Tesla, Inc. · 2021. 3. 31. · TESLA, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021 INDEX...

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UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

Washington,D.C.20549FORM10-Q

(MarkOne)☒ QUARTERLYREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF

1934ForthequarterlyperiodendedMarch31,2021

OR☐ TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF

1934CommissionFileNumber:001-34756

Tesla,Inc.(Exactnameofregistrantasspecifiedinitscharter)

Delaware 91-2197729(Stateorotherjurisdictionofincorporationororganization)

(I.R.S.EmployerIdentificationNo.)

3500DeerCreekRoadPaloAlto,California

(Addressofprincipalexecutiveoffices) (ZipCode)(650)681-5000

(Registrant’stelephonenumber,includingareacode)

SecuritiesregisteredpursuanttoSection12(b)oftheAct:

Titleofeachclass TradingSymbol(s) NameofeachexchangeonwhichregisteredCommonstock TSLA TheNasdaqGlobalSelectMarket

Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934(“ExchangeAct”)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.Yes☒No☐

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).Yes☒No☐

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct:

Largeacceleratedfiler ☒ Acceleratedfiler ☐

Non-acceleratedfiler ☐ Smallerreportingcompany ☐

Emerginggrowthcompany ☐

Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.☐

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).Yes☐No☒AsofApril21,2021,therewere963,330,448sharesoftheregistrant’scommonstockoutstanding.

TESLA,INC.

FORM10-QFORTHEQUARTERENDEDMARCH31,2021

INDEX PagePARTI.FINANCIALINFORMATION Item1. FinancialStatements(Unaudited) 4 ConsolidatedBalanceSheets 4 ConsolidatedStatementsofOperations 5 ConsolidatedStatementsofComprehensiveIncome(Loss) 6 ConsolidatedStatementsofRedeemableNoncontrollingInterestsandEquity 7 ConsolidatedStatementsofCashFlows 8 NotestoConsolidatedFinancialStatements 9Item2. Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations 29Item3. QuantitativeandQualitativeDisclosuresAboutMarketRisk 39Item4. ControlsandProcedures 39 PARTII.OTHERINFORMATION Item1. LegalProceedings 40Item1A. RiskFactors 41Item2. UnregisteredSalesofEquitySecuritiesandUseofProceeds 54Item3. DefaultsUponSeniorSecurities 54Item4. MineSafetyDisclosures 54Item5. OtherInformation 54Item6. Exhibits 54 Signatures 56

Forward-LookingStatementsThediscussionsinthisQuarterlyReportonForm10-Qcontainforward-lookingstatementsreflectingourcurrentexpectationsthatinvolverisksanduncertainties.Theseforward-lookingstatementsinclude,butarenotlimitedto,statementsconcerninganypotentialfutureimpactofthecoronavirusdisease(“COVID-19”)pandemiconourbusiness,ourstrategy,futureoperations,futurefinancialposition,futurerevenues,projectedcosts,profitability,expectedcostreductions,capitaladequacy,expectationsregardingdemandandacceptanceforourtechnologies,growthopportunitiesandtrendsinthemarketinwhichweoperate,prospectsandplansandobjectivesofmanagement.Thewords“anticipates,”“believes,”“could,”“estimates,”“expects,”“intends,”“may,”“plans,”“projects,”“will,”“would”andsimilarexpressionsareintendedtoidentifyforward-lookingstatements,althoughnotallforward-lookingstatementscontaintheseidentifyingwords.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatementsandyoushouldnotplaceunduerelianceonourforward-lookingstatements.Actualresultsoreventscoulddiffermateriallyfromtheplans,intentionsandexpectationsdisclosedintheforward-lookingstatementsthatwemake.Theseforward-lookingstatementsinvolverisksanduncertaintiesthatcouldcauseouractualresultstodiffermateriallyfromthoseintheforward-lookingstatements,including,withoutlimitation,theriskssetforthinPartII,Item1A,“RiskFactors”inthisQuarterlyReportonForm10-QandinourotherfilingswiththeSecuritiesandExchangeCommission(the"SEC").Wedonotassumeanyobligationtoupdateanyforward-lookingstatements.

PARTI.FINANCIALINFORMATIONITEM1.FINANCIALSTATEMENTS

Tesla,Inc.ConsolidatedBalanceSheets

(inmillions,exceptpersharedata)(unaudited)

March31, December31, 2021 2020

Assets Currentassets Cashandcashequivalents $ 17,141 $ 19,384 Accountsreceivable,net 1,890 1,886 Inventory 4,132 4,101 Prepaidexpensesandothercurrentassets 1,542 1,346 Totalcurrentassets 24,705 26,717

Operatingleasevehicles,net 3,396 3,091 Solarenergysystems,net 5,933 5,979 Property,plantandequipment,net 13,868 12,747 Operatingleaseright-of-useassets 1,647 1,558 Digitalassets,net 1,331 — Intangibleassets,net 299 313 Goodwill 206 207 Othernon-currentassets 1,587 1,536

Totalassets $ 52,972 $ 52,148 Liabilities Currentliabilities Accountspayable $ 6,648 $ 6,051 Accruedliabilitiesandother 4,073 3,855 Deferredrevenue 1,592 1,458 Customerdeposits 745 752 Currentportionofdebtandfinanceleases 1,819 2,132 Totalcurrentliabilities 14,877 14,248

Debtandfinanceleases,netofcurrentportion 9,053 9,556 Deferredrevenue,netofcurrentportion 1,294 1,284 Otherlong-termliabilities 3,283 3,330

Totalliabilities 28,507 28,418 Commitmentsandcontingencies(Note12) Redeemablenoncontrollinginterestsinsubsidiaries 601 604 Convertibleseniornotes(Note10) — 51 Equity Stockholders'equity Preferredstock;$0.001parvalue;100sharesauthorized;nosharesissuedandoutstanding — — Commonstock;$0.001parvalue;2,000sharesauthorized;963and960sharesissuedandoutstandingasofMarch31,2021andDecember31,2020,respectively 1 1 Additionalpaid-incapital 27,623 27,260 Accumulatedothercomprehensiveincome 143 363 Accumulateddeficit (4,750 ) (5,399 )Totalstockholders'equity 23,017 22,225

Noncontrollinginterestsinsubsidiaries 847 850 Totalliabilitiesandequity $ 52,972 $ 52,148

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.4

Tesla,Inc.

ConsolidatedStatementsofOperations(inmillions,exceptpersharedata)

(unaudited)

ThreeMonthsEndedMarch31, 2021 2020

Revenues Automotivesales $ 8,705 $ 4,893 Automotiveleasing 297 239 Totalautomotiverevenues 9,002 5,132

Energygenerationandstorage 494 293 Servicesandother 893 560 Totalrevenues 10,389 5,985

Costofrevenues Automotivesales 6,457 3,699 Automotiveleasing 160 122 Totalautomotivecostofrevenues 6,617 3,821

Energygenerationandstorage 595 282 Servicesandother 962 648 Totalcostofrevenues 8,174 4,751

Grossprofit 2,215 1,234 Operatingexpenses Researchanddevelopment 666 324 Selling,generalandadministrative 1,056 627 Restructuringandother (101 ) — Totaloperatingexpenses 1,621 951

Incomefromoperations 594 283 Interestincome 10 10 Interestexpense (99 ) (169 )Otherincome(expense),net 28 (54 )Incomebeforeincometaxes 533 70 Provisionforincometaxes 69 2 Netincome 464 68 Netincomeattributabletononcontrollinginterestsandredeemablenoncontrollinginterestsinsubsidiaries

26 52 Netincomeattributabletocommonstockholders $ 438 $ 16 Netincomepershareofcommonstockattributabletocommonstockholders(1)

Basic $ 0.46 $ 0.02 Diluted $ 0.39 $ 0.02

Weightedaveragesharesusedincomputingnetincomepershareofcommonstock(1)

Basic 961 915 Diluted 1,133 994

(1) Priorperiodresultshavebeenadjustedtoreflectthefive-for-onestockspliteffectedintheformofastockdividendinAugust2020.

Tesla,Inc.

ConsolidatedStatementsofComprehensiveIncome(Loss)(inmillions)(unaudited)

ThreeMonthsEndedMarch31, 2021 2020 Netincome $ 464 $ 68 Othercomprehensiveincome(loss):

Foreigncurrencytranslationadjustment (220 ) (77 )Comprehensiveincome(loss) 244 (9 )Less:Comprehensiveincomeattributabletononcontrollinginterestsandredeemablenoncontrollinginterestsinsubsidiaries 26 52 Comprehensiveincome(loss)attributabletocommonstockholders $ 218 $ (61 )

Tesla,Inc.

ConsolidatedStatementsofRedeemableNoncontrollingInterestsandEquity(inmillions,exceptpersharedata)

(unaudited)

Accumulated Redeemable Additional Other Total Noncontrolling Noncontrolling CommonStock Paid-In Accumulated Comprehensive Stockholders' Interestsin Total

Interests Shares(1) Amount(1) Capital(1) Deficit Loss Equity Subsidiaries Equity BalanceasofDecember31,2019

$ 643 905 $ 1 $12,736

$(6,083

) $ (36 ) $ 6,618 $ 849 $ 7,467 Adjustmentsforpriorperiodsfrom

adoptingASU2016-13 — — — — (37 ) — (37 ) — (37 )

Reclassificationbetweenequityand

mezzanineequityforconvertible

seniornotes — — — (60 ) — — (60 ) — (60 )

Issuanceofcommonstockforequity

incentiveawards — 7 0 160 — — 160 — 160 IssuanceofcommonstockinFeb

2020publicoffering,netof

issuancecostsof$28 — 15 0 2,309 — — 2,309 — 2,309 Stock-basedcompensation — — — 244 — — 244 — 244 Contributionsfromnoncontrolling

interests 2 — — — — — — 17 17 Distributionstononcontrolling

interests (14 ) — — — — — — (50 ) (50 )

Netincome 1 — — — 16 — 16 51 67 Othercomprehensiveloss — — — — — (77 ) (77 ) — (77 )

BalanceasofMarch31,2020 $ 632 927 $ 1 $ 15,389 $ (6,104 ) $ (113 ) $ 9,173 $ 867 $ 10,040

Accumulated Redeemable Additional Other Total Noncontrolling Noncontrolling CommonStock Paid-In Accumulated Comprehensive Stockholders' Interestsin Total

Interests Shares Amount Capital

Deficit

(Loss)Income Equity Subsidiaries Equity BalanceasofDecember31,2020 $ 604 960 $ 1 $ 27,260 $ (5,399 ) $ 363 $ 22,225 $ 850 $ 23,075 Adjustmentsforpriorperiodsfrom

adoptingASU2020-06 — — — (474 ) 211 — (263 ) — (263 )

Exercisesofconversionfeatureof

convertibleseniornotes — 0 0 11 — — 11 — 11 Issuanceofcommonstockforequity

incentiveawards — 3 0 183 — — 183 — 183 Stock-basedcompensation — — — 643 — — 643 — 643 Distributionstononcontrolling

interests (12 ) — — — — — — (20 ) (20 )

Netincome 9 — — — 438 — 438 17 455 Othercomprehensiveloss — — — — — (220 ) (220 ) — (220 )

BalanceasofMarch31,2021 $ 601 963 $ 1 $ 27,623 $ (4,750 ) $ 143 $ 23,017 $ 847 $ 23,864 (1) Priorperiodresultshavebeenadjustedtoreflectthefive-for-onestockspliteffectedintheformofastockdividendinAugust2020.

Tesla,Inc.

ConsolidatedStatementsofCashFlows(inmillions)(unaudited)

ThreeMonthsEndedMarch31, 2021 2020 CashFlowsfromOperatingActivities Netincome

$ 464 $68

Adjustmentstoreconcilenetincometonetcashprovidedby(usedin)operatingactivities:

Depreciation,amortizationandimpairment 621 553 Stock-basedcompensation 614 211 Inventoryandpurchasecommitmentswrite-downs 49 45 Foreigncurrencytransactionnet(gain)loss (2 ) 19 Non-cashinterestandotheroperatingactivities 8 111 Digitalassetsgain,net (101 ) — Changesinoperatingassetsandliabilities: Accountsreceivable (24 ) (14 )

Inventory (106 ) (981 )

Operatingleasevehicles (426 ) (197 )

Prepaidexpensesandothercurrentassets (143 ) (154 )

Othernon-currentassets (168 ) 40 Accountspayableandaccruedliabilities 672 (265 )

Deferredrevenue 162 53 Customerdeposits (2 ) 88 Otherlong-termliabilities 23 (17 )

Netcashprovidedby(usedin)operatingactivities 1,641 (440 )

CashFlowsfromInvestingActivities Purchasesofpropertyandequipmentexcludingfinanceleases,netofsales (1,348 ) (455 )

Purchasesofsolarenergysystems,netofsales (12 ) (26 )

Purchasesofdigitalassets (1,500 ) — Proceedsfromsalesofdigitalassets 272 — Receiptofgovernmentgrants 6 1

Netcashusedininvestingactivities (2,582 ) (480 )

CashFlowsfromFinancingActivities Proceedsfromissuancesofcommonstockinpublicofferings,netofissuancecosts — 2,309 Proceedsfromissuancesofconvertibleandotherdebt 2,983 2,802 Repaymentsofconvertibleandotherdebt (4,038 ) (2,318 )

Collateralizedleaserepayments (6 ) (97 )

Proceedsfromexercisesofstockoptionsandotherstockissuances 183 160 Principalpaymentsonfinanceleases (101 ) (100 )

Debtissuancecosts (5 ) — Proceedsfrominvestmentsbynoncontrollinginterestsinsubsidiaries — 19 Distributionspaidtononcontrollinginterestsinsubsidiaries (32 ) (67 )

Netcash(usedin)providedbyfinancingactivities (1,016 ) 2,708 Effectofexchangeratechangesoncashandcashequivalentsandrestrictedcash (221 ) (24 )

Net(decrease)increaseincashandcashequivalentsandrestrictedcash (2,178 ) 1,764 Cashandcashequivalentsandrestrictedcash,beginningofperiod 19,901 6,783 Cashandcashequivalentsandrestrictedcash,endofperiod $ 17,723 $ 8,547 SupplementalNon-CashInvestingandFinancingActivities Acquisitionsofpropertyandequipmentincludedinliabilities $ 1,061 $ 415 Leasedassetsobtainedinexchangeforfinanceleaseliabilities $ 64 $ 32 Leasedassetsobtainedinexchangeforoperatingleaseliabilities $ 179 $ 60

Tesla,Inc.

NotestoConsolidatedFinancialStatements(unaudited)

Note1–Overview

Tesla,Inc.(“Tesla”,the“Company”,“we”,“us”or“our”)wasincorporatedintheStateofDelawareonJuly1,2003.Wedesign,develop,manufactureandsellhigh-performancefullyelectricvehiclesanddesign,manufacture,installandsellsolarenergygenerationandenergystorageproducts.OurChiefExecutiveOfficer,asthechiefoperatingdecisionmaker(“CODM”),organizesourcompany,managesresourceallocationsandmeasuresperformanceamongtwooperatingandreportablesegments:(i)automotiveand(ii)energygenerationandstorage.

Beginninginthefirstquarterof2021,therehasbeenatrendinmanypartsoftheworldofincreasingavailabilityandadministrationofvaccinesagainstCOVID-19,aswellasaneasingofrestrictionsonsocial,business,travelandgovernmentactivitiesandfunctions.Ontheotherhand,infectionratesandregulationscontinuetofluctuateinvariousregionsandthereareongoingglobalimpactsresultingfromthepandemic,includingchallengesandincreasesincostsforlogisticsandsupplychains,suchasincreasedportcongestion,intermittentsupplierdelaysandashortfallofmicrochipsupply.Wehavealsopreviouslybeenaffectedbytemporarymanufacturingclosures,employmentandcompensationadjustments,andimpedimentstoadministrativeactivitiessupportingourproductdeliveriesanddeployments.

Note2–SummaryofSignificantAccountingPoliciesUnauditedInterimFinancialStatements

TheconsolidatedbalancesheetasofMarch31,2021,theconsolidatedstatementsofoperations,theconsolidatedstatementsofcomprehensiveincome,theconsolidatedstatementsofredeemablenoncontrollinginterestsandequity,andtheconsolidatedstatementsofcashflowsforthethreemonthsendedMarch31,2021and2020,aswellasotherinformationdisclosedintheaccompanyingnotes,areunaudited.TheconsolidatedbalancesheetasofDecember31,2020wasderivedfromtheauditedconsolidatedfinancialstatementsasofthatdate.TheinterimconsolidatedfinancialstatementsandtheaccompanyingnotesshouldbereadinconjunctionwiththeannualconsolidatedfinancialstatementsandtheaccompanyingnotescontainedinourAnnualReportonForm10-KfortheyearendedDecember31,2020.

Theinterimconsolidatedfinancialstatementsandtheaccompanyingnoteshavebeenpreparedonthesamebasisastheannualconsolidatedfinancialstatementsand,intheopinionofmanagement,reflectalladjustments,whichincludeonlynormalrecurringadjustments,necessaryforafairstatementoftheresultsofoperationsfortheperiodspresented.Theconsolidatedresultsofoperationsforanyinterimperiodarenotnecessarilyindicativeoftheresultstobeexpectedforthefullyearorforanyotherfutureyearsorinterimperiods.

UseofEstimates

ThepreparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciples(“GAAP”)requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassets,liabilities,revenues,costsandexpensesandrelateddisclosuresintheaccompanyingnotes.

DuetotheCOVID-19pandemic,therehasbeenuncertaintyanddisruptionintheglobaleconomyandfinancialmarketswhichcouldimpactourestimatesandassumptions.WehaveassessedtheimpactandarenotawareofanyspecificeventsorcircumstancesthatrequiredanupdatetoourestimatesandassumptionsormateriallyaffectedthecarryingvalueofourassetsorliabilitiesasofthedateofissuanceofthisQuarterlyReportonForm10-Q.Theseestimatesmaychangeasneweventsoccurandadditionalinformationisobtained.Actualresultscoulddiffermateriallyfromtheseestimatesunderdifferentassumptionsorconditions.

RevenueRecognitionRevenuebysourceThefollowingtabledisaggregatesourrevenuebymajorsource(inmillions):

Automotivesaleswithoutresalevalueguarantee $ 8,013 $ 4,367 Automotivesaleswithresalevalueguarantee 174 172 Automotiveregulatorycredits 518 354 Energygenerationandstoragesales 383 173 Servicesandother 893 560 Totalrevenuesfromsalesandservices 9,981 5,626

Automotiveleasing 297 239 Energygenerationandstorageleasing 111 120 Totalrevenues $ 10,389 $ 5,985

AutomotiveSegmentAutomotiveSalesRevenueAutomotiveSaleswithandwithoutResaleValueGuarantee

WerecognizerevenuewhencontroltransfersupondeliverytocustomersinaccordancewithASC606asasalewitharightofreturnwhenwedonotbelievethecustomerhasasignificanteconomicincentivetoexercisetheresalevalueguaranteeprovidedtothematcontractinception.Thetotalsalesreturnreserveonvehiclespreviouslysoldunderourbuybackoptionsprogramwas$629millionand$703millionasofMarch31,2021andDecember31,2020,respectively,ofwhich$206millionand$202millionwasshortterm,respectively.

DeferredrevenueactivityrelatedtotheaccesstoourSuperchargernetwork,internetconnectivity,FullSelfDriving(“FSD”)featuresandover-the-airsoftwareupdatesonautomotivesaleswithandwithoutresalevalueguaranteeamountedto$2.00billionand$1.93billionasofMarch31,2021andDecember31,2020,respectively.

Deferredrevenueisequivalenttothetotaltransactionpriceallocatedtotheperformanceobligationsthatareunsatisfied,orpartiallyunsatisfied,asofthebalancesheetdate.RevenuerecognizedfromthedeferredrevenuebalanceasofDecember31,2020and2019was$79millionand$57millionforthethreemonthsendedMarch31,2021and2020,respectively.OfthetotaldeferredrevenueonautomotivesaleswithandwithoutresalevalueguaranteesasofMarch31,2021,weexpecttorecognize$1.21billionofrevenueinthenext12months.Theremainingbalancewillberecognizedovertheperformanceperiodwhichisgenerallytheexpectedownershiplifeofthevehicleortheeight-yearlifeofthevehicle.

AutomotiveRegulatoryCredits

Weearntradablecreditsintheoperationofourautomotivebusinessundervariousregulationsrelatedtozero-emissionvehicles,greenhousegas,fueleconomyandcleanfuel.Wesellthesecreditstootherregulatedentitieswhocanusethecreditstocomplywithemissionstandardsandotherregulatoryrequirements.

Paymentsforautomotiveregulatorycreditsaretypicallyreceivedatthepointcontroltransferstothecustomer,orinaccordancewithpaymenttermscustomarytothebusiness.Werecognizerevenueonthesaleofautomotiveregulatorycreditsatthetimecontroloftheregulatorycreditsistransferredtothepurchasingpartyasautomotivesalesrevenueintheconsolidatedstatementsofoperations.Deferredrevenuerelatedtosalesofautomotiveregulatorycreditswas$61millionand$21millionasofMarch31,2021andDecember31,2020,respectively.WeexpecttorecognizethemajorityofthedeferredrevenueasofMarch31,2021inthenext12months.RevenuerecognizedfromthedeferredrevenuebalanceasofDecember31,2020and2019wasimmaterialforthethreemonthsendedMarch31,2021and2020,respectively.

AutomotiveLeasingRevenueDirectSales-TypeLeasingProgram

ForthethreemonthsendedMarch31,2021,werecognized$42millionofsales-typeleasingrevenueand$26millionofsales-typeleasingcostofrevenue.Therewasnosales-typeleasingrevenueorassociatedcostofrevenuerecognizedinthethreemonthsendedMarch31,2020aswehadnotlaunchedthisoffering.

Netinvestmentinsales-typeleases,whichisthesumofthepresentvalueofthefuturecontractualleasepayments,ispresentedontheconsolidatedbalancesheetasacomponentofPrepaidexpensesandothercurrentassetsforthecurrentportionandasOtherassetsforthelong-termportion.Leasereceivablesrelatingtosales-typeleasesarepresentedontheconsolidatedbalancesheetasfollows(inmillions):

March31,2021 December31,2020

Grossleasereceivables $ 134 $ 102 Unearnedinterestincome (14 ) (11 )Netinvestmentinsales-typeleases $ 120 $ 91 Reportedas: Prepaidexpensesandothercurrentassets $ 23 $ 17 Otherassets 97 74 Netinvestmentinsales-typeleases $ 120 $ 91

EnergyGenerationandStorageSegmentEnergyGenerationandStorageSales

Werecordasdeferredrevenueanynon-refundableamountsthatarecollectedfromcustomersrelatedtofeeschargedforprepaymentsandremotemonitoringserviceandoperationsandmaintenanceservice,whichisrecognizedasrevenueratablyovertherespectivecustomercontractterm.AsofMarch31,2021andDecember31,2020,deferredrevenuerelatedtosuchcustomerpaymentsamountedto$195millionand$187million,respectively.RevenuerecognizedfromthedeferredrevenuebalanceasofDecember31,2020and2019was$33millionand$21millionforthethreemonthsendedMarch31,2021and2020respectively.AsofMarch31,2021,totaltransactionpriceallocatedtoperformanceobligationsthatwereunsatisfiedorpartiallyunsatisfiedforcontractswithanoriginalexpectedlengthofmorethanoneyearwas$107million.Ofthisamount,weexpecttorecognize$6millioninthenext12monthsandtheremainingoveraperiodupto27years.

IncomeTaxes

Therearetransactionsthatoccurduringtheordinarycourseofbusinessforwhichtheultimatetaxdeterminationisuncertain.AsofMarch31,2021andDecember31,2020,theaggregatebalancesofourgrossunrecognizedtaxbenefitswere$387millionand$380million,respectively,ofwhich$356millionand$353million,respectively,wouldnotgiverisetochangesinoureffectivetaxratesincethesetaxbenefitswouldincreaseadeferredtaxassetthatiscurrentlyfullyoffsetbyavaluationallowance.

ThelocalgovernmentofShanghaigrantedabeneficialcorporateincometaxrateof15%tocertaineligibleenterprises,comparedtothe25%statutorycorporateincometaxrateinChina.OurGigafactoryShanghaisubsidiarywasgrantedthisbeneficialincometaxrateof15%for2019through2023.

WefileincometaxreturnsintheU.S.,Californiaandvariousstateandforeignjurisdictions.WearecurrentlyunderexaminationbytheIRSfortheyears2015to2018.Additionaltaxyearswithintheperiod2004to2014and2019remainsubjecttoexaminationforfederalincometaxpurposes,andtaxyears2004to2019remainsubjecttoexaminationforCaliforniaincometaxpurposes.AllnetoperatinglossesandtaxcreditsgeneratedtodatearesubjecttoadjustmentforU.S.federalandCaliforniaincometaxpurposes.Taxyears2008to2020remainsubjecttoexaminationinotherU.S.stateandforeignjurisdictions.

Thepotentialoutcomeofthecurrentexaminationcouldresultinachangetounrecognizedtaxbenefitswithinthenexttwelvemonths.However,wecannotreasonablyestimatepossibleadjustmentsatthistime.

NetIncomeperShareofCommonStockAttributabletoCommonStockholdersBasicnetincomepershareofcommonstockattributabletocommonstockholdersiscalculatedbydividingnetincomeattributabletocommon

stockholdersbytheweighted-averagesharesofcommonstockoutstandingfortheperiod.Potentiallydilutiveshares,whicharebasedontheweighted-averagesharesofcommonstockunderlyingoutstandingstock-basedawards,warrantsandconvertibleseniornotesusingthetreasurystockmethodortheif-convertedmethod,asapplicable,areincludedwhencalculatingdilutednetincomepershareofcommonstockattributabletocommonstockholderswhentheireffectisdilutive.

OnJanuary1,2021,weadoptedASU2020-06usingthemodifiedretrospectivemethod.Followingthisadoption,weutilizetheif-convertedmethodfordilutednetincomepersharecalculationofourconvertibledebtinstruments(seeRecentAccountingPronouncementssectionbelowforfurtherdetails).DuringthethreemonthsendedMarch31,2021,weincreasednetincomeattributabletocommonstockholdersby$5milliontoarriveatthenumeratorusedtocalculatedilutednetincomepershare,whichrepresentstheinterestexpenserecognizedontheconvertibledebtinstrumentsthatweresubjecttothischangeinmethodology.

Priortotheadoption,weappliedthetreasurystockmethodwhencalculatingthepotentialdilutiveeffect,ifany,ofthefollowingconvertibleseniornoteswhichweintendedtosettleorhavesettledincashtheprincipaloutstanding:our1.25%ConvertibleSeniorNotesduein2021(“2021Notes”),2.375%ConvertibleSeniorNotesduein2022(“2022Notes”),2.00%ConvertibleSeniorNotesduein2024(“2024Notes”)andoursubsidiary’s5.50%ConvertibleSeniorNotesduein2022.Furthermore,inconnectionwiththeofferingsofourconvertibleseniornotes,weenteredintoconvertiblenotehedgesandwarrants(seeNote10,Debt).However,ourconvertiblenotehedgesarenotincludedwhencalculatingpotentiallydilutivesharessincetheireffectisalwaysanti-dilutive.Warrantswhichhaveastrikepriceaboveouraveragesharepriceduringtheperiodwereoutofthemoneyandwerenotincludedinthetablesbelow.Warrantswillbeincludedintheweighted-averagesharesusedincomputingbasicnetincomepershareofcommonstockintheperiod(s)theyaresettled.

Thefollowingtablepresentsthereconciliationofbasictodilutedweightedaveragesharesusedincomputingnetincomepershareofcommonstockattributabletocommonstockholders,asadjustedtogiveeffecttothefive-for-onestockspliteffectedintheformofastockdividendinAugust2020(the“StockSplit”)(inmillions):

Weightedaveragesharesusedincomputingnetincomepershareofcommonstock,basic 961 915 Add:

Stock-basedawards 97

Convertibleseniornotes(1) 21 30 Warrants 54 3 Weightedaveragesharesusedincomputingnetincomepershareofcommonstock,diluted 1,133 994

Thefollowingtablepresentsthepotentiallydilutivesharesthatwereexcludedfromthecomputationofdilutednetincomepershareofcommon

stockattributabletocommonstockholders,becausetheireffectwasanti-dilutive,asadjustedtogiveeffecttotheStockSplit(inmillions):

Stock-basedawards 0 0 Convertibleseniornotes(1) 1 2 (1) UnderthemodifiedretrospectivemethodofadoptionofASU2020-06,thedilutiveimpactofconvertibleseniornoteswascalculatedusingtheif-

convertedmethodforthethreemonthsendedMarch31,2021.CertainconvertibleseniornoteswerecalculatedusingthetreasurystockmethodforthethreemonthsendedMarch31,2020.Refertodiscussionaboveforfurtherdetails.

RestrictedCash

Wemaintaincertaincashbalancesrestrictedastowithdrawaloruse.Ourrestrictedcashiscomprisedprimarilyofcashascollateralforoursalestoleasepartnerswitharesalevalueguarantee,lettersofcredit,realestateleases,insurancepolicies,creditcardborrowingfacilitiesandcertainoperatingleases.Inaddition,restrictedcashincludescashreceivedfromcertainfundinvestorsthathavenotbeenreleasedforusebyusandcashheldtoservicecertainpaymentsundervarioussecureddebtfacilities.Werecordrestrictedcashasotherassetsintheconsolidatedbalancesheetsanddeterminecurrentornon-currentclassificationbasedontheexpecteddurationoftherestriction.

Ourtotalcashandcashequivalentsandrestrictedcash,aspresentedintheconsolidatedstatementsofcashflows,wasasfollows(inmillions):

March31, December31, March31, December31, 2021 2020 2020 2019

Cashandcashequivalents $ 17,141 $ 19,384 $ 8,080 $ 6,268 Restrictedcashincludedinprepaidexpensesandothercurrentassets

305 238 193 246

Restrictedcashincludedinothernon-currentassets 277 279 274 269

Totalaspresentedintheconsolidatedstatementsofcashflows $ 17,723 $ 19,901 $ 8,547 $ 6,783 AccountsReceivableandAllowanceforDoubtfulAccounts

Accountsreceivableprimarilyincludeamountsrelatedtoreceivablesfromfinancialinstitutionsandleasingcompaniesofferingvariousfinancingproductstoourcustomers,salesofenergygenerationandstorageproducts,salesofregulatorycreditstootherautomotivemanufacturers,governmentrebatesalreadypassedthroughtocustomersandmaintenanceservicesonvehiclesownedbyleasingcompanies.Weprovideanallowanceagainstaccountsreceivablefortheamountweexpecttobeuncollectible.Wewrite-offaccountsreceivableagainsttheallowancewhentheyaredeemeduncollectible.

Dependingonthedayoftheweekonwhichtheendofafiscalquarterfalls,ouraccountsreceivablebalancemayfluctuateaswearewaitingforcertaincustomerpaymentstoclearthroughourbankinginstitutionsandreceiptsofpaymentsfromourfinancingpartners,whichcantakeuptoapproximatelytwoweeksbasedonthecontractualpaymenttermswithsuchpartners.Ouraccountsreceivablebalancesassociatedwithoursalesofregulatorycredits,whicharetypicallytransferredtoothermanufacturersduringthelastfewdaysofthequarter,isdependentoncontractualpaymentterms.Additionally,governmentrebatescantakeuptoayearormoretobecollecteddependingonthecustomaryprocessingtimelinesofthespecificjurisdictionsissuingthem.Thesevariousfactorsmayhaveasignificantimpactonouraccountsreceivablebalancefromperiodtoperiod.

MyPowerCustomerNotesReceivableAsofMarch31,2021andDecember31,2020,thetotaloutstandingbalanceofMyPowercustomernotesreceivable,netofallowanceforcredit

losses,was$324millionand$334million,respectively,ofwhich$10millionand$9millionweredueinthenext12monthsasofMarch31,2021andDecember31,2020,respectively.AsofMarch31,2021andDecember31,2020,theallowanceforcreditlosseswas$45million.Inaddition,therewerenomaterialnon-accrualorpastduecustomernotesreceivableasofMarch31,2021andDecember31,2020.

ConcentrationofRiskCreditRiskFinancialinstrumentsthatpotentiallysubjectustoaconcentrationofcreditriskconsistofcash,cashequivalents,restrictedcash,accounts

receivable,convertiblenotehedges,andinterestrateswaps.OurcashbalancesareprimarilyinvestedinmoneymarketfundsorondepositathighcreditqualityfinancialinstitutionsintheU.S.Thesedepositsaretypicallyinexcessofinsuredlimits.AsofMarch31,2021andDecember31,2020,noentityrepresented10%ormoreofourtotalaccountsreceivablebalance.Theriskofconcentrationforourconvertiblenotehedgesandinterestrateswapsismitigatedbytransactingwithseveralhighly-ratedmultinationalbanks.

SupplyRiskWearedependentonoursuppliers,includingsinglesourcesuppliers,andtheinabilityofthesesupplierstodelivernecessarycomponentsofour

productsinatimelymanneratprices,qualitylevelsandvolumesacceptabletous,orourinabilitytoefficientlymanagethesecomponentsfromthesesuppliers,couldhaveamaterialadverseeffectonourbusiness,prospects,financialconditionandoperatingresults.

OperatingLeaseVehiclesThegrosscostofoperatingleasevehiclesasofMarch31,2021andDecember31,2020was$3.89billionand$3.54billion,respectively.Operating

leasevehiclesontheconsolidatedbalancesheetsarepresentednetofaccumulateddepreciationof$498millionand$446millionasofMarch31,2021andDecember31,2020,respectively.

DigitalAssets,Net

DuringthethreemonthsendedMarch31,2021,wepurchasedanaggregateof$1.50billionindigitalassets,comprisedsolelyofbitcoin.Inaddition,duringthethreemonthsendedMarch31,2021,webeganacceptingbitcoinasapaymentforsalesofcertainofourproductsinspecifiedregions,subjecttoapplicablelaws.Weaccountforsuchnon-cashconsiderationatthetimeweenterintotransactionswithourcustomersinaccordancewiththenon-cashconsiderationguidanceincludedintheAccountingStandardsCodification(“ASC”)606,RevenuefromContractswithCustomers,basedonthethencurrentquotedmarketpricesofbitcoin.

Wecurrentlyaccountforalldigitalassetsheldasaresultofthesetransactionsasindefinite-livedintangibleassetsinaccordancewithASC350,Intangibles—GoodwillandOther.Wehaveownershipofandcontroloverourbitcoinandwemayusethird-partycustodialservicestosecureit.Thedigitalassetsareinitiallyrecordedatcostandaresubsequentlyremeasuredontheconsolidatedbalancesheetatcost,netofanyimpairmentlossesincurredsinceacquisition.

WedeterminethefairvalueofourbitcoinonanonrecurringbasisinaccordancewithASC820,FairValueMeasurement,basedonquotedpricesontheactiveexchange(s)thatwehavedeterminedisitsprincipalmarketforbitcoin(Level1inputs).Weperformananalysiseachquartertoidentifywhethereventsorchangesincircumstances,principallydecreasesinthequotedpricesonactiveexchanges,indicatethatitismorelikelythannotthatourdigitalassetsareimpaired.Indeterminingifanimpairmenthasoccurred,weconsiderthelowestmarketpriceofonebitcoinquotedontheactiveexchangesinceacquiringthebitcoin.Ifthethencurrentcarryingvalueofadigitalassetexceedsthefairvaluesodetermined,animpairmentlosshasoccurredwithrespecttothosedigitalassetsintheamountequaltothedifferencebetweentheircarryingvaluesandthepricedetermined.

ImpairmentlossesarerecognizedwithinRestructuringandotherintheconsolidatedstatementsofoperationsintheperiodinwhichtheimpairmentisidentified.Theimpaireddigitalassetsarewrittendowntotheirfairvalueatthetimeofimpairmentandthisnewcostbasiswillnotbeadjustedupwardforanysubsequentincreaseinfairvalue.Gainsarenotrecordeduntilrealizeduponsale(s),atwhichpointtheyarepresentednetofanyimpairmentlossesforthesamedigitalassetsheldwithinRestructuringandother.Indeterminingthegaintoberecognizeduponsale,wecalculatethedifferencebetweenthesalespriceandcarryingvalueofthedigitalassetssoldimmediatelypriortosale.

SeeNote3,DigitalAssets,Net,forfurtherinformationregardingdigitalassets.

WarrantiesWeprovideamanufacturer’swarrantyonallnewandusedvehiclesandawarrantyontheinstallationandcomponentsoftheenergygeneration

andstoragesystemswesellforperiodstypicallybetween10to25years.Weaccrueawarrantyreservefortheproductssoldbyus,whichincludesourbestestimateoftheprojectedcoststorepairorreplaceitemsunderwarrantiesandrecallsifidentified.Theseestimatesarebasedonactualclaimsincurredtodateandanestimateofthenature,frequencyandcostsoffutureclaims.Theseestimatesareinherentlyuncertaingivenourrelativelyshorthistoryofsales,andchangestoourhistoricalorprojectedwarrantyexperiencemaycausematerialchangestothewarrantyreserveinthefuture.ThewarrantyreservedoesnotincludeprojectedwarrantycostsassociatedwithourvehiclessubjecttooperatingleaseaccountingandoursolarenergysystemsunderleasecontractsorPowerPurchaseAgreements("PPAs"),asthecoststorepairthesewarrantyclaimsareexpensedasincurred.Theportionofthewarrantyreserveexpectedtobeincurredwithinthenext12monthsisincludedwithinAccruedliabilitiesandother,whiletheremainingbalanceisincludedwithinOtherlong-termliabilitiesontheconsolidatedbalancesheets.WarrantyexpenseisrecordedasacomponentofCostofrevenuesintheconsolidatedstatementsofoperations.Duetothemagnitudeofourautomotivebusiness,accruedwarrantybalancewasprimarilyrelatedtoourautomotivesegment.Accruedwarrantyactivityconsistedofthefollowing(inmillions): ThreeMonthsEndedMarch31, 2021 2020 Accruedwarranty—beginningofperiod $ 1,468 $ 1,089 Warrantycostsincurred (116 ) (81 )Netchangesinliabilityforpre-existingwarranties,includingexpirationsandforeignexchangeimpact (1 ) 3 Provisionforwarranty 183 119 Accruedwarranty—endofperiod $ 1,534 $ 1,130

RecentAccountingPronouncementsRecentlyissuedaccountingpronouncementsnotyetadopted

InMarch2020,theFASBissuedASUNo.2020-04,FacilitationoftheEffectsofReferenceRateReformonFinancialReporting(Topic848).TheASUprovidesoptionalexpedientsandexceptionsforapplyingGAAPtotransactionsaffectedbyreferencerate(e.g.,LIBOR)reformifcertaincriteriaaremet,foralimitedperiodoftimetoeasethepotentialburdeninaccountingfor(orrecognizingtheeffectsof)referenceratereformonfinancialreporting.TheASUiseffectiveasofMarch12,2020throughDecember31,2022.Wewillevaluatetransactionsorcontractmodificationsoccurringasaresultofreferenceratereformanddeterminewhethertoapplytheoptionalguidanceonanongoingbasis.TheASUiscurrentlynotexpectedtohaveamaterialimpactonourconsolidatedfinancialstatements.

RecentlyadoptedaccountingpronouncementsInDecember2019,theFASBissuedASUNo.2019-12,SimplifyingtheAccountingforIncomeTaxes,aspartofitsinitiativetoreducecomplexityin

accountingstandards.TheamendmentsintheASUincluderemovingexceptionstoincrementalintraperiodtaxallocationoflossesandgainsfromdifferentfinancialstatementcomponents,exceptionstothemethodofrecognizingincometaxesoninterimperiodlosses,andexceptionstodeferredtaxliabilityrecognitionrelatedtoforeignsubsidiaryinvestments.Inaddition,theASUrequiresthatentitiesrecognizefranchisetaxbasedonanincrementalmethodandrequiresanentitytoevaluatetheaccountingforstep-upsinthetaxbasisofgoodwillasinsideoroutsideofabusinesscombination.WeadoptedASU2019-12starting2021,whichdidnothaveamaterialimpactonourconsolidatedfinancialstatements.

ASU2020-06InAugust2020,theFASBissuedASU2020-06,AccountingforConvertibleInstrumentsandContractsinanEntity’sOwnEquity.TheASU

simplifiestheaccountingforconvertibleinstrumentsbyremovingcertainseparationmodelsinASC470-20,Debt—DebtwithConversionandOtherOptions,forconvertibleinstruments.TheASUupdatestheguidanceoncertainembeddedconversionfeaturesthatarenotrequiredtobeaccountedforasderivativesunderTopic815,DerivativesandHedging,orthatdonotresultinsubstantialpremiumsaccountedforaspaid-incapital,suchthatthosefeaturesarenolongerrequiredtobeseparatedfromthehostcontract.Theconvertibledebtinstrumentswillbeaccountedforasasingleliabilitymeasuredatamortizedcost.ThiswillalsoresultintheinterestexpenserecognizedforconvertibledebtinstrumentstobetypicallyclosertothecouponinterestratewhenapplyingtheguidanceinTopic835,Interest.Further,theASUmadeamendmentstotheEPSguidanceinTopic260forconvertibledebtinstruments,themostsignificantimpactofwhichisrequiringtheuseoftheif-convertedmethodfordilutedEPScalculation,andnolongerallowingthenetsharesettlementmethod.TheASUalsomaderevisionstoTopic815-40,whichprovidesguidanceonhowanentitymustdeterminewhetheracontractqualifiesforascopeexceptionfromderivativeaccounting.TheamendmentstoTopic815-40changethescopeofcontractsthatarerecognizedasassetsorliabilities.TheASUiseffectiveforinterimandannualperiodsbeginningafterDecember15,2021,withearlyadoptionpermittedforperiodsbeginningafterDecember15,2020.AdoptionoftheASUcaneitherbeonamodifiedretrospectiveorfullretrospectivebasis.

OnJanuary1,2021,weadoptedtheASUusingthemodifiedretrospectivemethod.WerecognizedacumulativeeffectofinitiallyapplyingtheASUasanadjustmenttotheJanuary1,2021openingbalanceofaccumulateddeficit.Duetotherecombinationoftheequityconversioncomponentofourconvertibledebtremainingoutstanding,additionalpaidincapitalandconvertibleseniornotes(mezzanineequity)werereduced.Theremovaloftheremainingdebtdiscountsrecordedforthispreviousseparationhastheeffectofincreasingournetdebtbalanceandthereductionofproperty,plantandequipmentwasrelatedtopreviouslycapitalizedinterest.Thepriorperiodconsolidatedfinancialstatementshavenotbeenretrospectivelyadjustedandcontinuetobereportedundertheaccountingstandardsineffectforthoseperiods.

Accordingly,thecumulativeeffectofthechangesmadeonourJanuary1,2021consolidatedbalancesheetfortheadoptionoftheASUwasasfollows(inmillions):

Balancesat

December31,2020

AdjustmentsfromAdoptionofASU2020-

06 Balancesat

January1,2021

Assets Property,plantandequipment,net $ 12,747 $ (45 ) $ 12,702

Liabilities Currentportionofdebtandfinanceleases 2,132 50 2,182 Debtandfinanceleases,netofcurrentportion 9,556 219 9,775

Mezzanineequity Convertibleseniornotes 51 (51 ) —

Equity Additionalpaid-incapital 27,260 (474 ) 26,786 Accumulateddeficit (5,399 ) 211 (5,188 )

TheimpactofadoptiononourconsolidatedstatementsofoperationsforthethreemonthsendedMarch31,2021wasprimarilytodecreasenetinterestexpenseby$145millionandtodecreasedepreciationexpensebyanimmaterialamount.ThishadtheeffectofincreasingourbasicanddilutednetincomepershareofcommonstockattributabletocommonstockholdersforthethreemonthsendedMarch31,2021by$0.15and$0.13,respectively.Thechangeinmethodologytodeterminethedenominatorusedinthecalculationofdilutednetincomepershareofcommonstockattributabletocommonstockholderscontributedlessthan$0.01oftheincreasebyrequiringtheuseoftheif-convertedmethodasdiscussedabove.

Note3–DigitalAssets,NetDuringthethreemonthsendedMarch31,2021,wepurchasedandreceived$1.50billionofbitcoin.DuringthethreemonthsendedMarch31,

2021,werecorded$27millionofimpairmentlossesonbitcoin.Wealsorealizedgainsof$128millionthroughsalesduringthethreemonthsendedMarch31,2021.SuchgainsarepresentednetofimpairmentlossesinRestructuringandotherintheconsolidatedstatementofoperations.AsofMarch31,2021,thecarryingvalueofourbitcoinheldwas$1.33billion,whichreflectscumulativeimpairmentsof$27million.ThefairmarketvalueofbitcoinheldasofMarch31,2021was$2.48billion.

Note4–GoodwillandIntangibleAssetsGoodwilldecreased$1millionwithintheautomotivesegmentfrom$207millionasofDecember31,2020to$206millionasofMarch31,2021due

toforeigncurrencytranslationadjustmentsduringthethreemonthsendedMarch31,2021.TherewerenoaccumulatedimpairmentlossesasofMarch31,2021andDecember31,2020.

Informationregardingourintangibleassetsincludingassetsrecognizedfromouracquisitionswasasfollows(inmillions):

GrossCarrying

Amount Accumulated

Amortization Other NetCarrying

Amount GrossCarrying

Amount Accumulated

Amortization Other NetCarrying

Amount Finite-livedintangibleassets: Developedtechnology $ 302 $ (122 ) $ 3 $ 183 $ 302 $ (111 ) $ 3 $ 194 Tradenames 3 (1 ) — 2 3 (1 ) — 2 Favorablecontractsand

leases,net 113 (34 ) — 79 113 (32 ) — 81 Other 38 (19 ) 1 20 38 (18 ) 1 21 Totalfinite-lived

intangibleassets 456 (176 ) 4 284 456 (162 ) 4 298 Indefinite-livedintangibleassets: GigafactoryNevada

waterrights 15 — — 15 15 — — 15 Totalintangibleassets $ 471 $ (176 ) $ 4 $ 299 $ 471 $ (162 ) $ 4 $ 313

Totalfutureamortizationexpenseforfinite-livedintangibleassetswasestimatedasfollows(inmillions):

NinemonthsendingDecember31,2021 $ 37 2022 50 2023 44 2024 29 2025 29 Thereafter 95 Total $ 284

Note5–FairValueofFinancialInstruments

ASC820,FairValueMeasurements,statesthatfairvalueisanexitprice,representingtheamountthatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipants.Assuch,fairvalueisamarket-basedmeasurementthatshouldbedeterminedbasedonassumptionsthatmarketparticipantswoulduseinpricinganassetoraliability.Thethree-tieredfairvaluehierarchy,whichprioritizeswhichinputsshouldbeusedinmeasuringfairvalue,iscomprisedof:(LevelI)observableinputssuchasquotedpricesinactivemarkets;(LevelII)inputsotherthanquotedpricesinactivemarketsthatareobservableeitherdirectlyorindirectlyand(LevelIII)unobservableinputsforwhichthereislittleornomarketdata.Thefairvaluehierarchyrequirestheuseofobservablemarketdatawhenavailableindeterminingfairvalue.Ourassetsandliabilitiesthatweremeasuredatfairvalueonarecurringbasiswereasfollows(inmillions):

March31,2021 December31,2020 FairValue LevelI LevelII LevelIII FairValue LevelI LevelII LevelIII Moneymarketfunds(cashandcashequivalents) $ 11,366 $ 11,366 $ — $ — $ 13,847 $ 13,847 $ — $ —Interestrateswapliabilities 30 — 30 — 58 — 58 — Total $ 11,396 $ 11,366 $ 30 $ — $ 13,905 $ 13,847 $ 58 $ —

AllofourmoneymarketfundswereclassifiedwithinLevelIofthefairvaluehierarchybecausetheywerevaluedusingquotedpricesinactivemarkets.OurinterestrateswapswereclassifiedwithinLevelIIofthefairvaluehierarchybecausetheywerevaluedusingalternativepricingsourcesormodelsthatutilizedmarketobservableinputs,includingcurrentandforwardinterestrates.

InterestRateSwapsWeenterintofixed-for-floatinginterestrateswapagreementstoswapvariableinterestpaymentsoncertaindebtforfixedinterestpayments,as

requiredbycertainofourlenders.Wedonotdesignateourinterestrateswapsashedginginstruments.Accordingly,ourinterestrateswapsarerecordedatfairvalueontheconsolidatedbalancesheetswithinOthernon-currentassetsorOtherlong-termliabilities,withanychangesintheirfairvaluesrecognizedasOtherincome(expense),net,intheconsolidatedstatementsofoperationsandwithanycashflowsrecognizedasoperatingactivitiesintheconsolidatedstatementsofcashflows.Ourinterestrateswapsoutstandingwereasfollows(inmillions):

AggregateNotional

Amount GrossAssetat

FairValue GrossLiabilityat

FairValue AggregateNotional

Amount GrossAssetat

FairValue GrossLiabilityat

FairValue Interestrateswaps $ 398 $ — $ 30 $ 554 $ — $ 58

Ourinterestrateswapsactivitywasasfollows(inmillions):

ThreeMonthsEndedMarch31, 2021 2020 Grosslosses $ — $ 39 Grossgains $ 20 $ —

DisclosureofFairValues

Ourfinancialinstrumentsthatarenotre-measuredatfairvalueincludeaccountsreceivable,MyPowercustomernotesreceivable,accountspayable,accruedliabilities,customerdepositsanddebt.Thecarryingvaluesofthesefinancialinstrumentsotherthanour2021Notes,2022Notes,2024Notes,andoursubsidiary’s5.50%ConvertibleSeniorNotesduein2022(collectivelyreferredtoas“ConvertibleSeniorNotes”below),5.30%SeniorNotesduein2025(“2025Notes”),solarasset-backednotesandsolarloan-backednotesapproximatetheirfairvalues.

WeestimatethefairvalueoftheConvertibleSeniorNotesandthe2025Notesusingcommonlyacceptedvaluationmethodologiesandmarket-basedriskmeasurementsthatareindirectlyobservable,suchascreditrisk(LevelII).Inaddition,weestimatethefairvaluesofoursolarasset-backednotesandsolarloan-backednotesbasedonratescurrentlyofferedforinstrumentswithsimilarmaturitiesandterms(LevelIII).Thefollowingtablepresentstheestimatedfairvaluesandthecarryingvalues(inmillions):

March31,2021 December31,2020 CarryingValue FairValue CarryingValue FairValue

ConvertibleSeniorNotes $ 790 $ 8,410 $ 1,971 $ 24,596 2025Notes $ 1,786 $ 1,868 $ 1,785 $ 1,877 Solarasset-backednotes $ 1,097 $ 1,118 $ 1,115 $ 1,137 Solarloan-backednotes $ 128 $ 135 $ 146 $ 152

Note6–Inventory

Ourinventoryconsistedofthefollowing(inmillions):

March31, December31, 2021 2020 Rawmaterials $ 1,836 $ 1,508 Workinprocess 454 493 Finishedgoods(1) 1,341 1,666 Serviceparts 501 434 Total $ 4,132 $ 4,101

(1) Finishedgoodsinventoryincludesvehiclesintransittofulfillcustomerorders,newvehiclesavailableforsale,usedvehicles,energystorage

productsandSolarRoofproductsavailableforsale.

Forsolarenergysystems,wecommencetransferringcomponentpartsfrominventorytoconstructioninprogress,acomponentofsolarenergysystems,oncealeaseorPPAcontractwithacustomerhasbeenexecutedandinstallationhasbeeninitiated.Additionalcostsincurredontheleasedsolarenergysystems,includinglaborandoverhead,arerecordedwithinsolarenergysystemsunderconstruction.

Wewrite-downinventoryforanyexcessorobsoleteinventoriesorwhenwebelievethatthenetrealizablevalueofinventoriesislessthanthecarryingvalue.DuringthethreemonthsendedMarch31,2021and2020,werecordedwrite-downsof$35millioninCostofrevenuesandResearchanddevelopmentexpensesand$45millioninCostofrevenues,respectively.Note7–Property,PlantandEquipment,Net

Ourproperty,plantandequipment,net,consistedofthefollowing(inmillions):

March31, December31, 2021 2020 Machinery,equipment,vehiclesandofficefurniture $ 8,711 $ 8,493 Tooling 1,916 1,811 Leaseholdimprovements 1,494 1,421 Landandbuildings 3,681 3,662 Computerequipment,hardwareandsoftware 1,020 856 Constructioninprogress 2,435 1,621

19,257 17,864 Less:Accumulateddepreciation (5,389 ) (5,117 )Total $ 13,868

$ 12,747

ConstructioninprogressisprimarilycomprisedofconstructionofGigafactoryBerlinandGigafactoryTexas,expansionofGigafactoryShanghai

andequipmentandtoolingrelatedtothemanufacturingofourproducts.WearecurrentlyconstructingGigafactoryBerlinunderconditionalpermitsinanticipationofbeinggrantedfinalpermits.Completedassetsaretransferredtotheirrespectiveassetclasses,anddepreciationbeginswhenanassetisreadyforitsintendeduse.Interestonoutstandingdebtiscapitalizedduringperiodsofsignificantcapitalassetconstructionandamortizedovertheusefullivesoftherelatedassets.DuringthethreemonthsendedMarch31,2021and2020,wecapitalized$15millionand$10million,respectively,ofinterest.

DepreciationexpenseduringthethreemonthsendedMarch31,2021and2020was$424millionand$371million,respectively.Grossproperty,plantandequipmentunderfinanceleasesasofMarch31,2021andDecember31,2020was$2.34billionand$2.28billion,respectively,withaccumulateddepreciationof$907millionand$816million,respectively.

PanasonichaspartneredwithusonGigafactoryNevadawithinvestmentsintheproductionequipmentthatitusestomanufactureandsupplyuswithbatterycells.UnderourarrangementwithPanasonic,weplantopurchasethefulloutputfromtheirproductionequipmentatnegotiatedprices.AsthetermsofthearrangementconveyafinanceleaseunderASC842,Leases,weaccountfortheirproductionequipmentasleasedassetswhenproductioncommences.Weaccountforeachleaseandanynon-leasecomponentsassociatedwiththatleaseasasingleleasecomponentforallassetclasses,exceptproductionequipmentclassesembeddedinsupplyagreements.ThisresultsinusrecordingthecostoftheirproductionequipmentwithinProperty,plantandequipment,net,ontheconsolidatedbalancesheetswithacorrespondingliabilityrecordedtodebtandfinanceleases.DepreciationonPanasonicproductionequipmentiscomputedusingtheunits-of-productionmethodwherebycapitalizedcostsareamortizedoverthetotalestimatedproductivelifeoftherespectiveassets.AsofMarch31,2021andDecember31,2020,wehadcumulativelycapitalizedcostsof$1.79billionand$1.77billion,respectively,ontheconsolidatedbalancesheetsinrelationtotheproductionequipmentunderourPanasonicarrangement.

Note8–AccruedLiabilitiesandOther

AsofMarch31,2021andDecember31,2020,accruedliabilitiesandothercurrentliabilitiesconsistedofthefollowing(inmillions):

March31, December31, 2021 2020 Accruedpurchases(1) $ 993 $ 901 Taxespayable(2) 828 777 Payrollandrelatedcosts 660 654 Accruedwarrantyreserve,currentportion 544 479 Salesreturnreserve,currentportion 430 417 Operatingleaseliabilities,currentportion 309 286 Accruedinterest 36 77 Othercurrentliabilities 273 264 Total $ 4,073 $ 3,855

(1) Accruedpurchasesprimarilyreflectsreceiptsofgoodsandservicesthatwehadnotbeeninvoicedyet.Asweareinvoicedforthesegoodsand

services,thisbalancewillreduceandaccountspayablewillincrease.(2) Taxespayableincludesvalueaddedtax,salestax,propertytax,usetaxandincometaxpayables.Note9–OtherLong-TermLiabilities

AsofMarch31,2021andDecember31,2020,otherlong-termliabilitiesconsistedofthefollowing(inmillions):

March31, December31, 2021 2020 Operatingleaseliabilities $ 1,330 $ 1,254 Accruedwarrantyreserve 990 989 Salesreturnreserve 424 500 Deferredtaxliability 144 151 Othernon-currentliabilities 395 436 Totalotherlong-termliabilities $ 3,283 $ 3,330

Note10–Debt

ThefollowingisasummaryofourdebtandfinanceleasesasofMarch31,2021(inmillions):

Unpaid Unused NetCarryingValue Principal Committed Contractual Contractual

Current Long-Term

Balance

Amount(1)

InterestRates MaturityDate

Recoursedebt: 2022Notes $ 317 $ — $ 319 $ — 2.375% March2022

2024Notes 51 378 439 — 2.00% May2024

2025Notes — 1,786 1,800 — 5.30% August2025

CreditAgreement — 1,898 1,898 266 3.3% July2023

SolarBondsandotherLoans 30 23 53 — 4.0-5.8% June2021-January2031

Totalrecoursedebt 398 4,085 4,509 266 Non-recoursedebt: AutomotiveAsset-backedNotes 936 1,636 2,582 — 0.2-7.9% August2021-March2025

SolarAsset-backedNotes 39 1,058 1,125 — 2.9%-7.7% September2024-February2048

ChinaLoanAgreements — 614 614 1,368 4.0% June2021-December2024

CashEquityDebt 19 406 436 — 5.3%-5.8% July2033-January2035

SolarLoan-backedNotes 13 115 134 — 4.8%-7.5% September2048-September2049

WarehouseAgreements — — — 1,100

Notapplicable

September2022

AutomotiveLease-backedCreditFacilities 10 24 34 148 0.8-5.9% September2022-November2022

SolarRevolvingCreditFacilityand

otherLoans — 81 81 23

2.7-5.1%

June2022-February2033

Totalnon-recoursedebt 1,017 3,934 5,006 2,639 Totaldebt 1,415 8,019 $ 9,515 $ 2,905 Financeleases 404 1,034 Totaldebtandfinanceleases $ 1,819 $ 9,053

ThefollowingisasummaryofourdebtandfinanceleasesasofDecember31,2020(inmillions):

Unpaid Unused NetCarryingValue Principal Committed Contractual Contractual

Current Long-Term Balance Amount(1) InterestRates MaturityDate

Recoursedebt: 2021Notes $ 419 $ — $ 422 $ — 1.25% March2021

2022Notes 115 366 503 — 2.375% March2022

2024Notes 171 856 1,282 — 2.00% May2024

2025Notes — 1,785 1,800 — 5.30% August2025

CreditAgreement — 1,895 1,895 278 3.3% July2023

SolarBondsandotherLoans 4 49 55 — 3.6%-5.8% January2021-January2031

Totalrecoursedebt 709 4,951 5,957 278 Non-recoursedebt: AutomotiveAsset-backedNotes 777 921 1,705 — 0.6%-7.9% August2021-August2024

SolarAsset-backedNotes 39 1,076 1,141 — 3.0%-7.7% September2024-February2048

ChinaLoanAgreements — 616 616 1,372 4.0% June2021-December2024

CashEquityDebt 18 408 439 — 5.3%-5.8% July2033-January2035

SolarLoan-backedNotes 13 133 152 — 4.8%-7.5% September2048-September2049

WarehouseAgreements 37 257 294 806 1.7%-1.8% September2022

SolarTermLoan

151 —

January2021

AutomotiveLease-backedCreditFacility 14 19 33 153 1.9%-5.9% September2022-November2022

SolarRevolvingCreditFacilityand

otherLoans — 81 81 23

2.7%-5.1%

June2022-February2033

Totalnon-recoursedebt 1,049 3,511 4,612 2,354 Totaldebt 1,758 8,462 $ 10,569 $ 2,632 Financeleases 374 1,094 Totaldebtandfinanceleases $ 2,132 $ 9,556

(1) Therearenorestrictionsondraw-downoruseforgeneralcorporatepurposeswithrespecttoanyavailablecommittedfundsunderourcreditfacilitiesandfinancingfunds,exceptcertainspecifiedconditionspriortodraw-down,includingpledgingtoourlenderssufficientamountsofqualifiedreceivables,inventories,leasedvehiclesandourinterestsinthoseleases,solarenergysystemsandtheassociatedcustomercontracts,ourinterestsinfinancingfundsorvariousotherassetsandasmaybedescribedbelowandinthenotestotheconsolidatedfinancialstatementsincludedinourreportonForm10-KfortheyearendedDecember31,2020.

Recoursedebtreferstodebtthatisrecoursetoourgeneralassets.Non-recoursedebtreferstodebtthatisrecoursetoonlyassetsofoursubsidiaries.Thedifferencesbetweentheunpaidprincipalbalancesandthenetcarryingvaluesareduetodebtdiscountsordeferredfinancingcosts.ThedebtdiscountswereupdatedasofJanuary1,2021forourconvertiblenoteswiththeadoptionofASU2020-06asdiscussedinNote2,SummaryofSignificantAccountingPolicies.AsofMarch31,2021,wewereinmaterialcompliancewithallfinancialdebtcovenants,whichincludeminimumliquidityandexpense-coveragebalancesandratios.

2021Notes,2022Notesand2024NotesDuringthefirstquarterof2021,theclosingpriceofourcommonstockexceeded130%oftheapplicableconversionpriceofeachofour2022

Notesand2024Notesonatleast20ofthelast30consecutivetradingdaysofthequarter;causingthe2022Notesand2024Notestobeconvertiblebytheirholdersduringthesecondquarterof2021.Aswenowexpecttosettleaportionofthe2024Notesinthesecondquarterof2021,wereclassified$51millionofthecarryingvalueofthe2024Notesfromdebtandfinanceleases,netofcurrentportiontocurrentportionofdebtandfinanceleasesonourconsolidatedbalancesheetasofMarch31,2021.Shouldtheclosingpriceconditionsbemetinafuturequarterforanyofthesenotes,suchnoteswillbeconvertibleattheirholders’optionduringtheimmediatelyfollowingquarter.

OnJanuary1,2021,weadoptedASU2020-06usingthemodifiedretrospectivemethod.Asaresultofthisadoption,wehavede-recognizedtheremainingdebtdiscountsonthe2022Notesand2024Notesandthereforenolongerrecognizeanyamortizationofdebtdiscountsasinterestexpense(seeNote2,SummaryofSignificantAccountingPolicies).Duringthefirstquarterof2021,$422million,$184millionand$843millioninaggregateprincipalamountofthe2021Notes,2022Notesand2024Notes,respectively,weresettledfor$422million,$184millionand$843millionincashfortheirparamount,andtheissuanceof5.3million,2.5millionand12.5millionsharesofourcommonstockfortheconversionpremium,respectively.Thenotehedgesweenteredintoinconnectionwiththeissuanceofthe2021Notes,2022Notesand2024Noteswereautomaticallysettledwiththerespectiveconversionsofthe2021Notes,2022Notesand2024Notes,resultinginthereceiptof5.3million,2.5millionand12.5millionsharesofourcommonstock,respectively.InMarch2021,the2021Noteswerefullysettled.

AutomotiveAsset-backedNotesandWarehouseAgreementsInMarch2021,wetransferredbeneficialinterestsrelatedtocertainleasedvehiclesintoanSPEandissued$1.08billioninaggregateprincipal

amountofAutomotiveAsset-backedNotes,withtermssimilartoourotherAutomotiveAsset-backedNotes.Theproceedsfromtheissuance,netofdiscountsandfees,were$1.07billion.Inconjunctionwiththisfinancingwerepaidtheremainingoutstandingbalanceofourvehiclelease-backedloanandsecurityagreement(the"2016WarehouseAgreement"),forwhichcommittedfundsremainedavailableforfutureborrowings.

ChinaLoanAgreementsInApril2021,wefullyrepaidthe$614millioninaggregateprincipalofoursecuredtermloanfacilityinconnectionwiththeconstructionof

GigafactoryShanghai(the“FixedAssetFacility”)andthefacilitywasterminated.Afterthetermination,the$758millionofunusedcommitmentundertheFixedAssetFacilityincludedinthedebtandfinanceleasetableasofMarch31,2021abovewasnolongeravailable.

SolarTermLoanInJanuary2021,ourSolarTermLoanmaturedandwasrepaid.

InterestExpenseThefollowingtablepresentstheinterestexpenserelatedtothecontractualinterestcoupon,theamortizationofdebtissuancecostsandthe

amortizationofdebtdiscountsonourconvertibleseniornoteswithcashconversionfeatures,whichincludethe2021Notes,the2022Notesandthe2024Notes(inmillions):

Contractualinterestcoupon $ 7 $

Amortizationofdebtissuancecosts 2 2 Amortizationofdebtdiscounts(1) — 44 Total $ 9 $ 65

(1) UnderthemodifiedretrospectivemethodofadoptionofASU2020-06,therewasneitheramortizationofdebtdiscounts,norlossesonextinguishmentofdebtrecognizedforthethreemonthsendedMarch31,2021.Refertodiscussionaboveforfurtherdetails.

Note11–EquityIncentivePlans

2018CEOPerformanceAwardInMarch2018,ourstockholdersapprovedtheBoardofDirectors’grantof101.3millionstockoptionawards,asadjustedtogiveeffecttothe

StockSplit,toourCEO(the“2018CEOPerformanceAward”).The2018CEOPerformanceAwardconsistsof12vestingtrancheswithavestingschedulebasedentirelyontheattainmentofbothoperationalmilestones(performanceconditions)andmarketconditions,assumingcontinuedemploymenteitherastheCEOorasbothExecutiveChairmanandChiefProductOfficerandservicethrougheachvestingdate.Eachofthe12vestingtranchesofthe2018CEOPerformanceAwardwillvestuponcertificationbytheBoardofDirectorsthatboth(i)themarketcapitalizationmilestoneforsuchtranche,whichbeginsat$100.0billionforthefirsttrancheandincreasesbyincrementsof$50.0billionthereafter(basedonbothasixcalendarmonthtrailingaverageanda30calendardaytrailingaverage,countingonlytradingdays),hasbeenachieved,and(ii)anyoneofthefollowingeightoperationalmilestonesfocusedontotalrevenueoranyoneoftheeightoperationalmilestonesfocusedonAdjustedEBITDAhavebeenachievedforthefourconsecutivefiscalquartersonanannualizedbasisandsubsequentlyreportedbyusinourfinancialstatementsfiledwithourForms10-Qand/or10-K.AdjustedEBITDAisdefinedasnetincome(loss)attributabletocommonstockholdersbeforeinterestexpense,provision(benefit)forincometaxes,depreciationandamortizationandstock-basedcompensation.Uponvestingandexercise,includingthepaymentoftheexercisepriceof$70.01pershare,ourCEOmustholdsharesthatheacquiresforfiveyearspost-exercise,otherthanacashlessexercisewheresharesaresimultaneouslysoldtopayfortheexercisepriceandanyrequiredtaxwithholding.

TheachievementstatusoftheoperationalmilestonesasofMarch31,2021isprovidedbelow.Althoughanoperationalmilestoneisdeemedachievedinthelastquarteroftherelevantannualizedperiod,itmaybecertifiedonlyafterthefinancialstatementssupportingitsachievementhavebeenfiledwithourForms10-Qand/or10-K.

TotalAnnualizedRevenue AnnualizedAdjustedEBITDAMilestone(inbillions) AchievementStatus

Milestone(inbillions) AchievementStatus

$ 20.0 Achieved $ 1.5 Achieved$ 35.0 Achieved(1) $ 3.0 Achieved$ 55.0 Probable $ 4.5 Achieved$ 75.0 - $ 6.0 Achieved(1)$ 100.0 - $ 8.0 Probable$ 125.0 - $ 10.0 -$ 150.0 - $ 12.0 -$ 175.0 - $ 14.0 -

(1) Achievedinthefirstquarterof2021andexpectedtobecertifiedfollowingthefilingofthisQuarterlyReportonForm10-Q.

Stock-basedcompensationunderthe2018CEOPerformanceAwardrepresentsanon-cashexpenseandisrecordedasaSelling,general,andadministrativeoperatingexpenseinourconsolidatedstatementofoperations.Ineachquartersincethegrantofthe2018CEOPerformanceAward,wehaverecognizedexpense,generallyonapro-ratedbasis,foronlythenumberoftranches(uptothemaximumof12tranches)thatcorrespondstothenumberofoperationalmilestonesthathavebeenachievedorhavebeendeterminedprobableofbeingachievedinthefuture,inaccordancewiththefollowingprinciples.

Onthegrantdate,aMonteCarlosimulationwasusedtodetermineforeachtranche(i)afixedamountofexpenseforsuchtrancheand(ii)thefuturetimewhenthemarketcapitalizationmilestoneforsuchtranchewasexpectedtobeachieved,orits“expectedmarketcapitalizationmilestoneachievementtime.”Separately,basedonasubjectiveassessmentofourfuturefinancialperformance,eachquarterwedeterminewhetheritisprobablethatwewillachieveeachoperationalmilestonethathasnotpreviouslybeenachievedordeemedprobableofachievementandifso,thefuturetimewhenweexpecttoachievethatoperationalmilestone,orits“expectedoperationalmilestoneachievementtime.”Whenwefirstdeterminethatanoperationalmilestonehasbecomeprobableofbeingachieved,weallocatetheentireexpensefortherelatedtrancheoverthenumberofquartersbetweenthegrantdateandthethen-applicable“expectedfullachievementtime.”The“expectedfullachievementtime”atanygiventimeisthelaterof(i)theexpectedoperationalmilestoneachievementtime(iftherelatedoperationalmilestonehasnotyetbeenachieved)and(ii)theexpectedmarketcapitalizationmilestoneachievementtime(iftherelatedmarketcapitalizationmilestonehasnotyetbeenachieved).Weimmediatelyrecognizeacatch-upexpenseforallaccumulatedexpenseforthequartersfromthegrantdatethroughthequarterinwhichtheoperationalmilestonewasfirstdeemedprobableofbeingachieved.Eachquarterthereafter,werecognizetheproratedportionofthethen-remainingexpenseforthetranchebasedonthenumberofquartersbetweensuchquarterandthethen-applicableexpectedfullachievementtime,exceptthatupontheachievementofbothamarketcapitalizationmilestoneandoperationalmilestonewithrespecttoatranche,allremainingexpenseforthattrancheisimmediatelyrecognized.

Asaresult,wehaveexperienced,andmayexperienceinthefuture,significantcatch-upexpensesinquarterswhenoneormoreoperationalmilestonesarefirstdeterminedtobeprobableofbeingachieved.Historically,theexpectedmarketcapitalizationachievementtimesweregenerallylaterthantherelatedexpectedoperationalmilestoneachievementtimes.Therefore,whenmarketcapitalizationmilestonesareachievedearlierthanoriginallyforecasted,forexampleduetoperiodsofrapidstockpriceappreciation,thishasresulted,andmayresultinthefuture,inhighercatch-upexpensesandtheremainingexpensesbeingrecognizedovershorterperiodsoftimeatahigherper-quarterrate.Duringthefirstquarterof2021,allremainingmarketcapitalizationmilestonesexceptforthemilestonerelatingto$650.0billionwereachieved.

Duringthefirstquarterof2021,theoperationalmilestoneofannualizedrevenueof$55.0billionbecameprobableofbeingachievedandconsequently,werecognizedacatch-upexpenseof$116million.

AsofMarch31,2021,wehad$129millionoftotalunrecognizedstock-basedcompensationexpensefortheoperationalmilestonesthatwereconsideredprobableofachievement,whichwillberecognizedoveraweighted-averageperiodof0.9years.AsofMarch31,2021,wehadunrecognizedstock-basedcompensationexpenseof$548millionfortheoperationalmilestonesthatwereconsiderednotprobableofachievement.ForthethreemonthsendedMarch31,2021and2020werecordedstock-basedcompensationexpenseof$299millionand$66millionrelatedtothe2018CEOPerformanceAward,respectively.

SummaryStock-BasedCompensationInformationThefollowingtablesummarizesourstock-basedcompensationexpensebylineitemintheconsolidatedstatementsofoperations(inmillions):

ThreeMonthsEndedMarch31,

2021 2020 Costofrevenues $ 103 $ 33 Researchanddevelopment 125 65 Selling,generalandadministrative 386 113 Total $ 614 $ 211

Ourincometaxbenefitsrecognizedfromstock-basedcompensationarrangementsineachoftheperiodspresentedwereimmaterialdueto

cumulativelossesandvaluationallowances.

Note12–CommitmentsandContingenciesOperatingLeaseArrangementinBuffalo,NewYork

WehaveanoperatingleasethroughtheResearchFoundationfortheStateUniversityofNewYork(the“SUNYFoundation”)withrespecttoGigafactoryNewYork.Undertheleaseandarelatedresearchanddevelopmentagreement,wearecontinuingtofurtherdevelopthefacility.

Underthisagreement,weareobligatedto,amongotherthings,meetemploymenttargetsaswellasspecifiedminimumnumbersofpersonnelintheStateofNewYorkandinBuffalo,NewYorkandspendorincur$5.00billionincombinedcapital,operationalexpenses,costsofgoodssoldandothercostsintheStateofNewYorkduringthe10-yearperiodbeginningApril30,2018.Onanannualbasisduringtheinitialleaseterm,asmeasuredoneachanniversaryofsuchdate,ifwefailtomeetthesespecifiedinvestmentandjobcreationrequirements,thenwewouldbeobligatedtopaya$41million“programpayment”totheSUNYFoundationforeachyearthatwefailtomeettheserequirements.Furthermore,ifthearrangementisterminatedduetoamaterialbreachbyus,thenadditionalamountsmaybecomepayablebyus.

AswetemporarilysuspendedmostofourmanufacturingoperationsatGigafactoryNewYorkpursuanttoaNewYorkStateexecutiveorderissuedinMarch2020asaresultoftheCOVID-19pandemic,weweregrantedaone-yeardeferralofourobligationtobecompliantwithourapplicabletargetsundersuchagreementonApril30,2020,whichwasmemorializedinanamendmenttoouragreementwiththeSUNYFoundationinJuly2020.InApril2021,weweregrantedanadditionaldeferralthroughDecember31,2021subjectonlytomemorializationinwritingbyusandtheSUNYFoundation,asouroperationsatGigafactoryNewYorkhavenotyetfullyrampedduetoanumberoffactorsrelatedtothepandemic.GiventhatwewouldhavemetalltargetsoriginallyrequiredasofApril30,2020iftheyhadbeenmeasuredpriortothemandatedreductionofoperationsinMarch2020,andwearecurrentlyinexcessofsuchtargetsrelatingtoinvestmentsandpersonnelintheStateofNewYork,wedonotcurrentlyexpectanyissuesmeetingourapplicableobligationsfollowingthisexpecteddeferralorintheyearsbeyond.However,ifourexpectationsastothecostsandtimelinesofourinvestmentandoperationsatBuffaloorourproductionrampoftheSolarRoofproveincorrect,wemayincuradditionalexpensesorsubstantialpaymentstotheSUNYFoundation.

OperatingLeaseArrangementinShanghai,ChinaWehaveanoperatingleasearrangementforaninitialtermof50yearswiththelocalgovernmentofShanghaiforlanduserightswhereweare

constructingGigafactoryShanghai.Underthetermsofthearrangement,wearerequiredtospendRMB14.08billionincapitalexpendituresbytheendof2023,andtogenerateRMB2.23billionofannualtaxrevenuesstartingattheendof2023.Ifweareunwillingorunabletomeetsuchtargetorobtainperiodicprojectapprovals,inaccordancewiththeChinesegovernment’sstandardtermsforsucharrangements,wewouldberequiredtorevertthesitetothelocalgovernmentandreceivecompensationfortheremainingvalueofthelandlease,buildingsandfixtures.Webelievethecapitalexpenditurerequirementandthetaxrevenuetargetwillbeattainableevenifouractualvehicleproductionwasfarlowerthanthevolumesweareforecasting.

LegalProceedingsLitigationRelatingtotheSolarCityAcquisition

BetweenSeptember1,2016andOctober5,2016,sevenlawsuitswerefiledintheDelawareCourtofChancerybypurportedstockholdersofTeslachallengingouracquisitionofSolarCityCorporation(“SolarCity”).Followingconsolidation,thelawsuitnamesasdefendantsthemembersofTesla’sboardofdirectorsasthenconstitutedandalleges,amongotherthings,thatboardmembersbreachedtheirfiduciarydutiesinconnectionwiththeacquisition.Thecomplaintassertsbothderivativeclaimsanddirectclaimsonbehalfofapurportedclassandseeks,amongotherrelief,unspecifiedmonetarydamages,attorneys’fees,andcosts.OnJanuary27,2017,defendantsfiledamotiontodismisstheoperativecomplaint.Ratherthanrespondtothedefendants’motion,theplaintiffsfiledanamendedcomplaint.OnMarch17,2017,defendantsfiledamotiontodismisstheamendedcomplaint.OnDecember13,2017,theCourtheardoralargumentonthemotion.OnMarch28,2018,theCourtdenieddefendants’motiontodismiss.Defendantsfiledarequestforinterlocutoryappeal,andtheDelawareSupremeCourtdeniedthatrequestwithoutrulingonthemeritsbutelectingnottohearanappealatthisearlystageofthecase.DefendantsfiledtheiransweronMay18,2018,andmediationswereheldonJune10,2019.PlaintiffsanddefendantsfiledrespectivemotionsforsummaryjudgmentonAugust25,2019,andfurthermediationswereheldonOctober3,2019.TheCourtheldahearingonthemotionsforsummaryjudgmentonNovember4,2019.OnJanuary22,2020,allofthedirectordefendantsexceptElonMuskreachedasettlementtoresolvethelawsuitagainstthemforanamounttobepaidentirelyundertheapplicableinsurancepolicy.Thesettlement,whichdoesnotinvolveanadmissionofanywrongdoingbyanyparty,wasapprovedbytheCourtonAugust17,2020.Teslareceivedpaymentofapproximately$43milliononSeptember16,2020,whichhasbeenrecognizedinourconsolidatedstatementofoperationsasareductiontoSelling,generalandadministrativeoperatingexpensesforcostspreviouslyincurredrelatedtotheacquisitionofSolarCity.OnFebruary4,2020,theCourtissuedarulingthatdeniedplaintiffs’previously-filedmotionforsummaryjudgmentandgrantedinpartanddeniedinpartdefendants’previously-filedmotionforsummaryjudgment.Factandexpertdiscoveryiscomplete,andthecasewassetfortrialinMarch2020untilitwaspostponedbytheCourtduetosafetyprecautionsconcerningCOVID-19.ThecurrentdatesforthetrialarefromJuly12toJuly23,2021,subjecttochangebasedonanyfurthersafetymeasuresimplementedbytheCourt.

TheseplaintiffsandothersfiledparallelactionsintheU.S.DistrictCourtfortheDistrictofDelawareonoraboutApril21,2017.TheyincludeclaimsforviolationsofthefederalsecuritieslawsandbreachoffiduciarydutiesbyTesla’sboardofdirectors.Thoseactionshavebeenconsolidatedandstayedpendingtheabove-referencedChanceryCourtlitigation.

SecuritiesLitigationRelatingtoProductionofModel3VehiclesOnOctober10,2017,apurportedstockholderclassactionwasfiledintheU.S.DistrictCourtfortheNorthernDistrictofCaliforniaagainstTesla,

twoofitscurrentofficersandaformerofficer.ThecomplaintallegesviolationsoffederalsecuritieslawsandseeksunspecifiedcompensatorydamagesandotherreliefonbehalfofapurportedclassofpurchasersofTeslasecuritiesfromMay4,2016toOctober6,2017.ThelawsuitclaimsthatTeslasupposedlymademateriallyfalseandmisleadingstatementsregardingTesla’spreparednesstoproduceModel3vehicles.PlaintiffsfiledanamendedcomplaintonMarch23,2018,anddefendantsfiledamotiontodismissonMay25,2018.Thecourtgranteddefendants’motiontodismisswithleavetoamend.PlaintiffsfiledtheiramendedcomplaintonSeptember28,2018,anddefendantsfiledamotiontodismisstheamendedcomplaintonFebruary15,2019.ThehearingonthemotiontodismisswasheldonMarch22,2019,andonMarch25,2019,theCourtruledinfavorofdefendantsanddismissedthecomplaintwithprejudice.OnApril8,2019,plaintiffsfiledanoticeofappealtotheU.S.CourtofAppealsfortheNinthCircuit(“NinthCircuit”)andonJuly17,2019filedtheiropeningbrief.WefiledouroppositiononSeptember16,2019,andplaintiffsfiledtheirreplyonOctober8,2019.Ahearingontheappealwasheldbeforeathree-judgepanelonApril30,2020.OnJanuary26,2021,thepanelaffirmedtheDistrictCourt’sdismissalofthecomplaintwithprejudice.OnMarch5,2021,theNinthCircuitdeniedplaintiffs’requestforarehearingbeforethefullcourt,andamandateissuedonMarch16,2021.

OnOctober26,2018,inasimilaraction,apurportedstockholderclassactionwasfiledintheSuperiorCourtofCaliforniainSantaClaraCountyagainstTesla,ElonMuskandseveninitialpurchasersinanofferingofdebtsecuritiesbyTeslainAugust2017.ThecomplaintallegesmisrepresentationsmadebyTeslaregardingthenumberofModel3vehiclesTeslaexpectedtoproducebytheendof2017inconnectionwithsuchofferingandseeksunspecifiedcompensatorydamagesandotherreliefonbehalfofapurportedclassofpurchasersofTeslasecuritiesinsuchoffering.Teslathereafterremovedthecasetofederalcourt.OnJanuary22,2019,plaintiffabandoneditsefforttoproceedinstatecourt,insteadfilinganamendedcomplaintagainstTesla,ElonMuskandseveninitialpurchasersinthedebtofferingbeforethesamejudgeintheU.S.DistrictCourtfortheNorthernDistrictofCaliforniawhoishearingtheabove-referencedearlier-filedfederalcase.OnFebruary5,2019,theCourtstayedthisnewcasependingarulingonthemotiontodismissthecomplaintintheearlier-filedfederalcase.Aftersuchearlier-filedfederalcasewasdismissed,defendantsfiledamotiononJuly2,2019todismissthiscaseaswell.ThecasewasthenstayedpendingarulingfromtheNinthCircuitontheearlier-filedfederalcase,withanagreementthatifdefendantsprevailedontheappeal,plaintiffswoulddismissthelater-filedcase.FollowingtheNinthCircuit’saffirmancediscussedabove,theplaintiffsdismissedthelater-filedcasewithprejudiceonApril15,2021.

LitigationRelatingto2018CEOPerformanceAwardOnJune4,2018,apurportedTeslastockholderfiledaputativeclassandderivativeactionintheDelawareCourtofChanceryagainstElonMusk

andthemembersofTesla’sboardofdirectorsasthenconstituted,allegingcorporatewaste,unjustenrichmentandthatsuchboardmembersbreachedtheirfiduciarydutiesbyapprovingthestock-basedcompensationplan.Thecomplaintseeks,amongotherthings,monetarydamagesandrescissionorreformationofthestock-basedcompensationplan.OnAugust31,2018,defendantsfiledamotiontodismissthecomplaint;plaintifffileditsoppositionbriefonNovember1,2018;anddefendantsfiledareplybriefonDecember13,2018.ThehearingonthemotiontodismisswasheldonMay9,2019.OnSeptember20,2019,theCourtgrantedthemotiontodismissastothecorporatewasteclaimbutdeniedthemotionastothebreachoffiduciarydutyandunjustenrichmentclaims.OuranswerwasfiledonDecember3,2019,andtrialissetforApril2022.Factdiscoveryisongoing.

LitigationRelatedtoDirectors’CompensationOnJune17,2020,apurportedTeslastockholderfiledaderivativeactionintheDelawareCourtofChancery,purportedlyonbehalfofTesla,

againstcertainofTesla’scurrentandformerdirectorsregardingcompensationawardsgrantedtoTesla’sdirectors,otherthanElonMusk,between2017and2020.Thesuitassertsclaimsforbreachoffiduciarydutyandunjustenrichmentandseeksdeclaratoryandinjunctiverelief,unspecifieddamagesandotherrelief.DefendantsfiledtheiransweronSeptember17,2020.TrialissetforSeptember2022,andfactdiscoveryisongoing.

LitigationRelatingtoPotentialGoingPrivateTransactionBetweenAugust10,2018andSeptember6,2018,ninepurportedstockholderclassactionswerefiledagainstTeslaandElonMuskinconnection

withMr.Musk’sAugust7,2018TwitterpostthathewasconsideringtakingTeslaprivate.AllofthesuitsarenowpendingintheU.S.DistrictCourtfortheNorthernDistrictofCalifornia.Althoughthecomplaintsvaryincertainrespects,theyeachpurporttoassertclaimsforviolationsoffederalsecuritieslawsrelatedtoMr.Musk’sstatementandseekunspecifiedcompensatorydamagesandotherreliefonbehalfofapurportedclassofpurchasersofTesla’ssecurities.PlaintiffsfiledtheirconsolidatedcomplaintonJanuary16,2019andaddedasdefendantsthemembersofTesla’sboardofdirectors.Thenow-consolidatedpurportedstockholderclassactionwasstayedwhiletheissueofselectionofleadcounselwasbriefedandarguedbeforetheNinthCircuit.TheNinthCircuitruledregardingleadcounsel.DefendantsfiledamotiontodismissthecomplaintonNovember22,2019.ThehearingonthemotionwasheldonMarch6,2020.OnApril15,2020,theCourtdenieddefendants’motiontodismiss.Thepartiesstipulatedtocertificationofaclassofstockholders,whichthecourtgrantedonNovember25,2020.TrialissetforMay2022.

BetweenOctober17,2018andMarch8,2021,sevenderivativelawsuitswerefiledintheDelawareCourtofChancery,purportedlyonbehalfofTesla,againstMr.MuskandthemembersofTesla’sboardofdirectors,asconstitutedatrelevanttimes,inrelationtostatementsmadeandactionsconnectedtoapotentialgoingprivatetransaction,withcertainofthelawsuitschallengingadditionalTwitterpostsbyMr.Musk,amongotherthings.Fiveofthoseactionswereconsolidated,andallsevenactionshavebeenstayedpendingresolutionoftheabove-referencedconsolidatedpurportedstockholderclassaction.Inadditiontothesecases,twoderivativelawsuitswerefiledonOctober25,2018andFebruary11,2019intheU.S.DistrictCourtfortheDistrictofDelaware,purportedlyonbehalfofTesla,againstMr.MuskandthemembersoftheTeslaboardofdirectorsasthenconstituted.Thosecaseshavealsobeenconsolidatedandstayedpendingresolutionoftheabove-referencedconsolidatedpurportedstockholderclassaction.

Unlessotherwisestated,theindividualdefendantsnamedinthestockholderproceedingsdescribedaboveandtheCompanywithrespecttothestockholderclassactionproceedingsdescribedabovebelievethattheclaimsinsuchproceedingshavenomeritandintendtodefendagainstthemvigorously.Weareunabletoestimatethepossiblelossorrangeofloss,ifany,associatedwiththeseclaims.

CertainInvestigationsandOtherMattersWereceiverequestsforinformationfromregulatorsandgovernmentalauthorities,suchastheNationalHighwayTrafficSafetyAdministration,the

NationalTransportationSafetyBoard,theSEC,theDepartmentofJustice(“DOJ”)andvariousstate,federal,andinternationalagencies.Weroutinelycooperatewithsuchregulatoryandgovernmentalrequests.

Inparticular,theSEChadissuedsubpoenastoTeslainconnectionwith(a)ElonMusk’spriorstatementthathewasconsideringtakingTeslaprivateand(b)certainprojectionsthatwemadeforModel3productionratesduring2017andotherpublicstatementsrelatingtoModel3production.Thetake-privateinvestigationwasresolvedandclosedwithasettlemententeredintowiththeSECinSeptember2018andasfurtherclarifiedinApril2019inanamendment.OnDecember4,2019,theSEC(i)closedtheinvestigationintotheprojectionsandotherpublicstatementsregardingModel3productionratesand(ii)issuedasubpoenaseekinginformationconcerningcertainfinancialdataandcontractsincludingTesla’sregularfinancingarrangements.Separately,theDOJhadalsoaskedustovoluntarilyprovideitwithinformationabouttheabovemattersrelatedtotakingTeslaprivateandModel3productionrates.

Asidefromthesettlement,asamended,withtheSECrelatingtoMr.Musk’sstatementthathewasconsideringtakingTeslaprivate,therehavenotbeenanydevelopmentsinthesemattersthatwedeemtobematerial,andtoourknowledgenogovernmentagencyinanyongoinginvestigationhasconcludedthatanywrongdoingoccurred.Asisournormalpractice,wehavebeencooperatingandwillcontinuetocooperatewithgovernmentauthorities.Wecannotpredicttheoutcomeorimpactofanyongoingmatters.Shouldthegovernmentdecidetopursueanenforcementaction,thereexiststhepossibilityofamaterialadverseimpactonourbusiness,resultsofoperation,prospects,cashflowsandfinancialposition.

Wearealsosubjecttovariousotherlegalproceedingsandclaimsthatarisefromthenormalcourseofbusinessactivities.Ifanunfavorablerulingordevelopmentweretooccur,thereexiststhepossibilityofamaterialadverseimpactonourbusiness,resultsofoperations,prospects,cashflows,financialpositionandbrand.

IndemnificationandGuaranteedReturnsWearecontractuallyobligatedtocompensatecertainfundinvestorsforanylossesthattheymaysufferincertainlimitedcircumstancesresulting

fromreductionsininvestmenttaxcreditsclaimedunderU.S.federallawsfortheinstallationofsolarpowerfacilitiesandenergystoragesystemsthatarechargedfromaco-sitedsolarpowerfacility(“ITC”s).Generally,suchobligationswouldariseasaresultofreductionstothevalueoftheunderlyingsolarenergysystemsasassessedbytheU.S.InternalRevenueService(the“IRS”)forpurposesofclaimingITCs.Foreachbalancesheetdate,weassessandrecognize,whenapplicable,adistributionpayableforthepotentialexposurefromthisobligationbasedonalltheinformationavailableatthattime,includinganyauditsundertakenbytheIRS.Webelievethatanypaymentstothefundinvestorsinexcessoftheamountsalreadyrecognizedbyusforthisobligationarenotprobableormaterialbasedonthefactsknownatthefilingdate.

ThemaximumpotentialfuturepaymentsthatwecouldhavetomakeunderthisobligationwoulddependonthedifferencebetweenthefairvaluesofthesolarenergysystemssoldortransferredtothefundsasdeterminedbyusandthevaluesthattheIRSwoulddetermineasthefairvalueforthesystemsforpurposesofclaimingITCs.WeclaimITCsbasedonguidelinesprovidedbytheU.S.TreasurydepartmentandthestatutoryregulationsfromtheIRS.Weusefairvaluesdeterminedwiththeassistanceofindependentthird-partyappraisalscommissionedbyusasthebasisfordeterminingtheITCsthatarepassed-throughtoandclaimedbythefundinvestors.SincewecannotdetermineexactlyhowtheIRSwillevaluatesystemvaluesusedinclaimingITCs,weareunabletoreliablyestimatethemaximumpotentialfuturepaymentsthatitcouldhavetomakeunderthisobligationasofeachbalancesheetdate.

Weareeligibletoreceivecertainstateandlocalincentivesthatareassociatedwithrenewableenergygeneration.Theamountofincentivesthatcanbeclaimedisbasedontheprojectedoractualsolarenergysystemsizeand/ortheamountofsolarenergyproduced.Wealsocurrentlyparticipateinonestate’sincentiveprogramthatisbasedoneitherthefairmarketvalueorthetaxbasisofsolarenergysystemsplacedinservice.Stateandlocalincentivesreceivedareallocatedbetweenusandfundinvestorsinaccordancewiththecontractualprovisionsofeachfund.Wearenotcontractuallyobligatedtoindemnifyanyfundinvestorforanylossestheymayincurduetoashortfallintheamountofstateorlocalincentivesactuallyreceived.

Note13–VariableInterestEntityArrangements

Wehaveenteredintovariousarrangementswithinvestorstofacilitatethefundingandmonetizationofoursolarenergysystemsandvehicles.Inparticular,ourwhollyownedsubsidiariesandfundinvestorshaveformedandcontributedcashandassetsintovariousfinancingfundsandenteredintorelatedagreements.Wehavedeterminedthatthefundsarevariableinterestentities(“VIEs”)andwearetheprimarybeneficiaryoftheseVIEsbyreferencetothepowerandbenefitscriterionunderASC810,Consolidation.Wehaveconsideredtheprovisionswithintheagreements,whichgrantusthepowertomanageandmakedecisionsthataffecttheoperationoftheseVIEs,includingdeterminingthesolarenergysystemsorvehiclesandtheassociatedcustomercontractstobesoldorcontributedtotheseVIEs,redeployingsolarenergysystemsorvehiclesandmanagingcustomerreceivables.Weconsiderthattherightsgrantedtothefundinvestorsundertheagreementsaremoreprotectiveinnatureratherthanparticipating.

AstheprimarybeneficiaryoftheseVIEs,weconsolidateinthefinancialstatementsthefinancialposition,resultsofoperationsandcashflowsoftheseVIEs,andallintercompanybalancesandtransactionsbetweenusandtheseVIEsareeliminatedintheconsolidatedfinancialstatements.Cashdistributionsofincomeandotherreceiptsbyafund,netofagreeduponexpenses,estimatedexpenses,taxbenefitsanddetrimentsofincomeandlossandtaxcredits,areallocatedtothefundinvestorandoursubsidiaryasspecifiedintheagreements.

Generally,oursubsidiaryhastheoptiontoacquirethefundinvestor’sinterestinthefundforanamountbasedonthemarketvalueofthefundortheformulaspecifiedintheagreements.

Uponthesaleorliquidationofafund,distributionswouldoccurintheorderandpriorityspecifiedintheagreements.26

Pursuanttomanagementservices,maintenanceandwarrantyarrangements,wehavebeencontractedtoprovideservicestothefunds,suchasoperationsandmaintenancesupport,accounting,leaseservicingandperformancereporting.Insomeinstances,wehaveguaranteedpaymentstothefundinvestorsasspecifiedintheagreements.Afund’screditorshavenorecoursetoourgeneralcreditortothatofotherfunds.Noneoftheassetsofthefundshadbeenpledgedascollateralfortheirobligations.

TheaggregatecarryingvaluesoftheVIEs’assetsandliabilities,aftereliminationofanyintercompanytransactionsandbalances,intheconsolidatedbalancesheetswereasfollows(inmillions):

March31, December31, 2021 2020

Assets Currentassets Cashandcashequivalents $ 78 $ 87 Accountsreceivable,net 35 28 Prepaidexpensesandothercurrentassets 124 105 Totalcurrentassets 237 220

Solarenergysystems,net 4,709 4,749 Othernon-currentassets 197 182

Totalassets $ 5,143 $ 5,151 Liabilities Currentliabilities Accruedliabilitiesandother $ 61 $ 63 Deferredrevenue 11 11 Customerdeposits 16 14 Currentportionofdebtandfinanceleases 957 797 Totalcurrentliabilities 1,045 885

Deferredrevenue,netofcurrentportion 169 168 Debtandfinanceleases,netofcurrentportion 2,062 1,346 Otherlong-termliabilities 17 19

Totalliabilities $ 3,293 $ 2,418 Note14–SegmentReportingandInformationaboutGeographicAreas

Wehavetwooperatingandreportablesegments:(i)automotiveand(ii)energygenerationandstorage.Theautomotivesegmentincludesthedesign,development,manufacturing,sales,andleasingofelectricvehiclesaswellassalesofautomotiveregulatorycredits.Additionally,theautomotivesegmentisalsocomprisedofservicesandother,whichincludesnon-warrantyafter-salesvehicleservices,salesofusedvehicles,retailmerchandise,salesbyouracquiredsubsidiariestothirdpartycustomers,andvehicleinsurancerevenue.Theenergygenerationandstoragesegmentincludesthedesign,manufacture,installation,sales,andleasingofsolarenergygenerationandenergystorageproductsandrelatedservicesandsalesofsolarenergysystemsincentives.OurCODMdoesnotevaluateoperatingsegmentsusingassetorliabilityinformation.Thefollowingtablepresentsrevenuesandgrossprofitbyreportablesegment(inmillions):

ThreeMonthsEndedMarch31, 2021 2020 Automotivesegment Revenues $ 9,895 $ 5,692 Grossprofit $ 2,316 $ 1,223

Energygenerationandstoragesegment Revenues $ 494 $ 293 Grossprofit $ (101 ) $ 11

Thefollowingtablepresentsrevenuesbygeographicareabasedonthesaleslocationofourproducts(inmillions):

UnitedStates $ 4,424 $ 2,768 China 3,043 900 Other 2,922 2,317 Total $ 10,389 $ 5,985

Thefollowingtablepresentslong-livedassetsbygeographicarea(inmillions):

March31, December31,

2021 2020 UnitedStates $ 16,650 $ 15,989 International 3,151 2,737 Total $ 19,801 $ 18,726

ITEM2.MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONSThefollowingdiscussionandanalysisshouldbereadinconjunctionwiththeconsolidatedfinancialstatementsandtherelatednotesincluded

elsewhereinthisQuarterlyReportonForm10-Q.

OverviewOurmissionistoacceleratetheworld’stransitiontosustainableenergy.Wedesign,develop,manufacture,leaseandsellhigh-performancefully

electricvehicles,solarenergygenerationsystemsandenergystorageproducts.Wealsooffermaintenance,installation,operation,financialandotherservicesrelatedtoourproducts.

In2021,wehaveproduced180,338vehiclesanddelivered184,877vehiclesthroughthefirstquarter.Wearecurrentlyfocusedonincreasingvehicleproductionandcapacity,improvinganddevelopingandbatterytechnologies,increasingtheaffordabilityandefficiencyofourvehicles,expandingourglobalinfrastructureandintroducingournextvehicles.

In2021,wehavedeployed445GWhofenergystorageproductsand92megawattsofsolarenergysystemsthroughthefirstquarter.Wearecurrentlyfocusedonrampingproductionofenergystorageproducts,improvingourSolarRoofinstallationcapabilityandefficiencyandincreasingmarketshareofretrofitsolarenergysystems.

DuringthethreemonthsendedMarch31,2021,werecognizedtotalrevenuesof$10.39billion,representinganincreaseof$4.40billionoverthethreemonthsendedMarch31,2020.Wecontinuetorampproduction,buildnewmanufacturingcapacityandexpandouroperationstoenableincreaseddeliveriesanddeploymentsofourproductsandfurtherrevenuegrowth.

DuringthethreemonthsendedMarch31,2021,ournetincomeattributabletocommonstockholderswas$438million,representingafavorablechangeof$422millionoverthethreemonthsendedMarch31,2020.Wecontinuetofocusonoperationalefficiencies,whilewehaveseenanaccelerationofnon-cashstock-basedcompensationexpenseduetoarapidincreaseinourmarketcapitalizationandupdatestoourbusinessoutlook.

Weendedthefirstquarterof2021with$17.14billionincashandcashequivalents,representingadecreaseof$2.24billionfromtheendof2020.OurcashflowsprovidedbyoperatingactivitiesduringthethreemonthperiodendedMarch31,2021was$1.64billion,representingafavorablechangeof$2.08billioncomparedtoourcashflowsusedinoperatingactivitiesduringtheperiodendedMarch31,2020of$440million,andcapitalexpendituresamountedto$1.35billionduringthethreemonthperiodendedMarch31,2021,comparedto$455millionduringthesameperiodendedMarch31,2020.Sustainedgrowthhasallowedourbusinesstogenerallyfunditself,butwewillcontinueanumberofcapital-intensiveprojectsinupcomingperiods.

ManagementOpportunities,ChallengesandRisksImpactofCOVID-19Pandemic

Beginninginthefirstquarterof2021,therehasbeenatrendinmanypartsoftheworldofincreasingavailabilityandadministrationofvaccinesagainstCOVID-19,aswellasaneasingofrestrictionsonsocial,business,travelandgovernmentactivitiesandfunctions.Ontheotherhand,infectionratesandregulationscontinuetofluctuateinvariousregionsandthereareongoingglobalimpactsresultingfromthepandemic,includingchallengesandincreasesincostsforlogisticsandsupplychains,suchasincreasedportcongestion,intermittentsupplierdelaysandashortfallofmicrochipsupply.Wehavealsopreviouslybeenaffectedbytemporarymanufacturingclosures,employmentandcompensationadjustments,andimpedimentstoadministrativeactivitiessupportingourproductdeliveriesanddeployments.

Ultimately,wecannotpredictthedurationoftheCOVID-19pandemic.Wewillcontinuetomonitormacroeconomicconditionstoremainflexible

andtooptimizeandevolveourbusinessasappropriate,andwewillhavetoaccuratelyprojectdemandandinfrastructurerequirementsgloballyanddeployourproduction,workforceandotherresourcesaccordingly.

Automotive—ProductionThefollowingisasummaryofthestatusofproductionofeachofourannouncedvehiclemodelsinproductionandunderdevelopment,asofthe

dateofthisQuarterlyReportonForm10-Q:

ProductionLocation VehicleModel(s) ProductionStatusFremontFactory ModelS/ModelX Active

Model3/ModelY ActiveGigafactoryShanghai Model3/ModelY ActiveGigafactoryBerlin ModelY ConstructingmanufacturingfacilitiesGigafactoryTexas ModelY Constructingmanufacturingfacilities

Cybertruck IndevelopmentTBD TeslaSemi Indevelopment

TeslaRoadster IndevelopmentWeinstalledandtestedthemanufacturingequipmentforournewversionsofModelSandModelXinthefirstquarterof2021andweareinthe

earlystagesoframpingproduction.WearefocusedonrampingthesemodelsandModelYtoatleasttheirinstalledproductioncapacities.WehavealsoworkedtoincreaselocalizationatGigafactoryShanghaibyintroducingdriveunitmanufacturingandModelYone-piececastingthere.ThenextphaseofproductiongrowthwilldependontheconstructionofGigafactoryBerlinandGigafactoryTexas,eachofwhichisprogressingasplannedforproductionanddeliveriesbeginninginlate2021,andwherewewillalsoaddtoouravailablesourcesofbatterycellsupplybymanufacturingourowncellsthatwearedevelopingtohavehigh-volumeoutput,lowercapitalandproductioncostsandlongerrange.Consistentwithourapproachofinnovatingatnewfactories,weexpecttopioneertherethemassproductionofthesecellsandouruniquestructuralbatterypackconcept.Ourgoalsaretoimprovevehicleperformance,decreaseproductioncostsandincreaseaffordability.

However,theseplansaresubjecttouncertaintiesinherentinestablishingandrampingmanufacturingoperations,whichmaybeexacerbatedbythenumberofconcurrentinternationalprojectsandanyfutureimpactfromeventsoutsideofourcontrolsuchastheCOVID-19pandemicandanyindustry-widecomponentconstraints.Moreover,wemustmeetambitioustechnologicaltargetswithourplansforbatterycellsaswellasforiterativemanufacturinganddesignimprovementsforourvehicleswitheachnewfactory.

Automotive—DemandandSalesOurcostreductioneffortsandadditionallocalizedprocurementandmanufacturingarekeytoourvehicles’affordability,andforexamplehave

allowedustocompetitivelypriceourvehiclesinChina.Inadditiontoopeningnewfactoriesin2021,wewillalsocontinuetogeneratedemandandbrandawarenessbyimprovingourvehicles’performanceandfunctionality,includingAutopilot,FSDandsoftwarefeatures,andintroducinganticipatedfuturevehicles.Moreover,weexpecttobenefitfromongoingelectrificationoftheautomotivesectorandincreasingenvironmentalawareness.

However,weoperateinacyclicalindustrythatissensitivetotrade,environmentalandpoliticaluncertainty,allofwhichmayalsobecompoundedbyanyfutureglobalimpactfromtheCOVID-19pandemic.Moreover,asadditionalcompetitorsenterthemarketplaceandhelpbringtheworldclosertosustainabletransportation,wewillhavetocontinuetoexecutewelltomaintainourmomentum.

Automotive—DeliveriesandCustomerInfrastructure

Asourdeliveriesincrease,wemustworkconstantlytopreventourvehicledeliverycapabilityfrombecomingabottleneckonourtotaldeliveries.IncreasingtheexportsofvehiclesmanufacturedatGigafactoryShanghaihasbeeneffectiveinmitigatingthestrainonourdeliveries,andweexpecttobenefitfurtherfromsituatingadditionalfactoriesclosertolocalmarkets.Inanycase,asweexpand,wewillhavetocontinuetoincreaseandstaffourdelivery,servicingandcharginginfrastructure,maintainourvehiclereliabilityandoptimizeourSuperchargerlocationstoensurecost-effectivenessandcustomersatisfaction.Inparticular,weremainfocusedonincreasingthecapabilityandefficiencyofourservicingoperations.

EnergyGenerationandStorageDemand,ProductionandDeployment

Thelong-termsuccessofthisbusinessisdependentuponincreasingmarginsthroughgreatervolumes.Wecontinuetoincreasetheproductionofourenergystorageproductstomeethighlevelsofdemand.ForPowerwall,betteravailabilityandgrowinggridstabilityconcernsdrivehigherinterest,andweareemphasizingcross-sellingwithourresidentialsolarenergyproducts.Weremaincommittedtoincreasingourretrofitsolarenergybusinessbyofferingalow-costandsimplifiedonlineorderingexperience.Inaddition,wecontinuetoimproveourinstallationcapabilitiesforSolarRoofbyon-boardingandtrainingalargenumberofinstallersandreducingtheinstallationtimedramatically.Astheseproductlinesgrow,wewillhavetomaintainadequatebatterycellsupplyforourenergystorageproductsandhireadditionalpersonnel,particularlyskilledelectricianstosupporttherampofSolarRoof.

CashFlowandCapitalExpenditureTrendsOurcapitalexpendituresaretypicallydifficulttoprojectbeyondtheshorttermgiventhenumberandbreadthofourcoreprojectsatanygiven

time,andmayfurtherbeimpactedbyuncertaintiesinfutureglobalmarketconditions.WearesimultaneouslyrampingnewproductsinthenewModelSandModelX,ModelYandSolarRoof,constructingorrampingmanufacturingfacilitiesonthreecontinentsandpilotingthedevelopmentandmanufactureofnewbatterycelltechnologies,andthepaceofourcapitalspendmayvarydependingonoverallpriorityamongprojects,thepaceatwhichwemeetmilestones,productionadjustmentstoandamongourvariousproducts,increasedcapitalefficienciesandtheadditionofnewprojects.Owingandsubjecttotheforegoingaswellasthepipelineofannouncedprojectsunderdevelopmentandallothercontinuinginfrastructuregrowth,wecurrentlyexpectourcapitalexpenditurestobe$4.50to$6.00billionin2021andeachofthenexttwofiscalyears.

Ourbusinesshasrecentlybeenconsistentlygeneratingcashflowfromoperationsinexcessofourlevelofcapitalspend,andwithbetterworkingcapitalmanagementresultinginshorterdayssalesoutstandingthandayspayableoutstanding,oursalesgrowthisalsofacilitatingpositivecashgeneration.Ontheotherhand,wearelikelytoseeheightenedlevelsofcapitalexpendituresduringcertainperiodsdependingonthespecificpaceofourcapital-intensiveprojects.Moreover,asourstockpricehassignificantlyincreasedrecently,wehaveseenhigherlevelsofearlyconversionsof“in-the-money”convertibleseniornotes,whichobligatesustodelivercashandorsharespursuanttothetermsofthosenotes.Overall,weexpectourabilitytobeself-fundingtocontinueaslongasmacroeconomicfactorssupportcurrenttrendsinoursales.

OperatingExpenseTrendsAslongasweseeexpandingsales,andexcludingthepotentialimpactofnon-cashstockcompensationexpenseattributabletothe2018CEO

PerformanceAwardandimpairmentchargesoncertainassetsasexplainedbelow,wegenerallyexpectoperatingexpensesrelativetorevenuestodecreaseasweadditionallyincreaseoperationalefficiencyandprocessautomation.

InMarch2018,ourstockholdersapprovedaperformance-basedstockoptionawardtoourCEO(the“2018CEOPerformanceAward”),consistingof12vestingtranchescontingentontheachievementofspecifiedmarketcapitalizationandoperationalmilestones.Weincurnon-cashstock-basedcompensationexpenseforeachtrancheonlyaftertherelatedoperationalmilestoneinitiallybecomesprobableofbeingachievedbasedonasubjectiveassessmentofourfuturefinancialperformance,andifthishappensfollowingthegrantdate,werecordatsuchtimeacumulativecatch-upexpensethatmaybesignificantbasedonthelengthoftimeelapsedfromthegrantdate.Moreover,theremainingexpenseforthattrancheisratablyrecordedovertheperiodremaininguntilthelaterof(i)theexpectedachievementoftherelevantoperationalmilestone(ifithasnotyetbeenachieved)and(ii)theexpectedachievementoftherelatedmarketcapitalizationmilestone(ifithasnotyetbeenachieved).Upontheachievementofbothmilestonesrelatedtoatranche,allremainingassociatedexpenseisrecognizedimmediately.Becausethemarketcapitalizationmilestoneachievementsweregenerallyexpectedtooccurlaterthantherelatedexpectedoperationalmilestoneachievements,theachievementoftheformerearlierthanexpectedmayincreasethemagnitudeofanycatch-upexpenseand/oracceleratetherateatwhichtheremainingexpenseisrecognized.Since2020,severaloperationalmilestoneshavebecomeprobableand/orhavebeenachievedandallmarketcapitalizationmilestonesexceptonehavebeenachieved,resultingintherecognitionoraccelerationofrelatedexpenseearlierthananticipatedandwithinarelativelyshortperiodoftime.SeeNote11,EquityIncentivePlans—2018CEOPerformanceAward,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Qforfurtherdetailsregardingthestock-basedcompensationrelatingtothe2018CEOPerformanceAward.

Inthefirstquarterof2021,weinvestedanaggregate$1.50billioninbitcoinandbeganacceptingbitcoinasaformofpaymentforcertainofourproductsinspecifiedregions,subjecttoapplicablelaws.Digitalassetsareconsideredindefinite-livedintangibleassetsunderapplicableaccountingrules.Accordingly,anydecreaseintheirfairvaluesbelowourcarryingvaluesforsuchassetsatanytimesubsequenttotheiracquisitionwillrequireustorecognizeimpairmentcharges,whereaswemaymakenoupwardrevisionsforanymarketpriceincreasesuntilasale.Aswegenerallyintendtoholdtheseassetslong-term,thesechargesmaynegativelyimpactourprofitabilityintheperiodsinwhichsuchimpairmentsoccureveniftheoverallmarketvaluesoftheseassetsincrease.Forexample,inthefirstquarterof2021,werecordedapproximately$27millionofimpairmentlossesresultingfromchangestothecarryingvalueofourbitcoinandgainsof$128milliononcertainsalesofbitcoinbyus.

CriticalAccountingPoliciesandEstimatesTheconsolidatedfinancialstatementsarepreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheU.S.(“GAAP”).The

preparationoftheconsolidatedfinancialstatementsrequiresustomakeestimatesandassumptionsthataffectthereportedamountsofassets,liabilities,revenues,costsandexpensesandrelateddisclosures.Webaseourestimatesonhistoricalexperience,asappropriate,andonvariousotherassumptionsthatwebelievetobereasonableunderthecircumstances.Changesintheaccountingestimatesarereasonablylikelytooccurfromperiodtoperiod.Accordingly,actualresultscoulddiffersignificantlyfromtheestimatesmadebyourmanagement.Weevaluateourestimatesandassumptionsonanongoingbasis.Totheextentthattherearematerialdifferencesbetweentheseestimatesandactualresults,ourfuturefinancialstatementpresentation,financialcondition,resultsofoperationsandcashflowsmaybeaffected.

DuetotheCOVID-19pandemic,therehasbeenuncertaintyanddisruptionintheglobaleconomyandfinancialmarkets.Theestimatesusedfor,butnotlimitedto,determiningsignificanteconomicincentiveforresalevalueguaranteearrangements,salesreturnreserves,thecollectabilityofaccountsreceivable,inventoryvaluation,fairvalueoflong-livedassets,goodwill,fairvalueoffinancialinstruments,fairvalueandresidualvalueofoperatingleasevehiclesandsolarenergysystemssubjecttoleasescouldbeimpacted.WehaveassessedtheimpactandarenotawareofanyspecificeventsorcircumstancesthatrequiredanupdatetoourestimatesandassumptionsormateriallyaffectedthecarryingvalueofourassetsorliabilitiesasofthedateofissuanceofthisQuarterlyReportonForm10-Q.Theseestimatesmaychangeasneweventsoccurandadditionalinformationisobtained.Actualresultscoulddiffermateriallyfromtheseestimatesunderdifferentassumptionsorconditions.

Foradescriptionofourcriticalaccountingpoliciesandestimates,refertoPartII,Item7,CriticalAccountingPoliciesandEstimatesinourAnnualReportonForm10-KfortheyearendedDecember31,2020.TherehavebeennomaterialchangestoourcriticalaccountingpoliciesandestimatessinceourAnnualReportonForm10-KfortheyearendedDecember31,2020.

RecentAccountingPronouncements

SeeNote2,SummaryofSignificantAccountingPolicies,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q.

ResultsofOperationsEffectsofCOVID-19

Beginninginthefirstquarterof2021,therehasbeenatrendinmanypartsoftheworldofincreasingavailabilityandadministrationofvaccinesagainstCOVID-19,aswellasaneasingofrestrictionsonsocial,business,travelandgovernmentactivitiesandfunctions.Ontheotherhand,infectionratesandregulationscontinuetofluctuateinvariousregionsandthereareongoingglobalimpactsresultingfromthepandemic,includingchallengesandincreasesincostsforlogisticsandsupplychainissues,suchasashortfallofmicrochipsupply.

During2020,wewerealsoaffectedbytemporarymanufacturingclosures,employmentandcompensationadjustments,andimpedimentstoadministrativeactivitiessupportingourproductdeliveriesanddeployments.Ourtemporarysuspensionatourfactoriesresultedinidlecapacitychargesaswestillincurredfixedcostssuchasdepreciation,certainpayrollrelatedexpensesandpropertytaxes.AspartofourresponsestrategytothebusinessdisruptionsanduncertaintyaroundmacroeconomicconditionscausedbytheCOVID-19pandemic,weinstitutedcostreductioninitiativesacrossourbusinessgloballytobecommensuratetothescopeofouroperationswhiletheywerescaledbackinthefirsthalfof2020.Additionally,wesuspendednon-criticaloperatingspendandopportunisticallyrenegotiatedsupplierandvendorarrangements.Aspartofvariousgovernmentalresponsestothepandemicgrantedtocompaniesglobally,wereceivedcertainpayrollrelatedbenefitswhichhelpedtoreducetheimpactoftheCOVID-19pandemiconourfinancialresults.Suchpayrollrelatedbenefitsrelatedtoourdirectheadcounthavebeenprimarilynettedagainstourdisclosedidlecapacitychargesandtheymarginallyreducedouroperatingexpenses.Theimpactoftheidlecapacitychargesincurredduringthefirsthalfof2020werealmostentirelyoffsetbyourcostsavingsinitiativesandpayrollrelatedbenefits.Revenues

ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Automotivesales $ 8,705 $ 4,893 $ 3,812 78%Automotiveleasing 297 239 58 24%Totalautomotiverevenues 9,002 5,132 3,870 75%

Servicesandother 893 560 333 59%

Totalautomotive&servicesandothersegmentrevenue 9,895 5,692 4,203 74%

Energygenerationandstoragesegmentrevenue 494 293 201 69%Totalrevenues $ 10,389 $ 5,985 $ 4,404 74%

Automotive&ServicesandOtherSegment

AutomotivesalesrevenueincludesrevenuesrelatedtocashdeliveriesofnewModelS,ModelX,Model3andModelYvehicles,includingaccesstoourSuperchargernetwork,internetconnectivity,FSDfeaturesandover-the-airsoftwareupdates,aswellassalesofregulatorycreditstootherautomotivemanufacturers.Cashdeliveriesarevehiclesthatarenotsubjecttoleaseaccounting.Ourrevenuefromregulatorycreditsfluctuatesdependingonwhenacontractisexecutedwithabuyerandwhenthecreditsaredelivered.

Automotiveleasingrevenueincludestheamortizationofrevenueforvehiclesunderdirectoperatingleaseagreementsaswellasthosesoldwithresalevalueguaranteesaccountedforasoperatingleasesunderleaseaccounting.WebeganofferingdirectleasingforModelYvehiclesinthethirdquarterof2020.Additionally,automotiveleasingrevenueincludesdirectsales-typeleasingprogramswherewerecognizeallrevenueassociatedwiththesales-typeleaseupondeliverytothecustomer,whichweintroducedinvolumeduringthethirdquarterof2020.

Servicesandotherrevenueconsistsofnon-warrantyafter-salesvehicleservices,salesofusedvehicles,retailmerchandise,salesbyouracquiredsubsidiariestothirdpartycustomersandvehicleinsurancerevenue.

Automotivesalesrevenueincreased$3.81billion,or78%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoanincreaseof96,464Model3andModelYcashdeliveriesyearoveryearfromproductionrampingatbothGigafactoryShanghaiandtheFremontFactory.Therewasalsoanincreaseof$164millionfromadditionalsalesofregulatorycreditsto$518millioninthethreemonthsendedMarch31,2021.Theincreasesinautomotivesalesrevenuewerepartiallyoffsetbyadecreasefrom8,380fewerModelSandModelXcashdeliveriesataslightlylowercombinedaveragesellingpriceinthethreemonthsendedMarch31,2021comparedtothepriorperiodaswephaseouttheinventoryofoldermodelstogetreadyfortheintroductionoftheupdatedversions.Additionally,therewasadecreaseinthecombinedaveragesellingpriceofModel3andModelYprimarilyduetoahigherproportionofStandardRangevariantsinoursalesmixcomparedtothepriorperiod.

Automotiveleasingrevenueincreased$58million,or24%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoanincreaseincumulativevehiclesunderourdirectoperatingleaseprogramandtheintroductionofdirectsales-typeleasingprogramswhichwebeganofferinginvolumeduringthethirdquarterof2020wherewerecognizeallrevenueassociatedwiththesales-typeleaseupondeliverytothecustomer.Theseincreaseswerepartiallyoffsetbythedecreasesinautomotiveleasingrevenueassociatedwithourresalevalueguaranteeleasingprogramsaccountedforasoperatingleasesasthoseportfolioshavedeclined.

Servicesandotherrevenueincreased$333million,or59%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoincreasesinusedvehiclerevenuedrivenbyanincreaseintrade-ins,non-warrantymaintenanceservicesrevenueasourfleetcontinuestogrowandretailmerchandiserevenue.

EnergyGenerationandStorageSegmentEnergygenerationandstoragerevenueincludessalesandleasingofsolarenergygenerationandenergystorageproducts,servicesrelatedto

suchproductsandsalesofsolarenergysystemsincentives.

Energygenerationandstoragerevenueincreasedby$201million,or69%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoincreasesindeploymentsofsolarcashandloanjobs,PowerwallandMegapack,partiallyoffsetbyreducedaveragesellingpricesonoursolarcashandloanjobsasaresultofourlowcostsolarstrategyintroducedmid-2020.

CostofRevenuesandGrossMargin ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Costofrevenues Automotivesales $ 6,457 $ 3,699 $ 2,758 75%Automotiveleasing 160 122 38 31%

Totalautomotivecostofrevenues 6,617 3,821 2,796 73%Servicesandother 962 648 314 48%

Totalautomotive&servicesandothersegmentcostofrevenues

7,579 4,469 3,110 70%Energygenerationandstoragesegment 595 282 313 111%

Totalcostofrevenues $ 8,174 $ 4,751 $ 3,423 72%Grossprofittotalautomotive $ 2,385 $ 1,311 Grossmargintotalautomotive 26% 26% Grossprofittotalautomotive&servicesandothersegment

$ 2,316 $ 1,223

Grossmargintotalautomotive&servicesandothersegment

23% 21%

Grossprofitenergygenerationandstoragesegment $ (101 ) $ 11 Grossmarginenergygenerationandstoragesegment -20% 4% Totalgrossprofit $ 2,215 $ 1,234 Totalgrossmargin 21% 21%

Automotive&ServicesandOtherSegment

Costofautomotivesalesrevenueincludesdirectparts,materialandlaborcosts,manufacturingoverhead,includingdepreciationcostsoftoolingandmachinery,shippingandlogisticcosts,vehicleconnectivitycosts,allocationsofelectricityandinfrastructurecostsrelatedtoourSuperchargernetworkandreservesforestimatedwarrantyexpenses.Costofautomotivesalesrevenuesalsoincludesadjustmentstowarrantyexpenseandchargestowritedownthecarryingvalueofourinventorywhenitexceedsitsestimatednetrealizablevalueandtoprovideforobsoleteandon-handinventoryinexcessofforecasteddemand.

Costofautomotiveleasingrevenueincludestheamortizationofoperatingleasevehiclesovertheleaseterm,costofgoodssoldassociatedwithdirectsales-typeleaseswhichwereintroducedinvolumeinthethirdquarterof2020,aswellaswarrantyexpensesrelatedtoleasedvehicles.CostofautomotiveleasingrevenuealsoincludesvehicleconnectivitycostsandallocationsofelectricityandinfrastructurecostsrelatedtoourSuperchargernetworkforvehiclesunderourleasingprograms.

Costofservicesandotherrevenueincludescostsassociatedwithprovidingnon-warrantyafter-salesservices,coststoacquireandcertifyusedvehicles,costsforretailmerchandise,andcoststoprovidevehicleinsurance.Costofservicesandotherrevenuealsoincludesdirectparts,materialandlaborcostsandmanufacturingoverheadassociatedwiththesalesbyouracquiredsubsidiariestothirdpartycustomers.

Costofautomotivesalesrevenueincreased$2.76billion,or75%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoanincreaseof96,464Model3andModelYcashdeliveries,partiallyoffsetbyadecreaseincombinedaverageModel3andModelYcostsperunitduetolowermaterial,manufacturing,freightanddutycostsfromlocalizedprocurementandmanufacturinginChina,ahighersalesmixofStandardRangetrimsandreductionsinModelYaveragecostsperunitascomparedtothepriorperiodduetotemporaryunder-utilizationofmanufacturingcapacityatlowerproductionvolumesduringourproductionrampinthefirsthalfof2020.Additionally,therewasadecreaseof8,380ModelSandModelXcashdeliveriesinthethreemonthsendedMarch31,2021comparedtothepriorperiod.

Costofautomotiveleasingrevenueincreased$38million,or31%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoanincreaseincumulativevehiclesunderourdirectoperatingleaseprogramandtheintroductionofdirectsales-typeleasingprogramswhichwebeganofferinginvolumeduringthethirdquarterof2020wherewerecognizeallcostofrevenueassociatedwiththesales-typeleaseupondeliverytothecustomer.Theseincreaseswerepartiallyoffsetbythedecreasesincostofautomotiveleaserevenueassociatedwithourresalevalueguaranteeleasingprogramswhichareaccountedforasoperatingleasesasthoseportfolioshavedeclined.

Costofservicesandotherrevenueincreased$314million,or48%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoincreasesinusedvehiclecostofrevenuedrivenbyanincreaseintrade-ins,coststosupportourincreaseinnon-warrantymaintenanceservicesrevenueandcostsofretailmerchandiseasoursaleshaveincreased.

Grossmarginfortotalautomotiveremainedrelativelyconsistentat26%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.TherewereincreasesfromimprovementsofModelYandModel3grossmarginsprimarilyfromlowermaterial,manufacturing,freightanddutycostsfromlocalizedprocurementandmanufacturinginChinaandreductionsinModelYaveragecostsperunitascomparedtothepriorperiodduetotemporaryunder-utilizationofmanufacturingcapacityatlowerproductionvolumesduringourproductionrampinthefirsthalfof2020.Additionally,therewasapositiveimpactfromanincreaseof$164millioninsalesofregulatorycredits.TheseincreaseswerepartiallyoffsetbyadecreaseinthecombinedaveragesellingpriceofModel3andModelYduetoahigherproportionofStandardRangevariantsinoursalesmixcomparedtothepriorperiod.

Grossmarginfortotalautomotive&servicesandothersegmentincreasedfrom21%to23%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetotheautomotivegrossmarginimpactsdiscussedaboveandanimprovementinourservicesandothergrossmargin.Additionally,therewasalowerproportionofservicesandother,whichoperatedatalowergrossmarginthanourautomotivebusiness,withinthesegmentinthethreemonthsendedMarch31,2021ascomparedtothepriorperiod.

EnergyGenerationandStorageSegmentCostofenergygenerationandstoragerevenueincludesdirectandindirectmaterialandlaborcosts,warehouserent,freight,warrantyexpense,

otheroverheadcostsandamortizationofcertainacquiredintangibleassets.Costofenergygenerationandstoragerevenuealsoincludeschargestowritedownthecarryingvalueofourinventorywhenitexceedsitsestimatednetrealizablevalueandtoprovideforobsoleteandon-handinventoryinexcessofforecasteddemand.InagreementsforsolarenergysystemandPPAswherewearethelessor,thecostofrevenueisprimarilycomprisedofdepreciationofthecostofleasedsolarenergysystems,maintenancecostsassociatedwiththosesystemsandamortizationofanyinitialdirectcosts.

Costofenergygenerationandstoragerevenueincreasedby$313million,or111%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoincreasesindeploymentsofsolarcashandloanjobs,SolarRoof,PowerwallandMegapackandincreasedservicemaintenancecostsonsolarenergysystemswherewearethelessor,partiallyoffsetbyreductionsinaveragecostsperunitofSolarRoofandsolarcashandloanjobsfromimprovedoverheadutilizationasdeploymentsincreased.AlthoughouraveragecostsperunitofSolarRoofimprovedcomparedtothepriorperiod,theystillremainsignificantandcontributedisproportionatelytoourcostofenergygenerationandstoragerevenue.

Grossmarginforenergygenerationandstoragedecreasedfrom4%to-20%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020primarilyduetoahigherproportionofSolarRoofinouroverallenergybusinesswhichoperatedatlowergrossmarginsasaresultoftemporarymanufacturingunderutilizationduringproductramp,increasedservicemaintenancecostsonsolarenergysystemswherewearethelessorandlowergrossmarginsinourenergystoragebusinessaswearerampingMegapack.

ResearchandDevelopmentExpense

ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Researchanddevelopment $ 666 $ 324 $ 342 106%Asapercentageofrevenues 6% 5%

Researchanddevelopment(“R&D”)expensesconsistprimarilyofpersonnelcostsforourteamsinengineeringandresearch,manufacturingengineeringandmanufacturingtestorganizations,prototypingexpense,contractandprofessionalservicesandamortizedequipmentexpense.

R&Dexpensesincreased$342million,or106%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.Theincreasewasprimarilyduetoan$147millionincreaseinemployeeandlaborrelatedexpensesduetoanincreaseinheadcountandincreasedpayrolltaxesrelatedtoappreciationofourstockprice,a$122millionincreaseinR&Dexpensedmaterialsandoutsideservicesanda$60millionincreaseinstock-basedcompensationexpense.TheseincreasesweretosupportourexpandingproductroadmapsuchasthenewversionsofModelSandModelXandtechnologiesincludingourproprietarybatterycells.

R&Dexpensesasapercentageofrevenueincreasedfrom5%to6%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.TheincreaseisprimarilyduetotheincreaseinourR&Dexpensesasdetailedabove,partiallyoffsetbyanincreaseintotalrevenuesfromexpandingsales.

Selling,GeneralandAdministrativeExpense

ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Selling,generalandadministrative $ 1,056 $ 627 $ 429 68%Asapercentageofrevenues 10% 10%

Selling,generalandadministrative(“SG&A”)expensesgenerallyconsistofpersonnelandfacilitiescostsrelatedtoourstores,marketing,sales,executive,finance,humanresources,informationtechnologyandlegalorganizations,aswellasfeesforprofessionalandcontractservicesandlitigationsettlements.

SG&Aexpensesincreased$429million,or68%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.Theincreaseisprimarilyduetoanincreaseof$273millioninstock-basedcompensationexpense,ofwhich$233millionwasattributabletothe2018CEOPerformanceAward.Werecordedstock-basedcompensationexpenseof$299millioninthethreemonthsendedMarch31,2021forthe2018CEOPerformanceAwardcomparedto$66millioninthepriorperiod.Theincreaseinexpenseunderthe2018CEOPerformanceAwardwasduetothecatch-upexpenseof$116millionrecognizedinthethreemonthsendedMarch31,2021whentheoperationalmilestoneofannualizedrevenueof$55.0billionbecameprobableofbeingachievedaswellastheaccelerationoftheexpenserelatedtothefifthandsixthtranchesastheirmarketcapitalizationmilestoneswereachievedearlierthanoriginallyforecastedduetorapidappreciationofourstockpricesince2020(seeNote11,EquityIncentivePlans,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q).Additionally,therewasanincreaseof$125millioninemployeeandlaborrelatedexpensesfromincreasedheadcountandincreasedpayrolltaxesrelatedtoappreciationofourstockprice.

SG&Aexpensesasapercentageofrevenueremainedrelativelyconsistentat10%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.Therewasafavorableimpactfromtheincreaseintotalrevenuefromexpandingsales,partiallyoffsetbyanincreaseinourSG&Aexpensesasdetailedabove.

RestructuringandOtherExpense

ThreeMonthsEndedMarch31, Change(Dollarsinmillions) 2021 2020 $ %Restructuringandother $ (101 ) $ — $ (101 )

Notmeaningful

Asapercentageofrevenues -1% 0%

DuringthethreemonthsendedMarch31,2021,werealizedgainsof$128millionthroughsalesofbitcoinandalsorecorded$27millionofimpairmentlosses.SeeNote2,SummaryofSignificantAccountingPolicies,andNote3,DigitalAssets,Net,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Qforfurtherdetails.

InterestExpense

ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Interestexpense $ (99 ) $ (169 ) $ 70 -41%

Asapercentageofrevenues 1% 3%

Interestexpensedecreasedby$70million,or41%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetotheadoptionofASU2020-06,AccountingforConvertibleInstrumentsandContractsinanEntity’sOwnEquity,onJanuary1,2021,wherebywehavede-recognizedtheremainingdebtdiscountsonthe2022Notesand2024Notesandthereforenolongerrecognizeanyamortizationofdebtdiscountsasinterestexpense,aswellasthecontinuedreductioninouroveralldebtbalance.SeeNote2,SummaryofSignificantAccountingPolicies,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Qforfurtherdetails.

OtherIncome(Expense),Net

ThreeMonthsEndedMarch31, Change(Dollarsinmillions) 2021 2020 $ %

Otherincome(expense),net $ 28 $ (54 ) $ 82 Not

meaningfulAsapercentageofrevenues 0% 1%

Otherincome(expense),net,consistsprimarilyofforeignexchangegainsandlossesrelatedtoourforeigncurrency-denominatedmonetaryassetsandliabilitiesandchangesinthefairvaluesofourfixed-for-floatinginterestrateswaps.Weexpectourforeignexchangegainsandlosseswillvarydependinguponmovementsintheunderlyingexchangerates.

Otherincome(expense),net,changedfavorablyby$82millioninthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetoa$60millionfavorablechangeinthemark-to-marketremeasurementofourinterestrateswapsandfavorablefluctuationsinforeigncurrencyexchangerates.

ProvisionforIncomeTaxes

ThreeMonthsEndedMarch31, Change (Dollarsinmillions) 2021 2020 $ % Provisionforincometaxes $ 69 $ 2 $ 67 3350%Effectivetaxrate 13% 3%

Ourprovisionforincometaxesis$69millionwithpre-taxincomeof$533millionforthethreemonthsendedMarch31,2021.Theprovisionforincometaxesincreasedby$67million,comparedto$2millionprovisionforincometaxeswithpre-taxincomeof$70millionforthethreemonthsendedMarch31,2020.Theincreasewasprimarilyduetothesubstantialincreasesintaxableprofitsinourforeignjurisdictionsyear-over-year.

Oureffectivetaxrateincreasedfrom3%to13%inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020,primarilyduetosubstantialpre-taxincomeinthethreemonthsendedMarch31,2021ascomparedtoasmallpre-taxincomeforthethreemonthsendedMarch31,2020.

SeeNote2,SummaryofSignificantAccountingPolicies,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Qforfurtherdetails.

NetIncomeAttributabletoNoncontrollingInterestsandRedeemableNoncontrollingInterests

ThreeMonthsEndedMarch31, Change(Dollarsinmillions) 2021 2020 $ %Netincomeattributabletononcontrollinginterestsandredeemablenoncontrollinginterestsinsubsidiaries $ 26 $ 52 $ (26 ) -50%

Ournetincomeattributabletononcontrollinginterestsandredeemablenoncontrollinginterestswasrelatedtofinancingfundarrangements.

Netincomeattributabletononcontrollinginterestsandredeemablenoncontrollinginterestsdecreasedby$26million,or50%,inthethreemonthsendedMarch31,2021ascomparedtothethreemonthsendedMarch31,2020.Thechangewasprimarilyduetoloweractivitiesfromnewfinancingfundarrangementsoffsetbyadecreaseindistributionstofinancingfundinvestors.

LiquidityandCapitalResources

Weexpecttocontinuetogeneratenetpositiveoperatingcashflowaswehavedoneinthelastthreefiscalyears.Thecashwegeneratefromourcoreoperationsenablesustofundongoingoperationsandproduction,ourresearchanddevelopmentprojectsfornewproductsandtechnologiesincludingourproprietarybatterycells,additionalmanufacturingrampsatexistingmanufacturingfacilitiessuchastheFremontFactory,GigafactoryNevada,GigafactoryShanghaiandGigafactoryNewYork,theconstructionofGigafactoryBerlinandGigafactoryTexas,andthecontinuedexpansionofourretailandservicelocations,bodyshops,MobileServicefleet,Superchargernetworkandenergyproductinstallationcapabilities.

Inaddition,becausealargeportionofourfutureexpenditureswillbetofundourgrowth,weexpectthatifneededwewillbeabletoadjustourcapitalandoperatingexpendituresbyoperatingsegment.Forexample,ifournear-termmanufacturingoperationsdecreaseinscaleorrampmoreslowlythanexpected,includingduetoglobaleconomicorbusinessconditions,wemaychoosetocorrespondinglyslowthepaceofourcapitalexpenditures.Finally,wecontinuallyevaluateourcashneedsandmaydecideitisbesttoraiseadditionalcapitalorseekalternativefinancingsourcestofundtherapidgrowthofourbusiness,includingthroughdrawdownsonexistingornewdebtfacilitiesorfinancingfunds.Conversely,wemayalsofromtimetotimedeterminethatitisinourbestintereststovoluntarilyrepaycertainindebtednessearly.

Accordingly,webelievethatourcurrentsourcesoffundswillprovideuswithadequateliquidityduringthe12-monthperiodfollowingMarch31,2021,includingtopaydownnear-termdebtobligations,aswellasinthelong-term.

Seethesectionsbelowformoredetailsregardingthematerialrequirementsforcashinourbusinessandoursourcesofliquiditytomeetsuchneeds.

MaterialCashRequirements

Fromtimetotimeintheordinarycourseofbusiness,weenterintoagreementswithvendorsforthepurchaseofcomponentsandrawmaterialstobeusedinthemanufactureofourproducts.However,duetocontractualterms,variabilityintheprecisegrowthcurvesofourdevelopmentandproductionramps,andopportunitiestorenegotiatepricing,wegenerallydonothavebindingandenforceablepurchaseordersundersuchcontractsbeyondtheshortterm,andthetimingandmagnitudeofpurchaseordersbeyondsuchperiodisdifficulttoaccuratelyproject.

AsdiscussedinandsubjecttotheconsiderationsreferencedinPartII,Item7,Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations—ManagementOpportunities,ChallengesandRisks—CashFlowandCapitalExpenditureTrendsinthisQuarterlyReportonForm10-Q,wecurrentlyexpectourcapitalexpenditurestosupportourprojectsgloballytobe$4.50to$6.00billionin2021andineachofthenexttwofiscalyears.InconnectionwithouroperationsatGigafactoryBuffalo,wehaveanagreementtospendorincur$5.0billionincombinedcapital,operationalexpenses,costsofgoodssoldandothercostsintheStateofNewYorkthroughDecember31,2029(pursuanttoadeferralofourrequiredtimelinestomeetsuchobligationsthatwasgrantedinApril2021subjectonlytomemorializationinwritingbyusandtheSUNYFoundation).WealsohaveanoperatingleasearrangementwiththelocalgovernmentofShanghaipursuanttowhichwearerequiredtospendRMB14.08billionincapitalexpendituresatGigafactoryShanghaibytheendof2023.Fordetailsregardingtheseobligations,refertoNote12,CommitmentsandContingencies,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q.

AsofMarch31,2021,weandoursubsidiarieshadoutstanding$9.52billioninaggregateprincipalamountofindebtedness,ofwhich$1.43billionisscheduledtobecomedueinthesucceeding12months.Fordetailsregardingourindebtedness,refertoNote10,Debt,totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q.

SourcesandConditionsofLiquidity

Oursourcestofundourmaterialcashrequirementsarepredominantlyfromourdeliveriesofvehicles,salesandinstallationsofourenergystorageproductsandsolarenergysystems,proceedsfromdebtfacilities,proceedsfromfinancingfundsandproceedsfromequityofferings.

AsofMarch31,2021,wehad$17.14billionofcashandcashequivalents.BalancesheldinforeigncurrencieshadaU.S.dollarequivalentof$7.79billionandconsistedprimarilyofeuros,ChineseyuanandCanadiandollars.Inaddition,wehad$2.15billionofunusedcommittedamountsunderourcreditfacilitiesandfinancingfundsasofMarch31,2021,netofamountsformerlyavailableundertheFixedAssetFacilitythatwaspaidoffandterminatedinApril2021.Certainofsuchunusedcommittedamountsaresubjecttosatisfyingspecifiedconditionspriortodraw-down(suchaspledgingtoourlenderssufficientamountsofqualifiedreceivables,inventories,leasedvehiclesandourinterestsinthoseleases,solarenergysystemsandtheassociatedcustomercontracts,ourinterestsinfinancingfundsorvariousotherassets;andcontributingorsellingqualifiedsolarenergysystemsandtheassociatedcustomercontractsorqualifiedleasedvehiclesandourinterestsinthoseleasesintothefinancingfunds).Fordetailsregardingourindebtednessandfinancingfunds,refertoNote10,Debt,andNote13,VariableInterestEntityArrangementstotheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q.

Inthefirstquarterof2021,weinvestedanaggregate$1.50billioninbitcoinandbeganacceptingbitcoinasaformofpaymentforourproductsincertainregions,subjecttoapplicablelaws.Inthefirstquarterof2021,wealsosoldanaggregate$272millioninbitcoin.Netofsuchsales,thefairmarketvalueofourbitcoinholdingsasofMarch31,2021was$2.48billion.Basedonourtradingactivitytodate,webelievebitcoinishighlyliquid,althoughwegenerallyintendtoholdourbitcoinlong-termregardlessofthemannerofacquisition.However,digitalassetsmaybesubjecttovolatilemarketprices,whichmaybeunfavorableatthetimeswhenwemaywantorneedtoliquidatethem.

SummaryofCashFlows ThreeMonthsEndedMarch31, (Dollarsinmillions) 2021 2020 Netcashprovidedby(usedin)operatingactivities $ 1,641 $ (440 )Netcashusedininvestingactivities $ (2,582 ) $ (480 )Netcash(usedin)providedbyfinancingactivities $ (1,016 ) $ 2,708 CashFlowsfromOperatingActivities

Ourcashflowsfromoperatingactivitiesaresignificantlyaffectedbyourcashinvestmentstosupportthegrowthofourbusinessinareassuchasresearchanddevelopmentandselling,generalandadministrativeandworkingcapital,especiallyinventory,whichincludesvehiclesintransit.Ouroperatingcashinflowsincludecashfromvehiclesales,customerleasepayments,customerdeposits,cashfromsalesofregulatorycreditsandenergygenerationandstorageproducts.Thesecashinflowsareoffsetbyourpaymentstosuppliersforproductionmaterialsandpartsusedinourmanufacturingprocess,operatingexpenses,operatingleasepaymentsandinterestpaymentsonourfinancings.

Netcashfromoperatingactivitieschangedfavorablyby$2.08billiontonetcashprovidedbyoperatingactivitiesof1.64billionduringthethreemonthsendedMarch31,2021fromnetcashusedinoperatingactivitiesof$440millionduringthethreemonthsendedMarch31,2020.Thisincreasewasprimarilyduetothedecreaseinnetoperatingassetsandliabilitiesof$1.44billionandtheincreaseinnetincomeexcludingnon-cashexpensesandgainsof$747million,partiallyoffsetby$101millionofnetgainondigitalassets.ThedecreaseinournetoperatingassetsandliabilitieswasmainlydrivenbyanincreaseinaccountspayableandaccruedliabilitiesinthethreemonthsendedMarch31,2021ascomparedtoadecreaseinthethreemonthsendedMarch31,2020fromrampupinproductionatGigafactoryShanghaiandtheFremontFactoryandasmallerincreaseininventoryfrombuildupoffinishedgoodsfromlimitedcapacitytodeliverorinstallourproductsattheendofthefirstquarterof2020.ThedecreaseinournetoperatingassetsandliabilitieswaspartiallyoffsetbyalargerincreaseinoperatingleasevehiclesasModelYdirectleasingwasintroducedinthethirdquarterof2020andanincreaseinothernon-currentassetsinthethreemonthsendedMarch31,2021ascomparedtoadecreaseinthesameperiodin2020.

CashFlowsfromInvestingActivities

Cashflowsfrominvestingactivitiesandtheirvariabilityacrosseachperiodrelatedprimarilytocapitalexpenditures,whichwere$1.35billionforthethreemonthsendedMarch31,2021,mainlyforconstructionofGigafactoryTexasandGigafactoryBerlinandexpansionofGigafactoryShanghaiand$455millionforthethreemonthsendedMarch31,2020,mainlyforModelYproductionattheFremontFactoryandGigafactoryShanghaiconstruction.Additionally,netcashactivitiesrelatedtodigitalassetswere$1.23billioninthethreemonthsendedMarch31,2021frompurchasesofdigitalassetsfor$1.50billionandproceedsfromsalesofdigitalassetsof$272million.

CashFlowsfromFinancingActivitiesNetcashusedinfinancingactivitiesduringthethreemonthsendedMarch31,2021was$1.02billion,whichconsistedprimarilyof$1.45billion

ofcashrepaymentsuponconversionsofourconvertibleseniornotes,$294millionofrepaymentsunderour2016WarehouseAgreement,$151millionrepaymentofSolarTermLoanuponmaturityand$101millionprincipalrepaymentsofourfinanceleases.Thesecashoutflowswerepartiallyoffsetby$877millionofnetborrowingsfromtheAutomotiveAsset-backedNotesand$183millionofproceedsfromexerciseofstockoptionsandotherstockissuances.SeeNote10,DebttotheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Qforfurtherdetailsregardingourdebtobligations.

NetcashprovidedbyfinancingactivitiesduringthethreemonthsendedMarch31,2020was$2.71billion,whichconsistedprimarilyof$2.31billionfromourFebruary2020publicofferingofcommonstock,netofissuancecosts,$359millionofnetborrowingsunderourvehiclelease-backedloanandsecurityagreements(the"WarehouseAgreements"),$292millionofnetborrowingsundertheseniorsecuredasset-basedrevolvingcreditagreement(the“CreditAgreement”)and$160millionofproceedsfromexerciseofstockoptionsandotherstockissuances.Thesecashinflowswerepartiallyoffsetby$129millionofpaymentsoftheautomotiveasset-backednotesand$100millionprincipalrepaymentsofourfinanceleases.

ITEM3.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISKForeignCurrencyRisk

Wetransactbusinessgloballyinmultiplecurrenciesandhencehaveforeigncurrencyrisksrelatedtoourrevenue,costsofrevenue,operatingexpensesandlocalizedsubsidiarydebtdenominatedincurrenciesotherthantheU.S.dollar(primarilytheChineseyuan,euro,CanadiandollarandSwissfrancinrelationtoourcurrentyearoperations).Ingeneral,weareanetreceiverofcurrenciesotherthantheU.S.dollarforourforeignsubsidiaries.Accordingly,changesinexchangeratesaffectourrevenueandotheroperatingresultsasexpressedinU.S.dollarsaswedonottypicallyhedgeforeigncurrencyrisk.

Wehavealsoexperienced,andwillcontinuetoexperience,fluctuationsinournetincome(loss)asaresultofgains(losses)onthesettlementandthere-measurementofmonetaryassetsandliabilitiesdenominatedincurrenciesthatarenotthelocalcurrency(primarilyconsistingofourintercompanyandcashandcashequivalentsbalances).ForthethreemonthsendedMarch31,2021,werecognizedanetforeigncurrencygainof$2millioninOtherincome(expense),net,withourlargestre-measurementexposuresfromtheCanadiandollar,euroandU.S.dollarasoursubsidiaries’monetaryassetsandliabilitiesaredenominatedinvariouslocalcurrencies.ForthethreemonthsendedMarch31,2020,werecognizedanetforeigncurrencylossof$19millioninOtherincome(expense),net,withourlargestre-measurementexposuresfromtheU.S.dollar,AustraliandollarandSouthKoreanwon.

Weconsideredthehistoricaltrendsinforeigncurrencyexchangeratesanddeterminedthatitisreasonablypossiblethatadversechangesinforeigncurrencyexchangeratesof10%forallcurrenciescouldbeexperiencedinthenear-term.Thesechangeswereappliedtoourtotalmonetaryassetsandliabilitiesdenominatedincurrenciesotherthanourlocalcurrenciesatthebalancesheetdatetocomputetheimpactthesechangeswouldhavehadonournetincome(loss)beforeincometaxes.Thesechangeswouldhaveresultedinalossof$64millionatMarch31,2021and$8millionatDecember31,2020assumingnoforeigncurrencyhedging.

InterestRateRiskWeareexposedtointerestrateriskonourborrowingsthatbearinterestatfloatingrates.Pursuanttoourriskmanagementpolicies,incertain

cases,weutilizederivativeinstrumentstomanagesomeofthisrisk.Wedonotenterintoderivativeinstrumentsfortradingorspeculativepurposes.Ahypothetical10%changeininterestratesonourfloatingratedebtwouldhaveincreasedordecreasedourinterestexpenseforthethreemonthsendedMarch31,2021and2020by$1millionand$1million,respectively.

ITEM4.CONTROLSANDPROCEDURESEvaluationofDisclosureControlsandProcedures

Ourmanagement,withtheparticipationofourChiefExecutiveOfficerandourChiefFinancialOfficer,evaluatedtheeffectivenessofourdisclosurecontrolsandprocedurespursuanttoRule13a-15undertheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”).Indesigningandevaluatingthedisclosurecontrolsandprocedures,ourmanagementrecognizesthatanycontrolsandprocedures,nomatterhowwelldesignedandoperated,canprovideonlyreasonableassuranceofachievingthedesiredcontrolobjectives.Inaddition,thedesignofdisclosurecontrolsandproceduresmustreflectthefactthatthereareresourceconstraintsandthatourmanagementisrequiredtoapplyitsjudgmentinevaluatingthebenefitsofpossiblecontrolsandproceduresrelativetotheircosts.

Basedonthisevaluation,ourChiefExecutiveOfficerandourChiefFinancialOfficerconcludedthat,asofMarch31,2021,ourdisclosurecontrolsandproceduresweredesignedatareasonableassurancelevelandwereeffectivetoprovidereasonableassurancethattheinformationwearerequiredtodiscloseinreportsthatwefileorsubmitundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiodsspecifiedintheSECrulesandforms,andthatsuchinformationisaccumulatedandcommunicatedtoourmanagement,includingourChiefExecutiveOfficerandourChiefFinancialOfficer,asappropriate,toallowtimelydecisionsregardingrequireddisclosures.

ChangesinInternalControloverFinancialReportingTherewasnochangeinourinternalcontroloverfinancialreportingthatoccurredduringthequarterendedMarch31,2021,whichhas

materiallyaffected,orisreasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.

PARTII.OTHERINFORMATION

ITEM1.LEGALPROCEEDINGSForadescriptionofourmaterialpendinglegalproceedings,pleaseseeNote12,CommitmentsandContingencies,totheconsolidatedfinancial

statementsincludedelsewhereinthisQuarterlyReportonForm10-Q.

Inaddition,eachofthemattersbelowisbeingdisclosedpursuanttoItem103ofRegulationS-Kbecauseitrelatestoenvironmentalregulationsandaggregatecivilpenaltiesthatcouldpotentiallyexceed$1million.Webelievethatanyproceedingthatismaterialtoourbusinessorfinancialconditionislikelytohavepotentialpenaltiesfarinexcessofsuchamount.

TheBayAreaAirQualityManagementDistrict(“BAAQMD”)hasissuednoticesofviolationtousrelatingtoairpermittingandrelatedcompliancefortheFremontFactory,buthasnotinitiatedformalproceedings.Wehavedisputedcertainoftheseallegationsandhaveassertedthattherehasbeennorelatedadversecommunityorenvironmentalimpact.Whilewehavenotyetresolvedthismatter,weremaininclosecommunicationwithBAAQMDwithrespecttoit.Wedonotcurrentlyexpectanymaterialadverseimpactonourbusiness.

TheGermanUmweltbundesamthasissuedoursubsidiaryinGermanyanoticeandfineintheamountof12millioneuroallegingitsnon-complianceunderapplicablelawsrelatingtomarketparticipationnotificationsandtake-backobligationswithrespecttoend-of-lifebatteryproductsrequiredthereunder.Thisisprimarilyrelatingtoadministrativerequirements,butTeslahascontinuedtotakebackbatterypacks,andalthoughwecannotpredicttheoutcomeofthismatter,includingthefinalamountofanypenalties,wehavefiledourobjectionanditisnotexpectedtohaveamaterialadverseimpactonourbusiness.

InApril2021,wereceivedanoticefromtheEnvironmentalProtectionAgency(the“EPA”)allegingthatTeslafailedtoproviderecordsdemonstratingcompliancewithcertainrequirementsundertheapplicableNationalEmissionStandardsforHazardousAirPollutantsundertheCleanAirActof1963,asamended,relatingtoSurfaceCoatingofAutomobilesandLight-DutyTrucksregulations.TeslahasrespondedtoallinformationrequestsfromtheEPAandrefutestheallegations.Whiletheoutcomeofthismattercannotbedeterminedatthistime,itisnotcurrentlyexpectedtohaveamaterialadverseimpactonourbusiness.

ITEM1A.RISKFACTORS

Youshouldcarefullyconsidertherisksdescribedbelowtogetherwiththeotherinformationsetforthinthisreport,whichcouldmateriallyaffectourbusiness,financialconditionandfutureresults.Therisksdescribedbelowarenottheonlyrisksfacingourcompany.Risksanduncertaintiesnotcurrentlyknowntousorthatwecurrentlydeemtobeimmaterialalsomaymateriallyadverselyaffectourbusiness,financialconditionandoperatingresults.

RisksRelatedtoOurAbilitytoGrowOurBusinessWemaybeimpactedbymacroeconomicconditionsresultingfromtheglobalCOVID-19pandemic.Sincethefirstquarterof2020,therehasbeenaworldwideimpactfromtheCOVID-19pandemic.Governmentregulationsandshiftingsocial

behaviorshavelimitedorclosednon-essentialtransportation,governmentfunctions,businessactivitiesandperson-to-personinteractions.Insomecases,therelaxationofsuchtrendshasbeenfollowedbyactualorcontemplatedreturnstostringentrestrictionsongatheringsorcommerce,includinginpartsoftheU.S.andanumberofareasinEurope.

During2020,wetemporarilysuspendedoperationsateachofourmanufacturingfacilitiesworldwide,andcertainofoursuppliersalsoshutdownoperationstemporarilyorpermanently.WeinstitutedtemporaryemployeefurloughsandcompensationreductionswhileourU.S.operationswerescaledback.Temporaryimpedimentstoadministrativeactivitiessupportingouroperationsalsohamperedourproductdeliveriesanddeployments.

Globaltradeconditionsandconsumertrendsthatoriginatedduringthepandemiccontinuetopersistandmayalsohavelong-lastingadverseimpactonusandourindustriesindependentlyoftheprogressofthepandemic.Forexample,pandemic-relatedissueshaveexacerbatedportcongestionandintermittentsuppliershutdownsanddelays,resultinginadditionalexpensestoexpeditedeliveryofcriticalparts.Similarly,increaseddemandforpersonalelectronicshascreatedashortfallofmicrochips,whichhascausedchallengesinoursupplychainandproduction.Sustainingourproductiontrajectorywillrequiretheongoingreadinessandsolvencyofoursuppliersandvendors,astableandmotivatedproductionworkforceandgovernmentcooperation,includingfortravelandvisaallowances.ThecontingenciesinherentintheconstructionofandrampatnewfacilitiessuchasGigafactoryShanghai,GigafactoryBerlinandGigafactoryTexasmaybeexacerbatedbythesechallenges.

Wecannotpredictthedurationordirectionofcurrentglobaltrendsortheirsustainedimpact.Ultimately,wecontinuetomonitormacroeconomicconditionstoremainflexibleandtooptimizeandevolveourbusinessasappropriate,andwewillhavetoaccuratelyprojectdemandandinfrastructurerequirementsgloballyanddeployourproduction,workforceandotherresourcesaccordingly.Ifweexperienceunfavorableglobalmarketconditions,orifwecannotordonotmaintainoperationsatascopethatiscommensuratewithsuchconditionsorarelaterrequiredtoorchoosetosuspendsuchoperationsagain,ourbusiness,prospects,financialconditionandoperatingresultsmaybeharmed.

Wemayexperiencedelaysinlaunchingandrampingtheproductionofourproductsandfeatures,orwemaybeunabletocontrolourmanufacturingcosts.Wehavepreviouslyexperiencedandmayinthefutureexperiencelaunchandproductionrampdelaysfornewproductsandfeatures.For

example,weencounteredunanticipatedsupplierissuesthatledtodelaysduringtheinitialrampofModelXandexperiencedchallengeswithasupplierandwithrampingfullautomationforcertainofourinitialModel3manufacturingprocesses.Inaddition,wemayintroduceinthefutureneworuniquemanufacturingprocessesanddesignfeaturesforourproducts.Thereisnoguaranteethatwewillbeabletosuccessfullyandtimelyintroduceandscalesuchprocessesorfeatures.

Inparticular,ourfuturebusinessdependsinlargepartonincreasingtheproductionofmass-marketvehiclesincludingModel3andModelY,whichweareplanningtoachievethroughmultiplefactoriesworldwide.WehaverelativelylimitedexperiencetodateinmanufacturingModel3andModelYathighvolumesandevenlessexperiencebuildingandrampingvehicleproductionlinesacrossmultiplefactoriesindifferentgeographies.Inordertobesuccessful,wewillneedtoimplement,maintainandrampefficientandcost-effectivemanufacturingcapabilities,processesandsupplychainsandachievethedesigntolerances,highqualityandoutputrateswehaveplannedatourmanufacturingfacilitiesinCalifornia,Nevada,Texas,ChinaandGermany.Wewillalsoneedtohire,trainandcompensateskilledemployeestooperatethesefacilities.Bottlenecksandotherunexpectedchallengessuchasthoseweexperiencedinthepastmayariseduringourproductionramps,andwemustaddressthempromptlywhilecontinuingtoimprovemanufacturingprocessesandreducingcosts.Ifwearenotsuccessfulinachievingthesegoals,wecouldfacedelaysinestablishingand/orsustainingourModel3andModelYrampsorbeunabletomeetourrelatedcostandprofitabilitytargets.

Wemayalsoexperiencesimilarfuturedelaysinlaunchingand/orrampingproductionofourenergystorageproductsandSolarRoof;newproductversionsorvariantssuchastherecentlyupdatedModelSandModelX;newvehiclessuchasTeslaSemi,CybertruckandthenewTeslaRoadster;andfuturefeaturesandservicessuchasnewAutopilotorFSDfeaturesandtheautonomous

Teslaride-hailingnetwork.Likewise,wemayencounterdelayswiththedesign,constructionandregulatoryorotherapprovalsnecessarytobuildandbringonlinefuturemanufacturingfacilitiesandproducts.

Anydelayorothercomplicationinrampingtheproductionofourcurrentproductsorthedevelopment,manufacture,launchandproductionrampofourfutureproducts,featuresandservices,orindoingsocost-effectivelyandwithhighquality,mayharmourbrand,business,prospects,financialconditionandoperatingresults.

Wemaybeunabletogrowourglobalproductsales,deliveryandinstallationcapabilitiesandourservicingandvehiclechargingnetworks,orwemaybeunabletoaccuratelyprojectandeffectivelymanageourgrowth.Oursuccesswilldependonourabilitytocontinuetoexpandoursalescapabilities.WearetargetingwithModel3andModelYaglobalmass

demographicwithabroadrangeofpotentialcustomers,inwhichwehaverelativelylimitedexperienceprojectingdemandandpricingourproducts.Wecurrentlyproducenumerousinternationalvariantsatalimitednumberoffactories,andifourspecificdemandexpectationsforthesevariantsproveinaccurate,wemaynotbeabletotimelygeneratedeliveriesmatchedtothevehiclesthatweproduceinthesametimeframeorthatarecommensuratewiththesizeofouroperationsinagivenregion.Likewise,aswedevelopandgrowourenergyproductsandservicesworldwide,oursuccesswilldependonourabilitytocorrectlyforecastdemandinvariousmarkets.

Becausewedonothaveindependentdealernetworks,weareresponsiblefordeliveringallofourvehiclestoourcustomers.Wemayfacedifficultieswithdeliveriesatincreasingvolumes,particularlyininternationalmarketsrequiringsignificanttransittimes.Forexample,wesawchallengesinrampingourlogisticschannelsinChinaandEuropetoinitiallydeliverModel3thereinthefirstquarterof2019.Wehavedeployedanumberofdeliverymodels,suchasdeliveriestocustomers’homesandworkplacesandtouchlessdeliveries,butthereisnoguaranteethatsuchmodelswillbescalableorbeacceptedglobally.Likewise,aswerampSolarRoof,weareworkingtosubstantiallyincreaseinstallationpersonnelanddecreaseinstallationtimes.Ifwearenotsuccessfulinmatchingsuchcapabilitieswithactualproduction,orifweexperienceunforeseenproductiondelaysorinaccuratelyforecastdemandfortheSolarRoof,ourbusiness,financialconditionandoperatingresultsmaybeharmed.

Moreover,becauseofouruniqueexpertisewithourvehicles,werecommendthatourvehiclesbeservicedbyusorbycertainauthorizedprofessionals.Ifweexperiencedelaysinaddingsuchservicingcapacityorservicingourvehiclesefficiently,orexperienceunforeseenissueswiththereliabilityofourvehicles,particularlyhigher-volumeandneweradditionstoourfleetsuchasModel3andModelY,itcouldoverburdenourservicingcapabilitiesandpartsinventory.Similarly,theincreasingnumberofTeslavehiclesalsorequiresustocontinuetorapidlyincreasethenumberofourSuperchargerstationsandconnectorsthroughouttheworld.

Thereisnoassurancethatwewillbeabletorampourbusinesstomeetoursales,delivery,installation,servicingandvehiclechargingtargetsglobally,thatourprojectionsonwhichsuchtargetsarebasedwillproveaccurateorthatthepaceofgrowthorcoverageofourcustomerinfrastructurenetworkwillmeetcustomerexpectations.Theseplansrequiresignificantcashinvestmentsandmanagementresourcesandthereisnoguaranteethattheywillgenerateadditionalsalesorinstallationsofourproducts,orthatwewillbeabletoavoidcostoverrunsorbeabletohireadditionalpersonneltosupportthem.Asweexpand,wewillalsoneedtoensureourcompliancewithregulatoryrequirementsinvariousjurisdictionsapplicabletothesale,installationandservicingofourproducts,thesaleordispatchofelectricityrelatedtoourenergyproductsandtheoperationofSuperchargers.Ifwefailtomanageourgrowtheffectively,itmayharmourbrand,business,prospects,financialconditionandoperatingresults.

Ourfuturegrowthandsuccessaredependentuponconsumers’demandforelectricvehiclesandspecificallyourvehiclesinanautomotiveindustrythatisgenerallycompetitive,cyclicalandvolatile.IfthemarketforelectricvehiclesingeneralandTeslavehiclesinparticulardoesnotdevelopasweexpect,developsmoreslowlythanwe

expect,orifdemandforourvehiclesdecreasesinourmarketsorourvehiclescompetewitheachother,ourbusiness,prospects,financialconditionandoperatingresultsmaybeharmed.

Wearestillatanearlierstageandhavelimitedresourcesandproductionrelativetoestablishedcompetitorsthatofferinternalcombustionenginevehicles.Inaddition,electricvehiclesstillcompriseasmallpercentageofoverallvehiclesales.Asaresult,themarketforourvehiclescouldbenegativelyaffectedbynumerousfactors,suchas:

perceptionsaboutelectricvehiclefeatures,quality,safety,performanceandcost;

perceptionsaboutthelimitedrangeoverwhichelectricvehiclesmaybedrivenonasinglebatterycharge,andaccesstochargingfacilities;

competition,includingfromothertypesofalternativefuelvehicles,plug-inhybridelectricvehiclesandhighfuel-economyinternalcombustionenginevehicles;

volatilityinthecostofoilandgasoline,suchaswidefluctuationsincrudeoilpricesduring2020;

governmentregulationsandeconomicincentives;and

concernsaboutourfutureviability.42

Finally,thetargetdemographicsforourvehicles,particularlyModel3andModelY,arehighlycompetitive.Salesofvehiclesintheautomotiveindustrytendtobecyclicalinmanymarkets,whichmayexposeustofurthervolatility.

Oursuppliersmayfailtodelivercomponentsaccordingtoschedules,prices,qualityandvolumesthatareacceptabletous,orwemaybeunabletomanagethesecomponentseffectively.Ourproductscontainthousandsofpartsthatwepurchasegloballyfromhundredsofsuppliersincludingsingle-sourcedirectsuppliers.This

exposesustomultiplepotentialsourcesofcomponentshortages,suchasthosethatweexperiencedin2012and2016withourinitialModelSandModelXramps.Unexpectedchangesinbusinessconditions,materialspricing,laborissues,wars,governmentalchanges,tariffs,naturaldisasterssuchastheMarch2011earthquakesinJapan,healthepidemicssuchastheglobalCOVID-19pandemic,tradeandshippingdisruptionsandotherfactorsbeyondouroroursuppliers’controlcouldalsoaffectthesesuppliers’abilitytodelivercomponentstousortoremainsolventandoperational.Forexample,aglobalshortageofmicrochipshasbeenreportedsinceearly2021andhascausedchallengesinoursupplychainandproduction.Theunavailabilityofanycomponentorsuppliercouldresultinproductiondelays,idlemanufacturingfacilities,productdesignchangesandlossofaccesstoimportanttechnologyandtoolsforproducingandsupportingourproducts.Moreover,significantincreasesinourproduction,suchasforModel3andModelY,orproductdesignchangesbyushaverequiredandmayinthefuturerequireustoprocureadditionalcomponentsinashortamountoftime.Oursuppliersmaynotbewillingorabletosustainablymeetourtimelinesorourcost,qualityandvolumeneeds,ortodosomaycostusmore,whichmayrequireustoreplacethemwithothersources.Finally,wehavelimitedvehiclemanufacturingexperienceoutsideoftheFremontFactoryandwemayexperienceissuesincreasingtheleveloflocalizedprocurementatourGigafactoryShanghaiandatfuturefactoriessuchasGigafactoryBerlinandGigafactoryTexas.Whilewebelievethatwewillbeabletosecureadditionaloralternatesourcesordevelopourownreplacementsformostofourcomponents,thereisnoassurancethatwewillbeabletodosoquicklyoratall.Additionally,wemaybeunsuccessfulinourcontinuouseffortstonegotiatewithexistingsupplierstoobtaincostreductionsandavoidunfavorablechangestoterms,sourcelessexpensivesuppliersforcertainpartsandredesigncertainpartstomakethemlessexpensivetoproduce.Anyoftheseoccurrencesmayharmourbusiness,prospects,financialconditionandoperatingresults.

Asthescaleofourvehicleproductionincreases,wewillalsoneedtoaccuratelyforecast,purchase,warehouseandtransportcomponentsathighvolumestoourmanufacturingfacilitiesandservicinglocationsinternationally.Ifweareunabletoaccuratelymatchthetimingandquantitiesofcomponentpurchasestoouractualneedsorsuccessfullyimplementautomation,inventorymanagementandothersystemstoaccommodatetheincreasedcomplexityinoursupplychainandpartsmanagement,wemayincurunexpectedproductiondisruption,storage,transportationandwrite-offcosts,whichmayharmourbusinessandoperatingresults.

Wemaybeunabletomeetourprojectedconstructiontimelines,costsandproductionrampsatnewfactories,orwemayexperiencedifficultiesingeneratingandmaintainingdemandforproductsmanufacturedthere.Ourabilitytoincreaseproductionofourvehiclesonasustainedbasis,makethemaffordablegloballybyaccessinglocalsupplychainsand

workforcesandstreamlinedeliverylogisticsisdependentontheconstructionandrampofGigafactoryShanghai,GigafactoryBerlinandGigafactoryTexas.Theconstructionofandcommencementandrampofproductionatthesefactoriesaresubjecttoanumberofuncertaintiesinherentinallnewmanufacturingoperations,includingongoingcompliancewithregulatoryrequirements,procurementandmaintenanceofconstruction,environmentalandoperationallicensesandapprovalsforadditionalexpansion,potentialsupplychainconstraints,hiring,trainingandretentionofqualifiedemployeesandthepaceofbringingproductionequipmentandprocessesonlinewiththecapabilitytomanufacturehigh-qualityunitsatscale.Forexample,wearecurrentlyconstructingGigafactoryBerlinunderconditionalpermitsinanticipationofbeinggrantedfinalpermits.Moreover,wewillhavetoestablishandrampproductionofourproprietarybatterycellsandpacksatournewfactories,andweadditionallyintendtoincorporatesequentialdesignandmanufacturingchangesintovehiclesmanufacturedateachnewfactory.WehavelimitedexperiencetodatewithdevelopingandimplementingmanufacturinginnovationsoutsideoftheFremontFactory,aswebeganproductionatGigafactoryShanghairelativelyrecently.Inparticular,themajorityofourdesignandengineeringresourcesarecurrentlylocatedinCalifornia.Inordertomeetourexpectationsforournewfactories,wemustexpandandmanagelocalizeddesignandengineeringtalentandresources.Ifweexperienceanyissuesordelaysinmeetingourprojectedtimelines,costs,capitalefficiencyandproductioncapacityforournewfactories,expandingandmanagingteamstoimplementiterativedesignandproductionchangesthere,maintainingandcomplyingwiththetermsofanydebtfinancingthatweobtaintofundthemorgeneratingandmaintainingdemandforthevehicleswemanufacturethere,ourbusiness,prospects,operatingresultsandfinancialconditionmaybeharmed.

Wewillneedtomaintainandsignificantlygrowouraccesstobatterycells,includingthroughthedevelopmentandmanufactureofourowncells,andcontrolourrelatedcosts.Wearedependentonthecontinuedsupplyoflithium-ionbatterycellsforourvehiclesandenergystorageproducts,andwewillrequire

substantiallymorecellstogrowourbusinessaccordingtoourplans.Currently,werelyonsupplierssuchasPanasonicforthesecells.However,wehavetodatefullyqualifiedonlyaverylimitednumberofsuchsuppliersandhavelimitedflexibilityinchangingsuppliers.Anydisruptioninthesupplyofbatterycellsfromoursupplierscouldlimitproductionofourvehiclesandenergystorageproducts.Inthelongterm,weintendtosupplementcellsfromoursupplierswithcellsmanufacturedbyus,whichwebelievewillbemoreefficient,manufacturableatgreatervolumesandcost-effectivethancurrentlyavailablecells.However,oureffortsto

developandmanufacturesuchbatterycellshaverequiredandmayrequiresignificantinvestments,andtherecanbenoassurancethatwewillbeabletoachievethesetargetsinthetimeframesthatwehaveplannedoratall.Ifweareunabletodoso,wemayhavetocurtailourplannedvehicleandenergystorageproductproductionorprocureadditionalcellsfromsuppliersatpotentiallygreatercosts,eitherofwhichmayharmourbusinessandoperatingresults.

Inaddition,thecostofbatterycells,whethermanufacturedbyoursuppliersorbyus,dependsinpartuponthepricesandavailabilityofrawmaterialssuchaslithium,nickel,cobaltand/orothermetals.Thepricesforthesematerialsfluctuateandtheiravailablesupplymaybeunstable,dependingonmarketconditionsandglobaldemandforthesematerials,includingasaresultofincreasedglobalproductionofelectricvehiclesandenergystorageproducts.Anyreducedavailabilityofthesematerialsmayimpactouraccesstocellsandanyincreasesintheirpricesmayreduceourprofitabilityifwecannotrecouptheincreasedcoststhroughincreasedvehicleprices.Moreover,anysuchattemptstoincreaseproductpricesmayharmourbrand,prospectsandoperatingresults.

Wefacestrongcompetitionforourproductsandservicesfromagrowinglistofestablishedandnewcompetitors.Theworldwideautomotivemarketishighlycompetitivetodayandweexpectitwillbecomeevenmoresointhefuture.Forexample,Model3and

ModelYfacecompetitionfromexistingandfutureautomobilemanufacturersintheextremelycompetitiveentry-levelpremiumsedanandcompactSUVmarkets.Asignificantandgrowingnumberofestablishedandnewautomobilemanufacturers,aswellasothercompanies,haveenteredorarereportedtohaveplanstoenterthemarketforelectricandotheralternativefuelvehicles,includinghybrid,plug-inhybridandfullyelectricvehicles,aswellasthemarketforself-drivingtechnologyandothervehicleapplicationsandsoftwareplatforms.Insomecases,ourcompetitorsofferorwillofferelectricvehiclesinimportantmarketssuchasChinaandEurope,and/orhaveannouncedanintentiontoproduceelectricvehiclesexclusivelyatsomepointinthefuture.Manyofourcompetitorshavesignificantlygreaterorbetter-establishedresourcesthanwedotodevotetothedesign,development,manufacturing,distribution,promotion,saleandsupportoftheirproducts.Increasedcompetitioncouldresultinourlowervehicleunitsales,pricereductions,revenueshortfalls,lossofcustomersandlossofmarketshare,whichmayharmourbusiness,financialconditionandoperatingresults.

Wealsofacecompetitioninourenergygenerationandstoragebusinessfromothermanufacturers,developers,installersandserviceprovidersofcompetingenergysystems,aswellasfromlargeutilities.Decreasesintheretailorwholesalepricesofelectricityfromutilitiesorotherrenewableenergysourcescouldmakeourproductslessattractivetocustomersandleadtoanincreasedrateofresidentialcustomerdefaultsunderourexistinglong-termleasesandPPAs.RisksRelatedtoOurOperations

Wemayexperienceissueswithlithium-ioncellsorothercomponentsmanufacturedatGigafactoryNevada,whichmayharmtheproductionandprofitabilityofourvehicleandenergystorageproducts.Ourplantogrowthevolumeandprofitabilityofourvehiclesandenergystorageproductsdependsonsignificantlithium-ionbatterycell

production,includingbyourpartnerPanasonicatGigafactoryNevada.AlthoughPanasonichasalongtrackrecordofproducinghigh-qualitycellsatsignificantvolumeatitsfactoriesinJapan,ithasrelativelylimitedexperiencewithcellproductionatGigafactoryNevada,whichbeganin2017.Inaddition,weproduceseveralvehiclecomponents,suchasbatterymodulesandpacksincorporatingthecellsproducedbyPanasonicforModel3andModelYanddriveunits(includingtosupportGigafactoryShanghaiproduction),atGigafactoryNevada,andwealsomanufactureenergystorageproductsthere.Inthepast,someofthemanufacturinglinesforcertainproductcomponentstooklongerthananticipatedtoramptotheirfullcapacity,andadditionalbottlenecksmayariseinthefutureaswecontinuetoincreasetheproductionrateandintroducenewlines.IfweorPanasonicareunabletoorotherwisedonotmaintainandgrowourrespectiveoperationsatGigafactoryNevadaproduction,orifweareunabletodosocost-effectivelyorhireandretainhighly-skilledpersonnelthere,ourabilitytomanufactureourproductsprofitablywouldbelimited,whichmayharmourbusinessandoperatingresults.

Finally,thehighvolumesoflithium-ioncellsandbatterymodulesandpacksmanufacturedatGigafactoryNevadaarestoredandrecycledatourvariousfacilities.Anymishandlingofbatterycellsmaycausedisruptiontotheoperationofsuchfacilities.Whilewehaveimplementedsafetyproceduresrelatedtothehandlingofthecells,therecanbenoassurancethatasafetyissueorfirerelatedtothecellswouldnotdisruptouroperations.Anysuchdisruptionsorissuesmayharmourbrandandbusiness.

Wefacerisksassociatedwithmaintainingandexpandingourinternationaloperations,includingunfavorableanduncertainregulatory,political,economic,taxandlaborconditions.Wearesubjecttolegalandregulatoryrequirements,politicaluncertaintyandsocial,environmentalandeconomicconditionsinnumerous

jurisdictions,includingmarketsinwhichwegeneratesignificantsales,overwhichwehavelittlecontrolandwhichareinherentlyunpredictable.Ouroperationsinsuchjurisdictions,particularlyasacompanybasedintheU.S.,createrisksrelatingtoconformingourproductstoregulatoryandsafetyrequirementsandchargingandotherelectricinfrastructures;organizinglocaloperatingentities;establishing,staffingandmanagingforeignbusinesslocations;attractinglocalcustomers;navigatingforeign

governmenttaxes,regulationsandpermitrequirements;enforceabilityofourcontractualrights;traderestrictions,customsregulations,tariffsandpriceorexchangecontrols;andpreferencesinforeignnationsfordomesticallymanufacturedproducts.Suchconditionsmayincreaseourcosts,impactourabilitytosellourproductsandrequiresignificantmanagementattention,andmayharmourbusinessifweareunabletomanagethemeffectively.

Ourbusinessmaysufferifourproductsorfeaturescontaindefects,failtoperformasexpectedortakelongerthanexpectedtobecomefullyfunctional.Ifourproductscontaindesignormanufacturingdefectsthatcausethemnottoperformasexpectedorthatrequirerepair,orcertainfeaturesof

ourvehiclessuchasnewAutopilotorFSDfeaturestakelongerthanexpectedtobecomeenabled,arelegallyrestrictedorbecomesubjecttoonerousregulation,ourabilitytodevelop,marketandsellourproductsandservicesmaybeharmed,andwemayexperiencedeliverydelays,productrecalls,productliability,breachofwarrantyandconsumerprotectionclaimsandsignificantwarrantyandotherexpenses.Forexample,wearedevelopingself-drivinganddriverassisttechnologiestorelyonvision-basedsensors,unlikealternativetechnologiesindevelopmentthatadditionallyrequireotherredundantsensors.Thereisnoguaranteethatanyincrementalchangesinthespecificequipmentwedeployinourvehiclesovertimewillnotresultininitialfunctionaldisparitiesfromprioriterationsorwillperformasexpectedinthetimeframeweanticipate,oratall.

Ourproductsarealsohighlydependentonsoftware,whichisinherentlycomplexandmaycontainlatentdefectsorerrorsorbesubjecttoexternalattacks.IssuesexperiencedbyourcustomershaveincludedthoserelatedtotheModelSandModelX17-inchdisplayscreen,thepanoramicroofandthe12-voltbatteryintheModelS,theseatsanddoorsintheModelXandtheoperationofsolarpanelsinstalledbyus.Althoughweattempttoremedyanyissuesweobserveinourproductsaseffectivelyandrapidlyaspossible,sucheffortsmaynotbetimely,mayhamperproductionormaynotcompletelysatisfyourcustomers.Whilewehaveperformedextensiveinternaltestingonourproductsandfeatures,wecurrentlyhavealimitedframeofreferencebywhichtoevaluatetheirlong-termquality,reliability,durabilityandperformancecharacteristics.Therecanbenoassurancethatwewillbeabletodetectandfixanydefectsinourproductspriortotheirsaletoorinstallationforcustomers.

Wemayberequiredtodefendorinsureagainstproductliabilityclaims.Theautomobileindustrygenerallyexperiencessignificantproductliabilityclaims,andassuchwefacetheriskofsuchclaimsintheeventour

vehiclesdonotperformorareclaimedtonothaveperformedasexpected.Asistrueforotherautomakers,ourvehicleshavebeeninvolvedandweexpectinthefuturewillbeinvolvedinaccidentsresultingindeathorpersonalinjury,andsuchaccidentswhereAutopilotorFSDfeaturesareengagedarethesubjectofsignificantpublicattention.Wehaveexperiencedandweexpecttocontinuetofaceclaimsarisingfromorrelatedtomisuseorclaimedfailuresofsuchnewtechnologiesthatwearepioneering.Inaddition,thebatterypacksthatweproducemakeuseoflithium-ioncells.Onrareoccasions,lithium-ioncellscanrapidlyreleasetheenergytheycontainbyventingsmokeandflamesinamannerthatcanignitenearbymaterialsaswellasotherlithium-ioncells.Whilewehavedesignedourbatterypackstopassivelycontainanysinglecell’sreleaseofenergywithoutspreadingtoneighboringcells,therecanbenoassurancethatafieldortestingfailureofourvehiclesorotherbatterypacksthatweproducewillnotoccur,inparticularduetoahigh-speedcrash.Likewise,asoursolarenergysystemsandenergystorageproductsgenerateandstoreelectricity,theyhavethepotentialtofailorcauseinjurytopeopleorproperty.Anyproductliabilityclaimmaysubjectustolawsuitsandsubstantialmonetarydamages,productrecallsorredesignefforts,andevenameritlessclaimmayrequireustodefendit,allofwhichmaygeneratenegativepublicityandbeexpensiveandtime-consuming.Inmostjurisdictions,wegenerallyself-insureagainsttheriskofproductliabilityclaimsforvehicleexposure,meaningthatanyproductliabilityclaimswilllikelyhavetobepaidfromcompanyfundsandnotbyinsurance.

Wewillneedtomaintainpubliccredibilityandconfidenceinourlong-termbusinessprospectsinordertosucceed.Inordertomaintainandgrowourbusiness,wemustmaintaincredibilityandconfidenceamongcustomers,suppliers,analysts,investors,ratings

agenciesandotherpartiesinourlong-termfinancialviabilityandbusinessprospects.Maintainingsuchconfidencemaybechallengingduetoourlimitedoperatinghistoryrelativetoestablishedcompetitors;customerunfamiliaritywithourproducts;anydelayswemayexperienceinscalingmanufacturing,deliveryandserviceoperationstomeetdemand;competitionanduncertaintyregardingthefutureofelectricvehiclesorourotherproductsandservices;ourquarterlyproductionandsalesperformancecomparedwithmarketexpectations;andotherfactorsincludingthoseoverwhichwehavenocontrol.Inparticular,Tesla’sproducts,business,resultsofoperations,statementsandactionsarewell-publicizedbyarangeofthirdparties.Suchattentionincludesfrequentcriticism,whichisoftenexaggeratedorunfounded,suchasspeculationregardingthesufficiencyorstabilityofourmanagementteam.Anysuchnegativeperceptions,whethercausedbyusornot,mayharmourbusinessandmakeitmoredifficulttoraiseadditionalfundsifneeded.

Wemaybeunabletoeffectivelygrow,ormanagethecompliance,residualvalue,financingandcreditrisksrelatedto,ourvariousfinancingprograms.WeofferfinancingarrangementsforourvehiclesinNorthAmerica,EuropeandAsiaprimarilythroughvariousfinancialinstitutions.Wealso

currentlyoffervehiclefinancingarrangementsdirectlythroughourlocalsubsidiariesincertainmarkets.Dependingonthecountry,sucharrangementsareavailableforspecifiedmodelsandmayincludeoperatingleasesdirectlywithus

underwhichwetypicallyreceiveonlyaverysmallportionofthetotalvehiclepurchasepriceatthetimeoflease,followedbyastreamofpaymentsoverthetermofthelease.Wehavealsoofferedvariousarrangementsforcustomersofoursolarenergysystemswherebytheypayusafixedpaymenttoleaseorfinancethepurchaseofsuchsystemsorpurchaseelectricitygeneratedbythem.Ifwedonotsuccessfullymonitorandcomplywithapplicablenational,stateand/orlocalfinancialregulationsandconsumerprotectionlawsgoverningthesetransactions,wemaybecomesubjecttoenforcementactionsorpenalties.

Theprofitabilityofanydirectly-leasedvehiclesreturnedtousattheendoftheirleasesdependsonourabilitytoaccuratelyprojectourvehicles’residualvaluesattheoutsetoftheleases,andsuchvaluesmayfluctuatepriortotheendoftheirtermsdependingonvariousfactorssuchassupplyanddemandofourusedvehicles,economiccyclesandthepricingofnewvehicles.Wehavemadeinthepastandmaymakeinthefuturecertainadjustmentstoourpricesfromtimetotimeintheordinarycourseofbusiness,whichmayimpacttheresidualvaluesofourvehiclesandreducetheprofitabilityofourvehicleleasingprogram.Thefundingandgrowthofthisprogramalsoreliesonourabilitytosecureadequatefinancingand/orbusinesspartners.Ifweareunabletoadequatelyfundourleasingprogramthroughinternalfunds,partnersorotherfinancingsources,andcompellingalternativefinancingprogramsarenotavailableforourcustomerswhomayexpectorneedsuchoptions,wemaybeunabletogrowourvehicledeliveries.Furthermore,ifourvehicleleasingbusinessgrowssubstantially,ourbusinessmaysufferifwecannoteffectivelymanagetheresultinggreaterlevelsofresidualrisk.

Similarly,wehaveprovidedresalevalueguaranteestovehiclecustomersandpartnersforcertainfinancingprograms,underwhichsuchcounterpartiesmayselltheirvehiclesbacktousatcertainpointsintimeatpre-determinedamounts.However,actualresalevaluesaresubjecttofluctuationsoverthetermofthefinancingarrangements,suchasfromthevehiclepricingchangesdiscussedabove.Iftheactualresalevaluesofanyvehiclesresoldorreturnedtouspursuanttotheseprogramsaremateriallylowerthanthepre-determinedamountswehaveoffered,ourfinancialconditionandoperatingresultsmaybeharmed.

Finally,ourvehicleandsolarenergysystemfinancingprogramsandourenergystoragesalesprogramsalsoexposeustocustomercreditrisk.Intheeventofawidespreadeconomicdownturnorothercatastrophicevent,ourcustomersmaybeunableorunwillingtosatisfytheirpaymentobligationstousonatimelybasisoratall.Ifasignificantnumberofourcustomersdefault,wemayincursubstantialcreditlossesand/orimpairmentchargeswithrespecttotheunderlyingassets.

WemustmanageongoingobligationsunderouragreementwiththeResearchFoundationfortheStateUniversityofNewYorkrelatingtoourGigafactoryNewYork.WearepartytoanoperatingleaseandaresearchanddevelopmentagreementthroughtheSUNYFoundation.Theseagreementsprovideforthe

constructionanduseofourGigafactoryNewYork,whichwehaveprimarilyusedforthedevelopmentandproductionofourSolarRoofandothersolarproductsandcomponents,energystoragecomponentsandSuperchargercomponents,andforotherlessor-approvedfunctions.Underthisagreement,weareobligatedto,amongotherthings,meetemploymenttargetsaswellasspecifiedminimumnumbersofpersonnelintheStateofNewYorkandinBuffalo,NewYorkandspendorincur$5.00billionincombinedcapital,operationalexpenses,costsofgoodssoldandothercostsintheStateofNewYorkduringaperiodthatwasinitially10yearsbeginningApril30,2018.AswetemporarilysuspendedmostofourmanufacturingoperationsatGigafactoryNewYorkpursuanttoaNewYorkStateexecutiveorderissuedinMarch2020asaresultoftheCOVID-19pandemic,weweregrantedaone-yeardeferralofourobligationtobecompliantwithourapplicabletargetsundersuchagreementonApril30,2020,whichwasmemorializedinanamendmenttoouragreementwiththeSUNYFoundationinJuly2020.InApril2021,weweregrantedanadditionaldeferralthroughDecember31,2021subjectonlytomemorializationinwritingbyusandtheSUNYFoundation,asouroperationsatGigafactoryNewYorkhavenotyetfullyrampedduetoanumberoffactorsrelatedtothepandemic.WhileweexpecttohaveandgrowsignificantoperationsatGigafactoryNewYorkandthesurroundingBuffaloarea,anyfailurebyusinanyyearoverthecourseofthetermoftheagreementtomeetallapplicablefutureobligationsmayresultinourobligationtopaya“programpayment”of$41milliontotheSUNYFoundationforsuchyear,theterminationofourleaseatGigafactoryNewYorkwhichmayrequireustopayadditionalpenalties,and/ortheneedtoadjustcertainofouroperations,inparticularourproductionrampoftheSolarRooforothercomponents.Anyoftheforegoingeventsmayharmourbusiness,financialconditionandoperatingresults.

Ifweareunabletoattract,hireandretainkeyemployeesandqualifiedpersonnel,ourabilitytocompetemaybeharmed.Thelossoftheservicesofanyofourkeyemployeesoranysignificantportionofourworkforcecoulddisruptouroperationsordelaythe

development,introductionandrampofourproductsandservices.Inparticular,wearehighlydependentontheservicesofElonMusk,TechnokingofTeslaandourChiefExecutiveOfficer.Noneofourkeyemployeesisboundbyanemploymentagreementforanyspecifictermandwemaynotbeabletosuccessfullyattractandretainseniorleadershipnecessarytogrowourbusiness.Ourfuturesuccessalsodependsuponourabilitytoattract,hireandretainalargenumberofengineering,manufacturing,marketing,salesanddelivery,service,installation,technologyandsupportpersonnel,especiallytosupportourplannedhigh-volumeproductsales,marketandgeographicalexpansionandtechnologicalinnovations.Recruitingefforts,particularlyforsenioremployees,maybetime-consuming,whichmaydelaytheexecutionofourplans.Ifwearenotsuccessfulinmanagingtheserisks,ourbusiness,financialconditionandoperatingresultsmaybeharmed.

EmployeesmayleaveTeslaorchooseotheremployersoverTesladuetovariousfactors,suchasaverycompetitivelabormarketfortalentedindividualswithautomotiveortechnologyexperience,oranynegativepublicityrelatedtous.Inregionswherewehaveorwillhaveoperations,particularlysignificantengineeringandmanufacturingcenters,thereisstrongcompetitionforindividualswithskillsetsneededforourbusiness,includingspecializedknowledgeofelectricvehicles,softwareengineering,manufacturingengineeringandelectricalandbuildingconstructionexpertise.Moreover,wemaybeimpactedbyperceptionsrelatingtoreductionsinforcethatwehaveconductedinthepastinordertooptimizeourorganizationalstructureandreducecostsandthedepartureofcertainseniorpersonnelforvariousreasons.Likewise,asaresultofourtemporarysuspensionofvariousU.S.manufacturingoperationsinthefirsthalfof2020,inApril2020wetemporarilyfurloughedcertainhourlyemployeesandreducedmostsalariedemployees’basesalaries.Wealsocompetewithbothmatureandprosperouscompaniesthathavefargreaterfinancialresourcesthanwedoandstart-upsandemergingcompaniesthatpromiseshort-termgrowthopportunities.

Finally,ourcompensationphilosophyforallofourpersonnelreflectsourstartuporigins,withanemphasisonequity-basedawardsandbenefitsinordertocloselyaligntheirincentiveswiththelong-terminterestsofourstockholders.Weperiodicallyseekandobtainapprovalfromourstockholdersforfutureincreasestothenumberofawardsavailableunderourequityincentiveandemployeestockpurchaseplans.Ifweareunabletoobtaintherequisitestockholderapprovalsforsuchfutureincreases,wemayhavetoexpendadditionalcashtocompensateouremployeesandourabilitytoretainandhirequalifiedpersonnelmaybeharmed.

WearehighlydependentontheservicesofElonMusk,TechnokingofTeslaandourChiefExecutiveOfficer.WearehighlydependentontheservicesofElonMusk,TechnokingofTeslaandourChiefExecutiveOfficer.AlthoughMr.Muskspends

significanttimewithTeslaandishighlyactiveinourmanagement,hedoesnotdevotehisfulltimeandattentiontoTesla.Mr.MuskalsocurrentlyservesasChiefExecutiveOfficerandChiefTechnicalOfficerofSpaceExplorationTechnologiesCorp.,adeveloperandmanufacturerofspacelaunchvehicles,andisinvolvedinotheremergingtechnologyventures.

Wemustmanagerisksrelatingtoourinformationtechnologysystemsandthethreatofintellectualpropertytheft,databreachesandcyber-attacks.Wemustcontinuetoexpandandimproveourinformationtechnologysystemsasouroperationsgrow,suchasproductdatamanagement,

procurement,inventorymanagement,productionplanningandexecution,sales,serviceandlogistics,dealermanagement,financial,taxandregulatorycompliancesystems.ThisincludestheimplementationofnewinternallydevelopedsystemsandthedeploymentofsuchsystemsintheU.S.andabroad.Wemustalsocontinuetomaintaininformationtechnologymeasuresdesignedtoprotectusagainstintellectualpropertytheft,databreaches,sabotageandotherexternalorinternalcyber-attacksormisappropriation.However,theimplementation,maintenance,segregationandimprovementofthesesystemsrequiresignificantmanagementtime,supportandcost,andthereareinherentrisksassociatedwithdeveloping,improvingandexpandingourcoresystemsaswellasimplementingnewsystemsandupdatingcurrentsystems,includingdisruptionstotherelatedareasofbusinessoperation.Theserisksmayaffectourabilitytomanageourdataandinventory,procurepartsorsuppliesormanufacture,sell,deliverandserviceproducts,adequatelyprotectourintellectualpropertyorachieveandmaintaincompliancewith,orrealizeavailablebenefitsunder,taxlawsandotherapplicableregulations.

Moreover,ifwedonotsuccessfullyimplement,maintainorexpandthesesystemsasplanned,ouroperationsmaybedisrupted,ourabilitytoaccuratelyand/ortimelyreportourfinancialresultscouldbeimpairedanddeficienciesmayariseinourinternalcontroloverfinancialreporting,whichmayimpactourabilitytocertifyourfinancialresults.Moreover,ourproprietaryinformationorintellectualpropertycouldbecompromisedormisappropriatedandourreputationmaybeadverselyaffected.Ifthesesystemsortheirfunctionalitydonotoperateasweexpectthemto,wemayberequiredtoexpendsignificantresourcestomakecorrectionsorfindalternativesourcesforperformingthesefunctions.

Anyunauthorizedcontrolormanipulationofourproducts’systemscouldresultinlossofconfidenceinusandourproducts.Ourproductscontaincomplexinformationtechnologysystems.Forexample,ourvehiclesandenergystorageproductsaredesignedwithbuilt-in

dataconnectivitytoacceptandinstallperiodicremoteupdatesfromustoimproveorupdatetheirfunctionality.Whilewehaveimplementedsecuritymeasuresintendedtopreventunauthorizedaccesstoourinformationtechnologynetworks,ourproductsandtheirsystems,maliciousentitieshavereportedlyattempted,andmayattemptinthefuture,togainunauthorizedaccesstomodify,alterandusesuchnetworks,productsandsystemstogaincontrolof,ortochange,ourproducts’functionality,userinterfaceandperformancecharacteristicsortogainaccesstodatastoredinorgeneratedbyourproducts.Weencouragereportingofpotentialvulnerabilitiesinthesecurityofourproductsthroughoursecurityvulnerabilityreportingpolicy,andweaimtoremedyanyreportedandverifiedvulnerability.However,therecanbenoassurancethatanyvulnerabilitieswillnotbeexploitedbeforetheycanbeidentified,orthatourremediationeffortsareorwillbesuccessful.

Anyunauthorizedaccesstoorcontrolofourproductsortheirsystemsoranylossofdatacouldresultinlegalclaimsorgovernmentinvestigations.Inaddition,regardlessoftheirveracity,reportsofunauthorizedaccesstoourproducts,theirsystemsordata,aswellasotherfactorsthatmayresultintheperceptionthatourproducts,theirsystemsordataarecapableofbeinghacked,mayharmourbrand,prospectsandoperatingresults.Wehavebeenthesubjectofsuchreportsinthepast.

Ourbusinessmaybeadverselyaffectedbyanydisruptionscausedbyunionactivities.Itisnotuncommonforemployeesofcertaintradesatcompaniessuchasustobelongtoaunion,whichcanresultinhigheremployeecostsand

increasedriskofworkstoppages.Moreover,regulationsinsomejurisdictionsoutsideoftheU.S.mandateemployeeparticipationinindustrialcollectivebargainingagreementsandworkcouncilswithcertainconsultationrightswithrespecttotherelevantcompanies’operations.Althoughweworkdiligentlytoprovidethebestpossibleworkenvironmentforouremployees,theymaystilldecidetojoinorseekrecognitiontoformalaborunion,orwemayberequiredtobecomeaunionsignatory.Fromtimetotime,laborunionshaveengagedincampaignstoorganizecertainofouroperations,aspartofwhichsuchunionshavefiledunfairlaborpracticechargesagainstuswiththeNationalLaborRelationsBoard(the"NLRB"),andtheymaydosointhefuture.InSeptember2019,anadministrativelawjudgeissuedarecommendeddecisionforTeslaoncertainissuesandagainstusoncertainothers.InMarch2021,theNLRBadoptedaportionoftherecommendationandoverturnedothers.WehavefiledaNoticeofAppealwiththeUnitedStatesCircuitCourtfortheFifthCircuit.AnyunfavorableultimateoutcomeforTeslamayhaveanegativeimpactontheperceptionofTesla’streatmentofouremployees.Furthermore,wearedirectlyorindirectlydependentuponcompanieswithunionizedworkforces,suchassuppliersandtruckingandfreightcompanies.Anyworkstoppagesorstrikesorganizedbysuchunionscoulddelaythemanufactureandsaleofourproductsandmayharmourbusinessandoperatingresults.

Wemaychoosetoorbecompelledtoundertakeproductrecallsortakeothersimilaractions.Asamanufacturingcompany,wemustmanagetheriskofproductrecallswithrespecttoourproducts.Recallsforourvehicleshaveresulted

from,forexample,industry-wideissueswithairbagsfromaparticularsupplier,concernsofcorrosioninModelSandModelXpowersteeringassistmotorbolts,certainsuspensionfailuresinModelSandModelXandissueswithModelSandModelXmediacontrolunits.Inadditiontorecallsinitiatedbyusforvariouscauses,testingoforinvestigationsintoourproductsbygovernmentregulatorsorindustrygroupsmaycompelustoinitiateproductrecallsormayresultinnegativepublicperceptionsaboutthesafetyofourproducts,evenifwedisagreewiththedefectdeterminationorhavedatathatshowstheactualsafetyrisktobenon-existent.Inthefuture,wemayvoluntarilyorinvoluntarilyinitiaterecallsifanyofourproductsaredeterminedbyusoraregulatortocontainasafetydefectorbenoncompliantwithapplicablelawsandregulations,suchasU.S.federalmotorvehiclesafetystandards.Suchrecalls,whethervoluntaryorinvoluntaryorcausedbysystemsorcomponentsengineeredormanufacturedbyusoroursuppliers,couldresultinsignificantexpense,supplychaincomplicationsandserviceburdens,andmayharmourbrand,business,prospects,financialconditionandoperatingresults.

Ourcurrentandfuturewarrantyreservesmaybeinsufficienttocoverfuturewarrantyclaims.Weprovideamanufacturer’swarrantyonallnewandusedTeslavehicleswesell.Wealsoprovidecertainwarrantieswithrespecttotheenergy

generationandstoragesystemswesell,includingontheirinstallationandmaintenance.Forcomponentsnotmanufacturedbyus,wegenerallypassthroughtoourcustomerstheapplicablemanufacturers’warranties,butmayretainsomewarrantyresponsibilitiesforsomeorallofthelifeofsuchcomponents.Aspartofourenergygenerationandstoragesystemcontracts,wemayprovidethecustomerwithperformanceguaranteesthatguaranteethattheunderlyingsystemwillmeetorexceedtheminimumenergygenerationorotherenergyperformancerequirementsspecifiedinthecontract.Undertheseperformanceguarantees,webeartheriskofelectricityproductionorotherperformanceshortfalls,eveniftheyresultfromfailuresincomponentsfromthirdpartymanufacturers.Theserisksareexacerbatedintheeventsuchmanufacturersceaseoperationsorfailtohonortheirwarranties.

Ifourwarrantyreservesareinadequatetocoverfuturewarrantyclaimsonourproducts,ourfinancialconditionandoperatingresultsmaybeharmed.Warrantyreservesincludeourmanagement’sbestestimatesoftheprojectedcoststorepairortoreplaceitemsunderwarranty,whicharebasedonactualclaimsincurredtodateandanestimateofthenature,frequencyandcostsoffutureclaims.Suchestimatesareinherentlyuncertainandchangestoourhistoricalorprojectedexperience,especiallywithrespecttoproductssuchasModel3,ModelYandSolarRoofthatwehaveintroducedrelativelyrecentlyand/orthatweexpecttoproduceatsignificantlygreatervolumesthanourpastproducts,maycausematerialchangestoourwarrantyreservesinthefuture.

Ourinsurancecoveragestrategymaynotbeadequatetoprotectusfromallbusinessrisks.Wemaybesubject,intheordinarycourseofbusiness,tolossesresultingfromproductsliability,accidents,actsofGodandotherclaimsagainst

us,forwhichwemayhavenoinsurancecoverage.Asageneralmatter,wedonotmaintainasmuchinsurancecoverageasmanyothercompaniesdo,andinsomecases,wedonotmaintainanyatall.Additionally,thepoliciesthatwedohavemayincludesignificantdeductiblesorself-insuredretentions,policylimitationsandexclusions,andwecannotbecertainthatourinsurancecoveragewillbesufficienttocoverallfuturelossesorclaimsagainstus.Alossthatisuninsuredorwhichexceedspolicylimitsmayrequireustopaysubstantialamounts,whichmayharmourfinancialconditionandoperatingresults.

Thereisnoguaranteethatwewillhavesufficientcashflowfromourbusinesstopayourindebtednessorthatwewillnotincuradditionalindebtedness.AsofMarch31,2021,weandoursubsidiarieshadoutstanding$9.52billioninaggregateprincipalamountofindebtedness(seeNote10,Debt,

totheconsolidatedfinancialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q).Ourconsolidatedindebtednessmayincreaseourvulnerabilitytoanygenerallyadverseeconomicandindustryconditions.Weandoursubsidiariesmay,

subjecttothelimitationsinthetermsofourexistingandfutureindebtedness,incuradditionaldebt,secureexistingorfuturedebtorrecapitalizeourdebt.

Holdersofconvertibleseniornotesissuedbyusoroursubsidiarymayconvertsuchnotesattheiroptionpriortothescheduledmaturitiesoftherespectiveconvertibleseniornotesundercertaincircumstancespursuanttothetermsofsuchnotes.Uponconversionoftheapplicableconvertibleseniornotes,wewillbeobligatedtodelivercashand/orsharespursuanttothetermsofsuchnotes.Forexample,asourstockpricehassignificantlyincreasedrecently,wehaveseenhigherlevelsofearlyconversionsofsuch“in-the-money”convertibleseniornotes.Moreover,holdersofsuchconvertibleseniornotesmayhavetherighttorequireustorepurchasetheirnotesupontheoccurrenceofafundamentalchangepursuanttothetermsofsuchnotes.

Ourabilitytomakescheduledpaymentsoftheprincipalandinterestonourindebtednesswhendue,tomakepaymentsuponconversionorrepurchasedemandswithrespecttoourconvertibleseniornotesortorefinanceourindebtednessaswemayneedordesire,dependsonourfutureperformance,whichissubjecttoeconomic,financial,competitiveandotherfactorsbeyondourcontrol.Ourbusinessmaynotcontinuetogeneratecashflowfromoperationsinthefuturesufficienttosatisfyourobligationsunderourexistingindebtednessandanyfutureindebtednesswemayincur,andtomakenecessarycapitalexpenditures.Ifweareunabletogeneratesuchcashflow,wemayberequiredtoadoptoneormorealternatives,suchasreducingordelayinginvestmentsorcapitalexpenditures,sellingassets,refinancingorobtainingadditionalequitycapitalontermsthatmaybeonerousorhighlydilutive.Ourabilitytorefinanceexistingorfutureindebtednesswilldependonthecapitalmarketsandourfinancialconditionatsuchtime.Inaddition,ourabilitytomakepaymentsmaybelimitedbylaw,byregulatoryauthorityorbyagreementsgoverningourfutureindebtedness.Wemaynotbeabletoengageintheseactivitiesondesirabletermsoratall,whichmayresultinadefaultonourexistingorfutureindebtednessandharmourfinancialconditionandoperatingresults.

Ourdebtagreementscontaincovenantrestrictionsthatmaylimitourabilitytooperateourbusiness.Thetermsofcertainofourcreditfacilities,includingourseniorasset-basedrevolvingcreditagreement,contain,andanyofourotherfuture

debtagreementsmaycontain,covenantrestrictionsthatlimitourabilitytooperateourbusiness,includingrestrictionsonourabilityto,amongotherthings,incuradditionaldebtorissueguarantees,createliens,repurchasestock,ormakeotherrestrictedpayments,andmakecertainvoluntaryprepaymentsofspecifieddebt.Inaddition,undercertaincircumstanceswearerequiredtocomplywithafixedchargecoverageratio.Asaresultofthesecovenants,ourabilitytorespondtochangesinbusinessandeconomicconditionsandengageinbeneficialtransactions,includingtoobtainadditionalfinancingasneeded,mayberestricted.Furthermore,ourfailuretocomplywithourdebtcovenantscouldresultinadefaultunderourdebtagreements,whichcouldpermittheholderstoaccelerateourobligationtorepaythedebt.Ifanyofourdebtisaccelerated,wemaynothavesufficientfundsavailabletorepayit.

Additionalfundsmaynotbeavailabletouswhenweneedorwantthem.Ourbusinessandourfutureplansforexpansionarecapital-intensive,andthespecifictimingofcashinflowsandoutflowsmayfluctuate

substantiallyfromperiodtoperiod.Wemayneedorwanttoraiseadditionalfundsthroughtheissuanceofequity,equity-relatedordebtsecuritiesorthroughobtainingcreditfromfinancialinstitutionstofund,togetherwithourprincipalsourcesofliquidity,thecostsofdevelopingandmanufacturingourcurrentorfutureproducts,topayanysignificantunplannedoracceleratedexpensesorfornewsignificantstrategicinvestments,ortorefinanceoursignificantconsolidatedindebtedness,evenifnotrequiredtodosobythetermsofsuchindebtedness.Wecannotbecertainthatadditionalfundswillbeavailabletousonfavorabletermswhenrequired,oratall.Ifwecannotraiseadditionalfundswhenweneedthem,ourfinancialcondition,resultsofoperations,businessandprospectscouldbemateriallyandadverselyaffected.

Wemaybenegativelyimpactedbyanyearlyobsolescenceofourmanufacturingequipment.Wedepreciatethecostofourmanufacturingequipmentovertheirexpectedusefullives.However,productcyclesormanufacturingtechnology

maychangeperiodically,andwemaydecidetoupdateourproductsormanufacturingprocessesmorequicklythanexpected.Moreover,improvementsinengineeringandmanufacturingexpertiseandefficiencymayresultinourabilitytomanufactureourproductsusinglessofourcurrentlyinstalledequipment.Alternatively,aswerampandmaturetheproductionofourproductstohigherlevels,wemaydiscontinuetheuseofalreadyinstalledequipmentinfavorofdifferentoradditionalequipment.Theusefullifeofanyequipmentthatwouldberetiredearlyasaresultwouldbeshortened,causingthedepreciationonsuchequipmenttobeaccelerated,andourresultsofoperationsmaybeharmed.

Weholdandmayacquiredigitalassetsthatmaybesubjecttovolatilemarketprices,impairmentanduniquerisksofloss.InJanuary2021,weupdatedourinvestmentpolicytoprovideuswithmoreflexibilitytofurtherdiversifyandmaximizereturnsonourcashthatis

notrequiredtomaintainadequateoperatingliquidity,allowingustoinvestaportionofsuchcashincertainalternativereserveassetsincludingdigitalassets,goldbullion,goldexchange-tradedfundsandotherassetsasspecifiedinthefuture.Thereafter,weinvestedcertainofsuchcashinbitcoinandalsobeganacceptingbitcoinasaformofpaymentforcertainofourproductsinspecifiedregions,subjecttoapplicablelaws.Wegenerallyintendtoholdourbitcoinpositionslong-termregardlessofthemannerofacquisition.

Thepricesofdigitalassetshavebeeninthepastandmaycontinuetobehighlyvolatile,includingasaresultofvariousassociatedrisksand

uncertainties.Forexample,theprevalenceofsuchassetsisarelativelyrecenttrend,andtheirlong-termadoptionbyinvestors,consumersandbusinessesisunpredictable.Moreover,theirlackofaphysicalform,theirrelianceontechnologyfortheircreation,existenceandtransactionalvalidationandtheirdecentralizationmaysubjecttheirintegritytothethreatofmaliciousattacksandtechnologicalobsolescence.Finally,theextenttowhichsecuritieslawsorotherregulationsapplyormayapplyinthefuturetosuchassetsisunclearandmaychangeinthefuture.Ifweholddigitalassetsandtheirvaluesdecreaserelativetoourpurchaseprices,ourfinancialconditionmaybeharmed.

Moreover,digitalassetsarecurrentlyconsideredindefinite-livedintangibleassetsunderapplicableaccountingrules,meaningthatanydecrease

intheirfairvaluesbelowourcarryingvaluesforsuchassetsatanytimesubsequenttotheiracquisitionwillrequireustorecognizeimpairmentcharges,whereaswemaymakenoupwardrevisionsforanymarketpriceincreasesuntilasale,whichmayadverselyaffectouroperatingresultsinanyperiodinwhichsuchimpairmentoccurs.Moreover,thereisnoguaranteethatfuturechangesinGAAPwillnotrequireustochangethewayweaccountfordigitalassetsheldbyus.

Finally,asintangibleassetswithoutcentralizedissuersorgoverningbodies,digitalassetshavebeen,andmayinthefuturebe,subjecttosecurity

breaches,cyberattacksorothermaliciousactivities,aswellashumanerrorsorcomputermalfunctionsthatmayresultinthelossordestructionofprivatekeysneededtoaccesssuchassets.Whileweintendtotakeallreasonablemeasurestosecureanydigitalassets,ifsuchthreatsarerealizedorthemeasuresorcontrolswecreateorimplementtosecureourdigitalassetsfail,itcouldresultinapartialortotalmisappropriationorlossofourdigitalassets,andourfinancialconditionandoperatingresultsmaybeharmed.

Weareexposedtofluctuationsincurrencyexchangerates.Wetransactbusinessgloballyinmultiplecurrenciesandhaveforeigncurrencyrisksrelatedtoourrevenue,costsofrevenue,operatingexpenses

andlocalizedsubsidiarydebtdenominatedincurrenciesotherthantheU.S.dollar,currentlyprimarilytheChineseyuan,euro,CanadiandollarandSwissfranc.Totheextentwehavesignificantrevenuesdenominatedinsuchforeigncurrencies,anystrengtheningoftheU.S.dollarwouldtendtoreduceourrevenuesasmeasuredinU.S.dollars,aswehavehistoricallyexperienced.Inaddition,aportionofourcostsandexpenseshavebeen,andweanticipatewillcontinuetobe,denominatedinforeigncurrencies,includingtheChineseyuanandJapaneseyen.IfwedonothavefullyoffsettingrevenuesinthesecurrenciesandifthevalueoftheU.S.dollardepreciatessignificantlyagainstthesecurrencies,ourcostsasmeasuredinU.S.dollarsasapercentofourrevenueswillcorrespondinglyincreaseandourmarginswillsuffer.Moreover,whileweundertakelimitedhedgingactivitiesintendedtooffsettheimpactofcurrencytranslationexposure,itisimpossibletopredictoreliminatesuchimpact.Asaresult,ouroperatingresultsmaybeharmed.

Wemayneedtodefendourselvesagainstintellectualpropertyinfringementclaims,whichmaybetime-consumingandexpensive.Ourcompetitorsorotherthirdpartiesmayholdorobtainpatents,copyrights,trademarksorotherproprietaryrightsthatcouldprevent,limitor

interferewithourabilitytomake,use,develop,sellormarketourproductsandservices,whichcouldmakeitmoredifficultforustooperateourbusiness.Fromtimetotime,theholdersofsuchintellectualpropertyrightsmayasserttheirrightsandurgeustotakelicensesand/ormaybringsuitsalleginginfringementormisappropriationofsuchrights,whichcouldresultinsubstantialcosts,negativepublicityandmanagementattention,regardlessofmerit.Whileweendeavortoobtainandprotecttheintellectualpropertyrightsthatweexpectwillallowustoretainoradvanceourstrategicinitiatives,therecanbenoassurancethatwewillbeabletoadequatelyidentifyandprotecttheportionsofintellectualpropertythatarestrategictoourbusiness,ormitigatetheriskofpotentialsuitsorotherlegaldemandsbyourcompetitors.Accordingly,wemayconsidertheenteringintolicensingagreementswithrespecttosuchrights,althoughnoassurancecanbegiventhatsuchlicensescanbeobtainedonacceptabletermsorthatlitigationwillnotoccur,andsuchlicensesandassociatedlitigationcouldsignificantlyincreaseouroperatingexpenses.Inaddition,ifwearedeterminedtohaveorbelievethereisahighlikelihoodthatwehaveinfringeduponathirdparty’sintellectualpropertyrights,wemayberequiredtoceasemaking,sellingorincorporatingcertaincomponentsorintellectualpropertyintothegoodsandservicesweoffer,topaysubstantialdamagesand/orlicenseroyalties,toredesignourproductsandservicesand/ortoestablishandmaintainalternativebrandingforourproductsandservices.Intheeventthatwearerequiredtotakeoneormoresuchactions,ourbrand,business,financialconditionandoperatingresultsmaybeharmed.

Ouroperationscouldbeadverselyaffectedbyeventsoutsideofourcontrol,suchasnaturaldisasters,warsorhealthepidemics.Wemaybeimpactedbynaturaldisasters,wars,healthepidemics,weatherconditionsorothereventsoutsideofourcontrol.Forexample,our

corporateheadquarters,theFremontFactoryandGigafactoryNevadaarelocatedinseismicallyactiveregionsinNorthernCaliforniaandNevada,andourGigafactoryShanghaiislocatedinaflood-pronearea.Moreover,theareainwhichourGigafactoryTexasisbeingbuiltexperiencedseverewinterstormsinthefirstquarterof2021thathadawidespreadimpactonutilitiesandtransportation.Ifmajordisasterssuchasearthquakes,floodsorothereventsoccur,orourinformationsystemorcommunicationsnetworkbreaksdownoroperatesimproperly,ourheadquartersandproductionfacilitiesmaybeseriouslydamaged,orwemayhavetostopordelayproductionandshipmentofourproducts.Inaddition,theglobalCOVID-19pandemichasimpactedeconomicmarkets,manufacturingoperations,supplychains,employmentandconsumerbehaviorinnearlyeverygeographicregionandindustryacrosstheworld,andwehavebeen,andmayinthefuturebe,adverselyaffectedasaresult.Wemayincurexpensesordelaysrelatingtosucheventsoutsideofourcontrol,whichcouldhaveamaterialadverseimpactonourbusiness,operatingresultsandfinancialcondition.

RisksRelatedtoGovernmentLawsandRegulations

Demandforourproductsandservicesmaybeimpactedbythestatusofgovernmentandeconomicincentivessupportingthedevelopmentandadoptionofsuchproducts.GovernmentandeconomicincentivesthatsupportthedevelopmentandadoptionofelectricvehiclesintheU.S.andabroad,includingcertaintax

exemptions,taxcreditsandrebates,maybereduced,eliminatedorexhaustedfromtimetotime.Forexample,a$7,500federaltaxcreditthatwasavailableintheU.S.forthepurchaseofourvehicleswasreducedinphasesduringandultimatelyendedin2019.Webelievethatthissequentialphase-outlikelypulledforwardsomevehicledemandintotheperiodsprecedingeachreduction.Moreover,previouslyavailableincentivesfavoringelectricvehiclesinareasincludingOntario,Canada,Germany,HongKong,DenmarkandCaliforniahaveexpiredorwerecancelledortemporarilyunavailable,andinsomecaseswerenoteventuallyreplacedorreinstituted,whichmayhavenegativelyimpactedsales.Anysimilardevelopmentscouldhavesomenegativeimpactondemandforourvehicles,andweandourcustomersmayhavetoadjusttothem.

Inaddition,certaingovernmentalrebates,taxcreditsandotherfinancialincentivesthatarecurrentlyavailablewithrespecttooursolarandenergystorageproductbusinessesallowustolowerourcostsandencouragecustomerstobuyourproductsandinvestorstoinvestinoursolarfinancingfunds.However,theseincentivesmayexpirewhentheallocatedfundingisexhausted,reducedorterminatedasrenewableenergyadoptionratesincrease,sometimeswithoutwarning.Forexample,theU.S.federalgovernmentcurrentlyofferscertaintaxcreditsfortheinstallationofsolarpowerfacilitiesandenergystoragesystemsthatarechargedfromaco-sitedsolarpowerfacility;however,thesetaxcreditsarecurrentlyscheduledtodeclineand/orexpirein2023andbeyond.Likewise,injurisdictionswherenetmeteringiscurrentlyavailable,ourcustomersreceivebillcreditsfromutilitiesforenergythattheirsolarenergysystemsgenerateandexporttothegridinexcessoftheelectricloadtheyuse.Thebenefitavailableundernetmeteringhasbeenorhasbeenproposedtobereduced,alteredoreliminatedinseveraljurisdictions,andhasalsobeencontestedandmaycontinuetobecontestedbeforetheFederalEnergyRegulatoryCommission.Anyreductionsorterminationsofsuchincentivesmayharmourbusiness,prospects,financialconditionandoperatingresultsbymakingourproductslesscompetitiveforpotentialcustomers,increasingourcostofcapitalandadverselyimpactingourabilitytoattractinvestmentpartnersandtoformnewfinancingfundsforoursolarandenergystorageassets.

Finally,weandourfundinvestorsclaimtheseU.S.federaltaxcreditsandcertainstateincentivesinamountsbasedonindependentlyappraisedfairmarketvaluesofoursolarandenergystoragesystems.Nevertheless,therelevantgovernmentalauthoritieshaveauditedsuchvaluesandincertaincaseshavedeterminedthatthesevaluesshouldbelower,andtheymaydosoagaininthefuture.Suchdeterminationsmayresultinadversetaxconsequencesand/orourobligationtomakeindemnificationorotherpaymentstoourfundsorfundinvestors.

Wearesubjecttoevolvinglawsandregulationsthatcouldimposesubstantialcosts,legalprohibitionsorunfavorablechangesuponouroperationsorproducts.Aswegrowourmanufacturingoperationsinadditionalregions,weareorwillbesubjecttocomplexenvironmental,manufacturing,healthand

safetylawsandregulationsatnumerousjurisdictionallevelsintheU.S.,China,Germanyandotherlocationsabroad,includinglawsrelatingtotheuse,handling,storage,recycling,disposaland/orhumanexposuretohazardousmaterials,productmaterialinputsandpost-consumerproductsandwithrespecttoconstructing,expandingandmaintainingourfacilities.Thecostsofcompliance,includingremediationsofanydiscoveredissuesandanychangestoouroperationsmandatedbyneworamendedlaws,maybesignificant,andanyfailurestocomplycouldresultinsignificantexpenses,delaysorfines.Wearealsosubjecttolawsandregulationsapplicabletothesupply,manufacture,import,saleandserviceofautomobilesbothdomesticallyandabroad.Forexample,incountriesoutsideoftheU.S.,wearerequiredtomeetstandardsrelatingtovehiclesafety,fueleconomyandemissionsthatareoftenmateriallydifferentfromrequirementsintheU.S.,thusresultinginadditionalinvestmentintothevehiclesandsystemstoensureregulatorycomplianceinthosecountries.Thisprocessmayincludeofficialreviewandcertificationofourvehicles

byforeignregulatoryagenciespriortomarketentry,aswellascompliancewithforeignreportingandrecallmanagementsystemsrequirements.

Inparticular,weofferinourvehiclesAutopilotandFSDfeaturesthattodayassistdriverswithcertaintediousandpotentiallydangerousaspectsofroadtravel,butwhichcurrentlyrequiredriverstoremainfullyengagedinthedrivingoperation.WearecontinuingtodevelopourFSDtechnologywiththegoalofachievingfullyself-drivingcapabilityinthefuture.Thereareavarietyofinternational,federalandstateregulationsthatmayapplytothesale,registrationandoperationoffullyself-drivingvehicles,whichincludemanyexistingvehiclestandardsthatwerenotoriginallyintendedtoapplytovehiclesthatmaynothaveadriver.Suchregulationscontinuetorapidlychange,whichincreasesthelikelihoodofapatchworkofcomplexorconflictingregulations,ormaydelayproductsorrestrictself-drivingfeaturesandavailability,whichcouldadverselyaffectourbusiness.

Finally,asamanufacturer,installerandserviceproviderwithrespecttosolargenerationandenergystoragesystems,andasupplierofelectricitygeneratedandstoredbycertainofthesolarenergyandenergystoragesystemsweinstallforcustomers,weareimpactedbyfederal,stateandlocalregulationsandpoliciesconcerningelectricitypricing,theinterconnectionofelectricitygenerationandstorageequipmentwiththeelectricalgridandthesaleofelectricitygeneratedbythirdparty-ownedsystems.Ifregulationsandpoliciesthatadverselyimpacttheinterconnectionoruseofoursolarandenergystoragesystemsareintroduced,theycoulddeterpotentialcustomersfrompurchasingoursolarandenergystorageproducts,threatentheeconomicsofourexistingcontractsandcauseustoceasesolarandenergystoragesystemsalesandoperationsintherelevantjurisdictions,whichmayharmourbusiness,financialconditionandoperatingresults.

AnyfailurebyustocomplywithavarietyofU.S.andinternationalprivacyandconsumerprotectionlawsmayharmus.Anyfailurebyusorourvendororotherbusinesspartnerstocomplywithourpublicprivacynoticeorwithfederal,stateorinternationalprivacy,

dataprotectionorsecuritylawsorregulationsrelatingtotheprocessing,collection,use,retention,securityandtransferofpersonallyidentifiableinformationcouldresultinregulatoryorlitigation-relatedactionsagainstus,legalliability,fines,damages,ongoingauditrequirementsandothersignificantcosts.Substantialexpensesandoperationalchangesmayberequiredinconnectionwithmaintainingcompliancewithsuchlaws,andevenanunsuccessfulchallengebycustomersorregulatoryauthoritiesofouractivitiescouldresultinadversepublicityandcouldrequireacostlyresponsefromanddefensebyus.Inaddition,certainemergingprivacylawsarestillsubjecttoahighdegreeofuncertaintyastotheirinterpretation,applicationandimpact,andmayrequireextensivesystemandoperationalchanges,bedifficulttoimplement,increaseouroperatingcosts,adverselyimpactthecostorattractivenessoftheproductsorservicesweoffer,orresultinadversepublicityandharmourreputation.Forexample,inMay2018,theGeneralDataProtectionRegulationbegantofullyapplytotheprocessingofpersonalinformationcollectedfromindividualslocatedintheEuropeanUnion,andhascreatednewcomplianceobligationsandsignificantlyincreasedfinesfornoncompliance.Similarly,asofJanuary2020,theCaliforniaConsumerPrivacyActimposescertainlegalobligationsonouruseandprocessingofpersonalinformationrelatedtoCaliforniaresidents.Finally,newprivacyandcybersecuritylawsarecomingintoeffectinChina.Notwithstandingoureffortstoprotectthesecurityandintegrityofourcustomers’personalinformation,wemayberequiredtoexpendsignificantresourcestocomplywithdatabreachrequirementsif,forexample,thirdpartiesimproperlyobtainandusethepersonalinformationofourcustomersorweotherwiseexperienceadatalosswithrespecttocustomers’personalinformation.Amajorbreachofournetworksecurityandsystemsmayresultinfines,penaltiesanddamagesandharmourbrand,prospectsandoperatingresults.

Wecouldbesubjecttoliability,penaltiesandotherrestrictivesanctionsandadverseconsequencesarisingoutofcertaingovernmentalinvestigationsandproceedings.WearecooperatingwithcertaingovernmentinvestigationsasdiscussedinNote12,CommitmentsandContingencies,totheconsolidated

financialstatementsincludedelsewhereinthisQuarterlyReportonForm10-Q.Toourknowledge,nogovernmentagencyinanysuchongoinginvestigationhasconcludedthatanywrongdoingoccurred.However,wecannotpredicttheoutcomeorimpactofanysuchongoingmatters,andthereexiststhepossibilitythatwecouldbesubjecttoliability,penaltiesandotherrestrictivesanctionsandadverseconsequencesiftheSEC,theU.S.DepartmentofJusticeoranyothergovernmentagencyweretopursuelegalactioninthefuture.Moreover,weexpecttoincurcostsinrespondingtorelatedrequestsforinformationandsubpoenas,andifinstituted,indefendingagainstanygovernmentalproceedings.

Forexample,onOctober16,2018,theU.S.DistrictCourtfortheSouthernDistrictofNewYorkenteredafinaljudgmentapprovingthetermsofasettlementfiledwiththeCourtonSeptember29,2018,inconnectionwiththeactionstakenbytheSECrelatingtoMr.Musk’sstatementonAugust7,2018thathewasconsideringtakingTeslaprivate.Pursuanttothesettlement,we,amongotherthings,paidacivilpenaltyof$20million,appointedanindependentdirectorasthechairofourboardofdirectors,appointedtwoadditionalindependentdirectorstoourboardofdirectorsandmadefurtherenhancementstoourdisclosurecontrolsandothercorporategovernance-relatedmatters.OnApril26,2019,thissettlementwasamendedtoclarifycertainofthepreviously-agreeddisclosureprocedures,whichwassubsequentlyapprovedbytheCourt.Allothertermsofthepriorsettlementwerereaffirmedwithoutmodification.Althoughweintendtocontinuetocomplywiththetermsandrequirementsofthesettlement,ifthereisalackofcomplianceoranallegedlackofcompliance,additionalenforcementactionsorotherlegalproceedingsmaybeinstitutedagainstus.

Wemayfaceregulatorychallengestoorlimitationsonourabilitytosellvehiclesdirectly.Whileweintendtocontinuetoleverageourmosteffectivesalesstrategies,includingsalesthroughourwebsite,wemaynotbeabletosellour

vehiclesthroughourownstoresincertainstatesintheU.S.withlawsthatmaybeinterpretedtoimposelimitationsonthisdirect-to-consumersalesmodel.Ithasalsobeenassertedthatthelawsinsomestateslimitourabilitytoobtaindealerlicensesfromstatemotorvehicleregulators,andsuchassertionspersist.Incertainlocations,decisionsbyregulatorspermittingustosellvehicleshavebeenandmaybechallengedbydealerassociationsandothersastowhethersuchdecisionscomplywithapplicablestatemotorvehicleindustrylaws.Wehaveprevailedinmanyoftheselawsuitsandsuchresultshavereinforcedourcontinuingbeliefthatstatelawswerenotintendedtoapplytoamanufacturerthatdoesnothavefranchisedealers.Insomestates,therehavealsobeenregulatoryandlegislativeeffortsbydealerassociationstoproposelawsthat,ifenacted,wouldpreventusfromobtainingdealerlicensesintheirstatesgivenourcurrentsalesmodel.Afewstateshavepassedlegislationthatclarifiesourabilitytooperate,butatthesametimelimitsthenumberofdealerlicenseswecanobtainorstoresthatwecanoperate.Theapplicationofstatelawsapplicabletoouroperationscontinuestobedifficulttopredict.

Internationally,theremaybelawsinjurisdictionswehavenotyetenteredorlawsweareunawareofinjurisdictionswehaveenteredthatmayrestrictoursalesorotherbusinesspractices.Evenforthosejurisdictionswehaveanalyzed,thelawsinthisareacanbecomplex,difficulttointerpretandmaychangeovertime.Continuedregulatorylimitationsandotherobstaclesinterferingwithourabilitytosellvehiclesdirectlytoconsumersmayharmourfinancialconditionandoperatingresults.

RisksRelatedtotheOwnershipofOurCommonStockThetradingpriceofourcommonstockislikelytocontinuetobevolatile.Thetradingpriceofourcommonstockhasbeenhighlyvolatileandcouldcontinuetobesubjecttowidefluctuationsinresponsetovarious

factors,someofwhicharebeyondourcontrol.Ourcommonstockhasexperiencedoverthelast52weeksanintra-daytradinghighof$900.40pershareandalowof$89.28pershare,asadjustedtogiveeffecttotheStockSplit.Thestockmarketingeneral,andthemarketfortechnologycompaniesinparticular,hasexperiencedextremepriceandvolumefluctuationsthathaveoftenbeenunrelatedordisproportionatetotheoperatingperformanceofthosecompanies.Inparticular,alargeproportionofourcommonstockhasbeenhistoricallyandmayinthefuturebetradedbyshortsellerswhichmayputpressureonthesupplyanddemandforourcommonstock,furtherinfluencingvolatilityinitsmarketprice.Publicperceptionandotherfactorsoutsideofourcontrolmayadditionallyimpactthestockpriceofcompanieslikeusthatgarneradisproportionatedegreeofpublicattention,regardlessofactualoperatingperformance.Inaddition,inthepast,followingperiodsofvolatilityintheoverallmarketorthemarketpriceofourshares,securitiesclassactionlitigationhasbeenfiledagainstus.Whilewedefendsuchactionsvigorously,anyjudgmentagainstusoranyfuturestockholderlitigationcouldresultinsubstantialcostsandadiversionofourmanagement’sattentionandresources.

Ourfinancialresultsmayvarysignificantlyfromperiodtoperiodduetofluctuationsinouroperatingcostsandotherfactors.Weexpectourperiod-to-periodfinancialresultstovarybasedonouroperatingcosts,whichweanticipatewillfluctuateasthepaceatwhichwe

continuetodesign,developandmanufacturenewproductsandincreaseproductioncapacitybyexpandingourcurrentmanufacturingfacilitiesandaddingfuturefacilities,maynotbeconsistentorlinearbetweenperiods.Additionally,ourrevenuesfromperiodtoperiodmayfluctuateasweintroduceexistingproductstonewmarketsforthefirsttimeandaswedevelopandintroducenewproducts.Asaresultofthesefactors,webelievethatquarter-to-quartercomparisonsofourfinancialresults,especiallyintheshortterm,arenotnecessarilymeaningfulandthatthesecomparisonscannotberelieduponasindicatorsoffutureperformance.Moreover,ourfinancialresultsmaynotmeetexpectationsofequityresearchanalysts,ratingsagenciesorinvestors,whomaybefocusedonlyonshort-termquarterlyfinancialresults.Ifanyofthisoccurs,thetradingpriceofourstockcouldfallsubstantially,eithersuddenlyorovertime.

Wemayfailtomeetourpubliclyannouncedguidanceorotherexpectationsaboutourbusiness,whichcouldcauseourstockpricetodecline.Wemayprovidefromtimetotimeguidanceregardingourexpectedfinancialandbusinessperformance.Correctlyidentifyingkeyfactors

affectingbusinessconditionsandpredictingfutureeventsisinherentlyanuncertainprocess,andourguidancemaynotultimatelybeaccurateandhasinthepastbeeninaccurateincertainrespects,suchasthetimingofnewproductmanufacturingramps.Ourguidanceisbasedoncertainassumptionssuchasthoserelatingtoanticipatedproductionandsalesvolumes(whichgenerallyarenotlinearthroughoutagivenperiod),averagesalesprices,supplierandcommoditycostsandplannedcostreductions.Ifourguidancevariesfromactualresultsduetoourassumptionsnotbeingmetortheimpactonourfinancialperformancethatcouldoccurasaresultofvariousrisksanduncertainties,themarketvalueofourcommonstockcoulddeclinesignificantly.

Transactionsrelatingtoourconvertibleseniornotesmaydilutetheownershipinterestofexistingstockholders,ormayotherwisedepressthepriceofourcommonstock.Theconversionofsomeoralloftheconvertibleseniornotesissuedbyusoroursubsidiarieswoulddilutetheownershipinterestsofexisting

stockholderstotheextentwedeliversharesuponconversionofanyofsuchnotesbytheirholders,andwemaybe53

requiredtodeliverasignificantnumberofshares.Anysalesinthepublicmarketofthecommonstockissuableuponsuchconversioncouldadverselyaffecttheirprevailingmarketprices.Inaddition,theexistenceoftheconvertibleseniornotesmayencourageshortsellingbymarketparticipantsbecausetheconversionofsuchnotescouldbeusedtosatisfyshortpositions,ortheanticipatedconversionofsuchnotesintosharesofourcommonstockcoulddepressthepriceofourcommonstock.

Moreover,inconnectionwithcertainoftheconvertibleseniornotes,weenteredintoconvertiblenotehedgetransactions,whichareexpectedtoreducethepotentialdilutionand/oroffsetpotentialcashpaymentswearerequiredtomakeinexcessoftheprincipalamountuponconversionoftheapplicablenotes.Wealsoenteredintowarranttransactionswiththehedgecounterparties,whichcouldseparatelyhaveadilutiveeffectonourcommonstocktotheextentthatthemarketpricepershareofourcommonstockexceedstheapplicablestrikepriceofthewarrantsontheapplicableexpirationdates.Inaddition,thehedgecounterpartiesortheiraffiliatesmayenterintovarioustransactionswithrespecttotheirhedgepositions,whichcouldalsoaffectthemarketpriceofourcommonstockortheconvertibleseniornotes.

IfElonMuskwereforcedtosellsharesofourcommonstockthathehaspledgedtosecurecertainpersonalloanobligations,suchsalescouldcauseourstockpricetodecline.CertainbankinginstitutionshavemadeextensionsofcredittoElonMusk,ourChiefExecutiveOfficer,aportionofwhichwasusedtopurchase

sharesofcommonstockincertainofourpublicofferingsandprivateplacementsatthesamepricesofferedtothird-partyparticipantsinsuchofferingsandplacements.Wearenotapartytotheseloans,whicharepartiallysecuredbypledgesofaportionoftheTeslacommonstockcurrentlyownedbyMr.Musk.Ifthepriceofourcommonstockweretodeclinesubstantially,Mr.MuskmaybeforcedbyoneormoreofthebankinginstitutionstosellsharesofTeslacommonstocktosatisfyhisloanobligationsifhecouldnotdosothroughothermeans.Anysuchsalescouldcausethepriceofourcommonstocktodeclinefurther.

Anti-takeoverprovisionscontainedinourgoverningdocuments,applicablelawsandourconvertibleseniornotescouldimpairatakeoverattempt.Ourcertificateofincorporationandbylawsaffordcertainrightsandpowerstoourboardofdirectorsthatmayfacilitatethedelayorprevention

ofanacquisitionthatitdeemsundesirable.WearealsosubjecttoSection203oftheDelawareGeneralCorporationLawandotherprovisionsofDelawarelawthatlimittheabilityofstockholdersincertainsituationstoeffectcertainbusinesscombinations.Inaddition,thetermsofourconvertibleseniornotesmayrequireustorepurchasesuchnotesintheeventofafundamentalchange,includingatakeoverofourcompany.Anyoftheforegoingprovisionsandtermsthathastheeffectofdelayingordeterringachangeincontrolcouldlimittheopportunityforourstockholderstoreceiveapremiumfortheirsharesofourcommonstock,andcouldalsoaffectthepricethatsomeinvestorsarewillingtopayforourcommonstock.

ITEM2.UNREGISTEREDSALESOFEQUITYSECURITIESANDUSEOFPROCEEDSNone.

ITEM3.DEFAULTUPONSENIORSECURITIESNone.

ITEM4.MINESAFETYDISCLOSURESNotapplicable.

ITEM5.OTHERINFORMATIONNone.

ITEM6.EXHIBITSSeeIndextoExhibitsattheendofthisQuarterlyReportonForm10-QfortheinformationrequiredbythisItem.

INDEXTOEXHIBITS

Exhibit IncorporatedbyReference FiledNumber ExhibitDescription Form FileNo. Exhibit FilingDate Herewith

AmendmentNo.1totheSecondAmendedandRestatedLoanandSecurityAgreement,datedasofMarch15,2021,byandamongTesla2014WarehouseSPVLLC,TeslaFinanceLLC,theLendersandGroupAgentsfromtimetotimepartythereto,DeutscheBankTrustCompanyAmericas,asPayingAgent,andDeutscheBankAG,NewYorkBranch,asAdministrativeAgent.

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Rule13a-14(a)/15(d)-14(a)CertificationofPrincipalExecutiveOfficer

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Rule13a-14(a)/15(d)-14(a)CertificationofPrincipalFinancialOfficer

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Section1350Certifications

101.INS

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*Furnishedherewith

SIGNATURES

PursuanttotherequirementsofSection13or15(d)theSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized. Tesla,Inc. Date:April27,2021 /s/ZacharyJ.Kirkhorn ZacharyJ.Kirkhorn ChiefFinancialOfficer

(PrincipalFinancialOfficerand

DulyAuthorizedOfficer)

Exhibit10.1

AMENDMENTNO.1TO

SECONDAMENDEDANDRESTATEDLOANANDSECURITYAGREEMENT

THISAMENDMENTNO.1TOSECONDAMENDEDANDRESTATEDLOANANDSECURITYAGREEMENT (this“Amendment”),datedasofMarch15,2021,isenteredintobyandamongTESLA2014WAREHOUSESPVLLC,aDelawarelimited liability company (the “Borrower”), TESLA FINANCE LLC, a Delaware limited liability company (“TFL”), theLenders party hereto, the Group Agents party hereto, DEUTSCHE BANK TRUST COMPANY AMERICAS, a New Yorkbanking corporation, as paying agent (the “Paying Agent”) and DEUTSCHE BANK AG, NEW YORK BRANCH, asadministrativeagent (in such capacity, the “AdministrativeAgent”) and ismade in respect of theSecondAmendedandRestatedLoanandSecurityAgreement,datedasofAugust28,2020(the“LoanAgreement”)amongtheBorrower,TFL,theLenderspartythereto,theGroupAgentspartythereto,theAdministrativeAgentandthePayingAgent.Definedtermsusedherein and not otherwise defined herein shall have the respective meanings given to them in the Loan Agreement asamendedhereby.

WHEREAS, theBorrower, theLenders, theGroupAgents, thePayingAgent and theAdministrativeAgent haveagreedtoamendtheLoanAgreementonthetermsandconditionssetforthherein;

NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,theBorrower,theLenders,theGroupAgents,thePayingAgentandtheAdministrativeAgentagreeasfollows:

1.AmendmentstoLoanAgreement.EffectiveasoftheAmendmentEffectiveDate(asdefinedbelow)andsubjecttothesatisfactionoftheconditionsprecedentsetforthinSection2hereof:

(a)Section1.01oftheLoanAgreementisherebyamendedbyamendingclause(ii)thedefinitionof“ExcessConcentrationAmount”toreadasfollows:

“(ii)theaggregateBaseResidualValueofallWarehouseSUBILeasesthatareEligibleLeasesscheduledtoreachtheirLeaseMaturityDateinanyone(1)monthexceedstheSingleMonthMaturityLimit;provided,thatthisclause(ii) shall not apply during (A) the period beginning on the Effective Date and ending on April 30, 2021 and (B) if aSecuritizationTake-OutDateoccursduringtheperiodbeginningontheAmendmentEffectiveDateandendingonJune30,2021,duringtheperiodbeginningonsuchSecuritizationTake-OutDateandendingonthePaymentDateoccurringinthefourth(4th)monthafterthemonthinwhichsuchSecuritizationTake-OutDateoccurs;”

(b)Section1.01oftheLoanAgreementisherebyamendedbyamendingclause(iiii)thedefinitionof“ExcessConcentrationAmount”toreadasfollows:

“(iii)theaggregateBaseResidualValueofallWarehouseSUBILeasesthatareEligibleLeasesscheduled

toreachtheirLeaseMaturityDateinany6consecutivemonthsexceedstheSixMonthMaturityLimit;provided,thatthisclause(iii)shallnotapplyduring(A)theperiodbeginningontheEffectiveDateandendingonApril30,2021and(B)ifaSecuritizationTake-OutDateoccursduringtheperiodbeginningontheAmendmentEffectiveDateandendingonJune30,2021,duringtheperiodbeginningonsuchSecuritizationTake-OutDateandendingonthePaymentDateoccurringinthesixth(6th)monthafterthemonthinwhichsuchSecuritizationTake-OutDateoccurs;

2.ConditionsPrecedent.ThisAmendmentshallbecomeeffectiveasofthedatehereof(the“AmendmentEffectiveDate”)uponsatisfactionorwaiverofthefollowingconditionsprecedent:

(a)thereceiptbytheAdministrativeAgentoritscounselofcounterpartsignaturepagestothisAmendmentandeachotherdocumentandcertificatetobeexecutedordeliveredinconnectionwiththisAmendment;

(b)noDefault,EventofDefaultorPotentialServicerDefaultshallhaveoccurredorbecontinuing,theTerminationDateshallnothaveoccurredandnoEventofBankruptcyshallhaveoccurredwithrespecttoTFLorTesla,Inc.;and

(c)theAdministrativeAgentandeachGroupAgentshallhavereceivedsuchotherdocuments,instrumentsandagreementsastheAdministrativeAgentorsuchGroupAgentmayhavereasonablyrequested.

3.RepresentationsandWarrantiesoftheBorrower.TheBorrowerherebyrepresentsandwarrantstotheAdministrativeAgent,eachGroupAgentandeachLenderasofthedatehereofthat:

(a)ThisAmendmentandtheLoanAgreement,asamendedhereby,constitutethelegal,validandbindingobligationsoftheBorrowerandareenforceableagainsttheBorrowerinaccordancewiththeirrespectiveterms,exceptassuchenforcementmaybelimitedbyapplicablebankruptcy,insolvency,reorganizationorothersimilarlawsrelatingtoorlimitingcreditors’rightsgenerallyandbygeneralprinciplesofequity(regardlessofwhetherenforcementissoughtinaproceedinginequityoratlaw).

(b)UpontheeffectivenessofthisAmendment,theBorrowerherebyaffirmsthatallrepresentationsandwarrantiesmadebyitinArticleIVoftheLoanAgreement,asamended,arecorrectinallmaterialrespectsonthedatehereofasthoughmadeasoftheeffectivedateofthisAmendment,unlessandtotheextentthatanysuchrepresentationandwarrantyisstatedtorelatesolelytoanearlierdate,inwhichcasesuchrepresentationandwarrantyshallhavebeentrueandcorrectinallmaterialrespectsasofsuchearlierdate.

(c)Asofthedatehereof,noDefault,EventofDefaultorPotentialServicerDefaultshallhaveoccurredorbecontinuing,theTerminationDateshallnothaveoccurredandnoEventofBankruptcyshallhaveoccurredwithrespecttoTFLorTesla,Inc.

4.ReferencetoandEffectontheLoanAgreement.

(a)UpontheeffectivenessofSection1hereof,eachreferenceintheLoanAgreementto

“thisAgreement”,“hereunder”,“hereof”,“herein”orwordsoflikeimportshallmeanandbeareferencetotheLoanAgreementasamendedhereby.

(b)TheLoanAgreement,asamendedhereby,andallotherdocuments,instrumentsandagreementsexecutedand/ordeliveredinconnectiontherewith,shallremaininfullforceandeffectuntilhereafterterminatedinaccordancewiththeirrespectiveterms,andtheLoanAgreementandsuchdocuments,instrumentsandagreementsareherebyratifiedandconfirmed.

(c)Exceptasexpresslyprovidedherein,theexecution,deliveryandeffectivenessofthisAmendmentshallnotoperateasawaiverofanyright,powerorremedyoftheAdministrativeAgent,anyAgentoranyLender,norconstituteawaiverofanyprovisionoftheLoanAgreementoranyotherdocuments,instrumentsandagreementsexecutedand/ordeliveredinconnectiontherewith.

5.CostsandExpenses.TheBorroweragreestopayallreasonableandactualcosts,fees,andout‑of‑pocketexpenses(includingthereasonableattorneys’fees,costsandexpensesofMorgan,Lewis&BockiusLLP,counseltotheAdministrativeAgent,theGroupAgentsandtheLenders)incurredbytheAdministrativeAgent,eachGroupAgentandeachLenderinconnectionwiththepreparation,review,executionandenforcementofthisAmendment.

6.GOVERNINGLAW.THISAMENDMENTSHALLBEGOVERNEDBY,ANDCONSTRUEDINACCORDANCEWITH,THELAWSOFTHESTATEOFNEWYORKWITHOUTREFERENCETOITSCONFLICTSOFLAWSPROVISIONS(OTHERTHANSECTIONS5-1401AND5-1402OFTHENEWYORKGENERALOBLIGATIONSLAW).

7.Headings.SectionheadingsinthisAmendmentareincludedhereinforconvenienceofreferenceonlyandshallnotconstituteapartofthisAmendmentforanyotherpurpose.

8.Counterparts.ThisAmendmentmaybeexecutedbyoneormoreofthepartiestotheAmendmentonanynumberofseparatecounterpartsandallofsaidcounterpartstakentogethershallbedeemedtoconstituteoneandthesameinstrument.DeliveryofanexecutedcounterpartofasignaturepagetothisAmendmentbyfacsimile(transmittedbytelecopierorbyemail)shallbeeffectiveasdeliveryofamanuallyexecutedcounterpartofthisAmendment.

9.ElectronicSignatures.EachpartyagreesthatthisAmendmentmaybeelectronicallysigned,andthatanyelectronicsignaturesappearingonthisAmendmentorsuchotherdocumentsarethesameashandwrittensignaturesforpurposesofvalidity,enforceabilityandadmissibility.

10.DirectiontoPayingAgenttoExecutethisAmendment.ByexecutionofthisAmendment,theAdministrativeAgentandtheLendersherebydirectthePayingAgenttoexecutethisAmendment.

Remainderofpageleftintentionallyblank

INWITNESSWHEREOF,thepartieshavecausedthisAmendmenttobedulyexecutedanddeliveredbytheirduly

authorizedsignatoriesasofthedatefirstabovewritten.

TESLA2014WAREHOUSESPVLLC,asBorrowerBy:_/s/JeffreyMunsonName:JeffreyMunsonTitle:President

SignaturePagetoAmendmentNo.1toSecondAmendedandRestatedLoanandSecurityAgreement

DEUTSCHEBANKTRUSTCOMPANYAMERICAS,asPayingAgentBy:/s/AmyMcNultyName:AmyMcNultyTitle:AssistantVicePresidentBy:/s/CynthiaValverdeName:CynthiaValverdeTitle:AssistantVicePresident

DEUTSCHEBANKAG,NEWYORKBRANCH,asAdministrativeAgent,asaGroupAgentandasaCommittedLenderBy:/s/KevinFaganName:KevinFaganTitle:VicePresidentBy:/s/KatherineBolognaName:KatherineBolognaTitle:MD

CITIBANK,N.A.,asaGroupAgentandasaCommittedLenderBy:/s/BrianJChinName:BrianChinTitle:VicePresidentCAFCO,LLC,asConduitLenderBy:Citibank,N.A.,asAttorney-in-FactBy:/s/LindaMosesName:LindaMosesTitle:VicePresidentCHARTA,LLC,asConduitLenderBy:Citibank,N.A.,asAttorney-in-FactBy:/s/LindaMosesName:LindaMosesTitle:VicePresident

CIESCO,LLC,asConduitLenderBy:Citibank,N.A.,asAttorney-in-FactBy:/s/LindaMosesName:LindaMosesTitle:VicePresidentCRCFUNDING,LLC,asConduitLenderBy:Citibank,N.A.,asAttorney-in-Fact

By:/s/LindaMosesName:LindaMosesTitle:VicePresident

CREDITSUISSEAG,NEWYORKBRANCH,asaGroupAgentBy:/s/KevinQuinnName:KevinQuinnTitle:DirectorBy:/s/JasonRuchelsmanName:JasonRuchelsmanTitle:DirectorCREDITSUISSEAG,CAYMANISLANDSBRANCH,asaCommittedLenderBy:/s/KevinQuinnName:KevinQuinnTitle:AuthorizedSignatoryBy:/s/JasonRuchelsmanName:JasonRuchelsmanTitle:AuthorizedSignatoryGIFSCAPITALCOMPANYLLC,asaConduitLenderBy:/s/CareyD.FearName:CareyD.FearTitle:Manager

BARCLAYSBANKPLC,asaGroupAgent

By:/s/JohnMcCarthyName:JohnMcCarthyTitle:Director

SALISBURYRECEIVABLESCOMPANYLLC,asaConduitLender

By:BarclaysBankPLC,asattorney-in-fact

By:/s/JohnMcCarthyName:JohnMcCarthyTitle:Director

WELLSFARGOBANK,NATIONALASSOCIATIONasaGroupAgentandasaCommittedLender

By:/s/CharlieHinkleName:CharlieHinkleTitle:VicePresident

Exhibit31.1CERTIFICATIONSI,ElonMusk,certifythat:1.IhavereviewedthisQuarterlyReportonForm10-QofTesla,Inc.;2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethe

statementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4.Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,

toensurethatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;

(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;

(c)Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

(d)Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscalquarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternalcontroloverfinancialreporting;and

5.Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sBoardofDirectors(orpersonsperformingtheequivalentfunctions):(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhichare

reasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternal

controloverfinancialreporting.Date:April27,2021 /s/ElonMusk ElonMusk ChiefExecutiveOfficer (PrincipalExecutiveOfficer)

Exhibit31.2CERTIFICATIONSI,ZacharyJ.Kirkhorn,certifythat:1.IhavereviewedthisQuarterlyReportonForm10-QofTesla,Inc.;2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethe