tsla-10q_20190930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-34756

Tesla, Inc.

(Exact name of registrant as specified in its charter)

Delaware

91-2197729

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3500 Deer Creek Road

Palo Alto, California

94304

(Address of principal executive offices)

(Zip Code)

(650) 681-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	TSLA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 21, 2019, there were 180,244,858 shares of the registrant’s common stock outstanding.

TESLA, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income (Loss)	6
	Consolidated Statements of Redeemable Noncontrolling Interests and Equity	7
	Consolidated Statements of Cash Flows	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	71

SIGNATURES		73

Forward-Looking Statements

The discussions in this Quarterly Report on Form 10-Q contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Tesla, Inc.

Consolidated Balance Sheets

(in millions, except for par values)

(unaudited)

	September 30,			December 31,
	2019			2018
Assets
Current assets
Cash and cash equivalents	$	5,338		$	3,686
Restricted cash		233			193
Accounts receivable, net		1,128			949
Inventory		3,581			3,113
Prepaid expenses and other current assets		660			366
Total current assets		10,940			8,307
Operating lease vehicles, net		2,253			2,090
Solar energy systems, net		6,168			6,271
Property, plant and equipment, net		10,190			11,330
Operating lease right-of-use assets		1,234			—
Intangible assets, net		351			282
Goodwill		186			68
MyPower customer notes receivable, net of current portion		398			422
Restricted cash, net of current portion		255			398
Other assets		820			572
Total assets	$	32,795		$	29,740
Liabilities
Current liabilities
Accounts payable	$	3,468		$	3,405
Accrued liabilities and other		2,497			2,094
Deferred revenue		1,045			630
Resale value guarantees		441			503
Customer deposits		665			793
Current portion of long-term debt and finance leases		2,030			2,568
Total current liabilities		10,146			9,993
Long-term debt and finance leases, net of current portion		11,313			9,404
Deferred revenue, net of current portion		1,140			991
Resale value guarantees, net of current portion		38			329
Other long-term liabilities		2,676			2,710
Total liabilities		25,313			23,427
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests in subsidiaries		600			556
Equity
Stockholders' equity
Preferred stock; $0.001 par value; 100 shares authorized; no shares issued and outstanding		—			—
Common stock; $0.001 par value; 2,000 shares authorized; 180 and 173 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		0			0
Additional paid-in capital		12,348			10,249
Accumulated other comprehensive loss		(120	)		(8	)
Accumulated deficit		(6,188	)		(5,318	)
Total stockholders' equity		6,040			4,923
Noncontrolling interests in subsidiaries		842			834
Total liabilities and equity	$	32,795		$	29,740

The accompanying notes are an integral part of these consolidated financial statements.

Tesla, Inc.

Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues
Automotive sales	$	5,132		$	5,878		$	13,809		$	11,558
Automotive leasing		221			221			644			634
Total automotive revenues		5,353			6,099			14,453			12,192
Energy generation and storage		402			399			1,095			1,183
Services and other		548			326			1,646			860
Total revenues		6,303			6,824			17,194			14,235
Cost of revenues
Automotive sales		4,014			4,406			11,124			9,027
Automotive leasing		117			119			340			361
Total automotive cost of revenues		4,131			4,525			11,464			9,388
Energy generation and storage		314			330			956			1,036
Services and other		667			445			2,096			1,212
Total cost of revenues		5,112			5,300			14,516			11,636
Gross profit		1,191			1,524			2,678			2,599
Operating expenses
Research and development		334			351			998			1,104
Selling, general and administrative		596			730			1,947			2,167
Restructuring and other		—			27			161			130
Total operating expenses		930			1,108			3,106			3,401
Income (loss) from operations		261			416			(428	)		(802	)
Interest income		15			7			34			17
Interest expense		(185	)		(175	)		(515	)		(488	)
Other income, net		85			23			70			36
Income (loss) before income taxes		176			271			(839	)		(1,237	)
Provision for income taxes		26			17			68			36
Net income (loss)		150			254			(907	)		(1,273	)
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries		7			(57	)		60			(157	)
Net income (loss) attributable to common stockholders	$	143		$	311		$	(967	)	$	(1,116	)
Net income (loss) per share of common stock attributable to common stockholders
Basic	$	0.80		$	1.82			(5.54	)	$	(6.56	)
Diluted	$	0.78		$	1.75			(5.54	)	$	(6.56	)
Weighted average shares used in computing net income (loss) per share of common stock
Basic		179			171			176			170
Diluted		184			178			176			170

The accompanying notes are an integral part of these consolidated financial statements.

Tesla, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in millions)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss)	$	150		$	254		$	(907	)	$	(1,273	)
Other comprehensive loss:
Foreign currency translation adjustment		(114	)		(10	)		(112	)		(25	)
Comprehensive income (loss)		36			244			(1,019	)		(1,298	)
Less: Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries		7			(57	)		60			(157	)
Comprehensive income (loss) attributable to common stockholders	$	29		$	301		$	(1,079	)	$	(1,141	)

The accompanying notes are an integral part of these consolidated financial statements.

Tesla, Inc.

Consolidated Statements of Redeemable Noncontrolling Interests and Equity

(in millions, except per share data)

(unaudited)

												Accumulated
	Redeemable						Additional					Other		Total		Noncontrolling
	Noncontrolling		Common Stock				Paid-In		Accumulated			Comprehensive		Stockholders'		Interests in		Total
Three Months Ended September 30, 2018	Interests		Shares		Amount		Capital		Deficit			Income		Equity		Subsidiaries		Equity
Balance as of June 30, 2018	$	540		171	$	0	$	9,657	$	(5,768	)	$	18	$	3,907	$	821	$	4,728
Exercises of conversion feature of convertible senior notes		—		0		0		0		—			—		0		—		0
Common stock issued		—		1		0		95		—			—		95		—		95
Stock-based compensation		—		—		—		206		—			—		206		—		206
Contributions from noncontrolling interests		76		—		—