Tesla 2012 Annual Report Download - page 52

Table of Contents
find that our reservation agreement or advertising does not comply with state laws, we may face exposure under those laws which may include
exposure under consumer protection statutes such as those that deal with unfair competition and false advertising. Moreover, reductions in our
cash as a result of redemptions or an inability to take reservation payments could also make it more difficult for us to obtain additional
financing. The prospect of reductions in cash, even if unrealized, may also make it more difficult to obtain financing.
Our plan to expand our network of Tesla stores will require significant cash investments and management resources and may not meet
our expectations with respect to additional sales of our electric vehicles. In addition, we may not be able to open stores in certain states.
Our plan to expand our network of Tesla stores will require significant cash investments and management resources and may not meet our
expectations with respect to additional sales of our electric vehicles. This planned global expansion of Tesla stores may not have the desired
effect of increasing sales and expanding our brand presence to the degree we are anticipating. Furthermore there can be no assurances that we
will be able to construct additional storefronts on the budget or timeline we have established. We will also need to ensure we are in compliance
with any regulatory requirements applicable to the sale of our vehicles in those jurisdictions, which could take considerable time and expense. If
we experience any delays in expanding our network of Tesla stores, this could lead to a decrease in sales of our vehicles and could negatively
impact our business, prospects, financial condition and operating results. We have opened Tesla stores in major metropolitan areas throughout
North America, Europe and Asia. We plan to open additional stores, with a goal of establishing approximately 50 stores globally within the next
several years in connection with the Model S rollout. However, we may not be able to expand our network at such rate and our planned
expansion of our network of Tesla stores will require significant cash investment and management resources, as well as efficiency in the
execution of establishing these storefronts and in hiring and training the necessary employees to effectively sell our vehicles.
Furthermore, certain states and foreign jurisdictions may have permit requirements, franchise dealer laws or similar laws or regulations that
may preclude or restrict our ability to open stores or sell vehicles out of such states and jurisdictions. Any such prohibition or restriction may
lead to decreased sales in such jurisdictions, which could harm our business, prospects and operating results.
We face risks associated with our international operations, including unfavorable regulatory, political, tax and labor conditions, which
could harm our business.
We face risks associated with our international operations, including possible unfavorable regulatory, political, tax and labor conditions,
which could harm our business. We currently have international operations and subsidiaries in Australia, Canada, Denmark, France, Germany,
Hong Kong, Italy, Japan, Monaco, Netherlands, Norway, Singapore, Switzerland and the United Kingdom that are subject to the legal, political,
regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of our growth strategy, we intend to
expand our sales, maintenance and repair services internationally. However, we have limited experience to date selling and servicing our
vehicles internationally and such expansion would require us to make significant expenditures, including the hiring of local employees and
establishing facilities, in advance of generating any revenue. We are subject to a number of risks associated with international business activities
that may increase our costs, impact our ability to sell our electric vehicles and require significant management attention. These risks include:
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conforming our vehicles to various international regulatory requirements where our vehicles are sold, or homologation;
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difficulty in staffing and managing foreign operations;
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difficulties attracting customers in new jurisdictions;
• foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against
taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United
States;