Tesla 2016 Annual Report Download - page 5

P ART I
I TEM 1. BUSINESS
Overview
Wedesign,develop,manufactureandsellhigh-performancefullyelectricvehiclesandenergystorageproducts.Wehaveestablishedourownnetworkof
vehiclesalesandservicecentersandSuperchargerstationsgloballytoacceleratethewidespreadadoptionofelectricvehicles.Ourvehicles,electricvehicle
engineeringexpertise,andbusinessmodeldifferentiatesusfromincumbentautomobilemanufacturers.
Wecurrentlyproduceandselltwofullyelectricvehicles,theModelSsedanandtheModelXsportutilityvehicle(SUV).Bothvehiclesofferexceptional
performance,functionalityandattractivestyling.WecommenceddeliveriesofModelSinJune2012andasofDecember31,2015wehavedeliveredover107,000
newModelSvehiclesworldwide.WehavecontinuedtoimproveModelSbyintroducingperformance,all-wheeldrivedualmotor,andautopilotoptions,aswell
asfreeover-the-airsoftwareupdates.
WecommencedcustomerdeliveriesofModelXinthethirdquarterof2015.Thisuniquevehicleoffersexceptionalsafety,seatingforsevenpeople,all-
wheeldrive,andourautopilotfunctionality.WearecurrentlyrampingproductionanddeliveriesofModelXintheUnitedStatesandplantoofferitinEuropeand
Asiain2016.
AftertheModelX,ourgoalistointroducetheModel3,alowerpricedsedandesignedforthemassmarket.WeintendtounveilModel3inthefirstquarter
of2016andstartproductionanddeliveriesinlate2017.
Thecommercialproductionoffullyelectricvehiclesthatmeetsconsumers’rangeandperformanceexpectationsrequiressubstantialdesign,engineering,
andintegrationworkonalmosteverysystemofourvehicles.Ourdesignandvehicleengineeringcapabilities,combinedwiththetechnicaladvancementsofour
powertrainsystem,haveenabledustodesignanddevelopelectricvehiclesthatwebelieveovercomethedesign,styling,andperformanceissuesthathave
historicallylimitedbroadconsumeradoptionofelectricvehicles.Asaresult,ourcustomersenjoyseveralbenefits,including:
·LongRangeandRechargingFlexibility.Ourvehiclesofferrangesthatsignificantlyexceedthoseofanyothercommerciallyavailableelectric
vehicle.Inaddition,ourvehiclesincorporateourproprietaryon-boardchargingsystem,permittingrechargingfromalmostanyavailableelectrical
outlet.OurvehiclesalsoofferfastchargingcapabilityfromourSuperchargernetwork.Webelievethelong-rangeandchargingflexibilityofour
vehicleswillhelpreduceconsumeranxietyoverrange,alleviatetheneedforexpensive,large-scalecharginginfrastructure,anddifferentiateour
vehiclesascomparedtothoseofourcompetitors.
·High-PerformanceWithoutCompromisedDesignorFunctionality.Ourvehiclesdeliverunparalleleddrivingexperienceswithinstantaneousand
sustainedaccelerationthroughanextendedrangeofspeed.Inaddition,ourvehiclesprovidebestinclassstorageinthetrunkandhoodwhileoffering
designandperformancecomparableto,orbetterthan,otherpremiumvehicles.
·EnergyEfficiencyandCostofOwnership.Ourvehiclesofferconsumersanattractivecostofownershipwhencomparedtosimilarinternal
combustionengineorhybridelectricvehicles.Usingonlyanelectricpowertrainenablesustocreatemoreenergyefficientvehiclesthatare
mechanicallysimplerthancurrentlyavailablehybridorinternalcombustionenginevehicles.Thecosttofuelourvehiclesislesscomparedto
internalcombustionvehicles.Wealsoexpectourelectricvehicleswillhavelowerrelativemaintenancecoststhanhybrid,plug-inhybrid,orinternal
combustionenginevehiclesduetofewermovingpartsandtheabsenceofcertaincomponents,includingoil,oilfilters,sparkplugsandengine
valves.Additionally,governmentincentivesthatarecurrentlyavailablecanreducethecostofownershipevenfurther.
Wesellourvehiclesthroughourownsalesandservicenetworkwhichwearecontinuingtogrowglobally.Webelievethebenefitswereceivefrom
distributionownershipwillenableustoimprovetheoverallcustomerexperience,thespeedofproductdevelopmentandthecapitalefficiencyofourbusiness.We
arealsocontinuingtobuildournetworkofSuperchargersintheUnitedStates,EuropeandAsiatoprovidefastchargingthatenablesconvenientlongdistance
travel.
Inadditiontodevelopingourownvehicles,wesellenergystorageproducts.Werecentlyannouncedthenextgenerationofourenergystorageproducts,the
7kWhand10kWhPowerwallforresidentialapplicationsandthe100kWhPowerpackforcommercialandindustrialapplications.Webeganproductionand
deliveriesoftheseproducts,whichwemarketundertheTeslaEnergybrand,inthethirdquarterof2015.
WemanufactureourproductsprimarilyatourfacilitiesinFremont,California,Lathrop,California,Tilburg,NetherlandsandatourGigafactorynearReno,
Nevada.WearecurrentlyusingbatterypacksmanufacturedattheGigafactoryforourenergystorageproducts,andwilldosoforourvehiclesinthefuture.
Our Vehicles and Products
Wecurrentlydesign,develop,manufactureandsellfullyelectricvehiclesandenergystorageproducts.
4