Tesla 2012 Annual Report Download - page 25

Table of Contents
received from residents in the state of Washington must be placed in a segregated account until delivery of the vehicle, which account must be
unencumbered by any liens from creditors of the dealer and may not be used by the dealer. Consequently, we established a segregated account
for reservation payments in the state of Washington in January 2010. There can be no assurance that other state or foreign jurisdictions will not
require similar segregation of reservation payment received from customers. Our inability to access these funds for working capital purposes
could harm our liquidity.
Furthermore, while we have performed an analysis of the principal laws in the European Union relating to our distribution model and
believe we comply with such laws, we have not performed a complete analysis in all foreign jurisdictions in which we may sell vehicles.
Accordingly, there may be laws in jurisdictions we have not yet entered or laws we are unaware of in jurisdictions we have entered that may
restrict our vehicle reservation practices or other business practices. Even for those jurisdictions we have analyzed, the laws in this area can be
complex, difficult to interpret and may change over time.
In addition to licensing laws, specific laws and regulations in each of the states (and their interpretation by regulators) may limit or
determine how we sell, market, advertise, and otherwise solicit sales, take orders, take reservations and reservation payments, deliver, and
service vehicles for consumers and engage in other activities in that state. While we have performed an analysis of laws in certain jurisdictions in
which we have Tesla stores, we have not performed a complete analysis in all jurisdictions in which we may sell vehicles. Accordingly, there
may be laws in jurisdictions we have not yet entered that may restrict our vehicle reservation practices or other business practices.
Competition
Competition in the automotive industry is intense and evolving. We believe the impact of new regulatory requirements for occupant safety
and vehicle emissions, technological advances in powertrain and consumer electronics components, and shifting customer needs and
expectations are causing the industry to evolve in the direction of electric-based vehicles. We believe the primary competitive factors in our
markets include but are not limited to:
We believe that our vehicles compete in the market both based on their traditional segment classification as well as based on their
propulsion technology. Within the electric-based vehicle segment, there are three primary means of powertrain electrification which will
differentiate various competitors in this market:
24
•
technological innovation;
•
product quality and safety;
•
service options;
•
product performance;
•
design and styling;
•
product price; and
•
manufacturing efficiency.
•
Electric Vehicles
are vehicles powered completely by a single on-board energy storage system (battery pack or fuel cell) which is
refueled directly from an electricity source. Both the Tesla Roadster and Model S are examples of electric vehicles.
•
Plug
-
in Hybrid Vehicles
are vehicles powered by both a battery pack with an electric motor and an internal combustion engine which
can be refueled both with traditional petroleum fuels for the engine and electricity for the battery pack. The internal combustion
engine can either work in parallel with the