COMPANY REVIEW

OCTOBER 2016
TESLA COMPANY REVIEW
ABOUT THIS WORK

Along with traditional financial analysis, from time to time OLMA Next Ltd
commissions independent researchers to prepare challenging studies and OLMA Next Ltd
reviews connected with potential investment ideas and projects.
OLMA Next Ltd is contemplating the launch of a
This company review has been prepared by Frédéric Bonelli at the request of fund focused on future blue chip stocks. With a
OLMA Next Ltd. combination of youth and experience, OLMA Next
Ltd plans to scrutinise a number of high performing
stocks on the American, European and Asian
We are pleased to share this work about Tesla Motors Inc (TSLA) with you. We markets over the coming months.
hope it will provide you with sufficient data and insight to help you gain a
more thorough understanding of the big picture behind this Californian luxury www.olmafund.com
electric car manufacturer which might possibly change the car industry and
more.

Frédéric Bonelli
Frédéric Bonelli is an independent research
consultant and VC entrepreneur who prepares
You are welcome to share and adapt this work content about trends and companies for funds and
investors. He also helps start-ups and SMEs to
produce corporate support materials to help with
Please cite this document:
fundraising and other promotional activities.
fredbonelli.com, Tesla Motors Inc., Company Review, Sept 2016

[email protected]
You may distribute a modified version of this work subject to the consent
of Frédéric Bonelli

OLMA NEXT LTD OCTOBER 2016 2

TESLA COMPANY REVIEW
TESLA MOTORS INC.

TESLA HAS ADOPTED DIGITAL TECHNOLOGIES LIKE A TRUE DIGITAL

T H O R O U G H B R E D E S P E C I A L LY I N B R A N D M A R K E T I N G A N D
FUNDRAISING. IT HAS DISRUPTED THE TRADITIONAL PATHS TAKEN
B Y C A R M A K E R S A N D A I M S T O B E C O M E T H E F I R S T F U L LY
VERTICALLY INTEGRATED ENERGY COMPANY

OLMA NEXT LTD OCTOBER 2016 3

TESLA COMPANY REVIEW
INTRODUCTION

Much more than just an electric car manufacturer TESLA MOTORS INC.
Tesla Motors’ share price increased from $27 to $250 between January 2012 and October
2014. Its price to sales ratio is more than 6 while those of traditional carmakers are less
than 0.5. Tesla is not a simple electric vehicle designer and manufacturer, just as Apple ELECTRICITY TRANSPORTATION
was not simply a PC brand in 2000 and was not just an mp3 producer in 2001. Comparing
Tesla to other car manufacturers is like comparing Apple to IBM.
PV1 Cells Vehicles
SOLARCITY
Elon Musk, the man behind the story, really does “think differently”:
Money is not the problem
Nothing is impossible, until it really is Batteries Software
Nothing is too far from the core business as long as it serves it GIGAFACTORY
Acceleration is the key, at almost any price or level of risk
Goal delivery date is just a management/fundraising trick
Late is meaningless as long as you deliver a tremendously good product
If the market is not there yet, create it
B TOC
Due to the infancy of the EV2 market, Tesla’s strategy is to push across all fields: for the home: vehicles:
Software: proprietary vehicle autopilot technology
Powerwall Chassis I: Roadster
Chassis II: Model S, Model X
Energy: battery production and sales (Gigafactory) Chassis III: Model 3, Model Y
Recharging infrastructure: worldwide supercharger network
services:
Services: from vehicle after sale service to Tesla Mobility, the “PtoP taxi service” SuperCharger Network
Tesla Mobility (PtoP taxi service)
Tesla manages a progressive focus shift from “sustainable transport” to “sustainable
energy”: B TOB
SolarCity acquisition for PV cell production and installation - yet to complete, for commercial and utilities: for carmakers:
Powerpack Electric Powertrain
subject to shareholder approval
Solar roofs for home, utilities and cars for carmakers:
Solar farms to sustain electricity demand off the grid Batteries

Battery packs for home, commercial and utilities

CLIENTS: Amazon AWS, Smart, Daimler, Toyota

1 PV: Photovoltaic 2 EV: Electric Vehicle

OLMA NEXT LTD OCTOBER 2016 4
TESLA COMPANY REVIEW
BUSINESS GLOBAL OVERVIEW

Beyond EV manufacturing, the vision of Elon Musk for Tesla Motors is to create the first HEADQUARTERS
fully vertically integrated energy company, from energy generation to installation to TESLA MOTORS INC.

storage to application. Tesla will generate power from the sun, store energy in batteries and TSLA (NASDAQ)
use batteries to power vehicles and buildings.
PALO ALTO
Such a plan requires a sharp focus on vertical integration and a willingness to build huge
production facilities.
FACTORIES

EV SOLAR ROOF VEHICLES

Cars: Model S, Model X, Model 3
FREEMONT Software: Tesla mobility

SUPERCHARGERS
EV BATTERY For cars: Charger stations

UTILITY SOLAR ROOF HOME SOLAR ROOF

AUTOPILOT
BATTERIES
For cars: Battery pack
GIGAFACTORY For homes: Powerwall
NEVADA For utilities: Powerpack

POWERPACK POWERWALL

PV CELLS
For cars: EV solar roof
SOLARCITY For homes: Solar Roof
SAN MATEO For utilities: Solar Roof
Solar Farm: direct to the grid

CHARGERS SOLAR ROOF

PV CELLS

SUPERCHARGER STATIONS SOLAR WIND COAL NUCLEAR

OLMA NEXT LTD OCTOBER 2016 5

TESLA COMPANY REVIEW
TO DATE

It can be challenging to keep up with the CEO of Tesla Motors, Elon Musk.
He reveals “Master Plan Phase 2” of his vision, a “solar/electric 360°
society”:
For the home
Powerwall batteries + Solar Roof for charging
For commercial and utility
Powerpack + Solar Roof for charging
For transportation
Tesla EV full line + revolutionary Solar Roof for charging

Such a project has a significant cost. Let us put Elon Musk’s objectives
into perspective:

TESLA 2018 PRODUCTION GOALS Vehicle 2015 Market

Sales
Capitalisation
500,000 Tesla Model 3 EVs
$80b
=
2015 worldwide total EV production $60b
$58b
500,000 batteries for the Gigafactory FORD
= Founded: 1903
2013 worldwide total Li-ion battery production
$40b
$32b
GM
Founded: 1908 FIAT
2016 SITUATION ASSESSMENT: Founded: 1925 $21b
$2.73b of funds raised by Tesla since 2009 (equity and debt)
$3.25b of debt raised by SolarCity1 ($1.23b due by the end of 2017) TESLA
Completion in May 2016 of 14% of the Gigafactory building2 Founded: 2003
60,000 cars are expected to be produced in 2016 by Tesla
1900 1930 1960 1990 2003
2-year launch delay for the “multi-bugged” Model X

1 Photovoltaic roof production and installation business merged with Tesla in August 2008
2 Battery production (cars, home, commercial and utility)

OLMA NEXT LTD OCTOBER 2016 6

 TESLA COMPANY REVIEW
TIMELINE

Model 3
production
Model S Model X Model S Model X Model 3 planned to
unveiled unveiled deliveries production unveiled begin
begin begins
Public 370,000 Model 3
presentation reservations with
1 st retail store Strategic Roadster All Tesla Patents 500,000 vehicle
of the down payment only
in LA, 2 nd in partnership orders are released free for production target
Roadster (equivalent of $14b
Menlo Park with Toyota stopped other companies
prototypes in future sales)
80% of US
population
Sale of two Supercharger 1 st covered by 1 st death
sets of 100 station partial Supercharger using
roadsters building begins recall stations autopilot
FOUNDED

’03 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’20

22 June 2016
8 May 2015
Acquisition of
Acquisition of
SolarCity
Riviera Tool
announced for
(die stamping
29 June 2010 $2.6b in Tesla
systems)
IPO shares
on NASDAQ
Gigafactory
Fremont, Nevada 1x China
California Battery 2x Europe
Car Factory Factory Car Factories

TSLA share price vs S&P 500

+1,000%

+500%

0%

-250%
2008 2010 2012 2014 2016
OLMA NEXT LTD OCTOBER 2016 7
TESLA COMPANY REVIEW
1/7 MARKET, ASSETS & PRODUCTS : PRODUCTION SITE & HR
TESLA VS FORD MODEL T
Car factory PRODUCTION MILESTONES
The Fremont factory in California is one of the largest buildings in the world Nº of
with 5.3 million square feet of manufacturing and office space. Tesla has Vehicles
been acquiring space in other locations close to the factory to expand its 500k
operations, adding a total of over 1 million square feet of production or
warehouse space in the region. 400k
In June 2016, Tesla appointed Peter Hochholdinger as Vice President of
300k
Vehicle Production. He was previously responsible for leading the
production of Audi’s A4, A5 and Q5 vehicles, including 14 derivatives of 200k
those models and managed production of about 400,000 vehicles annually
Tesla Motors Ford Model T
at Audi. 100k sales and forecast 1909-1916
-
But
Greg Reichow, Tesla's Vice President of Production and one of its 2012 2014 2016 2018e 2020e
highest-paid executives and Josh Ensign, Vice President of
Manufacturing, left Tesla. This brings to five the total number of Tesla
vice presidents who left the company in 2016.
Expansion of factory operations will mean tooling up new production WORLDWIDE DEMAND FOR
lines, which will cost significant amounts (more than the down ELECTRIC PASSENGER CARS
payments received for around 370,000 Model 3 at $1,000 each). Nº of
Vehicles
Now that Tesla has delivered the ”Proof of Concept”, and the potential
800k
for a rising EV mass market if vehicle design and performance is equal
to that of ICE1 cars, all carmakers have announced EV launches
for 2018-2020 with significant R&D budgets: timing is now the 600k
key.

400k

Tesla Motors key figures:

200k
Fundraising and Debt: $2.73b
Factory production: 60,000 vehicles expected for 2016
2018 vehicle battery production goal: 500,000 vehicles -
2012 2014 2016 2018e 2020e 2022e 2024e

1 ICE: Internal Combustion Engine

OLMA NEXT LTD OCTOBER 2016 8
TESLA COMPANY REVIEW
2/7 MARKET, ASSETS & PRODUCTS : SALES, CHARGING NETWORK & BATTERIES
THE ELECTRIC CAR MARKET WORLDWIDE 2016
Tesla car sales
Car Price*
$100k
Now that other carmakers plan on investing significantly in EV to fill in the Tesla Model X
gap, how long will Tesla cars remain the best EVs on the market? Why Tesla Model S
could Tesla become the leading brand in the EV market from scratch in
less than a decade? Is the ”Open Source Patent strategy” a major mistake Q1:
Q2:

or a masterstroke from the visionary Musk? EXPENSIVE

EXPENSIVE

LOW RANGE GOOD RANGE

Here are some facts and figures to help build answers to these questions.
BMW i3 VW E-Golf Chevy Volt ‘17
1. Supercharger network Kia Soul EV
$25k Tesla
Tesla has invested heavily in its charger network. It plans to double its Ford Focus Electric Model 3
supercharger network in 2017, reaching 1,300 stations worldwide (North Chevy Nissan
Spark Leaf
America, Europe and the Asia-Pacific regions) with a total of more than
7,000 individual chargers. Tesla also regularly updates its charger Q3:
Q4:

technology, which is by far the world’s fastest recharging system. This AFFORDABLE
AFFORDABLE

system enables recharging of a Model S giving up to 160 miles autonomy LOW RANGE GOOD RANGE
in less than 30 minutes. Charging is currently free for any Tesla owner.

2. Price/range ratio and battery technology

-
Until 2016, Tesla had the lowest price to range ratio in the market: this is
the result of all Tesla technologies combined and especially the proprietary 0 150 300
battery design. Range
(in miles)
* after tax credit
No other carmaker is managing its own battery technology and production
and thus they depend upon availability from suppliers. This will be a
problem when the EV market gathers pace.

Tesla is on the way to resolving the production delay issue of its

Gigafactory. This should give Tesla a strong advantage to bring operational
costs down and maintain the cheapest cell cost in the EV industry.

The cost of the battery equals 25% of the total price of an EV in 2016. This Tesla Supercharger Network: no other carmaker has done this yet. It is now free for life
is why Chevrolet had to lower the autonomy of its Volt model to compete for any Tesla customer. This is a huge competitive advantage.
with Tesla’s Model 3 price. There are 90,000 service stations in the US, while EV charging stations have now
reached 40,000 (ChargingPoint + Tesla)

OLMA NEXT LTD OCTOBER 2016 9

TESLA COMPANY REVIEW
3/7 MARKET, ASSETS & PRODUCTS : STRATEGY, MARKET & IP

3. Top down strategy PLUG-IN VEHICLES (xEV) SALES VOLUME AND % GROWTH
Classical disruption theory suggests that most entrants start at the bottom of
the performance curve and slowly work their way up until they can eventually 2016 Q1 2015 Q1
overtake incumbent technologies.
43
With the Supersport Luxury Liftback Model S, Tesla started at the absolute China
21
+102%
top of the performance curve. This strategy has worked incredibly well for the
11
carmaker as it continues to execute on its vision. Japan 8 +36%

48
4. EV focused and market momentum Europe +27%
38
Tesla Motors is the only sizeable carmaker focused solely on EVs1 and the 27
USA +19%
only EV company to own both battery technology and a production facility. 23
All trends and studies confirm high market demand for lithium-ion batteries 3
Other +0%
over the next 5 years. They also predict significant technological advances 3
that will lower price and recharge time as well as increasing power and
overall lifetime. Thus the Panasonic co-owned Gigafactory has a strong 0 20k 40k 60k
competitive advantage. Number of Units Sold

5. Open Source patents 7. Sales strategy

In June 2014, Elon Musk stated that all Tesla patents will become “Open Part of Tesla's competitive advantage relates to its unique approach to
Source”, meaning that any person may freely use one or several of them. It is sales. Instead of offering vehicles through conventional dealerships, the
most likely that he will deliver on his promise but it is interesting to read company has created a direct sales approach that involves the concept
between the lines: of sales malls where consumers can view and inquire about the vehicles.
This drives a number of competitive advantages:
No patent has been canceled so far
Do not confuse patent with trade secret: some parts of the Tesla • better contact with customers
factory and the Gigafactory will never be open to the public • no inventory needed
With an industrial open patent portfolio, it is a case of releasing the • controlled advertising
technology “as-is”; Tesla has probably already exceeded released • savings on dealer’s fees
patents in terms of technological progress

6. Partnerships
Until the establishment of the Gigafactory with Panasonic, Tesla had
partnered with Daimler and Toyota, which built electric powertrain units for
some of their future EVs. These partnerships were seen as a sign of maturity
and acknowledgment for Tesla as a car company. They both invested in Tesla
shares and both have exited with huge cash-outs1. 1 Daimler’s investment of $50 million in May 2009 turned into over $780 million.
OLMA NEXT LTD OCTOBER 2016 10
TESLA COMPANY REVIEW
4/7 MARKET, ASSETS & PRODUCTS : MODEL 3 LAUNCH

Tesla Model 3 - The Big Leap forward TESLA HISTORICAL AND FORECAST PRODUCTION VOLUMES

The Tesla Model 3, an all-electric four-door compact luxury sedan, was Nº of

Vehicles Roadster Model S Model X Model 3
unveiled on 31 March 2016. The first 100,000 units were pre-booked
500k
before the public presentation. No one had seen, let alone driven one. All
the public knew was that prices start at $35,000, the range would be 200+ 400k
miles, a cash deposit of $1,000 was required and deliveries would start in
300k
late 2017, though a 12-24 month delay is probable.
200k
After the first public showing and over the following 3 weeks, reservations
approached 400,000 units. After reductions for bogus bookings, the 100k
official number of reservations published in Tesla’s quarterly SEC filings
was 373,000. The current tally is probably a lot higher.
2012 2014 2016 2018 2020

The demand is comparable to the annual global sales of Audi A4, BMW 3-
Series and Mercedes C-Class combined. This indicates the potential for
EVs with competitive price, style, space, acceptable range, superior
performance and efficiency. US ELECTRIC CAR SALES
YTD AUG 2016 vs YTD AUG 2015

All EVs Total 83,303 +21,8%

100 Electric1 Total 37,863 +7,4%

Tesla Model S 15,000 -2% $75,000 - 315 Miles - EV

Chevrolet Volt 14,295 +71,9% $34,000 - 53 Miles - PHEV 2
Tesla Model X 10,000 $80,000 - 250 Miles - EV
Ford Fusion Energi 9,998 +64,1% $34,000 - 22 Miles - PHEV
Nissan Leaf 7,922 -36% $30,000 - 107 Miles - EV

BMW i3 5,372 -13,1% $43,500 - ~80Miles - EV

“In roughly one year since our last visit, the progress Tesla Model 3 expected end 2017 $35,000 - 215 Miles - EV
witnessed is truly stunning.”
JAMES ALBERTINE - STIFEL ANALYST - MARCH 2016 1 100 Electric: EV with a minimum range of 100 miles
2 PHEV: Plug-In Hybrid Electric Vehicle

OLMA NEXT LTD OCTOBER 2016 11

TESLA COMPANY REVIEW
5/7 MARKET, ASSETS & PRODUCTS : THREATS

US sale regulations TESLA HISTORY OF DELAYS

State regulations in the US related to Tesla’s direct sales, along with federal
tax incentives, are going to dictate the future impact of Tesla’s product
pricing. It is not clear if and how strongly the US administration will Roadster 9 MONTHS LATE
continue to support the EV market with consumer incentives. Also, it is
uncertain if Tesla will continue to resist the traditional car dealer lobbying 6+ MONTHS LATE
Model S
pressure, which tries to impose its multi-brand sales business model.

Model X 18+ MONTHS LATE

Cash Burn Model 3

Tesla has raised over $4.5b since the IPO in 2010. As of January 2016,
Musk owns about 22% of the company. Tesla announced in August 2016 2006 2008 2010 2012 2014 2016 2018
that it will make a $2b secondary stock offering to finance its ambitious
vehicle production objective: an estimated $1.4b worth of stock will be
issued to help ramp-up production. Unveiling of First
prototype deliveries

CEO Elon Musk will exercice his outstanding stock options (5.5m shares) Initial Project
and is expected to sell 2.8m of his own shares, mainly to pay taxes related launch date
to exercising vested stock options. After the SolarCity acquisition by Tesla
(which has been delayed due to challenges from minority shareholders),
this move seems to challenge investors and the financial world ”limits”. To date, Musk has never met any past production targets. The new 2018
Some question whether this is a bold move to dominate the EV market forecast, like the original 2020 deadline, appears unrealistic. However,
and build the future of energy worldwide or simply a step too far. something odd happened the day after Musk moved the goalposts; even as
Tesla's stock declined, analysts and car enthusiasts almost universally
moved their own estimates for Tesla unit sales higher.

Ability to reach economy of scale: from 60k to 500k cars In the same report in which J Spak from RBC Capital Market warned of “the
Disruption and ability to “think out of the box” can revolutionise but can it risk to new investment” and maintained a neutral rating on the stock, he nearly
also enable an EV factory that struggles to produce 80k cars in Y16 to doubled his forecast for Tesla's 2020 sales, to 620,000. That is higher than
reach 500k cars 24 months later? Musk's old target—the one most people considered impossible.

OLMA NEXT LTD OCTOBER 2016 12

TESLA COMPANY REVIEW
6/7 MARKET, ASSETS & PRODUCTS : BATTERIES

Batteries

Tesla´s central competitive advantage is the low cost of its battery

pack. This has allowed the company to sell its models at a reasonable
price but with a near-normal 300-mile range, a combination other EVs
have yet to match.

This competitive advantage comes from Tesla’s ability to use

commoditised small cylindrical lithium cells (used in consumer electronics)
via proprietary thermal/power management, versus prismatic “pouch”
cells. “The Gigafactory is designed to reduce cell costs much faster than the
status quo and, by 2018, produce more lithium ion batteries
Taking all three battery characteristics into account (cost per kilowatt hour, annually than were produced worldwide in 2013. By the end of the
specific energy and battery system efficiency), Ark Group estimates that first year of volume production of our mass market vehicle, we expect the
the cost cross-over point between a 200-mile range EV using pouch cells
Gigafactory will have driven down the per kWh cost of our battery
and one using cylindrical cells will occur in the early 2020s. Consequently,
all other things being equal, Tesla should enjoy a five-year competitive pack by more than 30 percent.”
advantage before competing battery technology catches up. This TESLA CORPORATE - FEB 2014
advantage is further reinforced through Tesla’s partnership with
Panasonic, one of the top historical Li-ion battery producers.
WORLDWIDE LI-ION BATTERY PRODUCTION WILL TRIPLE BY 2020
In the rising EV market, developing a battery maker next to the car
producing core business is a very strong competitive advantage. This
simply makes good sense for Tesla considering the huge 2018 battery 7 GWh 35 GWh 15 GWh 20 GWh 10 GWh
volume required for the 500,000 Model 3 production goal. GWh

In addition to the ”Gigafactory” project, several other ”super factories”

100
have started in anticipation of a Li-ion battery market that needs to more
than triple by 2020.

Gigafactory key figures:

Cost: $5b 50
Factory building completion to date: 14%
2018 vehicle batteries production goal: 500,000 batteries
CURRENT DEMAND

2012 2014 2016 2018 2020

OLMA NEXT LTD OCTOBER 2016 13

TESLA COMPANY REVIEW
7/7 MARKET, ASSETS & PRODUCTS : PHOTOVOLTAIC CELLS

Solar Roofs “Despite the falling share prices and rising leverage, residential solar
has tremendous growth potential. Total US installations are expected
Deutsche Bank predicted in early 2015 that solar systems will be at grid
to reach 13.1 gigawatts by the end of 2018, more than double the
parity with up to 80 per cent of the global market within 2 years. It
amount now”
also says that the collapse in the oil price will do little to slow down the
solar juggernaut. BLOOMBERG NEW ENERGY FINANCE - JUNE 2016

SolarCity, with more than 2.1 gigawatts of systems in operation, has

pioneered the residential lease of solar panels, which has helped make $/Watt
PV CELL PRICE GigaWatt
residential roof-tops the fastest-growing segment of the US renewables VS
industry. PV ENERGY CAPACITY
80 250
However, PV roof installation companies struggle to find a workable
business model: installation costs are high. Reaching the 55-cents-per-
watt cost is essential to ensure that the cost structure can survive the
projected withdrawal of the ITC (Federal Investment Tax Credit). Several Price of 200
Global
companies are already bankrupt from trying to reach that limit. 60
crystalline
Solar
silicon
Energy
In recent months, SolarCity has shifted its strategy to focus less on rapid photovoltaic
Capacity 150
growth and more on finding the most profitable customers. This is where cells
synergies with Tesla’s customer base and 200+ unique branded
stores with their ”internet only” buying process1 can be a huge
competitive advantage for SolarCity. 40
100

Tesla also hopes to use SolarCity’s advanced technology2 to be the first

carmaker to offer high efficiency solar roofs on its cars. The company
PV panels have achieved 22% efficiency, the highest in the market to date. 50
20

SolarCity key figures:

1977 1990 2000 2013
Cost of acquisition for Tesla Motors: $2.6b
Factory debt to date: $3.25b ($1.23b due by end of 2017)
1
Recourse debt to date: $1.6b In the US, 48 of the 50 States have laws that limit or ban manufacturers from selling
vehicles directly to consumers. Tesla is the only carmaker doing so.
2 In 2014, SolarCity acquired Silevo in a $200 million transaction (with an additional $150

million in performance based earn-outs) for its high-efficiency Triex technology.

OLMA NEXT LTD OCTOBER 2016 14

TESLA COMPANY REVIEW
PORTER’S 5 FORCES ANALYSIS (COMPETITION LEVELS)
POTENTIAL ENTRANTS

THREAT: LOW

The EV industry has high entry barriers:

• large amount of capital investment
• specific set of skills and technologies
• long product development cycle
• state support for existing national manufacturers
• brand building (reputation)
SUPPLIERS China is expected to become the world’s largest EV market in 20202. This BUYERS
will attract new entrants and therefore raise the risk that new players come THREAT: MODERATE TO HIGH
THREAT: MODERATE TO LOW
into the market.
The EV industry requires 3 types of suppliers, To date: Due to the lack of quality offers in the
depending upon the products supplied: INDUSTRY COMPETITORS EV segment, consumer buying power seems
1. Similar to ICE industry (interior and body): relatively low. However, there is an opportunity
They work with a low number of customers COMPETITION: MODERATE TO HIGH to choose a substitute (PHEV).
which means dependency and bargaining
disadvantage Premium cars: Competition is very modest (very few models). The design In 2-5 years time: There are 40+ EV models
2. Raw materials Limited differentiation and and production cycle is long (5-6 years). expected for 2020. Tesla and BMW's own
price sensitivity of the end consumer means a Mass-market (Model 3): Chevrolet Volt is the real challenger and already on charger networks provide a strong competitive
bargaining disadvantage even if raw material sale. Several other carmakers have announced model releases for 2020. advantage. The Tesla brand image as a
prices fluctuate Chinese market: Seen as of high strategic importance, China is the world’s “premium 100% EV manufacturer” is a strong
3. Specific EV industry products: Tesla is current largest automobile market and expected largest EV market by 2020. competitive advantage.
very reliant on its suppliers. Any issue with Domestic Chinese companies are also expected to continue to evolve and China has the biggest market potential and is
delivery will have an impact on production. But therefore further increase competition. expected to have the largest car market in
it manages a strong partnership and in-house volume in 2020. German brands are already
production for every strategic component very strong with 80% of market share for the
SUBSTITUTES premium car segment.
(powertrain, chassis, battery pack).
THREAT: MODERATE

There are 3 types of potential substitutes:

1. ICE: ICE industry is still dominant, but customers are becoming more
environmentally cautious, EV cost could reach ICE cost by 2022.
2. HEV and PHEV: Have a lower level of environmental appeal than EVs.
They still require investment in technology and infrastructure in order to be
successful and reach a broad market.
3. Other transportation modes: Walking, cycling, public transportation:
none of these offer the convenience and flexibility of a car = not a direct
substitute.
OLMA NEXT LTD OCTOBER 2016 15
TESLA COMPANY REVIEW
SWOT ANALYSIS

STRENGTHS OPPORTUNITIES

Product: With the Model S, Tesla has created and dominates the market Cash: Interest rates are currently low.
for luxury, long-range electric vehicles.
EV market: It remains a blue ocean for the next 2-3 years. The
Production: Tesla’s vertically integrated value chain allows for cost competition has only just launched its ”real Tesla challenger” EV
reduction and quality control. It has the ability to maintain a high rate of development. Chevrolet is the most advanced with the Volt.
innovation.

L
Oil and gas: Prices will increase.
L

Brand: IT x luxury brand recognition = highest goodwill in the market as a

State policy: There are strong assistance programs for EV and PV and
carmaker.

A
stricter emissions policies.
A

Partnership: Tesla has strong partnerships with Toyota and Daimler. It is

Trend: The public is more and more receptive to environmental issues.
building the Gigafactory in partnership with Panasonic (a highly effective
strategic partner to stay at the top of the battery field)

N
N

Batteries: In-house production (Gigafactory), with proprietary form factor

and technology make Tesla’s battery pack the most efficient.

R
R

WEAKNESSES THREATS
Cash: Tesla Motors still needs significant funds to complete the “Musk Competition: All traditional carmakers have made the shift and plan to

E
E

Master Plan”: OPEX increase, with poor return on invested capital and invest significantly to fill the gap.
equity (dilution through recurrent fundraising) and high long-term
liquidity risk. Combustion engine: It still enjoys significant influence (performance/

T
consumption/pollution) and the average car turnover timeframe is 11
T

Production: It lacks the scale of operation to go mass market with the years for owners. Oil prices are expected to remain low in the short
Model 3 and the ability to downsize costs. term.

X
Innovation: R&D cost must stay very high to stay ahead of Infrastructure: Limited for EV support. There may be compatibility
N

competition in the battery field. Traditional carmakers are raising their issues regarding charging networks.
expectations and budget for the EV market.

E
State policy: The EV business model depends on state incentive
I

Dispersion: The recent purchase of SolarCity is not closely linked to programs that will decrease with market growth.
the car sector (in the short term) and will be a time/money consumer.
Battery: There are lithium supply constraints.

OLMA NEXT LTD OCTOBER 2016 16

TESLA COMPANY REVIEW
PESTEL ANALYSIS

POLITICAL ECONOMIC SOCIAL

+ Government incentives for EV + Decreasing battery costs + Increasing popularity of low-carbon lifestyles
+ Expanding free trade agreements + Decreasing renewable energy costs + Increasing preference for renewable energy
+ Political stability in the majority of major - Threat of economic stability issues + Improving wealth distribution in developing
markets markets

Due to its near zero carbon emission Battery costs are still 1/5 of the total car cost. These external factors improve market demand
performance, Tesla Motors has an opportunity to The continued decrease of renewable energy for the company’s electric vehicles and related
strengthen its financial performance through costs makes Tesla products more attractive products.
incentives from gover nments. Free trade supplementing business improvement due to
agreements open opportunities for Tesla to increased popularity of renewable energy
expand its operations internationally. Political solutions. However, economic stability issues
stability of major markets makes the remote or threaten the company’s financial performance,
macro-environment favourable to the company’s especially in Europe and Asia
market penetration strategies.
The exception is China, which plays by its own
rules to push local EV makers like BYD.

ENVIRONMENTAL TECHNOLOGICAL DEVELOPMENT LEGAL

+ Climate change +/- High rate of technological change +/- Dealer sales regulation in the USA
+ Expanding environmental programs + Increasing automation in business + Expanding international patent protection
+ Rising standards for waste disposal + Increasing popularity of online mobile + Energy consumption regulations
systems

The high rate of technological change presents an Tesla “direct sales” are allowed in many countries,
opportunity for Tesla to enhance its product but are not allowed in several US states, some of
technologies. Its position as an electricity, battery which are currently suing Tesla. Tesla’s patent
and car producer give it a huge competitive release should boost other companies entering
advantage. However, this external factor also the EV market. In addition, the company has the
threatens the company due to the potential for opportunity to promote its electric vehicles,
rapid obsolescence of technologies used in its based on energy consumption regulations that
products. Thus Tesla will need to employ a customer organisations must follow.
significant R&D budget.

OLMA NEXT LTD OCTOBER 2016 17

TESLA COMPANY REVIEW
Q&A
THE AMOUNT OF OIL DISPLACED BY ELECTRIC CARS
WHAT ABOUT THE OIL LOBBY’S STANCE DEPENDS ON WHEN VEHICLE SALES TAKE OFF.
REGARDING EV MARKET ? BELOW ARE 3 SCENARIOS FOR RISING EV SALES.
Millions of
Transportation used 70% of US oil production, 65% of which is barrels of oil 60% growth p.a. 45% growth 30% growth p.a. Forecasted
per day Current rate of adoption p.a. BNEF Forecast crash
used by cars. This means that 45.5% of US oil production is being
used for cars. 6

5
As can be seen from looking at carmaker announcements, after
years of denial regarding HEV and EV, they have agreed it is not With a continued EV adoption rate of 60%, electric
4
sustainable to delay investments in EV, unless they deliberately vehicles could displace oil demand of 2m barrels a
day as early as 2023. This would create an oil glut
wish to loose market share and money. 3 equivalent to the trigger of the 2014 oil crisis.

The “full electric” model has to be considered as the most probable 2

for the next decade.
1

By 2022, electric vehicles will cost the same as 2016 2018e 2020e 2022e 2024e
their internal-combustion counterparts. The Bloomberg New Energy Finance (BNEF) forecast of 30% CAGR for the coming years
seems less aggressive than simply taking into account current EV adoption rate (60%). Using
this forecast the oil-crash benchmark of 2m barrels per day would be crossed in 2028.

“ The oil markets are going through fundamental structural changes driven by a
technological revolution and geopolitical shifts and the business model that has
worked for the last quarter-century is broken.
[…]
The Chatham House Think Tank report offers two unappealing options for today’s oil
majors: “managing a gentle decline by downsizing or risking a rapid collapse by trying to
carry on business as usual.”
Of course, there is another option: the oil and gas companies could become energy
companies, focusing on new technologies, decentralized energy systems and
providing clean energy. Shell is gesturing in that direction by investing $1.7 billion in “
clean-energy projects. Considering that is about 5 percent of the $30 billion or so the
company invests in oil and gas every year, it is probably too little and too late.
www.technologyreview.com

OLMA NEXT LTD OCTOBER 2016 18

TESLA COMPANY REVIEW
Q&A
RELEVANT ASPECTS OF VEHICLE PERFORMANCE FOR BATTERY-
WHAT ABOUT HYDROGEN FUEL CELLS ELECTRIC VEHICLES (BEV) AND HYDROGEN FUEL-CELL VEHICLES (FCV)
COMPARED TO ELECTRIC BATTERIES ?
ASPECT CURRENT ICE BATTERY-ELECTRIC FUEL-CELL
Hydrogen-fueled vehicles were a good alternative to
electric vehicles due to their ability to refuel more
Fuel type Gasoline Electricity Hydrogen
quickly and overall better cell efficiency. Hydrogen
can be generated using oil and gas or, even better, Vehicle models available1 287 13 3
using wind power, solar power or any other source of
electricity that happens to be available (providing Average fuel economy1 23.3 mpg 105.2 mpge 58.5 mpge
ultimate flexibility). Fuel economy range1 12-50 mpg 84-119 mpge 50-67 mpge
But 3 factors will probably cause the hydrogen fuel
cell to loose the battle: Effective cost per mile $0.10 $0.04 $0.09
1. Hydrogen is not a source of energy; it is only a Well-to-wheels GHG emissions (g/mi)2 356-409 214 260-364
carrier of energy. Delivery of hydrogen, whether by
truck or pipeline, requires energy costs that are Well-to-wheels total petroleum usage (Btu/mi)2 3791-4359 54 27-67
several times those for established energy carriers
Driving range (average)1 418 mi 110 mi 289 mi
like natural gas or gasoline. Even the most efficient
fuel cells cannot recover these losses. Driving range (min-max)1 348-680 mi 62-257 mi 265-312 mi

2. Storage: Hydrogen’s low density and extremely Time to refuel 20-30 min (DC level 2)
~5 min 5-30 min
3.5-12 hr (AC Level 2)
low boiling point increase the energy cost of
compression or liquefaction, investment costs of Security: High voltage No Yes Yes
storage and evaporation due to security wastage.
Security: High pressure No No Yes
Energy input outweighs the energy delivered by a
factor of three to four. Availability of qualified mechanics Yes Limited Limited

3. Charging infrastructures: Most of the fuel-cell Availability of qualified emergency responders Yes Yes Limited
infrastructure that exists is limited to the Los Angeles
Lower than
and San Francisco Bay areas. Construction costs for Lower than
gasoline. High-
a hydrogen refuelling station are several times a gasoline. Possible
pressure tanks
Vehicle maintenance issues3 - battery replacement
traditional gasoline station. may require
required during
inspection and
vehicle lifetime
maintenance.
best worst
1 Model year 2016 (EPA, 2015a)
2 GREET 2015 release, using default setting for model year 2015 passenger cars (ANL, 2015)
3 AFDC (2014)

OLMA NEXT LTD OCTOBER 2016 19

TESLA COMPANY REVIEW
Q&A

DID TESLA REALLY HAVE TO BUILD AND FINANCE

ITS OWN SUPERCHARGER INFRASTRUCTURE?

Tesla is not just building and selling electric vehicles; the Tesla strategy
requires to provide consumers with the means to shift from ICE vehicles
to electric vehicles.

To achieve this major change in consumer behaviour, Elon Musk

anticipated that a mass-market shift to battery-powered cars faced 4
great obstacles:
limited battery range;
long battery charging time;
lack of a network of charging stations; and
battery pack lifetime and replacement cost.

Tesla was the first EV manufacturer to bring a tangible solution to the

market with a 200+ mile range battery and the first to build charging SUPERCHARGING CORRIDORS
clusters around major markets. Tesla then methodically extended the TESLA PLANS TO ENABLE IN 2016
network to make it possible to make a cross country trip. With a charging
time of 30 minutes and a range of 170 miles, Tesla had the world’s fastest
charging station.

Charger infrastructure is a crucial part of the user experience and Tesla’s

control over it gives a strong competitive advantage. This control means
that the network can be upgraded as battery capacity evolves and Tesla
can expand the network on its own terms.

Tesla cannot rely on third-party suppliers for the charger network since
the industry is mired in a standards battle. It pits two other systems
against Tesla’s: CHAdeMO, notably used by the Nissan Leaf, and SAE
CCS, which is used by BMW and Volkswagen.

Finally, it is no secret that the Phase 3 of Elon Musk’s “Master Plan” relies
upon its recent SolarCity acquisition. SolarCity will enable the use of PV
cells for individual solar roofs and significantly lower supercharger
dependence upon the grid.

OLMA NEXT LTD OCTOBER 2016 20

TESLA COMPANY REVIEW
Q&A

ARE ELECTRIC BATTERIES LIKE LIFE CYCLE GLOBAL WARMING EMISSIONS FROM THE
TESLA’S 100% EMISSION FREE? MANUFACTURING AND OPERATION OF GASOLINE AND EVs

Assumptions that EVs are pollution and CO2 free are myths that
have to be debunked. It is a proven fact that Tesla cars generate Life Cycle of
pollution during their 3 life stages: manufacturing, operation and Global Warming Emissions
end-of-life. (grams of CO2/mile)

600
The manufacture of an electric vehicle generates more carbon
emissions than building a conventional car due to the high
consumption of energy and material required for producing 500
batteries. 53%
DECREASE
EVs generate pollution, whether powered from the electrical grid, 400
by electricity generated from natural gas or by solar panels that 51%
need rare materials and energy for manufacture. Even when DECREASE
electricity used for EV operation is generated from coal, all 300
studies come to the conclusion that over an entire lifetime,
an EV generates on average half of the pollution of an ICE
200
equivalent.

In their 2015 study “Cleaner Cars from Cradle to Grave”, the Union 100
of Concerned Scientists (UCS) carried out a rigorous assessment
of the carbon footprint of Tesla cars and other electric vehicles
versus internal combustion vehicles including hybrids. They found
that the manufacturing of a full-sized Tesla Model S rear-wheel Midsize Midsize Full-size Full-size
drive car with an 85 KWH battery was equivalent to a full-sized Gazoline 84-mile Gazoline 265-mile
Car BEV Car BEV
ICE1 car except for the battery. This adds 15% (or one metric ton)
of CO2 emissions to the total manufacturing outlay. However, Battery manufacturing Operation
Tesla’s battery recycling process with Umicore is able to save at
Vehicle manufacturing
least 70% on CO2 emissions due to the recovery and refining of the
battery’s valuable metals.
Note: UCS assume that midsize vehicles are driven 135,000 miles over their lifetimes and full-size vehicles
179,000 miles. The difference in the two mileages derives from dissimilar uses of 84-mile-range and 256-
mile-range battery-electric cars. UCS further assumes that a consumer buying a BEV would drive it the
same total of miles as a corresponding gasoline vehicle. UCS use the US average electricity grid emissions
intensity during vehicle operation which are based on a sales-weighted average of where EVs are being
sold today.

OLMA NEXT LTD OCTOBER 2016 21

TESLA COMPANY REVIEW
Q&A

DOES TESLA’S BUSINESS MODEL RELY ON

GOVERNMENT SUBSIDIES? ““This very important [International Monetary Fund] analysis shatters the myth
that fossil fuels are cheap by showing just how huge their real costs are. There
On 30 May 2015, Jerry Hirsch wrote an article in the Los Angeles Times is no justification for these enormous subsidies for fossil fuels, which
claiming that Elon Musk companies, “Tesla Motors Inc, SolarCity Corp distort markets and damage economies, particularly in poorer countries.””
and Space Exploration Technologies Corp, known as SpaceX, together
NICHOLAS STERN - CLIMATE ECONOMIST AT THE LONDON SCHOOL OF ECONOMICS
have benefited from an estimated $4.9 billion in Government support.”
This was the peak of the ever-growing rumours about benefiting from
state and government subsidies for his businesses.

Musk immediately responded through an interview with the LA Times The Tesla subsidy affair had an unexpected associated effect: the
journalist. Several articles revealed details of each subsidy Musk's controversy revealed shocking figures about who was really taking
companies have received and their underlying obligations. significant amounts from the system.
It has been revealed that:
Most of this subsidies are not direct cash: The figure compiled As stated in the Guardian for example: “Fossil fuel companies worldwide
by the LA Times included a variety of government incentives are benefitting from global subsidies of $5.3tn a year, equivalent to $10m a
including grants, tax breaks, factory construction, discounted minute every day, according to a startling new estimate by the International
loans and environmental credits that Tesla can sell. It also includes Monetary Fund. The IMF calls the revelation ‘shocking’ and says the figure
tax credits and rebates to buyers of solar panels and electric cars. is an ‘extremely robust’ estimate of the true cost of fossil fuels. The $5.3tn
Some of the incentives do not come from tax payers: The subsidy estimated for 2015 is greater than the total health spending of all
ZEV credit (zero emission vehicle) in California was created the world’s governments.”
decades ago before Tesla was launched and was paid by other
car manufacturers. The IMF figure represents 6.5% of global GDP. Just over half the figure is
Most of the incentives were not Tesla creations. Thus it is the money governments are forced to spend to treat victims of air pollution
considered proper management to take advantage of them just and income lost because of ill health and premature deaths. This is a stark
like every other competitor does. They include Department of contrast to the $120bn subsidies available for renewable energy every
Energy loans, federal income tax credits and rebates for eligible year.
US buyers of electric vehicles, the California Self-Generation
Incentive Program, the California job training reimbursement and However, the problem is complex as Tim Wortsall explained in a Forbes
Oregon tax credits and rebates. article published on 14 November 2014: “It is largely poor and/or fossil fuel
producing countries subsidising fossil fuels. It is largely the rich world
Most of the government or state incentives come with onerous subsidising renewables. Meaning that abolishing those subsidies for oil
reciprocal obligations: and gas isn’t really something that’s in the control of us people in that rich
Job creation (>10,000) world.”
Spending milestones
Potential penalties in case of payment delay or failure

OLMA NEXT LTD OCTOBER 2016 22

TESLA COMPANY REVIEW
FIGURES: TESLA FINANCIAL STATEMENTS

TESLA MOTORS INC TESLA MOTORS INC

(TSLA)
IPO on 29 June 2010 on NASDAQ
$m 2015 2014 2013
Founded Sector
INCOME STATEMENT 01/01/2003 Technology

Revenues 4046.02 3198.35 2013.49 Employees Fiscal Year Ends

31,557 31 December
Gross Profit 923.5 881.67 456.26 Adress
3500 Deer Creek Road
Pretax Income (875.62) (284.63) (71.42) Palo Alto, CA 94304-1317
United States of America
Net Profit/(Loss) (888.66) (294.04) (74.01)
Website
www.teslamotors.com
EPS Basic Net (6.93) (2.36) (0.62)
$
200%
EPS Diluted Net (6.93) (2.36) (0.62) 4000

Total operating expense 4762.65 3385.04 2074.76 100% 3000

Operating income (716.62) (186.68) (61.28) 2000

0%
1000
BALANCE SHEET -100%
0
Total Current Assets 2791.56 3198.65 1265.93
-200% -1000
Total Assets 8092.46 5849.25 2416.93 2012 2013 2014 2015

Total Liabilities 7003.51 4937.54 1749.81 Revenues

Net Sales Or Revenues
Net Profit/(Loss)
Net Income $
Shareholders Equity 1088.94 911.71 667.12 200%
4000

3200
100%
CASH FLOW STATEMENT 2400
Net Income (888.66) (294.04) (74.01) 0% 1600

Net Cash From Operating Activities (524.49) (57.33) 257.99 800

-100%

Net Cash From Investment Activities (1,673.55) (990.44) (249.41) 0

-200% -800
Net Cash From Financing Activities 1,523.52 2,143.13 635.42 2012 2013 2014 2015

Net Change In Cash And Cash Equivalents (708.8) 1,059.82 643.99 Revenues
Net Sales Or Revenues
Operating income
Operating income

OLMA NEXT LTD OCTOBER 2016 23

TESLA COMPANY REVIEW
FIGURES: TESLA SHAREHOLDERS, FUNDING ROUNDS, M&A DEALS

Funding Rounds (14): $2.37b

Top 10 institutional shareholders
AMOUNT LEAD NUMBER OF
DATE
/ ROUND INVESTOR INVESTORS
SHAREHOLDERS Nº OF SHARES % HELD
May, 2016 $1.46b / Post IPO Equity — 5
FMR, LLC 20.74m 13.95%
Oct, 2012 $10m / Grant California Energy Commission 1
Baillie Gifford & Company 13.07m 8.79%
Nov, 2010 $30m / Post IPO Equity Panasonic 1
Price T. Rowe Associates, Inc. 10.51m 7.07%
May, 2010 $50m / Post IPO Equity Toyota 1

The Vanguard Group, Inc. 4.89m 3.29% Sep, 2009 $82.5m / Series F Al Wahada Capital Investment 4

Bank of Montreal, Canada 4.87m 3.28% Jun, 2009 $465m / Debt Financing US Department of Energy 1

Morgan Stanley Investment Management, Inc. 3.91m 2.63% May, 2009 $50m / Series E Daimler 2

Jennison Associates LLC 3.09m 2.08% Nov, 2008 $40m / Debt Financing Elon Musk 5

May, 2008 $40.17m / Debt Financing Elon Musk 5

BlackRock Institutional Trust Company 2.70m 1.81%
Feb, 2008 $40m / Series E Elon Musk 8
Capital World Investors 2.51m 1.69%
Elon Musk
May, 2007 $45m / Series D 10
Technology Venture Partners US
State Street Corp. 1.97m 1.32%
Elon Musk
May, 2006 $40m / Series C 11
VantagePoint Capital Partners
Elon Musk
Feb, 2005 $13m / Series B 3
Valor Equity Partners

Apr, 2004 $7.5m / Series A Elon Musk 2

Mergers & acquisitions (2)

DATE ACQUIRED CONSIDERATION
45.91%
45,07% Please note that Elon Musk
holds approximately 22% of
Per cent of shares Jun 22, 2016 SolarCity (subject to completion) $2.6b in Tesla shares
Tesla’s share capital
held by top 10 holders
May 8, 2015 Riviera Tool Unknown

Data as of 30 June 2016

OLMA NEXT LTD OCTOBER 2016 24

 TESLA COMPANY REVIEW
FIGURES: TESLA STOCK
$ per share
300
Tesla Motors Inc (TSLA) - NasdaqGS
250

200

150

100

50

Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul
2013 2014 2015 2016

Equity & Debt Situation Trailing Stock Performance

TSLA Auto
Car Manufacturers
Manufacturers S&P 500 TR USD
$2.52b 21% $677m  60%

Equity Debt

79%
 30%

Key Statistics and Ratios  0%

Q2 (JUN '16) 2015

Net profit margin -23.09% -21.96%

-17.71% - 30%
Operating margin -18.74% TOTAL RETURN
-7.27% (%) 1-MONTH 3-MONTH 6-MONTH YTD 1-YEAR 3-YEAR 5-YEAR 10-YEAR 15-YEAR
EBITDA margin - 31/08/2016

Return on average -11.17% -12.79% TSLA -9.70 -5.03 10.46 -11.67 -14.88 7.85 53.67
Return on average -67.38% -89.07%
Auto Man. 5.20 8.77 16.17 -2.21 3.03 0.93 10.06 3.23 5.38

— - S&P 500 0.14 4.10 13.60 7.82 12.55 12.30 14.69 7.51 6.55

OLMA NEXT LTD OCTOBER 2016 25

TESLA COMPANY REVIEW
FIGURES: SOLARCITY FINANCIAL STATEMENTS

SOLARCITY CORP INC SOLARCITY CORP INC

(SCTY)
$m 2015 2014 2013 IPO on 13 Dec 2012 on NASDAQ

Founded Sector
INCOME STATEMENT 04/07/2006 Utilities

Revenues 399.61 255.03 163.83 Employees Fiscal Year Ends

15,2731 31 December
Gross Profit 118.82 78.59 39.36 Adress
3055 Clearview Way
Pretax Income (765.49) (401.96) (176.55) San Mateo, 94402
United States of America
Net Proft/(Loss) (58.33) (56.03) (55.79)
Website
http://www.solarcity.com
EPS Basic Net (0.6) (0.6) (0.7)
$
200% 400
EPS Diluted Net (0.6) (0.6) (0.7)

Total operating expense 1047.4 590.62 313.2 100% 200

Operating income (647.79) (335.59) (149.37)

0% 0

BALANCE SHEET -100% -200

Total Current Assets 902.13 1,002.39 787.66
-200% -400
Total Assets 7,287.11 4,586.21 2,809.53 2012 2013 2014 2015

Total Liabilities 5,873.49 3,430.62 2,005.11 Revenues

Net Sales Or Revenues Net Income
Net Profit/(Loss)
Profitmargin
Profit margin
$
Shareholders Equity 1,413.62 1,155.58 804.41 200% 700

100% 350
CASH FLOW STATEMENT
Net Income (768.82) (375.23) (151.75)
0% 0
Net Cash From Operating Activities (789.88) (217.84) 174.51
-100% -350
Net Cash From Investment Activities (1,726.73) (1,344.81) (729.89)
-200% -700
Net Cash From Financing Activities 2,394.77 1,489.96 972.38 2012 2013 2014 2015

Net Change In Cash And Cash Equivalents (121.83) (72.69) 417 Revenues
Net Sales Or Revenues Operatingincome
Operating Income
Profit margin
Operating margin

1 12/31/2015
OLMA NEXT LTD OCTOBER 2016 26
TESLA COMPANY REVIEW
FIGURES: SOLARCITY SHAREHOLDERS, FUNDING ROUNDS, M&A DEALS
Funding Rounds (19): $2.11b
Top 10 institutional shareholders DATE AMOUNT/ROUND LEAD INVESTOR TOTAL

Sep, 2016 $305m / Post IPO Equity — 0

SHAREHOLDERS Nº OF SHARES % HELD Jul, 2016 $345m / Post IPO Debt — 0
Bank of America Merrill Lynch
FMR, LLC 11.65m 11.62% Apr, 2016 $338m / Post IPO Equity Credit Suisse 2
Nov, 2015 $113m / Post IPO Equity — 2
Bank of Montreal, Canada 5.28m 5.26% —
Jun, 2013 $201m / Post IPO Debt 0

The Vanguard Group, Inc. 4.42m 4.40% Jun, 2012 $250m / Private Equity U.S. Bancorp 1
Jun, 2012 $6.74m / 2nd Market Firsthand Technology Value Fund 1
Public Sector Pension Investment Board 1.87m 1.87% Silver Lake Kraftwerk
Feb, 2012 $81m / Series G Valor Equity Partners 5

BlackRock Institutional Trust Company 1.48m 1.48% Dec, 2011 undisclosed /2nd Market 137 Ventures 1
Jul, 2011 $20m / Series F — 5
Morgan Stanley Investment Management, Inc. 1.47m 1.47%
Jun, 2011 $280m / Undisclosed Google 1
Deutsche Bank AG 1.41m 1.40% Jul, 2010 $21.4m / Series E Mayfield Fund 4
Jan, 2010 $60m / Private Equity Pacific Gas and Electric (PG&E) 1
Founders Fund IV Management, LLC 0.99m 0.98%
Oct, 2009 $23.9m / Series E Generation Investment Management 2
Bank of America Corp. 0.93m 0.93% Oct, 2008 $29.9m / Series D First Solar 3
Aug, 2007 $21m / Series C — 0
BlackRock Fund Advisors 0.78m 0.78%
Apr, 2007 $3m / Series B — 0
Sep, 2006 $1m / Venture Elon Musk 4
Jul, 2006 $2.3m / Series A — 0

Mergers & acquisitions (7)

DATE ACQUIRED AMOUNT

Aug 5, 2015 ILIOSSON $10m in cash

Jun 17, 2014 Silevo $200m (terms undisclosed)
30.20%
30,99%! Please note that Elon Musk
holds approximately 22% of Oct 9, 2013 Zep Solar $158m in shares
Per cent of shares SolarCity’s share capital
held by top 10 holders Aug 13, 2013 Paramount Solar $120m (terms undisclosed)
May 12, 2010 Building Solutions Unknown
Sep 28, 2006 Palo Alto Solar Unknown
Data as of 30 June 2016 Sep 28, 2006 Declination Solar Unknown
OLMA NEXT LTD OCTOBER 2016 27
 TESLA COMPANY REVIEW
FIGURES: SOLARCITY STOCK
$ per share
90
SolarCity Corp Inc (SCTY) - NasdaqGS
80
70
60
50
40

30
20

Apr Jul Oct Apr Jul Oct Apr Jul Oct Apr Jul
2013 2014 2015 2016

Equity & Debt Situation Trailing Stock Performance

SCTY
$868m 22% Utilities - Independent Power Producers
 60%
Equity
$3.09b
78%
Debt  30%

 0%

Key Statistics and Ratios

- 30%
Q2 (JUN '16) 2015

Net profit margin -134.70% -192.39%

-162.10% - 60%
Operating margin -104.48% TOTAL RETURN
-120.40% (%) 1-MONTH 3-MONTH 6-MONTH YTD 1-YEAR 3-YEAR 5-YEAR 10-YEAR 15-YEAR
EBITDA margin - 31/08/2016

Return on average -12.41% -12.99% SCTY -22.62 -7.73 12.10 -59.51 -57.21 -12.97 0 0 0
Return on average -25.05% -7.18%
Utilities -5.65 -3.61 18.78 -1.25 -18.24 -9.42 -5.36 -2.35 3.32

- - S&P 500 0.14 4.10 13.60 7.82 12.55 12.30 14.69 7.51 6.55

OLMA NEXT LTD OCTOBER 2016 28

TESLA COMPANY REVIEW
CONCLUSIONS

As Steve Jobs did with Apple, Elon Musk plans to disrupt not only one, but
several industrial fields, in less than a decade. It is not an incongruous and
haphazard combination but an assumed strategy: quick, deep and perfect
vertical integration and synergies are essential to successfully disrupt
firmly rooted industries like fossil energy, utilities and ICE transportation.

Four major factors might make Tesla’s objectives difficult to meet:

the energy and utilities industries require heavy and costly local
industrial implantation, especially for production and charging
infrastructures
electric vehicle performance depends on component-extensive
synergies: therefore chassis, electric powertrain, battery cells and pack
conception and production have to be fully integrated
renewable energy/electric transportation still needs strong and
expensive R&D to increase efficiency ratios to be able to compete with
fossil energy based technology
market momentum is close: Tesla must speed up production and
development significantly and expect global and fierce competition

Unlike Apple, even if the anticipated products generate huge revenues, Tesla will
need vast financing to reach its goals based on current strategy. This
could trigger the mass dilutions which go with such financing. Tesla will
also need to deliver on its numerous proclaimed commitments.

OLMA NEXT LTD OCTOBER 2016 29

TESLA COMPANY REVIEW
SOURCES (1/2)
PAGE 2 https://cleantechnica.com/2016/08/17/10-solar-energy-facts-charts-everyone-know/
http://fortune.com/2016/06/22/elon-musk-merge-tesla-solarcity/
Icons: the nounproject - A.Zumahev, J.Fernandes, J.Wilson, J. Blake, misirlou, P. Rozenberg, E. Bolet, R. PAGE 15
Slater http://spherepress.com/tesla-motors-external-analysis-using-pestle-porters-5-analysis/
http://jtorres2015.wixsite.com/tesla-team5/porters-5-forces
PAGE 5 https://prezi.com/odfko5i1kaqp/tesla-and-porters-five-forces/
http://www.bloomberg.com/news/articles/2016-07-21/elon-musk-reveals-how-he-forecasts-tesla-s- http://studenttheses.cbs.dk/bitstream/handle/10417/4841/nicoline_eeg_praem.pdf?sequence=1
future http://www.autonews.com/article/20140528/OEM05/305299995/bmw-projects-china-will-become-
no.-1-ev-market-by-2019
PAGE 6 http://www.huffingtonpost.com/steven-cohen/the-growing-level-of-envi_b_6390054.html
http://www.bloomberg.com/features/2016-inside-tesla-gigafactory/ http://www.forbes.com/sites/ywang/2016/06/08/chinas-electric-car-market-in-danger-of-backfiring-
after-attracting-ragtag-crew-of-players/#3b02cf98399c
PAGE 7 http://www.sharpspixley.com/uploads/McKinseyPerspectiveonChinasautomarketin2020.pdf
https://en.wikipedia.org/wiki/NUMMI http://www.mckinseychina.com/wp-content/uploads/2013/04/McKinsey-China-Future-of-Chinas-
http://www.bloomberg.com/news/articles/2015-08-10/here-s-how-elon-musk-takes-tesla-to-500-000- Premium-Car-Market.pdf
cars-in-five-years http://www.pewresearch.org/key-data-points/environment-energy-2/
https://cleantechnica.com/2015/03/28/ev-demand-growing-global-market-hits-740000-units/ https://www.theguardian.com/environment/2016/feb/25/electric-cars-will-be-cheaper-than-
conventional-vehicles-by-2022
PAGE 9
http://www.statista.com/statistics/416750/number-of-electric-vehicle-charging-stations-outlets-united- PAGE 16
states/ http://studenttheses.cbs.dk/bitstream/handle/10417/4841/nicoline_eeg_praem.pdf?sequence=1
http://www.wsj.com/amp/articles/why-electric-cars-will-be-here-sooner-than-you-think-1472402674 http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Tesla_Motors,_Inc_.aspx
http://www.hybridcars.com/tesla-claims-to-have-worlds-fastest-charger-with-145-kilowatt- http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Tesla_Motors,_Inc_.aspx#.V9mBx5OLSHp
supercharger-rollout/ http://synergyfiles.com/2016/03/tesla-batterypack-optimization/
http://www.greencarreports.com/news/1102607_how-much-does-electric-car-range-cost-per-mile http://knoema.fr/infographics/yxptpab/crude-oil-price-forecast-long-term-2016-to-2025-data-and-
https://cleantechnica.com/2016/08/17/10-solar-energy-facts-charts-everyone-know/ charts
http://pubdocs.worldbank.org/en/677121461693540498/CMO-April-2016-Full-Report.pdf
PAGE 10 https://www.thebalance.com/oil-price-forecast-3306219
http://www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/ http://blog.alliance-renault-nissan.com/node/3164/
http://www.wsj.com/articles/daimler-sells-tesla-stake-for-780-million-1413926628 https://www.iea.org/publications/freepublications/publication/Global_EV_Outlook_2016.pdf

PAGE 11 PAGE 17
http://www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/ http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations
http://evobsession.com/us-electric-car-sales-14-highlights-august/
http://www.caranddriver.com/ PAGE 18
http://www.bloomberg.com/features/2016-ev-oil-crisis/
PAGE 12 https://www.technologyreview.com/s/601471/big-oil-companies-have-already-become-dinosaurs/
http://www.visualcapitalist.com/the-lithium-ion-megafactories-are-coming-chart/

PAGE 13
Bloomberg New Energy Finance
https://cleantechnica.com/2014/02/04/current-cost-solar-panels/

OLMA NEXT LTD OCTOBER 2016 30

TESLA COMPANY REVIEW
SOURCES (2/2)
PAGE 19 The content of this document has been researched and implemented with a high degree of
http://www.treehugger.com/cars/are-hydrogen-fuel-cell-cars-realistic-option-compared-battery-electric- care. However, the possibility of errors in the processing of sources acknowledgement and
vehicles.html copyright respect for external content use cannot be fully excluded.
http://uk.businessinsider.com/in-the-battle-between-electric-cars-and-fuel-cell-vehicles-we-currently- Please send any remarks or corrections to [email protected]
have-a-clear-winner-2016-2?r=US&IR=T
http://phys.org/news/2006-12-hydrogen-economy-doesnt.html

PAGE 20
https://electrek.co/2016/07/20/tesla-supercharger-capacity-increase-145-kw/
http://www.theverge.com/2015/1/22/7871657/bmw-volkswagen-chargepoint-fast-charging-electric-
vehicles
https://chargedevs.com/newswire/dc-fast-charging-maps-highlight-differences-between-tesla-and-
chademoccs-rollout-strategies/
https://chargedevs.com/newswire/elon-musk-tesla-is-in-talks-with-other-automakers-about-sharing-
the-supercharger-network/

PAGE 21
https://qph.is.quoracdn.net/main-qimg-3f0c0413ac0ed58f3c95352014ba35f6?convert_to_webp=true
https://chargedevs.com/newswire/new-union-of-concerned-scientists-report-ev-life-cycle-emissions-are-
half-that-of-an-average-gas-car/
http://www.ucsusa.org/sites/default/files/attach/2015/11/Cleaner-Cars-from-Cradle-to-Grave-full-
report.pdf
https://www.tesla.com/fr_FR/blog/teslas-closed-loop-battery-recycling-program?redirect=no
“Cleaner Cars from Cradle to Grave” study published by the Union of Concerned Scientists (UCS)

PAGE 22
https://www.theguardian.com/environment/2015/may/18/fossil-fuel-companies-getting-10m-a-
minute-in-subsidies-says-imf
https://electrek.co/2015/06/02/complete-breakdown-of-the-4-9-billion-in-government-support-the-la-
times-claims-elon-musks-companies-are-receiving/
http://www.worldenergyoutlook.org/resources/energysubsidies/
http://www.forbes.com/sites/timworstall/2014/11/12/as-the-iea-says-the-550-billion-a-year-subsidy-to-
fossil-fuels-restricts-renewables/#751d1b8f7ab1

PAGES 23-28
Financial Times, Morningstar, Google finance, Yahoo finance, Amigobulls, Nasdaq, Crunchbase, 4-
traders.com, CNN and Reuters

Pictures used in the document: Tesla Motors Inc

OLMA NEXT LTD OCTOBER 2016 31

TESLA COMPANY REVIEW
CONTACT DETAILS

Subscribe to OLMA Next’s free newsletter

to get access to Case Study Nº2

FREDERIC BONELLI
Researcher

[email protected]
+336 86 86 90 55

www.olmafund.com

All data and information provided on this document is for informational purposes only. Frédéric Bonelli makes no representations as to accuracy, completeness, currentness,
suitability, or validity of any information on this document and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages
arising from its display or use. All information is provided on an as-is basis.

OLMA NEXT LTD OCTOBER 2016 32