Tesla : Q4'21 Update Letter

Q4 and FY2021 Update

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Highlights	03
Financial Summary	04
Operational Summary	07
Vehicle Capacity	09
Core Technology	10
Other Highlights	11
Outlook	12
Photos & Charts	13
Key Metrics	27
Financial Statements	29
Additional Information	36

H I G H L I G H T S

Cash	Operating cash flow less capex (free cash flow) of $2.8B in Q4
	In total, $1.5B increase in our cash and cash equivalents in Q4 to $17.6B

Profitability $2.6B GAAP operating income; 14.7% operating margin in Q4

$2.3B GAAP net income; $2.9B non-GAAP net income (ex-SBC1) in Q4 30.6% GAAP Automotive gross margin (29.2% ex-credits) in Q4

Operations	Record vehicle deliveries of 0.94 million in 2021
	Annualized vehicle production run-rate of over 1.22 million in Q4-2021

S U M M A R Y

2021 was a breakthrough year for Tesla. There should no longer be doubt about the viability and profitability of electric vehicles. With our deliveries up 87% in 2021, we achieved the highest quarterly operating margin among all volume OEMs, based on the latest available data(2), demonstrating that EVs can be more profitable than combustion engine vehicles.

Additionally, we generated $5.5B of GAAP net income and $5.0B of free cash flow in 2021 - after spending $6.5B to build out new factories and on other capital expenditures.

After a successful 2021, our focus shifts to the future. We aim to increase our production as quickly as we can, not only through ramping production at new factories in Austin and Berlin, but also by maximizing output from our established factories in Fremont and Shanghai. We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production.

Full Self-Driving (FSD) software remains one of our primary areas of focus. Over time, our software-related profit should accelerate our overall profitability. More importantly, FSD is a key component to improve automobile safety as well as further accelerating the world's transition to sustainable energy through higher utilization of our vehicles.

While 2021 was a defining year for our company, we believe we are just at the very early stages of our journey. Thank you for being part of it.

1. 1. SBC = stock-based compensation.
2. Calendar Q3-2021 was the last widely reported quarter across OEMs

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)	Q4-2020	Q1-2021	Q2-2021	Q3-2021	Q4-2021	YoY
Automotive revenues	9,314	9,002	10,206	12,057	15,967	71%
of which regulatory credits	401	518	354	279	314	-22%
Automotive gross profit	2,244	2,385	2,899	3,673	4,882	118%
Automotive gross margin	24.1%	26.5%	28.4%	30.5%	30.6%	648 bp
Total revenues	10,744	10,389	11,958	13,757	17,719	65%
Total gross profit	2,066	2,215	2,884	3,660	4,847	135%
Total GAAP gross margin	19.2%	21.3%	24.1%	26.6%	27.4%	813 bp
Operating expenses	1,491	1,621	1,572	1,656	2,234	50%
Income from operations	575	594	1,312	2,004	2,613	354%
Operating margin	5.4%	5.7%	11.0%	14.6%	14.7%	940 bp
Adjusted EBITDA	1,850	1,841	2,487	3,203	4,090	121%
Adjusted EBITDA margin	17.2%	17.7%	20.8%	23.3%	23.1%	586 bp
Net income attributable to common stockholders (GAAP)	270	438	1,142	1,618	2,321	760%
Net income attributable to common stockholders (non-GAAP)	903	1,052	1,616	2,093	2,879	219%
EPS attributable to common stockholders, diluted (GAAP)(1)	0.24	0.39	1.02	1.44	2.05	754%
EPS attributable to common stockholders, diluted (non-GAAP)(1)	0.80	0.93	1.45	1.86	2.54	218%
Net cash provided by operating activities	3,019	1,641	2,124	3,147	4,585	52%
Capital expenditures	(1,151)	(1,348)	(1,505)	(1,819)	(1,810)	57%
Free cash flow	1,868	293	619	1,328	2,775	49%
Cash and cash equivalents	19,384	17,141	16,229	16,065	17,576	-9%

(1)EPS = earnings per share.

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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)	2017	2018	2019	2020	2021	YoY
Automotive revenues	9,642	18,515	20,821	27,236	47,232	73%
of which regulatory credits	360	419	594	1,580	1,465	-7%
Automotive gross profit	2,209	4,341	4,423	6,977	13,839	98%
Automotive gross margin	22.9%	23.4%	21.2%	25.6%	29.3%	368 bp
Total revenues	11,759	21,461	24,578	31,536	53,823	71%
Total gross profit	2,223	4,042	4,069	6,630	13,606	105%
Total GAAP gross margin	18.9%	18.8%	16.6%	21.0%	25.3%	426 bp
Operating expenses	3,855	4,430	4,138	4,636	7,083	53%
(Loss) income from operations	(1,632)	(388)	(69)	1,994	6,523	227%
Operating margin	-13.9%	-1.8%	-0.3%	6.3%	12.1%	580 bp
Adjusted EBITDA	644	2,395	2,985	5,817	11,621	100%
Adjusted EBITDA margin	5.5%	11.2%	12.1%	18.4%	21.6%	315 bp
Net (loss) income attributable to common stockholders (GAAP)	(1,962)	(976)	(862)	721	5,519	665%
Net (loss) income attributable to common stockholders (non-GAAP)	(1,495)	(227)	36	2,455	7,640	211%
EPS attributable to common stockholders, diluted (GAAP)(1)	(2.37)	(1.14)	(0.98)	0.64	4.90	666%
EPS attributable to common stockholders, diluted (non-GAAP)(1)	(1.80)	(0.27)	0.03	2.24	6.78	203%
Net cash (used in) provided by operating activities	(61)	2,098	2,405	5,943	11,497	93%
Capital expenditures	(3,415)	(2,101)	(1,327)	(3,157)	(6,482)	105%
Free cash flow	(3,476)	(3)	1,078	2,786	5,015	80%
Cash and cash equivalents	3,368	3,686	6,268	19,384	17,576	-9%

(1)EPS = earnings per share.

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