Case 17 Teaching Note Tesla Motors’ Strategy to Revolutionize the Global Automotive Industry
nWill Tesla still be in business in 2020? If your answer is no, will it be because Tesla went bankrupt or
nIn 2020, will battery-powered electric vehicles be rapidly growing in popularity across the world, such
In November 2014, Tesla released its third quarter 2014 results. Highlights included the following:
nTesla achieved its highest ever quarterly deliveries (7,785 vehicles), despite a month-long factory shutdown
nIt also achieved its highest ever peak deliveries in a single day (907 vehicles).
nThe majority of Q3 deliveries were in North America; Q3 sales in North America were up 65% over the third
quarter of 2013.
nThe introduction of Dual Motor all-wheel drive and Autopilot further accelerated Model S demand during
nModel S orders and deliveries alone expected to increase by 50% in 2015.
nInvesting to increase production to 2,000+ vehicles per week by end of 2015.
nReductions in the number of Model S options and powertrain combinations, in order to ramp production
nNon-GAAP revenue was $932 million for the quarter, up 55% from a year ago, while GAAP revenue was
nThe GAAP-based net loss for Q3 2014 was $71.0 million and the net loss for the first three quarters of 2014
totaled $186.4 million ($1.32 per diluted share); non-GAAP net income for Q3 2014 was $3.1 million and
non-GAAP net income for the first nine months of 2014 was $36.3 million ($0.26 per diluted share).
nCash ow from operations was a negative $27.9 million in Q3 2014, but was a positive $29.1 million for the
first nine months of 2014.
nCompared to Q2, the average selling price of Model S declined slightly due to the stronger dollar.
nAutomotive revenue for Q3 included $31 million of powertrain sales primarily to Daimler for the Mercedes-
Benz B Class Electric Drive. It also included $93 million of regulatory credits, including $76 million of
Zero Emission Vehicle (ZEV) credits. ZEV credit revenue was much higher than expected due to closing
additional contracts with several OEMs.
nWork was continuing on the finalization of Model X with the testing of Alpha prototypes and initial builds
of the first Beta prototypes.
nFull-year production was expected to be about 35,000 vehicles, with deliveries of about 33,000 vehicles.
nPlans called for spending about $350 million on capital improvements in Q4 in order to add more production
capacity, accelerate the pace of Gigafactory construction, continue vehicle development, and expand
For the very latest information on developments at Tesla Motors, we urge that you check the press releases and
the investor relations sections at www.teslamotors.com.