Tesla 2012 Annual Report Download - page 44

Table of Contents
the extent that such resources are devoted to the manufacture and production of Model S, we may have difficulty producing and delivering our
Model X vehicle in a timely manner. If we are not able to manufacture and deliver our Model X in a timely manner and consistent with our
budget and cost projections, our business, prospects, operating results and financial condition will be negatively impacted and our ability to grow
our business will be harmed.
The automotive market is highly competitive, and we may not be successful in competing in this industry. We currently face competition
from new and established competitors and expect to face competition from others in the future.
The worldwide automotive market, particularly for alternative fuel vehicles, is highly competitive today and we expect it will become even
more so in the future. Other automobile manufacturers entered the electric vehicle market at the end of 2010 and we expect additional
competitors to enter this market. With respect to our Tesla Roadster, we currently face strong competition from established automobile
manufacturers, including manufacturers of high-performance vehicles, such as Porsche and Ferrari. In addition, upon the launch of our Model S
sedan, we will face competition from existing and future automobile manufacturers in the extremely competitive premium sedan market,
including Audi, BMW, Lexus and Mercedes.
Many established and new automobile manufacturers have entered or have announced plans to enter the alternative fuel vehicle market. In
Japan, Mitsubishi has been selling its electric iMiEV since April 2010. In December 2010, Nissan introduced in the United States the Nissan
Leaf, a fully electric vehicle and Ford introduced the pure electric Ford Focus and plug-in hybrid Ford CMax in 2012. In addition, several
manufacturers, including General Motors, Toyota, Ford, and Honda, are each selling hybrid vehicles, and certain of these manufacturers have
announced plug-in versions of their hybrid vehicles. For example, in December 2010, General Motors introduced the Chevrolet Volt, which is a
plug-
in hybrid vehicle that operates purely on electric power for a limited number of miles, at which time an internal combustion engine engages
to recharge the battery pack.
Moreover, it has been reported that many of the large OEMs such as BMW, Daimler, Lexus, Audi, Renault and Volkswagen are also
developing electric vehicles. Several new start-ups have also announced plans to enter the market for performance electric vehicles, although
none of these have yet come to market. Finally, electric vehicles have already been brought to market in China and other foreign countries and
we expect a number of those manufacturers to enter the United States market as well.
Most of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources
than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of
their products. Virtually all of our competitors have more extensive customer bases and broader customer and industry relationships than we do.
In addition, almost all of these companies have longer operating histories and greater name recognition than we do. Our competitors may be in a
stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively.
Furthermore, certain large manufacturers offer financing and leasing options on their vehicles and also have the ability to market vehicles
at a substantial discount, provided that the vehicles are financed through their affiliated financing company. We only began offering a leasing
program in February 2010 which is currently only available to qualified Tesla Roadster customers in the United States and Canada. We do not
currently plan to offer any lease financing on Model S, but may do so at a later date. We have not in the past, and do not currently, offer
customary discounts on our vehicles. The lack of lease financing and the absence of customary vehicle discounts could put us at a competitive
disadvantage.
We expect competition in our industry to intensify in the future in light of increased demand for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide automotive industry. Factors affecting
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