Tesla 2011 Annual Report Download - page 4

Table of Contents
PART I
We design, develop, manufacture and sell high-performance fully electric vehicles and advanced electric vehicle powertrain components.
We own our sales and service network and have operationally structured our business in a manner that we believe will enable us to rapidly
develop and launch advanced electric vehicles and technologies. We believe our vehicles, electric vehicle engineering expertise, and operational
structure differentiates us from incumbent automobile manufacturers.
We are the first company to commercially produce a federally-compliant electric vehicle, the Tesla Roadster, which achieves a market-
leading range on a single charge combined with attractive design, driving performance and zero tailpipe emissions. Our Tesla Roadster offers
impressive acceleration and performance without producing any tailpipe emissions. The Tesla Roadster’s proprietary electric vehicle powertrain
system is the foundation of our business and, with design enhancements, will also form the basis for our Model S sedan which is currently
scheduled to begin production in mid-2012. In addition, we provide services for the development of electric powertrain components and sell
electric powertrain components to other automotive manufacturers as evidenced by our development services and sales of battery packs and
chargers to Daimler AG (Daimler) for its Smart fortwo and A-Class electric vehicles, and our agreement to produce a validated electric
powertrain system for Toyota Motor Corporation (Toyota) for use in its RAV4 EV.
The commercial production of a highway capable, fully electric vehicle that meets consumers’ range and performance expectations
required substantial design, engineering, and integration work on almost every system of our Tesla Roadster. Our roots in Silicon Valley have
enabled us to recruit engineers with strong skills in electrical engineering, power electronics and software engineering. We have complemented
this talent base with automotive engineers with substantial expertise in vehicle engineering and manufacturing. Our ability to combine expertise
in electric powertrain and vehicle engineering provides a broad capability in electric vehicle design and systems integration. We believe these
capabilities, coupled with our focus solely on electric vehicle technology, will enable us to sustain the electric vehicle industry leadership we
created through the production of the Tesla Roadster.
We sell and service our Tesla Roadster though our company-
owned sales and service network. Our intent is to offer a compelling customer
experience while achieving operating efficiencies, better control costs of inventory, manage warranty service and pricing, maintain and
strengthen the Tesla brand, and obtain rapid customer feedback. Our Tesla stores do not carry large vehicle inventories and, as a result, do not
require corresponding large floor spaces. We believe the benefits we receive from distribution ownership, combined with our product design
based on modularity and common platforms, will enable us to improve the speed of product development and improve the capital efficiency of
our business. We believe that this approach provides us with a competitive advantage as compared to incumbent automobile manufacturers.
Our first vehicle, the Tesla Roadster, can accelerate from zero to 60 miles per hour in 3.9 seconds and has a maximum speed of
approximately 120 miles per hour. The Roadster Sport version can accelerate from zero to 60 miles per hour in 3.7 seconds. The Tesla Roadster
has a range of 245 miles on a single charge, as determined using the United States Environmental Protection Agency’s (EPA’s), combined two-
cycle city/highway test. Recently, the EPA announced its intention to develop and establish new energy efficiency testing methodologies for
electric vehicles, which we believe could result in a significant decrease to the advertised ranges of all electric vehicles, including ours. The
Tesla Roadster has a range that is almost double that of any other commercially released electric vehicle and reportedly set a new world distance
record of 313 miles on a single charge for a production electric car in a rally across Australia as part of the 2009 Global Green Challenge. The
current effective price of the base configuration of the Tesla Roadster is $101,500 in the United States, assuming and after giving effect to the
continuation of a currently available United States federal tax credit of $7,500 for the purchase of alternative fuel vehicles. The Tesla Roadster is
currently in production, and as of December 31, 2010, we had delivered over 1,500 Tesla Roadsters to customers in 31 countries, almost all of
which were sold in
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ITEM 1.
BUSINESS