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

Model X launch & start of deliveries
Autopilot released to 40,000 vehicles globally, over the air
Produced a record 13,091 vehicles, despite one week shut down
Delivered a record 11,603 new vehicles
Gigafactory construction and production ahead of schedule
Model 3 unveiling planned for late March 2016

November 3, 2015

Dear Fellow Shareholders:
Vehicle electrification and autonomous driving are crucial to sustainable and safe personal transportation; plus thesetechnologies make driving more enjoyable. Recently, Tesla introduced two new groundbreaking innovations that advancedriving on these fronts.
In September, we launched our third vehicle, Model X, featuring a combination of safety, performance and convenience thatis unmatched by any other sport utility vehicle (SUV). Model X demonstrates that any vehicle type can be successfully
electrified, even a large SUV that seats seven adults, carries all their gear and can tow up to 5,000 lbs. With such acomprehensive mix of best-in-class capabilities Model X also proves, just as Model S does, that electric drive leads to better
vehicles.
We also recently released a vehicle software update that delivers a range of new Autopilot features. These features relieve
drivers of the most tedious and potentially dangerous aspects of road travel. As a beta release, Autopilot is designed to
improve over time, and marks an important step toward a future of autonomous driving.
Such innovations define new frontiers for the automotive industry, but more importantly, they improve personal transportationfor everyone.

Model X and Autopilot Expand Demand
In Q3, global Model S orders increased by more than 50% from a year ago, and grew at a faster pace in North America,
Europe and Asia, than during Q2. In China, our newest major market, Q3 Model S orders increased substantially from Q2,
due in part to the opening of two new retail locations. We expect order growth in China to remain strong with more store
openings and the recent policy changes in Beijing and other major cities that allow buyers of Tesla vehicles to bypass license
plate restrictions.

	  Our customers and reservation holders are
enthusiastically embracing the new featuresof Model X. In addition to the unique falcon
wing doors that improve vehicle access anda panoramic windshield that transforms theinterior of the cabin, our internal crashtesting shows that Model X should receive
the best ever safety ratings for an SUV.
Model X also has ludicrously fast
acceleration and hospital-grade cabin air
quality - all in a vehicle with an estimated
EPA single charge range of up to 257 miles
for the 90kWh pack option. Consequently,
Model X Signature Series reservation
holders are converting to firm production
orders at a much higher rate than we witnessedwith Model S.

Model X – World’s First EV with Towing Capability

Since the Model X launch event, order rates haveaccelerated for both Model S and Model X.
Although it is too early to draw firm conclusions,this supports our belief that Model X expands themarket for Tesla vehicles, with little to nocannibalization of Model S.

Hangzhou, China Store

Version 7.0 software released over the air in
October has delivered a significant visual updateto the digital displays of the entire Model S
fleet. The release also enabled Autopilot on
about 40,000 Model S and Model X vehicles
globally, giving these cars the ability to steer
within a lane, change lanes with a tap of a turnsignal and parallel park autonomously. Autopilot
also reduces front and side collision risk andhelps keep the car on the road should the driver
become distracted.

Thousands of Autopilot-equipped Tesla vehicles are gathering over one million miles of driving data per day. We thenanalyze this data and feed it back to the fleet to continually improve our customers’ driving experiences. Autopilot is soadvanced and unique that test drive requests from prospective customers have increased significantly since its introduction.
To manage this volume of requests efficiently, consumers can now schedule their own test drives online, representing
another industry-first by Tesla.

Tesla Energy Production Begins at the Gigafactory
We began production of Tesla Energy products in Q3 at our Fremont factory, with a long-term plan to shift production to theGigafactory. Faced with growing demand for Powerpacks and Powerwalls, we have accelerated our plans to expand
manufacturing capacity. In early Q4, we relocated production from Fremont to an automated assembly line at the Gigafactory.
This positions us for strong growth in 2016, but the Gigafactory pull-ahead will push some Tesla Energy Q4 production anddeliveries into Q1.
We are seeing very strong demand for Tesla Energy products globally, and particularly in Australia, Germany and South
Africa. To respond to these opportunities, we are growing our worldwide Tesla Energy sales team and are continuing to sign
new business partnerships with utilities and energy companies. There is also an exciting market opportunity for us in India
with strong government alignment that we look forward to growing in 2016. Recent changes to feed-in tariff structures in
Hawaii also create a large new storage market inthat state.
We have also accelerated plans to begin cell
production for Tesla Energy products at the
Gigafactory by the end of 2016. This is several
quarters ahead of our initial plan.
In conjunction with development of the Gigafactory,
we recently signed two conditional purchase orders
for lithium hydroxide in order to promote sourcing of
this commodity at lower cost and with reduced
environmental impact. We are planning on
establishing further supplier arrangements with theintent of having a robust, flexible and cost effective
supply chain in place for our long-term needs.

Gigafactory – Reno, Nevada

Q3 Results
Total Q3 non-GAAP revenue was $1.24 billion for the quarter, up nearly 33% from a year ago, while GAAP revenue was$937 million. Total Q3 gross margin was 25.1% on a non-GAAP basis and 24.7% on a GAAP basis.
Automotive revenue was $1.16 billion on a non-GAAP basis, and comprises GAAP Automotive revenue of $853 million plus a
net increase of $307 million in deferred revenue as a result of lease accounting. Leasing was more popular in North America
during Q3, but the percentage of Tesla direct leasing declined as our leasing partner absorbed more than the sequential
increase in leases. Tesla directly leased 494 cars to customers in Q3, worth $45 million of aggregate transaction value.
Q3 Automotive gross margin excluding $39 million of ZEV credit revenue was 23.7% on a non-GAAP basis and 22.8% on a
GAAP basis, in line with our expectations. As anticipated, the average selling price of Model S declined slightly with the firstfull quarter of deliveries of our lower priced 70 kWh variants of Model S. Our warranty reserves were generally in line with theprior quarter, based on our analysis of projected
warranty costs.
In Q3, we exceeded our plan by producing 13,091
vehicles, including our first Model X vehicles, despitea one-week shut down to expand manufacturing
capacity. During the factory shut down, we retooled
our final assembly line to increase throughput by over
35%, completed and commissioned our new paintshop, enabled new stamping equipment andlaunched Model X on its own new robotic body line.
During the quarter, we delivered 11,603 vehicles,
slightly above the number estimated in our October
announcement. To support higher Q4 deliveries, we
increased vehicles in transit resulting in higher
finished goods inventory at the end of Q3. However,the number of “delivery days” in transit based on ourQ4 deliveries outlook remained flat compared to theModel X Bodies in Production
prior quarter at about one month. Consistent with ourpast reporting, finished goods inventory also includes cars currently used in marketing and as service loaners that will
eventually be sold, trade-in Tesla cars and in-transit units of Daimler powertrains and Tesla Energy products.
Q3 Services and Other revenue was $84 million, up 62% from a year ago. This includes $33 million of pre-owned Model S
sales. The number of pre-owned Tesla vehicles that we sold in Q3 exceeded the number of customer trade-ins that we
received, leading to a 17% sequential reduction in trade-in unit inventory. Q3 Services and Other gross margin increased
sequentially to 9.1%.
Our operating expenses in Q3 were $363 million on a non-GAAP basis, up 5% from Q2. Research and development
expenses declined sequentially as Model X development work diminished during the quarter. GAAP operating expenses
were $415 million and include $52 million of non-cash stock based compensation. Stock based compensation increased
sequentially as it became highly probable that we will achieve certain operational milestones in the near future and becauseof grants to new employees.
Our Q3 non-GAAP net loss was $75 million, or a loss of $0.58 per basic share based on 129 million basic shares, while ourQ3 GAAP net loss was $230 million or a loss of $1.78 per basic share. Both figures include a $15 million loss, or almost$0.12 per basic share, related mostly to unrealized losses from revaluation of our foreign currency holdings and finishedgoods inventory held by our foreign entities. Q3 weakness in the Norwegian krone, Canadian dollar and Chinese yuan had
the largest impacts.
Cash and cash equivalents were $1.4 billion at the end of the quarter, up $275 million sequentially, as a result of our equity
offering that raised $739 million net of fees. This was offset by capital expenditures of $392 million and the repayment of theentire $50 million drawn against our asset based credit line in Q3. Capital expenditures were primarily for the capacity
expansion and tooling associated with Model X, as well as for the construction of the Gigafactory.

Our GAAP cash outflow from operations during the quarter was $203 million, but this does not include $163 million in cash
inflows from vehicle sales to our bank leasing partners. Furthermore, $31 million of cash was consumed by our direct leasing
business funded by Tesla, and is included in cash flow from operations. Adjusting for the impact of our leasing and financing
business, our core business was almost breakeven on cash generated in Q3 prior to capital expenditures.

OutlookIn Q4, we plan to build 15,000 to 17,000 vehicles, and deliver 17,000 to 19,000 vehicles, which will result in 50,000 to 52,000
total deliveries for the year.
Model S production and deliveries are on track to achieve our initial Q4 plan. The primary limiting factor to higher Q4deliveries is the near term ramp of Model X production, with the biggest constraint being the supply of components related tothe second row monopost seats. To eliminate these supply constraints and achieve a better overall outcome, we havebrought manufacturing of these seats in-house. In addition we, and some of our other Model X suppliers, are still ramping up
and fine-tuning production. These factors add uncertainty to our build plans during Q4, but we feel emphasizing quality is theright decision for our customers.
We expect that Model X will achieve steady state production capacity during Q1 as we do not foresee any significant
production, design or supply chain constraints that will impact this plan. Looking ahead, we still remain highly confident of
average production and deliveries of 1,600 to 1,800 vehicles per week for Model S and Model X combined during 2016.
We expect our average vehicle sales price to increase slightly in Q4 with more deliveries of highly optioned Model X vehicles.
We expect Q4 Model S gross margin to improve sequentially, but initial Model X launch expenses and higher overhead anddepreciation allocations will temporarily elevate total production costs in Q4. As a result, we expect non-GAAP Automotive
gross margin to decline slightly from Q3. After Model X production stabilizes in Q1 2016, we expect Model X gross margin to
improve rapidly and become comparable to Model S gross margin over the next several quarters, even as we launch a lower
priced version of Model X with a smaller battery pack during 2016. Finally, we expect gross margin in Services and Other toremain positive, but to vary within a relatively wide band given the diversity of businesses reflected in this measure.
In Q4, we expect to directly lease about the same percentage of cars that we did in Q3. As always, we will use leaseaccounting for these cars even in our non-GAAP financial results, as such treatment is consistent with the cash collected onthese transactions. We do not expect to sell any ZEV credits in Q4.
During the next several quarters, operating leverage should improve with revenue and gross profit both growing faster thanoperating expenses. Operating expenses should increase slightly in Q4, but reflect a further decline in Model X development
expenses, offset by increased costs related to expanding our global sales capability and developing Model 3. We are on
track to unveil Model 3 in late March 2016.
We plan to invest about $500 million in Q4, which will bring the projected total capital expenditures for this year to about $1.7
billion. The increase in spending is primarily due to accelerated investments in the Gigafactory, further vertical integration ofseat assembly and other manufacturing activities, as well as faster milestone execution by certain suppliers for Model X
manufacturing equipment and tooling.
Our customers drove their cars almost 250 million miles this quarter, for a total of nearly 1.5 billion miles to date. We arelooking forward to the day when we can tell you how far our cars have driven our customers, and to the introduction of many
more innovative products manufactured and sold globally.

Elon Musk, Chairman & CEO

Deepak Ahuja, Chief Financial OfficerWebcast Information
Tesla will provide a live webcast of its third quarter 2015 financial results conference call beginning at 2:30 p.m. PT on
November 3, 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 relating to the progress
Tesla is making with respect to product development, including future Autopilot features and functionality and Model X
development and delivery plans; statements regarding growth in the number of Tesla store, service center andSupercharger locations; statements relating to the production and delivery timing of Tesla Energy products, as well as
future products such as Model 3; growth in demand and orders for Tesla vehicles such as Model X, and the catalysts forthat growth; the ability to achieve vehicle demand, volume, production, delivery, revenue, leasing, average sales price,gross margin, spending, capital expenditure and profitability targets; productivity improvements and capacity expansion
plans; and Tesla Gigafactory timing, plans and output expectations, including those related to battery module and packproduction, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements
are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may
differ materially from those projected. The following important factors, without limitation, could cause actual results to differ
materially from those in the forward-looking statements: the risk of delays in the manufacture, production and delivery ofModel S and Model X vehicles, and production and delivery of Model 3 vehicles; 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 ability of suppliers to meet quality and part delivery expectations at increasing volumes; adverse
foreign exchange movements; 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 the alternative fuel vehicle market in particular; Tesla’s ability toestablish, 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 electricvehicles; 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. 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 7, 2015. Tesla disclaims any obligation to update information containedin these forward-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)

Sept 30,
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
June 30
Sept 30,2015
2014

852,555
84,234
936,789$

878,090
76,886954,976$

799,91551,889851,804

Nine Months Ended
Sept 30,
Sept 30,
2015
2014
$

2,623,965
207,680
2,831,645$

2,116,616
125,079
2,241,695

628,729
76,564705,293

666,386
75,220741,606

552,987
46,966599,953

1,926,860
199,846
2,126,706

1,509,052
112,669
1,621,721

231,496

213,370

251,851

704,939

619,974

178,791
236,367
415,158

181,712201,846
383,558

135,873
155,107
290,980

527,657
633,578
1,161,235

325,135
406,690731,825(183,662)
327(29,308)(15,431)(228,074)
1,784(170,188)247(24,352)
13,233(181,060)
3,167(39,129)300(29,062)(3,090)(70,981)
3,727(456,296)
758(80,234)(24,503)(560,275)
7,991(111,851)
907(72,183)2,401(180,726)
5,685$(229,858) $(184,227) $(74,708)$(568,266) $(186,411)$(1.78) $(1.45) $(0.60)$(4.47) $Shares used in per share calculation, basic and diluted

129,006

126,689

124,911

127,225(1.50)
124,217

Notes:(1) Due to the application of lease accounting for Model S vehicles w ith the resale value guarantee or similar buy-back 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$

307,048$

242,147$

80,544$

712,871$

261,212(B) Net increase in operating lease vehicles as a result oflease accounting and therefore not recognized in
automotive cost of sales$

221,268$

174,242$

63,981$

509,333$

202,476$

12,40145,00654,572111,979

The table above excludes assumed net w arranty and stock based compensation amounts included in non-GAAP cost of sales.
(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

$

$

3,828
24,15328,05256,033$$

4,820
19,912
18,60343,335$$

5,383
16,63917,13639,158$$13,24963,85765,288142,394$Classification of Revenues and Costs of Revenues
Our income statement reflects the classifications of revenues and costs of revenues to segregate our new vehicle business fromour other business activities. “Automotive” revenue and related costs now reflect activities related to the sale or lease of newvehicles including regulatory credits, data connectivity, Autopilot functionality 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.

Tesla Motors, Inc.
Condensed Consolidated Balance Sheets(Unaudited)(In thousands)
Sept 30,
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

1,426,036
25,223
119,964
1,293,717
133,855
1,360,725
3,103,811
26,35557,811
7,547,497$

1,284,300
710,378
269,545$$

28,0332,605,170
1,289,234
6,186,660
46,181$

1,314,656
7,547,497

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

689,689
103,022
170,025
215,337$

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

1,178,073$

689,689$

81,63635,68739,58725,162$$

182,072$

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

Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

376,471
45,33460,76767,522$

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

Ending balance$

550,094$

376,471(3) Includes the following increase in other liabilities related to deliveries of Model S with the resale value guarantee and similar programs andsubject to lease accounting for the following periods:
Beginning balanceFirst quarter
Second quarter
Third quarter
Fourth quarter$

487,879
118,341
186,957
245,133$

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

Ending balance$

1,038,310$

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 fourth quarter of 2015. As such, the carrying value of the2018 Notes was classified as a current liability as of September 30, 2015 and the difference between the principal amount and the carrying
value of the 2018 Notes was reflected as convertible debt in mezzanine equity on our condensed consolidated balance sheet as of
September 30, 2015.

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

Sept 30,
2015
Selected Cash Flow Information
Cash flows provided by (used in) operating activities (1)Cash flows used in investing activities
Cash flows provided by financing activities
Other Selected Financial Information
Cash flows provided by (used in) operating activities (1)Capital expenditures
Free cash flow (cash flow from operations plus capital expenditures)(1)
Depreciation and amortization

Three Months Ended
June 302015$(203,340)(404,090)
893,978$(159,516)(422,837)
218,351$(27,996)(291,643)
33,755$(494,650)(1,259,271)
1,298,485$

29,065(618,213)
2,131,805$(203,340)(392,403)$(159,516)(405,165)$(27,996)(284,175)$(494,650)(1,223,628)$

29,065(601,224)$(595,743)$(564,681)$(312,171)$(1,718,278)$(572,159)$

110,366$

91,389$64,972$

278,867$

163,955

Sept 30,
Cash and Investments
Cash and cash equivalents
Restricted cash and marketable securities - current
Restricted cash - noncurrent

Nine Months Ended
Sept 30,
Sept 30,20152014

Sept 30,2014$

1,426,036
25,22326,355June 30$

1,150,673
20,591
19,774

Sept 30,$

2,370,735
17,3319,090(1) During the three months ended June 30, 2014, we began separately presenting the effect of exchange rate changes on our cash and cash
equivalents in our condensed consolidated statement of cash flows due to our growing operations in foreign currency environments.
Prior period amounts have been reclassified to conform to the current period presentation.

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

Vehicles delivered
Average per unit price of vehicles delivered
Aggregate value of vehicles delivered (1)$$Three Months Ended
June 30
494
631
91 $
100 $
44,804 $63,127 $Direct leasing revenue recognized$

11,514

Sept 30,

$

9,228

$

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

Sept 30,347
99
34,490

$
$

1,117

$

Nine Months Ended
Sept 30,
Sept 30,
1,717
505
100 $
100
171,290 $
50,53627,211$

1,287

Non-GAAP Financial Information
This letter includes non-GAAP financial information because we plan and manage our business using such information. Our nonGAAP measures align the recognition of revenues and costs related to a vehicle sale with the time when the customer takedelivery 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, eventhough 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 withresale value guarantee and where we have collected, or will collect from a bank intermediary in a matter of days, the purchaseprice of the car in cash. For cars leased directly by Tesla, we recognize lease revenue and related costs over the lease term andthe same way for both GAAP and non-GAAP purposes. Our non-GAAP expense and per share information also exclude noncash 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)

Sept 30,
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(229,858) $56,033
21,850(151,975)(184,227) $43,335
18,171(122,721)(74,708)
39,15822,160(13,390)$

77,022(74,953) $61,907(60,814) $16,5643,174$(1.78) $(1.45) $(0.60)

0.43

0.34

0.31

0.17

0.14

0.60
(0.58) $0.49(0.48) $Model S gross profit deferred due to lease accounting (1)(2)
Net incom e (loss) per share, basic (Non-GAAP)

Three Months Ended
June 30
Sept 30,
2015
2014

$

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

129,006

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)$

126,689(568,266) $142,393 $
59,531 $(366,341)(186,411)
111,979
54,192(20,240)$

185,325(181,016) $56,55536,315$(4.47) $(1.50)

1.12

0.90

0.18

0.47

0.44

0.13
0.02

1.46
(1.42) $

0.46
0.30

(1.45) $0.34
0.14(0.97)(0.52)
0.27
0.15(0.10)

0.60(0.58) $0.49(0.48) $

0.12
0.02

126,689$$

124,911(1.78) $0.43
0.17(1.18)

129,006

Nine Months Ended
Sept 30,
Sept 30,2015
2014

142,747

127,225$$

124,217(4.47) $1.12
0.47(2.88)(1.32)
0.79
0.39(0.14)

1.46(1.42) $

0.40
0.26

127,225

141,406(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 buy-back terms and subject to lease accounting.
For Non-GAAP purposes, an estimated incremental w arranty reserve of $12.7 million, $10.2 million and $3.6 million is included for the three months ended September 30, 2015 ,June30, 2015, and September 30, 2014, respectively. For the nine months ended September 30, 2015 and 2014, an estimated incremental w arranty reserve of $29.7 million and $9.1 million
is included, respectively. Additionally, stock-based compensation of $2.4 million, $2.3 million and $1.0 million is excluded for non-GAAP purposes for the three months ended
September 30, 2015, June 30, 2015, and September 30, 2014, respectively. For the nine months ended September 30, 2015 and 2014, stock-based compensation of $6.3 million and$2.4 million is excluded, respectively.

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

Sept 30,
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
June 30
2015$$

936,789
307,048
1,243,837$

231,496$

77,022
3,828
312,346

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)

$

$

$

$

$

954,976
242,148
1,197,124$

213,370$

61,9074,820
280,097

Nine Months Ended
Sept 30,
Sept 30,20152014

Sept 30,
2014$$

851,804
80,544
932,348$$

2,831,647
712,8713,544,518$

2,241,695
261,2122,502,907$

251,851$

16,564
5,383
273,798$

704,939$

619,974$

185,325
13,249903,513$56,555
12,401
688,930

178,791 $(24,153)
154,638 $

181,712 $(19,912)
161,800 $135,873(16,639)
119,234$

527,657 $(63,857)
463,800 $325,135(45,006)
280,129

236,367 $(28,052)
208,315 $

201,846 $(18,603)183,243 $

155,107(17,136)
137,971$

633,578 $(65,288)568,290 $

406,690(54,572)
352,118$$(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 buy-back terms and subject to leaseaccounting. For Non-GAAP purposes, an estimated incremental w arranty reserve of $12.7 million, $10.2 million and $3.6 million is included for the three months ended September
30, 2015 ,June 30, 2015, and September 30, 2014, respectively. For the nine months ended September 30, 2015 and 2014, an estimated incremental w arranty reserve of $29.7
million and $9.1 million is included, respectively. Additionally, stock-based compensation of $2.4 million, $2.3 million and $1.0 million is excluded for non-GAAP purposes for thethree months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively. For the nine months ended September 30, 2015 and 2014, stock-based
compensation of $6.3 million and $2.4 million is excluded, respectively.