Tesla 2011 Annual Report Download - page 60

Table of Contents
Sales and Customer Experience, joined us in July 2010, and Eric Whitaker, our General Counsel, joined us in October 2010. This lack of long-
term experience working together may impact the team’s ability to collectively quickly and efficiently respond to problems and effectively
manage our business. Although we are taking steps to add senior management personnel that have significant automotive experience, many of
the members of our current senior management team have limited or no prior experience in the automobile or electric vehicle industries.
We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in building
our manufacturing facilities.
As an automobile manufacturer, we and our operations, both in the United States and abroad, are subject to national, state, provincial
and/or local environmental laws and regulations, including laws relating to the use, handling, storage, disposal and human exposure to hazardous
materials. Environmental and health and safety laws and regulations can be complex, and we expect that our business and operations will be
affected by future amendments to such laws or other new environmental and health and safety laws which may require us to change our
operations, potentially resulting in a material adverse effect on our business. These laws can give rise to liability for administrative oversight
costs, cleanup costs, property damage, bodily injury and fines and penalties. Capital and operating expenses needed to comply with
environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third party damages,
suspension of production or a cessation of our operations.
Contamination at properties formerly owned or operated by us, as well as at properties we will own and operate, and properties to which
hazardous substances were sent by us, may result in liability for us under environmental laws and regulations, including, but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which can impose liability for the full amount of
remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building
contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and
regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse
effect on our financial condition or operating results. We may face unexpected delays in obtaining the necessary permits and approvals required
by environmental laws in connection with our planned manufacturing facilities that could require significant time and financial resources and
delay our ability to operate these facilities, which would adversely impact our business prospects and operating results.
New United Motor Manufacturing, Inc. (NUMMI) has previously identified environmental conditions at the Fremont Site which affect soil
and groundwater, and is currently undertaking efforts to address these conditions. Although we have been advised by NUMMI that it has
documented and managed the environmental issues at the Fremont Site, we cannot currently determine with certainty the total potential costs to
remediate pre-existing contamination, and we may be exposed to material liability as a result of the existence of any environmental
contamination at the Fremont Site.
As the owner of the Fremont Site, we may be responsible under federal and state laws and regulations for the entire investigation and
remediation of any environmental contamination at the Fremont Site, whether it occurred before or after the date we purchase the property. We
have reached an agreement with NUMMI under which, over a ten year period, we will pay the first $15.0 million of any costs of any
governmentally-required remediation activities for contamination that existed prior to the closing of the purchase for any known or unknown
environmental conditions (Remediation Activities), and NUMMI has agreed to pay the next $15.0 million for such Remediation Activities. Our
agreement provides, in part, that NUMMI will pay up to the first $15.0 million on our behalf if such expenses are incurred in the first four years
of our agreement, subject to our reimbursement of such costs on the fourth anniversary date of the closing.
On the ten-year anniversary of the closing or whenever $30.0 million has been spent on the Remediation Activities, whichever comes first,
NUMMI
’s liability to us with respect to Remediation Activities ceases, and we
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