EX-99.1 2 tsla-ex991_8.htm EX-99.1 tsla-ex991_8.htm

Exhibit 99.1

 

Tesla Fourth Quarter & Full Year 2017 Update

      Record Model S and Model X deliveries in Q4 2017

      Cash balance of $3.4B entering Q1 2018

      2017 revenue of $11.8B, up 55% y-o-y from organic growth

      2018 revenue growth expected to significantly exceed 2017 growth

      Continuing to target Model 3 production rate of 5,000/wk by Q2 end

 

2017 was an important year in Tesla’s history.  Among other things, we started delivering Model 3 to customers, unveiled the Semi and the next-generation Roadster, installed the world’s largest battery in Australia, and had record vehicle production and deliveries of Model S and Model X.  We also learned many lessons from the slower than planned production ramp of Model 3. All of this sets the stage for 2018 to be a transformative year for us.    

 

At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis. With the planned ramp of both Model 3 and our energy storage products, our rate of revenue growth this year is poised to significantly exceed last year’s growth rate.  The launch of Model 3 is what Tesla had been building towards from day one.  We incorporated all the learnings from the development and production of Roadster, Model S, and Model X to create the world’s first mass market electric vehicle that is priced on par with its gasoline-powered equivalents – even without incentives.  Now we are ramping up production significantly, and as we look ahead in 2018, we are on the cusp of a step change in the world’s transition to sustainability.

 

ADVANCING SUSTAINABLE TRANSPORT

We continue to target weekly Model 3 production rates of 2,500 by the end of Q1 and 5,000 by the end of Q2. It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time. What we can say with confidence is that we are taking many actions to systematically address bottlenecks and add capacity in places like the battery module line where we have experienced constraints, and these actions should result in our production rate significantly increasing during the rest of Q1 and through Q2.  

 

Our goal is to become the best manufacturer in the automotive industry, and having cutting edge robotic expertise in-house is at the core of that goal.  Our recent acquisitions of advanced automation companies have added to our talent base and are helping us increase Model 3 production rates more effectively.  We don’t want to simply replicate what we have built previously while designing additional capacity. We want to continuously push the boundaries of mass manufacturing.

 

As we shared previously, in order to incorporate our learnings and be capital efficient, we intend to start adding enough capacity to get to a 10,000 unit weekly rate for Model 3 once we have first hit the 5,000 per week milestone.

 

Despite the delays that we experienced in our production ramp, Model 3 net reservations remained stable in Q4.  In recent weeks, they have continued to grow as Model 3 has arrived in select Tesla stores and received numerous positive reviews, including Automobile Magazine’s 2018 Design of the Year award.  We want to thank both our Model 3 suppliers and our customers, who have continued to be such great partners and advocates, while patiently waiting as the ramp continues to accelerate.

 

In Q4, we delivered 28,425 Model S and Model X vehicles and 1,542 Model 3 vehicles, totaling 29,967 deliveries. Combined Model S and Model X deliveries in Q4 grew 10% globally compared to our prior record in Q3, and they grew 28% compared to Q4 2016. As we indicated heading into Q4, production of Model S and Model X during the quarter was limited to 22,137 vehicles due to reallocation of some of the manufacturing resources to Model 3 production.  This enabled us to reduce our finished-goods inventory to the lowest level in about 18 months.


 

Combined Model S and Model X net orders in Q4 were just shy of Q3’s all-time high.  Importantly, combined orders for Model S and Model X grew significantly in 2017 compared to 2016.  There had initially been concerns about whether Model 3 would cannibalize Model S and Model X.  It seems the opposite is true.  In stores where Model 3 is on display, customer foot traffic has increased considerably and orders for Model S and Model X have in fact increased.  There has been an even bigger increase in solar and Powerwall sales.

 

The upcoming autonomous coast-to-coast drive will showcase a major leap forward for our self-driving technology. Additionally, an extensive overhaul of the underlying architecture of our software has now been completed, which has enabled a step-change improvement in the collection and analysis of data and fundamentally enhanced its machine learning capabilities.  Our neural net, which expands as our customer fleet grows, is able to collect and analyze more high-quality data than ever before, enabling us to rollout a series of new Autopilot features in 2018 and beyond.  

 

During Q4, we opened 12 new store and service locations resulting in 330 total locations worldwide at the end of the year.  Service capacity more than doubled in 2017, partially due to new locations, but also through a 50% increase in productivity of existing service locations, as well as the significant expansion of our Mobile Service fleet, which now has 230 vehicles.  We strive to create the best car ownership experience on the planet, and a big part of that is through not requiring customers to come in to service their vehicle.  In North America alone, Mobile Service is now completing 30% of all service jobs, allowing those customers to never have to leave their home or office to get their cars serviced.  Not surprisingly, Mobile Service has achieved customer satisfaction that averages 98%.  In addition, the cost of servicing with our Mobile Service fleet is significantly lower than from our service centers.  It now covers all of North America and provides a level of convenience and a speed for scaling that is unique and unprecedented in the industry.  In 2018, we will continue to increase our service capacity with the goal of always remaining ahead of the Model 3 ramp.

 

Our Supercharger network has seen the most significant growth yet.  In 2017, 338 new locations opened for a total of 1,128 Supercharger stations globally.  Between Supercharger and Destination Charging, we increased capacity by over 90%. In preparation for Model 3, we opened several large Supercharger stations along our most popular corridors, including between Los Angeles and San Francisco and between Los Angeles and Las Vegas, both of which have a customer lounge, a café, a display of our energy products and 40 charging stalls.  With continued emphasis on convenient, reliable, and ubiquitous charging, 2018 will be another big year for Tesla charging infrastructure.

 

The unveiling of Tesla Semi on November 16 launched Tesla into a new product category that will have a transformative impact due to a total cost of ownership that is superior to diesel trucks. Tesla Semi combines a real-world range of up to 500 miles with unprecedented performance while pulling a standard payload.  Its distinctive torque enables smooth acceleration to highway speed even when fully loaded with cargo.  Moreover, it has been designed to dramatically improve safety not only for the driver and cargo, but also for pedestrians and other cars on the road.  

 

Tesla will be the first Semi customer.  We plan to use the Tesla Semi for our own logistics by transporting Model 3 components from Gigafactory 1 to Fremont.  Additionally, our initial fleet customers who placed reservations for the Tesla Semi have been helping us develop the best possible truck.  

 

Also, after developing it in stealth with a very small team, we were thrilled to surprise everyone with the next-generation Roadster.  Roadster was at the genesis of Tesla, a car that proved electric vehicles can be fast, exciting and here to stay.  The new Roadster takes this concept to the next level.  With 0-60 mph acceleration of 1.9 seconds and maximum speed of more than 250 mph, it will be the fastest car in the world.  When that performance is combined with its 620 miles (1,000 km) of range, this supercar puts to rest any debate about the limitations of electric vehicles.  

 



ADVANCING SUSTAINABLE ENERGY

2018 will see major growth in Tesla energy storage deployments, as the production ramp of our storage products is just as steep as with Model 3.  This year, we aim to deploy at least three times the storage capacity we deployed in 2017.

 

On December 1, 2017, installation of the largest battery in the world was completed ahead of schedule in South Australia.  This project is already generating substantial benefit by meeting high summer demand when supply is limited and by instantaneously responding to unplanned interruptions or frequency drops in the grid.  Due to the success of this project, we're seeing an increase in demand for Powerpack, our commercial energy storage product. With more electric utilities and governments around the world recognizing the reliability, environmental, and economic benefits of this product, it’s clear that there is a huge opportunity for us in large scale energy storage.

 

Powerwall demand for home energy storage remains exceptionally high, with orders consistently above production levels.  We are increasingly promoting our energy products in Tesla stores and in non-Tesla retail locations.  There is a significant cross-selling potential between Powerwall and our solar products, as evidenced by the fact that a vast majority of the customers who have ordered Solar Roof have also ordered at least one Powerwall.

 

In Q4, we deployed 143 MWh of energy storage products, growing 45% from Q4 2016.  Deployment of 129 MWh of energy storage in South Australia will be recognized in Q1 2018 based on commercial transfer of the site to the customer.

 

We also deployed 87 MW of energy generation systems in Q4, which is 20% less than Q3 2017.  Solar MW deployed declined as volumes continue to be impacted by our decision to close certain sales channels earlier this year and to focus on projects with better margins.  In addition, solar deployments were affected by the short supply of Powerwalls for customers who wanted solar plus Powerwall in their house.  While volumes may continue to be impacted by these factors over the near-term, we expect growth to resume later this year.  

 

We continue to ramp energy sales in Tesla retail stores and are expanding our presence in partner locations.  The mix of our residential solar sales continues to shift towards cash and loan as compared to leasing, reaching 54% of total residential solar sales in Q4, up from 25% in Q4 2016. This has contributed to improved cash performance of this business.

 

 

Initial production of Solar Roof at the Gigafactory 2 in Buffalo started in Q4, and we are ahead of schedule with the hiring targets we’ve agreed to with the state of New York.  As Solar Roof is truly the first-of-its-kind and there is significant complexity in both its manufacturing and installation, we are deliberately ramping production at a gradual pace.  When fully scaled, Gigafactory 2 will be able to produce enough solar cells to add more than 150,000 new residential solar installations every year.  As we ramp production, a portion of the output will be dedicated for Solar Roof tiles with the balance used in our proprietary high-efficiency retrofit solar panels.  With demand outpacing production, we expect our backlog to remain in excess of one year for the next several quarters.

 

Q4 2017 RESULTS

 

Revenue & Gross Margin

 

Three Months Ended

 

 

Change

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

 

 

 

 

 

 

2017

 

 

2017

 

 

2016

 

 

QoQ

 

YoY

 

Automotive revenue ($000)

$

2,702,195

 

 

$

2,362,889

 

 

$

1,994,123

 

 

 

14

%

 

36

%

Automotive gross margin – GAAP

 

18.9

%

 

 

18.3

%

 

 

22.6

%

 

 

63

bp

 

-364

bp

Automotive gross margin excluding SBC

   and ZEV credit – non-GAAP

 

13.8

%

 

 

18.7

%

 

 

22.2

%

 

 

-490

bp

 

-841

bp

 

Automotive revenue in Q4 increased by 36% over Q4 2016, mainly due to 35% growth in vehicle deliveries. For 2017, Automotive revenue was up 52% from 2016.  ZEV credit sales in Q4 were $179 million as compared to $20 million in Q4 2016.  

Approximately 23% of Q4 deliveries were subject to lease accounting, which was slightly higher than in Q3.  Last week, we closed a $546 million asset backed securitization (ABS) of our Model S and X lease portfolio, which was our first such offering.  This transaction and future ones like it will free up significant leasing capacity for long-term growth.



GAAP Automotive gross margin improved slightly compared to Q3 to 18.9%.  Non-GAAP Automotive gross margin declined to 13.8% in Q4, which was below our expectations.  This is more than fully explained by the slower than expected ramp of Model 3.  Since Model 3 production was in the early stages of the ramp, allocation of full operating costs and depreciation made its gross margin negative.  We are expecting a negative Model 3 gross margin in Q1, while generating positive operating cash flows.  

Model S and Model X gross margin in Q4 declined very slightly compared to Q3.  This was primarily due to significant reserves booked for fixed assets that are no longer in service.  We expect Model S and Model X gross margins to increase in 2018 with improved trim mix and option content, lower cost of acquisition and lower manufacturing costs.

 

 

Three Months Ended

 

 

Change

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

 

 

 

 

 

 

2017

 

 

2017

 

 

2016

 

 

QoQ

 

YoY

 

Energy generation and storage revenue ($000)

$

298,037

 

 

$

317,505

 

 

$

131,385

 

 

 

-6

%

 

127

%

Energy generation and storage gross margin

 

5.5

%

 

 

25.3

%

 

 

2.7

%

 

 

-1,979

bp

 

273

bp

 

Energy generation and storage revenue in Q4 decreased by 6% compared to Q3. This was mainly driven by seasonal decline in solar deployment and by our continued focus on more profitable, cash sales.

GAAP gross margin in Q4 declined significantly as compared to Q3, due largely to several one-time factors and a higher mix of storage products.  Q4 gross margin was impacted by the typical seasonal decline in solar energy production and correspondingly lower lease revenue in the winter months. We also booked one-time air freight costs for the South Australian battery project and took write-downs related to legacy commercial & industrial projects that we had committed to prior to the acquisition of SolarCity.  

We expect gross margin to improve significantly in 2018 from higher operational and manufacturing cost efficiencies as well as deployment of higher-quality commercial projects.

 

 

Other Highlights

 

Service and Other revenue decreased by 5% compared to Q3 but increased by 81% compared to Q4 2016.  Used car sales was the main driver of this year-over-year growth.  

Service and Other gross loss increased to $89 million due to the significant growth of our service network in Q4 that has not been fully utilized yet as the Model 3 production ramp works to catch up, reserves for settlements with former customers of Grohmann and a one-time warranty true-up for used car sales.  Gross margin on used cars sales was close to breakeven.

Operating expenses increased by 5% sequentially to a total of $1.04 billion in spite of significant revenue growth.  We continue to focus on keeping tight control over operating expenses even as we ramp production.  

Basic shares outstanding at the end of Q4 were approximately 168 million.

 

 

Cash Flow and Liquidity

 

Three Months Ended

 

 

Change

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

 

 

 

 

 

($000)

2017

 

 

2017

 

 

2016

 

 

QoQ

 

YoY

 

Cash flows from operating activities

$

509,891

 

 

$

(300,562

)

 

$

(448,209

)

 

 

270

%

 

214

%

Collateralized lease borrowings

 

94,894

 

 

 

80,752

 

 

 

212,040

 

 

 

18

%

 

-55

%

Operating cash flows plus collateralized lease borrowings

$

604,785

 

 

$

(219,810

)

 

$

(236,169

)

 

 

375

%

 

356

%

 

Cash flow from operating activities reached $510 million in Q4, achieving a new quarterly record.  This was achieved mainly by improved collection of receivables, inventory reduction of finished vehicles, improved working capital from the ramp of Model 3, and growth in customer deposits.  Cash flow from operating activities in 2017 was close to breakeven.

The definition of operating cash flow includes cash outflow consumed by vehicle leasing.  In order to show our cash flow from operations before leasing activities, proceeds from collateralized lease borrowing need to be added back.  When that is done, our operating cash flow was $605 million in Q4.  Additional $149 million of net funding was received in Q4 through our vehicle lease warehouse line and tax equity fund to help our cash flows.

Capital expenditures reached $787 million in Q4. The majority was attributable to Model 3 and Gigafactory 1 production capacity increases. We are continuing to proactively manage capex spending.  Additionally, some capex payments for Model 3 have been deferred to Q1.  



OUTLOOK

2018 will be a transformative year for Tesla, with a high level of operational scaling.  As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018.

 

We expect Model S and Model X deliveries to be approximately 100,000 in total, constrained by the supply of cells with the old 18650 form factor.  As our sales network continues to expand to new markets in 2018, we believe orders should continue to grow.  With demand outpacing production, we plan to optimize the options mix in order to maximize gross margin.  As stated above, we continue to target a weekly Model 3 production rate of 2,500 by the end of Q1 and 5,000 by the end of Q2.  Also, we are focused on achieving our target of 25% gross margin for Model 3 after our production stabilizes at 5,000 cars per week.  

 

We expect energy storage products to experience significant growth, with our aim to at least triple our sales this year.  We expect energy generation and storage gross margin to improve significantly in 2018 as we enter the year with a backlog of higher-margin commercial solar projects and a more profitable energy storage business due to manufacturing efficiencies from scaling.

 

Service and Other gross margin should improve in each subsequent quarter in 2018.  This will be achieved mainly through improved service productivity via Mobile Service and better remote diagnostics for Model 3.  Diagnostics architecture has been substantially redesigned for Model 3 in order to reduce physical service visits by more than 50%.  Additionally, Superchargers will start generating revenue in 2018 with pay per use charging primarily by Model 3 customers.

 

Capital expenditures in 2018 are projected to be slightly more than 2017.  The majority of the spending will be to support increases in production capacity at Gigafactory 1 and Fremont, and for building stores, service centers, and Superchargers.

 

This year, we are starting a new chapter of our journey.  Hundreds of thousands of people will switch to our EVs and many others will turn their houses into near self-sufficient energy generators. This is the year when we believe we can achieve true cost parity - producing a premium EV like the Model 3 will be no more expensive than producing an ICE vehicle, something that many believe is not yet possible.  We’ll continue to work as hard as we can to bring sustainable energy generation, storage and consumption into the mainstream.

 

 

 

 

 

Elon Musk, Chairman & CEO

 

Deepak Ahuja, Chief Financial Officer

 

 



WEBCAST INFORMATION

Tesla will provide a live webcast of its fourth quarter and full year 2017 financial results conference call beginning at 2:30 p.m. PT on February 7, 2018, at ir.tesla.com. This webcast will also be available for replay for approximately one year thereafter.

 

 

NON-GAAP FINANCIAL INFORMATION

Consolidated financial information has been presented in accordance with GAAP as well as on a non-GAAP basis to supplement our consolidated financial results. Our non-GAAP financial measures include non-GAAP gross margin, non-GAAP net income (loss) attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders on a per share basis, and operating cash flows plus change in collateralized lease borrowing. Management believes that it is useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Tesla’s historical performance as well as comparisons to the operating results of other companies. Management also believes that presentation of the non-GAAP financial measures provides useful information to our investors regarding our financial condition and results of operations because it allows investors greater transparency to the information used by Tesla management in its financial and operational decision-making so that investors can see through the eyes of Tesla management regarding important financial metrics that Tesla management uses to run the business as well as allows investors to better understand Tesla’s performance. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under U.S. GAAP when understanding Tesla’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided below.

 

 

FORWARD-LOOKING STATEMENTS

Certain statements in this shareholder letter, including statements in the “Outlook” section; statements relating to the progress Tesla is making with respect to product and software development, such as Model 3, Solar Roof and Autopilot; statements regarding growth in the number of Tesla store, service center, delivery hub, Supercharger and destination charger locations and in other service and repair capabilities; statements relating to the production, production rate and delivery timing of products such as Model 3, energy storage and Solar Roof; statements regarding growth of our energy generation and storage business and means to achieve such growth; growth in demand and orders for Tesla products and the catalysts for that growth; the ability to achieve product demand, volume, production, delivery, inventory, deployment, revenue, cash generation, cash flow, leasing, gross margin, spending, capital expenditure and profitability targets; productivity improvements and capacity expansion plans, such as for Gigafactory 1; and statements regarding Gigafactory 1 and Gigafactory 2 timing, plans and output expectations, including those related to battery and photovoltaic cell and other production, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the risk of delays in the manufacture, production, delivery and/or completion of our vehicles and energy products, particularly Model 3; the ability to design and achieve and grow simultaneous and separate market acceptance of Model S, Model X and their variants, as well as new vehicle models, specifically Model 3; the ability of suppliers to meet quality and part delivery expectations at increasing volumes, especially with respect to Model 3 parts; any failures by Tesla products to perform as expected or if product recalls occur; Tesla’s ability to continue to reduce or control manufacturing and other costs; consumers’ willingness to adopt electric vehicles; competition in the automotive and energy product markets generally and the alternative fuel vehicle market and the premium sedan, premium SUV and small to medium-sized sedan markets in particular; Tesla’s ability to establish, maintain and strengthen the Tesla brand; Tesla’s ability to manage future growth effectively as we rapidly grow, especially internationally; the unavailability, reduction or elimination of government and economic incentives for electric vehicles and energy products; Tesla’s ability to establish, maintain and strengthen its relationships with strategic partners such as Panasonic; potential difficulties in finalizing, performing and realizing potential benefits under definitive agreements for Gigafactory 1 and Gigafactory 2, maintaining Gigafactory 1 and Gigafactory 2 implementation schedules, output and cost estimates; Tesla’s ability to execute on its strategy for new store, delivery hub, service center, Supercharger and other locations and capabilities; and adverse foreign exchange movements. More information on potential factors that could affect our financial results is included from time to time in our Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in our quarterly report on Form 10-Q filed with the SEC on November 3, 2017. Tesla disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

 

 

 

Investor Relations Contact:

Martin Viecha

Investor Relations

ir@tesla.com

 

 

  

Press Contact:

Dave Arnold

Communications

press@tesla.com

 



Tesla, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive sales

 

$

2,409,109

 

 

$

2,076,731

 

 

$

1,739,449

 

 

$

8,534,752

 

 

$

5,589,007

 

Automotive leasing

 

 

293,086

 

 

 

286,158

 

 

 

254,674

 

 

 

1,106,548

 

 

 

761,759

 

Total automotive revenue

 

 

2,702,195

 

 

 

2,362,889

 

 

 

1,994,123

 

 

 

9,641,300

 

 

 

6,350,766

 

Energy generation and storage

 

 

298,037

 

 

 

317,505

 

 

 

131,385

 

 

 

1,116,266

 

 

 

181,394

 

Services and other

 

 

288,017

 

 

 

304,281

 

 

 

159,123

 

 

 

1,001,185

 

 

 

467,972

 

Total revenues

 

 

3,288,249

 

 

 

2,984,675

 

 

 

2,284,631

 

 

 

11,758,751

 

 

 

7,000,132

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive sales

 

 

1,999,631

 

 

 

1,755,622

 

 

 

1,372,604

 

 

 

6,724,480

 

 

 

4,268,087

 

Automotive leasing

 

 

191,541

 

 

 

175,224

 

 

 

171,818

 

 

 

708,224

 

 

 

481,994

 

Total automotive cost of revenues

 

 

2,191,172

 

 

 

1,930,846

 

 

 

1,544,422

 

 

 

7,432,704

 

 

 

4,750,081

 

Energy generation and storage

 

 

281,715

 

 

 

237,288

 

 

 

127,779

 

 

 

874,538

 

 

 

178,332

 

Services and other

 

 

376,576

 

 

 

367,401

 

 

 

177,152

 

 

 

1,229,022

 

 

 

472,462

 

Total cost of revenues (1)

 

 

2,849,463

 

 

 

2,535,535

 

 

 

1,849,353

 

 

 

9,536,264

 

 

 

5,400,875

 

Gross profit

 

 

438,786

 

 

 

449,140

 

 

 

435,278

 

 

 

2,222,487

 

 

 

1,599,257

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (1)

 

 

354,637

 

 

 

331,622

 

 

 

245,960

 

 

 

1,378,073

 

 

 

834,408

 

Selling, general and administrative (1)

 

 

682,290

 

 

 

652,998

 

 

 

456,016

 

 

 

2,476,500

 

 

 

1,432,189

 

Total operating expenses

 

 

1,036,927

 

 

 

984,620

 

 

 

701,976

 

 

 

3,854,573

 

 

 

2,266,597

 

Loss from operations

 

 

(598,141

)

 

 

(535,480

)

 

 

(266,698

)

 

 

(1,632,086

)

 

 

(667,340

)

Interest income

 

 

6,280

 

 

 

5,531

 

 

 

2,179

 

 

 

19,686

 

 

 

8,530

 

Interest expense (2)(3)

 

 

(146,363

)

 

 

(117,109

)

 

 

(65,104

)

 

 

(471,259

)

 

 

(198,810

)

Other (expense) income, net

 

 

(41,677

)

 

 

(24,390

)

 

 

121,224

 

 

 

(125,373

)

 

 

111,272

 

Loss before income taxes

 

 

(779,901

)

 

 

(671,448

)

 

 

(208,399

)

 

 

(2,209,032

)

 

 

(746,348

)

(Benefit) provision for income taxes

 

 

(9,094

)

 

 

(285

)

 

 

11,070

 

 

 

31,546

 

 

 

26,698

 

Net loss

 

 

(770,807

)

 

 

(671,163

)

 

 

(219,469

)

 

 

(2,240,578

)

 

 

(773,046

)

Net loss attributable to noncontrolling interests

   and redeemable noncontrolling interests

 

 

(95,457

)

 

 

(51,787

)

 

 

(98,132

)

 

 

(279,178

)

 

 

(98,132

)

Net loss attributable to common

   stockholders

 

$

(675,350

)

 

$

(619,376

)

 

$

(121,337

)

 

$

(1,961,400

)

 

$

(674,914

)

Net loss per share of common stock

   attributable to common stockholders –

   basic and diluted

 

$

(4.01

)

 

$

(3.70

)

 

$

(0.78

)

 

$

(11.83

)

 

$

(4.68

)

Weighted average shares used in computing

   net loss per share of common stock –

   basic and diluted

 

 

168,314

 

 

 

167,294

 

 

 

155,024

 

 

 

165,758

 

 

 

144,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation

   expense of the following for the periods

   presented:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

16,182

 

 

$

10,166

 

 

$

8,562

 

 

$

43,845

 

 

$

30,400

 

Research and development

 

 

59,564

 

 

 

51,066

 

 

 

41,304

 

 

 

217,616

 

 

 

154,632

 

Selling, general and administrative

 

 

58,602

 

 

 

51,421

 

 

 

37,845

 

 

 

205,299

 

 

 

149,193

 

Total stock-based compensation

   expense

 

$

134,348

 

 

$

112,653

 

 

$

87,711

 

 

$

466,760

 

 

$

334,225

 

(2) Interest expense includes non-cash interest

   expense related to convertible notes and

   other borrowing for the periods presented:

 

$

71,597

 

 

$

62,731

 

 

$

39,915

 

 

$

251,206

 

 

$

133,815

 

(3) Interest expense includes the following as

   a result of the assumed debt from SolarCity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (excluding amortization of debt discount and fees) – recourse debt

 

$

6,129

 

 

$

8,943

 

 

$

5,476

 

 

$

39,348

 

 

$

5,476

 

Interest expense (excluding amortization of debt discount and fees) – non-recourse debt

 

 

25,581

 

 

 

24,508

 

 

 

10,007

 

 

 

97,867

 

 

 

10,007

 

Total

 

$

31,710

 

 

$

33,451

 

 

$

15,483

 

 

$

137,215

 

 

$

15,483

 

 

 


Tesla, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,367,914

 

 

$

3,393,216

 

Restricted cash

 

 

155,323

 

 

 

105,519

 

Accounts receivable, net

 

 

515,381

 

 

 

499,142

 

Inventory

 

 

2,263,537

 

 

 

2,067,454

 

Prepaid expenses and other current assets

 

 

268,365

 

 

 

194,465

 

Total current assets

 

 

6,570,520

 

 

 

6,259,796

 

Operating lease vehicles, net

 

 

4,116,604

 

 

 

3,134,080

 

Solar energy systems, leased and to be leased, net

 

 

6,347,490

 

 

 

5,919,880

 

Property, plant and equipment, net

 

 

10,027,522

 

 

 

5,982,957

 

Goodwill and intangible assets, net

 

 

421,739

 

 

 

376,145

 

MyPower customer notes receivable, net of current portion

 

 

456,652

 

 

 

506,302

 

Restricted cash, net of current portion

 

 

441,722

 

 

 

268,165

 

Other assets

 

 

273,123

 

 

 

216,751

 

Total assets

 

$

28,655,372

 

 

$

22,664,076

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,390,250

 

 

$

1,860,341

 

Accrued liabilities and other

 

 

1,731,366

 

 

 

1,210,028

 

Deferred revenue

 

 

1,015,253

 

 

 

763,126

 

Resale value guarantees

 

 

787,333

 

 

 

179,504

 

Customer deposits

 

 

853,919

 

 

 

663,859

 

Current portion of long-term debt and capital leases (1)

 

 

858,026

 

 

 

1,150,147

 

Total current liabilities

 

 

7,636,147

 

 

 

5,827,005

 

Long-term debt and capital leases, net of current portion (1)

 

 

9,456,842

 

 

 

5,969,500

 

Deferred revenue, net of current portion

 

 

1,177,799

 

 

 

851,790

 

Resale value guarantees, net of current portion

 

 

2,309,222

 

 

 

2,210,423

 

Other long-term liabilities

 

 

2,442,970

 

 

 

1,891,449

 

Total liabilities

 

 

23,022,980

 

 

 

16,750,167

 

Redeemable noncontrolling interests in subsidiaries

 

 

397,734

 

 

 

367,039

 

Convertible senior notes (1)(2)

 

 

70

 

 

 

8,784

 

Total stockholders' equity

 

 

4,237,242

 

 

 

4,752,911

 

Noncontrolling interests in subsidiaries

 

 

997,346

 

 

 

785,175

 

Total liabilities and equity

 

$

28,655,372

 

 

$

22,664,076

 

 

 

 

 

 

 

 

 

 

(1) Breakdown of our debt is as follows:

 

 

 

 

 

 

 

 

Recourse debt

 

$

6,755,376

 

 

$

4,630,886

 

Non-recourse debt

 

$

2,873,458

 

 

$

2,375,782

 

 

 

 

 

 

 

 

 

 

(2) As of December 31, 2017, our common stock price exceeded the conversion threshold price of our convertible senior notes due in

      2018 (2018 Notes) issued in May 2013; therefore, the 2018 Notes were convertible at the holder’s option. As such, the carrying

      value of the 2018 Notes was classified as a current liability and the difference between the principal amount and the carrying value

      of the 2018 Notes was reflected as convertible debt in mezzanine equity, on our condensed consolidated balance sheet as of

      December 31, 2017.

 

 

 


Tesla, Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(770,807

)

 

$

(671,163

)

 

$

(219,469

)

 

$

(2,240,578

)

 

$

(773,046

)

Adjustments to reconcile net loss to net

   cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

469,606

 

 

 

400,624

 

 

 

326,939

 

 

 

1,636,003

 

 

 

947,099

 

Stock-based compensation

 

 

134,348

 

 

 

112,653

 

 

 

87,711

 

 

 

466,760

 

 

 

334,225

 

Losses (gains) related to the SolarCity

   acquisition

 

 

27,950

 

 

 

18,225

 

 

 

(88,727

)

 

 

57,746

 

 

 

(88,727

)

Other

 

 

151,756

 

 

 

88,867

 

 

 

(8,068

)

 

 

516,018

 

 

 

150,481

 

Changes in operating assets and liabilities,

   net of effect of business combinations

 

 

497,038

 

 

 

(249,768

)

 

 

(546,595

)

 

 

(496,603

)

 

 

(693,861

)

Net cash provided by (used in)

   operating activities

 

 

509,891

 

 

 

(300,562

)

 

 

(448,209

)

 

 

(60,654

)

 

 

(123,829

)

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(786,688

)

 

 

(1,116,434

)

 

 

(521,612

)

 

 

(3,414,814

)

 

 

(1,280,802

)

Payments for the cost of solar energy systems,

   leased and to be leased

 

 

(119,455

)

 

 

(128,293

)

 

 

(159,669

)

 

 

(666,540

)

 

 

(159,669

)

Business combinations, net of cash acquired

 

 

(5,376

)

 

 

 

 

 

213,523

 

 

 

(114,523

)

 

 

213,523

 

Maturities of short-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,667

 

Changes in restricted cash and other

 

 

(50,357

)

 

 

(70,205

)

 

 

(126,993

)

 

 

(223,090

)

 

 

(206,149

)

Net cash used in investing activities

 

 

(961,876

)

 

 

(1,314,932

)

 

 

(594,751

)

 

 

(4,418,967

)

 

 

(1,416,430

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash flows from debt activities

 

 

28,056

 

 

 

1,820,399

 

 

 

880,154

 

 

 

2,414,896

 

 

 

538,439

 

Collateralized lease borrowings

 

 

94,894

 

 

 

80,752

 

 

 

212,040

 

 

 

511,321

 

 

 

769,709

 

Net borrowings under warehouse facilities

 

 

116,820

 

 

 

78,297

 

 

 

90,000

 

 

 

283,811

 

 

 

390,000

 

Net cash flows from noncontrolling interests

 

 

26,284

 

 

 

41,643

 

 

 

180,277

 

 

 

527,487

 

 

 

180,277

 

Proceeds from issuances of common stock

   in public offerings

 

 

 

 

 

 

 

 

 

 

 

400,175

 

 

 

1,701,734

 

Other

 

 

19,788

 

 

 

80,415

 

 

 

10,356

 

 

 

277,174

 

 

 

163,817

 

Net cash provided by

   financing activities

 

 

285,842

 

 

 

2,101,506

 

 

 

1,372,827

 

 

 

4,414,864

 

 

 

3,743,976

 

Effect of exchange rate changes on

   cash and cash equivalents

 

 

4,027

 

 

 

8,094

 

 

 

(20,908

)

 

 

39,455

 

 

 

(7,409

)

Net (decrease) increase in cash and

   cash equivalents

 

 

(162,116

)

 

 

494,106

 

 

 

308,959

 

 

 

(25,302

)

 

 

2,196,308

 

Cash and cash equivalents at beginning of period

 

 

3,530,030

 

 

 

3,035,924

 

 

 

3,084,257

 

 

 

3,393,216

 

 

 

1,196,908

 

Cash and cash equivalents at end of period

 

$

3,367,914

 

 

$

3,530,030

 

 

$

3,393,216

 

 

$

3,367,914

 

 

$

3,393,216

 

 

Supplemental Consolidated Financial Information:

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

Free Cash Flow

 

2017

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Cash flows from operating activities

 

$

509,891

 

 

$

(300,562

)

 

$

(448,209

)

 

$

(60,654

)

 

$

(123,829

)

Capital expenditures

 

 

(786,688

)

 

 

(1,116,434

)

 

 

(521,612

)

 

 

(3,414,814

)

 

 

(1,280,802

)

Free cash flow

 

$

(276,797

)

 

$

(1,416,996

)

 

$

(969,821

)

 

$

(3,475,468

)

 

$

(1,404,631

)

 

 

 


Tesla, Inc.

Reconciliation of GAAP to Non-GAAP Financial Information

(Unaudited)

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2017

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Automotive gross profit – GAAP

 

$

511,023

 

 

$

432,043

 

 

$

449,701

 

 

$

2,208,596

 

 

$

1,600,685

 

Stock-based compensation expense

 

 

16,182

 

 

 

10,166

 

 

 

8,562

 

 

 

43,845

 

 

 

30,400

 

ZEV credit revenue recognized

 

 

(179,142

)

 

 

(575

)

 

 

(19,840

)

 

 

(279,717

)

 

 

(215,432

)

Automotive gross profit excluding SBC and

   ZEV credit – non-GAAP

 

$

348,063

 

 

$

441,634

 

 

$

438,423

 

 

$

1,972,724

 

 

$

1,415,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive gross margin – GAAP

 

 

18.9

%

 

 

18.3

%

 

 

22.6

%

 

 

22.9

%

 

 

25.2

%

Stock-based compensation expense

 

 

0.6

%

 

 

0.4

%

 

 

0.4

%

 

 

0.5

%

 

 

0.5

%

ZEV credit revenue recognized