

3,743,976

4,027

8,094

(20,908 )39,455(7,409 )(162,116 )3,530,030
3,367,914 $

494,106
3,035,924
3,530,030 $

308,959
3,084,257
3,393,216 $(25,302 )3,393,216
3,367,914 $

2,196,308
1,196,908
3,393,216

Supplemental Consolidated Financial Information:

Free Cash Flow
Cash flows from operating activities
Capital expenditures
Free cash flow

Three Months EndedYear Ended
December 31, September 30, December 31, December 31, December 31,
2017
2017
2016
2017
2016
$
509,891 $(300,562 ) $(448,209 ) $(60,654 ) $(123,829 )(786,688 )(1,116,434 )(521,612 )(3,414,814 )(1,280,802 )$(276,797 ) $ (1,416,996 ) $(969,821 ) $ (3,475,468 ) $ (1,404,631 )Tesla, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information(Unaudited)(In thousands, except per share data)
Year Ended
Three Months Ended
December 31, September 30, December 31, December 31, December 31,
2017
2017
2016
2017
2016
$
511,023 $432,043 $
449,701 $ 2,208,596 $ 1,600,685
16,182
10,166
8,562
43,84530,400(179,142 )(575 )(19,840 )(279,717 )(215,432 )Automotive gross profit – GAAP
Stock-based compensation expense
ZEV credit revenue recognized
Automotive gross profit excluding SBC and
ZEV credit – non-GAAP$
Automotive gross margin – GAAP
Stock-based compensation expense
ZEV credit revenue recognized
Automotive gross margin excluding SBC
and ZEV credit – non-GAAP
Net loss attributable to common
stockholders – GAAP
Stock-based compensation expense
Acquisition related transaction costs
Losses (gains) related to the SolarCity
acquisition
Net loss attributable to common
stockholders – non-GAAP
Net loss per share attributable tocommon stockholders, basic anddiluted – GAAP
Stock-based compensation expense
Acquisition related transaction costs
Losses (gains) related to the SolarCity
acquisition
Net loss income per share attributable tocommon stockholders, basic anddiluted – non-GAAP
Shares used in per share calculation,
basic and diluted – GAAP and non-GAAP

348,063$441,634$

438,423$

1,972,724$

1,415,653

18.9 %
0.6 %-5.7 %

18.3 %
0.4 %0.0 %22.6 %
0.4 %-0.8 %

22.9 %
0.5 %-2.3 %

25.2 %
0.5 %-2.6 %

13.8 %

18.7 %

22.2 %

21.1 %

23.1 %(675,350 ) $134,348—(619,376 ) $112,653—(121,337 ) $87,71115,807(1,961,400 ) $466,760—(674,914 )
334,225
15,807

27,95018,225(88,727 )

57,746(88,727 )$(513,052 ) $(488,498 ) $(106,546 ) $(1,436,894 ) $(413,609 )$(4.01 ) $0.80—

(3.70 ) $0.67—

(0.78 ) $
0.56
0.10

(11.83 ) $2.82—(4.68 )
2.32
0.11

0.17

0.11

(0.57 )

0.35

(0.62 )

(3.04 ) $(2.92 ) $(0.69 ) $(8.66 ) $(2.87 )$$

168,314167,294

155,024

165,758

144,212