Tesla 2014 Annual Report Download - page 5

Table of Contents
PART I
Overview
We design, develop, manufacture and sell high-performance fully electric vehicles and advanced electric vehicle powertrain components.
We have established our own network of sales and service centers and Supercharger stations globally thus creating a unique business model in
the automobile industry. We have operationally structured our business in a manner that we believe will enable us to rapidly develop and launch
advanced electric vehicles and technologies. We believe our vehicles, electric vehicle engineering expertise, and operational structure
differentiates us from incumbent automobile manufacturers.
We are currently producing and selling our second vehicle, the Model S sedan. Model S is a four door, five-passenger premium sedan that
offers exceptional performance, functionality and attractive styling. The Model S inherited many of the electric powertrain innovations we
introduced with our first vehicle, the Tesla Roadster which was launched in 2008 and was the first commercially produced and federally
compliant EV in the United States. We completed production of approximately 2,500 Tesla Roadsters in January 2012 and began deliveries of
Model S in June 2012. As of December 31, 2013, we have delivered over 25,000 Model S vehicles in North America and Europe. In 2014, we
expect to grow our presence in several international markets with deliveries to commence in China, Japan, the United Kingdom and Australia.
Since its launch, Model S has won several awards, including the prestigious Motor Trend Car of the Year for 2013. In November 2013, Model S
received 99 out of 100 in an owner survey conducted by Consumer Reports , the highest customer satisfaction score of any car in the world. Our
goal is to deliver the highest possible level of ownership satisfaction in every way.
We are adapting the platform architecture of Model S to develop our Model X crossover. This unique vehicle has been designed to fill the
niche between the roominess of a minivan and the style of an SUV, while having high performance features such as a dual motor all-wheel drive
system. We revealed a prototype of Model X in February 2012. We currently expect to have production design Model X prototypes on the road
by end of year and begin volume deliveries to customers in the spring of 2015. We have also publicly announced our intent to develop a third
generation electric vehicle, to which we refer as “Gen III”, which we intend to offer at a lower price point and produce at higher volumes than
our Model S in approximately three years.
We are also building a network of Superchargers in the United States and Europe to enable free and convenient long distance driving.
Superchargers allow Model S owners to replenish 50% of the battery pack in as little as 20 minutes. Supercharger stations are strategically
placed along well-travelled highways to allow Model S owners to enjoy long distance travel with convenient, minimal stops. As of February 19,
2014, we had 90 Supercharger stations open in North America and Europe. We plan to continue to open Supercharger stations in these regions as
well as in Asia during 2014 and expect to triple our Supercharger stations during 2014. We expect that Model X and our future cars will be able
to use this network.
We sell and service our electric vehicles through our company-owned sales and service network in North America, Europe and Asia. Our
intent is to offer a compelling customer experience while gathering rapid customer feedback and achieving operating efficiencies, better control
over the costs of inventory, warranty service, pricing, and the development of the Tesla brand. Our Tesla stores do not carry large vehicle
inventories and, as a result, do not require corresponding large floor spaces. We believe the benefits we receive from distribution ownership will
enable us to improve the speed of product development and improve the capital efficiency of our business. We believe that this approach
provides us with a competitive advantage as compared to incumbent automobile manufacturers.
In addition to developing our own vehicles, we provide services for the development of full electric powertrain systems and components,
and sell electric powertrain components to other automotive manufacturers. We have provided development services and powertrain components
to Daimler AG (Daimler) for its Smart fortwo, A-Class, and B-Class electric vehicles. We also have developed a full electric powertrain system
for
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ITEM 1.
BUSINESS