Tesla Case Annual Report 2015 PDF

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TESLA MOTORS INC

FORM 10-K (Annual Report)

Filed 02/24/16 for the Period Ending 12/31/15 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year

3500 DEER CREEK RD PALO ALTO, CA 94070 650-681-5000 0001318605 TSLA 3711 - Motor Vehicles and Passenger Car Bodies Auto & Truck Manufacturers Consumer Cyclical 12/31

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 

FORM 10-K 

(Mark One)

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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR

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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-34756 

Tesla Motors, Inc. (Exact name of registrant as specified in its charter)  

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Delaware (State or other jurisdiction of incorporation or organization)

91-2197729 (I.R.S. Employer Identification No.)

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3500 Deer Creek Road Palo Alto, California (Address of principal executive offices)

  (650) 681-5000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:

94304 (Zip Code)

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Title of each class CommonStock,$0.001parvalue

Name of each exchange on which registered   TheNASDAQStockMarketLLC Securities registered pursuant to Section 12(g) of the Act: None 

Indicatebycheckmarkwhethertheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesxNo¨ IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13or15(d)oftheAct.Yes¨Nox Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934(“ExchangeAct”)duringthe preceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesxNo ¨ IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandposted pursuanttoRule405ofRegulationS-Tduringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).YesxNo¨ IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnotcontainedherein,andwillnotbecontained,tothebestof registrant’sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.¨ Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfilerorasmallerreportingcompany.Seethedefinitionsof“largeaccelerated filer,”“acceleratedfiler,”and“smallerreportingcompany”inRule12b-2oftheExchangeAct: 

Largeacceleratedfiler  x  Acceleratedfiler  ¨ Non-acceleratedfiler  ¨(Donotcheckifasmallerreportingcompany)  Smallerreportingcompany  ¨ Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).Yes¨Nox Theaggregatemarketvalueofvotingstockheldbynon-affiliatesoftheregistrant,asofJune30,2015,thelastdayofregistrant’smostrecentlycompletedsecondfiscalquarter,was $26,340,519,416(basedontheclosingpriceforsharesoftheregistrant’sCommonStockasreportedbytheNASDAQGlobalSelectMarketonJune30,2015).SharesofCommonStockheld eachexecutiveofficer,director,andholderof5%ormoreoftheoutstandingCommonStockhavebeenexcludedinthatsuchpersonsmaybedeemedtobeaffiliates.Thisdeterminationof affiliatestatusisnotnecessarilyaconclusivedeterminationforotherpurposes. AsofJanuary31,2016,therewere132,056,338sharesoftheregistrant’sCommonStockoutstanding. DOCUMENTS INCORPORATED BY REFERENCE Portionsoftheregistrant’sProxyStatementforthe2015AnnualMeetingofStockholdersareincorporatedhereinbyreferenceinPartIIIofthisAnnualReportonForm10-Ktotheextent statedherein.SuchproxystatementwillbefiledwiththeSecuritiesandExchangeCommissionwithin120daysoftheregistrant’sfiscalyearendedDecember31,2015. 

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TESLA MOTORS, INC. ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015 INDEX  

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PART I. 

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Item1. Item1A. Item1B. Item2. Item3. Item4.

Business RiskFactors UnresolvedStaffComments Properties LegalProceedings MineSafetyDisclosures

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4 13 27 28 28 28

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PART II.

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Item5. Item6. Item7. Item7A. Item8. Item9. Item9A. Item9B.

MarketforRegistrant’sCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities SelectedFinancialData Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations QuantitativeandQualitativeDisclosuresAboutMarketRisk FinancialStatementsandSupplementaryData ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure ControlsandProcedures OtherInformation

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2 31 3 4 45 7 74 74

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PART III.

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Item10. Item11. Item12. Item13. Item14.

Directors,ExecutiveOfficersandCorporateGovernance ExecutiveCompensation SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters CertainRelationshipsandRelatedTransactions,andDirectorIndependence PrincipalAccountantFeesandServices

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PART IV. 

Item15.

ExhibitsandFinancialStatementSchedules

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Signatures  

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Forward-Looking Statements The discussions in this Annual Report on Form 10-K contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial positio future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in ou forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do no assume any obligation to update any forward-looking statements.  

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P ART I I TEM 1.

BUSINESS

Overview Wedesign,develop,manufactureandsellhigh-performancefullyelectricvehiclesandenergystorageproducts.Wehaveestablishedourownnetworkof vehiclesalesandservicecentersandSuperchargerstationsgloballytoacceleratethewidespreadadoptionofelectricvehicles.Ourvehicles,electricvehicle engineeringexpertise,andbusinessmodeldifferentiatesusfromincumbentautomobilemanufacturers. Wecurrentlyproduceandselltwofullyelectricvehicles,theModelSsedanandtheModelXsportutilityvehicle(SUV).Bothvehiclesofferexceptional performance,functionalityandattractivestyling.WecommenceddeliveriesofModelSinJune2012andasofDecember31,2015wehavedeliveredover107,0 newModelSvehiclesworldwide.WehavecontinuedtoimproveModelSbyintroducingperformance,all-wheeldrivedualmotor,andautopilotoptions,aswel asfreeover-the-airsoftwareupdates. WecommencedcustomerdeliveriesofModelXinthethirdquarterof2015.Thisuniquevehicleoffersexceptionalsafety,seatingforsevenpeople,allwheeldrive,andourautopilotfunctionality.WearecurrentlyrampingproductionanddeliveriesofModelXintheUnitedStatesandplantoofferitinEuropean Asiain2016. AftertheModelX,ourgoalistointroducetheModel3,alowerpricedsedandesignedforthemassmarket.WeintendtounveilModel3inthefirstquart of2016andstartproductionanddeliveriesinlate2017. Thecommercialproductionoffullyelectricvehiclesthatmeetsconsumers’rangeandperformanceexpectationsrequiressubstantialdesign,engineering, andintegrationworkonalmosteverysystemofourvehicles.Ourdesignandvehicleengineeringcapabilities,combinedwiththetechnicaladvancementsofour powertrainsystem,haveenabledustodesignanddevelopelectricvehiclesthatwebelieveovercomethedesign,styling,andperformanceissuesthathave historicallylimitedbroadconsumeradoptionofelectricvehicles.Asaresult,ourcustomersenjoyseveralbenefits,including: 

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LongRangeandRechargingFlexibility.Ourvehiclesofferrangesthatsignificantlyexceedthoseofanyothercommerciallyavailableelectric vehicle.Inaddition,ourvehiclesincorporateourproprietaryon-boardchargingsystem,permittingrechargingfromalmostanyavailableelectrical outlet.OurvehiclesalsoofferfastchargingcapabilityfromourSuperchargernetwork.Webelievethelong-rangeandchargingflexibilityofour vehicleswillhelpreduceconsumeranxietyoverrange,alleviatetheneedforexpensive,large-scalecharginginfrastructure,anddifferentiateour vehiclesascomparedtothoseofourcompetitors.

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High-PerformanceWithoutCompromisedDesignorFunctionality.Ourvehiclesdeliverunparalleleddrivingexperienceswithinstantaneousand sustainedaccelerationthroughanextendedrangeofspeed.Inaddition,ourvehiclesprovidebestinclassstorageinthetrunkandhoodwhileoffer designandperformancecomparableto,orbetterthan,otherpremiumvehicles.

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EnergyEfficiencyandCostofOwnership.Ourvehiclesofferconsumersanattractivecostofownershipwhencomparedtosimilarinternal combustionengineorhybridelectricvehicles.Usingonlyanelectricpowertrainenablesustocreatemoreenergyefficientvehiclesthatare mechanicallysimplerthancurrentlyavailablehybridorinternalcombustionenginevehicles.Thecosttofuelourvehiclesislesscomparedto internalcombustionvehicles.Wealsoexpectourelectricvehicleswillhavelowerrelativemaintenancecoststhanhybrid,plug-inhybrid,orintern combustionenginevehiclesduetofewermovingpartsandtheabsenceofcertaincomponents,includingoil,oilfilters,sparkplugsandengine valves.Additionally,governmentincentivesthatarecurrentlyavailablecanreducethecostofownershipevenfurther.

Wesellourvehiclesthroughourownsalesandservicenetworkwhichwearecontinuingtogrowglobally.Webelievethebenefitswereceivefrom distributionownershipwillenableustoimprovetheoverallcustomerexperience,thespeedofproductdevelopmentandthecapitalefficiencyofourbusiness.W arealsocontinuingtobuildournetworkofSuperchargersintheUnitedStates,EuropeandAsiatoprovidefastchargingthatenablesconvenientlongdistance travel. Inadditiontodevelopingourownvehicles,wesellenergystorageproducts.Werecentlyannouncedthenextgenerationofourenergystorageproducts,t 7kWhand10kWhPowerwallforresidentialapplicationsandthe100kWhPowerpackforcommercialandindustrialapplications.Webeganproductionand deliveriesoftheseproducts,whichwemarketundertheTeslaEnergybrand,inthethirdquarterof2015. WemanufactureourproductsprimarilyatourfacilitiesinFremont,California,Lathrop,California,Tilburg,NetherlandsandatourGigafactorynearRen Nevada.WearecurrentlyusingbatterypacksmanufacturedattheGigafactoryforourenergystorageproducts,andwilldosoforourvehiclesinthefuture. Our Vehicles and Products Wecurrentlydesign,develop,manufactureandsellfullyelectricvehiclesandenergystorageproducts. 4

Model S ModelSisafullyelectric,four-door,five-adultpassengersedanthatofferscompellingrangeandperformancewithzerotailpipeemissions.ModelSoffe arangeonasinglechargeofupto288milesasdeterminedusingtheUnitedStatesEPA’scombinedtwo-cyclecity/highwaytest.Weofferperformanceandallwheeldrivedualmotorsystemoptions.TheperformanceversionofourAll-WheelDriveDualMotorModelSacceleratesfrom0to60milesperhourin2.8 secondswiththeLudicrousspeedupgrade. ModelSoffersauniquecombinationoffunctionality,convenience,safetyandstylingwithoutcompromisingperformanceandenergyefficiency.Withth batterypackinthefloorofthevehicleandthemotorandgearboxinlinewiththerearaxle,oursinglemotorModelSprovidesbestinclassstoragespace.Mode isalsoavailablewithpremiumluxuryfeatures,includinga17inchtouchscreendriverinterface,ouradvancedautopilotsystemwithbothactivesafetyand conveniencefeatures,andover-the-airsoftwareupdates.Webelievethecombinationofperformance,safety,styling,convenienceandenergyefficiencyofMod Spositionsitasacompellingalternativetoothervehiclesintheluxuryandperformancesegments. Model X ModelXisasportutilityvehiclethatoffersexceptionalfunctionalitywithhighperformancefeaturessuchasourfullyelectric,all-wheeldrivedualmoto systemandourautopilotsystem.ModelXprovidesupto257milesofrangeonasinglecharge,andcanacceleratefrom0to60asquicklyas3.2secondswithth Ludicrousspeedupgrade.ModelXseatssevenadultsandincorporatesauniquefalconwingdoorsystemforsuperioraccesstothesecondandthirdseatingrows AlthoughtheNationalHighwayTrafficSafetyAdministrationhasnotyetconductedcrashtestingonModelX,basedonourinternaltesting,weexpectModelX receivethehighestsafetyratingineverycategory.WebegancustomerdeliveriesofModelXinthethirdquarterof2015intheUnitedStates.Afteritsinitial launchintheUnitedStates,ModelXwillbesoldinallthemarketswhereModelSisavailableincludinginAsiaandEurope. Model 3 Wehavealsopubliclyannouncedourintenttodevelopathirdgenerationelectricvehicle,calledModel3,tobeproducedattheTeslaFactory.Weintend offerthisvehicleatalowerpricepointandexpecttoproduceitathighervolumesthanourModelSorModelX.WeplantounveilModel3inMarchof2016an expecttostartproductionanddeliveriesofthisvehicleinlate2017. Energy Storage Applications Usingtheenergymanagementtechnologiesandmanufacturingprocessesdevelopedforourvehiclepowertrainsystems,wehavedevelopedenergystorag productsforuseinhomes,commercialsitesandutilities.Theapplicationsforthesebatterysystemsincludebackuppower,peakdemandreduction,demand responseandwholesaleelectricmarketservices.Webegansellingourhomesystemsin2013andourcommercialandutilitysystemsin2014.Werecently announcedthenextgenerationofourenergystorageproductsundertheTeslaEnergybrand. TheTeslaEnergyproductportfoliowillincludeenergystorageproductswithawiderangeofapplications,fromuseinsinglehomestouseinlargerutilit scaleprojects.TeslaPowerwallisarechargeablelithium-ionbatterydesignedtostoreenergyataresidentialandsmallcommerciallevelforloadshifting,backu powerandself-consumptionofsolarpowergeneration.Powerwallisavailableinstoragesizesof10kWh,optimizedforbackupapplications,or7kWh,optimized fordailyuseapplications.Inaddition,weoffera100kWhPowerpackforpeakshaving,loadshiftinganddemandresponseforcommercialcustomersandfor renewablefirmingandavarietyofgridservicesforutilities.Forutilityscalesystems,100kWhbatteryblockscanbegroupedtogethertoofferinstallationofove 10MWh.WebeganproductionofourTeslaEnergyproductsattheGigafactoryinthefourthquarterof2015. Technology Ourcorecompetenciesarepowertrainengineering,vehicleengineering,innovativemanufacturingandenergystorage.Ourcoreintellectualpropertyresi notonlywithinourelectricpowertrain,butalsowithinourabilitytodesignavehiclethatutilizestheuniqueadvantagesofanelectricpowertrainandthelatest advancementsinconsumertechnologies.Ourpowertrainconsistsofourbatterypack,powerelectronics,motor,gearboxandcontrolsoftware.Wedesignedour powertrainoriginallyforourfirstvehicle,theTeslaRoadster,andcommercializedimprovementsintovehiclesmanufacturedbyDaimlerandToyota,and ultimatelyintotheModelSandModelX.Today,weofferseveralpowertrainvariantsfortheModelSandModelXthatincorporateyearsofresearchand developmentperformedsincetheoriginaldesign.Inaddition,wehavedesignedourvehiclestoincorporatethelatestadvancesinconsumertechnologies,sucha mobilecomputing,sensing,displays,andconnectivity.FurtherevolutionofourtechnologycontinuesforModel3,whichweplantoofferatsignificantlylower price.Inaddition,advancementsoriginallycommercializedinourvehiclesarebeingleveragedforourstorageapplications. 5

Battery Pack Wedesignourbatterypackstoachievehighenergydensityatalowcostwhilealsomaintainingsafety,reliabilityandlonglife.Ourproprietarytechnolog includessystemsforhighdensityenergystorage,cooling,safety,chargebalancing,structuraldurability,andelectronicsmanagement.Wehavealsopioneered advancedmanufacturingtechniquestomanufacturelargevolumesofbatterypackswithhighqualityandlowcosts. Wehavesignificantexpertiseinthesafetyandmanagementsystemsneededtouselithium-ioncellsintheautomotiveenvironment,andhaveactively workedwithlithium-ioncellsupplierstofurtheroptimizecelldesignstoincreaseoverallperformance.Theseadvancementshaveenabledustoimprovecostand performanceofourbatteriesovertime.Forexample,in2015alone,weupgradedthebatteryof...