Tesla 2012 Annual Report Download - page 75

Table of Contents
we finalized a long term supply contract with Panasonic Corporation for battery cells to be used in our products, which gives us increased
visibility into our variable costs.
Research and development expenses included expenses related to Model S alpha and beta prototype build, development of the Tesla
Factory, significant engineering, design and testing work being undertaken to support Model S development, design and engineering activities
related to Model X, and other research and development activities. Research and development expenses for the year ended December 31, 2011
were $209.0 million, compared to $93.0 million for the year ended December 31, 2010.
In addition to Model S engineering, we also experienced significant activity at the Tesla Factory, where we intend to produce our Model S,
Model X and future vehicles. Significant construction has taken place and detailed manufacturing readiness plans are being executed. Almost all
of our Model S vehicle manufacturing equipment has been installed at the Tesla Factory. As part of our testing and qualifying activities of our
manufacturing equipment, we are now assembling beta prototype vehicles at the Tesla Factory and expect to start building release candidate
vehicles in the first quarter of 2012. During this process, we are continuing to fine-tune our production processes and incorporate a higher
percentage of production-intent components into the cars. Once we complete these activities, the Tesla Factory will be fully commissioned for
production and ready for its intended use. As a result of investments being made in the Tesla Factory and related supplier tooling for Model S,
capital expenditures increased to $197.9 million for the year ended December 31, 2011, compared to $105.4 million for the year ended
December 31, 2010. Our capital expenditures in 2010 were comprised primarily of payments we had made towards the purchase of the Tesla
Factory from New United Motor Manufacturing, Inc. (NUMMI).
With the opening of our Santana Row store in 2011, we launched what we believe to be a new and unique retail experience designed to
engage and inform potential customers about electric vehicles in general, learn about Tesla’s innovations and configure their cars through hands-
on interactive screens. During the year, we further expanded our company-owned retail network with the opening of several more stores in the
United States utilizing the new store concept embodied by our Santana Row Tesla store. Some of these new stores will replace existing stores
which we plan to continue using as service locations. As a result of our activities to support the sales of the Tesla Roadster, the opening and
operation of new stores, higher store-related and marketing activities, as well as the growth of our business in general, we incurred higher
selling, general and administrative expenses of $104.1 million for the year ended December 31, 2011 when compared to expenses of $84.6
million for the year ended December 31, 2010.
In June 2011, we completed a follow-on offering of common stock in which a total of 6,095,000 shares of our common stock were sold,
and received cash proceeds of $172.7 million, net of underwriting discounts. Concurrent with this offering, we also sold 1,416,000 shares of
common stock to Elon Musk, our Chief Executive Officer and 637,475 shares of common stock to Blackstar Investco LLC, an affiliate of
Daimler and received total cash proceeds of $59.1 million in these private placements. No underwriting discounts or commissions were paid in
connection with these private placements.
Along with the proceeds from our public offerings and private placements, our continued draw-downs under the Department of Energy
Loan Facility (DOE Loan Facility) and other sources of cash including cash from the sales of the Tesla Roadster, development services to
Toyota, sales of powertrain components to Daimler, and cash received from refundable reservation payments for our Model S, provided the
liquidity to fund our Model S, Model X and powertrain development activities, as well as our capital investments in manufacturing
infrastructure. During the year ended December 31, 2011, we received $204.4 million in draw-downs under the DOE Loan Facility bringing our
total long-term debt under the facility to $276.3 million. As we continue to progress on our Model S and powertrain activities, we expect to
continue making draw-downs under the DOE Loan Facility.
As of December 31, 2011, we had $492.7 million in principal sources of liquidity available from our cash and cash equivalents, short-term
marketable securities, cash held in our dedicated DOE account and the remaining amounts available under the DOE Loan Facility. This includes
our cash and cash equivalents in the
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