1. automotive and vehicles
2. electric vehicles

February 24, 2014
Baird Equity Research
Energy Technology & Resource Management
Tesla Motors Inc. (TSLA)
Brief Thoughts on the Gigafactory
We reiterate our Outperform rating and $245 price target. We believe more
details around the gigafactory should be a positive catalyst. Due to proprietary
reasons, however, and the early stage of the project, we are uncertain of how much
information TSLA will reveal in its announcement. In this research note, we outline
our thoughts (some of which are admittedly conjecture) on why we believe TSLA's
move upstream is positive for the company.
RESEARCH UPDATE
1-Year Price Chart
250
210
200
150
100
■
Gigafactory will bring TSLA one step closer to making Gen III a reality.
Although TSLA has likely done significant work on the gigafactory already,
construction and ramp will likely take at least three years. With that said,
progress on the factory means the Gen III is one step closer to reality.
■
We think CAPEX has been largely been overestimated (including by us)
and details will likely be a present surprise. Estimates have been as high as
$7-$10B, but through our channel checks we believe construction could be
substantially less (<$5B) through partnerships, potential incentives, and by
utilizing standardized production tools for 18650 batteries.
■
■
Partners remain unclear at this point and TSLA likely will keep many close
to vest. We are uncertain of who TSLA will partner with on the construction of
the gigafactory, but partners will likely bring operational experience and/or capital
contributions. We think partnering with Panasonic or upstream partners could
increase production efficiencies and lower costs while a battery consumer, such
as SolarCity, would provide a secondary off-taker.
50
F-14
J-14
D-13
N-13
O-13
S-13
A-13
A-13
J-13
34
J-13
0
M-13
TSLA hopes to bring innovation to battery production like other parts of
the automotive supply chain. To date, TSLA has brought innovation to auto
production and reinvented the downstream market with direct-to-consumer sales.
TSLA now seeks to reinvent the upstream market through cell and battery pack
production, and we believe TSLA could drive down costs through an
industrialization of battery pack assembly and economies of scale. Importantly,
the importance of recycling and refurbishing should not be underestimated.
M-13
■
Stock Data
Rating:
Suitability:
Price Target:
Price (2/21/14):
Market Cap (mil):
Shares Out (mil):
Average Daily Vol (mil):
Dividend Yield:
Outperform
Higher Risk
$245
$209.60
$28,883
137.8
9.45
0.0%
Estimates
FY Dec
2013A
2014E
2015E
Q1
Q2
Q3
Q4
Fiscal EPS
Fiscal P/E
0.12 A
0.20 A
0.12 A
0.33 A
0.77 A
NM
0.01 E
0.04 E
0.54 E
0.87 E
1.46 E
NM
3.32 E
63.1x
Chart/Table Sources: Bloomberg and Baird Data
Some will point to potential supply chain issues if a factory is built in North
America but TSLA’s Model S production ramp should help alleviate
investor concerns about managing a global supply chain.
Tesla develops, manufactures, and sells battery electric vehicles as well as
advanced powertrain components.
Ben Kallo, CFA
[email protected]
415.364.3345
Tyler Frank
[email protected]
415.364.3342
[
Please refer to Appendix
- Important Disclosures
and Analyst Certification
]
February 24, 2014 | Tesla Motors, Inc.
Details
1)
How large will the gigafactory be and how many cars can it produce?
We believe the factory will be large enough to produce ~30 GWh of cells based on a recent
interview with Elon Musk in Oslo. We estimate this will provide enough batteries to power
between ~353,000 and ~500,000 vehicles, depending on the size of the battery pack.
Total Cell Production: 30,000,000 kWh
60kWh Packs:
85kWh Packs:
Average:
500,000
352,941
426,471
So urce: Ro bert W. B aird and Co . Estimates
Link to Elon Musk interview in Oslo
2)
Who may be a potential partner in the gigafactory?
We think Panasonic is the most obvious partner choice given TSLA’s long-standing
relationship with the company and Panasonic’s position as the largest supplier of lithium-ion
batteries for the automotive industry.
2013 Battery Suppliers for Electric Vehicles*:
Other
5%
LEJ
4%
LG Chem
21%
4GWh
Panasonic
45%
AESC
25%
Suppliers
Panasonic
AESC
LG Chem
LEJ
Other
Total
MWh
1790
1010
835
180
185
4000
Source: Bloomberg New Energy Finance, Robert W. Baird & Co.
*Note: Includes incomplete information for November and does not include data for December, 2013.
In order to secure prerequisite materials for battery production, it could also make sense to
partner with upstream suppliers. We believe partnering with Panasonic’s suppliers would
facilitate best execution.
Current upstream suppliers to Panasonic include:
Anode: Hitachi Chemical, Mitsubishi Chemical
Cathode: Nichia, Tanaka Chemical
Separator: Asahi Kasei, Ube Industries
Electrolyte: Mitsubishi Chemical, Ube Industries
Additionally, TSLA could partner with battery off-takers such as SolarCity (SCTY;Neutral). As
residential solar expands throughout the United States, net metering is becoming a larger
focus for utilities and presents headline and operational risk to SolarCity and other solar
companies. Battery packs can reduce the need for net metering as excess energy produced by
PV systems can be stored and later used by customers instead of being transferred to the
electrical grid.
Robert W. Baird & Co.
2
February 24, 2014 | Tesla Motors, Inc.
3)
Why is the gigafactory important and what are the cost savings for in-house
battery production?
The gigafactory will be required to reduce the cost of TSLA’s battery packs for the Gen III
vehicle, which is expected to be mass produced at a price point of ~$45k or less (not including
the $7,500 federal tax credit). Current cost estimates for electric vehicle battery packs using
18650 cells are ~$315 per kWh but, in our opinion, reported sources of battery costs may be
inflated. We believe TSLA currently produces batteries at 10%-20% below this price
(~$250/kWh to ~$285/kWh), based on its production efficiencies and volumes.
Battery Pack Costs Using 18650 cells ($ per kWh)
$450
$400
$350
$300
$250
$200
Target: $175 to
$200
$400
$315
$150
$100
$50
$1H:2013
1H:2014
1H:2017
So urce: B lo o mberg New Energy Finance, Ro bert W. B aird and Co . Estimates
TSLA has indicated battery costs need to fall ~30% to make the Gen III vehicle feasible. We
believe TSLA is targeting a price point of ~$200/kWh and think this is achievable through
scale, production efficiencies, and vertical integration. At $200/kWh, a 60kWh battery pack
would cost TSLA $12,000, which should allow the company to successfully create its Gen III
vehicle with a healthy margin.
4)
How will TSLA fund the battery factory and how much will it cost?
We estimate the factory will cost <$5B. The lowest cost EV battery plant we identified was the
proposed Nissan Motors Co. Ltd (Not Rated) and Renault (Not Rated) battery plant in
Portugal.
Nissan and Renault Plant in Portugal
Units
kWh
Total kWh
Total wh
Cost (Euro)
2/11/2011 EUR to USD exchange
Cost USD
Cost per wh
TSLA's estimated wh production
Implied cost
€
50,000
24
1,200,000
1,200,000,000
156,000,000
$1.3547
$211,333,200
$0.1761
30,000,000,000
$5,283,330,000
So urce: Nissan co mpany repo rts, Ro bert W. B aird & Co . estimates
Using back of the envelope math, we believe the planned Nissan and Renault battery
production plant in Portugal cost ~$.018 per wh. We believe TSLA’s plant could cost <$5B as
the production process for 18650 cells is more standardized than large format battery packs
Robert W. Baird & Co.
3
February 24, 2014 | Tesla Motors, Inc.
(there is a chance, however, TSLA moves away from the 18650 cells and introduces a large
format battery cell). Additionally, TSLA could manage the entire cell lifecycle including
construction, battery packing, recycling, and refurbishing at the facility. By allowing battery
refurbishment, TSLA would not only be able to increase the life of existing cars but could also
have the optionality of using recycled batteries for grid storage applications. Managing the
entire battery lifecycle could lead to production efficiencies and enable the company to cost
efficiently recycle and reuse its batteries.
Link to Nissan’s press release
5)
What factors besides production could make TSLA’s batteries more efficient?
Through our channel checks, we believe TSLA has invested heavily in data and analytic
software to assess, manage, and maximize the life of its batteries. Lithium-ion batteries have a
memory effect, which causes them to degrade with certain charging cycles (i.e., allowing the
battery charge to get too high or low). Software can track how cells have been charged and
used in the past, and utilize this information to maximize the life and energy output of the
battery pack.
6)
Where could the factory be built and how long will it take?
We believe New Mexico and Nevada are potential locations for a factory.
New Mexico has been widely reported as a potential location for the battery factory. New
Mexico was originally in the running for TSLA’s automobile assembly facility, but California was
chosen after TSLA received state tax breaks and secured Toyota’s NUMMI facility in Fremont.
New Mexico would provide a favorable tax environment for TSLA and it has been reported that
the factory would employ 1,500 to 2,000 people. Additionally, New Mexico is an ideal location
for solar PV projects, as seen with First Solar’s (FSLR;Neutral) 50MW Macho Springs project,
which could provide sufficient renewable energy for the factory.
Nevada is home to the Chemetall Foote’s lithium operating plant, which is the only operating
lithium mine in the U.S. Building a factory close to this resource could help to lower input costs,
assuming Tesla is able to secure lithium from this plant. A battery factory in Nevada would also
be relatively close to California which would help lower transportation costs. Additionally,
Nevada’s desert could provide ample sun for solar PV installations and sufficient wind to power
wind turbines for electricity generation. TSLA indicated it will use both solar and wind to power
the battery plant on its Q4:13 earnings call.
We anticipate the factory will take ~3 years to build and could coincide with the launch of the
Gen III vehicle.
Link to Albuquerque Journal article
7)
Is there a sufficient supply of lithium to support high levels of demand?
We believe there is ample supply of lithium for TSLA’s batteries. The U.S. Geological Survey
reported identified lithium resources total ~5.5 million tons in the United States and ~34 million
tons in other countries. World mine production in 2012 was estimated at ~37k tons with over
13 million tons in reserves. Bloomberg New Energy Finance estimates that 13 million tons of
lithium could support ~2.5B electric vehicles. Additionally, if TSLA is able to recycle the lithium
used in its batteries, it could reduce the overall lithium demand of the company.
Link to U.S. Geological Survey, Mineral Commodity Summaries
Robert W. Baird & Co.
4
February 24, 2014 | Tesla Motors, Inc.
8)
How will TSLA pay for the battery factory?
We believe the best case scenario would be for TSLA to work with its strategic partners to fund
the plant. In our opinion, TSLA could offer its IP and battery technology to partners in
exchange for its partners paying for a substantial portion of the facility.
Having said that, we believe the most likely scenario is TSLA could issue debt and/or equity to
raise capital for its portion of the plant’s cost. We believe a well-defined use of proceeds and
current share price should help with the fundraising process.
Robert W. Baird & Co.
5
February 24, 2014 | Tesla Motors Inc.
Investment Thesis
Model S provides a luxury electric vehicle with triple the range of many of its competitors.
TSLA began delivering the Model S, a four-door premium sedan, in June 2012. It is the first fully
electric, luxury car model to hit the market and boasts an impressive range of ~270 miles (depending
on model), which is up to 3x the range of its closest EV competitor. Tesla sees annual demand of 40k
Model S vehicles by the end of 2014.
TSLA has reached a production run-rate of 600+ cars per week and quarterly profitability. TSLA
has reached a production run-rate target of ~600 cars per week with a YE:14 target of 1,000 cars per
week. TSLA delivered 4900 Model S sedans in Q1:13, 5150 in Q2:13, 5,500 in Q3:13, and 6,900 in
Q4:13 while recording consecutive profitable quarters throughout 2013, and we believe TSLA will
deliver ~35k Model S vehicles in 2014.The successful ramp of production and extensive miles driven
in the vehicles reduces the process/technology risk around the TSLA story.
TSLA’s “Platform Design” approach provides a capital-efficient method of introducing new
vehicle models. TSLA has designed the platform architecture for the Model S to serve as a basis
point for future vehicle models, allowing it to leverage existing designs/processes to expand its car line
quickly and cost-effectively. As a result, it estimates the development process for the Model X will
require approximately half the time and one-third the CapEx as the Model S.
Gen III model should outperform competitors, providing a fully electric vehicle at a competitive
price. TSLA's Gen III vehicles are expected to compete with the Audi A4 and BMW 3 Series, which
both range in cost from ~$32k for a base model to ~$53k fully loaded. We estimate Gen III vehicles
will begin at an ASP of $35,000, but we think TSLA will offer models for higher prices that carry greater
than a two-hundred mile range. We expect the performance of the Gen III models to exceed the A4
and BMW 3 Series, and that the annual gas savings and federal tax credits will help TSLA to gain
market share and significantly increase its target consumer base. With approximately 216k A4 Sedans
and 294k BMW 3 Series sold globally, we think our current sales estimate for the Gen III (185k in
2018) is achievable. Gas savings alone are estimated at ~$2,000/year versus a gas-powered vehicle,
assuming 12,000 miles/year are driven at 24 mpg (estimate for Audi A4/BMW 3 Series) with a
$4.00/gallon cost of gas.
Solid partnerships and several strategic investors help validate TSLA’s technology . TSLA
boasts an impressive list of strategic investors including Daimler, Panasonic, and Toyota. Daimler
invested $76M in TSLA via Blackstar and TSLA has signed an agreement to provide full powertrains
for a new Mercedes EV model expected to debut in 2014. Panasonic made a $30M investment and
recently resigned a supply agreement to provide up to ~2 billion automotive grade lithium-ion battery
cells to TSLA from 2014 through 2017. Toyota invested $50M and sold Tesla its NUMMI plant asset
for a significant discount to book value. Tesla will also provide an electric powertrain for Toyota’s
RAV4 EV model under a $100M contract. We believe investors will view these partnerships and
investments as sources of validation for TSLA's technology.
We believe several upcoming catalysts may drive the stock price higher. We think demand for
the Model S will remain strong throughout 2014 in the U.S., Europe, and China. Additionally, TSLA
has several significant milestones coming up over the next 18 months including the expansion of
production lines, production of the Model X, build out of store fronts and supercharger networks, and
continued expansion across Europe and Asia. We believe execution on several of these fronts could
drive the stock price higher in the near to intermediate term.
Upcoming catalysts include: (1) progress toward gross margin of 28%, (2) successful deployment of
Supercharger stations throughout North America, Europe, and Asia, (3) increasing global sales, (4)
Robert W. Baird & Co.
6
February 24, 2014 | Tesla Motors Inc.
intro of Model X, and (5) debut of Gen III prototype (6) expansion of production capacity (7) more
details on TSLA's cell/battery factory.
$245 price target. Our price target is based on 34x our 2016E non-GAAP EPS of $7.21 which
includes sales of ~48,000 Model S and ~38,000 Model X vehicles. We believe our multiple is valid
when compared to other technology and consumer category creators.
Risks & Caveats
Dependence on single-source suppliers for key automotive parts. A number of the component
parts used in TSLA’s designs come from single-source manufacturers. The company has not
identified/qualified alternative sources for many of these parts and does not as a typical practice enter
into long-term supply agreements. As a result, a disruption of its supply chain could negatively impact
Tesla’s ability to deliver its product.
Slow or limited adoption of electric vehicles. TSLA's technology is attempting to create a niche in
the automotive market by displacing incumbent combustion-engine vehicles. A slow pace or lack of
adoption by customers of these vehicles due to performance/safety concerns, range anxiety, or a
sharp decrease in the price of oil would jeopardize the company’s growth plans.
Limited advances in battery technology. The launch of low cost Gen III vehicles relies on the ability
to reduce battery costs. If TSLA is unable to significantly reduce battery costs through economies of
scale or technological advances it may prove challenging to produce vehicles at the $35,000 price
point without reductions in performance.
Challenging economic environment reduces automobile demand. The economic downturn in
2008 put tremendous pressure on vehicle manufacturers with both General Motors and Chrysler being
forced to file for bankruptcy. Tesla’s premium vehicle offerings are slated to price at relatively high
ASPs the 300 mile per charge version of the Model S starting at ~$72,400 after tax credits, and the
performance variation at $87,400. Prolonged economic challenges or a reversion of the economy back
into a recessionary state could negatively impact consumer discretionary income and reduce demand
for automobiles.
Company Description
Tesla develops, manufactures, and sells battery electric vehicles as well as advanced
powertrain components. The company released its first model, the Tesla Roadster, in early 2008
and has since commercialized its first completely in-house designed vehicle, the Model S. We
estimate TSLA will deliver ~35k Model S' in 2014 and should begin Model X deliveries in the spring of
2015. Tesla was founded in 2003 and is headquartered in Palo Alto, CA.
Robert W. Baird & Co.
7
Tesla Motors
Historical and Projected Income Statement
Dollars in Millions except per share
Fiscal Year Ends December 31
Revenues
Automotive Sales
% of Revenue
Deferred Revenue
% of Revenue
Development Services
% of Revenue
Total Revenues
% Growth (y/y)
% Growth (q/q)
2006
2007
2008
2009
2010
2011
2012
$0.0
n/a
$0.1
100.0%
$14.7
100.0%
$111.9
100.0%
$97.1
83.2%
$148.6
72.7%
$385.7
93.3%
$0.0
n/a
$0.0
n/a
$0.0
0.0%
$0.1
n/a
$0.0
0.0%
$14.7
20094.5%
$0.0
0.0%
$111.9
659.3%
$19.7
16.8%
$116.7
4.3%
$55.7
27.3%
$204.2
74.9%
Cost of Revenues
Automotive Sales
% of Revenue
Development Services
% of Revenue
Total Cost of Revenue
% of Revenue
Non-GAAP Cost of Revenue
% of Revenue
$0.0
n/a
$0.0
n/a
$0.0
n/a
$0.0
n/a
$0.0
12.3%
$0.0
n/a
$0.0
12.3%
$0.0
12.3%
$15.9
107.7%
$0.0
n/a
$15.9
107.7%
$15.9
107.6%
$102.4
91.5%
$0.0
n/a
$102.4
91.5%
$102.3
91.4%
$80.0
82.4%
$6.0
n/a
$86.0
73.7%
$85.8
73.5%
Automotive Gross Profit
Gross Margin (%)
Development Services Gross Profit
Gross Margin (%)
Total Gross Profit
Gross Margin (%)
Non-GAAP Gross Profit
Gross Margin (%)
$0.0
n/a
$0.0
n/a
$0.0
n/a
$0.0
n/a
$0.1
87.7%
$0.0
n/a
$0.1
87.7%
$0.1
87.7%
($1.1)
-7.7%
$0.0
n/a
($1.1)
-7.7%
($1.1)
-7.6%
$9.5
8.5%
$0.0
n/a
$9.5
8.5%
$9.6
8.6%
$25.0
n/a
$5.4
n/a
$30.4
n/a
$30.4
n/a
$62.8
85963.0%
$17.2
23621.9%
$80.0
109584.9%
$79.8
109313.7%
$53.7
364.4%
$23.6
160.4%
$77.4
524.8%
$77.0
522.0%
($30.4)
n/a
($30.4)
n/a
($79.9)
n/a
($79.7)
n/a
Interest Income
% of Revenue
Interest Expense
% of Revenue
Non-Cash Interest Expense
% of Revenue
Other Income (expense), net
% of Revenue
$0.9
n/a
($0.4)
n/a
Non-GAAP Pre-Tax Income
% of Revenue
Operating Expenses
Research & Development
% of Revenue
Selling, General & Administrative
% of Revenue
Total Operating Expenses
% of Revenue
Non-GAAP Operating Expenses
% of Revenue
EBIT
% of Revenue
Non-GAAP EBIT
% of Revenue
Provision (Benefit) for Income Taxes
Effective Tax Rate (%)
Net Income
Profit Margin (%)
Non-GAAP Net Income
Profit Margin (%)
Earnings per Share
Non-GAAP EPS
2013A
Q1:14E
Mar-14
Q2:14E
Jun-14
Q3:14E
Sep-14
Q4:14E
Dec-14
2014E
2015E
2016E
$625.8
97.7%
$628.0
97.7%
$959.0
98.5%
$1,140.8
98.7%
$3,353.6
98.2%
$4,869.4
98.8%
$8,206.6
99.3%
$27.6
6.7%
$413.3
102.3%
$1,997.8
80.6%
$464.2
18.7%
$15.7
0.6%
$2,477.7
499.5%
$15.0
2.3%
$640.8
14.1%
-15.8%
$15.0
2.3%
$643.0
16.5%
0.3%
$15.0
1.5%
$974.0
61.6%
51.5%
$15.0
1.3%
$1,155.8
51.8%
18.7%
$60.0
1.8%
$3,413.6
37.8%
$60.0
1.2%
$4,929.4
44.4%
$60.0
0.7%
$8,266.6
67.7%
$115.5
77.7%
$27.2
48.8%
$142.6
69.8%
$142.0
69.5%
$371.7
96.4%
$11.5
41.8%
$383.2
92.7%
$381.0
92.2%
$1,543.9
77.3%
$13.4
0.0%
$1,557.2
62.9%
$1,548.2
62.5%
$464.4
74.2%
$7.5
0.0%
$471.9
73.6%
$468.5
73.1%
$463.0
73.7%
$7.5
0.0%
$470.5
73.2%
$467.0
72.6%
$702.1
73.2%
$7.5
0.0%
$709.6
72.9%
$705.9
72.5%
$823.9
72.2%
$7.5
0.0%
$831.4
71.9%
$827.6
71.6%
$2,453.4
73.2%
$30.0
0.0%
$2,483.4
72.7%
$2,469.0
72.3%
$3,616.8
74.3%
$5,914.7
72.1%
0.0%
$3,616.8
73.4%
$3,600.7
73.0%
0.0%
$5,914.7
71.5%
$5,897.1
71.3%
$17.1
17.6%
$13.6
69.3%
$30.7
26.3%
$31.0
26.5%
$33.1
22.3%
$28.5
51.2%
$61.6
30.2%
$62.3
30.5%
$14.0
3.6%
$16.0
58.2%
$30.1
7.3%
$32.3
7.8%
$453.9
22.7%
$2.4
15.0%
$456.3
18.4%
$929.5
37.5%
$161.4
25.8%
$7.5
50.0%
$168.9
26.4%
$172.4
26.9%
$165.0
26.3%
$7.5
50.0%
$172.5
26.8%
$176.0
27.4%
$256.9
26.8%
$7.5
50.0%
$264.4
27.1%
$268.1
27.5%
$316.9
27.8%
$7.5
50.0%
$324.4
28.1%
$328.2
28.4%
$900.2
26.8%
$30.0
50.0%
$930.2
27.3%
$944.7
27.7%
$1,252.7
25.7%
$60.0
100.0%
$1,312.7
26.6%
$1,328.7
27.0%
$2,291.9
27.9%
$60.0
100.0%
$2,351.9
28.5%
$2,369.5
28.7%
$19.3
17.2%
$42.2
37.7%
$61.4
54.9%
$52.0
46.5%
$93.0
79.7%
$84.6
72.4%
$177.6
152.1%
$156.7
134.2%
$209.0
102.3%
$104.1
51.0%
$313.1
153.3%
$284.3
139.2%
$274.0
66.3%
$150.4
36.4%
$424.3
102.7%
$376.4
91.1%
$232.0
9.4%
$285.6
9.0%
$517.5
20.9%
$443.0
17.9%
$83.3
13.0%
$107.7
16.8%
$191.0
29.8%
$166.5
26.0%
$83.6
13.0%
$106.1
16.5%
$189.7
29.5%
$165.1
25.7%
$82.8
8.5%
$107.1
11.0%
$189.9
19.5%
$165.2
17.0%
$80.9
7.0%
$109.8
9.5%
$190.7
16.5%
$165.9
14.4%
$330.6
9.7%
$430.7
12.6%
$761.3
22.3%
$662.7
19.4%
$284.6
5.8%
$587.2
11.9%
$871.8
17.7%
$773.2
15.7%
$420.2
7.0%
$780.1
9.4%
$1,200.3
14.5%
$1,101.7
13.3%
($78.5)
-532.5%
($78.1)
-529.6%
($51.9)
-46.4%
($42.4)
-37.9%
($146.8)
-125.8%
($125.7)
-107.7%
($251.5)
-123.1%
($222.1)
-108.7%
($394.3)
-95.4%
($344.1)
-83.3%
($61.3)
-2.5%
$486.5
19.6%
($22.1)
-3.4%
$5.9
0.9%
($17.2)
-2.7%
$10.9
1.7%
$74.5
7.6%
$102.9
10.6%
$133.7
11.6%
$162.3
14.0%
$169.0
4.9%
$282.0
8.3%
$440.9
8.9%
$555.6
11.3%
$1,151.6
13.9%
$1,267.8
15.3%
$1.7
2395.9%
$0.0
0.0%
$0.5
3.6%
($3.7)
-25.4%
$0.2
0.1%
($2.5)
-2.3%
$0.3
0.2%
($1.0)
-0.8%
$0.3
0.1%
($0.0)
0.0%
$0.3
0.1%
($0.3)
-0.1%
$0.1
0.0%
($33.0)
-1.3%
($10.4)
$0.0
0.0%
($20.0)
-3.1%
($4.3)
$0.0
0.0%
($20.0)
-3.1%
($4.3)
$0.0
0.0%
($20.0)
-2.1%
($4.3)
$0.0
0.0%
($20.0)
-1.7%
($4.3)
$0.0
0.0%
($80.0)
-2.3%
($17.2)
$0.0
0.0%
($80.0)
-1.6%
($24.0)
$0.0
0.0%
($80.0)
-1.0%
($24.0)
$0.1
n/a
$0.1
187.7%
($1.0)
-6.5%
($1.4)
-1.3%
($6.6)
-5.6%
($2.6)
-1.3%
($1.8)
-0.4%
$22.6
0.9%
$0.0
0.0%
$0.0
0.0%
$0.0
0.0%
$0.0
0.0%
$0.0
0.0%
$0.0
0.0%
$0.0
0.0%
($29.9)
n/a
($77.8)
n/a
($82.2)
-557.9%
($46.2)
-41.3%
($133.0)
-113.9%
($224.5)
-109.9%
($345.9)
-83.7%
$89.7
3.6%
($9.8)
-1.5%
($4.8)
-0.7%
$87.2
8.9%
$146.6
12.7%
$219.2
6.4%
$469.6
9.5%
$1,181.8
14.3%
$0.1
-0.3%
$0.1
-0.1%
$0.1
-0.1%
$0.0
0.0%
$0.2
-0.1%
$0.5
-0.2%
$0.1
0.0%
$2.6
-3.6%
($11.12)
24.0%
($10.0)
24.0%
$12.0
24.0%
$26.3
24.0%
$17.2
19.4%
$73.7
20.4%
$244.2
22.8%
($30.0)
n/a
($30.0)
n/a
($78.2)
n/a
($78.0)
n/a
($82.8)
-561.5%
($82.3)
-558.6%
($55.7)
-49.8%
($46.2)
-41.3%
($154.3)
-132.2%
($128.2)
-109.8%
($254.4)
-124.6%
($222.2)
-108.8%
($396.2)
-95.9%
($344.2)
-83.3%
($74.1)
-3.0%
$103.5
4.2%
($35.2)
-5.5%
$1.3
0.2%
($31.6)
-4.9%
$5.2
0.8%
$38.2
3.9%
$75.1
7.7%
$83.2
7.2%
$120.3
10.4%
$71.7
2.1%
$201.9
5.9%
$287.3
5.8%
$395.9
8.0%
$827.4
10.0%
$937.6
11.3%
($10.18)
($10.18)
($22.69)
($22.64)
($12.46)
($12.39)
($7.94)
($6.58)
($3.04)
($2.53)
($2.53)
($2.21)
($3.69)
($3.20)
($0.62)
$0.77
($0.29)
$0.01
($0.26)
$0.04
$0.28
$0.54
$0.60
$0.87
$0.33
$1.46
$1.68
$3.32
$5.57
$7.21
50.7
50.7
100.4
100.4
107.3
107.3
118.8
132.4
122.9
138.0
123.0
138.1
123.1
138.2
123.2
138.3
123.1
138.2
123.5
138.6
123.9
139.0
Average Shares Outstanding:
Basic
2.9
GAAP Diluted
2.9
Non-GAAP Diluted
Source: Company reports, Robert W. Baird & Co.
3.4
3.4
6.6
6.6
7.0
7.0
Please refer to Appendix - Important Disclosures and Analyst Certification.
Robert W. Baird & Co.
8
Ben Kallo, CFA
415.364.3345
Tyler Frank
415.364.3342
Fiscal End
Last Updated
December
2/19/2014
Balance Sheet (in millions)
Tesla Motors (TSLA)
2008A
2009A
2010A
Q1:11A
Q2:11A
Q3:11A
Q4:11A
2011A
Q1:12A
Q2:12A
Q3:12A
Q4:12A
2012A
Q1:13A
Q2:13A
Q3:13A
Q4:13A
2013A
Cash & cash equivalents
$9.3
$69.6
$99.6
$100.7
$319.4
$278.4
$280.3
$280.3
$243.6
$210.6
$85.7
$201.9
$201.9
$214.4
$746.1
$795.1
$845.9
$845.9
Restricted cash
$0.0
$0.0
$73.6
$42.9
$11.3
$55.3
$23.5
$23.5
$39.2
$22.0
$22.9
$19.1
$19.1
$16.7
$1.4
$1.3
$3.0
$3.0
Accounts receivable
$3.3
$3.5
$6.7
$20.3
$23.3
$18.3
$9.5
$9.5
$13.6
$11.0
$9.2
$26.8
$26.8
$46.1
$113.5
$47.6
$49.1
$49.1
Inventory
$16.7
$66.7
$159.0
$268.5
$268.5
$237.6
Prepaid expenses and other current assets
Total current assets
$23.2
$45.2
$50.8
$54.3
$49.2
$50.1
$50.1
$55.4
$254.9
$347.5
$340.4
$340.4
$2.2
$4.2
$10.8
$12.2
$9.5
$11.0
$9.4
$9.4
$7.1
$6.9
$7.8
$8.4
$8.4
$11.1
$13.7
$27.3
$27.6
$27.6
$31.4
$100.6
$235.9
$226.9
$417.8
$412.1
$372.8
$372.8
$358.9
$317.1
$284.5
$524.8
$524.8
$526.0
$1,129.5
$1,218.8
$1,265.9
$1,265.9
Operating lease vehicles, net
$0.0
$0.0
$8.0
$9.1
$10.5
$11.7
$11.8
$11.8
$12.0
$11.8
$11.8
$10.1
$10.1
$9.1
$131.5
$268.8
$382.4
$382.4
Property, plant, & equipment
$18.8
$23.5
$114.6
$143.4
$189.6
$248.1
$298.4
$298.4
$364.1
$421.9
$486.2
$552.2
$552.2
$582.0
$595.6
$654.5
$738.5
$738.5
Restricted cash
$1.2
$3.6
$4.9
$4.9
$5.4
$5.8
$8.1
$8.1
$3.8
$4.0
$4.7
$5.2
$5.2
$5.0
$7.1
$8.1
$6.4
$6.4
Other assets
$0.3
$2.8
$22.7
$22.9
$22.8
$22.6
$22.4
$22.4
$22.2
$22.1
$21.9
$22.0
$22.0
$21.7
$24.2
$16.0
$23.6
$23.6
Total non-current assets
$20.3
$29.9
$150.2
$180.4
$228.4
$288.1
$340.6
$340.6
$402.2
$459.7
$524.6
$589.4
$589.4
$617.8
$758.3
$947.4
$1,151.0
$1,151.0
Total assets
$51.7
$130.4
$386.1
$407.3
$646.2
$700.3
$713.4
$713.4
$761.1
$776.9
$809.2
$1,114.2
$1,114.2
$1,143.8
$1,887.8
$2,166.2
$2,416.9
$2,416.9
Accounts payable
$14.2
$15.1
$29.0
$49.7
$57.2
$86.3
$88.3
$88.3
$97.9
$112.2
$190.5
$343.2
$343.2
$344.9
$317.4
$377.0
$412.2
$412.2
Accrued liabilities
$11.1
$14.5
$20.9
$19.8
$25.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
Deferred development compensation
$10.2
$0.2
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
Deferred revenue
$4.1
$1.4
$4.6
$3.8
$3.1
$5.8
$5.5
$5.5
$5.7
$5.4
$5.4
$5.0
$5.0
$9.0
$98.1
$195.0
$273.1
$273.1
Capital lease obligations, current portion
$0.3
$0.3
$0.3
$0.3
$0.3
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$14.9
$16.9
$20.6
$20.6
Reservation payments
$48.0
$26.0
$30.8
$39.4
$53.2
$65.2
$91.8
$91.8
$113.3
$133.4
$138.3
$138.8
$138.8
$130.7
$133.7
$140.3
$163.2
$163.2
$87.9
$57.5
$85.6
$113.0
$138.7
$157.3
$185.5
$185.5
$216.9
$251.0
$334.3
$487.0
$487.0
$484.7
$564.1
$729.2
$869.0
$869.0
Convertible preferred stock warrant liability
$2.1
$1.7
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
Common stock warrant liability
$0.0
$0.0
$6.1
$7.5
$7.8
$8.2
$8.8
$8.8
$8.7
$8.5
$9.7
$10.7
$10.7
$0.0
$0.0
$0.0
$0.0
$0.0
Capital lease obligations, less current portion
$0.9
$0.8
$0.5
$0.4
$0.4
$1.0
$3.9
$3.9
$5.4
$7.2
$9.5
$14.3
$14.3
$15.9
$0.0
$0.0
$0.0
$0.0
Convertible notes payable
$54.5
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
Deferred revenue, less current portion
$0.0
$1.2
$2.8
$3.1
$3.2
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
Long-term debt
$0.0
$0.0
$71.8
$102.5
$134.2
$225.0
$276.3
$276.3
$360.5
$431.8
$465.0
$452.3
$452.3
$439.6
$578.7
$582.5
$586.3
$586.3
Total current liabilities
Other long-term liabilities
$0.0
$4.8
$3.5
$12.3
$13.1
$13.4
$14.6
$14.9
$14.9
$15.7
$16.1
$18.6
$25.2
$25.2
$35.0
$115.6
$212.9
$294.5
$294.5
Total non-current liabilities
$62.3
$7.2
$93.5
$126.6
$159.0
$248.8
$303.9
$303.9
$390.3
$463.6
$502.8
$502.5
$502.5
$490.5
$694.3
$795.4
$880.8
$880.8
Total liabilities
$150.2
$64.7
$179.0
$239.6
$297.7
$406.1
$489.4
$489.4
$607.2
$714.7
$837.1
$989.5
$989.5
$975.2
$1,258.4
$1,524.5
$1,749.8
$1,749.8
Total stockholder's equity
($98.5)
$65.7
$207.0
$167.7
$348.5
$294.1
$224.0
$224.0
$153.9
$62.2
($27.9)
$124.7
$124.7
$168.6
$629.4
$641.7
$667.1
$667.1
Total liabilities & stockholder's equity
$51.7
$130.4
$386.1
$407.3
$646.2
$700.3
$713.4
$713.4
$761.1
$776.9
$809.2
$1,114.2
$1,114.2
$1,143.8
$1,887.8
$2,166.2
$2,416.9
$2,416.9
Current Ratio
35.7%
174.9%
275.7%
200.8%
301.1%
261.9%
201.0%
201.0%
165.4%
126.3%
85.1%
107.8%
107.8%
108.5%
200.2%
167.1%
145.7%
145.7%
Quick Ratio
16.8%
134.5%
222.9%
155.9%
262.0%
230.7%
174.0%
174.0%
139.9%
99.8%
37.5%
52.6%
52.6%
59.5%
155.1%
119.5%
106.5%
106.5%
Recievables Turnover
n/a
32.9
17.4
13.97
11.98
11.74
11.45
21.4
31.83
36.88
43.92
49.00
27.7
40.57
34.11
28.41
33.81
37.1
DSO's
n/a
11.1
21.0
26.12
30.47
31.09
31.88
17.0
11.47
9.90
8.31
7.45
13.2
9.00
10.70
12.85
10.79
Inventory Turnover
n/a
5.1
1.9
2.43
1.98
2.73
2.79
2.8
7.00
2.12
4.43
4.49
2.3
4.53
5.31
4.94
5.26
4.2
Days Inventory
n/a
71.1
191.7
150.51
184.79
133.81
130.77
128.1
52.13
171.82
82.45
81.22
158.7
80.58
68.68
73.82
69.44
86.3
Debt Ratio
107.8%
0.8%
18.8%
25.3%
20.9%
32.3%
39.3%
39.3%
48.1%
56.5%
58.6%
41.9%
41.9%
39.8%
31.4%
27.7%
25.1%
25.1%
Debt-to-Equity Ratio
-56.6%
1.7%
35.1%
61.5%
38.7%
76.9%
125.0%
125.0%
237.8%
705.6%
-1702.3%
374.2%
374.2%
270.2%
94.3%
93.4%
91.0%
91.0%
Balance Sheet Metrics
Liquidity Ratios
Asset Turnover Ratios
9.8
Leverage Ratios
Profitability
ROE
n/a
2.8
-0.6
-96.6%
-72.7%
-76.3%
-85.9%
-1.0
-228.7%
-340.5%
-645.6%
-853.6%
-5.4
-304.6%
-399.9%
-17.9%
-125.1%
0.1
ROA
n/a
-0.5
-0.3
-44.8%
-38.1%
-36.3%
-36.0%
-0.3
-82.7%
-84.7%
-87.0%
-77.2%
-0.6
-26.0%
-69.1%
-4.4%
-34.0%
0.0
Source: Company reports, Robert W. Baird & Co.
Please refer to Appendix - Important Disclosures and Analyst Certification.
Robert W. Baird & Co.
9
February 24, 2014 | Tesla Motors Inc.
Appendix - Important Disclosures and Analyst Certification
Covered Companies Mentioned
All stock prices below are the February 23, 2014 closing price.
First Solar, Inc. (FSLR - $55.93 - Neutral)
SolarCity Corp. (SCTY - $75.86 - Neutral)
(See recent research reports for more information)
Rating and Price Target History for: Tesla Motors Inc. (TSLA) as of 02-21-2014
09/22/11
I:O:$35
11/03/11
O:$37
02/16/12
O:$42
09/25/12
O:$35
02/13/13
O:$45
05/01/13
O:$62
05/09/13
O:$70
06/12/13
O:$118
08/08/13
O:$187
10/02/13
N:$187
01/14/14
O:$187
250
200
150
100
50
Q1
Q2
Q3
2011
02/18/14
O:$215
Q1
Q2
Q3
2012
Q1
Q2
0
Q1
Q3
2013
2014
02/20/14
O:$245
Created by BlueMatrix
Rating and Price Target History for: First Solar, Inc. (FSLR) as of 02-21-2014
08/05/11
O:$148
10/27/11
O:$80
12/15/11
N:$35
04/17/12
N:$25
08/02/12
O:$30
02/27/13
N:$25
04/10/13
N:$40
11/01/13
N:$49
200
160
120
80
40
Q1
2011
Q2
Q3
Q1
2012
Q2
Q3
Q1
2013
Q2
0
Q1
Q3
2014
Created by BlueMatrix
Robert W. Baird & Co.
10
February 24, 2014 | Tesla Motors Inc.
Rating and Price Target History for: SolarCity Corp. (SCTY) as of 02-21-2014
09/17/13
I:N:$37
11/07/13
N:$50
11/14/13
O:$71
01/09/14
O:$81
02/19/14
N:$81
100
80
60
40
20
Q1
2011
Q2
Q3
Q1
2012
Q2
Q3
Q1
2013
Q2
0
Q1
Q3
2014
Created by BlueMatrix
1 Robert W. Baird & Co. Incorporated makes a market in the securities of TSLA, FSLR and SCTY.
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensation
from the company or companies mentioned in this report within the next three months.
Robert W. Baird & Co. Incorporated may not be licensed to execute transactions in all foreign listed securities directly. Transactions in
foreign listed securities may be prohibited for residents of the United States. Please contact a Baird representative for more information.
Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader U.S. equity market
over the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity market over the next 12 months.
Underperform (U) - Expected to underperform on a total return, risk-adjusted basis the broader U.S. equity market over the next 12
months.
Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with an emphasis on
safety. Company characteristics may include: stable earnings, conservative balance sheets, and an established history of revenue and
earnings. A - Average Risk - Growth situations for investors seeking capital appreciation with an emphasis on safety. Company
characteristics may include: moderate volatility, modest balance-sheet leverage, and stable patterns of revenue and earnings. H Higher Risk - Higher-growth situations appropriate for investors seeking capital appreciation with the acceptance of risk. Company
characteristics may include: higher balance-sheet leverage, dynamic business environments, and higher levels of earnings and price
volatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to accept a high degree of volatility and risk.
Company characteristics may include: unpredictable earnings, small capitalization, aggressive growth strategies, rapidly changing
market dynamics, high leverage, extreme price volatility and unknown competitive challenges.
Valuation, Ratings and Risks. The recommendation and price target contained within this report are based on a time horizon of 12
months but there is no guarantee the objective will be achieved within the specified time horizon. Price targets are determined by a
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used to determine the value of a security including, but not limited to, discounted cash flow, earnings multiples, peer group comparisons,
and sum of the parts. Overall market risk, interest rate risk, and general economic risks impact all securities. Specific information
regarding the price target and recommendation is provided in the text of our most recent research report.
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managed or co-managed a public offering of securities for these companies in the past 12 months.
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Robert W. Baird & Co.
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February 24, 2014 | Tesla Motors Inc.
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Copyright 2014 Robert W. Baird & Co. Incorporated
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