What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-01-29 compared with 2023-01-31 · 585 added, 647 removed, 892 unchanged (58% of the section changed)

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We have audited the accompanying consolidated balance sheets of Tesla, Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of comprehensive income, of redeemable noncontrolling interests and equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income, of redeemable noncontrolling interests and equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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As described in Note 2 to the consolidated financial statements, total accrued warranty, which primarily relates to the automotive segment, was $5,152 million as of December 31, 2023.

The Company provides a manufacturer’s warranty on all new and used Tesla vehicles.

A warranty reserve is accrued for these products sold, which includes management’s best estimate of the projected costs to repair or replace items under warranty and recalls if identified.

The Company provides a manufacturer’s warranty on all new and used Tesla vehicles.

A warranty reserve is accrued for these products sold, which includes management’s best estimate of the projected costs to repair or replace items under warranty and recalls if identified.

These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims.

The principal considerations for our determination that performing procedures relating to the automotive warranty reserve is a critical audit matter are the significant judgment by management in determining the automotive warranty reserve for certain Tesla vehicle models;

this in turn led to significant auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s significant assumptions related to the nature, frequency and costs of future claims for certain Tesla vehicle models, and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s estimate of the automotive warranty reserve for certain Tesla vehicle models, including controls over management’s significant assumptions related to the nature, frequency and costs of future claims as well as the completeness and accuracy of actual claims incurred to date.

These procedures also included, among others, performing one of the following:

(i) testing management’s process for determining the automotive warranty reserve for certain Tesla vehicle models or (ii) developing an independent estimate of the automotive warranty reserve for certain Tesla vehicle models and comparing the independent estimate to management’s estimate to evaluate the reasonableness of the estimate.

Testing management’s process involved evaluating the reasonableness of significant assumptions related to the nature and frequency of future claims and the related costs to repair or replace items under warranty.

Evaluating the assumptions related to the nature and frequency of future claims and the related costs to repair or replace items under warranty involved evaluating whether the assumptions used were reasonable by performing a lookback analysis comparing prior period forecasted claims to actual claims incurred.

Developing the independent estimate involved testing the completeness and accuracy of historical vehicle claims processed and testing that such claims were appropriately used by management in the estimation of future claims.

Professionals with specialized skill and knowledge were used to assist in developing an independent estimate of the automotive warranty reserve for certain Tesla vehicle models and in evaluating the appropriateness of certain aspects of management’s significant assumptions related to the nature and frequency of future claims.

/s/ PricewaterhouseCoopers LLP

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January 26, 2024

We have served as the Company’s auditor since 2005.

Consolidated Balance Sheets

(in millions, except per share data)

2023 December 31,

Current assets

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Accounts receivable, net 3,508 2,952

Inventory 13,626 12,839

Prepaid expenses and other current assets 3,388 2,941

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Intangible assets, net 178 215

Goodwill 253 194

Deferred tax assets 6,733 328

Other non-current assets 4,531 3,865

Total assets $ 106,618 $ 82,338

Current liabilities

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Deferred revenue 2,864 1,747

Customer deposits

Current portion of debt and finance leases 2,373 1,502

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Redeemable noncontrolling interests in subsidiaries 242 409

Stockholders’

Stockholders’ equity

Preferred stock;

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6,000 shares authorized;

3,164 and 3,100 shares issued and outstanding as of

December 31, 2022 and December 31, 2021, respectively (1)

3,185 and 3,164 shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital 34,892 32,177

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss ( 143 ) ( 361 )

Retained earnings 27,882 12,885

Total stockholders’

Total stockholders’ equity 62,634 44,704

Noncontrolling interests in subsidiaries 733 785

Total liabilities and equity $ 106,618 $ 82,338

(1) Prior period results have been adjusted to reflect the three -for-one stock split effected in the form of a stock dividend in August 2022 .

See Note 1, Overview , for details.

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

2023 2022 2021

Automotive sales $ 78,509 $ 67,210 $ 44,125

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Total cost of revenues 79,113 60,609 40,217

Gross profit 17,660 20,853 13,606

Operating expenses

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Interest expense ( 156 ) ( 191 ) ( 371 )

Other (expense) income, net

Other income (expense), net 172 ( 43 ) 135

Income before income taxes 9,973 13,719 6,343

Provision for income taxes

Net income attributable to noncontrolling

interests and redeemable noncontrolling interests

in subsidiaries

(Benefit from) provision for income taxes ( 5,001 ) 1,132 699

Net income 14,974 12,587 5,644

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries ( 23 ) 31 125

Net income attributable to common stockholders $ 14,997 $ 12,556 $ 5,519

Net income per share of common stock

attributable to common stockholders (1)

Weighted average shares used in computing net

income per share of common stock (1)

(1) Prior period results have been adjusted to reflect the three -for-one stock split effected in the form of a stock dividend in August 2022 .

See Note 1, Overview , for details.

Net income per share of common stock attributable to common stockholders

Basic $ 4.73 $ 4.02 $ 1.87

Diluted $ 4.30 $ 3.62 $ 1.63

Weighted average shares used in computing net income per share of common stock

Basic 3,174 3,130 2,959

Diluted 3,485 3,475 3,386

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

Other comprehensive (loss) income:

2023 2022 2021

Net income $ 14,974 $ 12,587 $ 5,644

Other comprehensive income (loss):

Foreign currency translation adjustment 198 ( 392 ) ( 308 )

Unrealized net loss on investments

Unrealized net gain (loss) on investments 16 ( 23 ) ( 1 )

Adjustment for net loss realized and included in net income 4 — —

Comprehensive income 15,192 12,172 5,335

Comprehensive income attributable to

noncontrolling interests and redeemable

noncontrolling interests in subsidiaries

Comprehensive income attributable to

common stockholders

Comprehensive (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries ( 23 ) 31 125

Comprehensive income attributable to common stockholders $ 15,215 $ 12,141 $ 5,210

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Redeemable Noncontrolling Interests and Equity

(in millions, except per share data)

Noncontrolling

(in millions)

Noncontrolling

Common Stock Additional

Comprehensive

Stockholders’

(Loss) Income

Income (Loss)

Stockholders’

Noncontrolling

Shares Amount

Balance as of December 31, 2020 $ 604 2,879 $ 3 $ 27,260 $ 363 $ ( 5,401 ) $ 22,225 $ 850 $ 23,075

Adjustments for prior periods from adopting ASU 2020-06 — — — ( 474 ) — 211 ( 263 ) — ( 263 )

Reclassification between equity and mezzanine equity for convertible senior

Exercises of conversion feature of convertible senior notes — 2 — 6 — — 6 — 6

Settlements of warrants — 112 — — — — — — —

Issuance of common stock for equity incentive awards — 107 — 707 — — 707 — 707

Issuance of common stock in public offerings, net of issuance costs of $ 68

Stock-based compensation — — — 2,299 — — 2,299 — 2,299

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Buy-outs of noncontrolling interests ( 15 ) — — 5 — — 5 — 5

Other comprehensive income

Net income 43 — — — — 5,519 5,519 82 5,601

Other comprehensive loss — — — — ( 309 ) — ( 309 ) — ( 309 )

Balance as of December 31, 2021 $ 568 3,100 $ 3 $ 29,803 $ 54 $ 329 $ 30,189 $ 826 $ 31,015

Adjustments for prior periods from adopting ASU 2020-06

Exercises of conversion feature of convertible senior notes

Settlements of warrants — 37 — — — — — — —

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Stock-based compensation — — — 1,806 — — 1,806 — 1,806

Contributions from noncontrolling interests

Distributions to noncontrolling interests ( 46 ) — — — — — — ( 113 ) ( 113 )

Buy-outs of noncontrolling interests ( 11 ) — — 27 — — 27 ( 61 ) ( 34 )

Net (loss) income ( 102 ) — — — — 12,556 12,556 133 12,689

Other comprehensive loss — — — — ( 415 ) — ( 415 ) — ( 415 )

Balance as of December 31, 2022 $ 409 3,164 $ 3 $ 32,177 $ ( 361 ) $ 12,885 $ 44,704 $ 785 $ 45,489

Exercises of conversion feature of convertible senior notes

Settlements of warrants

Issuance of common stock for equity incentive awards — 21 — 700 — — 700 — 700

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Net (loss) income ( 96 ) — — — — 14,997 14,997 73 15,070

Other comprehensive loss

Other comprehensive income — — — — 218 — 218 — 218

Balance as of December 31, 2023 $ 242 3,185 $ 3 $ 34,892 $ ( 143 ) $ 27,882 $ 62,634 $ 733 $ 63,367

(1) Prior period results have been adjusted to reflect the three -for-one stock split effected in the form of a stock dividend in August 2022 .

See Note 1, Overview , for details.

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended December 31,

2023 2022 2021

Cash Flows from Operating Activities

Net income $ 14,974 $ 12,587 $ 5,644

Adjustments to reconcile net income to net cash provided by operating activities:

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Inventory and purchase commitments write-downs 463 177 140

Foreign currency transaction net unrealized loss (gain)

Foreign currency transaction net unrealized (gain) loss ( 144 ) 81 ( 55 )

Deferred income taxes ( 6,349 ) ( 196 ) ( 149 )

Non-cash interest and other operating activities 81 340 245

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Accounts receivable ( 586 ) ( 1,124 ) ( 130 )

Inventory ( 1,195 ) ( 6,465 ) ( 1,709 )

Operating lease vehicles ( 1,952 ) ( 1,570 ) ( 2,114 )

Prepaid expenses and other current assets

Other non-current assets

Accounts payable and accrued liabilities

Prepaid expenses and other assets ( 2,652 ) ( 3,713 ) ( 1,540 )

Accounts payable, accrued and other liabilities 2,605 8,029 5,367

Deferred revenue 1,532 1,131 793

Customer deposits

Other long-term liabilities

Net cash provided by operating activities 13,256 14,724 11,497

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Proceeds from maturities of investments 12,353 22 —

Proceeds from sales of investments 138 — —

Receipt of government grants — 76 6

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Cash Flows from Financing Activities

Proceeds from issuances of common stock in public offerings, net of issuance costs

Proceeds from issuances of debt 3,931 — 8,883

Repayments of convertible and other debt

Repayments of debt ( 1,351 ) ( 3,364 ) ( 14,167 )

Collateralized lease repayments — — ( 9 )

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Payments for buy-outs of noncontrolling interests in subsidiaries ( 54 ) ( 45 ) ( 10 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities 2,589 ( 3,527 ) ( 5,203 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 4 ( 444 ) ( 183 )

Net (decrease) increase in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash 265 ( 1,220 ) ( 1,757 )

Cash and cash equivalents and restricted cash, beginning of period 16,924 18,144 19,901

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Cash paid during the period for interest, net of amounts capitalized $ 126 $ 152 $ 266

Cash paid during the period for taxes, net of refunds

Cash paid during the period for income taxes, net of refunds $ 1,119 $ 1,203 $ 561

The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements

Note 1 –

(“Tesla”, the “Company”, “we”, “us”

or “our”) was incorporated in the State of Delaware on July 1, 2003.

Note 1 – Overview

(“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003.

We design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems, and offer services related to our products.

Our Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes our company, manages resource allocations and measures performance among two operating and reportable segments:

(i) automotive and (ii) energy generation and stor age.

Since the first quarter of 2020, there has been a worldwide impact from the COVID-19 pandemic, as well as an easing of restrictions on social, business, travel and government activities and functions.

There are ongoing global impacts resulting from the pandemic, and we have been affected by temporary manufacturing closures, employment and compensation adjustments and impediments to administrative activities supporting our product deliveries and deployments.

In addition, we have experienced and are experiencing the impacts of varying levels of inflation caused by the COVID‐19 pandemic and general global economic conditions.

On August 5, 2022, we increased the number of authorized shares of common stock by 4,000,000,000 shares and our Board of Directors declared the 2022 Stock Split.

Each stockholder of record on August 17, 2022 received a dividend of two additional shares of common stock for each then-held share, distributed after close of trading on August 24, 2022.

All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the 2022 Stock Split.

Note 2 –

Summary of Significant Accounting Policies

(i) automotive and (ii) energy generation and storage.

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with GAAP and reflect our accounts and operations and those of our subsidiaries in which we have a controlling financial interest.

In accordance with the provisions of ASC 810, Consolidation (“ASC 810”), we consolidate any variable interest entity (“VIE”) of which we are the primary beneficiary.

We have formed VIEs with financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with solar energy systems and leases under our direct vehicle leasing programs.

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however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests.

ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

We do not consolidate a VIE in which we have a majority ownership interest when we are not considered the primary beneficiary.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.

The estimates used for, but not limited to, determining significant economic incentive for resale value guarantee arrangements, sales return reserves, the collectability of accounts and finance receivables, inventory valuation, warranties, fair value of long-lived assets, goodwill, fair value of financial instruments, fair value and residual value of operating lease vehicles and solar energy systems subject to leases could be impacted.

The estimates used for, but not limited to, determining significant economic incentive for resale value guarantee arrangements, sales return reserves, income taxes, the collectability of accounts and finance receivables, inventory valuation, warranties, fair value of long-lived assets, goodwill, fair value of financial instruments, fair value and residual value of operating lease vehicles and solar energy systems subject to leases could be impacted.

We have assessed the impact and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this Annual Report on Form 10-K.

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Year Ended December 31,

2023 2022 2021

Automotive sales $ 78,509 $ 67,210 $ 44,125

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Total revenues $ 96,773 $ 81,462 $ 53,823

(1) Pricing adjustments on our vehicle offerings can impact the estimate of likelihood that customers would exercise their resale value guarantees, resulting in an adjustment of our sales return reserve on vehicles sold with resale value guarantees.

Actual return rates being lower than expected and increases in resale values of our vehicles in 2021 resulted in a net release of our reserve of $ 365 million for the year ended December 31, 2021, which represented increases in automotive sales revenue.

The net release or increase of reserves which impacted automotive sales revenue were immaterial for the years ended December 31, 2022 and December 31, 2020.

Further, $ 324 million of the total revenue recognized as of December 31, 2022 is related to the general FSD feature release in North America in the fourth quarter of 2022.

Automotive Segment

Automotive Sales

Automotive sales revenue includes revenues related to cash and financing deliveries of new vehicles, and specific other features and services that meet the definition of a performance obligation under ASC 606, including access to our FSD features, internet connectivity, Supercharger network and over-the-air software updates.

Automotive sales revenue includes revenues related to cash and financing deliveries of new vehicles, and specific other features and services that meet the definition of a performance obligation under ASC 606, including access to our FSD Capability features and their ongoing maintenance, internet connectivity, free Supercharging programs and over-the-air software updates.

We recognize revenue on automotive sales upon delivery to the customer, which is when the control of a vehicle transfers.

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We also recognize a sales return reserve based on historical experience plus consideration for expected future market values, when we offer resale value guarantees or similar buyback terms.

Other features and services such as access to our internet connectivity, legacy programs offering unlimited free Supercharging and over-the-air software updates are provisioned upon control transfer of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer.

Other features and services such as access to our internet connectivity, unlimited free Supercharging and over-the-air software updates are provisioned upon control transfer of a vehicle and recognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer.

Other limited free Supercharging incentives are recognized based on actual usage or expiration, whichever is earlier.

We recognize revenue related to these other features and services over the performance period, which is generally the expected ownership life of the vehicle.

Revenue related to FSD is recognized when functionality is delivered to the customer and the portion related to software updates is recognized over time.

Revenue related to FSD Capability features is recognized when functionality is delivered to the customer and their ongoing maintenance is recognized over time.

For our obligations related to automotive sales, we estimate standalone selling price by considering costs used to develop and deliver the service, third-party pricing of similar options and other information that may be available.

Any fees that are paid or payable by us to a customer’s lender when we arrange the financing are recognized as an offset against automotive sales revenue.

Costs to obtain a contract mainly relate to commissions paid to our sales personnel for the sale of vehicles.

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Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.

We offer resale value guarantees or similar buy-back terms to certain international customers who purchase vehicles and who finance their vehicles through one of our specified commercial banking partners.

Under these programs, we receive full payment for the vehicle sales price at the time of delivery and our counterparty has the option of selling their vehicle back to us during the guarantee period, which currently is generally at the end of the term of the applicable loan or financing program, for a pre-determined resale value.

We account for such automotive sales as a sale with a right of return when we do not believe the customer has a significant economic incentive to exercise the resale value guarantee provided to them at contract inception.

The process to determine whether there is a significant economic incentive includes a comparison of a vehicle’s estimated market value at the time the option is exercisable with the guaranteed resale value to determine the customer’s economic incentive to exercise.

On a quarterly basis, we assess the estimated market values of vehicles sold with resale value guarantees to determine whether there have been changes to the likelihood of future product returns.

We offer resale value guarantees to our commercial banking partners in connection with certain vehicle leasing programs.

Under these programs, we originate the lease with our end customer and immediately transfer the lease and the underlying vehicle to our commercial banking partner, with the transaction being accounted for as a sale under ASC 606.

We receive upfront payment for the vehicle, do not bear casualty and credit risks during the lease term, and we provide a guarantee capped to a limit if they are unable to sell the vehicle at or above the vehicle’s contract residual value at the end of the lease term.

We estimate a guarantee liability in accordance with ASC 460, Guarantees and record it within other liabilities on our consolidated balance sheet.

On a quarterly basis, we assess the estimated market value of vehicles sold under this program to determine whether there have been changes to the amount of expected resale value guarantee payments.

As we accumulate more data related to the resale values of our vehicles or as market conditions change, there may be material changes to their estimated values.

The total sales return reserve on vehicles sold with resale value guarantees was $ 91 million and $ 223 million as of December 31, 2022 and 2021, respectively, of which $ 40 million and $ 91 million was short-term, respectively.

Deferred revenue related to the access to our FSD features, internet connectivity, free Supercharging programs and over-the-air software updates primarily on automotive sales consisted of the following (in millions):

The total guarantee liability on vehicles sold under this program was immaterial as of December 31, 2023.

Deferred revenue related to the access to our FSD Capability features and their ongoing maintenance, internet connectivity, free Supercharging programs and over-the-air software updates primarily on automotive sales consisted of the following (in millions):

Year Ended December 31,

Deferred revenue—

beginning of period

Deferred revenue— beginning of period $ 2,913 $ 2,382

Additions 1,201 1,178

Net changes in liability for pre-existing contracts 17 ( 67 )

Revenue recognized ( 595 ) ( 580 )

Deferred revenue—

end of period

Deferred revenue— end of period $ 3,536 $ 2,913

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date.

Revenue recognized from the deferred revenue balance as of December 31, 2021 was $ 472 million as of December 31, 2022, primarily related to the general FSD feature release in North America in the fourth quarter of 2022.

We had recognized revenue of $ 312 million from the deferred revenue balance as of December 31, 2020, for the year ended December 31, 2021.

Revenue recognized from the deferred revenue balance as of December 31, 2022 was $ 469 million for the year ended December 31, 2023.

We had recognized revenue of $ 472 million from the deferred revenue balance as of December 31, 2021, for the year ended December 31, 2022, primarily related to the general FSD Capability feature release in North America in the fourth quarter of 2022.

Of the total deferred revenue balance as of December 31, 2023, we expect to recognize $ 926 million of revenue in the next 12 months.

The remaining balance will be recognized at the time of transfer of control of the product or over the performance period as discussed above in Automotive Sales.

We have been providing loans for financing our automotive deliveries during the year ended December 31, 2022.

We have recorded net financing receivables on the consolidated balance sheets, of which $ 128 million is recorded within Accounts receivable, net, for the current portion and $ 665 million is recorded within Other non-current assets for the long-term portion, as of December 31, 2022.

We have been providing loans for financing our automotive deliveries in volume since fiscal year 2022.

As of December 31, 2023 and 2022, we have recorded net financing receivables on the consolidated balance sheets, of which $ 242 million and $ 128 million, respectively, is recorded within Accounts receivable, net, for the current portion and $ 1.04 billion and $ 665 million, respectively, is recorded within Other non-current assets for the long-term portion.

Automotive Regulatory Credits

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We record leasing revenues to automotive leasing revenue on a straight-line basis over the contractual term, and we record the depreciation of these vehicles to cost of automotive leasing revenue.

For the years ended December 31, 2022, 2021 and 2020, we recognized $ 1.75 billion, $ 1.25 billion and $ 752 million of direct vehicle leasing revenue, respectively.

For the years ended December 31, 2023, 2022 and 2021, we recognized $ 1.86 billion, $ 1.75 billion and $ 1.25 billion of direct vehicle leasing revenue, respectively.

As of December 31, 2023 and 2022, we had deferred $ 458 million and $ 407 million, respectively, of lease-related upfront payments, which will be recognized on a straight-line basis over the contractual terms of the individual leases.

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Direct Sales-Type Leasing Program

We have outstanding direct leases and vehicles financed by us under loan arrangements accounted for as sales-type leases under ASC 842, Leases (“ASC 842”), in certain countries in Asia and Europe.

Depending on the specific program, customers may or may not have a right to return the vehicle to us during or at the end of the lease term.

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Services and Other Revenue

Services and other revenue consists of non-warranty after-sales vehicle services and parts, sales of used vehicles, paid Supercharging, retail merchandise and vehicle insurance revenue.

Revenues related to repair and maintenance services are recognized over time as services are provided and extended service plans are recognized over the performance period of the service contract as the obligation represents a stand-ready obligation to the customer.

Services and other revenue consists of sales of used vehicles, non-warranty after-sales vehicle services, body shop and parts, paid Supercharging, vehicle insurance revenue and retail merchandise.

Revenues related to repair, maintenance and vehicle insurance services are recognized over time as services are provided and extended service plans are recognized over the performance period of the service contract as the obligation represents a stand-ready obligation to the customer.

We sell used vehicles, services, service plans, vehicle components and merchandise separately and thus use standalone selling prices as the basis for revenue allocation to the extent that these items are sold in transactions with other performance obligations.

Payment for used vehicles, services, and merchandise are typically received at the point when control transfers to the customer or in accordance with payment terms customary to the business.

Payment for used vehicles, services, vehicle components, and merchandise are typically received at the point when control transfers to the customer or in accordance with payment terms customary to the business.

Payments received for prepaid plans are refundable upon customer cancellation of the related contracts and are included within Customer deposits on the consolidated balance sheets.

Deferred revenue related to services and other revenue was immaterial as of December 31, 2022 and 2021.

We record in Deferred revenue any non-refundable prepayment amounts that are collected from customers and unearned insurance premiums, which is recognized as revenue ratably over the respective customer contract term.

Deferred revenue excluding unearned insurance premiums was immaterial as of December 31, 2023 and 2022.

Energy Generation and Storage Segment

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Payment for such storage systems is made upon invoice or in accordance with payment terms customary to the business.

For large commercial and utility grade solar energy system and energy storage system sales which consist of the engineering, design and installation of the system, customers make milestone payments that are consistent with contract-specific phases of a project.

Revenue from such contracts is recognized over time using the percentage of completion method based on cost incurred as a percentage of total estimated contract costs for energy storage system sales and as a percentage of total estimated labor hours for solar energy system sales.

For large commercial and utility grade energy storage system sales which consist of the engineering, design and installation of the system, customers make milestone payments that are consistent with contract-specific phases of a project.

Revenue from such contracts is recognized over time using the percentage of completion method based on cost incurred as a percentage of total estimated contract costs for energy storage system sales.

In instances where there are multiple performance obligations in a single contract, we allocate the consideration to the various obligations in the contract based on the relative standalone selling price method.

Standalone selling prices are estimated based on estimated costs plus margin or by using market data for comparable products.

Costs incurred on the sale of residential installations before the solar energy systems are completed are included as work in process within inventory in the consolidated balance sheets.

Any fees that are paid or payable by us to a solar loan lender would be recognized as an offset against revenue.

Costs to obtain a contract relate mainly to commissions paid to our sales personnel related to the sale of solar energy systems and energy storage systems.

As our contract costs related to solar energy system and energy storage system sales are typically fulfilled within one year, the costs to obtain a contract are expensed as incurred.

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

In certain instances, we may receive a bonus payment if the system performs above a specified level.

Conversely, if a solar energy system or energy storage system does not meet the performance guarantee requirements, we may be required to pay liquidated damages.

Other forms of variable consideration related to our large commercial and utility grade solar energy system and energy storage system contracts include variable customer payments that will be made based on our energy market participation activities.

Costs to obtain a contract relate mainly to commissions paid to our sales personnel related to the sale of energy storage systems.

As our contract costs related to energy storage system sales are typically fulfilled within one year, the costs to obtain a contract are expensed as incurred.

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

If an energy storage system does not meet the performance guarantee requirements, we may be required to pay liquidated damages.

Other forms of variable consideration related to our large commercial and utility grade energy storage system contracts include variable customer payments that will be made based on our energy market participation activities.

Such guarantees and variable customer payments represent a form of variable consideration and are estimated at contract inception at their most likely amount and updated at the end of each reporting period as additional performance data becomes available.

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We record as deferred revenue any non-refundable amounts that are collected from customers related to fees charged for prepayments, which is recognized as revenue ratably over the respective customer contract term.

As of December 31, 2022 and 2021, deferred revenue related to such customer payments amounted to $ 863 million and $ 399 million, respectively, mainly due to milestone payments.

As of December 31, 2023 and 2022, deferred revenue related to such customer payments amounted to $ 1.60 billion and $ 863 million, respectively, mainly due to contractual payment terms.

Revenue recognized from the deferred revenue balance as of December 31, 2022 and 2021 was $ 571 million and $ 171 million for the years ended December 31, 2023 and 2022, respectively.

We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for energy generation and storage sales with an original expected contract length of one year or less and the amount that we have the right to invoice when that amount corresponds directly with the value of the performance to date.

As of December 31, 2022, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $ 210 million.

Of this amount, we expect to recognize $ 12 million in the next 12 months and the remaining over a period up to 25 years.

We have been providing loans for financing our energy generation products during the year ended December 31, 2022.

We have recorded net financing receivables on the consolidated balance sheets, of which $ 24 million is recorded within Accounts receivable, net, for the current portion and $ 387 million is recorded within Other non-current assets for the long-term portion, as of December 31, 2022.

As of December 31, 2023, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $ 3.43 billion.

Of this amount, we expect to recognize $ 1.05 billion in the next 12 months and the rest over the remaining performance obligation period.

We have been providing loans for financing our energy generation products in volume since fiscal year 2022.

As of December 31, 2023 and 2022, we have recorded net financing receivables on the consolidated balance sheets, of which $ 31 million and $ 24 million, respectively, is recorded within Accounts receivable, net, for the current portion and $ 578 million and $ 387 million, respectively, is recorded within Other non-current assets for the long-term portion.

Energy Generation and Storage Leasing

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Deferred revenue also includes the portion of rebates and incentives received from utility companies and various local and state government agencies, which is recognized as revenue over the lease term.

As of December 31, 2022 and 2021, deferred revenue from rebates and incentives amounted to $ 25 million and $ 27 million, respectively.

As of December 31, 2023 and 2022, deferred revenue from rebates and incentives was immaterial.

We capitalize initial direct costs from the execution of agreements for solar energy systems and PPAs, which include the referral fees and sales commissions, as an element of solar energy systems, net, and subsequently amortize these costs over the term of the related agreements.

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Automotive Sales

Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, allocations of electricity and infrastructure costs related to our Supercharger network and reserves for estimated warranty expenses.

Cost of automotive sales revenue includes direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistic costs, vehicle connectivity costs, FSD Capability ongoing maintenance costs, allocations of electricity and infrastructure costs related to our Supercharger network and reserves for estimated warranty expenses.

Cost of automotive sales revenues also includes adjustments to warranty expense and charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand.

Additionally, cost of automotive sales revenue benefits from manufacturing credits earned.

Automotive Leasing

Cost of automotive leasing revenue includes the depreciation of operating lease vehicles, cost of goods sold associated with direct sales-type leases and warranty expense related to leased vehicles.

Cost of automotive leasing revenue also includes vehicle connectivity costs and allocations of electricity and infrastructure costs related to our Supercharger network for vehicles under our leasing programs.

Services and Other

Costs of services and other revenue includes costs associated with providing non-warranty after-sales services and parts, costs of paid Supercharging, cost of used vehicles including refurbishment costs, costs for retail merchandise, and costs to provide vehicle insurance.

Costs of services and other revenue includes cost of used vehicles including refurbishment costs, costs associated with providing non-warranty after-sales services, costs associated with our body shops and part sales, costs of paid Supercharging, costs to provide vehicle insurance and costs for retail merchandise.

Energy Generation and Storage Segment

Energy Generation and Storage

Cost of energy generation and storage revenue includes direct and indirect material and labor costs, warehouse rent, freight, warranty expense, other overhead costs and amortization of certain acquired intangible assets.

Cost of energy generation and storage revenue includes direct and indirect material and labor costs, overhead costs, freight, warranty expense, and amortization of certain acquired intangible assets.

Cost of energy generation and storage revenue also includes charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand.

Additionally, cost of energy generation and storage revenue benefits from manufacturing credits earned.

In agreements for solar energy systems and PPAs where we are the lessor, the cost of revenue is primarily comprised of depreciation of the cost of leased solar energy systems, maintenance costs associated with those systems and amortization of any initial direct costs.

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Research and development costs are expensed as incurred.

We are subject to income taxes in the U.S.

and in many foreign jurisdictions.

Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period.

Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets that are not more likely than not to be realized.

In completing our assessment of realizability of our deferred tax assets, we consider our history of income (loss) measured at pre-tax income (loss) adjusted for permanent book-tax differences on a jurisdictional basis, volatility in actual earnings, excess tax benefits related to stock-based compensation in recent prior years, and impacts of the timing of reversal of existing temporary differences.

We also rely on our assessment of the Company’s projected future results of business operations, including uncertainty in future operating results relative to historical results, volatility in the market price of our common stock and its performance over time, variable macroeconomic conditions impacting our ability to forecast future taxable income, and changes in business that may affect the existence and magnitude of future taxable income.

Our valuation allowance assessment is based on our best estimate of future results considering all available information.

We record liabilities related to uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that it is more likely than not that those positions may not be fully sustained upon review by tax authorities.

Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense.

The Tax Cuts and Jobs Act (“TCJA”) subjects a U.S.

shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries.

The Tax Cuts and Jobs Act subjects a U.S.

shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries.

Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes.

We elected the deferred method, under which we recorded the corresponding deferred tax assets and liabilities in our consolidated balance sheets, currently subject to valuation allowance.

We elected the deferred method, under which we recorded the corresponding deferred tax assets and liabilities in our consolidated balance sheets.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive (loss) income.

Other comprehensive (loss) income consists of foreign currency translation adjustments and unrealized net gains and losses on investments that have been excluded from the determination of net income.

Comprehensive income is comprised of net income and other comprehensive income (loss).

Other comprehensive income (loss) consists of foreign currency translation adjustments and unrealized net gains and losses on investments that have been excluded from the determination of net income.

Stock-Based Compensation

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We have determined that the contractual provisions of the funds represent substantive profit-sharing arrangements.

We have further determined that the methodology for calculating the noncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit-sharing arrangements is a balance sheet approach using the hypothetical liquidation at book value (“HLBV”) method.

We, therefore, determine the amount of the noncontrolling interests and redeemable noncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balance sheet as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries.

Under the HLBV method, the amounts reported as noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheet represent the amounts the third parties would hypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at their recorded amounts determined in accordance with GAAP and with tax laws effective at the balance sheet date and distributed to the third parties.

The third parties’

interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrolling interest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between the funds and the third parties.

The third parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrolling interest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between the funds and the third parties.

However, the redeemable noncontrolling interest balance is at least equal to the redemption amount.

The redeemable noncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheet since these third parties have the right to redeem their interests in the funds for cash or other assets.

For certain funds, there may be significant fluctuations in net income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries due to changes in the liquidation provisions as time-based milestones are reached.

For certain funds, there have been significant fluctuations in net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries due to changes in the liquidation provisions as time-based milestones have been reached.

Net Income per Share of Common Stock Attributable to Common Stockholders

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Year Ended December 31,

2023 2022 2021

Net income attributable to common stockholders $ 14,997 $ 12,556 $ 5,519

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Net income used in computing diluted net income per share of common stock $ 14,999 $ 12,584 $ 5,533

The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders, as adjusted to give effect to the 2022 Stock Split (in millions):

The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders (in millions):

Year Ended December 31,

2023 2022 2021

Weighted average shares used in computing net income per share of common stock, basic 3,174 3,130 2,959

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Convertible senior notes 2 3 29

Warrants 11 32 106

Weighted average shares used in computing net income per share of common stock, diluted 3,485 3,475 3,386

The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income per share of common stock attributable to common stockholders, because their effect was anti-dilutive, as adjusted to give effect to the 2022 Stock Split (in millions):

Year Ended December 31,

2023 2022 2021

Stock-based awards 12 4 1

Convertible senior notes (1)

(1) Under the modified retrospective method of adoption of ASU 2020-06, the dilutive impact of convertible senior notes was calculated using the if-converted method for the years ended December 31, 2022 and 2021.

Certain convertible senior notes were calculated using the treasury stock method for the year ended December 31, 2020.

Business Combinations

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We recognize goodwill if the fair value of the total purchase consideration and any noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed.

We recognize a bargain purchase gain within Other (expense) income, net, in the consolidated statement of operations if the net fair value of the identifiable assets acquired and the liabilities assumed is in excess of the fair value of the total purchase consideration and any noncontrolling interests.

We recognize a bargain purchase gain within Other income (expense), net, in the consolidated statement of operations if the net fair value of the identifiable assets acquired and the liabilities assumed is in excess of the fair value of the total purchase consideration and any noncontrolling interests.

We include the results of operations of the acquired business in the consolidated financial statements beginning on the acquisition date.

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All highly liquid investments with an original maturity of three months or less at the date of purchase are considered cash equivalents.

Our cash equivalents are primarily comprised of money market funds and certificates of deposit.

Our cash equivalents are primarily comprised of U.S.

government securities, money market funds and commercial paper.

Restricted Cash

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Our restricted cash is comprised primarily of cash held to service certain payments under various secured debt facilities.

In addition, restricted cash includes cash held as collateral for certain permits as well as sales to lease partners with a resale value guarantee, letters of credit, real estate leases, deposits held for our insurance services and certain operating leases.

In addition, restricted cash includes cash held as collateral for sales to lease partners with a resale value guarantee, letters of credit, real estate leases and deposits held for our insurance services.

We record restricted cash as other assets in the consolidated balance sheets and determine current or non-current classification based on the expected duration of the restriction.

Our total cash and cash equivalents and restricted cash, as presented in the consolidated statements of cash flows, was as follows (in millions):

2023 December 31,

2022 December 31,

Cash and cash equivalents $ 16,398 $ 16,253 $ 17,576

Restricted cash included in prepaid expenses and other

current assets

Restricted cash included in prepaid expenses and other current assets 543 294 345

Restricted cash included in other non-current assets 248 377 223

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Investments may be comprised of a combination of marketable securities, including U.S.

government securities, corporate debt securities, time deposit, and certain certificates of deposit, which are all designated as available-for-sale and reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive income which is included within stockholders’

government securities, corporate debt securities, commercial paper, time deposits, and certain certificates of deposit, which are all designated as available-for-sale and reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive income which is included within stockholders’ equity.

Available-for-sale marketable securities with maturities greater than three months at the date of purchase are included in short-term investments in our consolidated balance sheets.

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The cost of available-for-sale investments sold is based on the specific identification method.

Realized gains and losses on the sale of available-for-sale investments are recorded in Other (expense) income, net.

Realized gains and losses on the sale of available-for-sale investments are recorded in Other income (expense), net.

We regularly review all of our investments for declines in fair value.

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Depending on the day of the week on which the end of a fiscal quarter falls, our accounts receivable balance may fluctuate as we are waiting for certain customer payments to clear through our banking institutions and receipts of payments from our financing partners, which can take up to approximately two weeks based on the contractual payment terms with such partners.

Our accounts receivable balances associated with our sales of regulatory credits, which are typically transferred to other manufacturers during the last few days of the quarter, is dependent on contractual payment terms.

Our accounts receivable balances associated with our sales of regulatory credits are dependent on contractual payment terms.

Additionally, government rebates can take up to a year or more to be collected depending on the customary processing timelines of the specific jurisdictions issuing them.

These various factors may have a significant impact on our accounts receivable balance from period to period.

As of December 31, 2022 and December 31, 2021 , we had $ 753 million and $ 627 million, respectively, of long-term government rebates receivable in Other non-current assets in our consolidated balance sheets.

As of December 31, 2023 and 2022, we had $ 207 million and $ 753 million, respectively, of long-term government rebates receivable in Other non-current assets in our consolidated balance sheets.

Financing Receivables

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When originating consumer receivables, we review the credit application, the proposed contract terms, credit bureau information (e.g., FICO score) and other information.

Our evaluation emphasizes the applicant’s ability to pay and creditworthiness focusing on payment, affordability, and applicant credit history as key considerations.

Generally, all customers in this portfolio have strong creditworthiness at loan origination.

After origination, we review the credit quality of retail financing based on customer payment activity and aging analysis.

For all financing receivables, we define “past due”

as any payment, including principal and interest, which is at least 31 days past the contractual due date.

As of December 31, 2022, the majority of our financing receivables were at current status with only an immaterial balance being past due.

Additionally, as of December 31, 2022, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2022.

For all financing receivables, we define “past due” as any payment, including principal and interest, which is at least 31 days past the contractual due date.

As of December 31, 2023 and 2022, the vast majority of our financing receivables were at current status with only an immaterial balance being past due.

As of December 31, 2023, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2023 and 2022, and as of December 31, 2022, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2022.

We have customer notes receivable under the legacy MyPower loan program, which provided residential customers with the option to finance the purchase of a solar energy system through a 30-year loan and were all originated prior to year 2018.

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These deposits are typically in excess of insured limits.

As of December 31, 2022 and December 31, 2021 , no entity represented 10 % or more of our total receivables balance.

As of December 31, 2023 and 2022, no entity represented 10% or more of our total receivables balance.

We are dependent on our suppliers, including single source suppliers, and the inability of these suppliers to deliver necessary components of our products in a timely manner at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components from these suppliers, could have a material adverse effect on our business, prospects, financial condition and operating results.

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We generally depreciate their cost, less residual value, using the straight-line-method to cost of automotive leasing revenue over the contractual period.

The gross cost of operating lease vehicles as of December 31, 2022 and December 31, 2021 was $ 6.08 billion and $ 5.28 billion, respectively.

Operating lease vehicles on the consolidated balance sheets are presented net of accumulated depreciation of $ 1.04 billion and $ 773 million as of December 31, 2022 and December 31, 2021 , respectively.

The gross cost of operating lease vehicles as of December 31, 2023 and 2022 was $ 7.36 billion and $ 6.08 billion, respectively.

Operating lease vehicles on the consolidated balance sheets are presented net of accumulated depreciation of $ 1.38 billion and $ 1.04 billion as of December 31, 2023 and 2022, respectively.

Digital Assets, Net

We currently account for all digital assets held as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other .

We have ownership of and control over our digital assets and we may use third-party custodial services to secure it.

The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition.

We determine the fair value of our digital assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level I inputs).

We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our digital assets are impaired.

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Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets, as follows:

Solar energy systems in service

30 to 35 years

Initial direct costs related to customer

solar energy system lease acquisition

Lease term (up to 25 years )

Solar energy systems in service 30 to 35 years

Initial direct costs related to customer solar energy system lease acquisition costs Lease term (up to 25 years)

Solar energy systems pending interconnection will be depreciated as solar energy systems in service when they have been interconnected and placed in-service.

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Depreciation is generally computed using the straight-line method over the estimated useful lives of the respective assets, as follows:

Machinery, equipment, vehicles and

office furniture

3 to 15 years

Building and building improvements

15 to 30 years

Computer equipment and software

3 to 10 years

Machinery, equipment, vehicles and office furniture 3 to 15 years

Tooling 4 to 7 years

Building and building improvements 15 to 30 years

Computer equipment and software 3 to 10 years

Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the terms of the related leases.

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For the years ended December 31, 2023, 2022 and 2021, we have recognized no material impairments of our long-lived assets.

Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from three to thirty years .

We assess goodwill for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value.

Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from seven to thirty years .

For the years ended December 31, 2023, 2022, and 2021, we did no t recognize any impairment of goodwill.

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Costs related to preliminary project activities and post-implementation activities are expensed as incurred.

Such costs are amortized on a straight-line basis over its estimated useful life of three years.

Such costs are amortized on a straight-line basis over their estimated useful life of three to five years .

Software development costs incurred in development of software to be sold, leased, or otherwise marketed, incurred subsequent to the establishment of technological feasibility and prior to the general availability of the software are capitalized when they are expected to become significant.

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For each subsidiary, we apply the monthly average functional exchange rate to its monthly income or loss and the month-end functional currency rate to translate the balance sheet.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency.

Transaction gains and losses are recognized in Other (expense) income, net, in the consolidated statements of operations.

For the years ended December 31, 2022, 2021 and 2020, we recorded a net foreign currency transaction loss of $ 89 million, gain of $ 97 million and loss of $ 114 million, respectively.

We provide a manufacturer’s warranty on all new and used vehicles and a warranty on the installation and components of the energy generation and storage systems we sell for periods typically between 10 to 25 years .

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the respective subsidiary.

Transaction gains and losses are recognized in Other income (expense), net, in the consolidated statements of operations.

For the years ended December 31, 2023, 2022 and 2021, we recorded a net foreign currency transaction gain of $ 122 million, loss of $ 89 million and gain of $ 97 million, respectively.

We accrue a warranty reserve for the products sold by us, which includes our best estimate of the projected costs to repair or replace items under warranties and recalls if identified.

These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims.

These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience may cause material changes to the warranty reserve in the future.

These estimates are inherently uncertain and changes to our historical or projected warranty experience may cause material changes to the warranty reserve in the future.

The warranty reserve does not include projected warranty costs associated with our vehicles subject to operating lease accounting and our solar energy systems under lease contracts or PPAs, as the costs to repair these warranty claims are expensed as incurred.

The portion of the warranty reserve expected to be incurred within the next 12 months is included within Accrued liabilities and other, while the remaining balance is included within Other long-term liabilities on the consolidated balance sheets.

For liabilities that we are entitled to receive indemnification from our suppliers, we record receivables for the contractually obligated amounts on the consolidated balance sheets as a component of Prepaid expenses and other current assets for the current portion and as Other non-current assets for the long-term portion.

Warranty expense is recorded as a component of Cost of revenues in the consolidated statements of operations.

Due to the magnitude of our automotive business, accrued warranty balance is primarily related to our automotive segment.

Due to the magnitude of our automotive business, our accrued warranty balance is primarily related to our automotive segment.

Accrued warranty activity consisted of the following (in millions):

Year Ended December 31,

Accrued warranty—beginning of period

2023 2022 2021

Accrued warranty—beginning of period $ 3,505 $ 2,101 $ 1,468

Warranty costs incurred ( 1,225 ) ( 803 ) ( 525 )

Net changes in liability for pre-existing warranties,

including expirations and foreign exchange impact

Net changes in liability for pre-existing warranties, including expirations and foreign exchange impact 539 522 102

Provision for warranty 2,333 1,685 1,056

Accrued warranty—end of period

Accrued warranty—end of period $ 5,152 $ 3,505 $ 2,101

Customer Deposits

Customer deposits primarily consist of cash payments from customers at the time they place an order or reservation for a vehicle or an energy product and any additional payments up to the point of delivery or the completion of installation.

Customer deposits primarily consist of refundable cash payments from customers at the time they place an order or reservation for a vehicle or an energy product and any additional payments up to the point of delivery or the completion of installation.

Customer deposits also include prepayments on contracts that can be cancelled without significant penalties, such as vehicle maintenance plans.

Customer deposit amounts vary depending on the vehicle model, the energy product and the country of delivery.

With the exception of a nominal order fee, customer deposits are fully refundable on vehicles prior to delivery and fully refundable in the case of an energy generation or storage product prior to the entry into a purchase agreement or in certain cases for a limited time thereafter (in accordance with applicable laws).

Customer deposits are included in current liabilities until refunded, forfeited or applied towards the customer’s purchase balance.

Customer deposits are included in Accrued liabilities and other on the consolidated balance sheets until refunded, forfeited or applied towards the customer’s purchase balance.

Government Assistance Programs and Incentives

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The benefit is generally recorded when all conditions attached to the incentive have been met or are expected to be met and there is reasonable assurance of their receipt.

The government incentives received by us are immaterial in all periods presented since the adoption of ASU 2021-10.

Gigafactory New York—New York State Investment and Lease

The IRA Incentives

On August 16, 2022, the IRA was enacted into law and is effective for taxable years beginning after December 31, 2022.

The IRA includes multiple incentives to promote clean energy, electric vehicles, battery and energy storage manufacture or purchase, in addition to a new corporate alternative minimum tax of 15% on adjusted financial statement income of corporations with profits greater than $1 billion.

Some of these measures are expected to materially affect our consolidated financial statements.

For the year ended December 31, 2023, the impact from our IRA incentive was primarily a reduction of our material costs in our consolidated statement of operations.

We will continue to evaluate the effects of the IRA as more guidance is issued and the relevant implications to our consolidated financial statements.

Gigafactory New York—New York State Investment and Lease

We have a lease through the Research Foundation for the SUNY Foundation with respect to Gigafactory New York.

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This incentive reduces the related lease costs of the facility within the Energy generation and storage cost of revenues and operating expense line items in our consolidated statements of operations.

Gigafactory Shanghai—Land Use Rights and Economic Benefits

We have an agreement with the local government of Shanghai for land use rights at Gigafactory Shanghai.

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In addition, the Shanghai government has granted to our Gigafactory Shanghai subsidiary certain incentives to be used in connection with eligible capital investments at Gigafactory Shanghai (refer to Note 15, Commitments and Contingencies ).

For the years ended December 31, 2022 and 2021, we received grant funding of $ 76 million and $ 6 million, respectively.

For the year ended December 31, 2022, we received grant funding of $ 76 million.

These incentives offset the related costs of our facilities and are recorded as a reduction of the cost of the capital investment within the Property, plant and equipment, net line item in our consolidated balance sheets.

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This incentive is recorded as a reduction of the related expenses within the Cost of automotive revenues and operating expense line items of our consolidated statements of operations.

As of December 31, 2023, the grant funding related to property taxes paid were immaterial.

Defined Contribution Plan

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Under the 401(k) savings plan, participating employees may elect to contribute up to 90 % of their eligible compensation, subject to certain limitations.

Beginning in January 2022, we began to match 50 % of each employee’s contributions up to a maximum of 6 % (capped at $ 3,000 ) of the employee’s eligible compensation, vested upon one year of service.

We recognized $ 91 million of expenses related to employer contributions for the 401(k) savings plan during the year ended December 31, 2022.

During the years ended December 31, 2023 and 2022, we recognized $ 99 million and $ 91 million, respectively, of expenses related to employer contributions for the 401(k) savings plan.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

This ASU will likely result in us including the additional required disclosures when adopted.

We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.

In December 2023, the FASB issued ASU No.

2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60).

This ASU requires certain crypto assets to be measured at fair value separately in the balance sheet and income statement each reporting period.

This ASU also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and number of units for each significant crypto holding.

The ASU is effective for annual periods beginning after December 15, 2024, including interim periods within those fiscal years.

Adoption of the ASU requires a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period in which an entity adopts the amendments.

Early adoption is also permitted, including adoption in an interim period.

However, if the ASU is early adopted in an interim period, an entity must adopt the ASU as of the beginning of the fiscal year that includes the interim period.

This ASU will result in gains and losses recorded in the consolidated financial statements of operations and additional disclosures when adopted.

We are currently evaluating the adoption of this ASU and it will affect the carrying value of our crypto assets held and the gains and losses relating thereto, once adopted.

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.

This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.

Recently adopted accounting pronouncements

In October 2021, the FASB issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805).

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The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Adoption of the ASU should be applied prospectively.

Early adoption is also permitted, including adoption in an interim period.

If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption.

This ASU is currently not expected to have a material impact on our consolidated financial statements.

We adopted this ASU prospectively on January 1, 2023.

This ASU has not and is currently not expected to have a material impact on our consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures.

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The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Adoption of the ASU would be applied prospectively.

Early adoption is also permitted, including adoption in an interim period.

This ASU is currently not expected to have a material impact on our consolidated financial statements.

On August 16, 2022, the IRA was enacted into law and is effective for taxable years beginning after December 31, 2022.

The IRA includes multiple incentives to promote clean energy, electric vehicles, battery and energy storage manufacture or purchase, in addition to a new corporate alternative minimum tax of 15 % on adjusted financial statement income of corporations with profits greater than $ 1 billion.

These measures may materially affect our consolidated financial statements, and we will continue to evaluate the applicability and effect of the IRA as more guidance is issued.

Recently adopted accounting pronouncements

In December 2022, the FASB issued ASU No.

2022-06, Deferral of the Sunset Date of Reference Rate Reform (Topic 848).

Topic 848 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

The ASU deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The ASU is effective as of December 21, 2022 through December 31, 2024.

We continue to evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis.

We adopted ASU 2022-06 during 2022.

The ASU has not and is currently not expected to have a material impact on our consolidated financial statements.

In November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832).

This ASU requires business entities to disclose information about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting model.

The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the significant terms and conditions of the transactions.

The ASU is effective for annual periods beginning after December 15, 2021.

The disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date of initial application.

We adopted the ASU prospectively on January 1, 2023.

Adoption of this ASU did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments.

This ASU has not and is currently not expected to have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments.

The ASU updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required to be separated from the host contract.

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On January 1, 2021, we adopted the ASU using the modified retrospective method.

We recognized a cumulative effect of initially applying the ASU as an adjustment to the January 1, 2021 opening balance of accumulated deficit.

Due to the recombination of the equity conversion component of our convertible debt remaining outstanding, additional paid in capital and convertible senior notes (mezzanine equity) were reduced.

The removal of the remaining debt discounts recorded for this previous separation had the effect of increasing our net debt balance and the reduction of property, plant and equipment was related to previously capitalized interest.

We recognized a favorable $ 211 million cumulative effect of initially applying the ASU as an adjustment to the January 1, 2021 opening balance of accumulated deficit.

Due to the recombination of the equity conversion component of our convertible debt remaining outstanding, additional paid in capital was reduced by $ 474 million and convertible senior notes (mezzanine equity) was reduced by $ 51 million.

The removal of the remaining debt discounts recorded for this previous separation had the effect of increasing our net debt balance by $ 269 million and we reduced property, plant and equipment by $ 45 million related to previously capitalized interest.

The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.

Accordingly, the cumulative effect of the changes made on our January 1, 2021 consolidated balance sheet for the adoption of the ASU was as follows (in millions):

December 31, 2020

Adjustments from

Adoption of ASU 2020-06

January 1, 2021

Property, plant and equipment, net

Current portion of debt and finance leases

Debt and finance leases, net of current portion

Mezzanine equity

Convertible senior notes

Additional paid-in capital

Accumulated deficit

Note 3 –

Digital Assets, Net

During the years ended December 31, 2022 and 2021, we purchased and/or received an immaterial amount and $ 1.50 billion, respectively, of digital assets.

As of December 31, 2022 , we have converted approximately 75 % of our purchases into fiat currency.

During the years ended December 31, 2022 and 2021 , we recorded $ 204 million and $ 101 million of impairment losses on such digital assets, respectively.

During the years ended December 31, 2022 and 2021 , we realized gains of $ 64 million and $ 128 million, respectively, in connection with converting our holdings of digital assets into fiat currency.

Note 3 – Digital Assets, Net

During the years ended December 31, 2023 and 2022, we purchased and/or received immaterial amounts of digital assets.

During the year ended December 31, 2023, we recorded an immaterial amount of impairment losses on digital assets.

During the year ended December 31, 2022, we recorded $ 204 million of impairment losses on digital assets and realized gains of $ 64 million in connection with converting our holdings of digital assets into fiat currency.

The gains are presented net of impairment losses in Restructuring and other in the consolidated statements of operations.

As of December 31, 2022 and 2021, the carrying value of our digital assets held was $ 184 million and $ 1.26 billion , which reflects cumulative impairments of $ 204 million and $ 101 million, each period, respectively.

The fair market value of such digital assets held as of December 31, 2022 and 2021 was $ 191 million and $ 1.99 billion, respectively.

Note 4 –

Goodwill and Intangible Assets

Goodwill decreased $ 6 million within the automotive segment from $ 200 million as of December 31, 2021 to $ 194 million as of December 31, 2022.

As of December 31, 2023 and 2022, the carrying value of our digital assets held reflects cumulative impairment of $ 204 million.

Note 4 – Goodwill and Intangible Assets

Goodwill increased $ 59 million within the automotive segment from $ 194 million as of December 31, 2022 to $ 253 million as of December 31, 2023 primarily from a business combination, net of the impact of a divestiture.

There were no accumulated impairment losses as of December 31, 2023 and 2022.

The net carrying value of our intangible assets decreased from $ 215 million as of December 31, 2022 to $ 178 million as of December 31, 2023 mainly from amortization.

Note 5 –

Fair Value of Financial Instruments

ASC 820 states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Note 5 – Fair Value of Financial Instruments

ASC 820, Fair Value Measurements (“ASC 820”) states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

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Our assets and liabilities that were measured at fair value on a recurring basis were as follows (in millions):

December 31, 2022

December 31, 2021

December 31, 2023 December 31, 2022

Fair Value Level I Level II Level III Fair Value Level I Level II Level III

Money market funds $ 109 $ 109 $ — $ — $ 2,188 $ 2,188 $ — $ —

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Certificates of deposit and time deposits 6,996 — 6,996 — 4,253 — 4,253 —

Interest rate swap liabilities

Commercial paper 470 — 470 — — — — —

Total $ 13,191 $ 109 $ 13,082 $ — $ 8,220 $ 2,188 $ 6,032 $ —

All of our money market funds were classified within Level I of the fair value hierarchy because they were valued using quoted prices in active markets.

government securities, certificates of deposit, time deposits and corporate debt securities are classified within Level II of the fair value hierarchy and the market approach was used to determine fair value of these investments.

Our interest rate swaps were classified within Level II of the fair value hierarchy because they were valued using alternative pricing sources or models that utilized market observable inputs, including current and forward interest rates.

government securities, certificates of deposit, commercial paper, time deposits and corporate debt securities are classified within Level II of the fair value hierarchy and the market approach was used to determine fair value of these investments.

Our cash, cash equivalents and investments classified by security type as of December 31, 2023 and 2022 consisted of the following (in millions):

December 31, 2023

Adjusted Cost

Gross Unrealized Gains

Gross Unrealized Losses

Cash and Cash Equivalents

Short-Term Investments

Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Investments

Cash $ 15,903 $ — $ — $ 15,903 $ 15,903 $ —

Money market funds 109 — — 109 109 —

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Certificates of deposit and time deposits 6,995 1 — 6,996 — 6,996

Commercial paper 470 — — 470 109 361

Total cash, cash equivalents and short-term investments $ 29,098 $ 3 $ ( 7 ) $ 29,094 $ 16,398 $ 12,696

December 31, 2022

Adjusted Cost

Gross Unrealized Gains

Gross Unrealized Losses

Cash and Cash Equivalents

Short-Term Investments

Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Short-Term Investments

Cash $ 13,965 $ — $ — $ 13,965 $ 13,965 $ —

Money market funds 2,188 — — 2,188 2,188 —

government securities 897 — ( 3 ) 894 — 894

Corporate debt securities 907 — ( 22 ) 885 — 885

Certificates of deposit and time deposits 4,252 1 — 4,253 100 4,153

Total cash, cash equivalents and short-term investments $ 22,209 $ 1 $ ( 25 ) $ 22,185 $ 16,253 $ 5,932

We record gross realized gains, losses and credit losses as a component of Other (expense) income, net in the consolidated statements of operations.

We record gross realized gains, losses and credit losses as a component of Other income (expense), net in the consolidated statements of operations.

For the years ended December 31, 2023 and 2022, we did not recognize any material gross realized gains, losses or credit losses.

The ending allowance balances for credit losses were immaterial as of December 31, 2022 and December 31, 2021.

We have determined that the gross unrealized losses on our investments as of December 31, 2022 and December 31, 2021 were temporary in nature.

The ending allowance balances for credit losses were immaterial as of December 31, 2023 and 2022.

We have determined that the gross unrealized losses on our investments as of December 31, 2023 and 2022 were temporary in nature.

The following table summarizes the fair value of our investments by stated contractual maturities as of December 31, 2023 (in millions):

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Due in 5 years through 10 years 25

Total $ 12,696

Disclosure of Fair Values

Our financial instruments that are not re-measured at fair value include accounts receivable, financing receivables, accounts payable, accrued liabilities, customer deposits and debt.

The carrying values of these financial instruments approximate their fair values, other than our 2.375 % Convertible Senior Notes due in 2022 (“2022 Notes”) and 2.00 % Convertible Senior Notes due in 2024 (“2024 Notes”) (collectively referred to as “Convertible Senior Notes”

We estimate the fair value of the Convertible Senior Notes using commonly accepted valuation methodologies and market-based risk measurements that are indirectly observable, such as credit risk (Level II).

Our financial instruments that are not re-measured at fair value include accounts receivable, financing receivables, other receivables, digital assets, accounts payable, accrued liabilities, customer deposits and debt.

The carrying values of these financial instruments materially approximate their fair values, other than our 2.00 % Convertible Senior Notes due in 2024 (“2024 Notes”) and digital assets.

We estimate the fair value of the 2024 Notes using commonly accepted valuation methodologies and market-based risk measurements that are indirectly observable, such as credit risk (Level II).

In addition, we estimate the fair values of our digital assets based on quoted prices in active markets (Level I).

The following table presents the estimated fair values and the carrying values (in millions):

December 31, 2022

December 31, 2021

Carrying Value

Convertible Senior Notes (1)

(1) The 2022 Notes were fully settled in the first quarter of 2022.

Note 6 –

December 31, 2023 December 31, 2022

Carrying Value Fair Value Carrying Value Fair Value

2024 Notes $ 37 $ 443 $ 37 $ 223

Digital assets, net $ 184 $ 487 $ 184 $ 191

Note 6 – Inventory

Our inventory consisted of the following (in millions):

2023 December 31,

Raw materials $ 5,390 $ 6,137

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Service parts 1,171 842

(1) Finished goods inventory includes vehicles in transit to fulfill customer orders, new vehicles available for sale, used vehicles and energy products available for sale.

For solar energy systems, we commence transferring component parts from inventory to construction in progress, a component of solar energy systems, once a lease or PPA contract with a customer has been executed and installation has been initiated.

Additional costs incurred on the leased solar energy systems, including labor and overhead, are recorded within solar energy systems under construction.

Total $ 13,626 $ 12,839

(1) Finished goods inventory includes products in transit to fulfill customer orders, new vehicles available for sale, used vehicles and energy products available for sale.

We write-down inventory for any excess or obsolete inventories or when we believe that the net realizable value of inventories is less than the carrying value.

During the years ended December 31, 2023, 2022 and 2021 we recorded write-downs of $ 233 million, $ 144 million and $ 106 million, respectively, in Cost of revenues in the consolidated statements of operations.

Note 7 –

Solar Energy Systems, Net

Note 7 – Solar Energy Systems, Net

Our solar energy systems, net, consisted of the following (in millions):

2023 December 31,

Solar energy systems in service $ 6,755 $ 6,785

Initial direct costs related to customer solar energy

system lease acquisition costs

Initial direct costs related to customer solar energy system lease acquisition costs 104 104

accumulated depreciation and amortization (1) ( 1,643 ) ( 1,418 )

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(1) Depreciation and amortization expense during the years ended December 31, 2023, 2022 and 2021 was $ 235 million, $ 235 million and $ 236 million, respectively.

(2) As of December 31, 2022 and 2021, there were $ 802 million and $ 1.02 billion, respectively, of gross solar energy systems under lease pass-through fund arrangements with accumulated depreciation of $ 148 million and $ 165 million, respectively.

Note 8 –

Property, Plant and Equipment, Net

(2) As of December 31, 2023 and 2022, there were $ 740 million and $ 802 million, respectively, of gross solar energy systems under lease pass-through fund arrangements with accumulated depreciation of $ 157 million and $ 148 million, respectively.

Note 8 – Property, Plant and Equipment, Net

Our property, plant and equipment, net, consisted of the following (in millions):

2023 December 31,

Machinery, equipment, vehicles and office furniture $ 16,372 $ 13,558

Tooling 3,147 2,579

Leasehold improvements 3,168 2,366

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Construction in progress 5,791 4,263

41,782 32,589

Accumulated depreciation ( 12,057 ) ( 9,041 )

Construction in progress is primarily comprised of construction of Gigafactory Texas and Gigafactory Berlin-Brandenburg, and equipment and tooling related to the manufacturing of our products.

Total $ 29,725 $ 23,548

Construction in progress is primarily comprised of ongoing construction and expansion of our facilities, and equipment and tooling related to the manufacturing of our products.

Completed assets are transferred to their respective asset classes and depreciation begins when an asset is ready for its intended use.

Interest on outstanding debt is capitalized during periods of significant capital asset construction and amortized over the useful lives of the related assets.

During the years ended December 31, 2022, 2021 and 2020, we capitalized interest of an immaterial amount, $ 53 million and $ 48 million, respectively.

Depreciation expense during the years ended December 31, 2023, 2022 and 2021 was $ 3.33 billion, $ 2.42 billion and $ 1.91 billion, respectively.

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As of December 31, 2023 and 2022, we had cumulatively capitalized gross costs of $ 2.02 billion and $ 2.01 billion, respectively, on the consolidated balance sheets in relation to the production equipment under our Panasonic arrangement.

Note 9 –

Accrued Liabilities and Other

Note 9 – Accrued Liabilities and Other

Our accrued liabilities and other current liabilities consisted of the following (in millions):

2023 December 31,

Accrued purchases (1) $ 2,721 $ 2,747

Taxes payable (2)

Payroll and related costs

Accrued warranty reserve, current portion 1,546 1,025

Sales return reserve, current portion

Payroll and related costs 1,325 1,026

Taxes payable (2) 1,204 1,235

Customer deposits 876 1,063

Operating lease liabilities, current portion 672 485

Sales return reserve, current portion 219 270

Other current liabilities 517 354

Total $ 9,080 $ 8,205

(1) Accrued purchases primarily reflects receipts of goods and services for which we had not yet been invoiced.

As we are invoiced for these goods and services, this balance will reduce and accounts payable will increase.

For the year ended December 31, 2022, accrued purchases increased as we continued construction and expansion of our facilities and operations.

(2) Taxes payable includes value added tax, sales tax, property tax, use tax and income tax payables.

Note 10 –

Other Long-Term Liabilities

(2) Taxes payable includes value added tax, income tax, sales tax, property tax and use tax payables.

Note 10 – Other Long-Term Liabilities

Our other long-term liabilities consisted of the following (in millions):

2023 December 31,

Operating lease liabilities $ 3,671 $ 2,164

Accrued warranty reserve 3,606 2,480

Sales return reserve

Deferred tax liability

Other non-current liabilities 876 686

Total other long-term liabilities $ 8,153 $ 5,330

Note 11 –

Note 11 – Debt

The following is a summary of our debt and finance leases as of December 31, 2023 (in millions):

Net Carrying Value

Interest Rates

Net Carrying Value Unpaid

Balance Unused

Amount (1) Contractual

Interest Rates Contractual

Maturity Date

Current Long-Term

Recourse debt:

Credit Agreement

Not applicable

2024 Notes $ 37 $ — $ 37 $ — 2.00 % May 2024

RCF Credit Agreement — — — 5,000 Not applicable January 2028

Solar Bonds — 7 7 — 4.70 - 5.75 %

March 2025 - January 2031

Other — — — 28 Not applicable December 2026

Total recourse debt 37 7 44 5,028

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Automotive Asset-backed Notes 1,906 2,337 4,259 — 0.60 - 6.57 %

December 2023 - September 2025

Solar Asset-backed Notes

December 2026

July 2024 - May 2031

Solar Asset-backed Notes 4 8 13 — 4.80 % December 2026

Cash Equity Debt 28 330 367 — 5.25 - 5.81 %

July 2033 - January 2035

Automotive Lease-backed Credit Facilities

Not applicable

September 2024

Total non-recourse debt 1,938 2,675 4,639 —

Total debt 1,975 2,682 $ 4,683 $ 5,028

Finance leases 398 175

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The following is a summary of our debt and finance leases as of December 31, 2022 (in millions):

Net Carrying Value

Interest Rates

Net Carrying Value Unpaid

Balance Unused

Amount (2) Contractual

Interest Rates Contractual

Maturity Date

Current Long-Term

Recourse debt:

Credit Agreement

January 2022 - January 2031

2024 Notes $ — $ 37 $ 37 $ — 2.00 % May 2024

Credit Agreement — — — 2,266 Not applicable July 2023

Solar Bonds — 7 7 — 4.70 - 5.75 %

March 2025 - January 2031

Total recourse debt — 44 44 2,266

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Automotive Asset-backed Notes 984 613 1,603 — 0.36 - 4.64 %

September 2022 - September 2025

Solar Asset and Loan-backed Notes

September 2024 - September 2049

December 2023 - September 2025

Solar Asset-backed Notes 4 13 17 — 4.80 % December 2026

Cash Equity Debt 28 359 397 — 5.25 - 5.81 %

July 2033 - January 2035

Automotive Lease-backed Credit Facilities

Not applicable

September 2023

February 2033

Automotive Lease-backed Credit Facilities — — — 151 Not applicable September 2024

Total non-recourse debt 1,016 985 2,017 151

Total debt 1,016 1,029 $ 2,061 $ 2,417

Finance leases 486 568

Total debt and finance leases $ 1,502 $ 1,597

(1) There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our credit facilities, except certain specified conditions prior to draw-down, including pledging to our lenders sufficient amounts of qualified receivables, inventories, leased vehicles and our interests in those leases or various other assets and as may be described below.

(1) There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our RCF Credit Agreement, except certain specified conditions prior to draw-down.

Refer to the section below for the terms of the facility.

(2) There were no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our credit facilities, except certain specified conditions prior to draw-down, including pledging to our lenders sufficient amounts of qualified receivables, inventories, leased vehicles and our interests in those leases or various other assets as described below.

Recourse debt refers to debt that is recourse to our general assets.

Non-recourse debt refers to debt that is recourse to only assets of our subsidiaries.

The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred financing costs.

The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred issuance costs.

As of December 31, 2023, we were in material compliance with all financial debt covenants.

2022 Notes, Bond Hedges and Warrant Transactions

During the first quarter of 2022, the remaining $ 29 million in aggregate principal amount of the 2022 Notes was converted and settled in cash for their par amount, and 1.2 million shares of our common stock were issued for the applicable conversion premium, as adjusted to give effect to the 2022 Stock Split.

The note hedges we entered into in connection with the issuance of the 2022 Notes were automatically settled with the respective conversions of the 2022 Notes, resulting in the receipt of 1.2 million shares of our common stock during the same period, as adjusted to give effect to the 2022 Stock Split.

Additionally, during the year ended December 31, 2022, we fully settled the warrants entered into in connection with the issuance of the 2022 Notes, resulting in the issuance of 37.0 million shares of our common stock, as adjusted to give effect to the 2022 Stock Split.

2024 Notes, Bond Hedges and Warrant Transactions

In May 2019, we issued $ 1.84 billion in aggregate principal amount of our 2024 Notes in a public offering.

The net proceeds from the issuance, after deducting transaction costs, were $ 1.82 billion.

As adjusted to give effect to the 2022 Stock Split, each $ 1,000 of principal of the 2024 Notes is now convertible into 48.4140 shares of our common stock, which is equivalent to a conversion price of approximately $ 20.66 per share, subject to adjustment upon the occurrence of specified events.

Holders of the 2024 Notes may convert, at their option, on or after February 15, 2024.

Further, holders of the 2024 Notes may convert, at their option, prior to February 15, 2024 only under the following circumstances:

(1) during any calendar quarter commencing after September 30, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each trading day;

(2) during the five -business day period after any five-consecutive trading day period in which the trading price per $1,000 principal amount of the 2024 Notes for each trading day of such period is less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day, or (3) if specified corporate events occur.

Upon conversion, the 2024 Notes will be settled in cash, shares of our common stock or a combination thereof, at our election.

If a fundamental change occurs prior to the maturity date, holders of the 2024 Notes may require us to repurchase all or a portion of their 2024 Notes for cash at a repurchase price equal to 100 % of the principal amount plus any accrued and unpaid interest.

In addition, if specific corporate events occur prior to the maturity date, we would increase the conversion rate for a holder who elects to convert its 2024 Notes in connection with such an event in certain circumstances.

Early conversion of notes which are scheduled to settle in the following quarter are classified as current in our consolidated balance sheets.

In connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions whereby we had the option to purchase 89.1 million shares of our common stock at a price of approximately $ 20.66 per share, as adjusted to give effect to the 2022 Stock Split.

The cost of the convertible note hedge transactions was $ 476 million.

In addition, we sold warrants whereby the holders of the warrants had the option to purchase 89.1 million shares of our common stock at a price of approximately $ 40.50 per share, as adjusted to give effect to the 2022 Stock Split.

We received $ 174 million in cash proceeds from the sale of these warrants.

Taken together, the purchase of the convertible note hedges and the sale of the warrants were intended to effectively increase the overall conversion price from approximately $ 20.66 to approximately $ 40.50 per share.

As these transactions meet certain accounting criteria, the convertible note hedges and warrants were recorded in stockholders’

equity and were not accounted for as derivatives.

The net cost incurred in connection with the convertible note hedge and warrant transactions was recorded as a reduction to additional paid-in capital on the consolidated balance sheet.

The closing price of our common stock exceeded 130% of the applicable conversion price on at least 20 of the last 30 consecutive trading days of each quarter in 2022, causing the 2024 Notes to be convertible by their holders in the subsequent quarter.

During the year ended December 31, 2022, $ 54 million in aggregate principal amount of the 2024 Notes was converted and settled in cash for their par amount, and 2.4 million shares of our common stock were issued for the applicable conversion premium, as adjusted to give effect to the 2022 Stock Split.

The note hedges we entered into in connection with the issuance of the 2024 Notes were automatically settled with the respective conversions of the 2024 Notes, resulting in the receipt of 2.4 million shares of our common stock during the same period, as adjusted to give effect to the 2022 Stock Split .

The closing price of our common stock continued to exceed 130 % of the applicable conversion price of our 2024 Notes on at least 20 of the last 30 consecutive trading days of each quarter in 2023, causing the 2024 Notes to be convertible by their holders in the subsequent quarter.

As of December 31, 2023, the if-converted value of the notes exceeds the outstanding principal amount by $ 406 million.

Upon conversion, the 2024 Notes will be settled in cash, shares of our common stock or a combination thereof, at our election.

Credit Agreement

In June 2015, we entered into a senior asset-based revolving credit agreement (as amended from time to time, the “Credit Agreement”) with a syndicate of banks.

Borrowed funds bear interest, at our option, at an annual rate of (a) 1 % plus LIBOR or (b) the highest of (i) the federal funds rate plus 0.50 %, (ii) the lenders’

“prime rate”

or (iii) 1% plus LIBOR.

In June 2015, we entered into a senior asset-based revolving credit agreement (as amended from time to time, the “Credit Agreement”) with a syndicate of banks.

Borrowed funds bear interest, at our option, at an annual rate of (a) 1 % plus LIBOR or (b) the highest of (i) the federal funds rate plus 0.50 %, (ii) the lenders’ “prime rate” or (iii) 1 % plus LIBOR.

The fee for undrawn amounts is 0.25 % per annum.

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Availability under the Credit Agreement is based on the value of such assets, as reduced by certain reserves.

In January 2023, we entered into a 5 -year senior unsecured revolving credit facility (the “RCF Credit Agreement”) with a syndicate of banks to replace the existing Credit Agreement, which was terminated.

In January 2023, we entered into a 5-year senior unsecured revolving credit facility (the “RCF Credit Agreement”) with a syndicate of banks to replace the existing Credit Agreement, which was terminated.

The RCF Credit Agreement contains two optional one-year extensions and has a total commitment of up to $ 5.00 billion, which could be increased up to $ 7.00 billion under certain circumstances.

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in each case, plus an applicable margin.

The applicable margin will be based on the rating assigned to our senior, unsecured long-term indebtedness (the “Credit Rating”) from time to time.

The fee for undrawn amounts is variable based on the Credit Rating and is currently 0.125 % per annum.

Automotive Asset-backed Notes

From time to time, we transfer receivables or beneficial interests related to certain leased vehicles into special purpose entities (“SPEs”) and issue Automotive Asset-backed Notes, backed by these automotive assets to investors.

From time to time, we transfer receivables and/or beneficial interests related to certain vehicles (either leased or financed) into special purpose entities (“SPEs”) and issue Automotive Asset-backed Notes, backed by these automotive assets to investors.

The SPEs are consolidated in the financial statements.

The cash flows generated by these automotive assets are used to service the principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPEs’

expenses, and any remaining cash is distributed to the owners of the SPEs.

We recognize revenue earned from the associated customer lease contracts in accordance with our revenue recognition policy.

The SPEs’

assets and cash flows are not available to our other creditors, and the creditors of the SPEs, including the Automotive Asset-backed Note holders, have no recourse to our other assets.

Solar Asset and Loan-backed Notes

Our subsidiaries pooled and transferred qualifying solar energy systems and the associated customer contracts, our interests in certain financing funds or certain MyPower customer notes receivable into SPEs and issued Solar Asset and Loan-backed Notes backed by these solar assets, interests to investors or MyPower customer notes receivable .

The SPEs are wholly owned by us and are consolidated in the financial statements.

The cash flows generated by these solar assets and notes receivable, or distributed by the underlying financing funds to certain SPEs are used to service the principal and interest payments on the Solar Asset and Loan-backed Notes and satisfy the SPEs’

expenses, and any remaining cash is distributed to us.

The SPEs’

assets and cash flows are not available to our other creditors, and the creditors of the SPEs, including the Solar Asset and Loan-backed Note holders, have no recourse to our other assets.

We contracted with certain SPEs to provide operations & maintenance and administrative services for the solar energy systems.

As of December 31, 2022, solar assets pledged as collateral for Solar Asset and Loan-backed Notes had a carrying value of $ 69 million and are included within Solar energy systems, net, on the consolidated balance sheet.

During the year ended December 31, 2022, we early repaid $ 819 million in aggregate principal of the Solar Asset and Loan-backed Notes and recorded an extinguishment of debt charge of $ 24 million related to the early repayments in Interest expense in the consolidated statement of operations.

The cash flows generated by these automotive assets are used to service the principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPEs’ expenses, and any remaining cash is distributed to the owners of the SPEs.

We recognize revenue earned from the associated customer lease or financing contracts in accordance with our revenue recognition policy.

The SPEs’ assets and cash flows are not available to our other creditors, and the creditors of the SPEs, including the Automotive Asset-backed Note holders, have no recourse to our other assets.

In 2023, we transferred beneficial interests related to certain leased vehicles and financing receivables into SPEs and issued $ 3.93 billion in aggregate principal amount of Automotive Asset-backed Notes, with terms similar to our other previously issued Automotive Asset-backed Notes.

The proceeds from the issuance, net of debt issuance costs, were $ 3.92 billion.

Cash Equity Debt

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Automotive Lease-backed Credit Facilities

Our subsidiaries have entered into various credit agreements for borrowings secured by our interests in certain vehicle leases.

These facilities are non-recourse to our other assets.

In the third quarter of 2023, we terminated our Automotive Lease-backed Credit Facilities and the previously committed funds are no longer available for future borrowings.

Pledged Assets

As of December 31, 2022 and 2021, we had pledged or restricted $ 2.02 billion and $ 5.25 billion of our assets (consisting principally of restricted cash, receivables, inventory, solar energy systems, operating lease vehicles, property and equipment and equity interests in certain SPEs) as collateral for our outstanding debt.

As of December 31, 2023 and 2022, we had pledged or restricted $ 4.64 billion and $ 2.02 billion of our assets (consisting principally of operating lease vehicles, financing receivables, restricted cash, and equity interests in certain SPEs) as collateral for our outstanding debt.

Schedule of Principal Maturities of Debt

The future scheduled principal maturities of debt as of December 31, 2023 were as follows (in millions):

Recourse debt

Non-recourse debt

Note 12 –

We have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, equipment, vehicles, and solar energy systems, worldwide.

Recourse debt Non-recourse debt Total

2024 $ 37 $ 1,941 $ 1,978

2025 4 1,663 1,667

2026 — 494 494

2027 — 276 276

Thereafter 3 221 224

Total $ 44 $ 4,639 $ 4,683

Note 12 – Leases

We have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, data centers, equipment, vehicles, and solar energy systems, worldwide.

We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.

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The balances for the operating and finance leases where we are the lessee are presented as follows (in millions) within our consolidated balance sheets:

December 31, 2022

December 31, 2021

December 31, 2023 December 31, 2022

Operating leases:

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Year Ended December 31,

2023 2022 2021

Operating lease expense:

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Other information related to leases where we are the lessee is as follows:

December 31, 2022

December 31, 2021

December 31, 2023 December 31, 2022

Weighted-average remaining lease term:

Operating leases

Finance leases

Operating leases 7.4 years 6.4 years

Finance leases 2.3 years 3.1 years

Weighted-average discount rate:

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Year Ended December 31,

2023 2022 2021

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Operating cash outflows from finance leases (interest payments) $ 47 $ 75 $ 89

Financing cash outflows from finance leases

Leased assets obtained in exchange for finance lease liabilities $ 10 $ 58 $ 486

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As of December 31, 2023, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as follows (in millions):

Leases Finance

2024 $ 892 $ 418

Thereafter 1,820 4

Total minimum lease payments 5,360 600

Interest 1,017 27

Present value of lease obligations 4,343 573

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Long-term portion of lease obligations $ 3,671 $ 175

As of December 31, 2022, we have excluded from the table above additional operating leases that have not yet commenced with aggregate rent payments of $ 901 million.

As of December 31, 2023, we have excluded from the table above additional operating leases that have not yet commenced with aggregate rent payments of $ 1.53 billion.

These operating leases will commence between fiscal year 2024 and 2025 with lease terms of 2 years to 20 years.

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As of December 31, 2023, maturities of our operating lease and sales-type lease receivables from customers for each of the next five years and thereafter were as follows (in millions):

Leases Sales-type

2024 $ 1,405 $ 227

Thereafter 1,492 2

Gross lease receivables $ 4,742 $ 780

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Lease receivables relating to sales-type leases are presented on the consolidated balance sheets as follows (in millions):

December 31, 2022

December 31, 2021

December 31, 2023 December 31, 2022

Gross lease receivables $ 780 $ 837

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Lease Pass-Through Financing Obligation

As of December 31, 2022 , we have six transactions referred to as “lease pass-through fund arrangements.”

Under these arrangements, our wholly owned subsidiaries finance the cost of solar energy systems with investors through arrangements contractually structured as master leases for an initial term ranging between 10 and 25 years .

As of December 31, 2023, we have five transactions referred to as “lease pass-through fund arrangements.” Under these arrangements, our wholly owned subsidiaries finance the cost of solar energy systems with investors through arrangements contractually structured as master leases for an initial term ranging between 10 and 25 years.

These solar energy systems are subject to lease or PPAs with customers with an initial term not exceeding 25 years.

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As of December 31, 2023, the future minimum master lease payments to be received from investors, for each of the next five years and thereafter, were as follows (in millions):

Note 13 –

Equity Incentive Plans

In June 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

Thereafter 337

Note 13 – Equity Incentive Plans

In June 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

The 2019 Plan provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to our employees, directors and consultants.

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Vesting typically terminates when the employment or consulting relationship ends.

As of December 31, 2022, 148.0 million shares were reserved and available for issuance under the 2019 Plan, as adjusted to give effect to the 2022 Stock Split.

As of December 31, 2023, 131.1 million shares were reserved and available for issuance under the 2019 Plan.

The following table summarizes our stock option and RSU activity for the year ended December 31, 2023:

Stock Options

Stock Options RSUs

(in thousands)

Price Weighted-

Life (years) Aggregate

(in billions)

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Beginning of period 343,564 $ 30.65 21,333 $ 162.32

Granted 9,521 $ 226.50 11,743 $ 228.33

Exercised or released ( 7,626 ) $ 43.07 ( 11,085 ) $ 116.47

Cancelled ( 1,438 ) $ 194.23 ( 2,903 ) $ 192.22

End of period 344,021 $ 35.11 4.31 $ 73.57 19,088 $ 225.01

Vested and expected

to vest, December 31, 2022

Exercisable and vested,

December 31, 2022 (2)

(1) Prior period results have been adjusted to give effect to the 2022 Stock Split.

See Note 1, Overview , for details.

(2) Tranche 12 of the 2018 CEO Performance Award, which represents 25.3 million stock options, was achieved in the fourth quarter of 2022 and will vest upon expected certification following the filing of this Annual Report on Form 10-K.

The weighted-average grant date fair value of RSUs granted in the years ended December 31, 2022, 2021 and 2020 was $ 239.85 , $ 261.33 and $ 100.17 , respectively, as adjusted to give effect to the 2022 Stock Split.

Vested and expected to vest, December 31, 2023 340,884 $ 33.38 4.27 $ 73.45 18,446 $ 225.76

Exercisable and vested, December 31, 2023 329,124 $ 27.07 4.11 $ 72.90

The weighted-average grant date fair value of RSUs granted in the years ended December 31, 2023, 2022 and 2021 was $ 228.33 , $ 239.85 and $ 261.33 , respectively.

The aggregate release date fair value of RSUs in the years ended December 31, 2023, 2022 and 2021 was $ 2.50 billion, $ 4.32 billion and $ 5.70 billion, respectively.

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The purchase price would be 85 % of the lower of the fair market value on the first and last trading days of each six-month offering period.

During the years ended December 31, 2022, 2021 and 2020, under the ESPP we issued 1.4 million, 1.5 million and 5.5 million shares, respectively, as adjusted to give effect to the 2022 Stock Split.

As of December 31, 2022, there were 99.9 million shares available for issuance under the ESPP, as adjusted to give effect to the 2022 Stock Split.

During the years ended December 31, 2023, 2022 and 2021, under the ESPP we issued 2.1 million, 1.4 million and 1.5 million shares, respectively.

As of December 31, 2023, there were 97.8 million shares available for issuance under the ESPP.

Fair Value Assumptions

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Year Ended December 31,

2023 2022 2021

Risk-free interest rate 3.90 % 3.11 % 0.66 %

3 unchanged sentences

Grant date fair value per share $ 121.62 $ 114.51 $ 128.02

(1) Prior period results have been adjusted to give effect to the 2022 Stock Split.

See Note 1, Overview , for details.

The fair value of RSUs with service or service and performance conditions is measured on the grant date based on the closing fair market value of our common stock.

1 unchanged sentence

Treasury yield for zero-coupon U.S.

Treasury notes with maturities approximating each grant’s expected life.

We use our historical data in estimating the expected term of our employee grants.

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2018 CEO Performance Award

In March 2018, our stockholders approved the Board of Directors’

grant of 304.0 million stock option awards, as adjusted to give effect to the 2020 Stock Split and the 2022 Stock Split, to our CEO (the “2018 CEO Performance Award”).

The 2018 CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each vesting date.

Each of the 12 vesting tranches of the 2018 CEO Performance Award will vest upon certification by the Board of Directors that both (i) the market capitalization milestone for such tranche, which began at $ 100.0 billion for the first tranche and increases by increments of $ 50.0 billion thereafter (based on both a six calendar month trailing average and a 30 calendar day trailing average, counting only trading days), has been achieved, and (ii) any one of the following eight operational milestones focused on total revenue or any one of the eight operational milestones focused on Adjusted EBITDA have been achieved for the four consecutive fiscal quarters on an annualized basis and subsequently reported by us in our consolidated financial statements filed with our Forms 10-Q and/or 10-K.

Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation and amortization and stock-based compensation.

In March 2018, our stockholders approved the Board of Directors’ grant of 304.0 million stock option awards, as adjusted to give effect to the 2020 Stock Split and the 2022 Stock Split, to our CEO (the “2018 CEO Performance Award”).

The 2018 CEO Performance Award consisted of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each vesting date.

Each of the 12 vesting tranches of the 2018 CEO Performance Award vested upon certification by the Board of Directors that both (i) the market capitalization milestone for such tranche, which began at $ 100.0 billion for the first tranche and increases by increments of $ 50.0 billion thereafter (based on both a six calendar month trailing average and a 30 calendar day trailing average, counting only trading days), had been achieved, and (ii) any one of the following eight operational milestones focused on total revenue or any one of the eight operational milestones focused on Adjusted EBITDA had been achieved for the four consecutive fiscal quarters on an annualized basis and subsequently reported by us in our consolidated financial statements filed with our Forms 10-Q and/or 10-K.

Adjusted EBITDA was defined as net income (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation and amortization and stock-based compensation.

Upon vesting and exercise, including the payment of the exercise price of $ 23.34 per share as adjusted to give effect to the 2020 Stock Split and the 2022 Stock Split, our CEO must hold shares that he acquires for five years post-exercise, other than a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.

The achievement status of the operational milestones as of December 31, 2023 is provided below.

Although an operational milestone is deemed achieved in the last quarter of the relevant annualized period, it may be certified only after the financial statements supporting its achievement have been filed with our Forms 10-Q and/or 10-K.

Total Annualized Revenue

Annualized Adjusted EBITDA

Total Annualized Revenue Annualized Adjusted EBITDA

(in billions)

Achievement Status

Achievement Status Milestone

(in billions)

Achievement Status

(1) Achieved in the fourth quarter of 2022 and expected to be certified following the filing of this Annual Report on Form 10-K.

Stock-based compensation under the 2018 CEO Performance Award represents a non-cash expense and is recorded as a Selling, general, and administrative operating expense in our consolidated statements of operations.

In each quarter since the grant of the 2018 CEO Performance Award, we have recognized expense, generally on a pro-rated basis, for only the number of tranches (up to the maximum of 12 tranches) that corresponds to the number of operational milestones that have been achieved or have been determined probable of being achieved in the future, in accordance with the following principles.

Separately, based on a subjective assessment of our future financial performance, each quarter we determine whether it is probable that we will achieve each operational milestone that has not previously been achieved or deemed probable of achievement and if so, the future time when we expect to achieve that operational milestone, or its “expected operational milestone achievement time.”

During the first quarter of 2022, three operational milestones were achieved and consequently, we recognized an aggregate catch-up expense of $ 11 million.

As of December 31, 2022 , all remaining unrecognized stock-based compensation expense under the 2018 CEO Performance Award has been recognized.

For the years ended December 31, 2022, 2021 and 2020, we recorded stock-based compensation expense of $ 66 million, $ 910 million and $ 838 million, respectively, related to the 2018 CEO Performance Award.

$ 20.0 Achieved $ 1.5 Achieved

$ 35.0 Achieved $ 3.0 Achieved

$ 55.0 Achieved $ 4.5 Achieved

$ 75.0 Achieved $ 6.0 Achieved

$ 100.0 - $ 8.0 Achieved

$ 125.0 - $ 10.0 Achieved

$ 150.0 - $ 12.0 Achieved

$ 175.0 - $ 14.0 Achieved

Stock-based compensation under the 2018 CEO Performance Award represented a non-cash expense and was recorded as a Selling, general, and administrative operating expense in our consolidated statements of operations.

In each quarter since the grant of the 2018 CEO Performance Award, we had recognized expense, generally on a pro-rated basis, for only the number of tranches (up to the maximum of 12 tranches) that corresponded to the number of operational milestones that had been achieved or had been determined probable of being achieved in the future, in accordance with the following principles.

On the grant date, a Monte Carlo simulation was used to determine for each tranche (i) a fixed amount of expense for such tranche and (ii) the future time when the market capitalization milestone for such tranche was expected to be achieved, or its “expected market capitalization milestone achievement time.” Separately, based on a subjective assessment of our future financial performance each quarter, we determined whether it was probable that we would achieve each operational milestone that had not previously been achieved or deemed probable of achievement and if so, the future time when we expected to achieve that operational milestone, or its “expected operational milestone achievement time.”

As of December 31, 2022, all remaining unrecognized stock-based compensation expense under the 2018 CEO Performance Award had been recognized.

For the years ended December 31, 2022 and 2021, we recorded stock-based compensation expense of $ 66 million and $ 910 million, respectively, related to the 2018 CEO Performance Award.

Other Performance-Based Grants

2021 Performance-Based Stock Option & RSU Awards

During the fourth quarter of 2021, the Compensation Committee of our Board of Directors granted to certain employees performance-based RSUs and stock options to purchase an aggregate 2.2 million shares of our common stock, as adjusted to give effect to the 2022 Stock Split.

We begin recording stock-based compensation expense when the performance milestones become probable of achievement.

Following achievement, vesting occurs over a two-year period with continued employment.

As of December 31, 2022, we had unrecognized stock-based compensation expense of $ 204 million, which will be recognized over a weighted-average period of 3.2 years.

For the year ended December 31, 2022, we recorded $ 159 million of stock-based compensation expense related to this grant, net of forfeitures.

From time to time, the Compensation Committee of our Board of Directors grants certain employees performance-based RSUs and stock options.

As of December 31, 2023, we had unrecognized stock-based compensation expense of $ 655 million under these grants to purchase or receive an aggregate 5.3 million shares of our common stock.

For awards probable of achievement, we estimate the unrecognized stock-based compensation expense of $ 110 million will be recognized over a weighted-average period of 4.0 years.

For the years ended December 31, 2023 and 2022, we recorded $ 57 million and $ 159 million, respectively, of stock-based compensation expense related to these grants, net of forfeitures.

Summary Stock-Based Compensation Information

1 unchanged sentence

Year Ended December 31,

2023 2022 2021

Cost of revenues $ 741 $ 594 $ 421

1 unchanged sentence

Selling, general and administrative 382 430 1,252

Our income tax benefits recognized from stock-based compensation arrangements in each of the periods presented were immaterial due to cumulative losses and valuation allowances.

Total $ 1,812 $ 1,560 $ 2,121

Our income tax benefits recognized from stock-based compensation arrangements were immaterial while we were under full valuation allowances on our U.S.

deferred tax assets during the years ended December 31, 2022 and 2021.

With the release of the valuation allowance associated with our federal and certain state deferred tax assets in 2023, income tax benefits recognized from stock-based compensation expense were $ 326 million during the year ended December 31, 2023.

During the years ended December 31, 2023, 2022 and 2021, stock-based compensation expense capitalized to our consolidated balance sheets was $ 199 million, $ 245 million and $ 182 million, respectively.

As of December 31, 2023, we had $ 4.82 billion of total unrecognized stock-based compensation expense related to non-performance awards, which will be recognized over a weighted-average period of 2.8 years.

Note 14 –

A provision for income taxes of $ 1.13 billion, $ 699 million and $ 292 million has been recognized for the years ended December 31, 2022, 2021 and 2020, respectively, related primarily to our subsidiaries located outside of the U.S.

Our income before provision for income taxes for the years ended December 31, 2022, 2021 and 2020 was as follows (in millions):

Note 14 – Income Taxes

Our income before (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions):

Year Ended December 31,

Noncontrolling interest and redeemable

noncontrolling interest

2023 2022 2021

Domestic $ 3,196 $ 5,524 $ ( 130 )

Noncontrolling interest and redeemable noncontrolling interest ( 23 ) 31 125

Foreign 6,800 8,164 6,348

Income before income taxes $ 9,973 $ 13,719 $ 6,343

The components of the provision for income taxes for the years ended December 31, 2022, 2021 and 2020 consisted of the following (in millions):

A (benefit from) provision for income taxes of $( 5.00 ) billion, $ 1.13 billion and $ 699 million has been recognized for the years ended December 31, 2023, 2022 and 2021, respectively.

The components of the (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following (in millions):

Year Ended December 31,

2023 2022 2021

Federal $ 48 $ — $ —

State 57 62 9

Foreign 1,243 1,266 839

Total current 1,348 1,328 848

Federal ( 5,246 ) 26 —

State ( 653 ) 1 —

Foreign ( 450 ) ( 223 ) ( 149 )

Total deferred ( 6,349 ) ( 196 ) ( 149 )

Total provision for income taxes

Total (Benefit from) provision for income taxes $ ( 5,001 ) $ 1,132 $ 699

The reconciliation of taxes at the federal statutory rate to our (benefit from) provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions):

Year Ended December 31,

2023 2022 2021

Tax at statutory federal rate $ 2,094 $ 2,881 $ 1,332

State tax, net of federal benefit ( 372 ) 51 6

Nondeductible executive compensation 23 14 201

Excess tax benefits related to stock-based compensation ( 288 ) ( 745 ) ( 7,123 )

Nontaxable manufacturing credit ( 101 ) — —

Foreign income rate differential ( 816 ) ( 923 ) ( 668 )

tax credits ( 593 ) ( 276 ) ( 328 )

GILTI inclusion 670 1,279 1,008

Unrecognized tax benefits 183 252 28

Change in valuation allowance ( 5,962 ) ( 1,532 ) 6,165

Other 161 131 78

(Benefit from) provision for income taxes $ ( 5,001 ) $ 1,132 $ 699

We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period.

As of December 31, 2023, based on the relevant weight of positive and negative evidence, including the amount of our taxable income in recent years which is objective and verifiable, and consideration of our expected future taxable earnings, we concluded that it is more likely than not that our U.S.

federal and certain state deferred tax assets are realizable.

As such, we released $ 6.54 billion of our valuation allowance associated with the U.S.

federal and state deferred tax assets, with the exception of our California deferred tax assets.

We continue to maintain a full valuation allowance against our California deferred tax assets as of December 31, 2023, because we concluded they are not more likely than not to be realized as we expect our California deferred tax assets generation in future years to exceed our ability to use these deferred tax assets.

Deferred tax assets (liabilities) as of December 31, 2023 and 2022 consisted of the following (in millions):

2023 December 31,

Deferred tax assets:

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Operating lease right-of-use assets ( 859 ) ( 506 )

Deferred revenue

Other ( 116 ) ( 15 )

Total deferred tax liabilities ( 3,230 ) ( 1,937 )

Deferred tax assets (liabilities), net of valuation allowance $ 6,652 $ 247

As of December 31, 2022 , we recorded a valuation allowance of $ 7.35 billion for the portion of the deferred tax asset that we do not expect to be realized.

The valuation allowance on our net deferred taxes decreased by $ 1.73 billion in the year ended December 31, 2022, and increased by $ 6.14 billion and $ 974 million during the years ended December 31, 2021 and 2020 , respectively.

The changes in valuation allowance are primarily due to changes in U.S.

deferred tax assets and liabilities incurred in the respective year.

The decrease in the year ended December 31, 2022 included utilization of $ 13.57 billion net operating loss carry forwards to offset our 2022 U.S.

taxable income.

We have $ 532 million of deferred tax assets in foreign jurisdictions, which management believes are more-likely-than-not to be realized given the expectation of future earnings in these jurisdictions.

We did not have any material releases of valuation allowance for the years ended December 31, 2022, 2021 and 2020.

We continue to monitor the realizability of the U.S.

deferred tax assets taking into account multiple factors.

In completing this assessment, we considered both objective and subjective factors.

These factors included, but were not limited to, a history of losses in prior years, excess tax benefits related to stock-based compensation, future reversal of existing temporary differences and tax planning strategies.

After evaluating all available evidence, we intend to continue maintaining a full valuation allowance on our U.S.

deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Given the improvement in our operating results and depending on the amount of stock-based compensation tax deductions available in the future, we may release the valuation allowance associated with the U.S.

deferred tax assets in the next few years.

Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2022, 2021 and 2020 was as follows (in millions):

Year Ended December 31,

Tax at statutory federal rate

State tax, net of federal benefit

Nondeductible executive compensations

Other nondeductible expenses

Excess tax benefits related to stock based

Foreign income rate differential

Noncontrolling interests and redeemable

noncontrolling interests adjustment

GILTI inclusion

Unrecognized tax benefits

Change in valuation allowance

Provision for income taxes

As of December 31, 2023, we maintained valuation allowances of $ 892 million for deferred tax assets that are not more likely than not to be realized, which primarily included deferred tax assets in the state of California and certain foreign operating losses.

The valuation allowance on our net deferred tax assets decreased by $ 6.46 billion and $ 1.73 billion during the years ended December 31, 2023 and 2022, respectively, and increased by $ 6.14 billion during the year ended December 31, 2021.

The valuation allowance decrease during the year ended December 31, 2023 was primarily due to the release of our valuation allowance with respect to our U.S.

federal and certain state deferred tax assets.

The changes in valuation allowances during the years ended December 31, 2022 and 2021 were primarily due to changes in our U.S.

deferred tax assets and liabilities in the respective year.

Among our deferred tax assets in foreign jurisdictions, we recorded a valuation allowance on certain foreign net operating losses that are not more likely than not to be realized.

The remainder of our foreign deferred tax assets are more likely than not to be realized given the expectation of future earnings in these jurisdictions.

As of December 31, 2023, we had $ 10.31 billion of federal and $ 10.36 billion of state net operating loss carry-forwards available to offset future taxable income, some of which, if not utilized, will begin to expire in 2024 for federal and state purposes.

A portion of these losses were generated by our acquisition of SolarCity Corporation (“SolarCity”) and some of the other companies we acquired, and therefore are subject to change of control provisions, which limit the amount of acquired tax attributes that can be utilized in a given tax year.

We do not expect the change of control limitations or expiration dates to significantly impact our ability to utilize these attributes.

As of December 31, 2022 , we had research and development tax credits of $ 969 million and $ 734 million for federal and state income tax purposes, respectively.

If not utilized, the federal research and development tax credits will expire in various amounts beginning in 2024 .

However, the state of California research and development tax credits can be carried forward indefinitely.

In addition, we have other general business tax credits of $ 197 million for federal income tax purposes, which will not begin to significantly expire until 2033 .

Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,”

as defined in Section 382 of the Internal Revenue Code.

We have determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards due to prior ownership changes.

Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code.

We have determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards due to prior ownership changes or expirations.

As of December 31, 2023, we had federal research and development tax credits of $ 1.10 billion, federal renewable energy tax credits of $ 605 million, and state research and development tax credits of $ 923 million.

Most of our state research and development tax credits were in the state of California.

If not utilized, some of the federal tax credits may expire in various amounts beginning in 2036 .

However, California research and development tax credits can be carried forward indefinitely.

The local government of Shanghai granted a beneficial corporate income tax rate of 15 % to certain eligible enterprises, compared to the 25 % statutory corporate income tax rate in China.

Our Gigafactory Shanghai subsidiary was granted this beneficial income tax rate of 15 % for 2019 through 2023.

Starting in 2024, Gigafactory Shanghai is subject to 25 % statutory corporate income tax rate in China.

As of December 31, 2023, we intend to indefinitely reinvest our foreign earnings and cash unless such repatriation results in no or minimal tax costs.

We have recorded the taxes associated with the earnings we intend to repatriate in the future.

We have recorded the taxes associated with the foreign earnings we intend to repatriate in the future.

For the earnings we intend to indefinitely reinvest, no deferred tax liabilities for foreign withholding or other taxes have been recorded.

The estimated amount of such unrecognized deferred tax liability associated with the indefinitely reinvested earnings is approximately $ 168 million.

The estimated amount of such unrecognized withholding tax liability associated with the indefinitely reinvested earnings is approximately $ 245 million.

Uncertain Tax Positions

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Increases in balances related to prior year tax positions 117

Increases in balances related to current year tax

Decreases in balances related to prior year tax positions ( 90 )

Increases in balances related to current year tax positions 124

December 31, 2021 531

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Decreases in balances related to prior year tax positions ( 12 )

Increases in balances related to current year tax

Increases in balances related to current year tax positions 222

Decreases in balances related to expiration of the statute of limitations ( 7 )

December 31, 2022 870

Increases in balances related to prior year tax positions 59

Decreases in balances related to prior year tax positions

Decreases related to settlement with tax authorities ( 6 )

Increases in balances related to current year tax positions 255

1 unchanged sentence

December 31, 2023 $ 1,174

As of December 31, 2022 , accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and amounted to $ 31 million.

Unrecognized tax benefits of $ 572 million, if recognized, would not affect our effective tax rate since the tax benefits would increase a deferred tax asset that is currently fully offset by a valuation allowance.

We include interest and penalties related to unrecognized tax benefits in income tax expense.

We recognized net interest and penalties related to unrecognized tax benefits in provision for income taxes line of our consolidated statements of operations of $ 17 million, $ 27 million and $ 4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, and 2022, we have accrued $ 47 million and $ 31 million, respectively, related to interest and penalties on our unrecognized tax benefits.

Unrecognized tax benefits of $ 901 million, if recognized, would affect our effective tax rate.

We file income tax returns in the U.S.

and various state and foreign jurisdictions.

We are currently under examination by the Internal Revenue Service (“IRS”) for the years 2015 to 2018 .

We are currently under examination by the Internal Revenue Service (“IRS”) for the years 2015 to 2018.

Additional tax years within the periods 2004 to 2014 and 2019 to 2022 remain subject to examination for federal income tax purposes.

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Given the uncertainty in timing and outcome of our tax examinations, an estimate of the range of the reasonably possible change in gross unrecognized tax benefits within twelve months cannot be made at this time.

Note 15 –

Commitments and Contingencies

Note 15 – Commitments and Contingencies

Operating Lease Arrangement in Buffalo, New York

We have an operating lease through the Research Foundation for the SUNY Foundation with respect to Gigafactory New York.

We have an operating lease arrangement through the Research Foundation for the SUNY Foundation with respect to Gigafactory New York.

Under the lease and a related research and development agreement, we are continuing to further develop the facility.

Under this agreement, we are obligated to, among other things, meet employment targets as well as specified minimum numbers of personnel in the State of New York and in Buffalo, New York and spend or incur $ 5.00 billion in combined capital, operational expenses, costs of goods sold and other costs in the State of New York during the 10-year period beginning April 30, 2018.

On an annual basis during the initial lease term, as measured on each anniversary of such date, if we fail to meet these specified investment and job creation requirements, then we would be obligated to pay a $ 41 million “program payment”

to the SUNY Foundation for each year that we fail to meet these requirements.

Furthermore, if the arrangement is terminated due to a material breach by us, then additional amounts may become payable by us.

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On February 1, 2022, we reported to the State of New York that we had met and exceeded our annual requirements for jobs and investment in Buffalo and New York State.

As of December 31, 2022, we are currently in excess of such targets relating to investments and personnel in the State of New York and Buffalo and do not currently expect any issues meeting our applicable obligations in the years beyond.

However, if our expectations as to the costs and timelines of our investment and operations at Buffalo or our production ramp of the Solar Roof prove incorrect, we may incur additional expenses or be required to make substantial payments to the SUNY Foundation.

As of December 31, 2023, we have met and expect to meet the requirements under this arrangement based on our current and anticipated level of operations.

However, if our expectations as to the costs and timelines of our investment and operations at Buffalo prove incorrect, we may incur additional expenses or be required to make substantial payments to the SUNY Foundation.

Operating Lease Arrangement in Shanghai, China

We have an operating lease arrangement for an initial term of 50 years with the local government of Shanghai for land use rights where we have been constructing Gigafactory Shanghai.

Under the terms of the arrangement, we are required to spend RMB 14.08 billion in capital expenditures by the end of 2023 and to generate RMB 2.23 billion of annual tax revenues starting at the end of 2023.

If we are unwilling or unable to meet such target or obtain periodic project approvals, in accordance with the Chinese government’s standard terms for such arrangements, we would be required to revert the site to the local government and receive compensation for the remaining value of the land lease, buildings and fixtures.

We expect to meet the capital expenditure and tax revenue requirements based on our current level of spend and sales.

Under the terms of the arrangement, we are required to spend RMB 14.08 billion in capital expenditures by the end of 2023, which has been achieved in 2023, and to generate RMB 2.23 billion of annual tax revenues starting at the end of 2023.

As of December 31, 2023, we have met and expect to meet the tax revenue requirements based on our current level of spend and sales.

Legal Proceedings

Litigation Relating to the SolarCity Acquisition

Between September 1, 2016 and October 5, 2016, seven lawsuits were filed in the Delaware Court of Chancery by purported stockholders of Tesla challenging our acquisition of SolarCity.

Following consolidation, the lawsuit names as defendants the members of Tesla’s board of directors as then constituted and alleges, among other things, that board members breached their fiduciary duties in connection with the acquisition.

The complaint asserts both derivative claims and direct claims on behalf of a purported class and seeks, among other relief, unspecified monetary damages, attorneys’

fees and costs.

On January 22, 2020, all of the director defendants except Elon Musk reached a settlement to resolve the lawsuit against them for an amount to be paid entirely under the applicable insurance policy.

The settlement, which does not involve an admission of any wrongdoing by any party, was approved by the Court on August 17, 2020.

Tesla received payment of approximately $ 43 million on September 16, 2020, which has been recognized in our consolidated statements of operations as a reduction to Selling, general and administrative operating expenses for costs previously incurred related to the acquisition of SolarCity.

On February 4, 2020, the Court issued a ruling that denied plaintiffs’

previously-filed motion for summary judgment and granted in part and denied in part defendants’

previously-filed motion for summary judgment.

The case was set for trial in March 2020 until it was postponed by the Court due to safety precautions concerning COVID-19.

The trial was held from July 12 to July 23, 2021 and on August 16, 2021.

On October 22, 2021, the Court approved the parties’

joint stipulation that (a) the class is decertified and the action shall continue exclusively as a derivative action under Court of Chancery Rule 23.1 and (b) the direct claims against Elon Musk are dismissed with prejudice.

Following post-trial briefing, post-trial argument was held on January 18, 2022.

On April 27, 2022, the Court entered judgment in favor of Mr.

Musk on all counts.

On May 26, 2022, the plaintiff filed a notice of appeal.

The parties have completed briefing and argument will be held before the Supreme Court of Delaware on March 29, 2023.

These plaintiffs and others filed parallel actions in the U.S.

District Court for the District of Delaware on or about April 21, 2017.

They include claims for violations of the federal securities laws and breach of fiduciary duties by Tesla’s board of directors.

Those actions have been consolidated and stayed pending the above-referenced Chancery Court litigation.

Litigation Relating to 2018 CEO Performance Award

On June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Elon Musk and the members of Tesla’s board of directors as then constituted, alleging corporate waste, unjust enrichment and that such board members breached their fiduciary duties by approving the stock-based compensation plan awarded to Elon Musk in 2018.

The complaint seeks, among other things, monetary damages and rescission or reformation of the stock-based compensation plan.

On August 31, 2018, defendants filed a motion to dismiss the complaint;

plaintiff filed its opposition brief on November 1, 2018;

and defendants filed a reply brief on December 13, 2018.

The hearing on the motion to dismiss was held on May 9, 2019.

On September 20, 2019, the Court granted the motion to dismiss as to the corporate waste claim but denied the motion as to the breach of fiduciary duty and unjust enrichment claims.

Defendants’

answer was filed on December 3, 2019.

On January 25, 2021, the Court conditionally certified certain claims and a class of Tesla stockholders as a class action.

On September 30, 2021, plaintiff filed a motion for leave to file a verified amended derivative complaint.

On October 1, 2021, defendants Kimbal Musk and Steve Jurvetson moved for summary judgment as to the claims against them.

Following the motion, plaintiff agreed to voluntarily dismiss the claims against Kimbal Musk and Steve Jurvetson.

Plaintiff also moved for summary judgment on October 1, 2021.

On October 27, 2021, the Court approved the parties’

joint stipulation that, among other things, (a) all claims against Kimbal Musk and Steve Jurvetson in the Complaint are dismissed with prejudice;

(b) the class is decertified and the action shall continue exclusively as a derivative action under Court of Chancery Rule 23.1;

and (c) the direct claims against the remaining defendants are dismissed with prejudice.

On November 18, 2021, the remaining defendants (a) moved for partial summary judgment, (b) opposed plaintiff’s summary judgment motion and (c) opposed the plaintiff’s motion to amend his complaint.

In January 2022, the case was assigned to a different judge.

On February 24, 2022, the court (i) granted plaintiff’s motion to amend his complaint, and (ii) canceled oral argument on the summary judgment motions, stating that the court is “skeptical that this litigation can be resolved based on the undisputed facts”

and the “case is going to trial,”

but that the “parties may reassert their arguments made in support of summary judgment in their pre-trial and post-trial briefs.”

Trial was held November 14-18, 2022.

Post-trial briefing is underway and post-trial argument is scheduled for February 21, 2023.

Litigation Related to Directors’

On June 17, 2020, a purported Tesla stockholder filed a derivative action in the Delaware Court of Chancery, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors regarding compensation awards granted to Tesla’s directors, other than Elon Musk, between 2017 and 2020.

Post-trial briefing and argument are now complete.

Litigation Related to Directors’ Compensation

The suit asserts claims for breach of fiduciary duty and unjust enrichment and seeks declaratory and injunctive relief, unspecified damages and other relief.

Defendants filed their answer on September 17, 2020.

Trial is currently set for November 27, 2023, to December 1, 2023.

On July 14, 2023, the parties filed a Stipulation and Agreement of Compromise and Settlement, which does not involve an admission of any wrongdoing by any party.

If the settlement is approved by the Court, this action will be fully settled and dismissed with prejudice.

Pursuant to the terms of the agreement, Tesla provided notice of the proposed settlement to stockholders of record as of July 14, 2023.

The Court held a hearing regarding the settlement on October 13, 2023, after which it took the settlement and plaintiff counsels’ fee request under advisement.

The settlement is not expected to have an adverse impact on our results of operations, cash flows or financial position.

Litigation Relating to Potential Going Private Transaction

Between August 10, 2018 and September 6, 2018, nine purported stockholder class actions were filed against Tesla and Elon Musk in connection with Mr.

Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private.

All of the suits are now pending in the U.S.

District Court for the Northern District of California.

Although the complaints vary in certain respects, they each purport to assert claims for violations of federal securities laws related to Mr.

Musk’s statement and seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of Tesla’s securities.

Plaintiffs filed their consolidated complaint on January 16, 2019 and added as defendants the members of Tesla’s board of directors.

The now-consolidated purported stockholder class action was stayed while the issue of selection of lead counsel was briefed and argued before the Ninth Circuit.

The Ninth Circuit ruled regarding lead counsel.

Defendants filed a motion to dismiss the complaint on November 22, 2019.

The hearing on the motion was held on March 6, 2020.

On April 15, 2020, the Court denied defendants’

motion to dismiss.

Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private.

On January 16, 2019, Plaintiffs filed their consolidated complaint in the United States District Court for the Northern District of California and added as defendants the members of Tesla’s board of directors.

The consolidated complaint asserts claims for violations of the federal securities laws and seeks unspecified damages and other relief.

The parties stipulated to certification of a class of stockholders, which the court granted on November 25, 2020.

On January 11, 2022, plaintiff filed a motion for partial summary judgment.

On April 1, 2022, the Court granted in part plaintiffs’

motion for partial summary judgment.

The Company disagrees with the ruling and accordingly, on April 22, 2022, asked the Court for reconsideration or, in the alternative, certification to file an interlocutory appeal.

On June 16, 2022, in response to Tesla’s motions, the Court denied certification to appeal and declined to reconsider its opinion but clarified its summary judgment ruling to make clear that it had not ruled that any misstatements it identified met the required materiality element under the securities statute.

The issue of materiality and reliance will both be questions for the jury to decide at trial, which started on January 17, 2023.

Trial started on January 17, 2023, and on February 3, 2023, a jury rendered a verdict in favor of the defendants on all counts.

After trial, plaintiffs filed a motion for judgment as a matter of law and a motion for new trial, which the Court denied and judgement was entered in favor of defendants on July 11, 2023.

On July 14, 2023, plaintiffs filed a notice of appeal.

Between October 17, 2018 and March 8, 2021, seven derivative lawsuits were filed in the Delaware Court of Chancery, purportedly on behalf of Tesla, against Mr.

Musk and the members of Tesla’s board of directors, as constituted at relevant times, in relation to statements made and actions connected to a potential going private transaction, with certain of the lawsuits challenging additional Twitter posts by Mr.

Musk, among other things.

Five of those actions were consolidated, and all seven actions have been stayed pending resolution of the above-referenced consolidated purported stockholder class action.

Five of those actions were consolidated, and all seven actions have been stayed pending resolution of the appeal in the above-referenced consolidated purported stockholder class action.

In addition to these cases, two derivative lawsuits were filed on October 25, 2018 and February 11, 2019 in the U.S.

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Musk and the members of the Tesla board of directors as then constituted.

Those cases have also been consolidated and stayed pending resolution of the above-referenced consolidated purported stockholder class action.

On October 21, 2022, a lawsuit was filed in the Delaware Court of Chancery by a purported shareholder of Tesla alleging, among other things, that board members breached their fiduciary duties in connection with their oversight of the Company’s 2018 settlement with the SEC, as amended.

Among other things, the plaintiff seeks reforms to the Company’s corporate governance and internal procedures, unspecified damages, and attorneys’

Those cases have also been consolidated and stayed pending resolution of the appeal in the above-referenced consolidated purported stockholder class action.

Among other things, the plaintiff seeks reforms to the Company’s corporate governance and internal procedures, unspecified damages, and attorneys’ fees.

The parties reached an agreement to stay the case until March 5, 2024.

Unless otherwise stated, the individual defendants named in the stockholder proceedings described above and the Company with respect to the stockholder class action proceedings described above believe that the claims in such proceedings have no merit and intend to defend against them vigorously.

We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims.

On November 15, 2021, JPMorgan Chase Bank (“JP Morgan”) filed a lawsuit against Tesla in the Southern District of New York alleging breach of a stock warrant agreement that was entered into as part of a convertible notes offering in 2014.

In 2018, JP Morgan informed Tesla that it had adjusted the strike price based upon Mr.

Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private.

Tesla disputed JP Morgan’s adjustment as a violation of the parties’

Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private.

Tesla disputed JP Morgan’s adjustment as a violation of the parties’ agreement.

In 2021, Tesla delivered shares to JP Morgan per the agreement, which they duly accepted.

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On October 4, 2021, in a case captioned Diaz v.

Tesla , a jury in the Northern District of California returned a verdict of $ 136.9 million against Tesla on claims by a former contingent worker that he was subjected to race discrimination while assigned to work at Tesla’s Fremont Factory from 2015-2016.

On November 16, 2021, Tesla filed a post-trial motion for relief that included a request for a new trial or reduction of the jury’s damages.

The Court held a hearing on Tesla’s motion on January 19, 2022.

On April 13, 2022, the Court granted Tesla’s motion in part, reducing the total damages to $ 15 million and conditionally denied the motion for a new trial subject to the plaintiff’s acceptance of the reduced award.

On June 21, 2022, the plaintiff rejected the reduced award and, as a result, on June 27, 2022, the Court ordered a new trial on damages only, to commence on March 27, 2023.

Tesla continues to believe that the facts and law do not justify the damages awarded and is assessing its next steps.

On February 9, 2022, shortly after the Diaz jury verdict, the California Civil Rights Department (”CRD,”

formerly “DFEH”) filed a civil complaint against Tesla in Alameda County, California Superior Court, alleging systemic race discrimination, hostile work environment and pay equity claims, among others.

CRD’s amended complaint seeks monetary damages and injunctive relief.

On September 22, 2022, Tesla filed a cross complaint against CRD, alleging that it violated the Administrative Procedures Act by failing to follow statutory pre-requisites prior to filing suit and that cross complaint was subject to a sustained demurrer.

Tesla has until February 3, 2023 to amend its cross complaint.

The case is now in discovery.

Additionally, on June 1, 2022 the Equal Employment Opportunity Commission (“EEOC”) issued a cause finding against Tesla that closely parallels the CRD’s allegations.

Tesla is in the process of setting up a mandatory mediation with the EEOC.

Tesla, a jury in the Northern District of California returned a verdict against Tesla on claims by a former contingent worker that he was subjected to race discrimination while assigned to work at Tesla’s Fremont Factory from 2015-2016.

A retrial was held starting on March 27, 2023, after which a jury returned a verdict of $ 3,175,000 .

As a result, the damages awarded against Tesla were reduced from an initial $ 136.9 million (October 4, 2021) down to $ 15 million (April 13, 2022), and then further down to $ 3.175 million (April 3, 2023).

On November 2, 2023, the plaintiff filed a notice of appeal, and on November 16, 2023, Tesla filed a notice of cross appeal.

On February 9, 2022, shortly after the first Diaz jury verdict, the California Civil Rights Department (“CRD,” formerly “DFEH”) filed a civil complaint against Tesla in Alameda County, California Superior Court, alleging systemic race discrimination, hostile work environment and pay equity claims, among others.

CRD’s amended complaint seeks monetary damages and injunctive relief.

The case is currently in discovery.

Additionally, on June 1, 2022 the Equal Employment Opportunity Commission (“EEOC”) issued a cause finding against Tesla that closely parallels the CRD’s allegations.

On September 28, 2023, the EEOC filed a civil complaint against Tesla in the United States District Court for the Northern District of California asserting claims for race harassment and retaliation and seeking, among other things, monetary and injunctive relief.

On December 18, 2023, Tesla filed a motion to stay the case.

Separately, on December 26, 2023, Tesla filed a motion to dismiss the case.

On June 16, 2022, two Tesla stockholders filed separate derivative actions in the U.S.

District Court for the Western District of Texas, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors.

Both suits assert claims for breach of fiduciary duty, unjust enrichment, and violation of the federal securities laws in connection with alleged race and gender discrimination and sexual harassment.

Among other things, plaintiffs seek declaratory and injunctive relief, unspecified damages payable to Tesla, and attorneys’

Among other things, plaintiffs seek declaratory and injunctive relief, unspecified damages payable to Tesla, and attorneys’ fees.

On July 22, 2022, the Court consolidated the two cases and on September 6, 2022, plaintiffs filed a consolidated complaint.

On November 7, 2022, the defendants filed a motion to dismiss the case.

Plaintiffs filed a response of January 13, 2023, and the defendants’

reply is due February 17, 2023.

On November 7, 2022, the defendants filed a motion to dismiss the case and on September 15, 2023, the Court dismissed the action but granted plaintiffs leave to file an amended complaint.

On November 2, 2023, plaintiff filed an amended complaint purportedly on behalf of Tesla, against Elon Musk.

On December 19, 2023, the defendants moved to dismiss the amended complaint.

Other Litigation Related to Our Products and Services

We are also subject to various lawsuits that seek monetary and other injunctive relief.

These lawsuits include proposed class actions and other consumer claims that allege, among other things, purported defects and misrepresentations related to our products and services.

For example, on September 14, 2022, a proposed class action was filed against Tesla, Inc.

and related entities in the U.S.

District Court for the Northern District of California, alleging various claims about the Company’s driver assistance technology systems under state and federal law.

This case was later consolidated with several other proposed class actions, and a Consolidated Amended Complaint was filed on October 28, 2022, which seeks damages and other relief on behalf of all persons who purchased or leased from Tesla between January 1, 2016 to the present.

On October 5, 2022 a proposed class action complaint was filed in the U.S.

District Court for the Eastern District of New York asserting similar state and federal law claims against the same defendants.

On September 30, 2023, the Court dismissed this action with leave to amend the complaint.

On November 20, 2023, the plaintiff moved to amend the complaint, which Tesla opposed.

On March 22, 2023, the plaintiffs in the Northern District of California consolidated action filed a motion for a preliminary injunction to order Tesla to (1) cease using the term “Full Self-Driving Capability” (FSD Capability), (2) cease the sale and activation of FSD Capability and deactivate FSD Capability on Tesla vehicles, and (3) provide certain notices to consumers about proposed court-findings about the accuracy of the use of the terms Autopilot and FSD Capability.

Tesla opposed the motion.

On September 30, 2023, the Court denied the request for a preliminary injunction, compelled four of five plaintiffs to arbitration, and dismissed the claims of the fifth plaintiff with leave to amend the complaint.

On October 31, 2023, the remaining plaintiff in the Northern District of California action filed an amended complaint, which Tesla has moved to dismiss.

On October 2, 2023, a similar proposed class action was filed in San Diego County Superior Court in California.

Tesla subsequently removed the San Diego County case to federal court and on January 8, 2024, the federal court granted Tesla’s motion to transfer the case to the U.S.

District Court for the Northern District of California.

On February 27, 2023, a proposed class action was filed in the U.S.

District Court for the Northern District of California against Tesla, Inc., Elon Musk and certain current and former Company executives.

The complaint alleges that the defendants made material misrepresentations and omissions about the Company’s Autopilot and FSD Capability technologies and seeks money damages and other relief on behalf of persons who purchased Tesla stock between February 19, 2019 and February 17, 2023.

An amended complaint was filed on September 5, 2023, naming only Tesla, Inc.

and Elon Musk as defendants.

On November 6, 2023, Tesla moved to dismiss the amended complaint.

On March 14, 2023, a proposed class action was filed against Tesla, Inc.

District Court for the Northern District of California.

Several similar complaints have also been filed in the same court and these cases have now all been consolidated.

These complaints allege that Tesla violates federal antitrust and warranty laws through its repair, service, and maintenance practices and seeks, among other relief, damages for persons who paid Tesla for repairs services or Tesla compatible replacement parts from March 2019 to March 2023.

On July 17, 2023, these plaintiffs filed a consolidated amended complaint.

On September 27, 2023, the court granted Tesla’s motion to compel arbitration as to three of the plaintiffs, and on November 17, 2023, the court granted Tesla’s motion to dismiss without prejudice.

The plaintiffs filed a Consolidated Second Amended Complaint on December 12, 2023, which Tesla has moved to dismiss.

Plaintiffs have also appealed the court’s arbitration order.

Trial is currently set for July 7, 2025.

The Company intends to vigorously defend itself in these matters;

however, we cannot predict the outcome or impact.

We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.

Certain Investigations and Other Matters

We receive requests for information from regulators and governmental authorities, such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the SEC, the Department of Justice (“DOJ”) and various state, federal, and international agencies.

We routinely cooperate with such regulatory and governmental requests, including subpoenas, formal and informal requests and other investigations and inquiries.

For example, the SEC had issued subpoenas to Tesla in connection with Elon Musk’s prior statement that he was considering taking Tesla private.

The take-private investigation was resolved and closed with a settlement entered into with the SEC in September 2018 and as further clarified in April 2019 in an amendment.

The SEC also has periodically issued subpoenas to us seeking information on our governance processes around compliance with the SEC settlement, as amended.

Separately, the company has received requests from the DOJ for documents related to Tesla’s Autopilot and FSD features.

We regularly receive requests for information, including subpoenas, from regulators and governmental authorities such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the Securities and Exchange Commission (“SEC”), the Department of Justice (“DOJ”), and various local, state, federal, and international agencies.

The ongoing requests for information include topics such as operations, technology (e.g., vehicle functionality, Autopilot and FSD Capability), compliance, finance, data privacy, and other matters related to Tesla’s business, its personnel, and related parties.

We routinely cooperate with such formal and informal requests for information, investigations, and other inquiries.

To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred.

We cannot predict the outcome or impact of any ongoing matters.

Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows and financial position.

We are also subject to various other legal proceedings and claims that arise from the normal course of business activities.

If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position and brand.

We are also subject to various other legal proceedings, risks and claims that arise from the normal course of business activities.

For example, during the second quarter of 2023, a foreign news outlet reported that it obtained certain misappropriated data including, purportedly non-public Tesla business and personal information.

Tesla has made notifications to potentially affected individuals (current and former employees) and regulatory authorities and we are working with certain law enforcement and other authorities.

On August 5, 2023, a putative class action was filed in the United States District Court for the Northern District of California, purportedly on behalf of all U.S.

individuals impacted by the data incident, followed by several additional lawsuits, that each assert claims under various state laws and seeks monetary damages and other relief.

If an unfavorable ruling or development were to occur in these or other possible legal proceedings, risks and claims, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.

Letters of Credit

As of December 31, 2023, we had $ 525 million of unused letters of credit outstanding.

Note 16 –

Variable Interest Entity Arrangements

Note 16 – Variable Interest Entity Arrangements

We have entered into various arrangements with investors to facilitate the funding and monetization of our solar energy systems and vehicles.

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Cash distributions of income and other receipts by a fund, net of agreed upon expenses, estimated expenses, tax benefits and detriments of income and loss and tax credits, are allocated to the fund investor and our subsidiary as specified in the agreements.

Generally, our subsidiary has the option to acquire the fund investor’s interest in the fund for an amount based on the market value of the fund or the formula specified in the agreements.

Upon the sale or liquidation of a fund, distributions would occur in the order and priority specified in the agreements.

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In some instances, we have guaranteed payments to the fund investors as specified in the agreements.

A fund’s creditors have no recourse to our general credit or to that of other funds.

Certain assets of the funds have been pledged as collateral for their obligations.

The aggregate carrying values of the VIEs’

assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows (in millions):

The aggregate carrying values of the VIEs’ assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows (in millions):

2023 December 31,

Current assets

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Other non-current assets 369 404

Total assets $ 4,087 $ 4,828

Current liabilities

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Total liabilities $ 3,777 $ 2,215

Note 17 –

Related Party Transactions

In February 2020, our CEO and a member of our Board of Directors purchased from us 195,555 and 18,750 shares, respectively, as adjusted to give effect to the 2022 Stock Split, of our common stock in a public offering at the public offering price for an aggregate $ 10 million and $ 1 million, respectively.

In June 2020, our CEO entered into an indemnification agreement with us for an interim term of 90 days.

During the interim term, we resumed our annual evaluation of all available options for providing directors’

and officers’

indemnity coverage, which we had suspended during the height of shelter-in-place requirements related to the COVID-19 pandemic.

As part of such process, we obtained a binding market quote for a directors’

and officers’

liability insurance policy with an aggregate coverage limit of $ 100 million.

Pursuant to the indemnification agreement, our CEO provided, from his personal funds, directors’

and officers’

indemnity coverage to us during the interim term in the event such coverage is not indemnifiable by us, up to a total of $ 100 million.

In return, we paid our CEO a total of $ 3 million, which represents the market-based premium for the market quote described above as prorated for 90 days and further discounted by 50 %.

Following the lapse of the 90-day period, we did not extend the term of the indemnification agreement with our CEO and instead bound a customary directors’

and officers’

liability insurance policy with third-party carriers.

In relation to our CEO’s exercise of stock options and sale of common stock from the 2012 CEO Performance Award, Tesla withheld the appropriate amount of taxes.

Note 17 – Related Party Transactions

In relation to our CEO’s exercise of stock options and sale of common stock from the 2012 CEO Performance Award, Tesla withheld the appropriate amount of taxes.

However, given the significant amounts involved, our CEO entered into an indemnification agreement with us in November 2021 for additional taxes owed, if any.

Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as SpaceX and Twitter, Inc., in accordance with our Related Person Transactions Policy.

Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as SpaceX and X Corp., in accordance with our Related Person Transactions Policy.

Such transactions have not had to date, and are not currently expected to have, a material impact on our consolidated financial statements.

Note 18 –

Segment Reporting and Information about Geographic Areas

Note 18 – Segment Reporting and Information about Geographic Areas

We have two operating and reportable segments:

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The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits.

Additionally, the automotive segment is also comprised of services and other, which includes non-warranty after-sales vehicle services and parts, paid Supercharging, sales of used vehicles, retail merchandise and vehicle insurance revenue.

Additionally, the automotive segment is also comprised of services and other, which includes sales of used vehicles, non-warranty after-sales vehicle services, body shop and parts, paid Supercharging, vehicle insurance revenue and retail merchandise.

The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives.

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Year Ended December 31,

2023 2022 2021

Automotive segment

Revenues $ 90,738 $ 77,553 $ 51,034

Gross profit $ 16,519 $ 20,565 $ 13,735

Energy generation and storage segment

Revenues $ 6,035 $ 3,909 $ 2,789

Gross profit $ 1,141 $ 288 $ ( 129 )

The following table presents revenues by geographic area based on the sales location of our products (in millions):

Year Ended December 31,

2023 2022 2021

United States $ 45,235 $ 40,553 $ 23,973

China 21,745 18,145 13,844

Other international 29,793 22,764 16,006

Total $ 96,773 $ 81,462 $ 53,823

The following table presents long-lived assets by geographic area (in millions):

2023 December 31,

United States $ 26,629 $ 21,667

Germany 4,258 3,547

China 2,820 2,978

Other international 1,247 845

Total $ 34,954 $ 29,037

The following table presents inventory by reportable segment (in millions):

2023 December 31,

Automotive $ 11,139 $ 10,996

Energy generation and storage 2,487 1,843

Note 19 –

Restructuring and Other

Total $ 13,626 $ 12,839

Note 19 – Restructuring and Other

During the years ended December 31, 2022 and 2021, we recorded $ 204 million and $ 101 million, respectively, of impairment losses on digital assets.

During the years ended December 31, 2022 and 2021 we also realized gains of $ 64 million and $ 128 million, respectively, in connection with converting our holdings of digital assets into fiat currency.

Additionally, we recorded other expenses of $ 36 million in the second quarter during the year ended December 31, 2022 .

We also recorded other expenses of $ 36 million during the second quarter of the year ended December 31, 2022, related to employee terminations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data