Tesla : Update Letter

Q1 2022 Update

1

Highlights 03

Financial Summary 04

Operational Summary 06

Vehicle Capacity 07

Core Technology 08

Other Highlights 09

Outlook 10

Photos & Charts 11

Key Metrics 20

Financial Statements 22

Additional Information 28

H I G H LI G H T S

S U M MA R Y

Cash

Operating cash flow less capex (free cash flow) of $2.2B in Q1

Total debt ex. vehicle and energy product financing under $0.1B

The first quarter of 2022 was another record quarter for Tesla by several measures such as revenues, vehicle deliveries, operating profit and an operating margin of over 19%. Our outstanding recourse debt has fallen below $0.1B at the end of Q1. Public interest in a sustainable future continues to rise, and we remain focused on growing as fast as is reasonably possible.

Profitability

$3.6B GAAP operating income; 19.2% operating margin in Q1

$3.3B GAAP net income; $3.7B non-GAAP net income (ex-SBC1) in Q1

Expansion of our production capacity is core to our decision-making. In the past two months, we began deliveries of Model Y from Gigafactory Texas and Gigafactory Berlin-Brandenburg (negligible impact on Q1 gross profit). At the same time, we are putting significant efforts into in-house cell production, raw material procurement and supplier diversification.

32.9% GAAP Automotive gross margin in Q1

Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations. Furthermore, prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on our cost structure has contributed to adjustments in our product pricing, despite a continued focus on reducing our manufacturing costs where possible.

Operations

Production & Deliveries started from Gigafactory Berlin in March 2022

Production & Deliveries started from Gigafactory Texas in April 2022

We would like to thank everyone who attended our factory opening events or watched live at home. We're excited to see people so passionate about mass manufacturing and a sustainable future.

(1) SBC = stock-based compensation.

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

($ in millions, except percentages and per share data)	Q1-2021	Q2-2021	Q3-2021	Q4-2021	Q1-2022	YoY
Automotive revenues	9,002	10,206	12,057	15,967	16,861	87%
of which regulatory credits	518	354	279	314	679	31%
Automotive gross profit	2,385	2,899	3,673	4,882	5,539	132%
Automotive gross margin	26.5%	28.4%	30.5%	30.6%	32.9%	636 bp
Total revenues	10,389	11,958	13,757	17,719	18,756	81%
Total gross profit	2,215	2,884	3,660	4,847	5,460	147%
Total GAAP gross margin	21.3%	24.1%	26.6%	27.4%	29.1%	779 bp
Operating expenses	1,621	1,572	1,656	2,234	1,857	15%
Income from operations	594	1,312	2,004	2,613	3,603	507%
Operating margin	5.7%	11.0%	14.6%	14.7%	19.2%	1,349 bp
Adjusted EBITDA	1,841	2,487	3,203	4,090	5,023	173%
Adjusted EBITDA margin	17.7%	20.8%	23.3%	23.1%	26.8%	906 bp
Net income attributable to common stockholders (GAAP)	438	1,142	1,618	2,321	3,318	658%
Net income attributable to common stockholders (non-GAAP)	1,052	1,616	2,093	2,879	3,736	255%
EPS attributable to common stockholders, diluted (GAAP)(1)	0.39	1.02	1.44	2.05	2.86	633%
EPS attributable to common stockholders, diluted (non-GAAP)(1)	0.93	1.45	1.86	2.54	3.22	246%
Net cash provided by operating activities	1,641	2,124	3,147	4,585	3,995	143%
Capital expenditures	(1,348)	(1,505)	(1,819)	(1,810)	(1,767)	31%
Free cash flow	293	619	1,328	2,775	2,228	660%
Cash and cash equivalents	17,141	16,229	16,065	17,576	17,505	2%

(1)EPS = earnings per share.

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

Revenue

Total revenue grew 81% YoY in Q1 to $18.8B. YoY, revenue was impacted by the following items:

• + growth in vehicle deliveries

• + increased average selling price (ASP)

• + growth in other parts of the business

Profitability

Our operating income improved to $3.6B in Q1, resulting in a 19.2% operating margin. This profit level was reached while incurring SBC expense attributable to the 2018 CEO award of $48M in Q1. YoY, operating income was primarily impacted by the following items:

• + growth in vehicle deliveries

• + increased ASP

• + reduced cost (COGS) per vehicle despite inflationary pressures

• + lower stock-based compensation expense

• + increase in regulatory credit sales

- rising raw material, commodity, logistics and expedite costs - increase in operating expenses

Cash

Quarter-end cash, cash equivalents and short-term marketable securities increased sequentially by $0.3B to $18.0B in Q1, driven mainly by free cash flow of $2.2B, partially offset by debt repayments of $2.1B. Our total debt excluding vehicle and energy product financing fell to less than $0.1B at the end of Q1.