Tesla 2014 Annual Report Download - page 17

Table of Contents
Panasonic
Panasonic is a supplier of battery cells for our battery packs. In January 2010, we announced that we were collaborating with Panasonic on
the development of next-generation electric vehicle cells based on the 18650 form factor and nickel-based lithium ion chemistry. In October
2011, we finalized a supply agreement for these battery cells. The agreement supplies us with battery cells to build more than 80,000 vehicles
over the next four years. In October 2013, we entered into an amendment to the supply agreement to, among other things, provide for the long-
term preferential prices and a minimum of 1.8 billion lithium-ion battery cells that we intend to purchase from Panasonic from 2014 through
2017.
In November 2010, we sold 1,418,573 shares of our common stock to an entity affiliated with Panasonic Corporation at a price of $21.15
per share.
Governmental Programs, Incentives and Regulations
Full Repayment of United States Department of Energy Loans
In May 2013, we paid $451.8 million to settle all outstanding loan amounts due under a loan facility we had entered into with the Federal
Financing Bank (FFB) and the United States Department of Energy (DOE), under the DOE’s Advanced Technology Vehicles Manufacturing
Loan Program, as set forth in Section 136 of the Energy Independence and Security Act of 2007 (ATVM Program). We refer to the loan facility
with the DOE as the DOE Loan Facility.
Under the DOE Loan Facility, the FFB had made available to us two multi-draw term loan facilities in an aggregate principal amount of
$465.0 million beginning on January 20, 2010. As of August 31, 2012, we had fully drawn down the aforementioned facilities. On May 22,
2013, we paid $451.8 million to fully retire our obligations under the DOE Loan Facility.
In connection with the closing of the DOE Loan Facility, we had also issued a warrant to the DOE to purchase up to 9,255,035 shares of
our Series E convertible preferred stock at an exercise price of $2.51 per share. Upon the completion of our initial public offering on July 2,
2010, this preferred stock warrant became a warrant to purchase up to 3,090,111 shares of common stock at an exercise price of $7.54 per share.
As a result of our repayment of all outstanding principal and interest under the DOE Loan Facility and the termination of the DOE Loan Facility
in May 2013, the DOE warrant expired. Additionally, we amortized all remaining unamortized debt issuance costs related to the DOE Loan
Facility.
California Alternative Energy and Advanced Transportation Financing Authority Tax Incentives
In December 2009, we finalized an arrangement with the California Alternative Energy and Advanced Transportation Financing Authority
(CAEATFA) that resulted in an exemption from California state sales and use taxes for $320 million of manufacturing equipment. As the
equipment purchased would otherwise have been subject to California state sales and use tax, we believe this incentive resulted in tax savings by
us of approximately $31 million over the period starting in December 2009 and ending in December 2013. The equipment purchases were used
only for three purposes: (i) to establish our production facility for Model S in California, (ii) to upgrade our Palo Alto powertrain production
facility, and (iii) to expand our current Tesla Roadster assembly operations at our Menlo Park facility. In January 2012, we finalized an
additional agreement with CAEATFA that will result in an exclusion from California state sales and use taxes for up to $292 million of
manufacturing equipment. To the extent all of this equipment is purchased and would otherwise be subject to California state sales or use tax, we
believe this incentive would result in tax savings by us of up to approximately $24 million over the period starting in December 2011 and ending
in December 2015. The equipment purchases may be used only for two purposes: (i) to develop Model X and its production capacity in
California and, (ii) to further upgrade our powertrain production facilities in California. In December 2013, we exhausted all funds from the
December 2009 approved exemption from California state sales and use taxes for
16