Tesla Third Quarter 2018 Update


GAAP net income of $312M, non-GAAP net income of $516M

Operating income of $417M and operating margin of 6.1%

Free cash flow of $881M supported by operating cash flow of $1.4B

$3.0B of cash and cash equivalents at Q3-end, increased by $731M in Q3

Model 3 GAAP and non-GAAP gross margin > 20% in Q3



Reaffirm expectation of continued GAAP net income and free cash flow in Q4

Q3 2018 was a truly historic quarter for Tesla. Model 3 was the best-selling car in the US in terms of revenue and the 5th best-selling
car in terms of volume. With average weekly Model 3 production through the quarter (excluding planned shutdowns) of roughly 4,300
units per week, we achieved GAAP net income of $312 million. We also delivered on our internal cost efficiency targets, leading to
GAAP Model 3 gross margin of more than 20%, which exceeded our guidance. Finally, our total cash increased by $731 million and we
had free cash flow (operating cash flow less capex) of $881 million despite less than 10% of that amount coming from key working
capital items (payables, receivables, and inventory).
Model 3 is attracting customers of both premium and non-premium brands, making it a truly mainstream product. We are thankful to ourcustomers for being such strong advocates of our products and mission.
AUTOMOTIVE PRODUCTS
The Model 3 production system stabilized in Q3. We went froma steep S-curve to more gradual monthly improvements.
Among other things, we made the changes necessary toenable production of an All-Wheel Drive (AWD) version ofModel 3, and we did this without disrupting our production rate.
We started the quarter producing only Rear Wheel Drive(RWD) Model 3s and ended the quarter producing almost
entirely AWD cars. Even though AWD cars are significantly
more complex to build, we produced 5,300 Model 3s in the last
week of Q3.
Labor hours per Model 3 decreased by more than 30% from
Q2 to Q3, falling for the first time below the level for Model S
and X. In Q4, we will focus even further on cost improvements
while continuing to increase our production rate.

US Passenger Car sales in Q3

Vehicle delivery and logistics were our main challenges in Q3 as our delivery
system went through a similar “ramp” to what our production system went
through in Q2. Fortunately, these challenges are easier to solve than vehicle
manufacturing, and we made improvements through the quarter. One of themost significant improvements was the expansion of direct deliveries where our
employee delivers the car wherever the customer would like. We believedelivering vehicles to the front door of a customer’s house or office is superior
from both a cost and customer satisfaction perspective.

US vehicle inventory – Days of sales

Despite logistical challenges earlier in the quarter, our US inventory at the end of
Q3 (including customer vehicles in transit, test drive vehicles, service loanersand engineering fleet – all of which accounted for the vast majority of ourinventory) remains the lowest in the industry when measured in terms of days ofsales. Even when compared to our own history, our vehicle inventory level at theend of Q3 was the lowest in over two years in terms of days of sales.

In Q3, we delivered 56,065 Model 3s to customers. Based on trade-ins received from
customers since the start of Model 3 production, more than half of those trade-in
vehicles were priced below $35,000 when new. It is clear that customers are trading
up their relatively cheaper vehicles to buy a Model 3 even though there is not yet aleasing option and the Q3 starting price of a Model 3 was $49,000. This leads us tobelieve that the total market potential for Model 3 is larger than just the premium sedan
market. Additionally, we are working hard to bring down the price of Model 3 to$35,000. We have taken a step forward by recently introducing a medium range
version that has a 260-mile EPA estimated range and a starting price of $46,000.
Better than expected Model 3 cost reduction is allowing us to bring more affordable
options to the market sooner.
We stopped taking Model 3 reservations in North America in early July 2018 when we Original purchase price of Model 3 trade-ins
moved to a direct order system. Of the 455,000 net reservations that we reported inAugust 2017, less than 20% have cancelled. We are expecting most of the remaining
reservations to gradually convert to orders as we launch more versions of Model 3,
introduce other financing options, and begin sales outside North America.
The mid-sized premium sedan market in Europe is more than twice as big as the same segment in the US. This is why we are excited
to bring Model 3 to Europe early next year. The reception at the Paris Auto Show as well as the Goodwood Festival of Speed was verystrong. We expect to start taking orders in Europe and China for Model 3 before the end of this year.
Given the growth of Model 3, we delivered almost 70,000 vehicles in the US in Q3. Although we only sell Model 3, Model S and Model
X, our total US deliveries in Q3 were on par with total vehicle deliveries made by our long-established premium competitors, each ofwhich has multiple models and a vast network of dealerships.
In order to significantly increase the affordability of Model 3, we have decided to accelerate our manufacturing timeline in China. We areaiming to bring portions of Model 3 production to China during 2019 and to progressively increase the level of localization through local
sourcing and manufacturing. Production in China will be designated only for local customers.
Model 3 mix was strong in Q3 due to the launch of AWD and Performance variants.
While the average selling price will gradually decline as we introduce lower priced
variants, we are not expecting this to impact profitability. Model S and X Performancemix declined roughly 4-fold since 2015, yet Model S and X gross margin (excluding
ZEV credits) continued to improve by roughly 600 basis points over the same periodof time. Margin growth was caused by gradual cost improvements driven by loweringlabor hours per vehicle, reduced cost of raw materials, and various other cost
efficiencies. We continue to target a 25% gross margin ex-ZEV credits on Model 3.
In Q3, we delivered 27,710 Model S and X vehicles to customers. While demand in
China remains challenging due to a 40% import duty for Model S and X, China
deliveries still remained a material portion of our Q3 deliveries, and we managed tooffset the decline there with growth in North America and Europe.
Model S/X gross margin vs.
Performance mix
Electric vehicles that are designed from the ground up to be electric are structurally safer than equivalent combustion engine vehicles.
That is why we were excited to confirm earlier this month that Model 3 received a 5-star rating from NHTSA in every category and subcategory. We continue to improve both the hardware and software on our cars so that our customers immediately get the best of what
we have to offer without waiting for a new model year.
Battery pack and powertrain are at the heart of our vehicles. Over the past 15 years, we have worked hard to make the best powertrain
anywhere on the market. By 2016, Model X energy efficiency was 3.1 miles of EPA range per kWh. This is an extremely important
metric as it allows an EV to reach a long EPA range even when using a relatively small, inexpensive battery pack. With Model 3, energy
efficiency improved dramatically to 4.1 EPA miles per kWh, the highest efficiency for any all-wheel drive EV. To put this in context, ourcurrent or upcoming AWD (2019) competition is expected to achieve 2.4 to 2.8 miles of EPA range per kWh. Model 3 has far better
energy efficiency while also providing the quickest acceleration (0-60 mph in as little as 3.3 seconds) and the highest top speed (155mph). Additionally, the curb weight of Model 3 long range RWD is only 3% heavier than its gas powered equivalents.

We recently started releasing Version 9.0 of our vehicle software, which marks ourbiggest software upgrade in the last two years. Our Autopilot software is now
much improved, and, as a result, we can start adding new functionality that was
not possible in the past. The main functionality we added to our early accessusers is “Navigate on Autopilot” where on most controlled-access roads such as
highways, any Tesla vehicle made from October 2016 with Enhanced Autopilot
will be able to automatically change lanes with driver confirmation, transition fromone freeway to another, and ultimately exit the freeway when approaching the finaldestination. We also enabled long-awaited dashboard camera functionality as well
as some Atari games when a vehicle is parked. This new software architecture will
enable us to accelerate deployment of new Autopilot and Self-Driving features in
the future.
During Q3, we opened four new store and service locations, resulting in 351 locations
worldwide at the end of the quarter. Our electrified Mobile Service fleet continued to
grow further to more than 373 service vehicles on the road at the end of Q3. Sincebody repairs have been one of the major drawbacks for our customers, we havestarted to roll out our own body shops in the US. Thus far, we have opened several
body shops in the highest density areas and are planning to open dozens more in thenext few quarters.

Total Tesla fleet with Autopilot hardware

In Q3, we opened 44 new Supercharger locations for a total of 1,352 Supercharger stations. To date, we have over 11,000
Supercharging connectors and over 20,000 Destination Charging connectors globally.
ENERGY PRODUCTS
Our energy business is also going through significant changes that led to higher revenues and significantly better profitability.
In Q3, energy storage deployments grew to 239 MWh, an increase of 18% sequentially and 118% compared to Q3 2017. This meansthat we are well on track to achieve our goal of tripling energy storage deployments in 2018 compared to 2017. We increased
Powerwall production so that we can continue to work through our order backlog. We also rolled out new software features forPowerwall, including Time Based Control and Storm Watch (full Powerwall recharge in case of a storm forecast), to continue to bring
additional value to our customers.
We deployed 93 MW of solar energy generation systems in Q3, an 11% increase
sequentially. Cash and loan sales made up 80% of residential deployments in thequarter, up from 46% in Q3 2017. Due to the complexity of Solar Roof, we continue
to iterate on the design of the product via intensive reliability testing, and we also
continue to refine the installation process. Accordingly, we expect to ramp production
more quickly during the first half of 2019.
We are prioritizing residential solar installations that are combined with our energy
storage products because this combination provides a better customer experienceand improves both our revenues and profits. As a result of greater scale,manufacturing efficiencies and improvements in our installation processes, ourenergy storage gross margin improved materially in Q3.
MWh of Energy Storage deployed(12-months rolling)

We have significantly improved the time to install our solar and energy storage
products and customers will continue to see faster installation. Though solar energy
economics continue to improve every year, one of the remaining gating factors has
been customer acquisition costs. Following adjustments to our sales channel
strategy earlier this year, a majority of our new solar energy orders now comes fromour own website and stores rather than through third-party channels. This has helped
us to significantly lower our customer acquisition costs. At the end of Q3, there were
almost 450,000 Tesla vehicle owners around the world. Ultimately, we believe thisgroup will become the largest demand generator for our residential solar andPowerwall business.

Q3 2018 RESULTS
Revenue & Gross Margin

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










25.5 %

21.0 %

18.7 %

Change
QoQ
YoY
82 %
158 %
522 bp 752 bp
453 bp 681 bp

Automotive revenue in Q3 increased by 82% sequentially over Q2, mainly due to a sharp increase in Model 3 deliveries. In Q3, werecorded $52M in ZEV credit sales compared to zero in Q2.
With the adoption of the new revenue recognition standard starting January 1, 2018, lease accounting generally applies to vehicles
directly leased by us without using bank partners. Only 3% of vehicles delivered in Q3 were subject to lease accounting.
GAAP Automotive gross margin improved significantly to 25.8% in Q3 from 20.6% in Q2, while non-GAAP Automotive grossmargin improved to 25.5% in Q3 as compared to 21.0% in Q2.
At an average Model 3 production rate of about 4,300 per week in Q3 (excluding planned shutdowns), Model 3 gross margin grew
very significantly to above 20%. The mix of the Model 3 Performance version was only slightly higher than the Performance mix ofModel S and X. This strong margin growth was driven by a higher production rate while keeping fixed costs stable, significant
reductions in manufacturing costs through lower labor hours per unit, lower scrap rate, lower material costs, and higher average
selling price.
Gross margin of Model S and X continued to improve sequentially even though the average selling price per vehicle declined
slightly. Model S has been in production for over six years, but we continue to achieve efficiencies in material cost and othermanufacturing costs.

Energy generation and storage revenue ($000)
Energy generation and storage gross margin

Three Months Ended
September 30,
September 30,
June 30,
2018
2018
2017
$
6,098,766 $
3,357,681$
2,362,889
25.8 %
20.6 %
18.3 %

Three Months Ended
September 30,
September 30,
June 30,
2018
2018
2017
$
399,317 $374,408 $317,505
17.2 %
11.8 %
25.3 %

ChangeQoQ
7%543 bpYoY
26 %-804 bp

Energy generation and storage revenue in Q3 increased by 7% over Q2 and by 26% compared to Q3 2017. This year-over-yearincrease was mainly driven by a substantial growth in energy storage deployments and higher mix of cash and loan sales for solar
deployments.
GAAP gross margin of the Energy business in Q3 improved significantly to 17.2% compared to 11.8% in Q2 mainly due to cost
improvements in our solar and storage businesses.

Other Highlights






Service and Other revenue in Q3 increased by 21% compared to Q2. This was mainly due to higher used car sales.
Service and Other gross margin loss in Q3 was less than in Q2. Total gross loss of Service and Other remained relatively stable.
This was in line with our expectations.
Our total GAAP operating expenses decreased to $1.11 billion in Q3, which was 11% less than in Q2. Excluding one-time
restructuring and other costs, operating expenses decreased by 5% sequentially as we are seeing the benefit of our ongoing cost
reduction efforts.
Interest and Other expenses were $145 million in Q3.
There were approximately 171 million basic shares outstanding at the end of Q3.

Cash Flow and Liquidity






Cash flow from operating activities in Q3 was $1.39 billion. This was mainly due to significantly improved volumes and profitabilityof Model 3. Change in key working capital items (receivables, payables and inventory) during Q3 impacted operating cash flow
only slightly. Although our accounts payable increased as expected, our accounts receivables also increased by a similar
magnitude since the quarter ended on a Sunday, which limited our ability to collect cash from the banks financing our customer
loans.
Customer deposits decreased slightly compared to Q2 to $906 million as we continue to work through our Model 3 backlog.
Our capital expenditures were $510 million, which was below the Q2 2018 level.
Our cash position increased by $731 million in Q3 despite repaying $82.5 million of bonds.

OUTLOOK
Model 3 quarterly production and deliveries should continue to increase in Q4 compared to Q3. Our target of delivering 100,000 Model
S and X vehicles this year remains unchanged.
We expect gross margin for Model 3 to remain stable in Q4 as manufacturing efficiencies and fixed cost absorption offset a slightly
lower trim mix and the negative impact of tariffs from Chinese sourced components. Gross margin for Model S and X will likely decline
slightly in Q4, as we expect that the sequential increase in tariffs in Q4 from Chinese sourced components will be only partially offset byincreased manufacturing cost efficiencies. For all three vehicles, additional tariffs in Q4 on parts sourced from China will impact ourgross profit negatively by roughly $50 million.
Energy generation and storage revenue should decline slightly in Q4 compared to Q3, mainly due to seasonality of the solar business.
As a result of lower solar mix and seasonality, gross margin of this segment should also decline slightly in Q4.
We expect our Services and Other business to continue to grow mainly due to used car sales volumes. Gross margin of this segment
should see further sequential improvement. We will increase investment in our service infrastructure in North America throughdeployment of new service locations and additional mobile service vehicles.
Total operating expenses should grow only slightly in Q4 compared to Q3 levels.
We reaffirm our prior guidance that we expect to again achieve positive GAAP net income in Q4. Similarly, in Q4, we continue to expect
to generate positive cash from operating cash flows net of capital expenditures, as well as the normal inflow of cash received from nonrecourse financing activities on leased vehicles and solar products. Our cash position should remain at least flat in spite of our plan to
repay $230 million of convertible notes in cash during Q4.
Our total 2018 capex, the vast majority of which is to grow our capacity, is expected to be slightly below $2.5 billion, consistent with ourprior guidance. Our Q4 capex projection includes the purchase of land in China and initial design and other expenditures for
Gigafactory 3. Interest expenses in Q4 should be roughly $170 million and losses attributable to noncontrolling interests should decline
significantly compared to Q3.
As we have transformed from a 100,000 per year unit carmaker into a ~340,000 unit per year carmaker, our earnings profile has flipped
dramatically. Sufficient Model 3 profitability was critical to make our business sustainable – something many argued would be
impossible to achieve. Due to the ingenuity and incredible hard work of our team combined with an innovative vehicle design andmanufacturing strategy, we have achieved total auto gross margin of ~25%.
We can’t thank you enough for your support. We would not have achieved this historic quarter without it.

Elon Musk

Deepak Ahuja

WEBCAST INFORMATION
Tesla will provide a live webcast of its third quarter 2018 financial results conference call beginning at 3:30 p.m. PT on October 24,
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 and ramp, such as Model 3, Autopilot and Solar Roof; statements regarding
growth in the number of Tesla stores, service centers, body shops, and in other delivery, service, and repair capabilities; statements
relating to the production, production rate and delivery timing of products such as Model 3 and Solar Roof and deployment of energy
storage capacity; statements regarding growth of our energy business and means to achieve such growth; statements regarding growthin demand and potential customer base, conversion of reservations to orders, cross-selling opportunities and orders for Tesla products
and the catalysts for that growth; statements regarding the ability to achieve product demand, volume, production, delivery, leasing,inventory and deployment; statements regarding revenue, cash generation, cash flow, gross margin, spending, capital expenditure andprofitability targets; statements regarding productivity improvements and capacity expansion plans, such as for Model 3 manufacturing
processes and localization of parts sourcing and manufacturing in China; and statements regarding Gigafactory 1, Gigafactory 2 andGigafactory 3, including timing and manufacturing plans, including those related to vehicle, 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, including internationally; the ability to design and achieve and grow simultaneous and separate market acceptanceof Model S, Model X, Model 3 and their variants, as well as new vehicle models; the ability of suppliers to meet quality and part delivery
expectations at increasing volumes, especially with respect to Model 3 parts; adverse foreign exchange movements; increases ininternational tariffs, any failures by Tesla products 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 andenergy product markets generally and the alternative fuel vehicle market and the premium sedan, premium SUV and small to mediumsized sedan markets 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 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 and future manufacturing facilities, such as Gigafactory 3, maintaining Gigafactory 1 and Gigafactory 2
implementation schedules, output and cost estimates; and Tesla’s ability to execute on its strategy for new store, delivery hub, direct
delivery, service center, Supercharger and other locations and capabilities. 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 August 6, 2018. 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.
Condensed Consolidated Statements of Operations(Unaudited)(In thousands, except per share data)
Nine Months Ended
Three Months Ended
September 30,
September 30, September 30, September 30,
June 30,
2018
2018
2017
2018
2017
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
Gross profit
Operating expenses
Research and development
Selling, general and administrative
Restructuring and otherTotal operating expenses
Income (loss) from operations
Interest income
Interest expense
Other (expense) income, net
Income (loss) before income taxes
Provision (benefit) for income taxes
Net income (loss)
Net loss attributable to noncontrolling interests
and redeemable noncontrolling interests
Net income (loss) attributable to common
stockholders
Net income (loss) per share of common stock
attributable to common stockholders –basic and diluted
Basic
DilutedWeighted average shares used in computing
net income (loss) per share of common stock –basic and diluted
Basic
Diluted

$5,878,305 $ 3,117,865 $
220,461
239,816
6,098,766
3,357,681
399,317374,408
326,330
270,142
6,824,413
4,002,231

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

11,558,051 $
633,713
12,191,764
1,183,747
859,884
14,235,395

6,125,643
813,4626,939,105
818,229
713,168
8,470,502

4,405,919
119,283
4,525,202
330,554444,992
5,300,748
1,523,665

2,529,739
136,915
2,666,654
330,273
386,374
3,383,301
618,930

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

9,027,055
360,694
9,387,749
1,036,190
1,212,335
11,636,274
2,599,121

4,724,849
516,683
5,241,532
592,823
852,446
6,686,801
1,783,701

350,848
729,876
26,184
1,106,908
416,757
6,907(175,220 )
22,876271,320
16,647
254,673

386,129
750,759
103,434
1,240,322(621,392 )
5,064(163,582 )
50,911(728,999 )13,707(742,706 )

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

1,104,073
2,167,039
129,618
3,400,730(801,609 )
17,185(488,348 )
36,071(1,236,701 )
35,959(1,272,660 )1,023,436
1,794,210—
2,817,646(1,033,945 )
13,406(324,896 )(83,696 )(1,429,131 )
40,640(1,469,771 )(56,843 )(25,167 )(51,787 )(157,086 )(183,721 )$

311,516 $(717,539 ) $(619,376 ) $(1,115,574 ) $(1,286,050 )$$1.82 $
1.75 $(4.22 ) $(4.22 ) $(3.70 ) $(3.70 ) $(6.56 ) $(6.56 ) $(7.80 )
(7.80 )

170,893
178,196

169,997
169,997

167,294
167,294

170,019
170,019

164,897
164,897

Tesla, Inc.
Condensed Consolidated Balance Sheets(Unaudited)(In thousands)
September 30,
2018
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)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,
2017

2,967,504
158,627
1,155,001
3,314,127
325,232
7,920,491
2,186,137
6,301,537
11,246,295
356,702422,897
396,835
431,819
29,262,713$

3,596,984
1,990,095
570,920604,949
905,838
2,106,538
9,775,324
9,672,613
950,126
455,7622,555,319
23,409,144
551,264—
4,508,838
793,467
29,262,713-$

7,250,617
3,248,021

$
$

$

$

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

2,390,250
1,731,366
1,015,253
787,333
853,919896,549
7,674,670
9,418,319
1,177,799
2,309,222
2,442,970
23,022,980
397,73470
4,237,242
997,346
28,655,372
6,755,376
2,873,458

Tesla, Inc.
Condensed Consolidated Statement of Cash Flows(Unaudited)(In thousands)
Supplemental Consolidated Financial Information
Nine Months Ended
Three Months Ended
September 30,
September 30, September 30, September 30,
June 30,
2018
2018
2017
2018
2017
Cash Flows from Operating Activities
Net income (loss)$
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation, amortization and impairment
Stock-based compensation
Losses 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
Net cash used in investing activities
Cash Flows from Financing Activities
Net cash flows from debt activities
Collateralized lease (repayments) borrowings
Net borrowings under Warehouse
Agreements and automotive asset-backed notes
Net cash flows from noncontrolling interests - Auto
Net cash flows from noncontrolling interests - Solar
Proceeds from issuances of common stockin public offerings
Other
Net cash (used in) provided byfinancing activities
Effect of exchange rate changes oncash and cash equivalents andrestricted cash
Net increase (decrease) in cash andcash equivalents and restricted cash
Cash and cash equivalents and restricted cash
at beginning of period
Cash and cash equivalents and restricted cash
at end of period$

254,673 $(742,706 ) $(671,163 ) $(1,272,660 ) $(1,469,771 )

502,825
204,728

485,255
197,344

400,624
112,653

1,404,313
543,711

1,166,397
332,412—77,737—
97,432

18,22588,867—
328,974

29,796364,262

351,318(166,989 )(249,768 )(141,097 )(993,641 )

1,391,281(129,664 )(300,562 )

863,241(570,545 )(510,271 )(609,813 )(1,116,434 )(1,775,746 )(2,628,126 )(49,494 )(1,200 )(560,965 )(67,400 )(5,604 )(682,817 )(128,293 )—(1,244,727 )(189,869 )(6,804 )(1,972,419 )(547,085 )(109,147 )(3,284,358 )(195,760 )(142,568 )

244,196(113,426 )

1,820,399
80,752

221,301(343,086 )2,386,840
416,427

114,942
17,22427,070114,069
32,35590,37578,297—41,643403,039
74,178110,687

166,991
11,654
489,549—
94,874—31,053—80,415—219,945

400,175
257,386(84,218 )398,622

2,101,506

686,064

4,129,022(6,370 )(22,611 )

7,800(18,879 )

35,736

739,728(436,470 )

564,017(441,993 )

309,855

2,783,238

3,219,708

3,512,738

3,964,959

3,766,900

3,522,966 $

2,783,238 $

4,076,755 $3,522,966 $

4,076,755

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

Automotive gross profit – GAAP
Stock-based compensation expensein automotive cost of revenue
ZEV credit revenue recognized
Automotive gross profit excluding SBC and
ZEV credit – non-GAAP

Three Months Ended
September 30, June 30, September 30,
2018
2018
2017
$
1,573,564 $ 691,027 $
432,043$

Automotive gross margin – GAAP
Stock-based compensation expense
ZEV credit revenue recognized
Automotive gross margin excluding SBC
and ZEV credit – non-GAAP
Net income (loss) attributable to common
stockholders – GAAP
Stock-based compensation expense
Losses related to the SolarCity
acquisition
Net income (loss) attributable to common
stockholders – non-GAAP
Net income (loss) per share attributable tocommon stockholders, basic – GAAP
Stock-based compensation expense
Losses related to the SolarCity
acquisition
Net income (loss) per share attributable tocommon stockholders, basic – non-GAAP$

13,198—1,542,250$ 704,225$

2,750,663$

1,624,661

23.0 %
0.4 %-0.6 %

24.5 %
0.4 %-1.1 %

25.5 %

21.0 %

18.7 %

22.8 %

23.8 %

311,516
204,728

$

1.82
1.20

$ (717,539 ) $197,344—$ (520,195 ) $

$

—
3.02

1.75
1.15

$

178,196(3.06 ) $169,997$—
2.90(4.22 ) $1.16—

170,893$441,634

27,663(100,575 )

18.3 %
0.4 %
0.0 %

516,244$$

49,231(102,583 )

20.6 %
0.4 %
0.0 %

$

$

10,166(575 )

25.8 %
0.3 %-0.6 %—

Shares used in per share calculation,
basic – GAAP and non-GAAP
Net income (loss) per share attributable tocommon stockholders, diluted - GAAP
Stock-based compensation expense
Losses related to the SolarCity
acquisition
Net income (loss) per share attributable tocommon stockholders, diluted - non-GAAP
Shares used in per share calculation,
diluted - GAAP and non-GAAP

20,955(52,269 )Nine Months Ended
September 30, September 30,
2018
2017
$
2,804,015 $
1,697,573(4.22 ) $
1.16
—

$

(3.06 ) $169,997(619,376 ) $112,653(1,115,574 ) $543,711(1,286,050 )
332,412

18,225—29,796(488,498 ) $(571,863 ) $(923,842 )(3.70 ) $0.67

(6.56 ) $3.20

(7.80 )
2.02

—

0.18

(3.36 ) $(5.60 )

0.11
(2.92 ) $167,294(3.70 ) $0.67
0.11
(2.92 ) $167,294

170,019

164,897(6.56 ) $3.20

(7.80 )
2.02

—

0.18

(3.36 ) $(5.60 )

170,019

164,897