Tesla 2011 Annual Report Download - page 92

Table of Contents
During the first three quarters of 2009, we continued to fulfill reservations for the Tesla Roadster and we had made a significant effort to
increase our production capacity in order to accelerate deliveries to customers who had been on our waitlist for a significant amount of time. As
a result, a significant portion of the revenue recognized during the first three quarters of 2009 came from fulfilling reservations placed prior to
2009. Beginning with the fourth quarter of 2009, sales of the Tesla Roadster began more closely approximating the level of orders placed during
the quarter. Consequently, the comparison of revenue for the year ended December 31, 2010 versus the year ended December 31, 2009 may not
be meaningful. As such, vehicle, options and related sales for the year ended December 31, 2010 were more reflective of current demand as
compared to the prior year. Similarly, ZEV credit sales which are included in vehicle, options and related sales, were higher during the year
ended December 31, 2009 as the fulfillment of a significant number of reservations allowed us to sell a larger number of ZEV credits. The year
over year decrease in vehicle deliveries was partially offset by higher selling prices from an expanded offering of vehicle options to our
customers as well as higher average selling prices outside of the United States.
In February 2010, we began offering a leasing program to qualified customers in the United States for the Tesla Roadster. Through our
wholly owned subsidiary, Tesla Motors Leasing, Inc., qualifying customers are permitted 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 pre-determined 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 are recorded in vehicle, options and related sales within automotive sales revenue and for the year ended December 31, 2010, we
recognized $0.8 million. During the year ended December 31, 2010, approximately 14% of the vehicles delivered during the year were under
operating leases. As of December 31, 2010, we had deferred revenues of $1.1 million of down payments which will be recognized over the term
of the individual leases.
Powertrain component and related sales were comprised primarily of battery packs and chargers that we delivered to supply Daimler’s
Smart fortwo program. We have been selected by Daimler to supply it with up to 1,800 battery packs and chargers to support a trial of the Smart
fortwo electric drive in at least five European cities. We began delivering and recognizing revenue for these production battery packs and
chargers at the end of 2009.
Prior to 2010, most of our revenues had been generated through sales of our vehicles in the United States and we had no revenues from
sales outside of the United States prior to the third quarter of 2009. Our international sales commenced with the launch of the Tesla Roadster in
Europe in July 2009 and since then, we have recognized revenue from sales of the Tesla Roadster in additional countries including Canada,
Japan and Hong Kong. For the years ended December 31, 2010 and 2009, 55% and 19% of our revenue from vehicle, options and related sales,
respectively, were derived outside of the United States. All of our powertrain component and related sales were derived outside of the United
States. As we continue to expand into additional new markets, we expect our international automotive sales to increase in aggregate dollar
amounts but to remain relatively consistent as a percentage of total revenues.
While revenue related to servicing vehicles has been insignificant to date, we expect such revenues to increase in future periods as we sell
more vehicles and as vehicle warranties begin to expire.
Development Services
Beginning in the first quarter of 2010, we started entering into development services arrangements with the expectation that our
development services would constitute a viable revenue-
generating activity. We began recognizing development services revenue during the first
quarter of 2010 with the development and delivery of modular battery packs for Freightliner Custom Chassis Corporation, or Freightliner, an
affiliate of Daimler. These battery packs were to be used in electric delivery vans in a limited number of Freightliner’s customer trials. Prior to
2010, compensation that we had received from our first development arrangement with Daimler
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