3. CEO: Elon Musk
} PayPal
} Founded in 1999 as X.com, a payment processor
} In October 2002, PayPal was acquired by eBay for US $1.5 bill
} SpaceX
} A space transportation company, develops and manufactures launch
vehicles and dragon spacecraft
} Musk is the current CEO and CTO
} SolarCity
} The largest provider of solar power systems in the US
} Musk is the largest shareholder and chairman of the board
} Recently filed for a $201 million IPO
ü “Elon Musk is 'Steve Jobs, John D. Rockefeller, and Howard Hughes
rolled into one” – Bloomberg Businessweek
ü Hyperloop
4. Products
} Tesla Roadster
} First ever federally-compliant electric vehicle
} Model S
} Sedan version in the electric platform
} Model X
} Crossover version in the electronic platform
} Development of electric powertrain components
} The components include battery pack, motor, gearbox, control software, and power
electronics
} Contracts to produce powertrains for Daimler AG (Mercedes Benz) and Toyota
7. Key Facts
} Backlog: Model S reservations sold out (8000 vehicles) in Q4 of
2011
} Saves about $2000 per year in fuel costs (pending gas prices)
} Short interest ratio is 49%
} Tesla Motors announces Super-Fast, Solar powered, FREE-FOR-LIFE
charge stations available across US, Canada, Europe and Asia within
2 years
} 400 cars per week in production
} 20,000 Model S cars total by 2013
} Miles per charge
} Model S- 300
} Roadster- 245
} Ford Focus- 76
} Nissan Leaf- 73
} ChevyVolt- 35
11. Investment Rationale – Fundamentals
} Tesla plans to be “cash flow positive” as early as next month, and profitable
by 2013
} Musk blogged the news after Mitt Romney referred toTesla as a loser
} Tesla will repay its $465 million fed gov loan earlier than expected
} Expenditures will fall off as the Model S starts to sell in high numbers in the
coming months
} Upon the successful launch of the Model S,Tesla is looking at 25% gross
margin which is considered very high compared to other car
manufacturers.
} Toyota ~ 13.17%
} Ford ~ 13.47%
} GM ~ 12.42%
} Expected Operating Margin ~ Low-Mid teens %
} Elon Musk inspects each vehicle ready for delivery individually
} “Every Model S needs to be exactly right, and I am literally personally looking at
every car at this point.”
} When volume drastically increases, Elon will use random sampling to inspect
12. Investment Rationale – Musk’s Incentives
} Granted a package of options equivalent to 5% of Tesla's stock
on issue
} These options will be split into 10 tranches of roughly 510,000
shares each
} Combination of operational and market capitalization milestones
} One tranche will become "eligible" for vestment for every $4
billion increase in Tesla's market cap
} The 10 operational milestones are linked to meeting sales
targets for upcoming vehicles
} And achieving a gross margin greater than 30% for four
consecutive quarters
14. Potential Risks
} Disruptions in supply chain
} Consumers hesitant to buy into “green factor”
} Competitors accused Tesla of operating illegal showrooms
} Bad press/recalls could adversely affect reputation
} Top Gear: Roadster lawsuit
} Automakers operate in a capital intensive industry
} Highly competitive in terms of capturing market share
} Sustainability issues
} Tesla's stock collapsed 12 percent last month after it admitted it
was several weeks behind production schedule
