Tesla 2011 Annual Report Download - page 101

Table of Contents
Summary of Cash Flows
Cash Flows from Operating Activities
We continue to experience negative cash flows from operations as we expand our business and build our infrastructure both in the United
States and internationally. Since inception, we have incurred significant losses and have used approximately $330.6 million of cash in operations
through December 31, 2010. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of
our business in areas such as research and development and selling, general and administrative. Our operating cash flows are also affected by our
working capital needs to support growth and fluctuations in inventory, personnel related expenditures, accounts payable and other current assets
and liabilities.
Net cash used in operating activities was $127.8 million during the year ended December 31, 2010. The largest component of our cash
used during this period related to our net loss of $154.3 million, which included non-cash charges of $21.2 million related to stock-based
compensation expense, $10.6 million related to depreciation and amortization and $5.0 million related to the fair value change in our warrant
liabilities. Significant operating cash outflows were primarily related to $177.6 million of operating expenses, $86.0 million of cost of revenues,
a $20.1 million increase in inventory, an $8.4 million increase in operating lease vehicles, and a $5.0 million increase in prepaid expenses and
other current assets, partially offset by a $13.3 million increase in accrued liabilities and a $3.5 million increase in other long-term liabilities.
Inventory increased to meet our production requirements for the Tesla Roadster and powertrain component sales while the increase in prepaid
expenses and other current assets and accrued liabilities was due to both the growth of our business, as well as our increased manufacturing and
Model S development activities. Operating lease vehicles increased with the introduction of our leasing program in 2010. Other long-term
liabilities increased as a result of higher warranty liability from sales of the Tesla Roadster.
Significant operating cash inflows for the year ended December 31, 2010 were derived primarily from automotive sales of $97.1 million,
$19.7 million of development services revenue, a $4.8 million increase in deferred revenues and a $4.7 million increase in reservation payments,
partially offset by a $3.2 million increase in accounts receivable. 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. Upon execution of the agreement, we received a $5.0
million upfront payment for which revenue is being recognized over the expected term of our performance. Deferred revenues also increased
from our vehicle leasing activities as we are recognizing the lease down-
payments over the term of the operating leases. The increase in accounts
receivable was related primarily to powertrain component sales in relation to Daimler’s Smart fortwo program as well as $2.3 million receivable
from Toyota for the achievement of the first milestone under the Phase 1 contract services agreement. During the year ended December 31,
2010, we received $10.4 million of net new reservation payments for the Model S while reservation payments for the Tesla Roadster decreased
by $5.7 million.
Net cash used in operating activities was $80.8 million during the year ended December 31, 2009. The largest component of our cash used
during this year was the $55.7 million net loss, which included non-cash charges of $6.9 million related to depreciation and amortization,
$2.7 million related to interest on convertible notes and $1.4 million related to inventory write-downs, as well as a non-cash gain of $1.5 million
from the extinguishment of convertible notes and warrants. Significant operating cash outflows were primarily related to $102.4 million of cost
of revenues, $61.4 million of operating expenses, a $7.9 million increase in inventory and
100
2010
2009
2008
(in thousands)
Net cash used in operating activities
$
(127,817
)
$
(80,825
)
$
(52,412
)
Net cash used in investing activities
(180,297
)
(14,244
)
(11,590
)
Net cash provided by financing activities
338,045
155,419
56,068