Comprehensive Exam – January 2022

Congratulations on getting ready to achieve your degree!

The comprehensive examination is an open resources exam with all online and books,
publications or any other materials. The exam includes seven questions on the case
based upon the program objectives; at least you need to pass successfully five questions
in order to be granted an overall grade of “Pass”. You will have one-hour (1) to
download and read the case plus twelve (12) hours to answer the questions that
gives you thirteen hours in TOTAL to complete the exam.

Tesla, Inc.

Overview of Tesla, Inc

The automotive industry has seen some big changes in the last few decades. The advent
of new sources has always been related to the need in finding new solutions, especially
in periods in which the oil price was increasing, or new techniques or technologies were
found to innovate how people get around. Lots of innovations that we can find in modern
vehicles came directly from 19th century, but these were either used just for small lots of
cars or dismissed ones, because the gasoline engine proved to be better with regard to
building simplicity. Tesla Motors is an example of how a start-up company can
revolutionize a traditional industry as the automotive one.

Tesla was founded by Jeffrey B. Straubel, Elon Reeve Musk, Martin Eberhard, and Marc
Tarpenning on July 1, 2003 and is headquartered in Palo Alto, California, USA.

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Tesla's mission statement is “to accelerate the world's transition to sustainable
energy.” It shows the shift towards innovative and sustainable business approaches that
are more futuristic. sedan.

“Our goal when we created Tesla a

decade ago was the same as it is
today: to accelerate the advent of
sustainable transport by bringing
compelling mass market electric cars
to market as soon as possible. If we
could have done that with our first
product, we would have, but that was
simply impossible to achieve for a startup company that had never built a car and that
had one technology iteration and no economies of scale. Our first product was going to
be expensive no matter what it looked like, so we decided to build a sports car, as that
seemed like it had the best chance of being competitive with its gasoline alternatives.”
Quoted by Elon Musk, Tesla Chairman, Product Architect & CEO, 2013

Tesla provides vehicle service centers, supercharger station, and self-driving capability.
It operates across two major target segments the automotive and energy generation and
storage. The automotive segment represents the customer durables in the motor vehicle
industry which includes the design, development, manufacture and sale of electric
vehicles. The energy generation and storage segment include the design, manufacture,
installation, sale, lease of stationary energy storage products, solar energy systems, and
sale of electricity generated by its solar energy systems and related services to
residential, commercial, and industrial customers. These are being utilized through its
website, stores, and galleries, as well as through a network of channel partners. This
segment also offers service and repairs to its energy product customers, including under
warranty; and various financing options to its solar customers. It develops energy storage
products for use in homes, commercial facilities and utility sites. This segment is also
involved in the provision of non-warranty after-sales vehicle services, sale of used

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vehicles, retail merchandise, and vehicle insurance, as well as sale of products through
its subsidiaries to third party customers. Also, it provides services for electric vehicles
through its company-owned service location. In some areas, Tesla employs what it calls
Tesla Rangers—mobile technicians who make house calls. In some cases, the service is
delivered remotely. The Model S is able to wirelessly upload data, so technicians can
view and fix some problems without ever physically touching the car.

Tesla’s vision is becoming smarter. Tesla's taking its camera-based "Tesla Vision" system
to school. After a Tesla owner posted a tweet showing how the system now recognizes
when a vehicle is at a stop with brake lights illuminated, CEO Elon Musk responded
saying the technology will soon understand a whole lot more. Specifically, the cars will
recognize hand gestures, emergency vehicle lights, vehicles with hazards on and turn
signals. Tesla still faces its own challenges. Sales of its most profitable vehicles, the
Model S luxury sedan and Model X S.U.V., have faltered and remain low. Federal safety
regulators are also looking into suspension failures in those vehicles. The company also
faces questions about the quality of its vehicles. And Tesla seemed to make little progress
toward Mr. Musk’s ambitious promise to have one million self-driving Tesla’s by the end
of 2020. The company has yet to show the world a car capable of operating without a
driver. Tesla ramped up production at a factory in China, which has fueled sales growth
in that country, the world’s largest market for conventional and electric cars. Currently,
Tesla is building new factories in Austin, Texas and Berlin, Germany to augment its
production in Fremont, California and Shanghai, China. The company also makes battery
components in Reno, Nevada and Buffalo, New York.

Despite the success of Tesla’s mission, not all of Tesla’s history has been smooth sailing.
Over the years, and in the current media climate, Tesla has garnered criticism for being
unable to follow through on promises. Yet they have shown that it is possible to keep
growing amid challenges. In 2006, Elon Musk shared his secret of success Master plan
by posting it on the Tesla website and stating with a tag (Between you and me) and this
was two years just before the car was in production. In his post, Elon said ‘the overarching
purpose of Tesla Motors (and the reason I am funding the company) is to help expedite

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the move from a mine-and-burn hydrocarbon economy towards a solar electric economy,
which I believe to be the primary, but not exclusive, sustainable solution.’ Only a few
companies in the world have gained so much attraction and adoration as Tesla. The
automotive company has a long reputation for being unconventional. Maybe it’s the
reason why Forbes has named the company as the “Most Innovative Company.” But other
than its mainstream business, Tesla has a lot of things going on inside the company that
makes the news.

Worldwide, 70,757 full-time employees work at Tesla and its subsidiaries. Tesla’s
employee count has grown by 47.36% since 2019, in which time the company has added
22,741 new employees. The average compensation at Tesla in the US is an estimated
$153,755. Tesla employees working in the US on an H1-B visa receive a median base
salary of $130,000. Recently, Tesla’s handbook for employees got leaked on the internet,
surprising many about the company’s work ethics and culture. Written in a conversational
tone, Tesla’s Anti-Handbook is just a 4-page document that briefs the employees about
the company’s expectations from them. Tesla even mentions in it’s handbook that they
have no issues with people having employment outside of Tesla as long as it doesn’t
hamper with the productivity of the employee and that all employees are evaluated based
on the same standards. The company lays down a lot of pointers for the leave and
vacation of the employees. Commenting on the “No Show Policy” of Tesla, the document
says, “Our assumption will be that if you don’t call and don’t show up for work, you’re a
jerk. You better have a really good reason for not letting us know why you didn’t come in
or you’re out of here.” The handbook has positioned Tesla as an outlier in the auto and
tech industries. The handbook begins with, “We’re Tesla. We’re changing the world.
We’re willing to rethink everything. We’re different and we like it that way. Being different
allows us to do what no one else is doing; to do what others tell us is impossible.” When
it comes to handbooks, a lot has changed over the years. From being a long and dull
document with a lot of legal issues to its transformation as a storytelling tool, handbooks
have become a collection of the company’s spirit, ethos, goals, and culture. And, Tesla is
just winning this game. Tesla has even increased the bar in employee engagement for its
employees by opening up an “Answer Bar” at its headquarters. Inspired by the Genius

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Bar in Apple stores, where you can ask any question about Apple products and services,
Tesla’s Answer Bar, however, allows employees to meet and greet HR staff and get
answers to any and all questions, like benefits, or to provide feedback. The idea behind
this is that the company wants to have an open dialogue with its employees, to foster their
relationship – and thus boost employee loyalty – and to empower employees with
knowledge.

Tesla products and the demand for its cars

Tesla is active in the energy production and storage sector, with the Tesla Energy brand
as mentioned earlier. On the 30th April 2015 Musk announced the availability by the end
of the year of a battery pack that allows to generate the energy required to power a house.
This device takes energy from solar panels, or from the grid when the price of utilities is
less expensive, and it stores this energy into lithium-ion batteries, energy that will be
available whenever needed. Its functions are the following: it prevents power outages, by
providing a backup electricity supply; it can be combined with other similar Powerwalls to
provide more energy; it can make a home independent from the power grid; it is easy to
install and needs no maintenance. The electricity stored from solar panels or taken from
the energy network is converted through an inverter to make it possible to use it inside
the house.

Tesla commercializes another version, the Powerpack, intended for industrial buyers,
which can stock up to 100 KW of electricity. The Powerwall has been an instantaneous
success, in fact it allowed Tesla to gain over $800 million in reservations just in the first
week. After the presentation, two other producers decided to offer similar products:
Daimler AG announced that its version will be on the market by the end of 2015, using a
lithium-ion battery; BYD (a Chinese car and battery producer) announced the production
of a 5 MW system, which will allow to power about 2,500 homes.

Another Tesla product is the Supercharger. Tesla operates 3,059 Supercharger stations
in over 40 countries as of October 2021, it has added 1,652 new Supercharger stations.
The US and China account for 65.54% of all Tesla Supercharger Stations While the Tesla

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Supercharger network extends to over 40 countries, the vast majority (86.6%) of stations
are located in just 10 countries. It represents the fastest way to charge an electric vehicle
at the moment, they are located near points of interest like shopping malls, restaurants,
and cafes so that the customers can eat something or surf the net during the recharge
process. All Superchargers have from 2 to 12 parking stalls, where the chargers
guarantee that the batteries of an 85 KW Tesla Model S will be fully charged in 75
minutes, while a 50% charge takes just 20 minutes. Moreover, the recharge is free
because Superchargers use the solar power or other renewable sources, so it is fully
sustainable.

As the electric vehicle market is changing fast, with Tesla among those leading the way,
there is clearly a demand for Tesla cars. Every month the company seems to set new
sales records. But despite the demand, there is a bottleneck in production, creating a
waitlist for backordered vehicles that is growing steadily. Unlike established car
companies, Tesla does not have the manufacturing capacity to meet the current demand
all at once. Because the demand exceeds the current supply, basic economics suggests
that the price would be bid up. Tesla seems to be constrained by production, not demand.
The demand is fuelled in part by the green energy movement. Because Tesla cars are
all-electric, they do not consume greenhouse gas-emitting gasoline and do not directly
create carbon dioxide. It remains true, however, that CO2 is a by-product of the electrical
generation needed to charge the car's batteries. Demand is also driven by Tesla's sleek,
modern design and its high-tech driver interface and dashboard that features an
impressive all-digital, touch-sensitive display. Tesla cars are expensive, but that hasn't
stopped people from lining up to buy them. Batteries to store and use electrical power are
the most expensive single component of these cars. One of management's main goals
has been to reduce the battery costs per kilowatt-hour for its cars, and the company has
made some significant headway toward that goal.

Tesla brands, market prices and customers

In June 2012, the company released the Tesla Model S, a vehicle aimed at the luxury
brand segment of the market costing between $50k up to $90k. By 2015 they had sold

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over 100,000 Model S cars. The Model X, a hybrid SUV with the falcon wing doors
followed in 2015. In Mid-2017, production of the Tesla 3 began, with over 300,000 being
sold by late 2019. The Tesla 3 is aimed at the mass market and is labeled as a family car.
The launch of the Tesla 3 aligns perfectly with Elon Musk’s vision and business model to
build more affordable cars over the years.

In mid-2020, the average sticker price for an electric vehicle was a hefty $19,000 higher
than the average for a gasoline-powered car.1 Small-scale production simply costs more.
But the gap is beginning to close. The 2021 Tesla Model 3 starts at $37,900, while the
Model S base price is $69,420 and the Model X is $79,900. This reflects Musk's initial
assertion that his company had to start out with a luxury offering in order to get established
before ramping up to include (relatively) more affordable models. The other main reason
for Tesla cars' high sticker price is the very high cost of the electric battery packs that
supply these vehicles with power. The market analysis before the launch of Tesla Model
S indicated that the market segment that was targeted had been identified as primarily
males ages 25-60. They tended to have good jobs, are at a comfortable stage in their
lives, and have an annual household income of $100,000 or more. They live in urban or
urban fringe areas. Some of them can have up to 2-hour commutes to work and want a
luxury vehicle to make the long ride enjoyable. Many of Tesla’s target customers were
parents. They wanted a high-performance luxury vehicle for themselves but needed the
room and the safety for their families as well. In addition to being responsible for their
family consumption effect on environment. It was analyzed that Tesla’s customers had a
“West Coast” mentality concerning their attitude towards the environment and being on
top of trends. In regard to the product diffusion curve the Model S targeted innovators, a
group of well-informed customers who were willing to take a risk on an unproven product.
This group made up 2.5% of customers. While Tesla targeted its sales on the innovators
its marketing efforts also focused on educating the early adopters who made up the next
13.5% of customers.

However, Tesla has developed a line of luxurious electric vehicles that harbor both
performance and style, while still maintaining a competitive price to its target market.

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Customers wanted to stop paying for gasoline, especially if prices continue to rise. There
was also a trend with U.S. customers wanting to reduce their carbon footprint and live
more eco-friendly lives.

Tesla positioning and competition

Tesla Motors is unique in that it has essentially positioned itself in its own industry. There
are no other companies on the market that offer both the fully electric capabilities and the
luxurious features that Tesla offers. To market the Model S, Tesla will be competing in
both the luxury automobile market as well as the electric vehicle market. The electric
vehicle industry will be defined as any vehicle that utilizes electricity to supplement the
use of gasoline. The category includes luxury minivans, SUVs, convertibles, and sedans.
The original target of the Tesla Roadster included the upper-class business executives
and others who were looking for a high-end luxury car. The Tesla Roadster required a
large down payment and cost over $100,000, leading it to be unavailable to most
customers who were looking at higher-end cars, or below. The segment of this market
focused on males who were looking for a luxury sports car that also had an electric motor.
The segment was dominated by males because of the sports car aspect of the brand and
the availability. The Tesla Roadster was not only efficient, it was also fast and drove like
a true sports car. Since there is little price sensitivity in the luxury car market, companies
must compete primarily on product differentiation. The key success factors for the luxury
car industry are comfort, innovation, quality, and safety. Customers are willing to pay
more for one luxury car over another because of the perceived value and prestige of
owning a car with such attributes as the latest technology, the most comfortable driving
experience, the performance to handle all conditions, and superior safety that is shown
in the crash test high ratings.

Two notable competitors, the Chevrolet Bolt and the Nissan Leaf, failed to gain early
traction because of high retail prices and limited driving range. The Nissan Leaf starts at
$27,400 before incentives, with a range of up to 226 miles, as of October 2021. The 2022
model of the Chevrolet Bolt, starting at $31,000 before incentives, with a range of 259
miles, offers more than the 220-mile range of Tesla's standard Model 3, as of October of

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2021. Other companies plan to enter the electric car market in the next few years,
including Mercedes-Benz, Volkswagen, Subaru, Ford and BMW. If this happens, then
Tesla's market share may start to suffer because of the crowded market. Some tech
companies may also join the fray; Apple, Inc. believe they can challenge Tesla in the
transportation industry, and Google has also placed bets on the auto industry. Tesla is
admittedly concerned about businesses with broader existing customer bases.

Moreover, the eccentric CEO has proved a lightning-rod for scandal, there are now nine
pending class action lawsuits against Tesla and Musk, relating to a 2018 tweet in which
Musk falsely announced plans to take the company private. The tweet is alleged to have
been an effort to manipulate Tesla's share price, a violation of federal securities laws.
Musk's impulsive behavior also has real-world consequences. During the COVID-19
pandemic, Musk repeatedly aired misinformation about the pandemic, and criticized
lockdown restrictions as "fascist" in earnings call with Tesla investors. He later defied
public health authorities by reopening Tesla's Bay Area plant, causing a cluster of 450
infections.

Unlike other car manufacturers who sell through franchised dealerships, Tesla sells
directly to customers. It has created an international network of company-owned
showrooms and galleries, mostly in urban centers. By owning the sales channel, Tesla
believes it can gain an advantage in the speed of its product development. More
importantly, it creates a better customer buying experience. Unlike car dealerships, Tesla
showrooms have no potential conflicts of interest. Customers deal only with Tesla-
employed sales and service staff. Including the showrooms, Service Plus centers (a
combination of retail and service center), and service facilities, Tesla has 438 locations
around the world as of the end of 2021. Like its rival automakers, Tesla offers financial
services including vehicle loans and leases. For some of the loan programs, it has a
resale value guarantee provision. This provided some downside protection on a vehicle’s
value should the customer want to resell it. The bottom line is the biggest obstacle to the
mass adoption of electric vehicles: It cannot happen without the infrastructure to charge
on the go. Tesla did not invent the electric car or even the luxury electric car but Tesla did

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invent a successful business model for bringing compelling electric cars to the market.
Part of the strategy was building a network of charging stations to solve one of the
greatest obstacles facing the adoption of electric vehicles: re-fueling on long trips. Tesla’s
unique business model, which includes keeping control over sales and service, is one
reason its stock has soared since its initial public offering.

Tesla sales and value

In 2020, Tesla generated $31.54 billion in annual revenue. That’s an increase of 28.31%
compared to 2019. In the first six months of 2021, Tesla’s revenue is already $22.35
billion. Tesla's market capitalization reached 641 billion U.S. dollars at the end of March
2021, over six times its market cap of March 2020, at 96 billion U.S. dollars. Tesla was
the leader in the automotive industry for market capitalization, dwarfing second-in-the-
ranking Toyota. Tesla has manufactured 386,759 vehicles in the first two quarters of 2021
alone. Tesla’s revenue in Q1 and Q2 of year 2021 was $22.35 billion. Tesla’s worldwide
sale is at the top 10 of car manufacturers between January and August 2021 and which
were 473,136 followed by the sales of SGMW, BYD, Volkswagen, BMW, Mercedes,
SAIC, Volvo, Audi, and Kia. The main factors that led to the rise of the stock price may
be due to Tesla’s offering of “green products” which is aligned with the current global
trend that sees an increasing demand for such products; the management at Tesla has
a proven record of past success and they are passionate about making the company an
important player in the industry. Tesla’s recent expansion in Asian markets and the latest
news on pollution in that area will probably lead to an increase in the demand of such
products, making Tesla one of the most real alternative to traditional vehicles, which will
lead Tesla’s sales to rapidly grow and thus make more profits. The value of the brand has
risen so dramatically that CEO Elon Musk became the richest person in the world as a
result. For a company that spends zero dollars on marketing, it is astounding to see how
much public attention Tesla receives for their range of vehicles. In 2020, Tesla’s stock
price rose over 700%, booming the value of the brand to exceed 600 billion dollars.

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Tesla’s partnerships and innovation
At the end of 2012, Tesla had entered into two partnership contracts, one regarding the
Mercedes-Benz Smart Fortwo E-Cell and the other regarding the Toyota RAV4. Hence,
the methodology of coopetition can be used to bargain the fixed cost and unit powertrain
component cost between Tesla and Daimler/Toyota, influence the future sales of allied
firms and outsiders such as GM and Ford, and predict how and when the learning-by-
doing effect will foreshorten and finally end temporary strategic partnerships.

Tesla has strategic partnerships with big players of the automotive industry, Daimler and
Toyota, who have helped develop batteries and engines used in their production cars and
Panasonic, in the batteries sector, since 2010, who has been the only supplier of the
battery cells necessary to build battery packs in the batteries sector. In 2011, the next-
generation batteries were born from the partnership between the two companies. In 2013,
Panasonic signed another agreement to build 1.8 billion batteries for Tesla until 2017.
Tesla may be in position to disrupt industries well beyond the realm of traditional auto
manufacturing as It’s not just cars. Tesla´s strategy is different from that of any other
traditional carmaker as it can be compared to the relationship between Apple and
Foxconn, where the former builds all the key parts for its products, while the latter is
responsible for the production of batteries, displays and processors. Although Tesla has
to bear high monitoring costs when supervising and guiding powertrain component
assembly in Daimler and Toyota, Tesla experiences positive feedback from coopetition
with Daimler and Toyota, gaining extra USD 18.21 million or a 6.80% increase in profit in
its electrical vehicle (EV) market by selling powertrain components to Daimler and Toyota.

By opening Tesla Initial public (IP) portfolio, the company invites other car makers to
jointly tackle the carbon crisis through enhancing the technology and develop the EV
market compared to the gasoline powered automobiles which is minimal these days.
Within the rather traditional automotive industry, this decision caused an industry wide
stir as innovation and IP are recognized as crucial competitive factors for a company to
survive.

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Recently, Elon Musk announced the launch of Tesla Pi phone by the end of this year.
The mobile has a satellite connectivity, that has four cameras, solar charging, and
changes color in a futuristic design. In addition, the Model Pi is also rumored to have a
brain-phone interface from Neuralink.
The company is developing ultra-high bandwidth brain-
machine interfaces to connect humans and computers through
this new smart phone. With this new phone Tesla step into a
new market which is the smart phone industry and is expected
to bring a revolutionary impact in the phone universe.

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Case Questions:
1. It was quite challenging from Tesla, Inc to have a proactive vision about the future,
technology and sustainability combined together. Discuss the main schools of
management adopted at Tesla, Inc that fostered the use of innovation,
advanced technology and sustainability.

2. The personal brand of Elon Musk contributed to the strength and marketing of
Tesla’s corporate brand by which the brand values of Tesla are matching with the
values of Elon Musk himself. Discuss this statement to explain the brand
promise, brand characteristics and brand value of Tesla, Inc. used in its
marketing approach.

3. The ‘diffusion of innovation’ theory introduced by “Everett Rogers” described the

process by which an individual adopts a new idea. Based on the news about
launching Tesla’s new smart phone, assess the market potential for the
introduction of this type of revolutionary smart phones and global effects of
Tesla’s innovation on the smart phone business.

4. Strong rivalry may hinder firms from making profits. Firms have various ways to
evaluate the state of competition and take specific competitive moves, however,

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 Tesla used coopetition. Analyze the widely used Porter forces of competitive
rivalry to explain how Tesla embodied coopetition to reduce the rivalry of the
existing competition.

5. “Tesla’s human resources management & organization culture help the company
gain a sustainable competitive advantage through the strategic utilization of
people”. Discuss how Tesla’s human resources planning must be integrally
linked to its corporate strategy and what role might the company’s mission,
vision and values play in the selection of its employees.

6. Tesla’s net losses had begun to accelerate in 2014 and between 2014 and 2020,
Tesla’s losses ranged from minimum of 294 million U.S. dollars in 2014 to
maximum of 2.241 billion U.S. dollars in 2017. However, Tesla turned a full-year
profit for the first time on record in 2020. Net income of 862 million U.S. dollars in
2020. In addition, as of December 2021, Tesla’s market cap had exceeded $1
Trillion, which makes Tesla the world's 6th most valuable company by market
cap. (Check the table of the changes of Tesla market cap and stock prices,
appendix 1). Comment and make an argument of how a company that was
realizing losses till 2019 has turned to be what it is today explaining from
your point of view what are the factors that made this change and whether
Tesla is really worth this value or not!

7. Using the four-year financial statements of Tesla 2017-2020 (Appendix 2),

evaluate and explain the profitability, solvency, liquidity, activity and market
dimensions of Tesla’s financial performance highlighting the main
weaknesses and strengths of Tesla. [Only computation of ratios without
proper analysis would not be considered as the expected solution and will
result in a “Zero” in this question].

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 Appendix (1)

Changes of Tesla Market Cap and Stock Prices

Stock Prices
Year Market Cap Change As of
31/12/20XX
$958.51 (As of
2021 $1.071 T 60.19%
30 Sept 2021)
2020 $668.90B 783.42% $667.93
2019 $75.71B 31.82% $104.80
2018 $57.44B 9.77% $55.97
2017 $52.32B 52.01% $53.23
2016 $34.42B 9.13% $55.66
2015 $31.54B 12.84% $45.95
2014 $27.95B 50.97% $37.75
2013 $18.51B 378.65% $41.69
2012 $3.86B 29.87% $7.58
2011 $2.97B 17.86% $7.45
2010 $2.52B --- $5.55

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 Appendix (2)

Tesla, Inc.
Consolidated Balance Sheets
(in millions of $, except per share data)

December 31, December 31, December 31, December 31,

2017 2018 2019 2020
Assets
Current assets
Cash and cash equivalents 3,368 3,686 6,268 19,384
Restricted cash 155 193 ---
Accounts receivable, net 515 949 1,324 1,886
Inventory 2,264 3,113 3,552 4,101
Prepaid expenses and other current assets 268 366 959 1,346
Total current assets 6,570 8,307 12,103 26,717
Operating lease vehicles, net 4,117 2,090 2,447 3,091
Solar energy systems, leased and to be leased, net 6,347 6,271 6,138 5,979
Property, plant and equipment, net 10,028 11,330 10,396 12,747
Operating lease right-of-use assets --- --- 1,218 1,558
Intangible assets, net 362 282 339 313
Goodwill 60 68 198 207
MyPower customer notes receivable, net of current portion 457 422 --- ---
Restricted cash, net of current portion 442 398 --- ---
Other assets 273 572 1,470 1,536
Total assets 28,656 29,740 34,309 52,148
Liabilities
Current liabilities
Accounts payable 2,390 3,404 3,771 6,051
Accrued liabilities and other 1,732 2,094 3,222 3,855
Deferred revenue 1,015 630 1,163 1,458
Resale value guarantees 787 503 --- ---
Customer deposits 854 793 726 752
Current portion of long-term debt and capital leases 797 2,568 1,785 2,132
Current portion of promissory notes issued to related parties 100 — --- ---
Total current liabilities 7,675 9,992 10,667 14,248
Long-term debt and capital leases, net of current portion 9,418 9,404 11,634 9.556
Deferred revenue, net of current portion 1,178 991 1,207 1,284
Resale value guarantees, net of current portion 2,309 329 --- ---
Other long-term liabilities 2,443 2,710 2,691 3,330
Total liabilities 23,023 23,426 26,199 28,418
Commitments and contingencies

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Redeemable noncontrolling interests in subsidiaries 398 555 643 604
Convertible senior notes --- — --- 51
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;
960, 905, 173 and 169 shares issued and outstanding as of
December 31, 2020, 2019, 2018 and 2017, respectively
Additional paid-in capital 9,178 10,250 12,737 27,261
Accumulated other comprehensive (loss) income 33 (8) (36) 363
Accumulated deficit (4,974) (5,318) (6,083) (5,399)
Total stockholders' equity 4,237 4,924 6,618 22,225
Noncontrolling interests in subsidiaries 998 834 849 850
Total liabilities and equity 28,656 29,740 34,309 52,148

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 Tesla, Inc.
Consolidated Statements of Operations
(in millions of $, except per share data)

Year Ended December 31,

Revenues 2017 2018 2019 2020

Automotive sales 8,535 17,632 19,952 26,184

Automotive leasing 1,107 883 869 1,052
Total automotive revenues 9,642 18,515 20,821 27,236
Energy generation and storage 1,116 1,555 1,531 1,994
Services and other 1,001 1,391 2,226 2,306
Total revenues 11,759 21,461 24,578 31,536
Cost of revenues
Automotive sales 6,725 13,686 15,939 19,696
Automotive leasing 708 488 459 563
Total automotive cost of revenues 7,433 14,174 16,398 20,259
Energy generation and storage 875 1,365 1,341 1,976
Services and other 1,229 1,880 2,770 2,671
Total cost of revenues 9,537 17,419 20,509 24,906
Gross profit 2,222 4,042 4,069 6,630
Operating expenses
Research and development 1,378 1,460 1,343 1,491
Selling, general and administrative 2,477 2,835 2,646 3,145
Restructuring and other --- 135 149 —
Total operating expenses 3,855 4,430 4,138 4,636
Income (loss) from operations (1,633) (388) (69) 1,994
Interest income 20 24 44 30
Interest expense (471) (663) (685) (748)
Other (expense) income, net (125) 22 45 (122)
Income (loss) before income taxes (2,209) (1,005) (665) 1,154
Provision for income taxes 32 58 110 292
Net income (loss) (2,241) (1,063) (775) 862
Net income (loss) attributable to noncontrolling interests and
redeemable noncontrolling interests in subsidiaries (279) (87) 87 141
Net income (loss) attributable to common stockholders (1,962) (976) (862) 721

Less: Buy-out of noncontrolling interest --- — 8 31

Net income (loss) used in computing net
income (loss) per share of common stock (1,962) (976) (870) 690
Net income (loss) per share of common stock attributable
to common stockholders
Basic (11.83) (5.72) (0.98) 0.74
Diluted (11.83) (5.72) (0.98) 0.64
Weighted average shares used in computing net
income (loss) per share of common stock
Basic 166 171 887 933
Diluted 166 171 887 1,083

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 Tesla, Inc.

Consolidated Statements of Cash Flows

(in millions of $)

Items 2017 2018 2019 2020

Cash Flows from Operating Activities
Net income (loss) (2,241) (1,063) (775) 862
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation, amortization and impairment 1,636 1,901 2,154 2,322
Stock-based compensation 467 749 898 1,734
Amortization of debt discounts and issuance costs 91 159 188 180
Inventory and purchase commitments write-downs 132 85 193 202
Loss on disposals of fixed assets 106 162 146 117
Foreign currency transaction net loss (gain) 52 (2) (48) 114
Loss (gain) related to SolarCity acquisition 58 --- --- ---
Non-cash interest and other operating activities 135 49 186 228
Operating cash flow related to repayment of discounted
convertible senior notes --- — (188) —
Changes in operating assets and liabilities, net of effect of
business combinations:
Accounts receivable (25) (497) (367) (652)
Inventory (179) (1,023) (429) (422)
Operating lease vehicles (1,523) (215) (764) (1,072)
Prepaid expenses and other current assets (72) (82) (288) (251)
Other non-current assets (15) (207) 115 (344)
Accounts payable and accrued liabilities 388 1,797 646 2,102
Deferred revenue 469 406 801 321
Customer deposits 170 (96) (58) 7
Resale value guarantee 209
Other long-term liabilities 81 (25) (5) 495
Net cash provided by operating activities (61) 2,098 2,405 5,943
Cash Flows from Investing Activities
Purchases of property and equipment excluding finance leases, net
of sales (3,415) (2,101) (1,327) (3,157)
Purchases of solar energy systems, net of sales (667) (218) (105) (75)
Receipt of government grants --- — 46 123
Purchase of intangible assets --- — (5) (10)
Business combinations, net of cash acquired (115) (18) (45) (13)
Net cash used in investing activities (4,197) (2,337) (1,436) (3,132)
Cash Flows from Financing Activities

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Proceeds from issuances of common stock in public offerings, net of
issuance costs 400 — 848 12,269
Proceeds from issuances of convertible and other debt 7,138 6,176 10,669 9,713
Repayments of convertible and other debt (3,995) (5,247) (9,161) (11,623)
Repayments of borrowings issued to related parties (165) (100) — —
Collateralized lease repayments 511 (559) (389) (240)
Proceeds from exercises of stock options and other stock issuances 259 296 263 417
Principal payments on finance leases (103) (181) (321) (338)
Debt issuance costs (63) (15) (37) (6)
Purchase of convertible note hedges (204) — (476) —
Proceeds from settlement of convertible note hedges 287 --- --- ---
Proceeds from issuance of warrants 53 — 174 —
Payments for settlements of warrants (230)
Proceeds from investments by noncontrolling interests in subsidiaries 790 437 279 24
Distributions paid to noncontrolling interests in subsidiaries (262) (227) (311) (208)
Payments for buy-outs of noncontrolling interests in subsidiaries --- (6) (9) (35)
Net cash provided by financing activities 4,416 574 1,529 9,973
Effect of exchange rate changes on cash and cash equivalents and
restricted cash 40 (23) 8 334
Net increase in cash and cash equivalents and restricted cash 198 312 2,506 13,118
Cash and cash equivalents and restricted cash, beginning of period 3,767 3,965 4,277 6,783
Cash and cash equivalents and restricted cash, end of period 3,965 4,277 6,783 19,901
Supplemental Non-Cash Investing and Financing Activities
Equity issued in connection with business combination 10 — 207 —
Acquisitions of property and equipment included in liabilities 914 249 562 1,088
Estimated fair value of facilities under build-to-suit leases 313 94 — —
Supplemental Disclosures
Cash paid during the period for interest, net of amounts capitalized 183 381 455 444
Cash paid during the period for taxes, net of refunds 66 35 54 115

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