Tesla 2011 Annual Report Download - page 21

Table of Contents
development services to be provided by us over the expected term of our performance. In addition to these agreements, in July 2010, we sold
2,941,176 shares of our common stock to Toyota at our initial public offering price of $17.00 per share.
Panasonic
Panasonic is the supplier of cells for one of our current 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
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,
which was the average of the trading highs and lows of our common stock from October 25 to October 29, 2010.
Lotus Cars Limited
Lotus currently provides us with assembly and other manufacturing services. Although we complete the final assembly of our Tesla
Roadster, the initial body and chassis assembly processes occur at a Lotus facility in Hethel, England where our staff works closely with Lotus.
For vehicles destined for the United States, we ship the glider to our final assembly facility in Menlo Park, California. For European and Asian
deliveries, the full vehicle is assembled on-line at the Lotus facility and pre-delivery inspection occurs at a Tesla facility in Wymondham,
England. Pursuant to the supply agreement with Lotus, we are obligated to purchase a minimum of 2,400 vehicles or gliders over the term of the
agreement. If we are unable to meet this volume requirement, we are still responsible for payment to Lotus of the lesser of the sum of the actual
costs incurred and an agreed upon profit margin per vehicle up to the minimum volume requirement or £5,400,000. We currently intend to
manufacture gliders with Lotus for our current generation Tesla Roadster until January 2012. We intend to use these gliders in the manufacturing
of the Tesla Roadster to both fulfill orders placed in 2011 as well as new orders placed in 2012 until our supply of gliders is exhausted.
Accordingly, we intend to offer a limited number of Tesla Roadsters for sale in 2012. To the extent we wish to sell additional Tesla Roadsters
with the Lotus gliders beyond those we have contracted for, we will need to negotiate a new or amended supply agreement with Lotus. As of
December 31, 2010, we had purchased approximately 1,700 vehicles or gliders under this agreement.
Governmental Programs, Incentives and Regulations
United States Department of Energy Loans
On January 20, 2010, we entered into a loan facility 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 such loan facility as the DOE Loan Facility. Under the DOE Loan Facility, FFB has
made available to us two multi-draw term loan facilities in an aggregate principal amount of up to $465.0 million and the DOE has agreed to
reimburse FFB for any liabilities, losses, costs or expenses incurred by FFB with respect to the term loan facilities. Up to an aggregate principal
amount of $101.2 million will be made available under the first term loan facility to finance up to 80% of the costs eligible for funding under the
ATVM Program for the powertrain engineering and the build-out of a facility to design and manufacture lithium-ion battery packs, electric
motors and electric components (the Powertrain Facility). Up to an aggregate principal amount of $363.9 million will be made available under
the second term loan facility to finance up to 80% of the costs eligible for funding under the ATVM Program for the development of, and to
build out the manufacturing facility for, our Model S sedan (the Model S Facility). Under the DOE Loan Facility, we are responsible for the
remaining 20% of the costs eligible for funding under the ATVM Program for the projects as well as any cost overruns for each project. The
costs paid by us to date for the Powertrain Facility and the Model S Facility will be applied towards our obligation to contribute 20% of the
eligible project costs, and the DOE’s funding of future eligible costs will be adjusted to take this into account. Our remaining obligations for the
development and
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