Tesla 2016 Annual Report Download - page 33
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Please find page 33 of the 2016 Tesla annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.I TEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Thefollowingdiscussionandanalysisshouldbereadinconjunctionwithourconsolidatedfinancialstatementsandtherelatednotesthatappearelsewhere
inthisAnnualReportonForm10-K.
Overview and 2015 Highlights
Wedesign,develop,manufacture,andsellhigh-performancefullyelectricvehicles,andenergystorageproducts.Wearecurrentlyproducingandsellingour
ModelSsedanandourModelXsportutilityvehicle.SincetheintroductionofModelSinJune2012,wehaveenhancedourvehicleofferingswithall-wheeldrive
capability,autopilotoptions,andfreeover-the-airsoftwareupdates.WecommencedcustomerdeliveriesofourModelXinSeptember2015andarecurrently
rampingproduction.Wehavedeliveredover107,000vehiclesthroughDecember31,2015.WeintendtounveilModel3,alowerpricedsedandesignedforthe
massmarket,inthefirstquarterof2016andexpecttocommenceproductionanddeliveriesofthisvehicleinlate2017.
Inadditiontoourautomotiveproducts,werecentlyannouncedthenextgenerationofourenergystorageproducts,the7kWhand10kWhPowerwallfor
residentialapplicationsandthe100kWhPowerpackforcommercialandindustrialapplications.Webeganproductionanddeliveriesoftheseproducts,whichwe
willsellundertheTeslaEnergybrand,inthethirdquarterof2015.WetransitionedtheproductionoftheseproductsfromtheFremontFactorytotheGigafactory
duringQ42015.
Ourprimarysourceofrevenueisfromthesaleofourvehicles.DuringtheyearendedDecember31,2015,werecognizedtotalrevenuesof$4.05billion,an
increaseof$847.7millionovertotalrevenuesof$3.20billionfortheyearendedDecember31,2014,primarilydrivenbygrowthofModelSdeliveriesworldwide.
GrossmarginfortheyearendedDecember31,2015was22.8%,adecreasefrom27.6%fortheyearendedDecember31,2014.
WecontinuetoincreaseoursalesandservicefootprintworldwideandexpandourSupercharginganddestinationchargingnetworks.Withthecontinued
globalexpansionofourcustomersupportandSuperchargerinfrastructure,selling,generalandadministrativeexpenseswere$922.2millionfortheyearended
December31,2015,comparedto$603.7millionfortheyearendedDecember30,2014.
Management Opportunities, Challenges and Risks
VehicleOrders,ProductionandDeliveries
WearecurrentlyproducingandsellingboththeModelSsedanandtheModelXsportutilityvehicle.WehavebroadenedtheappealofModelSby
introducingnewvariantsthatimproverange,performance,andvalue.Forthosewantingamoreaffordablecar,weintroducedModelS70withastartingpriceof
only$70,000beforeincentivesandfuelsavings.Ournew90kWhbatterypackoptionenablesalmost300milesofrangeat65mph.Finally,forourperformance
enthusiasts,thenewLudicrousmodeoptionimproves0to60mphaccelerationto2.8seconds.TheintroductionofModelXnowprovidescustomerswitha
performanceelectricvehicleoptioninthesportutilitysegmentforthefirsttime.SimilartoModelS,weexpecttointroducenewversionsandfunctionalityforthe
ModelXovertime.Overall,weexpectthatdemandforourvehicleswillcontinuetoincreaseworldwideasmorepeopledriveandbecomeawareofourvehicles,
aswegrowourcustomersalesandserviceinfrastructure,andaswecontinuetodevelopourproducts.
Wehavebeenincreasingourproductionactivitiesandexpecttocontinuetodoso.InAugust2014,webeganasignificantproductioncapacityincreaseat
theTeslaFactorybytransitioningtoournewfinalassemblylineandupgradingourbodycenter.Theseproductioncapacityincreasescontinuedinto2015,with
furtherinvestmentsincludingbuildinganewpaintshop,anewbodyshopforModelX,andadditionalstampingcapacity.Weexpectourannualproductionwill
increaseconsiderablyeachyearforthenextseveralyears.Inaddition,scalingourdeliveriesmeansthatwewillhaveanincreasingnumberofcarsin-transit,
thereforeproductionwillexceeddeliveries.
During2015,weachievedsignificantefficienciesinModelSproductionandproduced14,037vehiclesinthefourthquarterof2015.Webeganproduction
ofModelXinthethirdquarterof2015.Weplantodeliver80,000to90,000newModelSandModelXvehiclesin2016.
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