Tesla 2014 Annual Report Download - page 43

Table of Contents
Additionally, as we have expanded into new international markets, we have faced challenges with ensuring that our charging equipment
works successfully with the charging infrastructure in such markets. For example, we have encountered such challenges in Norway. These types
of issues could also arise as we enter into other new markets, such as China. If customers experience problems with the way our charging
equipment works with the local charging infrastructure, or we are unable to adapt our equipment to resolve such problems, then the viability and
acceptance of our vehicles in such markets could be materially and adversely affected.
If we fail to successfully address these risks, our business, prospects, operating results and financial condition could be materially harmed.
Foreign currency movements relative to the U.S. dollar could harm our financial results.
Our revenues and costs denominated in foreign currencies are not completely matched. A portion of our costs and expenses have been and
we anticipate will continue to be denominated in foreign currencies, including the Japanese yen, the euro, the Chinese yuan and the British
pound. If we do not have fully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these
currencies (especially against the Japanese yen), our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase
and our margins will suffer. As a result, our operating results could be adversely affected. As we dramatically increase Model S deliveries
overseas during 2014 and beyond, as well as begin delivering powertrain units to Daimler, we may have greater revenues than costs denominated
in other currencies, in which case a strengthening of the dollar would tend to reduce our revenues as measured in U.S. dollars.
Developments in alternative technologies or improvements in the internal combustion engine may materially adversely affect the demand
for our electric vehicles.
Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or
improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we
do not currently anticipate. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing
technologies, could materially delay our development and introduction of new and enhanced electric vehicles, which could result in the loss of
competitiveness of our vehicles, decreased revenue and a loss of market share to competitors.
The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business,
financial condition, operating results and prospects.
Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the
reduced need for such subsidies and incentives due to the customer base of our electric vehicles, fiscal tightening or other reasons may result in
the diminished competitiveness of the alternative fuel vehicle industry generally or our electric vehicles in particular. This could materially and
adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial condition and operating results.
Our growth depends in part on the availability and amounts of government subsidies and economic incentives for alternative fuel vehicles
generally and performance electric vehicles specifically. For example, we
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foreign labor laws, regulations and restrictions;
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preferences of foreign nations for domestically produced vehicles;
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changes in diplomatic and trade relationships;
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political instability, natural disasters, war or events of terrorism; and
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the strength of international economies.