Tesla : Q2'21 Update Letter

Q2 2021 Update

Highlights	03
Financial Summary	04
Operational Summary	06
Vehicle Capacity	07
Core Technology	08
Other Highlights	09
Outlook	10
Photos	11
Key Metrics	19
Financial Statements	21
Additional Information	27

H I G H L I G H T SS U M M A R Y

Cash

Profitability

Operations

Operating cash flow less capex (free cash flow) of $619M in Q2 Net debt and finance lease repayments of $1.6B in Q2

In total, $912M decrease in our cash and cash equivalents in Q2 to $16.2B

$1.3B GAAP operating income; 11.0% operating margin in Q2

$1.1B GAAP net income; $1.6B non-GAAP net income (ex-SBC1) in Q2

28.4% GAAP Automotive gross margin (25.8% ex-credits) in Q2

Record vehicle production and deliveries in Q2

Successful launch of FSD subscription in July

Started delivering the new Model S to customers

In the second quarter of 2021, we broke new and notable records. We produced and delivered over 200,000 vehicles, achieved an operating margin of 11.0% and exceeded $1B of GAAP net income for the first time in our history.

Supply chain challenges, in particular global semiconductor shortages and port congestion, continued to be present in Q2. The Tesla team, including supply chain, software development and our factories, worked extremely hard to keep production running as close to full capacity as possible. With global vehicle demand at record levels, component supply will have a strong influence on the rate of our delivery growth for the rest of this year.

We successfully launched Tesla Vision in Q2, which was mainly possible due to our ability to use data from over a million Tesla vehicles to source a large, diverse and accurate dataset. Solving full autonomy is a difficult engineering challenge in which we continue to believe can only be solved through the collection of large, real-world datasets and cutting- edge AI.

Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point. We continue to work hard to drive down costs and increase our rate of production to make electric vehicles accessible to as many people as possible.

(1) SBC = stock-based compensation

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F I N A N C I A L S U M M A R Y (Unaudited)

($ in millions, except percentages and per share data)	Q2-2020	Q3-2020	Q4-2020	Q1-2021	Q2-2021	YoY
Automotive revenues	5,179	7,611	9,314	9,002	10,206	97%
of which regulatory credits	428	397	401	518	354	-17%
Automotive gross profit	1,317	2,105	2,244	2,385	2,899	120%
Automotive gross margin	25.4%	27.7%	24.1%	26.5%	28.4%	298 bp
Total revenues	6,036	8,771	10,744	10,389	11,958	98%
Total gross profit	1,267	2,063	2,066	2,215	2,884	128%
Total GAAP gross margin	21.0%	23.5%	19.2%	21.3%	24.1%	313 bp
Operating expenses	940	1,254	1,491	1,621	1,572	67%
Income from operations	327	809	575	594	1,312	301%
Operating margin	5.4%	9.2%	5.4%	5.7%	11.0%	555 bp
Net income attributable to common stockholders (GAAP)	104	331	270	438	1,142	998%
Net income attributable to common stockholders (non-GAAP)	451	874	903	1,052	1,616	258%
EPS attributable to common stockholders, diluted (GAAP) (1)	0.10	0.27	0.24	0.39	1.02	920%
EPS attributable to common stockholders, diluted (non-GAAP)(1)	0.44	0.76	0.80	0.93	1.45	230%
Adjusted EBITDA	1,209	1,807	1,850	1,841	2,487	106%
Net cash provided by operating activities	964	2,400	3,019	1,641	2,124	120%
Capital expenditures	(546)	(1,005)	(1,151)	(1,348)	(1,505)	176%
Free cash flow	418	1,395	1,868	293	619	48%
Cash and cash equivalents	8,615	14,531	19,384	17,141	16,229	88%

1. Prior period results have been retroactively adjusted to reflect the five-for-one stock split effected in the form of a stock dividend in August 2020.

4 EPS = Earnings per share

F I N A N C I A L S U M M A R Y

Revenue	Total revenue grew 98% YoY in Q2. This was primarily achieved through substantial growth in vehicle deliveries, as
	well as growth in other parts of the business. At the same time, vehicle ASP1 declined by 2% YoY as Model S and
	Model X deliveries were reduced in Q2 due to the product updates and as lower ASP China-made vehicles became a
	larger percentage of our mix.

Profitability	Our operating income improved in Q2 compared to the same period last year to $1.3B, resulting in an 11.0%
	operating margin. This profit level was reached while incurring SBC expense attributable to the 2018 CEO award
	of $176M in Q2, driven by a new operational milestone becoming probable.
	Operating income increased YoY mainly due to volume growth and cost reduction. Positive impacts were partially
	offset by growth in operating expenses including increased SBC, Model S/X ramp (negative margin in Q2),
	additional supply chain costs, lower regulatory credit revenue, Bitcoin-related impairment of $23M and other
	items.

Cash	Quarter-end cash and cash equivalents decreased to $16.2B in Q2, driven mainly by net debt and finance lease
	repayments of $1.6B, partially offset by free cash flow of $619M.

(1) ASP = average selling price

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