What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-01-30 compared with 2024-01-29 · 319 added, 368 removed, 1109 unchanged (38% of the section changed)

16 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible debt in 2021.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for digital assets in 2024.

Basis for Opinions

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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.

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

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the nature, frequency and costs of future claims for certain Tesla vehicle models;

and, (iii) 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.

These procedures also included, among others, (i) 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 and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate by (a) developing an independent estimate of the automotive warranty reserve for certain Tesla vehicle models and (b) comparing the independent estimate to management’s estimate.

Developing the independent estimate involved 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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6,000 shares authorized;

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

3,216 and 3,185 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 38,371 34,892

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Income before income taxes 8,990 9,973 13,719

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

Provision for (benefit from) income taxes 1,837 ( 5,001 ) 1,132

Net income 7,153 14,974 12,587

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

Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries 62 ( 23 ) 31

Net income attributable to common stockholders $ 7,091 $ 14,997 $ 12,556

13 unchanged sentences

Foreign currency translation adjustment ( 539 ) 198 ( 392 )

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

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

Unrealized net gain (loss) on investments, net of tax 12 16 ( 23 )

Net loss realized and included in net income — 4 —

Comprehensive income 6,626 15,192 12,172

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

Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries 62 ( 23 ) 31

Comprehensive income attributable to common stockholders $ 6,564 $ 15,215 $ 12,141

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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 — — — ( 474 ) — 211 ( 263 ) — ( 263 )

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

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

1 unchanged sentence

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

Contributions from noncontrolling interests 2 — — — — — — — —

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

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

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

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

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

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 — — — — ( 415 ) — ( 415 ) — ( 415 )

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

Adjustments for prior periods from adopting ASU 2023-08, net of tax — — — — — 236 236 — 236

Settlements of warrants — 11 — — — — — — —

Issuance of common stock for equity incentive awards — 20 — 1,241 — — 1,241 — 1,241

2 unchanged sentences

Buy-outs of noncontrolling interests ( 172 ) — — 39 — — 39 — 39

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

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

Net income 6 — — — — 7,091 7,091 56 7,147

Other comprehensive loss — — — — ( 527 ) — ( 527 ) — ( 527 )

Balance as of December 31, 2024 $ 63 3,216 $ 3 $ 38,371 $ ( 670 ) $ 35,209 $ 72,913 $ 704 $ 73,617

13 unchanged sentences

Non-cash interest and other operating activities 172 81 340

Digital assets loss (gain), net — 140 ( 27 )

Digital assets (gain) loss, net ( 589 ) — 140

Changes in operating assets and liabilities:

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Net cash provided by operating activities

14,923 13,256 14,724

Cash Flows from Investing Activities

1 unchanged sentence

Purchases of solar energy systems, net of sales ( 3 ) ( 1 ) ( 5 )

Purchases of digital assets — — ( 1,500 )

Proceeds from sales of digital assets — — 936

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Net cash used in investing activities

( 18,787 ) ( 15,584 ) ( 11,973 )

Cash Flows from Financing Activities

1 unchanged sentence

Repayments of debt ( 2,500 ) ( 1,351 ) ( 3,364 )

Collateralized lease repayments — — ( 9 )

Proceeds from exercises of stock options and other stock issuances 1,241 700 541

1 unchanged sentence

Debt issuance costs ( 14 ) ( 29 ) —

Proceeds from investments by noncontrolling interests in subsidiaries — — 2

Distributions paid to noncontrolling interests in subsidiaries ( 104 ) ( 144 ) ( 157 )

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Net cash provided by (used in) financing activities

3,853 2,589 ( 3,527 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash ( 141 ) 4 ( 444 )

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

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

( 152 ) 265 ( 1,220 )

Cash and cash equivalents and restricted cash, beginning of period 17,189 16,924 18,144

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Supplemental Disclosures

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

Cash paid during the period for interest $ 277 $ 126 $ 152

Cash paid during the period for income taxes, net of refunds $ 1,331 $ 1,119 $ 1,203

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Note 1 – Overview

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

(“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003 and converted to a Texas corporation on June 13, 2024.

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 storage.

Note 2 – Summary of Significant Accounting Policies

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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, 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.

The estimates used for, but not limited to, determining significant economic incentive for resale value guarantee arrangements, sales return reserves, resale value guarantee liabilities, 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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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 Capability features and their ongoing maintenance, internet connectivity, free Supercharging programs 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(Supervised) 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 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 Capability features is recognized when functionality is delivered to the customer and their ongoing maintenance is recognized over time.

Revenue related to FSD (Supervised) 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.

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

Costs to obtain a contract mainly relate to commissions for the sale of vehicles.

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

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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.

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

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 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):

The total recorded guarantee liabilities on vehicles sold under these programs were immaterial as of December 31, 2024 and 2023.

Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above the vehicle’s contractual residual value at the end of the lease term was $ 1.45 billion and $ 166 million as of December 31, 2024 and 2023, respectively.

Deferred revenue related to the access to our FSD (Supervised) 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,

1 unchanged sentence

Additions 1,343 1,201

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

Net changes in liability for pre-existing contracts, including foreign exchange impact

Revenue recognized ( 1,188 ) ( 595 )

1 unchanged sentence

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, 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.

Revenue recognized from the deferred revenue balance as of December 31, 2023 and 2022 was $ 872 million and $ 469 million for the years ended December 31, 2024 and 2023, respectively.

Of the total deferred revenue balance as of December 31, 2024, we expect to recognize $ 840 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 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.

We have financing receivables on our consolidated balance sheets related to loans we provide for financing our automotive deliveries.

As of December 31, 2024 and 2023, we had current net financing receivables of $ 247 million and $ 242 million, respectively, in Accounts receivable, net, and $ 821 million and $ 1.04 billion, respectively, in Other non-current assets for the long-term portion.

Automotive Regulatory Credits

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During the year ended December 31, 2022, we had also recognized $ 288 million in revenue due to changes in regulation which entitled us to additional consideration for credits sold previously.

We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for contracts with an original expected contract length of one year or less.

As of December 31, 2024, 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 $ 4.68 billion.

Of this amount, we expect to recognize $ 863 million in the next 12 months and the rest over the remaining performance obligation period.

Additionally, changes in regulations on automotive regulatory credits may significantly impact our remaining performance obligations and revenue to be recognized under these contracts.

Automotive Leasing Revenue

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Qualifying customers are permitted to lease a vehicle directly from Tesla for up to 48 months.

At the end of the lease term, customers are generally required to return the vehicles to us.

At the end of the lease term, customers may opt to return the vehicles to us or purchase the vehicles when contractually permitted.

We account for these leasing transactions as operating leases.

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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.

If the customer does not have a right to return, the customer will take title to the vehicle at the end of the lease term after making all contractual payments.

Under the programs for which there is a right to return, the purchase option is reasonably certain to be exercised by the lessee and we therefore expect the customer to take title to the vehicle at the end of the lease term after making all contractual payments.

Our arrangements under these programs can have terms for up to 72 months.

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Services and Other Revenue

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.

Services and other revenue consists of sales of used vehicles, non-warranty maintenance services and collision, part sales, paid Supercharging, insurance services revenue and retail merchandise sales.

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.

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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.

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

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.

Deferred revenue excluding unearned insurance premiums was not material as of December 31, 2024 and 2023.

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 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.

For certain 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.

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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.

As part of certain 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.

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Such estimates are included in the transaction price only to the extent that it is probable a significant reversal of revenue will not occur.

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, 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 record as deferred revenue any non-refundable amounts that are primarily related to prepayments from customers, which is recognized as revenue as or when the performance obligations are satisfied.

As of December 31, 2024 and 2023, deferred revenue related to such customer payments amounted to $ 1.77 billion and $ 1.60 billion, respectively, mainly due to contractual payment terms.

Revenue recognized from the deferred revenue balance as of December 31, 2023 and 2022 was $ 1.27 billion and $ 571 million for the years ended December 31, 2024 and 2023, 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.

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Of this amount, we expect to recognize $ 4.51 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.

We have financing receivables on our consolidated balance sheets related to loans we provide for financing our energy products.

As of December 31, 2024 and 2023, we had current net financing receivables of $ 34 million and $ 31 million, respectively, in Accounts receivable, net, and $ 658 million and $ 578 million, respectively, in Other non-current assets for the long-term portion.

Energy Generation and Storage Leasing

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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, 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 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 (Supervised) ongoing maintenance costs, electricity costs for our free Supercharging programs 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.

Additionally, cost of automotive sales revenue benefits from manufacturing credits earned, amounting to $ 625 million and $ 359 million for the years ended December 31, 2024 and 2023, respectively.

Automotive Leasing

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Services and Other

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, overhead costs, freight, warranty expense, and amortization of certain acquired intangible assets.

Cost of energy generation and storage revenue includes direct and indirect material and labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, freight, warranty expense, and cost of servicing.

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.

Additionally, cost of energy generation and storage revenue benefits from manufacturing credits earned, amounting to $ 756 million and $ 115 million for the years ended December 31, 2024 and 2023, respectively.

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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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.

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

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.

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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 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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Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income per share of common stock attributable to common stockholders when their effect is dilutive.

Furthermore, in connection with the offerings of our convertible senior notes, we entered into convertible note hedges and warrants (see Note 11, Debt ).

However, our convertible note hedges are not included when calculating potentially dilutive shares since their effect is always anti-dilutive.

The strike price on the warrants were below our average share price during the period and were included in the tables below.

Warrants are included in the weighted-average shares used in computing basic net income per share of common stock in the period(s) they are settled.

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

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Net income attributable to common stockholders $ 7,091 $ 14,997 $ 12,556

Buy-out of noncontrolling interest ( 2 ) ( 27 ) ( 5 )

Buy-outs of noncontrolling interests ( 39 ) ( 2 ) ( 27 )

Net income used in computing basic net income per share of common stock 7,130 14,999 12,583

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Stock-based awards 15 12 4

Business Combinations

We account for business acquisitions under ASC 805, Business Combinations .

The total purchase consideration for an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities assumed at the acquisition date.

Costs that are directly attributable to the acquisition are expensed as incurred.

Identifiable assets (including intangible assets), liabilities assumed (including contingent liabilities) and noncontrolling interests in an acquisition are measured initially at their fair values at the acquisition date.

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 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.

Cash and Cash Equivalents

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 U.S.

government securities, money market funds and commercial paper.

Restricted Cash

We maintain certain cash balances restricted as to withdrawal or use.

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 sales to lease partners with a resale value guarantee, letters of credit, real estate leases and deposits held for our insurance services.

Our restricted cash is comprised primarily of cash held to service certain payments under various secured debt facilities, cash held as collateral for sales to lease partners with a resale value guarantee 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.

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Total as presented in the consolidated statements of cash flows $ 17,037 $ 17,189 $ 16,924

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

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.

Our investments are all designated as available-for-sale and reported at estimated fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss 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.

Interest, dividends, amortization and accretion of purchase premiums and discounts on these investments are included within Interest income in our consolidated statements of operations.

Interest income on our short-term investments for the years ended December 31, 2024, 2023 and 2022 was $ 763 million, $ 388 million and an immaterial amount, respectively.

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

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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 are dependent on contractual payment terms.

Our accounts receivable balances associated with sales of energy storage products are dependent on billing milestones and payment terms negotiated for each contract, and 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, 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.

As of December 31, 2024 and 2023, government rebates receivable was $ 315 million and $ 378 million, respectively, in Accounts receivable, net for the current portion and an immaterial amount and $ 207 million, respectively, in Other non-current assets for the long-term portion in our consolidated balance sheets.

Financing Receivables

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In determining expected credit losses, we consider our historical level of credit losses, current economic trends, and reasonable and supportable forecasts that affect the collectability of the future cash flows.

Interest income on financing receivables is recognized over the loan term as revenue in the consolidated statements of operations.

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

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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.

As of December 31, 2024 and 2023, the vast majority of our financing receivables were at current status with an immaterial balance being past due.

As of December 31, 2024 and 2023, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2023 and 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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Financial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, investments, restricted cash, accounts receivable and other finance receivables.

Our cash and investments balances are primarily on deposit at high credit quality financial institutions or invested in money market funds.

Our cash and investments balances are primarily on deposit at high credit quality financial institutions or invested in highly rated, investment-grade securities.

These deposits are typically in excess of insured limits.

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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 account for all digital assets held as crypto assets, a subset of indefinite-lived intangible assets in accordance with ASC 350-60, Intangibles - Goodwill and Other - Crypto Assets .

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.

In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset.

When the then current carrying value of a digital asset exceeds the fair value determined each quarter, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the prices determined.

Impairment losses are recognized within Restructuring and other in the consolidated statements of operations in the period in which the impairment is identified.

Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within Restructuring and other.

The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at fair value.

Periods prior to January 1, 2024 include digital assets at cost, net of impairment losses incurred since their acquisition.

We determine and record the fair value of our digital assets 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 determine the cost basis of our digital assets using the specific identification of each unit received.

Realized and unrealized gains and losses are now recorded to Other income (expense), net in our consolidated statement of operations.

For periods prior to January 1, 2024, impairment losses were recognized within Restructuring and other in the consolidated statements of operations in the period in which the impairment was identified.

Also for periods prior to January 1, 2024, gains were not recorded until realized upon sale(s), at which point they were presented net of any impairment losses for the same digital assets held within Restructuring and other.

In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.

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Solar Energy Systems, Net

We are the lessor of solar energy systems.

Solar energy systems are stated at cost less accumulated depreciation.

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 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.

Solar energy systems under construction represents systems that are under installation, which will be depreciated as solar energy systems in service when they are completed, interconnected and placed in service.

Initial direct costs related to customer solar energy system agreement acquisition costs are capitalized and amortized over the term of the related customer agreements.

We are the lessor of solar energy systems, which are stated at cost less accumulated depreciation.

Depreciation of solar energy systems is calculated using the straight-line method over the estimated useful lives of 30 to 35 years.

The gross cost of solar energy systems as of December 31, 2024 and 2023 was $ 6.79 billion and $ 6.87 billion, respectively.

Solar energy systems on the consolidated balance sheets are presented net of accumulated depreciation of $ 1.86 billion and $ 1.64 billion as of December 31, 2024 and 2023, respectively.

Property, Plant and Equipment, Net

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Computer equipment and software 3 to 6 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.

AI infrastructure 5 to 30 years

Leasehold improvements are depreciated on a straight-line basis over their estimated useful lives.

AI infrastructure includes our owned data centers.

Upon the retirement or sale of our property, plant and equipment, the cost and associated accumulated depreciation are removed from the consolidated balance sheet, and the resulting gain or loss is reflected on the consolidated statement of operations.

Maintenance and repair expenditures are expensed as incurred while major improvements that increase the functionality, output or expected life of an asset are capitalized and depreciated ratably over the identified useful life.

Interest expense on outstanding debt is capitalized during the period of significant capital asset construction.

Capitalized interest on construction in progress is included within Property, plant and equipment, net and is amortized over the life of the related assets.

Long-Lived Assets Including Acquired Intangible Assets

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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.

For the years ended December 31, 2024, 2023 and 2022, we recorded a net foreign currency transaction gain of $ 57 million, gain of $ 122 million and loss of $ 89 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.

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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.

For the years ended December 31, 2024 and 2023, the impact from our IRA incentive was primarily a reduction of our costs of revenue in our consolidated statements of operations.

Gigafactory New York—New York State Investment and Lease

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and we are responsible for any construction or equipment costs in excess of such amount (refer to Note 14, Commitments and Contingencies ).

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.

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 and was not material for any period presented.

Gigafactory Shanghai—Land Use Rights and Economic Benefits

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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 14, Commitments and Contingencies ).

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.

The incentive therefore reduces the depreciation expense over the useful lives of the related equipment.

Incentives that offset costs of our facilities 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 and incentives related to our manufacturing operations are recorded as an offset to cost of revenues in our consolidated statements of operations.

For the years ended December 31, 2024 and 2023, the amounts received were immaterial.

Nevada Tax Incentives

In connection with the construction of Gigafactory Nevada, we entered into agreements with the State of Nevada and Storey County in Nevada that provide abatements for specified taxes, discounts to the base tariff energy rates and transferable tax credits of up to $ 195 million in consideration of capital investment and hiring targets that were met at Gigafactory Nevada.

In connection with the construction of Gigafactory Nevada, we entered into agreements in 2014 with the State of Nevada and Storey County in Nevada that provide abatements for specified taxes, discounts to the base tariff energy rates and transferable tax credits of up to $ 195 million in consideration of capital investment and hiring targets that were met at Gigafactory Nevada.

Gigafactory Texas Tax Incentives

In connection with the construction of Gigafactory Texas, we entered into a 20-year agreement with Travis County in Texas pursuant to which we would receive grant funding equal to 70 - 80 % of property taxes paid by us to Travis County and a separate 10-year agreement with the Del Valle Independent School District in Texas pursuant to which a portion of the taxable value of our property would be capped at a specified amount, in each case subject to our meeting certain minimum economic development metrics through our construction and operations at Gigafactory Texas.

In connection with the construction of Gigafactory Texas, we entered into a 20-year agreement in 2020 with Travis County in Texas pursuant to which we would receive grant funding equal to 70 - 80 % of property taxes paid by us to Travis County and a separate 10-year agreement in 2020 with the Del Valle Independent School District in Texas pursuant to which a portion of the taxable value of our property would be capped at a specified amount, in each case subject to our meeting certain minimum economic development metrics through our construction and operations at Gigafactory Texas.

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.

For the years ended December 31, 2024, 2023 and 2022, the grant funding related to property taxes paid were immaterial.

Defined Contribution Plan

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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.

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.

During the years ended December 31, 2024, 2023 and 2022, we recognized $ 107 million, $ 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 November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).

The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.

This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements.

Early adoption is also permitted.

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

We are currently evaluating the provisions of this ASU.

Recently adopted accounting pronouncements

In November 2023, the FASB issued ASU No.

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

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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.

We adopted this ASU retrospectively on December 31, 2024.

Refer to Note 17, Segment Reporting and Information about Geographic Areas for the inclusion of the new required disclosures.

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.

2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60) (“new crypto assets standard”).

The new crypto assets standard requires certain crypto assets to be measured at fair value separately on the balance sheet with changes reported in the statement of operations each reporting period.

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

The new crypto assets standard is effective for annual periods beginning after December 15, 2024, including interim periods within those fiscal years.

Adoption of the new crypto assets standard 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).

This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts.

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

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.

This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which we adopted on January 1, 2020.

This ASU also enhances the disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

In addition, the ASU amends the guidance on vintage disclosures to require entities to disclose current period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20.

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

We adopted the 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 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.

The convertible debt instruments will be accounted for as a single liability measured at amortized cost.

This will also result in the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate when applying the guidance in Topic 835, Interest.

Further, the ASU made amendments to the EPS guidance in Topic 260 for convertible debt instruments, the most significant impact of which is requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method.

The ASU also made revisions to Topic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting.

The amendments to Topic 815-40 change the scope of contracts that are recognized as assets or liabilities.

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

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.

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

We adopted the new crypto assets standard on a modified retrospective approach effective January 1, 2024.

Refer to Note 3, Digital Assets, Net for the inclusion of the new required disclosures.

The cumulative effect of the changes made on our January 1, 2024 consolidated balance sheet for the adoption of the new crypto assets standard was as follows (in millions):

December 31, 2023 Adjustments from Adoption of the New Crypto Assets Standard Balances at

January 1, 2024

Digital assets, net $ 184 $ 303 $ 487

Deferred tax assets 6,733 ( 67 ) 6,666

Stockholders' equity

Retained earnings 27,882 236 28,118

Note 3 – Digital Assets, Net

During the years ended December 31, 2024 and 2023, 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, 2023 and 2022, the carrying value of our digital assets held reflects cumulative impairment of $ 204 million.

During the years ended December 31, 2023 and 2022, we recorded an immaterial amount and $ 204 million of impairment losses on digital assets, respectively.

The table below summarizes the amounts shown on our consolidated balance sheet as of December 31, 2024 (in millions except units of digital assets).

December 31, 2024

Units Cost Basis Fair Value

Digital assets held:

Bitcoin 11,509 $ 386 $ 1,074

Total 387 1,076

The following table provides details of the activities related to our digital assets for the year ended December 31, 2024 (in millions):

Beginning balance at fair value $ 487

Unrealized gains, net 589

Ending balance $ 1,076

The following tables present summarized unaudited quarterly financial statement data for those impacted line items based on the Company’s adoption of the new crypto assets standard as described in Note 2, Summary of Significant Accounting Policies (in millions, except per share data):

Consolidated Balance Sheets (unaudited):

March 31, 2024 June 30, 2024 September 30, 2024

Digital assets, net

Before adoption $ 184 $ 184 $ 184

Adjustments 638 538 545

As adjusted $ 822 $ 722 $ 729

Deferred tax assets

Before adoption $ 6,769 $ 6,692 $ 6,486

Adjustments ( 141 ) ( 119 ) ( 120 )

As adjusted $ 6,628 $ 6,573 $ 6,366

Three Months Ended

Condensed Consolidated Statements of Operations (unaudited):

March 31, 2024 June 30, 2024 September 30, 2024

Other income (expense), net

Before adoption $ 108 $ 20 $ ( 270 )

Adjustments 335 ( 100 ) 7

As adjusted $ 443 $ ( 80 ) $ ( 263 )

Provision for (benefit from) income taxes

Before adoption $ 409 $ 393 $ 601

Adjustments 74 ( 22 ) 1

As adjusted $ 483 $ 371 $ 602

Net income attributable to common stockholders

Before adoption $ 1,129 $ 1,478 $ 2,167

Adjustments 261 ( 78 ) 6

As adjusted $ 1,390 $ 1,400 $ 2,173

Net income per share of common stock attributable to common stockholders

Before adoption $ 0.37 $ 0.46 $ 0.68

Adjustments 0.08 ( 0.02 ) —

As adjusted $ 0.45 $ 0.44 $ 0.68

Before adoption $ 0.34 $ 0.42 $ 0.62

Adjustments 0.07 ( 0.02 ) —

As adjusted $ 0.41 $ 0.40 $ 0.62

The unaudited impact of adoption for the three months ended December 31, 2024 was to increase Digital assets, net by $ 347 million, with a corresponding increase in Other income (expense), net and decrease our Deferred tax assets by $ 77 million with a corresponding increase in our Provision for (benefit from) income taxes, thus contributing $ 270 million to Net income attributable to common stockholders.

These amounts contributed $ 0.08 to both basic and diluted net income attributable to common stockholders per share of common stock for the three months ended December 31, 2024.

There were no impairment losses recorded for any period during the year ended December 31, 2024.

As a result, the unaudited interim balances of Digital assets, net did not change throughout the year ended December 31, 2024 prior to the adoption of the new crypto assets standard, which was adopted as of January 1, 2024.

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.

Goodwill decreased $ 9 million within the automotive segment from $ 253 million as of December 31, 2023 to $ 244 million as of December 31, 2024.

There were no accumulated impairment losses as of December 31, 2024 and 2023.

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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.

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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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 $ — $ —

government securities 5,136 — 5,136 — 894 — 894 —

Corporate debt securities 480 — 480 — 885 — 885 —

Certificates of deposit and time deposits $ 12,767 $ — $ 12,767 $ — $ 6,996 $ — $ 6,996 $ —

Commercial paper 3,919 — 3,919 — 470 — 470 —

government securities 3,620 — 3,620 — 5,136 — 5,136 —

Corporate debt securities 118 — 118 — 480 — 480 —

Money market funds 1,753 1,753 — — 109 109 — —

Digital assets 1,076 1,076 — — Not applicable

Total $ 23,253 $ 2,829 $ 20,424 $ — $ 13,191 $ 109 $ 13,082 $ —

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.

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

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.

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Cash $ 14,386 $ — $ — $ 14,386 $ 14,386 $ —

Money market funds 109 — — 109 109 —

government securities 5,136 1 ( 1 ) 5,136 277 4,859

Corporate debt securities 485 1 ( 6 ) 480 — 480

Certificates of deposit and time deposits 12,767 — — 12,767 — 12,767

Commercial paper 3,908 11 — 3,919 — 3,919

government securities 3,618 3 ( 1 ) 3,620 — 3,620

Corporate debt securities 117 1 — 118 — 118

Money market funds 1,753 — — 1,753 1,753 —

Total cash, cash equivalents and short-term investments $ 36,549 $ 15 $ ( 1 ) $ 36,563 $ 16,139 $ 20,424

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

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

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

government securities 5,136 1 ( 1 ) 5,136 277 4,859

Corporate debt securities 485 1 ( 6 ) 480 — 480

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

Commercial paper 470 — — 470 109 361

Money market funds 109 — — 109 109 —

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

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, 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):

Due in 1 year or less $ 12,374

Due in 1 year through 5 years 297

Due in 5 years through 10 years 25

Total $ 12,696

As of December 31, 2024, the vast majority of our short-term investments had contractual maturity dates within one year.

Disclosure of Fair Values

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, 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

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

The carrying values of these financial instruments materially approximate their fair values.

Note 6 – Inventory

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Total $ 12,017 $ 13,626

(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.

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

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

During the years ended December 31, 2024, 2023 and 2022, we recorded write-downs of $ 190 million, $ 233 million and $ 144 million, respectively, in Cost of revenues in the consolidated statements of operations.

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 104 104

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

Solar energy systems under construction 1 2

Solar energy systems pending interconnection 12 16

Solar energy systems, net (2) $ 5,229 $ 5,489

(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, 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 7 – Property, Plant and Equipment, Net

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Machinery, equipment, vehicles and office furniture $ 18,339 $ 16,309

Land and buildings 10,677 9,498

AI infrastructure 5,152 1,510

Tooling 3,883 3,129

Leasehold improvements 3,688 3,136

Land and buildings 9,505 7,751

Computer equipment, hardware and software 2,902 2,409

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Total $ 35,836 $ 29,725

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.

Construction in progress is primarily comprised of ongoing construction and expansion of our facilities, equipment and tooling related to the manufacturing of our products as well as AI-related assets which have not yet been placed in service.

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

Depreciation expense during the years ended December 31, 2024, 2023 and 2022 was $ 4.12 billion, $ 3.33 billion and $ 2.42 billion, respectively.

Panasonic has partnered with us on Gigafactory Nevada with investments in the production equipment that it uses to manufacture and supply us with battery cells.

Under our arrangement with Panasonic, we plan to purchase the full output from their production equipment at negotiated prices.

As the terms of the arrangement convey a finance lease under ASC 842, we account for their production equipment as leased assets when production commences.

We account for each lease and any non-lease components associated with that lease as a single lease component for all asset classes, except production equipment classes embedded in supply agreements.

This results in us recording the cost of their production equipment within Property, plant and equipment, net, on the consolidated balance sheets with a corresponding liability recorded to debt and finance leases.

Depreciation on Panasonic production equipment is computed using the units-of-production method whereby capitalized costs are amortized over the total estimated productive life of the respective assets.

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 8 – Accrued Liabilities and Other

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

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

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

Note 9 – Other Long-Term Liabilities

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Recourse debt:

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 %

Other 4 3 7 — 4.70 - 5.75 %

March 2025 - January 2031

Other — — — 28 Not applicable December 2026

Total recourse debt 4 3 7 5,000

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Automotive Asset-backed Notes 2,255 2,059 4,329 — 3.45 - 6.57 %

July 2024 - May 2031

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

September 2025 - June 2035

China Working Capital Facility — 2,740 2,740 — 1.92 % April 2025 (2)

Energy Asset-backed Notes 54 434 493 — 4.80 - 6.25 %

December 2025-June 2050

Cash Equity Debt 30 299 338 — 5.25 - 5.81 %

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

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

Solar Bonds — 7 7 — 4.70 - 5.75 %

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

Other — 7 7 28 4.70 - 5.75 %

March 2025 - January 2031

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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 4 13 17 — 4.80 % December 2026

July 2024 - May 2031

Cash Equity Debt 28 330 367 — 5.25 - 5.81 %

July 2033 - January 2035

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

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

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

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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.

(2) The contractual maturity date of the China Working Capital Facility is April 2025, renewable until March 2026 at our discretion.

As we have the intent and ability to refinance the loan on a long-term basis, we recorded it in Debt and finance leases, net of current portion in the consolidated balance sheets.

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

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As of December 31, 2024, we were in material compliance with all financial debt covenants.

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.

During the second quarter of 2024, the 2024 Notes reached maturity and were fully settled.

Additionally, in 2024, we fully settled the warrants entered into in connection with the issuance of the 2024 Notes, resulting in the issuance of 11.4 million shares of our common stock.

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.

The fee for undrawn amounts is 0.25 % per annum.

The Credit Agreement is secured by certain of our accounts receivable, inventory and equipment.

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.

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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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.

In 2024, we transferred beneficial interests related to certain leased vehicles and/or financing receivables into SPEs and issued $ 2.45 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 $ 2.44 billion.

Energy Asset-backed Notes

In 2024, we transferred certain financing receivables into an SPE and issued $ 499 million in aggregate principal amount of Energy Asset-backed Notes, backed by these financing receivables.

The proceeds from issuance, net of debt issuance costs, were $ 494 million.

The SPE is wholly owned by us and is consolidated in the financial statements.

The cash flows generated by these financing receivables are used to service the principal and interest payments on the Energy Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to us.

The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the Energy Asset-backed Notes holders, have no recourse to our other assets.

Cash Equity Debt

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This debt is secured by, among other things, our interests in certain financing funds and is non-recourse to our other assets.

Automotive Lease-backed Credit Facilities

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.

China Working Capital Facility

In April 2024, one of our subsidiaries entered into a loan agreement (the “China Working Capital Facility”) with lenders in China for an unsecured revolving facility of up to RMB 20.00 billion to be used for certain production expenditures as well as repayment of certain finance facilities.

Borrowed funds bear interest at a rate equal to the Loan Prime Rate published by the People’s Bank of China minus 1.18 %.

The China Working Capital Facility is non-recourse to our assets.

Pledged Assets

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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.

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

We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements.

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Net investment in sales-type leases $ 440 $ 696

Lease Pass-Through Financing Obligation

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.

Under a lease pass-through fund arrangement, the investor makes a large upfront payment to the lessor, which is one of our subsidiaries, and in some cases, subsequent periodic payments.

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):

Thereafter 337

Note 12 – Equity Incentive Plans

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Exercisable and vested, December 31, 2024 323,847 $ 27.75 3.14 $ 121.79

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 weighted-average grant date fair value per share of RSUs granted in the years ended December 31, 2024, 2023 and 2022 was $ 223.98 , $ 228.33 and $ 239.85 , respectively.

The aggregate release date fair value of RSUs in the years ended December 31, 2024, 2023 and 2022 was $ 1.75 billion, $ 2.50 billion and $ 4.32 billion, respectively.

The aggregate intrinsic value of options exercised in the years ended December 31, 2023, 2022, and 2021 was $ 1.33 billion, $ 1.90 billion and $ 26.88 billion, respectively.

During the year ended December 31, 2021, our CEO exercised all of the remaining vested options from the 2012 CEO Performance Award, which amounted to an intrinsic value of $ 23.45 billion.

The aggregate intrinsic value of options exercised during the years ended December 31, 2024, 2023, and 2022 was $ 1.77 billion, $ 1.33 billion and $ 1.90 billion, respectively.

Our employees are eligible to purchase our common stock through payroll deductions of up to 15 % of their eligible compensation, subject to any plan limitations.

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The expected volatility is based on the average of the implied volatility of publicly traded options for our common stock and the historical volatility of our common stock.

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 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.

Total Annualized Revenue Annualized Adjusted EBITDA

(in billions)

Achievement Status Milestone

(in billions)

Achievement Status

$ 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

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For awards probable of achievement, we estimate the unrecognized stock-based compensation expense of $ 421 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.

For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense related to these grants, net of forfeitures, were not material.

Summary Stock-Based Compensation Information

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Selling, general and administrative 389 382 430

Restructuring and other $ 2 $ — $ —

Total $ 1,999 $ 1,812 $ 1,560

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.

deferred tax assets during the year ended December 31, 2022.

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 during the years ended December 31, 2024 and 2023 were $ 371 million and $ 326 million, respectively.

During the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense capitalized to our consolidated balance sheets was $ 198 million, $ 199 million and $ 245 million, respectively.

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Note 13 – 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):

Our income before provision for (benefit from) income taxes for the years ended December 31, 2024, 2023 and 2022 was as follows (in millions):

Year Ended December 31,

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Income before income taxes $ 8,990 $ 9,973 $ 13,719

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):

A provision for (benefit from) income taxes of $ 1.84 billion, $( 5.00 ) billion and $ 1.13 billion has been recognized for the years ended December 31, 2024, 2023 and 2022, respectively.

The components of the provision for (benefit from) income taxes for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in millions):

Year Ended December 31,

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Total deferred 477 ( 6,349 ) ( 196 )

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):

Total provision for (benefit from) income taxes $ 1,837 $ ( 5,001 ) $ 1,132

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024, 2023 and 2022 was as follows (in millions):

Year Ended December 31,

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State tax, net of federal benefit 8 ( 372 ) 51

Nondeductible executive compensation 23 14 201

Excess tax benefits related to stock-based compensation ( 267 ) ( 288 ) ( 745 )

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tax credits ( 317 ) ( 593 ) ( 276 )

GILTI inclusion 670 1,279 1,008

GILTI and Subpart F inclusion 882 670 1,279

Unrecognized tax benefits 144 183 252

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Other 173 184 145

(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.

Provision for (benefit from) income taxes $ 1,837 $ ( 5,001 ) $ 1,132

Deferred tax assets (liabilities) as of December 31, 2024 and 2023 consisted of the following (in millions):

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Inventory and warranty reserves 1,769 1,258

Stock-based compensation 230 185

Operating lease right-of-use liabilities 1,186 930

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Deferred GILTI tax assets 691 760

Accruals and others 206 178

Other 412 436

Total deferred tax assets 11,962 10,774

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Depreciation and amortization ( 2,658 ) ( 2,122 )

Investment in certain financing funds ( 133 ) ( 238 )

Operating lease right-of-use assets ( 1,097 ) ( 859 )

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Deferred tax assets (liabilities), net of valuation allowance $ 6,422 $ 6,652

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.

As of December 31, 2024, we maintained valuation allowances of $ 1.22 billion for deferred tax assets that are not more likely than not to be realized, which primarily included our California deferred tax assets, U.S.

foreign tax credits and certain foreign operating losses.

The valuation allowance on our net deferred tax assets increased by $ 332 million during the year ended December 31, 2024, and decreased by $ 6.46 billion and $ 1.73 billion during the years ended December 31, 2023 and 2022, respectively.

The valuation allowance increase during the year ended December 31, 2024 was primarily due to the changes of our California deferred tax assets, U.S.

foreign tax credits and certain foreign operating losses.

The change in valuation allowance 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.

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

federal and certain state deferred tax assets are realizable and released the valuation allowance on these deferred tax assets.

The valuation allowance change during the years ended December 31, 2022 was primarily due to changes in our U.S.

deferred tax assets and liabilities.

Our deferred tax assets without a valuation allowance are more likely than not to be realized given the expectation of future earnings in the respective jurisdictions.

As of December 31, 2024, we had $ 4.34 billion of federal and $ 8.59 billion of state net operating loss carry-forwards available to offset future taxable income, an immaterial amount of which, if not utilized, will begin to expire in 2026 for federal and 2025 for state purposes.

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.

As of December 31, 2024, we had federal research and development tax credits of $ 1.48 billion, federal renewable energy tax credits of $ 1.01 billion, and state research and development tax credits of $ 1.06 billion.

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

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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, 2024, we intend to indefinitely reinvest our foreign earnings and cash unless such repatriation results in no or minimal tax costs.

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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 ( 12 )

Decreases in balances related to settlement with tax authorities ( 6 )

Increases in balances related to current year tax positions 255

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Increases in balances related to prior year tax positions 51

Decreases related to settlement with tax authorities ( 6 )

Decreases in balances related to prior year tax positions ( 27 )

Increases in balances related to current year tax positions 227

Decreases in balances related to settlement with tax authorities ( 4 )

Decreases in balances related to expiration of the statute of limitations ( 4 )

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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.

We recognized net interest and penalties related to unrecognized tax benefits in provision for (benefit from) income taxes line of our consolidated statements of operations of $ 23 million, $ 17 million and $ 27 million for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024, and 2023, we have accrued $ 69 million and $ 47 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.

Unrecognized tax benefits of $ 1.14 billion, if recognized, would affect our effective tax rate.

We file income tax returns in the U.S.

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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.

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, it may result in our incurring financial liabilities in the form of “program payments” which would not be expected to have a material adverse effect to our financial operations, the termination of our lease at Gigafactory New York, and/or the need to adjust certain of our operations.

In 2021, an amendment was executed to extend our overall agreement to spend or incur $ 5.00 billion in combined capital, operational expenses, costs of goods sold and other costs in the State of New York through December 31, 2029.

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, 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.

As of December 31, 2024, we have met and expect to meet the requirements under this arrangement, as may be modified and discussed from time to time, based on our current and anticipated level of operations.

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, 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.

Under the terms of the arrangement, we are required to spend RMB 14.08 billion in capital expenditures by the end of 2023, which was achieved in 2023, and to generate RMB 2.23 billion of annual tax revenues starting at the end of 2023.

As of December 31, 2024 and 2023, we had met and expect to meet the tax revenue requirements based on our current level of spend and sales.

Legal Proceedings

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.

Trial was held November 14-18, 2022.

Post-trial briefing and argument are now complete.

On January 30, 2024, the Court issued an opinion finding that the 2018 CEO Performance Award should be rescinded.

Plaintiff’s counsel filed a brief seeking a fee award of 29,402,900 Tesla shares, plus expenses of $ 1,120,115.50 .

Tesla opposed the fee request, and at Tesla’s 2024 Annual Meeting of Stockholders, 72 % of the disinterested voting shares of Tesla, excluding shares owned by Mr.

Musk and Kimbal Musk, voted to ratify the 2018 CEO Performance Award.

Because Tesla’s disinterested stockholders voted to ratify the 2018 CEO Performance Award, Mr.

Musk and the other director defendants, joined by Tesla, filed a brief seeking to revise the Court’s January 30, 2024 opinion.

On December 2, 2024, the Court issued an opinion denying the motion to revise the Court’s January 30, 2024 opinion and awarded Plaintiff’s counsel fees in the amount of $ 345 million.

A final judgment was entered by the Court, and the director defendants and Tesla appealed the decisions to the Delaware Supreme Court.

Litigation Related to Directors’ Compensation

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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.

On January 8, 2025, the Court approved the settlement and awarded Plaintiff’s counsel fees in the amount of approximately $ 176 million.

A final judgment was entered by the Court on January 13, 2025.

Tesla intends to appeal the Court’s fee award on or before the appeal deadline of February 12, 2025.

The settlement is not expected to have an adverse impact on our results of operations, cash flows or financial position.

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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.

On November 6, 2024, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of all claims.

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.

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Musk, among other things.

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.

Several of those actions were consolidated, and all have been stayed.

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 appeal in the above-referenced consolidated purported stockholder class action.

Those cases have also been consolidated and stayed.

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’ fees.

The parties reached an agreement to stay the case until March 5, 2024.

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’ agreement.

In 2021, Tesla delivered shares to JP Morgan per the agreement, which they duly accepted.

JP Morgan now alleges that it is owed approximately $ 162 million as the value of additional shares that it claims should have been delivered as a result of the adjustment to the strike price in 2018.

On January 24, 2022, Tesla filed multiple counterclaims as part of its answer to the underlying lawsuit, asserting among other points that JP Morgan should have terminated the stock warrant agreement in 2018 rather than make an adjustment to the strike price that it should have known would lead to a commercially unreasonable result.

Tesla believes that the adjustments made by JP Morgan were neither proper nor commercially reasonable, as required under the stock warrant agreements.

JP Morgan filed a motion for judgment on the pleadings, which Tesla opposed, and that motion is currently pending before the Court.

The lawsuit has been stayed pending resolution of a motion to consolidate certain derivative lawsuits in the Delaware Court of Chancery referenced below.

On November 15, 2021, JPMorgan Chase Bank 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.

Tesla denied any wrongdoing and filed multiple counterclaims.

On November 27, 2024, the parties agreed to settle their claims.

Certain Derivative Lawsuits in Delaware

Before converting from a Delaware to Texas corporation on June 13, 2024, three separate derivative actions brought by purported Tesla stockholders were filed in the Delaware Court of Chancery on May 24, June 10 and June 13, 2024, purportedly on behalf of Tesla, against current and former directors regarding topics involving Elon Musk and others, X Corp.

(formerly Twitter) and x.AI.

These suits assert various claims, including breach of fiduciary duty and breach of contract, and seek unspecified damages and other relief.

On August 6, 2024, the plaintiffs in these three actions moved to consolidate the matters into a single case.

The Court consolidated two of the three cases.

Litigation and Investigations Relating to Alleged Discrimination and Harassment

On October 4, 2021, in a case captioned Diaz v.

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.

On February 9, 2022, 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, which Tesla later amended and refiled.

The case is currently in discovery.

Trial is scheduled for September 15, 2025.

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.

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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.

On December 19, 2023, the defendants moved to dismiss the amended complaint, which the Court granted on April 12, 2024, with leave for plaintiffs to amend.

On May 15, 2024, plaintiffs filed a second amended consolidated complaint purportedly on behalf of Tesla, against Mr.

On July 1, 2024, the defendants moved to dismiss the second amended consolidated complaint.

Other Litigation Related to Our Products and Services

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On November 20, 2023, the plaintiff moved to amend the complaint, which Tesla opposed.

On August 8, 2024, the Court denied the plaintiff’s motion for leave to file an amended complaint and entered judgment for Tesla.

On September 5, 2024, the plaintiff filed a notice of appeal to United States Court of Appeals for the Second Circuit, and the parties are briefing the matter.

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.

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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 31, 2023, the remaining plaintiff in the Northern District of California action filed an amended complaint, which Tesla moved to dismiss, and on May 15, 2024, the Court granted in part and denied in part Tesla’s motion.

On October 2, 2023, a similar proposed class action was filed in San Diego County Superior Court in California.

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District Court for the Northern District of California.

Tesla moved to compel arbitration, which the plaintiff did not oppose, and on June 27, 2024, the Court stayed the case pending arbitration.

On February 27, 2023, a proposed class action was filed in the U.S.

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On November 6, 2023, Tesla moved to dismiss the amended complaint.

On September 30, 2024, the Court granted Tesla’s motion to dismiss without prejudice.

On November 26, 2024, the court issued a final judgment in Tesla’s favor, and on December 23, 2024, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit.

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.

Several similar complaints were also 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.

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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 plaintiffs filed a Consolidated Second Amended Complaint on December 12, 2023, which Tesla moved to dismiss.

Plaintiffs also appealed the court’s arbitration order, which was denied.

On June 17, 2024, the Court granted in part and denied in part Tesla’s motion to dismiss the Consolidated Second Amended Complaint.

The Company intends to vigorously defend itself in these matters;

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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.

The ongoing requests for information include topics such as operations, technology (e.g., vehicle functionality, vehicle incidents, 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.

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Total current assets 343 440

Operating lease vehicles, net 392 —

Solar energy systems, net 2,310 3,278

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Debt and finance leases, net of current portion 1,834 2,041

Other long-term liabilities — 3

Total liabilities $ 4,057 $ 3,777

Note 16 – 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 X Corp., 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 x.AI, SpaceX, The Boring Company, X Corp.

and Redwood Materials, 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 17 – Segment Reporting and Information about Geographic Areas

We have two operating and reportable segments:

Our Chief Executive Officer, as the CODM, organizes our company, manages resource allocations and measures performance among two operating and reportable segments:

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

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

Additionally, the automotive segment is also comprised of services and other, which includes sales of used vehicles, non-warranty maintenance services and collision, part sales, paid Supercharging, insurance services revenue and retail merchandise sales.

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.

Our CODM does not evaluate operating segments using asset or liability information.

The following table presents revenues and gross profit by reportable segment (in millions):

The CODM uses gross profit to allocate operating and capital resources and assesses performance of each segment by comparing actual gross profit results to historical results and previously forecasted financial information.

The following table presents revenues, cost of revenues and gross profit by reportable segment (in millions):

Year Ended December 31,

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Revenues $ 87,604 $ 90,738 $ 77,553

Cost of revenues (1) $ 72,794 $ 74,219 $ 56,988

Gross profit $ 14,810 $ 16,519 $ 20,565

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Revenues $ 10,086 $ 6,035 $ 3,909

Cost of revenues (2) $ 7,446 $ 4,894 $ 3,621

Gross profit $ 2,640 $ 1,141 $ 288

(1) Depreciation and amortization included in Cost of revenues for the automotive segment for the years ended December 31, 2024, 2023 and 2022 was $ 3.68 billion, $ 3.45 billion and $ 2.81 billion, respectively.

(2) Depreciation and amortization included in Cost of revenues for the energy generation and storage segment for the years ended December 31, 2024, 2023 and 2022 was $ 377 million, $ 343 million and $ 331 million, respectively.

The following table presents revenues by geographic area based on the sales location of our products (in millions):

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Germany 4,175 4,258

China 2,820 2,978

Other international 4,124 4,067

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Note 18 – 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.

In the second quarter of 2024, we initiated and substantially completed certain restructuring actions to reduce costs and improve efficiency.

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 with an immaterial accrual remaining in Accrued liabilities and other in our consolidated balance sheet as of December 31, 2024.

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

We also recorded other expenses of $ 36 million during the second quarter of the year ended December 31, 2022, related to employee terminations.

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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