Note 10 – Convertible and Long-Term Debt Obligations

The following is a summary of our debt as of March 31, 2018 (in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Committed		Contractual
	Balance		Current		Long-Term		Amount		Interest Rates			Maturity Date
Recourse debt:
1.50% Convertible Senior Notes due in 2018 ("2018 Notes")	$	303	$	302	$	—	$	—		1.50	%	June 2018
0.25% Convertible Senior Notes due in 2019 ("2019 Notes")		920,000		879,632		—		—		0.25	%	March 2019
1.25% Convertible Senior Notes due in 2021 ("2021 Notes")		1,380,000		—		1,199,967		—		1.25	%	March 2021
2.375% Convertible Senior Notes due in 2022 ("2022 Notes")		977,500		—		849,058		—		2.375	%	March 2022
5.30% Senior Notes due in 2025 ("2025 Notes")		1,800,000		—		1,776,340		—		5.30	%	August 2025
Credit Agreement		1,286,000		—		1,286,000		542,912	1% plus LIBOR			June 2020
Vehicle and other Loans		7,518		7,337		181		—	1.8% - 7.6%			April 2018- September 2019
2.75% Convertible Senior Notes due in 2018		230,000		226,305		—		—		2.75	%	November 2018
1.625% Convertible Senior Notes due in 2019		566,000		—		520,781		—		1.625	%	November 2019
Zero-Coupon Convertible Senior Notes due in 2020		103,000		—		87,758		—		0.0	%	December 2020
Related Party Promissory Notes		82,500		82,500		—		—		6.5	%	August 2018
Solar Bonds		31,698		7,095		24,508		—	2.6% - 5.75%			April 2018- January 2031
Total recourse debt		7,384,519		1,203,171		5,744,593		542,912
Non-recourse debt:
Warehouse Agreements		336,251		48,512		287,739		763,749		3.1	%	September 2019
Canada Credit Facility		76,282		29,467		46,815		—	3.6% - 5.1%			November 2021
Term Loan due in December 2018		158,472		157,956	—			—		5.2	%	December 2018
Term Loan due in January 2021		174,176		6,015		167,190		—		5.3	%	January 2021
Revolving Aggregation Credit Facility		187,155	—			183,859		412,845	4.6% - 5.0%			December 2019
Solar Renewable Energy Credit Loan Facility		34,883		15,111		19,741		—		7.5	%	July 2021
Cash equity debt		478,229		11,617		451,465		—	5.3% - 5.8%			July 2033- January 2035
Solar asset-backed notes		896,357		24,331		845,449		—	4.0% - 7.7%			November 2038- February 2048
Solar loan-backed notes		228,133		9,566		211,027		—	4.8% - 7.5%			September 2048- September 2049
Automotive asset-backed notes		511,587		249,888		261,699		—	2.3% - 4.9%			December 2019 - March 2021
Total non-recourse debt		3,081,525		552,463		2,474,984		1,176,594
Total debt	$	10,466,044	$	1,755,634	$	8,219,577	$	1,719,506

The following is a summary of our debt as of December 31, 2017 (in thousands):

	Unpaid						Unused
	Principal		Net Carrying Value				Committed		Contractual
	Balance		Current		Long-Term		Amount		Interest Rates			Maturity Date
Recourse debt:
2018 Notes	$	5,512	$	5,442	$	—	$	—		1.50	%	June 2018
2019 Notes		920,000		—		869,092		—		0.25	%	March 2019
2021 Notes		1,380,000		—		1,186,131		—		1.25	%	March 2021
2022 Notes		977,500		—		841,973		—		2.375	%	March 2022
2025 Notes		1,800,000		—		1,775,550		—		5.30	%	August 2025
Credit Agreement		1,109,000		—		1,109,000		729,929	1% plus LIBOR			June 2020
Vehicle and other Loans		16,205		15,944		261		—	1.8% - 7.6%			January 2018- September 2019
2.75% Convertible Senior Notes due in 2018		230,000		222,171		—		—	2.75%			November 2018
1.625% Convertible Senior Notes due in 2019		566,000		—		511,389		—	1.625%			November 2019
Zero-Coupon Convertible Senior Notes due in 2020		103,000		—		86,475		—	0.0%			December 2020
Related Party Promissory Notes due in February 2018		100,000		100,000		—		—	6.5%			February 2018
Solar Bonds		32,016		7,008		24,940		—	2.6% - 5.8%			March 2018- January 2031
Total recourse debt		7,239,233		350,565		6,404,811		729,929
Non-recourse debt:
Warehouse Agreement		673,811		195,382		477,867		426,189		3.1	%	September 2019
Canada Credit Facility		86,708		31,106		55,603		—	3.6% - 5.1%			November 2021
Term Loan due in December 2018		157,095		156,884		—		19,534	4.8%			December 2018
Term Loan due in January 2021		176,290		5,885		169,352		—	4.9%			January 2021
Revolving Aggregation Credit Facility		161,796		—		158,733		438,204	4.1% - 4.5%			December 2019
Solar Renewable Energy Credit Loan Facility		38,575		15,858		22,774		—	7.3%			July 2021
Cash equity debt		482,133		12,334		454,421		—	5.3% - 5.8%			July 2033- January 2035
Solar asset-backed notes		907,241		23,829		856,586		—	4.0% - 7.7%			November 2038- February 2048
Solar loan-backed notes		244,498		8,006		228,838		—	4.8% - 7.5%			September 2048- September 2049
Total non-recourse debt		2,928,147		449,284		2,424,174		883,927
Total debt	$	10,167,380	$	799,849	$	8,828,985	$	1,613,856

Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only specified assets of our subsidiaries. The differences between the unpaid principal balances and the net carrying values are due to convertible senior note conversion features, debt discounts or deferred financing costs. As of March 31, 2018, we were in compliance with all financial debt covenants, which include minimum liquidity and expense-coverage balances and ratios.

2018 Notes, Bond Hedges and Warrant Transactions

During the first quarter of 2018, $5.2 million in aggregate principal amount of the 2018 Notes were converted for $5.2 million in cash and 25,745 shares of our common stock. As a result, we recognized a loss on debt extinguishment of less than $0.1 million.

Credit Agreement

In June 2015, we entered into a senior asset-based revolving credit agreement (the “Credit Agreement”) with a syndicate of banks. Borrowed funds bear interest, at our option, at an annual rate of (a) 1% plus LIBOR or (b) the highest of (i) the federal funds rate plus 0.50%, (ii) the lenders’ “prime rate” or (iii) 1% plus LIBOR. The fee for undrawn amounts is 0.25% per annum. The Credit Agreement is secured by certain of our accounts receivable, inventory and equipment. Availability under the Credit Agreement is based on the value of such assets, as reduced by certain reserves. During 2017, the committed amount under the Credit Agreement was upsized three times.

On May 3, 2018, the Company and its subsidiary Tesla Motors Netherlands B.V. entered into the Ninth Amendment (the “Ninth Amendment”) to the Credit Agreement. The Ninth Amendment amended the Credit Agreement to permit Tesla to include in its discretion: (i) the Fremont Factory facilities in the U.S. borrowing base and/or (ii) vehicles in and in-transit to Belgium in the Dutch borrowing base.

Related Party Promissory Notes

In February 2018, we fully repaid the $17.5 million in aggregate principal amount of 6.50% promissory notes held by SolarCity’s former Chief Executive Officer that matured. On February 14, 2018, our Chief Executive Officer and SolarCity’s former Chief Technology Officer exchanged their $82.5 million (collectively) in aggregate principal amount of 6.50% promissory notes due in February 2018 for 6.50% promissory notes due in August 2018 in the same amounts.

Warehouse Agreements

On February 6, 2018, we repaid $453.6 million of the principal outstanding under the Warehouse Agreements.

Automotive Asset-backed Notes, Series 2018-A

On February 6, 2018, we transferred receivables related to certain leased vehicles into a special purpose entity (“SPE”) and issued $546.1 million in aggregate principal amount of Automotive Asset-backed Notes, Series 2018-A, backed by these automotive assets to investors. The SPE is wholly owned by us and is consolidated in the financial statements. The proceeds from the issuance, net of discounts and fees, were $543.1 million. The cash flows generated by these automotive assets are used to service the monthly principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customer lease contracts in accordance with our revenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the Automotive Asset-backed Note holders, have no recourse to our other assets. A third-party contracted with us to provide administrative and collection services for these automotive assets.

Interest Incurred

The following table presents the interest incurred on our convertible senior notes with cash conversion features, which include the 2018 Notes, the 2019 Notes, the 2021 Notes and the 2022 Notes (in thousands):

	Three Months Ended March 31,
	2018		2017
Contractual interest coupon	$	10,548	$	6,151
Amortization of debt issuance costs		1,615		1,308
Amortization of debt discounts		29,859		23,962
Total	$	42,022	$	31,421