Tesla 2011 Annual Report Download - page 31

Table of Contents
electronically. Our reports, proxy statements and other information are also made available, free of charge, on our investor relations website at
ir.teslamotors.com as soon as reasonably practicable after we electronically file such information with the SEC. The information posted on our
website is not incorporated into this Annual Report on Form 10-K.
You should carefully consider the risks described below together with the other information set forth in this Annual Report on Form 10-K,
which could materially affect our business, financial condition and future results. The risks described below are not the only risks facing our
company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our
business, financial condition and operating results.
Risks Related to Our Business and Industry
Our limited operating history makes evaluating our business and future prospects difficult, and may increase the risk of your investment.
You must consider the risks and difficulties we face as an early stage company with limited operating history. If we do not successfully
address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed. We were formed
in July 2003. We began delivering our first performance electric vehicle, the Tesla Roadster, in early 2008, and as of December 31, 2010, we had
only sold approximately 1,500 production vehicles to customers, almost all of which were sold in the United States and Europe. Our revenues for
the years ended December 31, 2010, 2009 and 2008, were $116.7 million, $111.9 million and $14.7 million, respectively. We have a very
limited operating history on which investors can base an evaluation of our business, operating results and prospects.
To date, we have derived our revenues principally from sales of the Tesla Roadster and related sales of zero emission vehicle credits, and
from electric powertrain development services and sales. We intend in the longer term to derive substantial revenues from the sales of our
planned Model S sedan electric vehicle which is at an early stage of development and which we do not expect to be in production until mid-
2012. We have no operating history with respect to the Model S electric vehicle and have not yet completed the component procurement process
for the Model S, which limits our ability to accurately forecast the cost of the vehicle. In addition, we only recently completed the purchase of a
manufacturing facility in Fremont, California to produce such vehicles, and we have not yet completely finalized the full vehicle design or our
engineering, manufacturing or component supply plans for the Model S. In addition, as of December 31, 2010 our powertrain sales, development
services revenue and powertrain research and development compensation have been almost entirely generated under arrangements with Daimler
AG (Daimler) for the development and sale of a battery pack and charger for Daimler’s Smart fortwo electric drive and for the development of a
battery pack for Daimler’s A-Class vehicle. Blackstar Investco LLC (Blackstar), an affiliate of Daimler, holds more than 5% of our outstanding
capital stock. In October 2010, Tesla and Toyota Motor Corporation, (Toyota) entered into an agreement to develop a validated electric
powertrain for the Toyota RAV4. Toyota also purchased 2,941,176 shares of our common stock in a private placement transaction that occurred
concurrently with the closing of our IPO. We have also announced our intention for Tesla to receive Toyota’s support with sourcing parts and
production and engineering expertise for the Model S. However, we have not entered into any agreements with Toyota for any such assistance,
including any purchase orders, and we may never do so. There are no assurances that we will be able to secure future business with Daimler,
Toyota, or any of their affiliates.
It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may
emerge and affect our business. For example, during the four quarters of 2010 and 2009, we recorded quarterly revenue of as much as
$45.5 million and as little as $18.6 million and quarterly operating losses of as much as $51.6 million and as little as $4.3 million. In the event
that actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be
materially affected.
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ITEM 1A.
RISK FACTORS