Tesla 2012 Annual Report Download - page 5

Table of Contents
PART I
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 have operationally structured our business in a manner that we believe will enable us to rapidly
develop and launch advanced electric vehicles and technologies. We believe our vehicles, electric vehicle engineering expertise, and operational
structure differentiates us from incumbent automobile manufacturers.
We are the first company to commercially produce a federally-compliant electric vehicle, the Tesla Roadster, which achieves a market-
leading range on a single charge combined with attractive design, driving performance and zero tailpipe emissions. Our Tesla Roadster offers
impressive acceleration and performance without producing any tailpipe emissions. The Tesla Roadster’s proprietary electric vehicle powertrain
system is the foundation of our business and, with design enhancements, will also form the basis for our Model S sedan, our Model X crossover,
as well as future vehicles.
Model S is in an advanced stage of development and is currently scheduled to commence customer deliveries by July 2012. We expect that
Model S will be manufactured with an adaptable platform architecture upon which other future vehicles, including our Model X crossover, will
be based. We revealed a prototype of the Model X crossover in February 2012. We plan to start Model X production in late 2013 and ramp up to
significant customer deliveries in early 2014. This unique vehicle has been designed to fill the niche between the roominess of a minivan and the
style of an SUV, while having high performance features such as a dual motor all-wheel drive system.
In addition to developing our own vehicles, we provide services for the development of electric powertrain components and sell electric
powertrain components to other automotive manufacturers. We have provided development services and powertrain components to Daimler AG
(Daimler) for its Smart fortwo and A-Class electric vehicles. We recently announced the receipt of an initial purchase order for the development
of a full powertrain system for an additional Mercedes Benz vehicle from Daimler. We also have almost completed a development services
program to produce a full electric powertrain system for Toyota Motor Corporation (Toyota) for use in its RAV4 EV. We anticipate beginning to
ship these systems to Toyota during the first half of 2012 under our supply and services agreement.
The commercial production of a highway capable, fully electric vehicle that meets consumers’ range and performance expectations
requires substantial design, engineering, and integration work on almost every system of our vehicles. Our roots in Silicon Valley have enabled
us to recruit engineers with strong skills in electrical engineering, power electronics and software engineering. We have complemented this talent
base with automotive engineers with substantial expertise in vehicle engineering and manufacturing. Our ability to combine expertise in electric
powertrain and vehicle engineering provides a broad capability in electric vehicle design and systems integration. We believe these capabilities,
coupled with our focus solely on electric vehicle technology as well as our strong inhouse engineering and manufacturing capacity, will enable
us to sustain the electric vehicle industry leadership we created through the production of the Tesla Roadster.
We sell and service our Tesla Roadster though our company-
owned sales and service network in the North America, Europe and Asia. Our
intent is to offer a compelling customer experience while gathering rapid customer feedback and achieving operating efficiencies, better control
over the costs of inventory, warranty service, pricing, and the development of the Tesla brand. Our Tesla stores do not carry large vehicle
inventories and, as a result, do not require corresponding large floor spaces. We believe the benefits we receive from distribution ownership,
combined with our product design based on modularity and common platforms, will enable us to improve the speed of product development and
improve the capital efficiency of our business. We believe that this approach provides us with a competitive advantage as compared to
incumbent automobile manufacturers.
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ITEM 1.
BUSINESS