Tesla 2011 Annual Report Download - page 37

Table of Contents
costs in constructing and building out our Model S and powertrain manufacturing facilities, each of which could potentially face cost overruns or
delays in construction. Additionally, in the future we may be required to incur substantial marketing costs and expenses to promote our vehicles,
including through the use of traditional media such as television, radio and print, even though our marketing expenses to date have been
relatively limited. If we are unable to keep our operating costs aligned with the level of revenues we generate, our operating results, business and
prospects will be harmed. Many of the factors that impact our operating costs are beyond our control. For example, the costs of our raw materials
and components, such as lithium-ion battery cells or carbon fiber body panels used in our vehicles, could increase due to shortages as global
demand for these products increases. Indeed, if the popularity of electric vehicles exceeds current expectations without significant expansion in
battery cell production capacity and advancements in battery cell technology, shortages could occur which would result in increased materials
costs to us.
Our future growth is dependent upon consumers’ willingness to adopt electric vehicles.
Our growth is highly dependent upon the adoption by consumers of, and we are subject to an elevated risk of any reduced demand for,
alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop as we expect or
develops more slowly than we expect, our business, prospects, financial condition and operating results will be harmed. The market for
alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional
competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and
behaviors. Factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include:
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•
perceptions about electric vehicle quality, safety (in particular with respect to lithium
-
ion battery packs), design, performance and
cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;
•
perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology,
including vehicle electronics and regenerative braking systems, such as the possible perception that Toyota’s recent vehicle recalls
may be attributable to these systems;
•
the limited range over which electric vehicles may be driven on a single battery charge;
•
the decline of an electric vehicle
’
s range resulting from deterioration over time in the battery
’
s ability to hold a charge;
• concerns about electric grid capacity and reliability, which could derail our past and present efforts to promote electric vehicles as a
practical solution to vehicles which require gasoline;
•
the availability of alternative fuel vehicles, including plug
-
in hybrid electric vehicles;
•
improvements in the fuel economy of the internal combustion engine;
•
the availability of service for electric vehicles;
•
consumers
’
desire and ability to purchase a luxury automobile or one that is perceived as exclusive;
•
the environmental consciousness of consumers;
•
volatility in the cost of oil and gasoline;
•
consumers
’
perceptions of the dependency of the United States on oil from unstable or hostile countries;
•
government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;
•
access to charging stations, standardization of electric vehicle charging systems and consumers
’
perceptions about convenience and
cost to charge an electric vehicle;