Supporting:
1. TESLA HANDLES SALES AND MARKETING OF ITS VEHICLES IN-HOUSE – Tesla has set up a number of retail outlets in
the US and abroad, and plans to handle sales and marketing of all its vehicles in-house. As a result, it does not have
any payment obligations towards third party dealers.
2. ZEV CREDITS – As per the laws of a number of states in the US, alternative fuel vehicle manufacturers, such as Tesla,
receive ZEV (Zero Emission Vehicle) credits for each vehicle sold. Tesla then sells excess credits to other auto
manufacturers, that purchase the credits to meet regulatory requirements. Tesla has entered into such agreements
with three auto manufacturers. We have taken into account the revenues Tesla receives from the sale of these credits
into our forecasts for revenue per vehicle sold.
3. LEASING ARRANGEMENT – Most companies which lease vehicles can only recognize the profits from the sale of leased
vehicles in a deferred account. However, Tesla has an arrangement with U.S. Bank which will allow them to record
the revenue from vehicle sales in their net sales, thus boosting the average revenue per vehicle sold.
Mitigating:
4. POSSIBILITY OF DISTRIBUTING VEHICLES THROUGH THIRD PARTY DEALERS IN THE FUTURE – As mentioned above,
Tesla currently handles all sales and marketing activities of its vehicles in-house. However, there is a possibility that
once Tesla reaches higher volumes, it may not be able to sustain this retail strategy. A portion of its vehicles may be
distributed through third party dealers, thereby leading to dealer margins which would lower revenues per vehicle
sold.
Sources for historical data and explanations can be found on the Trefis.com website (link)
— EV/HEV AS % OF TOTAL PASSENGER VEHICLE MARKET —

This represents the size of the EV market, which includes HEVs (Hybrid Electric Vehicles), PHEVs (Plug-in Hybrid
Electric Vehicles) and BEVs (Battery Electric Vehicles), expressed as a percentage of the total passenger car market. All of
Tesla's vehicles are BEVs.

EV/HEV as % of Total Passenger Vehicle Market (%)

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4
3
2
1
0
2011 1 2

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TREFIS ANALYSIS for TESLA MOTORS

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