Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Property, Plant and Equipment

Note 5 - Property, Plant and Equipment

As of December 31, 2015 and 2014, our property, plant and equipment, net, consisted of the following (in thousands):

	December 31,			December 31,
	2015			2014
Machinery, equipment and office furniture	$	1,694,910		$	720,746
Tooling		550,902			295,906
Leasehold improvements		338,392			230,270
Building and building improvements		461,303			154,362
Land		60,234			49,478
Computer equipment and software		175,512			98,970
Construction in progress		693,207			572,125
		3,974,460			2,121,857
Less: Accumulated depreciation and amortization		(571,126	)		(292,590	)
Total	$	3,403,334		$	1,829,267

Construction in progress is comprised primarily of tooling and equipment related to the manufacturing of our Model S and Model X vehicles, Gigafactory construction, and related capitalized interest. Completed assets are transferred to their respective asset class and depreciation begins when the asset is ready for its intended use. Interest expense on outstanding debt is capitalized during the period of significant capital asset construction. Capitalized interest on construction in progress is included in property, plant and equipment, and is amortized over the life of the related assets. During the years ended December 31, 2015 and 2014, we capitalized $41.5 million and $12.8 million of interest expense.

We are sometimes involved in construction at our leased facilities primarily related to retail stores, service centers, and certain manufacturing facilities. In accordance with Accounting Standards Codification 840, Leases, for build-to-suit lease arrangements where we are involved in the construction of structural improvements prior to the commencement of the lease or take some level of construction risk, we are considered the owner of the assets and land during the construction period. Accordingly, upon commencement of our construction activities, we record a construction in progress asset and a corresponding financing liability. Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, we will remove the asset and related financial obligation from the balance sheet and treat the building lease as an operating lease. If upon completion of construction, the project does not meet the “sale-leaseback” criteria, the leased property will be treated as a capital lease and included in building and building improvements in the table above. As of December 31, 2015 and December 31, 2014, the table above includes $206.1 million and $52.4 million of build-to-suit assets. As of December 31, 2015 and December 31, 2014, corresponding financing obligations of $1.3 million and $21.0 million are recorded in accrued liabilities and $201.3 million and $31.4 million are recorded in other long-term liabilities.

Depreciation and amortization expense during the years ended December 31, 2015, 2014 and 2013 were $278.7 million, $155.9 million and $83.9 million. Total property and equipment assets under capital lease as of December 31, 2015 and 2014 were $58.1 million and $33.4 million. Accumulated depreciation related to assets under capital lease as of these dates were $22.7 million and $12.8 million.

We have acquired land for the site of our Gigafactory and construction activities are ongoing for which we have incurred $317.5 million and $106.6 million of costs as of December 31, 2015 and 2014.