What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-24 compared with 2024-07-24 · 87 added, 87 removed, 151 unchanged (54% of the section changed)

5 unchanged sentences

Additionally, we are increasingly focused on products and services based on AI, robotics and automation.

In 2024, we produced approximately 844,000 consumer vehicles and delivered approximately 831,000 consumer vehicles through the second quarter.

In 2024, we produced approximately 1,314,000 consumer vehicles and delivered approximately 1,294,000 consumer vehicles through the third quarter.

We are focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products, further improving and deploying our FSD capabilities, including through our planned robotaxi product, reducing costs, increasing vehicle production, utilized capacity and delivery capabilities, improving and developing our vehicles and battery technologies, vertically integrating and localizing our supply chain, and expanding our global infrastructure, including our service and charging infrastructure.

In 2024, we deployed 13.46 GWh of energy storage products through the second quarter.

In 2024, we deployed 20.41 GWh of energy storage products through the third quarter.

We are focused on ramping the production and increasing the market penetration of our energy storage products.

During the three and six months ended June 30, 2024, we recognized total revenues of $25.50 billion and $46.80 billion, respectively, representing an increase of $573 million and a decrease of $1.46 billion, respectively, compared to the same periods in the prior year.

During the three and six months ended June 30, 2024, our net income attributable to common stockholders was $1.48 billion and $2.61 billion, respectively, representing decreases of $1.23 billion and $2.61 billion, respectively, compared to the same periods in the prior year.

During the three and nine months ended September 30, 2024, we recognized total revenues of $25.18 billion and $71.98 billion, respectively, representing increases of $1.83 billion and $377 million, respectively, compared to the same periods in the prior year.

During the three and nine months ended September 30, 2024, our net income attributable to common stockholders was $2.17 billion and $4.77 billion, respectively, representing an increase of $314 million and a decrease of $2.30 billion, respectively, compared to the same periods in the prior year.

We continue to ramp production and build and optimize our manufacturing capacity, expand our operations while focusing on further cost reductions and operational efficiencies to enable increased deliveries and deployments of our products, and invest in research and development to accelerate our AI, software, and fleet-based profits for further revenue growth.

We ended the second quarter of 2024 with $30.72 billion in cash and cash equivalents and investments, representing an increase of $1.63 billion from the end of 2023.

Our cash flows provided by operating activities were $3.85 billion during the six months ended June 30, 2024, compared to $5.58 billion during the same period ended June 30, 2023, representing a decrease of $1.72 billion.

Capital expenditures amounted to $5.04 billion during the six months ended June 30, 2024, compared to $4.13 billion during the same period ended June 30, 2023, representing an increase of $911 million.

We ended the third quarter of 2024 with $33.65 billion in cash and cash equivalents and investments, representing an increase of $4.55 billion from the end of 2023.

Our cash flows provided by operating activities were $10.11 billion during the nine months ended September 30, 2024, compared to $8.89 billion during the same period ended September 30, 2023, representing an increase of $1.22 billion.

Capital expenditures amounted to $8.56 billion during the nine months ended September 30, 2024, compared to $6.59 billion during the same period ended September 30, 2023, representing an increase of $1.96 billion.

Overall growth has allowed our business to generally fund itself, and we will continue investing in a number of capital-intensive projects and research and development in upcoming periods.

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TBD Roadster In development

We are focused on growing our manufacturing capacity, which includes capacity for manufacturing new vehicle models such as our Cybertruck, Tesla Semi and future vehicles utilizing aspects of our next generation platform, and ramping the production at our Gigafactories to their installed production capacities as well as increasing production rate and efficiency at our current factories.

We are focused on growing our manufacturing capacity, which includes capacity for manufacturing newer vehicle models such as our Cybertruck, Tesla Semi and future vehicles utilizing aspects of our next generation platform, and ramping the production at our Gigafactories to their installed production capacities as well as increasing production rate and efficiency at our current factories.

The next phase of production growth will depend on the continued ramp at our factories and be initiated by advances in autonomy and the introduction of new products, including those built on our next generation vehicle platform, as well as our ability to add to our available sources of battery cell supply by manufacturing our own cells that we are developing to have high-volume output, lower capital and production costs and longer range.

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Moreover, we expect to continue to benefit from ongoing electrification of the automotive sector and increasing environmental regulations and initiatives.

However, we operate in a cyclical industry that is sensitive to political and regulatory uncertainty, including with respect to trade and the environment, all of which can be compounded by inflationary pressures, rising energy prices, interest rate fluctuations and the liquidity of enterprise customers.

For example, inflationary pressures have increased across the markets in which we operate.

In an effort to curb this trend, central banks in developed countries raised interest rates rapidly and substantially, impacting the affordability of vehicle lease and finance arrangements.

However, we operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty, including with respect to trade and the environment, all of which can be compounded by inflationary pressures, rising energy prices, interest rate fluctuations and the liquidity of enterprise customers.

For example, as inflationary pressures increased across the markets in which we operate, central banks in developed countries raised interest rates rapidly and substantially, which impacted the affordability of vehicle lease and finance arrangements.

Further, sales of vehicles in the automotive industry also tend to be cyclical in many markets, which may expose us to increased volatility as we expand and adjust our operations.

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The long-term success of this business is dependent upon incremental volume growth.

We continue to increase the production of our energy storage products to meet high levels of demand, including the construction of a new Megafactory in Shanghai and the ongoing ramp at our Megafactory in Lathrop, California.

We continue to increase the production and capabilities of our energy storage products to meet high levels of demand, including the introduction of Powerwall 3 in 2024, the construction of a new Megafactory in Shanghai and the ongoing ramp at our Megafactory in Lathrop, California.

For Megapack, energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics.

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Results of Operations

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Automotive & Services and Other Segment

Automotive sales revenue decreased $1.89 billion, or 9%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to lower average selling price on our vehicles driven by overall price reductions and attractive financing options provided year over year.

Automotive sales revenue increased $249 million, or 1%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, due to an increase of approximately 23,000 combined Model 3 and Model Y cash deliveries and an increase of 8,000 deliveries of other models primarily due to our production ramp of Cybertruck.

Additionally, we recognized $326 million of FSD revenue for Cybertruck and certain features such as Actually Smart Summon in the third quarter of 2024.

The increases were partially offset by lower average selling price on our vehicles driven by overall price reductions and attractive financing options provided year over year as well as mix.

Automotive sales revenue decreased $4.06 billion, or 7%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to lower average selling price on our vehicles driven by overall price reductions and attractive financing options provided year over year as well as mix.

Additionally, there was a decrease of approximately 17,000 combined Model 3 and Model Y cash deliveries partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory.

The decreases were partially offset by an increase of approximately 4,000 deliveries of other models, including Model S, Model X and Cybertruck, primarily due to our production ramp of Cybertruck.

Automotive sales revenue decreased $4.31 billion, or 11%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to lower average selling price on our vehicles driven by overall price reductions and attractive financing options provided year over year.

Additionally, there was a decrease of approximately 40,000 combined Model 3 and Model Y cash deliveries partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin-Brandenburg.

The decreases were partially offset by an increase of approximately 11,000 deliveries of other models, including Model S, Model X and Cybertruck, primarily due to our production ramp of Cybertruck.

Automotive regulatory credits revenue increased $608 million, or 216%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Automotive regulatory credits revenue increased $529 million, or 66%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The decreases were partially offset by an increase of approximately 19,000 deliveries of other models primarily due to our production ramp of Cybertruck and an increase in FSD revenue compared to the prior period, as discussed above.

Automotive regulatory credits revenue increased $185 million, or 33%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Automotive regulatory credits revenue increased $714 million, or 53%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

These increases were driven by demand for credits in North America as other automobile manufacturers scale back on their battery electric vehicle plans.

Automotive leasing revenue decreased $109 million, or 19%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Automotive leasing revenue decreased $197 million, or 17%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The decreases were primarily due to lower direct sales-type leasing deliveries compared to the prior periods.

Services and other revenue increased $458 million, or 21%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Services and other revenue increased $909 million, or 23%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increases were primarily due to increases in non-warranty maintenance services and collision revenue, used vehicle revenue, insurance services revenue, paid Supercharging revenue and part sales revenue.

Automotive leasing revenue decreased $43 million, or 9%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Automotive leasing revenue decreased $240 million, or 15%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decreases were primarily due to lower direct sales-type leasing deliveries and a decrease in lease buyouts.

Services and other revenue increased $624 million, or 29%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Services and other revenue increased $1.53 billion, or 25%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increases were primarily due to increases in non-warranty maintenance services and collision revenue, used vehicle revenue, paid Supercharging revenue, insurance services revenue and part sales revenue.

Energy Generation and Storage Segment

Energy generation and storage revenue increased $1.51 billion, or 100%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Energy generation and storage revenue increased $1.61 billion, or 53%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increases were primarily due to increases in Megapack deployments compared to the prior periods.

Energy generation and storage revenue increased $817 million, or 52%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Energy generation and storage revenue increased $2.43 billion, or 53%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increases were primarily due to increases in Megapack and Powerwall deployments compared to the prior periods.

Cost of Revenues and Gross Margin

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Automotive & Services and Other Segment

Cost of automotive sales revenue decreased $879 million, or 5%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Cost of automotive sales revenue decreased $2.40 billion, or 7%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Cost of automotive sales revenue decreased due to a decrease in the average combined cost per unit of our vehicles primarily from lower raw material costs, freight and duties and higher IRA manufacturing credits in addition to the volume changes in deliveries year over year as discussed above.

These decreases were partially offset by higher costs for Cybertruck and the updated Model 3 at our Fremont factory as a result of the temporary under-utilization of manufacturing capacity as production ramps.

Cost of automotive leasing revenue decreased $93 million, or 28%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Cost of automotive leasing revenue decreased $157 million, or 23%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The decreases were primarily due to a decrease in direct sales-type leasing cost of revenue driven by lower deliveries compared to the prior periods.

Cost of services and other revenue increased $457 million, or 23%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Cost of services and other revenue increased $962 million, or 26%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increases were generally in line with the changes in services and other revenue as discussed above.

Gross margin for total automotive decreased from 19.2% to 18.5% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Gross margin for total automotive decreased from 20.1% to 18.5% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The decreases were driven by lower average selling price on our vehicles and temporary under-utilization of manufacturing capacity during production ramps, partially offset by increases in regulatory credits revenue and lower average combined cost per unit of our vehicles, as discussed above.

Gross margin for total automotive & services and other segment decreased from 18.2% to 17.1% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Gross margin for total automotive & services and other segment decreased from 19.0% to 16.9% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the automotive gross margin decreases discussed above.

Cost of automotive sales revenue increased $87 million, or 1%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to the increases in deliveries year over year as discussed above, partially offset by a decrease in the average combined cost per unit of our vehicles primarily from lower raw material costs, freight and duties as well as mix.

Cost of automotive sales revenue decreased $2.32 billion, or 5%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to a decrease in the average combined cost per unit of our vehicles primarily from lower raw material costs, freight and duties as well as mix, in addition to the volume changes in deliveries year over year as discussed above.

The decreases were partially offset by higher costs for Cybertruck and the updated Model 3 at our Fremont factory as a result of the temporary under-utilization of manufacturing capacity as production ramps.

Cost of automotive leasing revenue decreased $54 million, or 18%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Cost of automotive leasing revenue decreased $211 million, or 22%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decreases were primarily due to a decrease in direct sales-type leasing cost of revenue driven by lower deliveries and a decrease in our direct operating lease cost of revenue driven by lower lease payoffs compared to the prior periods.

Cost of services and other revenue increased $507 million, or 25%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Cost of services and other revenue increased $1.47 billion, or 26%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increases were primarily due to volume increases in used vehicle sales, insurance services, paid Supercharging, non-warranty maintenance services and collision and part sales.

Gross margin for total automotive increased from 18.7% to 20.1% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to lower average combined cost per unit of our vehicles, an increase in FSD revenue and an increase in regulatory credits revenue, partially offset by lower average selling price on our vehicles, as discussed above.

Gross margin for total automotive decreased from 19.7% to 19.0% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to lower average selling price on our vehicles and temporary under-utilization of manufacturing capacity during production ramps, partially offset by lower average combined cost per unit of our vehicles, an increase in regulatory credits revenue and an increase in FSD revenue, as discussed above.

Gross margin for total automotive & services and other segment increased from 17.4% to 18.7% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Gross margin for total automotive & services and other segment decreased from 18.5% to 17.6% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The changes in gross margin are primarily due to the automotive gross margin factors discussed above.

Energy Generation and Storage Segment

Cost of energy generation and storage revenue increased $1.04 billion, or 85%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Cost of energy generation and storage revenue increased $914 million, or 35%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increases were primarily due to increases in Megapack deployments, partially offset by increases in IRA manufacturing credits recognized as compared to the prior periods.

Gross margin for energy generation and storage increased from 18.4% to 24.6% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Gross margin for energy generation and storage increased from 14.7% to 24.6% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increases were primarily due to increases in IRA manufacturing credits and a higher proportion of our storage business, which operated at a higher gross margin, within the segment as compared to the prior periods.

Cost of energy generation and storage revenue increased $473 million, or 40%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Cost of energy generation and storage revenue increased $1.39 billion, or 37%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increases in cost of revenues were primarily due to increases in Megapack and Powerwall deployments, partially offset by increases in IRA manufacturing credits recognized as compared to the prior periods.

Gross margin for energy generation and storage increased from 24.4% to 30.5% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Gross margin for energy generation and storage increased from 18.0% to 26.6% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increases were primarily due to margin improvements for our energy storage products driven by cost reductions, including benefits from IRA manufacturing credits, and a higher proportion of our storage business, which operated at a higher gross margin, within the segment as compared to the prior periods.

Research and Development Expense

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

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As a percentage of revenues 4 % 5 % 5 % 4 %

Research and development (“R&D”) expenses increased $131 million, or 14%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

R&D expenses increased $511 million, or 30%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The overall increases were primarily driven by additional costs year over year related to AI and other programs.

R&D expenses as a percentage of revenue stayed consistent at 4% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

R&D expenses as a percentage of revenue increased from 4% to 5% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 as we continue to expand our product roadmap and technologies.

Research and development (“R&D”) expenses decreased $122 million, or 11%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to a decrease in vehicle programs, partially offset by an increase in AI related costs year over year.

R&D expenses as a percentage of revenue decreased from 5% to 4% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to lower R&D expenses in the current period.

R&D expenses increased $389 million, or 14%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The overall increases were primarily driven by additional costs year over year related to AI programs.

R&D expenses as a percentage of revenue increased from 4% to 5% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as we continue to expand our product roadmap and technologies.

Selling, General and Administrative Expense

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

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As a percentage of revenues 5 % 5 % 5 % 5 %

Selling, general and administrative (“SG&A”) expenses increased $86 million, or 7%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

This was driven by a $73 million increase in facilities related expenses and a $32 million increase in employee and labor costs, including professional services.

SG&A expenses increased $384 million, or 17%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

This was driven by a $208 million increase in employee and labor costs, including professional services, and a $135 million increase in facilities related expenses.

Selling, general and administrative (“SG&A”) expenses decreased $67 million, or 5%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 driven by a $40 million decrease in employee and labor costs, including professional services and a $32 million decrease in marketing expenses.

SG&A expenses increased $317 million, or 9%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 driven by a $168 million increase in employee and labor costs, including professional services, and a $153 million increase in facilities related expenses.

Restructuring and Other

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

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As a result, we recognized $583 million of employee termination expenses in Restructuring and other in our consolidated income statement.

These expenses were substantially paid during the quarter with the remaining unpaid immaterial accrual recorded in Accrued liabilities and other in our consolidated balance sheet as of June 30, 2024.

These expenses were substantially paid with an immaterial accrual remaining in Accrued liabilities and other in our consolidated balance sheet as of September 30, 2024.

Interest Income

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

Interest income $ 429 $ 282 $ 147 52 % $ 1,127 $ 733 $ 394 54 %

Interest income increased $110 million, or 46%, in the three months ended June 30, 2024 and increased $247 million, or 55%, in the six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, respectively.

The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments compared to the prior periods due to rising interest rates and increases in our portfolio balance.

Other Income, Net

Three Months Ended June 30, Change Six Months Ended June 30, Change

Interest income increased $147 million, or 52%, in the three months ended September 30, 2024 and increased $394 million, or 54%, in the nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, respectively.

The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments compared to the prior periods due to increases in our portfolio balance and higher interest rates.

Other (Expense) Income, Net

Three Months Ended September 30, Change Nine Months Ended September 30, Change

(Dollars in millions) 2024 2023 $ % 2024 2023 $ %

Other income, net $ 20 $ 328 $ (308) (94) % $ 128 $ 280 $ (152) (54)%

Other income, net, changed unfavorably by $308 million in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Other income, net changed unfavorably by $152 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Other (expense) income, net $ (270) $ 37 $ (307) Not meaningful $ (142) $ 317 $ (459) Not meaningful

Other (expense) income, net, changed unfavorably by $307 million in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Other (expense) income, net changed unfavorably by $459 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The unfavorable changes were primarily due to fluctuations in foreign currency exchange rates on our intercompany balances.

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Provision for Income Taxes

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Three Months Ended September 30, Change Nine Months Ended September 30, Change

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Effective tax rate 22 % 8 % 23 % 10 %

Our provision for income taxes increased by $70 million in the three months ended June 30, 2024 and increased by $218 million in the six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, respectively.

Our effective tax rate increased from 11% to 21% in the three months ended June 30, 2024 and increased from 10% to 23% in the six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, respectively.

Our provision for income taxes increased by $434 million in the three months ended September 30, 2024 and increased by $652 million in the nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, respectively.

Our effective tax rate increased from 8% to 22% in the three months ended September 30, 2024 and increased from 10% to 23% in the nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, respectively.

These increases are primarily due to the impact of releasing the valuation allowance on our U.S.

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Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following June 30, 2024, as well as in the long-term.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following September 30, 2024, as well as in the long-term.

See the sections below for more details regarding the material requirements for cash in our business and our sources of liquidity to meet such needs.

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We also have certain obligations in connection with our operations at Gigafactory New York and Gigafactory Shanghai, as outlined in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Material Cash Requirements in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of June 30, 2024, we and our subsidiaries had outstanding $7.39 billion in aggregate principal amount of indebtedness, of which $2.03 billion is current.

As of September 30, 2024, we and our subsidiaries had outstanding $7.42 billion in aggregate principal amount of indebtedness, of which $2.12 billion is current.

For details regarding our indebtedness, refer to Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Our sources to fund our material cash requirements are predominantly from our deliveries and servicing of new and used vehicles, sales and installations of our energy storage products, interest income, and proceeds from debt facilities and equity offerings, when applicable.

As of June 30, 2024, we had $14.64 billion and $16.09 billion of cash and cash equivalents and short-term investments, respectively.

As of September 30, 2024, we had $18.11 billion and $15.54 billion of cash and cash equivalents and short-term investments, respectively.

Balances held in foreign currencies had a U.S.

dollar equivalent of $3.32 billion and consisted primarily of Chinese yuan and euros.

We had $5.00 billion of unused committed credit amounts as of June 30, 2024.

We had $5.00 billion of unused committed credit amounts as of September 30, 2024.

For details regarding our indebtedness, refer to Note 7, Debt , to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Summary of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) 2024 2023

Net cash provided by operating activities

$ 10,109 $ 8,886

Net cash used in investing activities

Net cash provided by (used in) financing activities $ 2,736 $ (561)

$ (11,184) $ (10,780)

Net cash provided by financing activities

$ 2,868 $ 1,702

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $1.72 billion to $3.85 billion during the six months ended June 30, 2024 from $5.58 billion during the six months ended June 30, 2023.

This decrease was primarily due to the decrease in net income excluding non-cash expenses, gains and losses of $1.63 billion, and unfavorable changes in net operating assets and liabilities of $95 million.

Net cash provided by operating activities increased by $1.22 billion to $10.11 billion during the nine months ended September 30, 2024 from $8.89 billion during the nine months ended September 30, 2023.

This increase was primarily due to favorable changes in net operating assets and liabilities of $1.78 billion, partially offset by a decrease in net income excluding non-cash expenses, gains and losses of $558 million.

Cash Flows from Investing Activities

Cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $5.04 billion for the six months ended June 30, 2024 and $4.13 billion for the six months ended June 30, 2023, mainly for global factory expansion, machinery and equipment and AI-related capital expenditures as we expand and enhance our product roadmap.

We also purchased $3.26 billion and $1.81 billion of short-term investments, net of proceeds from maturities and sales, for the six months ended June 30, 2024 and 2023, respectively.

Net cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $8.56 billion and $6.59 billion for the nine months ended September 30, 2024 and 2023, respectively, mainly for AI-related capital expenditures, global factory expansion, machinery and equipment as we expand and enhance our product roadmap.

We also purchased $2.62 billion and $4.12 billion of short-term investments, net of proceeds from maturities and sales, for the nine months ended September 30, 2024 and 2023, respectively.

Cash Flows from Financing Activities

Net cash flows from financing activities changed by $3.30 billion to $2.74 billion net cash provided by financing activities during the six months ended June 30, 2024 from $561 million net cash used in financing activities during the six months ended June 30, 2023.

The change was primarily due to a $3.90 billion increase in proceeds from issuances of debt, partially offset by a $679 million increase in repayments of debt.

Net cash flows from financing activities increased by $1.17 billion to $2.87 billion during the nine months ended September 30, 2024 from $1.70 billion during the nine months ended September 30, 2023.

The increase was primarily due to a $1.83 billion increase in proceeds from issuances of debt, partially offset by a $896 million increase in repayments of debt.

See Note 7, Debt , to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details regarding our debt obligations.

Additionally, there was an increase of $240 million in proceeds from exercises of stock options and other stock issuances compared to the prior period.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis