Tesla IPO scheduled to trade Tuesday, June 29 adjusted for $17 IPO price, $226mm IPO, $1.557bb market cap at $17

BUSINESS

Manufacturing & directly selling 100% electric cars, aiming primarily at the premium sedan market, $50,000+. "100% Torque, 100% of the Time The Tesla Roadster delivers full availability of performance every moment you are in the car, even while at a stoplight. Its peak torque begins at 0 rpm and stays powerful at 14,000 rpm."

SUMMARY

Tesla is the only pure play in the upcoming growing 100% electric car market. And the company is very good at generating pr buzz. However, there are significant uncertainties regarding the projected 20,000 units per year production from the Model S sedan, not yet fully designed and production facilities are not yet actually acquired.

"We anticipate that we will experience an increase in losses and may experience a decrease in automotive sales revenues prior to the launch of the Model S." Therefore, until major milestones are met longer term investors may have difficulty defending Tesla’s expected $1.57bb market cap.

COMPARE & CONTRAST	IPO Mrkt	Price /	Price /	Price /	Price /
12 months ended March 31, 2010 for HMC, TM & F	Cap (mm)	Sales	Earnings	BookValue	TangibleBV
TSLA projected annual 20,000 units starting sometime in 2012	$1,557	1.3	26
Honda (HMC)	$55,130	0.6	19	1.2	1.2
Toyota (TM)	$113,330	0.5	49	1.0	1.0
Ford (F)*	$39,480	0.2	7.4	-7.2	-7.2
*applying a 45% tax rate

Trailing 12 months for Honda, Toyota, Ford, Projected for TSLA
percentages	TSLA-proj	HMC	Toyota	Ford
Revenue	100%	100%	100%	100%
Gross profit	25%	25%	12%	12%
Engineering/R&D	4%	5%
SG &A	7%	16%		11%
Operating Margin	14%	4%	1%	4%
Profit (loss)	5%*	3%	1%	3%
*IPOdesktop estimate	source: Google Finance & Tesla roadshow

TSLA’s projected operating margin of 14% seems high, see risks below

PROBLEMS

Anticipates increasing losses

Untested business model

. Straight to the consumer from the manufacturer business model. . Hasn’t been done successfully before in the automobile industry

Model S not yet fully designed

No production manufacturing or service experience.

. "We are in an early stage of planning for this facility" which is the facility expected to turn out 20,000 cars per year starting sometime in 2012."

Distribution

Plans to open up 50 retail stores worldwide, now has 12 retail stores, costs about $1mm for each store.

Service

Customers must transport the car to a retail store/service center, or have a technician go to the location

Competition

Daimler, Lexus, Audi, Renault, Mitsubishi, Volkswagen, Subaru, Nissan, Toyota, Honda, Ford and GM are all developing electric cars of their own.

PLUSES

Lowest cost battery pack

"We believe we have engineered what is currently the lowest cost battery pack when measured as a function of cost per kilowatt-hour."

Intellectual property

"As of June 14, 2010, we had 14 issued patents and 97 pending patent applications with the United States Patent and Trademark Office as well as numerous foreign patent applications in a broad range of areas related to our powertrain."

TESLA ROADSTER

As of March 31, 2010 had only sold 1,063 production Tesla Roadster electric vehicles to customers, list price over $100,000. Now anticipates Roadster quarterly sales in the 120+ range. Costs $5 to charge, 236 mile range

MODEL S – 20,000 units per year projected

"Currently executing a plan to finish the design, engineering and component sourcing for the Model S and to build out the planned manufacturing facility in Fremont, California and obtain the equipment to support its production with the goal of commercial introduction of the Model S in 2012.

"The Model S, which is planned to compete in the premium vehicle market, is intended to have a significantly broader customer base than the Tesla Roadster. We currently intend to begin volume production of the Model S in 2012 with a target annual production of up to approximately 20,000 cars per year. We currently anticipate introducing the base Model S at an effective price of $49,900 in the United States, assuming and after giving effect to the continuation of a currently available United States federal tax credit of $7,500 for the purchase of alternative fuel vehicles."

DISTRIBUTION

As of June 14, 2010, had opened 12 Tesla stores in the United States and Europe, 9 of which have been open for less than one year. Has only limited experience distributing and selling performance vehicles through Tesla stores

Plans to open additional stores during 2010, with a goal of establishing approximately 50 Tesla stores globally within the next several years in connection with the planned Model S rollout.

BACKLOG

As of March 31, 2010, had unfilled reservations for approximately 110 Tesla Roadsters and approximately 2,200 Model S sedans,

MARKET GROWH

According to Frost & Sullivan, a business research and consulting firm, the market for electric-based vehicles, which includes electric vehicles, hybrid electric vehicles and plug-in hybrid electric vehicles, is expected to grow to approximately 10.6 million units worldwide, or approximately 14% of new vehicles sold by 2015 from approximately 1.75 million units or 3% of new vehicles sold in 2008.

RISKS

. "We face significant barriers as we attempt to produce our first mass produced vehicle, our Model S." . "We anticipate that we will experience an increase in losses and may experience a decrease in automotive sales revenues prior to the launch of the Model S."

Can fund operations for 24 months

"As of March 31, 2010, we had $61.5 million in cash and cash equivalents. We expect that the proceeds of this offering, the concurrent private placement and the DOE Loan Facility, together with our anticipated cash from operating activities and cash on hand, will be sufficient to fund our operations for the next 24 months"

No Model S production intent prototype

"We currently have a drivable early prototype of the Model S, but do not have a full production intent prototype, a final design, a built-out manufacturing facility or a manufacturing process."

No experience

"We have no experience to date in high volume manufacturing of our electric vehicles. We do not know whether we will be able to develop efficient, automated, low-cost manufacturing capability and processes, and reliable sources of component supply, that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes required to successfully mass market the Model S. Even if we are successful in developing our high volume manufacturing capability and processes and reliable sources of component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, or in time to meet our vehicle commercialization schedules or to satisfy the requirements of customers. Any failure to develop such manufacturing processes and capabilities within our projected costs and timelines could have a material adverse effect on our business, prospects, operating results and financial condition.

Still evolving

Our production model for the non-powertrain portion of the Model S is unproven, still evolving and is very different from the non-powertrain portion of the production model for the Tesla Roadster.

We have no experience with using common platforms in the design and manufacture of our vehicles.

If we are unable to effectively leverage the benefits of using an adaptable platform architecture, our business prospects, operating results and financial condition would be adversely affected. We intend to design the Model S with an adaptable platform architecture and common electric powertrain so that we can use the platform of the Model S to create future electric vehicles, including, as examples, a crossover/sport utility vehicle, a van and a cabriolet. We have no experience with using common platforms in the design and manufacture of our vehicles and the design of the Model S is not complete. We may make changes to the design of the Model S that may make it more difficult to use the Model S platform for future electric vehicles. There are no assurances that we will be able to use the Model S platform to bring future vehicle models to market faster or more inexpensively by leveraging use of this common platform or that there will be sufficient customer demand for additional vehicle variants of this platform.

The design, manufacture, sale and servicing of automobiles is a capital intensive business. Since inception through March 31, 2010, we had incurred net losses of approximately $290.2 million and had used approximately $230.5 million of cash in operations and while recognizing only approximately $147.6 million in revenue.

Limited servicing experience

"We have very limited experience servicing our vehicles. As of March 31, 2010 we had sold only 1,063 Tesla Roadsters to customers, primarily in the United States and Europe. We do not plan to begin production of any Model S vehicles until 2012, and do not have any experience servicing these cars as they do not exist currently. Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques."

Return vehicle to nearest store or…

"We do not expect to be able to open Tesla stores in all the geographic areas in which our existing and potential customers may reside. In order to address the service needs of customers that are not in geographical proximity to our service centers, we plan to either transport those vehicles to the nearest Tesla store for servicing or deploy our mobile Tesla Rangers to service the vehicles at the customer’s location."

"As our vehicles are placed in more locations, we may encounter negative reactions from our consumers who are frustrated that they cannot use local service stations to the same extent as they have with their conventional automobiles and this frustration may result in negative publicity and reduced sales, thereby harming our business and prospects.

"In addition, the motor vehicle industry laws in many states require that service facilities be available with respect to vehicles physically sold from locations in the state. Whether these laws would also require that service facilities be available with respect to vehicles sold over the internet to consumers in a state in which we have no physical presence is uncertain. While we believe our Tesla Ranger program and our practice of shipping customers’ vehicles to our nearest Tesla store for service would satisfy regulators in these circumstances, without seeking formal regulatory guidance, there are no assurances that regulators will not attempt to require that we provide physical service facilities in their states. If issues arise in connection with these laws, certain aspects of Tesla’s service program would need to be restructured to comply with state law, which may harm our busines

INTELLECTUAL PROPERTY

"As of June 14, 2010, we had 14 issued patents and 97 pending patent applications with the United States Patent and Trademark Office as well as numerous foreign patent applications in a broad range of areas

LOWEST COST BATTERY PACK

"By utilizing a combination of standard components and innovative technology, we believe we have engineered what is currently the lowest cost battery pack when measured as a function of cost per kilowatt-hour."

RECENT DEVELOPMENTS

"In May 2010, we entered into a stock purchase agreement with Toyota pursuant to which Toyota will purchase $50.0 million of our common stock at a price per share equal to the initial public offering price in a private placement to close immediately subsequent to the closing of this offering. In addition, Tesla and Toyota announced their intention to cooperate on the development of electric vehicles, and for Tesla to receive Toyota’s support with sourcing parts and production and engineering expertise for the Model S. Active discussions are now underway, but we have not entered into any agreements with Toyota for any such arrangements, including any purchase orders. We also entered into an agreement to purchase an existing automobile production facility in Fremont, California from New United Motor Manufacturing, Inc., or NUMMI, which is a joint venture between Toyota and Motors Liquidation Company, the owner of selected assets of General Motors. The purchase totals 207 acres, or approximately 55% of the land at the site, and includes all of the manufacturing facilities located thereon. The purchase price for the land and the facility, excluding whatever manufacturing equipment we may subsequently acquire from NUMMI, is approximately $42 million"

DAIMLER INVESTMENT RELATIONSHIP

"Our strategic relationship with Daimler involved Blackstar, an affiliate of Daimler, making a significant equity investment in us as well as a representative from Daimler, Dr. Herbert Kohler, joining our Board."

USE OF IPO PROCEEDS

$211mm at price range mid-point of $15 from sale of 11.9mm shares in the IPO. Includes $50mm private placement post-IPO to Toyota are the IPO price. Shareholders intend to sell 1.1mm shares

To fund planned capital expenditures, working capital and other general corporate purposes. Such uses may include the $33 million of costs related to the development of the Model S and the planned Model S manufacturing facility plus cost overruns as well as cost overruns Tesla may encounter in developing its powertrain facility, which will not be funded by advances under the loan facility with the United States Department of Energy, or DOE Loan Facility.

Currently anticipates making aggregate capital expenditures of between $100 million and $125 million during the year ended December 31, 2010. Includes $42 million to purchase the planned Tesla manufacturing facility for the Model S in Fremont, California, excluding any manufacturing equipment Tesla may subsequently acquire.

Aggregate capital expenditures will also include funding the expansion of Tesla stores. Expects to use a portion of the net proceeds to fund the store expansion, estimated to cost $5 million during the year ended December 31, 2010 and an additional $5 million to $10 million annually over the next several years thereafter to establish approximately 50 stores globally.

Set aside 50% of IPO plus the concurrent private placement to Toyota

Tesla has agreed to set aside 50% of the net IPO proceeds and the concurrent private placement, up to a maximum of $100 million, to fund a separate, dedicated account under the DOE Loan Facility. This dedicated account can be used by Tesla to fund any cost overruns for the powertrain and Model S manufacturing facility projects and will also be used as a mechanism to defer advances under the DOE Loan Facility.

Tesla Motors (TSLA)	TSLA, C, 6					Post-IPO shares: 91.6mm
Electric cars					Projected
Palo Alto, CA	2008	2009	March'09qtr	March '10qtr	20,000 units	IPO Mkt
Revenue ($mm)	$15	$112	$21	$21	$1,200	Cap (mm)
Gross margin %	-7%	8%	-10%	18%	25%	$1,557
Profit (loss)	-$83.0	-$56.0	-$16.0	-$29.5	$60	@$17
Profit (loss) % of revenue	-565%	-50%	-76%	-140%	5%
VALUATION RATIOS
	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
trailing 12 months thru March	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
Tesla Motors (TSLA)	$1,557	18.5	-13	6.1	6.1	15%
projected -- 20,000 units	$1,557	1.3	26
COMPARE & CONTRAST	IPO Mrkt	Price /	Price /	Price /	Price /
12 months ended March 31, 2010 for HMC, TM & F	Cap (mm)	Sales	Earnings	BookValue	TangibleBV
TSLA projected annual 20,000 units starting sometime in 2012	$1,557	1.3	26
Honda (HMC)	$55,130	0.6	19	1.2	1.2
Toyota (TM)	$113,330	0.5	49	1.0	1.0
Ford (F)*	$39,480	0.2	7.4	-7.2	-7.2
*applying a 45% tax rate