This presentation was prepared by executive MBA students at the University of Texas at Dallas. The purpose of the presentation as delivered in an academic setting is to shine light on Tesla, Inc.'s strategic position in the market relative to their corporate governance challenges with a set of specific recommendations.

1. 1
SuperNova Consulting
Erinn Marks, Chief Strategy Officer
Anil Bondalapati, Head of Industry Analytics
James Hawes, Chief Revenue Officer
Michael Irausquin, Chief Financial Officer
Dustin Sheffield, Chief Marketing Officer
Tesla Motors Strategic Analysis Presentation | October 2018

2. AGENDA
Evolution
Mission
External Environment
Internal Environment
Strategic Analysis
Recommendations
1
2
3
4
5
6

3. EVOLUTION
Elon Musk removed as
chairman; SEC fines
Tesla $40 million

4. Accelerating the world’s transition to sustainable energy
Generation | Storage | Transport
MISSION

5. EXTERNAL ENVIRONMENT
Accelerating the world transition to sustainable energyMarket Position
LuxuryEconomy
Electric
Hybrid
Gas
$ $$$$

6. EXTERNAL ENVIRONMENT
Porter’s 5
High Medium
Threat of
New
Entrants
Industry
Rivalry
Power of
Buyers
Power of
Suppliers
Threat of
Substitutes
Intensity Scale

7. 7
EXTERNAL ENVIRONMENT
CYCLICAL OIL
PRICES
GLOBAL
MANUFACTURING
& SUPPLY CHAIN
OPERATIONS
DIVERSIFICATION
INTO RENEWABLE
ENERGY SOURCES
PERSONALIZED
SOFTWARE
DEVELOPMENT FOR
THE USER EXPERIENCE
EXTENDED INVESTMENT
IN ENERGY STORAGE
TECHNOLOGIES CUSTOMER
ABANDONMENT
& SALES DOWNTURN
INTENSIFIED
COMPETITION
CASH SUPPLY
CUTOFF FROM
INVESTORS
ACCESS & PRICE
CONTROLS TO
ESSENTIAL HIGH RAW
MATERIALS (LITHIUM)
REDUCTION IN
AUTOPILOT
DEMAND &
SAFETY RISKS
WALL STREET
EXPECTATIONS

8. 8
INTERNAL ENVIRONMENT
ABILITY TO MEET
PRODUCTION
DEMAND
INNOVATION &
TECHNOLOGY
LEADER
HIGH
CONSISTENT
DEMAND FOR
PRODUCTS
QUALITY
PRODUCTION &
PROCESS
CONTROL
ENERGY EFFICIENT
ENVIORMENTAL
SOLUTIONS
INTEGRATED MANUFACTURING
(SOLAR, ELECTRIC,
BATTERY STORAGE)
INDUSTRY
DIFFERENTIATOR
POOR CASH FLOW
FROM OPERATIONS
(CFFO)
LIMITED
MANUFACTURING &
SUPPLY CHAIN
CONSTRAINTS
HIGH DEBT SERVICING
OBLIGATIONS
LABOR
SAFETY
STANDARDS
EXECUTIVE CHURN &
ORGANIZATIONAL
LEADERSHIP
UNCONTROLABLE
CORPORATE
GOVERNANCE & FUTURE
FEDERAL LAWSUITS
PRODUCT LINE EXTENSION
CAPABILITIES
(COMMERCIAL TRUCKS)

9. 9
COMPETITIVE ADVANTAGE
SEGMENT
SPECIFICINDUSTRYWIDE
COMPETITIVE DRIVERS: INNOVATION | PRODUCTION PROCESS CONTROL | RAPID PROBLEM SOLVING | RESILIENCE

10. 10
VALUE-CHAIN ANALYSIS
VERTICAL
INTEGRATION
DIGITAL SUPPLY
CHAIN
ROBOTIC
AUTOMATION
ADVANCED
PRODUCTION
PROCESSES
BUILT TO ORDER
ONLINE
RESERVATION
112 US
STOREFRONTS &
GALLERIES
29 COUNTRY-WIDE
DISTRIBUTION
SHOWROOMS
REFUNDABLE
ONLINE DEPOSIT
TEST DRIVE
EXPERIENCE
ONLINE
COMMUNITY
SUPERCHARGER
NETWORK STATIONS
29 COUNTRY-WIDE
SERVICE
OPERATIONS
BATTERY & DRIVE
UNIT WARRANTY
PRIMARY ACTIVITES
INBOUND
LOGISTICS
OPERATIONS OUTBOUND
LOGISTICS
SALES &
MARKETING
SERVICE
SUPPORTACTIVITIES
PROCUREMENT: SUPPLIER PARTNERSHIPS & ALLIANCES – DAIMLER AG | PANASONIC | TOYOTA MOTOR CORP
HUMAN RESOURCE MANAGEMENT: 6 PRINCIPLES TO INNOVATIVE PROBLEM SOLVING | START-UP MENTALITY
TECHNOLOGY DEVELOPMENT: LEADING EDGE ENGINEERING | LARGE R&D | RELENTELSS INNOVATION IN
ENERGY EFFICIENCIES
Margin
M
argin

11. 11
FINANCIAL RATIO ANALYSIS
20%
-20%
-40%
-60+%
248%
40%
60+%
Gross Margin Operating
Margin (TTM)
27.2%
20.6%
5.4%
-16.4% -17.54%
4.62%
ROI (TTM)
-62.91%
9.83%
ROE
(TTM)
-9.73%
2.57%
ROA (TTM) Total Debt to Equity (TTM)
170%
Tesla Auto Industry
• Above average gross margins
compared to industry
• Q2 SG&A Expenses ($1.1B)
led to OM & EBITD losses
• R&D: $386M + $750M in
other SG&A
• Growth mode as operational
costs exceed competition
• Negative Profitability Return
Ratios
• Investors remain steadfast
despite negative ROI
Key Takeaways

12. 12
FINANCIAL RATIO COMPARISONS – Q2 2018
• Tesla continues to project high growth potential
• Large cap company with $51B market cap
• Investor confidence remains strong in company’s
future business growth model
• $1.69B cash as of 08/20181
• Excessive cash depletion is evidenced to be
recurring as shown by the negative CFGR: -2.4%
vs the auto industry of 9.62%
• Balance Sheet reveals an increase in inventory
purchases ($800M) from Q1 to Q2 - 2018
Key Takeaways

13. 1313
COMMITMENT TO CORPORATE GOVERNANCE
STRATEGIC ANALYSIS
Diminished Corporate Governance
Lack of segregation of responsibilities and Board of Directors
Independence
Misguided Corporate Governance enforcement for Succession
Planning and Social Media Policy
Lack of Business Unit &
Supporting Functions in Leadership
Limited Executive Oversight for Business Units
Key Strategic Issues

14. 1414
STRATEGIC RECOMMENDATIONS
COMMITMENT TO CORPORATE GOVERNANCE
Objective: Strengthen Corporate Governance
based on Corporate Governance Guidelines II & III (see appendix)
Actions Criteria/Outcomes
• No previous business or personal ties to CEO Elon Musk
• Expertise & leadership experience in 2 or more industries;
preference in automotive
1. Add Four Independent Board Members
2. Separate duties between acting Chairman and CEO • Strengthens integrity of company’s leadership since the CEO
reports to the Chairman
• Avoids conflict of interest in the areas of compensation, corporate
governance and audit committee independence
3. Updated & enforce a strict social media policy • Compliant with Tesla Code of Business Ethics & Confidentiality
• Require training on social media usage for employees at all levels;
80% pass rate
4. Implement Management Succession Planning (MSP) • Biannual exercises for all employees, next level job planning
• Oversight from corporate governance committee
• Led by Chief Human Resources Officer – MSP Process & Board
Reporting

15. 1515
Expansion of C-Suite Positions
• COO – Chief Operations Officer
• Reports to CEO and leads/has:
• Supply Chain continuity and contracts
• Prior automotive industry leadership
• Production capacity, quality and inventory management
• Integration of AI and robotics into production
• CHRO – Chief Human Resources Officer
• Report to CEO and leads:
• Bi-annual succession planning exercise with accountability to identified preparation action plans
• Executive recruitment and retention
• Annual implementation of employee satisfaction survey with management feedback, action plans
and accountability to implement changes.
• Enforcement of Communication Policy including disciplinary actions
STRATEGIC RECOMMENDATIONS
COMMITMENT TO CORPORATE GOVERNANCE

16. 16
Tim Collins, Amazon SVP, WW Logistics
https://www.linkedin.com/in/tim-collins-013962/
Tim is responsible for transportation and delivery operations
worldwide. A member of the Amazon executive team for more than
16 years, Tim Collins joined the company as the general manager of
fulfillment in 1999.
Jeff Williams, Apple COO
https://www.apple.com/leadership/jeff-williams/
Since 2010 he has overseen Apple’s entire supply chain, service
and support, and the social responsibility initiatives which protect
more than one million workers worldwide. Jeff joined Apple in
1998 as head of worldwide procurement and in 2004 he was
named vice president of Operations.
Kenneth Waggers, XPO COO
https://www.linkedin.com/in/kenny-wagers-aa48125/
The company provides services for global logistics (contract
logistics, reverse logistics and engineered solutions), brokered
freight transportation (truck, intermodal rail, drayage and
expedite), truckload and less-than-truck load transportation, last
mile logistics, managed transportation and freight forwarding.
Elon Musk
CEO
Chairman
TBD
STRATEGIC RECOMMENDATIONS
COO Recommendations

17. 17
Denise Young Smith, VP Worldwide Human Resources, Apple
https://www.linkedin.com/in/soprano/
Denise is a seasoned Human Resources professional with two
decades of experience. She excels in talent acquisition and retention
and employee relations. Prior to Apple she worked for Byers portfolio
companies & Kleiner Perkins Caufield.
Andreas Neumann – Board Responsible for HR.
Boehringer Ingelheim GmbH
https://www.linkedin.com/in/andreas-neumann-3498b3122/
Responsible for Human Resources and member of the Board.
Served as a leader at General Electric
Karen Magee - EVP & CHRO, Time Warner Inc.
https://www.linkedin.com/in/karen-magee-4771679/
Karen oversees HCM directions at the company on a global scale
including compensation, leadership development, recruitment, and
diversity. She is the CHROs who has been a CEO for three years.
Prior to Time Warner, Karen served in a variety of roles at within the
company.
Elon Musk
CEO
Chairman
TBD
STRATEGIC RECOMMENDATIONS
CHRO Recommendations

18. We now
welcome your
questions, and
thank you for this
opportunity.
18
SuperNova Consulting

19. 19
Appendix

20. 20
REFERENCES
Mackintosh, James. “Is Tesla or Exxon More Sustainable? It Depends Whom You Ask.” The Wall Street Journal, Dow
Jones & Company, 17 Sept. 2018, www.wsj.com/articles/is-tesla-or-exxon-more-sustainable-it-depends-whom-you-
ask-1537199931.
Team, Trefis. “Tesla's Unique Position In The Car Market Is One Of Its Biggest Strengths.” Forbes, Forbes Magazine, 2
July 2015, www.forbes.com/sites/greatspeculations/2015/07/02/teslas-unique-position-in-the-car-market-is-one-of-
its-biggest-strengths/#792e5673ad7f.
Linnane, Ciara. “Tesla Will Face First True Test of Its Position in Electric Vehicle Market in 2019, Analyst Says.”
MarketWatch, MarketWatch, 21 June 2018, www.marketwatch.com/story/tesla-will-face-first-true-test-of-its-
position-in-electric-vehicle-market-in-2019-analyst-says-2018-06-20.
DeBord, Matthew. “Tesla's Newest Rival Has Highlighted a Big Problem That No One Is Talking About.” Business
Insider, Business Insider, 29 Mar. 2018, www.businessinsider.com/tesla-faces-a-problem-with-market-segmentation-
2018-3.
“Tesla Inc.” Growth, Profitability, and Financial Ratios for LINE Corp ADR (LN) from Morningstar.com,
financials.morningstar.com/ratios/r.html?t=TSLA.

21. 21
REFERENCES CONTINUED…
Team, Trefis. “How Tesla's Battery Strategy Could Drive Strong Margins On Model 3.” Forbes, Forbes Magazine, 18
Aug. 2017, www.forbes.com/sites/greatspeculations/2017/08/18/how-teslas-battery-strategy-could-drive-strong-
margins-on-model-3/#6930a3585cc9.
“Master Plan, Part Deux.” Tesla, Inc, 21 July 2016, www.tesla.com/blog/master-plan-part-deux.
Hoang, Ha, and Frank T. Rothaermel. “How to Manage Alliances Strategically.” MIT Sloan Management Review, MIT
Sloan Management Review, sloanreview.mit.edu/article/how-to-manage-alliances-strategically/.
O'Marah, Kevin. “Tesla And The 21st Century Supply Chain.” Forbes, Forbes Magazine, 8 Apr. 2016,
www.forbes.com/sites/kevinomarah/2016/04/07/tesla-and-the-21st-century-supply-chain/#abb43d2584d1.
Colias, Mike, and Rolfe Winkler. “Tesla's Big Question: Better or Worse Off as Private Company.” The Wall Street
Journal, Dow Jones & Company, 8 Aug. 2018, www.wsj.com/articles/teslas-big-question-better-or-worse-off-as-
private-company-1533751228.
Bloomberg.com, Bloomberg, 2018, www.bloomberg.com/graphics/2018-tesla-tracker/.

22. 22
REFERENCES CONTINUED…
DeCambre, Mark. “'The Corporate-Governance Disaster That Is Tesla Continues,' Says One of the Fiercest Critics of
Musk and Company.” MarketWatch, MarketWatch, 27 Aug. 2018, www.marketwatch.com/story/the-corporate-
governance-disaster-that-is-tesla-continues-says-one-of-teslas-fiercest-critics-2018-08-25.
Lucid is planning a new high-performance electric car. It said the investment from Saudi Arabia's sovereign wealth
fund announced Monday will allow it to finish engineering on its first car. “Saudi Arabia Invests $1 Billion in Lucid, a
Potential Tesla Rival.” CNNMoney, Cable News Network, money.cnn.com/2018/09/17/news/companies/saudi-arabia-
tesla-competitor/index.html.
“Tesla Model S Achieves Best Safety Rating of Any Car Ever Tested.” Tesla, Inc, 22 Apr. 2015,
www.tesla.com/blog/tesla-model-s-achieves-best-safety-rating-any-car-ever-tested.
Salzman, Avi. “Tesla's Key Advantages Over the Big Automakers.” Barron's, Barrons, 14 Aug. 2017,
www.barrons.com/articles/teslas-key-advantages-over-the-big-automakers-1502733760.
“Corporate Governance.” Tesla, Inc., ir.tesla.com/corporate-governance/highlights.

23. 23
TESLA CORPORATE GOVERNANCE GUIDELINES (EXCERPTS)

24. 24
TESLA CORPORATE GOVERNANCE GUIDELINES (EXCERPTS)

25. 25
TESLA CORPORATE GOVERNANCE GUIDELINES (EXCERPTS)

26. 26
TESLA CORPORATE GOVERNANCE GUIDELINES (EXCERPTS)

27. 27
BATTERY COST FORECASTED PROJECTIONS

28. 28
TESLA PRODUCTION TARGETS
Source:
Bloomberg.com, Bloomberg, 2018,
www.bloomberg.com/graphics/2018-tesla-
tracker/.

29. 29
TESLA MARKET POSITION – ELECTRIC VEHICLES

30. Porter’s 5 Forces - Explained
Bargaining power of Tesla Customers (Medium)
Low Switching costs
Low volume of purchases
Moderate Availability of substitute
No Dealers of EV (couple states restrictions)
No Comparable technology available
Threat of New Entrants (High)
High Cost of brand development
High economies of scale
Large Capital Investments
Threat of Substitutes (High)
Low switching costs
Hybrids and Plugin Hybrids
Numerous alternatives to EV
Many substitutes among gasoline cars
Medium Performance of Substitutes
Bargaining power of Suppliers (Medium)
High costs of switching suppliers
Low Forward Integration
Limited No of Suppliers
Medium Supply Level
Rivalry among competitors (High)
High competitors increase bargaining power
Few EV cars available in market
Strong competitive brands
Tesla sector is Niche

32. 32
TESLA Q2 REVENUES & PROFITS COMPETITOR COMPARISON
Source: Colias, Mike, and Rolfe Winkler. “Tesla's Big Question: Better or Worse Off as Private
Company.” The Wall Street Journal, Dow Jones & Company, 8 Aug. 2018,
www.wsj.com/articles/teslas-big-question-better-or-worse-off-as-private-company-
1533751228.

33. Tesla delivers respectable Gross margins compared to the
industry
Q2-18 SGA expenses ($1.1B) causing OM and EBITD losses
R&D: $386M + $750M other SG&A (facilities,
operations, CEO bonus, etc)
Company on growth mode as operations cost continue to be
high compared to competitors
Every Return Ratio is negative
ROI is largely lower than competitors and negative.
However investors stay around
Aggressive financing to fuel growth. Double that its competitors
Assets have been funded largely by equity thus a strong D/A
ratio (<1)
Debt / Equity (SH) provides another strong idea on high leverage
Tesla’s liabilities are greater than their assets, thus weak
position to pay its debts w/ assets
FINANCIAL RATIOS EXPANDED (Q2-2018)