What changed in this filing

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Item 1A. Risk Factors

2022-10-24 compared with 2022-07-25 · 32 added, 34 removed, 435 unchanged (13% of the section changed)

20 unchanged sentences

Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and attempt to accurately project demand and infrastructure requirements globally and deploy our production, workforce and other resources accordingly.

If we experience unfavorable global market conditions, or if we cannot or do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations again, our business, prospects, financial condition and operating results may be harmed.

If we experience unfavorable global market conditions, or if we cannot or do not maintain operations at a scope that is

commensurate with such conditions or are later required to or choose to suspend such operations again, our business, prospects, financial condition and operating results may be harmed.

We may experience delays in launching and ramping the production of our products and features, or we may be unable to control our manufacturing costs.

11 unchanged sentences

new product versions or variants such as the updated Model S and Model X;

new vehicles such as

Tesla Semi, Cybertruck and the new Tesla Roadster;

new vehicles such as Tesla Semi, Cybertruck and the new Tesla Roadster;

and future features and services based on artificial intelligence, such as new Autopilot or FSD functionalities, the autonomous Tesla ride-hailing network and robotics.

15 unchanged sentences

While we believe that we will be able to secure additional or alternate sources or develop our own replacements for most of our components, there is no assurance that we will be able to do so quickly or at all.

Additionally, we may be unsuccessful in our continuous efforts to negotiate with existing suppliers to obtain cost reductions and avoid unfavorable changes to terms, source less expensive suppliers for certain parts and redesign certain parts to make them less expensive to produce, especially in light of the increases in materials pricing.

certain parts and redesign certain parts to make them less expensive to produce, especially in light of the increases in materials pricing.

Any of these occurrences may harm our business, prospects, financial condition and operating results.

26 unchanged sentences

These plans require significant cash investments and management resources and there is no guarantee that they will generate additional sales or installations of our products, or that we will be able to avoid cost overruns or be able to hire additional personnel to support them.

As we expand, we will also need to ensure our compliance with regulatory requirements in various jurisdictions applicable to the sale, installation and servicing of our products, the sale or dispatch of electricity related to our energy products and the operation of Superchargers.

As we expand, we will also need to ensure our compliance with regulatory requirements in various jurisdictions applicable to the sale, installation and servicing of our products,

the sale or dispatch of electricity related to our energy products and the operation of Superchargers.

If we fail to manage our growth effectively, it may harm our brand, business, prospects, financial condition and operating results.

34 unchanged sentences

Many of our competitors have significantly greater or better-established resources than we do to devote to the design, development, manufacturing, distribution, promotion, sale and support of their products.

Increased competition could result in our lower vehicle unit sales, price reductions, revenue shortfalls, loss of customers and loss of market share, which may harm our business, financial condition and operating results.

Increased competition could result in our

lower vehicle unit sales, price reductions, revenue shortfalls, loss of customers and loss of market share, which may harm our business, financial condition and operating results.

We also face competition in our energy generation and storage business from other manufacturers, developers, installers and service providers of competing energy technologies, as well as from large utilities.

50 unchanged sentences

Such attention includes frequent criticism, which is often exaggerated or unfounded, such as speculation regarding the sufficiency or stability of our management team.

negative perceptions, whether caused by us or not, may harm our business and make it more difficult to raise additional funds if needed.

Any such negative perceptions, whether caused by us or not, may harm our business and make it more difficult to raise additional funds if needed.

We may be unable to effectively grow, or manage the compliance, residual value, financing and credit risks related to, our various financing programs.

14 unchanged sentences

Finally, our vehicle and solar energy system financing programs and our energy storage sales programs also expose us to customer credit risk.

In the event of a widespread economic downturn or other catastrophic event, our customers may be unable or unwilling to satisfy their payment obligations to us on a timely basis or at all.

In the event of a widespread economic downturn or other catastrophic event, our customers may be unable or

unwilling to satisfy their payment obligations to us on a timely basis or at all.

If a significant number of our customers default, we may incur substantial credit losses and/or impairment charges with respect to the underlying assets.

4 unchanged sentences

As we temporarily suspended most of our manufacturing operations at Gigafactory New York pursuant to a New York State executive order issued in March 2020 as a result of the COVID-19 pandemic, we were granted a deferral of our obligation to be compliant with our applicable targets through December 31, 2021 in an amendment memorialized in August 2021.

As of June 30, 2022, we are currently in excess of such targets relating to investments and personnel in the State of New York and Buffalo.

As of September 30, 2022, we are currently in excess of such targets relating to investments and personnel in the State of New York and Buffalo.

While we expect to have and grow significant operations at Gigafactory New York and the surrounding Buffalo area, any failure by us in any year over the course of the term of the agreement to meet all applicable future obligations may result in our obligation to pay a “program payment”

4 unchanged sentences

In particular, we are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer.

None of our key employees is bound by an employment agreement

for any specific term and we may not be able to successfully attract and retain senior leadership necessary to grow our business.

None of our key employees is bound by an employment agreement for any specific term and we may not be able to successfully attract and retain senior leadership necessary to grow our business.

Our future success also depends upon our ability to attract, hire and retain a large number of engineering, manufacturing, marketing, sales and delivery, service, installation, technology and support personnel, especially to support our planned high-volume product sales, market and geographical expansion and technological innovations.

25 unchanged sentences

Further, the implementation, maintenance, segregation and improvement of these systems require significant management time, support and cost, and there are inherent risks associated with developing, improving and expanding our core systems as well as implementing new systems and updating current systems, including disruptions to the related areas of business operation.

may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, sell, deliver and service products, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, tax laws and other applicable regulations.

These risks may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, sell, deliver and service products, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, tax laws and other applicable regulations.

Moreover, if we do not successfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately and/or timely report our financial results could be impaired and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results.

35 unchanged sentences

For components not manufactured by us, we generally pass through to our customers the applicable manufacturers’

warranties, but may retain some

warranty responsibilities for some or all of the life of such components.

warranties, but may retain some warranty responsibilities for some or all of the life of such components.

As part of our energy generation and storage system contracts, we may provide the customer with performance guarantees that guarantee that the underlying system will meet or exceed the minimum energy generation or other energy performance requirements specified in the contract.

11 unchanged sentences

The terms of certain of our credit facilities, including our senior asset-based revolving credit agreement, contain, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to, among other things, incur additional debt or issue guarantees, create liens, repurchase stock, or make other restricted payments, and make certain voluntary prepayments of specified debt.

In addition, under certain circumstances we are required to comply with a fixed charge coverage ratio.

In addition, under certain circumstances we are required to

comply with a fixed charge coverage ratio.

As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.

26 unchanged sentences

There is no guarantee that we will have sufficient cash flow from our business to pay our indebtedness or that we will not incur additional indebtedness.

As of June 30, 2022, we and our subsidiaries had outstanding $3.18 billion in aggregate principal amount of indebtedness (see Note 10, Debt , to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

As of September 30, 2022, we and our subsidiaries had outstanding $2.41 billion in aggregate principal amount of indebtedness (see Note 10 , Debt , to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Our consolidated indebtedness may increase our vulnerability to any generally adverse economic and industry conditions.

8 unchanged sentences

We transact business globally in multiple currencies and have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S.

dollar, currently primarily the Chinese yuan, euro, pound sterling and Norwegian krone.

dollar, currently primarily the Chinese yuan, euro, South Korean won and pound sterling.

To the extent we have significant revenues denominated in such foreign currencies, any strengthening of the U.S.

9 unchanged sentences

Our competitors or other third parties may hold or obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to make, use, develop, sell or market our products and services, which could make it more difficult for us to operate our business.

From time to time, the holders of such intellectual property rights may assert their rights and urge us to take licenses and/or may bring suits alleging infringement or misappropriation of such rights, which could result in

substantial costs, negative publicity and management attention, regardless of merit.

While we endeavor to obtain and protect the intellectual property rights that we expect will allow us to retain or advance our strategic initiatives, there can be no assurance that we will be able to adequately identify and protect the portions of intellectual property that are strategic to our business, or mitigate the risk of potential suits or other legal demands by our competitors.

25 unchanged sentences

However, these incentives may expire when the allocated funding is exhausted, reduced or terminated as renewable energy adoption rates increase, sometimes without warning.

For example, the U.S.

federal government currently offers certain tax credits for the installation of solar power facilities and energy storage systems that are charged from a co-sited solar power facility;

however, these tax credits are currently scheduled to decline and/or expire in 2023 and beyond.

Likewise, in jurisdictions where net metering is currently available, our customers receive bill credits from utilities for energy that their solar energy systems generate and export to the grid in excess of the electric load they use.

The benefit available under net

metering has been or has been proposed to be reduced, altered or eliminated in several jurisdictions, and has also been contested and may continue to be contested before the Federal Energy Regulatory Commission.

The benefit available under net metering has been or has been proposed to be reduced, altered or eliminated in several jurisdictions, and has also been contested and may continue to be contested before the Federal Energy Regulatory Commission.

Any reductions or terminations of such incentives may harm our business, prospects, financial condition and operating results by making our products less competitive for customers, increasing our cost of capital and adversely impacting our ability to attract investment partners and to form new financing funds for our solar and energy storage assets.

8 unchanged sentences

If we are unable to successfully defend ourselves in such litigation or government investigations, it may harm our brand, ability to attract and retain qualified employees, business and financial condition.

We are also subject to laws and regulations applicable to the supply, manufacture, import, sale and service of our products both domestically and abroad.

We are also subject to laws and regulations applicable to the supply, manufacture,

import, sale and service of our products both domestically and abroad.

For example, in countries outside of the U.S., we are required to meet standards relating to vehicle safety, fuel economy and emissions that are often materially different from requirements in the U.S., thus resulting in additional investment into the vehicles and systems to ensure regulatory compliance in those countries.

11 unchanged sentences

In addition, certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation, application and impact, and may require extensive system and operational changes, be difficult to implement, increase our operating costs, adversely impact the cost or attractiveness of the products or services we offer, or result in adverse publicity and harm our reputation.

For example, the General

Data Protection Regulation applies to the processing of personal information collected from individuals located in the European Union, and has created new compliance obligations and significantly increased fines for noncompliance.

For example, the General Data Protection Regulation applies to the processing of personal information collected from individuals located in the European Union, and has created new compliance obligations and significantly increased fines for noncompliance.

Similarly, the California Consumer Privacy Act imposes certain legal obligations on our use and processing of personal information related to California residents.

13 unchanged sentences

For example, on October 16, 2018, the U.S.

District Court for the Southern District of New York entered a final judgment approving the terms of a settlement filed with the Court on September 29, 2018, in connection with the actions taken by the SEC relating to Mr.

relating to Mr.

Musk’s statement on August 7, 2018 that he was considering taking Tesla private.

18 unchanged sentences

The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control.

Our common stock has experienced over the last 52 weeks an intra-day trading high of $1,243.49 per share and a low of $620.57 per share.

Our common stock has experienced over the last 52 weeks an intra-day trading high of $414.50 per share and a low of $202.00 per share (as adjusted to give effect to the 2022 Stock Split).

The stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

In particular, a large proportion of our common stock has been historically and may in the future be traded by short sellers which may put pressure on the supply and demand for our common stock, further influencing

volatility in its market price.

Public perception and other factors outside of our control may additionally impact the stock price of companies like us that garner a disproportionate degree of public attention, regardless of actual operating performance.

10 unchanged sentences

Correctly identifying key factors affecting business conditions and predicting future events is inherently an uncertain process, and our guidance may not ultimately be accurate and has in the past been inaccurate in certain respects, such as the timing of new product manufacturing ramps.

Our guidance is based on certain assumptions such as those relating to anticipated production and sales volumes (which generally are not linear throughout a given period), average sales prices, supplier and commodity costs and planned cost reductions.

Our guidance is based on certain assumptions such as those relating to anticipated production and sales volumes (which generally are

not linear throughout a given period), average sales prices, supplier and commodity costs and planned cost reductions.

If our guidance varies from actual results due to our assumptions not being met or the impact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could decline significantly.

13 unchanged sentences

In addition, the terms of our convertible senior notes may require us to repurchase such notes in the event of a fundamental change, including a takeover of our company.

Any of the foregoing provisions and terms that has the effect of delaying

or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Any of the foregoing provisions and terms that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors