Tesla 2011 Annual Report Download - page 78

Table of Contents
The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes that
appear elsewhere in this Annual Report on Form 10-K. These discussions contain forward-looking statements reflecting our current
expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements concerning our
strategy, future operations, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our
technologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words
“anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “would” and similar expressions are
intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not
actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on
our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the
forward
-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results
to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk
Factors
” in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not assume any
obligation to update any forward-looking statements.
Overview and 2010 Highlights
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 market and sell our vehicles directly to consumers via the phone and internet, in-person at our
corporate events and through our network of Tesla stores. We were incorporated in Delaware in 2003, opened our first store in Los Angeles,
California in May 2008, and introduced our first vehicle, the Tesla Roadster, in early 2008. In July 2009, we introduced a new Roadster model,
the Tesla Roadster 2, and its higher performance option package Roadster Sport, as well as launched the Tesla Roadster in Europe. On July 1,
2010, we introduced the Roadster 2.5, with new styling and an upgraded interior.
During the year ended December 31, 2010, we experienced solid performance from sales of the Tesla Roadster, especially considering that
the automotive sales recognized in 2009 were driven primarily from the fulfillment of a significant reservations list that had accumulated prior to
and through 2009. Our automotive sales revenues in 2010 were primarily driven by retail store expansion globally and higher sales and
marketing activities, higher average selling prices from an expanded offering of vehicle options to our customers, as well as higher average
selling prices outside of the United States. During 2010, we continued to expand our presence in Europe and introduced the Tesla Roadster in
Canada and in Asia. Our network of stores increased to 16 stores by the end of 2010 and as of December 31, 2010, we had sold over 1,500 Tesla
Roadsters to customers in 31 countries, with sales volume being concentrated in the United States and in Europe.
In February 2010, we began offering a leasing program to qualified customers in the United States for the Tesla Roadster and during the
latter half of 2010, we began offering a leasing alternative in Canada. Under our program, we permit qualifying customers to lease the Tesla
Roadster for 36 months, after which time they have the option of either returning the vehicle to us or purchasing it for a predetermined residual
value. We account for these leasing transactions as operating leases and accordingly, we recognize leasing revenues on a straight-line basis over
the term of the individual leases. Lease revenues for the year ended December 31, 2010 were $0.8 million and are recorded as part of our
automotive sales revenue. Approximately 14% of the Tesla Roadsters delivered during 2010 were under operating leases.
We continued to expand our electric powertrain component and development activities with other automotive manufacturers. By the end of
2009, we had completed the development of a battery pack and charger for Daimler AG’s (Daimler) Smart fortwo electric drive and were
selected by Daimler to supply it initially with
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ITEM 7.
MANAGEMENT
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S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS