Tesla 2011 Annual Report Download - page 10

Table of Contents
vehicles with different range options. Our design of the Model S, however, is not complete and we may make changes to the design of the
Model S, including changes that may make it more difficult to use the Model S platform for future vehicles.
In 2011, we publicly announced the Tesla Model X as the first vehicle we intend to develop by leveraging the Model S platform. We are
designing the Model X as a crossover vehicle. We intend to develop a prototype of the Model X by the end of 2011.
We have also publicly announced our intent to develop a third generation electric vehicle to be produced at our planned manufacturing
facility in Fremont, California. We intend to offer this vehicle at a lower price point and expect to produce it at higher volumes than our planned
Model S. We expect that this vehicle will be produced a few years after the introduction of the Model X.
Powertrain Development and Sales
In addition to our own vehicles, we also design, develop, manufacture and sell advanced electric vehicle powertrain components.
In May 2009, we entered into a development agreement with Daimler under which we performed specified research and development
services for the development of a battery pack and charger for Daimler’s Smart fortwo electric drive. All development work related to the
development agreement had been completed as of December 31, 2009. We have been selected by Daimler to supply it with up to 1,800 battery
packs and chargers to support a trial of the Smart fortwo electric drive in at least five European cities. We began shipping the first of these
battery packs and chargers in November 2009 and started to recognize revenue for these sales in the fourth quarter of 2009.
In the first quarter of 2010, Daimler engaged us to assist with the development and production of a battery pack and charger for a pilot fleet
of its A-Class electric vehicles to be introduced in Europe during 2011. A formal agreement for this arrangement was entered into with Daimler
in May 2010. In October 2010, we completed the development of the A-Class battery pack and charger and began shipping production
components for a demonstration fleet in February 2011.
In the first quarter of 2010, we completed the development and sale of modular battery packs for electric delivery vans for Freightliner
Custom Chassis Corporation (Freightliner), an affiliate of Daimler. Freightliner plans to use these electric vans in a limited number of customer
trials.
In May 2010, we and Toyota announced our intention to cooperate on the development of electric vehicles, and for us to receive Toyota’s
support with sourcing parts and production and engineering expertise for the Model S. In July 2010, we entered into an early phase agreement to
develop an electric powertrain for the Toyota RAV4. With an aim by Toyota to market the electric vehicle in the United States in 2012,
prototypes would be made by combining the Toyota RAV4 model with a Tesla electric powertrain. We began developing and delivering
prototypes to Toyota for evaluation in September 2010.
In connection with the Toyota RAV4 program, in October 2010, we entered into a Phase 1 contract services agreement with Toyota for the
development of a validated powertrain system, including a battery, power electronics module, motor, gearbox and associated software, which
will be integrated into an electric vehicle version of the Toyota RAV4. Pursuant to our agreements, Toyota will pay us up to $69 million for the
anticipated development services to be provided by us over the expected term of our performance.
We are continuing to develop our electric powertrain component and systems business and have secured a $101.2 million loan under our
DOE Loan Facility for the expansion of our engineering and production capability for these activities in our Palo Alto facility. This facility,
which also serves as our corporate headquarters, also
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