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Page 1: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

Tesla Motors, Inc.

Devonshire Research Group, LLCDevonshire Research Group, LLCDevonshire Research Group, LLCDevonshire Research Group, LLC

March 2016March 2016March 2016March 2016

Page 2: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Disclaimer

As of the publication date of this report, the Principals and Clients of Devonshire Research Group LLC ("Devonshire") have a short position in the stock of the company covered

herein (“Company”) and stand to realize gains in the event that the price of the stock declines. Following publication of the report, Devonshire’s Principals and Clients may

transact in the securities of the company covered herein, including but not limited to the use of derivatives to hedge, synthetically replicate, or profit from near term volatility in its

position. All content in this report represent the opinions of Devonshire and is based on information that Devonshire believes to be reliable and the vast majority of which comes

from publicly available sources. However, such information is presented “as is”, without warranty of any kind – whether express or implied. Devonshire makes no representations,

and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material contained. All expressions of opinion are

subject to change without notice, and Devonshire undertakes no obligation to correct, update or revise those statements or to otherwise provide any additional materials.

This document is for informational purposes only and it is not intended as an official confirmation of any transaction. All market prices, data and other information are not

warranted as to completeness or accuracy and are subject to change without notice. The information included in this document is based upon selected public market data and

reflects prevailing conditions and Devonshire’s opinions as of this date, all of which are accordingly subject to change. Devonshire’s opinions and estimates constitute a best efforts

judgment and should be regarded as indicative, preliminary and for illustrative purposes only. Any investment involves substantial risks, including, but not limited to, pricing

volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential

fundamental valuation of a specific security, and is not expressed as, or implied as, assessments of the quality of a security, a summary of past performance, or an actionable

investment strategy for an investor.

This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein or of any of the affiliates of

Devonshire. Also, this document does not in any way constitute an offer or solicitation of an offer to buy or sell any security in any jurisdiction in which such an offer would be

unlawful under the securities laws of such jurisdiction. To the best of Devonshire’s abilities and beliefs, all information contained herein is accurate and reliable. Devonshire

reserves the rights for its Principals, Clients, affiliates, officers, employees, and contractors to hold cash, equity, or derivative positions in any company discussed in this document at

any time. As of the original publication date of this document, investors should assume that Devonshire is net short shares of “Company” and stands to potentially realize gains in

the event that the market valuation of the company’s common equity and other financial instruments are lower than prior to the original publication date. These Principals, Clients,

affiliates, officers, and individuals shall have no obligation to inform any investor about their historical, current, and future trading activities. In addition, Devonshire may benefit

from any change in the valuation of any other companies, securities, or commodities discussed in this document.

The information contained in this document may include, or incorporate by reference, forward looking statements, which would include any statements that are not statements of

historical fact. Any or all of Devonshire’s forward-looking assumptions, expectations, projections, intentions or beliefs about future events may turn out to be wrong. These

forward-looking statements may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Devonshire’s control. Investors should

conduct independent due diligence, with assistance from professional financial, legal and tax experts, on all securities, companies, and commodities discussed in this document and

develop a stand-alone judgment of the relevant markets prior to making any investment decision.

2

Page 3: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Notice of investment interests

As of the publication date of this report, the Principals and Clients of Devonshire

Research Group LLC have a net short position in the stock, put options, bonds, and

credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of

the stock “TSLA” declines over the long run, or if investment sentiment improves the

appeal of an expected decline in any of its securities.

However, Devonshire recognizes that while the technology strategy of the Company

reflects a long term bearish outlook for Tesla Motors, Inc.’s security instruments, the

short term implication of powerful marketing, including the power of social media

tweeting by the CEO and his PR firm, well orchestrated and heavily blogged product

launches, and a deep and powerful short term media control and attention span, suggests

unpredictable short term volatility.

Principals and Clients of Devonshire Research Group LLC are short term volatility

oriented with a long term net short position across multiple security instruments.

3

Page 4: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

On humility:

4

It is unwise to be too sure of one’s own wisdom. Itis healthy to be reminded that the strongest mightweaken and the wisest might err.

-Ghandi

Page 5: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Executive Summary

5

� What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its

valuation multiples (when they can be calculated) lie well above its direct business model comparables

− TSLA is attempting more vertical integration than any auto company has recently tried

− TSLA trades at a higher revenue multiple than any related technology business

− TSLA’s only comparables in terms of multiple are business models that TSLA is not:

− Software companies: TSLA has low / negative margins and heavy fixed asset commitment

− Social media companies: TSLA has no network effects, no platform economics and high scaling costs

− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces

� TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some

valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology

− TSLA’s patents cover battery-related technology and selected components but not battery cells

− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market

where its technology position is modest

− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left

− TSLA’s valuable inventions can be readily copied by its EV competitors

− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to

price aggressively for their advanced technologies

� TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle

− TSLA battery production requires the mining and use of numerous toxic chemicals

− TSLA EV production has a heavier carbon footprint than traditional vehicles

− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants

− Disposal of TSLA batteries at large scale will create a heavy toxic burden

Page 6: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Executive Summary

6

� What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its

valuation multiples (when they can be calculated) lie well above its direct business model comparables

− TSLA is attempting more vertical integration than any auto company has recently tried

− TSLA trades at a higher revenue multiple than any related technology business

− TSLA’s only comparables in terms of multiple are business models that TSLA is not:

− Software companies: TSLA has low / negative margins and heavy fixed asset commitment

− Social media companies: TSLA has no network effects, no platform economics and high scaling costs

− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces

� TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some

valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology

− TSLA’s patents cover battery-related technology and selected components but not battery cells

− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market

where its technology position is modest

− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left

− TSLA’s valuable inventions can be readily copied by its EV competitors

− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to

price aggressively for their advanced technologies

� TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle

− TSLA battery production requires the mining and use of numerous toxic chemicals

− TSLA EV production has a heavier carbon footprint than traditional vehicles

− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants

− Disposal of TSLA batteries at large scale will create a heavy toxic burden

Page 7: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla wears many hats—does this large scope of functions justify its

“disruptive” reputation and corresponding market cap?

7

Automotive Design /

Manufacture

AutomotiveComponents

Sales & Service

Software

Business Function

Electric Utility88888888

Battery / Energy

Storage Provider77777777

Automotive Dealer66666666

Electric Motor /

Powertrain Provider55555555

Software Company33333333

Consumer Electronic

Device Maker44444444

Systems Integrator22222222

Automotive

Manufacturer / Designer11111111

SIC / NAIC Code

4931 / 2211

3691 / 335911

5511 / 441110

3714 / 336390

7372 / 511210

3571 / 334111

7373 / 541512

3711 / 336111

Nature of TSLA Involvement

Charging stations, battery swapping

Powerwall home battery, Gigafactory

Direct-to-consumer vehicle sales

EV powertrain design & manufacture

Autopilot, over-the-air updates, GUI

Control & sensor electronics

Assembly plant in Fremont, CA; network

of suppliers, retail stores, charging stations

Models S and X in production

Example Comps

Entergy, Edison, Ameren

A123, Panasonic, LG Chem

Sonic, Penske, CarMax

Magna, Denso, Delphi

Symantec, Microsoft, Oracle

LG, Toshiba, Sony, HP

Apple, IBM, Fujitsu

GM, Ford, Honda, VW

Page 8: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla is currently trading at a 7.0x revenue multiple—far above any

comparable except, at the extreme, a high-flying software company

8

Key financials across TSLA comps (EV in billion USD)

Tesla is not, and will not grow like, a software company—it is an automotive

company, and the automotive industry is mature and famously difficult to disrupt

Systems Integrator22222222

Electric Motor /

Powertrain Provider

55555555

Software Company33333333

Automotive Dealer66666666

Battery / Energy Storage77777777

Electric Utility88888888

Consumer

Electronic Device Maker

44444444Automotive

Manufacturer / Designer

11111111

Name EV/Rev EV P/E

GM 0.6 91 6

Honda 0.7 99 9

VW 0.7 159 7

Nissan 1.0 106 8

Daimler 1.0 173 8

Continental 1.1 47 13

Ford 1.1 162 7

AverageAverageAverageAverage 0.9 119 8

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Fujitsu 0.4 15 8

Hitachi 0.7 63 10

Cisco 2.0 100 12

IBM 2.0 165 10

Rockwell 2.2 13 18

Apple 2.5 585 11

Citrix 3.6 12 16

AverageAverageAverageAverage 1.9 136 12

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

HP 0.2 22 7

Sharp 0.3 7 NM

LG 0.3 15 16

Toshiba 0.4 22 NM

Sony 0.5 37 18

Samsung 0.7 118 9

Canon 0.8 28 16

AverageAverageAverageAverage 0.5 36 13

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Symantec 1.7 11 16

Microsoft 4.0 351 18

Oracle 4.0 150 14

SAP 4.3 98 17

Intuit 5.9 26 27

Salesforce 7.1 48 69

Adobe 8.4 40 31

AverageAverageAverageAverage 5.1 103 27

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Magna 0.5 16 8

Valeo 0.7 12 13

Denso 0.8 33 13

Cummins 0.9 18 13

MAN 1.1 17 39

Delphi 1.5 23 11

Eaton 1.7 35 14

AverageAverageAverageAverage 1.0 22 16

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Sonic 0.3 3 9

Penske 0.4 8 10

Group 1 0.4 4 8

AutoNation 0.5 11 12

Asbury 0.5 3 10

Lithia 0.6 5 12

CarMax 1.4 20 16

AverageAverageAverageAverage 0.6 8 11

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Panasonic 0.3 20 14

Elentec 0.5 0 NM

Saft 1.0 1 13

LG Chem 1.0 17 14

EnerSys 1.1 3 14

Electrovaya 2.3 0 9

A123 - - NM

AverageAverageAverageAverage 1.0 7 13

TeslaTeslaTeslaTesla 7.0 29 NM

Name EV/Rev EV P/E

Entergy 2.3 26 14

FirstEnergy 2.5 37 12

Xcel Energy 3.1 35 18

Edison 3.2 36 18

Ameren 3.2 19 19

Natl. Grid 3.9 88 16

NextEra 4.7 83 19

AverageAverageAverageAverage 3.3 46 17

TeslaTeslaTeslaTesla 7.0 29 NM

Page 9: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

By valuation multiples, Tesla is comparable to a social media

giant—except that it lacks network effects or serious user traction

9

Name EV/Rev EV P/E

Yelp 2.2 1 40

SINA 2.7 4 36

LinkedIn 4.4 13 35

Twitter 4.9 11 34

Alphabet 5.6 420 21

Renren 16.2 1 NM

Facebook 16.3 293 34

AverageAverageAverageAverage 7.5 106 33

TeslaTeslaTeslaTesla 7.0 29 NM

Social Media

Comps derived from business model fail to support valuation Valuation-appropriate comp set?

Social media companies have… Tesla has…VS

Network effects / tipping point economics Word-of-mouth marketing

A dominant platform used by an active user base A subreddit with 30k subscribers

A clear path to user base monetization No ability to sell product at a profit

Page 10: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

11

12

14

0

6

8

2

10

4

1

9

13

5

3

7 TSLA

Broadly speaking, Tesla’s multiple places it among industries that

rely on speculative future windfalls; true comparables lie far below

10*Source: Cognient Industry Valuation Multiples, Q3 2015

Distribution of median revenue multiples across non-financial industries

EV / LTM

Revenue

Percentile Rank

Real EstateReal EstateReal EstateReal Estate

BiotechBiotechBiotechBiotech

PharmaPharmaPharmaPharma

Software

AutomotiveAutomotiveAutomotiveAutomotive

Retail

Transportation Electric Utilities

Electrical

Equipment

Chemicals

Upstream OilUpstream OilUpstream OilUpstream Oil

Electronics

Where Tesla Currently Is

Where Tesla Should Be

Square

Twitter

Page 11: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Executive Summary

11

� What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its

valuation multiples (when they can be calculated) lie well above its direct business model comparables

− TSLA is attempting more vertical integration than any auto company has recently tried

− TSLA trades at a higher revenue multiple than any related technology business

− TSLA’s only comparables in terms of multiple are business models that TSLA is not:

− Software companies: TSLA has low / negative margins and heavy fixed asset commitment

− Social media companies: TSLA has no network effects, no platform economics and high scaling costs

− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces

� TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some

valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology

− TSLA’s patents cover battery-related technology and selected components but not battery cells

− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market

where its technology position is modest

− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left

− TSLA’s valuable inventions can be readily copied by its EV competitors

− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to

price aggressively for their advanced technologies

� TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle

− TSLA battery production requires the mining and use of numerous toxic chemicals

− TSLA EV production has a heavier carbon footprint than traditional vehicles

− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants

− Disposal of TSLA batteries at large scale will create a heavy toxic burden

Page 12: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s patents focus on battery peripherals but do not address

battery cells, the key performance driver of their products

12

TSLA patent portfolio*: semantic map of 357357357357 patent documents

* Worldwide search of grants and applications, collapsed to one document per distinct invention

Page 13: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s limited IP footprint is clearly evident in the broader scope

of automotive technologies—they are exposed in many key areas

13

Broad automotive space*: semantic map of 24,30224,30224,30224,302 patent families (past 10 years only)

TSLA patents

Non-TSLA patents

Key

* US grants in past 10 years on the topic of motor vehicle or electric vehicle technology

Page 14: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Key players in the broad landscape have a long history of

patenting, meaning larger stockpiles of enforceable IP

14

Rank Company 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 TOTAL

1 GEN MOTORS CORP 43 39 52 47 36 28 34 22 37 32 39 48 94 254 281 273 398 504 280 300 2841

2 TOYOTA MOTOR CO LTD 19 35 51 59 42 31 42 38 51 42 31 36 76 161 324 201 322 399 349 407 2716

3 BOSCH GMBH ROBERT 23 30 52 67 92 92 91 88 101 95 88 85 104 99 137 147 192 248 321 276 2428

4 FORD MOTOR CO 54 58 77 53 45 41 48 66 59 58 57 76 73 103 187 129 175 281 258 443 2341

5 HONDA MOTOR CO LTD 41 66 59 62 75 71 63 58 80 102 53 59 59 107 187 139 170 268 182 216 2117

6 DAIMLER AG 25 27 49 47 106 116 87 60 51 55 65 60 73 65 36 48 59 63 61 61 1214

7 DENSO CORP 0 1 14 32 40 47 29 31 49 57 38 40 56 91 81 69 99 101 88 127 1090

8 YAZAKI CORP 28 56 75 56 51 36 44 40 34 39 16 22 35 39 43 33 61 96 86 153 1043

9 CONTINENTAL 0 0 0 0 3 12 11 8 8 7 10 19 31 58 145 107 136 170 118 173 1016

10 NISSAN MOTOR 15 21 39 41 51 31 28 40 38 64 30 35 39 39 31 23 47 94 109 159 974

11 VALEO 13 23 50 37 25 41 29 29 33 16 21 46 51 61 70 66 65 143 81 85 985

12 ZF GROUP 5 1 3 4 4 10 7 5 11 10 32 34 57 72 136 82 96 94 80 79 822

13 HYUNDAI MOTOR CO LTD 6 18 12 10 10 14 16 8 9 7 7 11 13 71 69 48 90 96 91 158 764

14 PORSCHE AG 4 6 4 9 7 11 8 15 12 21 19 25 43 84 86 72 79 70 72 92 739

15 PANASONIC CORP 2 5 12 15 15 15 14 19 29 18 16 14 29 55 60 32 81 92 69 122 714

16 BMW AG 2 4 12 2 10 11 14 9 15 17 9 29 44 89 71 52 70 83 77 85 705

17 MITSUBISHI ELECTRIC CORP 15 37 21 23 10 26 22 17 14 23 10 14 26 23 47 22 41 79 45 103 618

18 DELPHI TECH INC 0 0 0 1 16 34 64 96 63 47 43 31 31 39 30 18 20 20 21 20 594

19 SUMITOMO WIRING 24 19 22 17 9 13 16 15 23 12 3 4 9 27 59 41 54 60 48 78 553

20 SIEMENS AG 3 6 5 19 36 48 23 38 35 54 47 45 45 20 15 14 3 8 9 14 487

… … … … … … … … … … … … … … … … … … … … … … …

85 TESLA MOTORS INC 0 0 0 0 0 0 0 0 0 0 0 0 2 2 13 8 14 29 20 22 110

11111111

33333333

44444444

22222222

55555555

66666666

11111111 22222222 Secondary cohort contributing significant R&D spendSustained leadership with recent ramp-up

33333333 44444444 Re-investment following R&D down-cycleRecent ramp-up / expansion in scope

55555555 66666666Transient R&D productivity Niche player with short history of innovative activity

Broad automotive space*: top assignee filing trends

* US grants and applications in the past 20 years on the topic of motor vehicle or electric vehicle technology, collapsed by family

Page 15: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

As a technology owner, Tesla’s patent holdings in key topic areas

are dwarfed by its direct competitors in the automotive space

15

Patent counts* in core automotive topic areas

* INPADOC families filed in past 20 years, worldwide patent search

Page 16: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Within even the more narrowly specified electric vehicles space,

Tesla’s portfolio accounts for a small share of total R&D activity

16

Key

More EV patents

than TSLA

Fewer EV patents

than TSLA

TSLA

Electric vehicle* patent citation network

*Source: Search on electric vehicle keywords returning ~13k INPADOC families filed in past 20 years. Chart shows assignees with 50+ patent families in set

Page 17: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s Model S battery technology builds on pioneering

innovation by EV competitors — these patents are still enforceable

17

Patent No. Title InventorsPublication

Year CitationsAssignee

Method for adjusting battery

power limits in a hybrid EV to

provide consistent launch

William Cawthorne

Gregory HubbardUS6868318B1US6868318B1US6868318B1US6868318B1 2005GM 257257257257

Interactive battery charger for

electric vehicle

Allan Gale

Michael DegnerUS7679336B2US7679336B2US7679336B2US7679336B2 2010Ford 50505050

System and method for

minimizing energy

consumption in hybrid vehicles

James Hafner

Anthony TomlinUS7013205B1US7013205B1US7013205B1US7013205B1 2006IBM 226226226226

Battery assembly system used

for electric vehicle

Minamiura Keiichi

Nakanishi ToshiakiUS6541151B2US6541151B2US6541151B2US6541151B2 2003Toyota 52525252

Method for resetting a state of

charge of a battery of a hybrid

electric vehicle

Jae Seung Koo US6841972B2US6841972B2US6841972B2US6841972B2 2005Hyundai 26262626

Battery unit mounting structure

for electric vehicle

Takasaki Seiichi

Shimura NobuyukiUS7610978B2US7610978B2US7610978B2US7610978B2 2009Mitsubishi 55555555

Tesla has proudly Open Sourced and abandoned it’s Intellectual Property, but other

companies have not, and are under no obligation to abandon their rights

Page 18: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla has orders of magnitude less patent protection than

competitors in any of the related industries in which it participates

18

Automotive Manufacturer / Designer

Consumer Electronic Device Maker

Electric Motor / Powertrain Provider

Battery / Energy Storage

Tesla Motors

Software Company

Systems Integrator

* INPADOC families filed in past 20 years, worldwide patent search

10

100

1,000

10,000

100,000

100 1,000 10,000 100,000 1,000,000

CanonPanasonic

EnerSys

AdobeRockwell Automation

VW

Nissan

Honda

GM

Ford

IBM

TeslaTeslaTeslaTesla

Microsoft

Oracle

SymantecSAP

Patent Count*

Sony

Samsung

Sharp

Salesforce

Magna

Toshiba

Cummins

DelphiDaimler

Continental

Hitachi

Cisco

Apple

Citrix

Fujitsu

Intuit

Eaton

DensoLG

HP

Saft Groupe

LG ChemValeo

MAN

TEV

(MM USD)

Page 19: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s small inventor group highlights their lack of R&D depth in

an industry with vast inventive resources

19

Tesla: 114 iTesla: 114 iTesla: 114 iTesla: 114 inventors with >2 patents Ford: 3245Ford: 3245Ford: 3245Ford: 3245 inventors with >2 patents

Inventor Co-Occurrence Networks

Beyond the overwhelming difference in scale, Tesla’s small core inventor team is a

source of fragility—R&D quality relies on the consistent output of a small talent base

Page 20: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

The core inventor team is fragile: of the 16 inventors with 5+ co-

authored patents, 10 have since left Tesla for other opportunities

20

Currently employed by TSLA

No longer employed by TSLA

Key

IP Counsel

Page 21: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Why patents matter: battery and automotive technology is

complicated, and keeping up requires every advantage possible

21

TSLA battery patents: 9-grams in claim language

Page 22: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s technology would risk being copied even if it owned all the

patents assigned to it…but it has actually given its IP away

22

Patents have no value beyond the ability to enforce them; unless this is a PR platitude with no real-

world meaning, then TSLA has discarded a key source of competitive advantage

Translation: “please do not sue us, established auto manufacturers of the world!” Engineers do build

technology leadership, but IP (and the threat of mutually assured destruction) maintains it

Page 23: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla imports large volumes of strategic components in a supply

network that is volatile and poorly understood

23

Two 10x swings in less than a year

Page 24: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s need to reduce cost requires tough negotiations with

numerous strategic suppliers, possibly leading to drastic recent shifts

24

J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13 J-14 F-14 M-14 A-14 M-14 J-14 J-14 A-14 S-14 O-14 N-14 D-14 J-15 F-15 M-15 A-15 M-15 J-15 J-15 A-15 S-15 O-15 N-15 D-15 J-16 F-16

Sanyo Electric Co. Ltd. 43416 34532 48600 51605 50760 62650 41040 80460 73374 75384 99360 81297 74376 95040 1E+05 84240 1E+05 1E+05 68178 69120 2E+05 2E+05 2E+05 28080 1E+05 2E+05 3E+05 1E+05 30247 2E+05 1E+05 1E+05 2E+05 2E+05 2E+05 2E+05 2E+05 2E+05

Luvata Pori Oy 48 47 58 58 33 33 34 35 33 29 60 70 69 102 41 0 121 120 62 35 12 4 118 0 15 107 251 127 124 178 129 90 78 79231 4E+05 1E+05 9E+05 3E+05

Fukuta Electric & Machinery Co.,Ltd 28 21 97 159 100 176 145 240 195 177 116 183 126 155 210 214 298 230 283 208 136 7890 15241 4080 7620 12208 12533 28856 27310 30468 26324 22950 24616 10460 31226 27780 37734 6250

Ceramtec Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12483 4 1 0 1 2 4 31201 62400 46800 78000 54600

Ningbo Jinyi Automotive Parts 5509 5244 5227 5079 7410 4692 5302 5388 6958 5797 4254 7704 4988 7070 1718 5714 9170 11822 6013 18389 15167 14220 12304 1457 6857 7055 13743 7195 3304 1245 2561 4900 6139 7646 0 0 0 1155

Hota Industrial Mfg. Co., Ltd. 836 668 2428 2073 4100 248 1708 2791 2366 2244 1718 3660 2841 3808 1647 4147 5722 4872 3379 993 7441 5171 4171 1306 3143 5308 10115 8802 3950 7662 8846 10151 5706 7068 12371 9541 8309 2961

Srems Zhongshan Cenity Electronic 7200 2599 3006 9776 7930 4288 23695 9196 9752 6429 6729 6337 3045 5968 2538 4364 3634 6499 3883 3430 1840 1450 500 0 1080 540 1200 1470 1000 300 1080 360 0 0 0 0 0 0

Pektron Plc 1 7584 0 63 28 7 41 31 0 0 0 0 0 0 0 0 0 0 0 0 55 73 39 19 35 62 41 82 98 124 37 39 4549 20098 19120 24388 24406 22608

Barum Continental Spol Sro 2000 2300 5000 5000 3948 2787 6 2000 1800 2216 0 0 1600 600 1432 1728 4682 3864 1296 5616 4320 3888 4321 864 1296 1296 11231 6406 6912 8208 1728 1728 2160 432 1296 1728 4752 4035

Nishikawa Rubber Co., Ltd. 1399 1765 1428 1565 1310 1146 1422 2146 1633 2824 2086 1226 2559 2076 2433 3015 2950 1693 2167 3147 3378 2346 2858 1266 3804 1942 4110 4202 3888 3456 3930 4886 2240 3702 3956 3968 3622 2508

Premo Mediterranee Sarl 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 61 4 1 3 0 13 9 2 10 5 6 10 36 26136 27 39921 33780

Amtek(Suzhou) Precision Engineering 240 1558 2904 729 762 3283 1948 0 0 0 0 0 34 0 0 0 0 48 408 0 4690 5790 3256 0 2753 678 3613 6623 4663 4343 6807 3547 4083 6379 5333 5733 5917 2105

Amtek Plastic (Shenzhen) Ltd 0 0 115 170 214 196 121 88 319 121 1003 62 731 1324 1158 1945 2452 2453 1359 2767 1211 4735 1596 879 1706 415 5745 2982 2428 3491 3746 2896 3977 5438 3959 4892 3573 3238

Wabco Fahrzeugsysteme Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 37 700 22500 20272 17900 11000

Dura Automotive Systems Gmbh 0 3 2 3 2 1 6 1 0 0 0 0 0 0 0 0 0 0 0 0 6 10 9 4 3 6 7 4 4 8 8 10 23 3971 18793 13146 14073 22270

Sixxon Precision Machinery Co., Ltd 705 1024 1242 983 387 722 1132 1083 954 1037 1084 1223 301 2487 843 1771 2287 1898 1277 565 3551 2252 1823 350 1298 2331 1098 3948 1673 1604 1378 2203 1679 1697 1940 1705 2595 405

Fuji Polymer Industries Co., Ltd. 1350 1305 1260 945 765 900 900 900 1485 1825 1848 3150 900 1848 2700 1944 1944 1944 3036 1044 1992 1140 1944 0 1044 2088 2256 1044 900 2088 1992 2161 192 1164 1080 1080 1164 1068

Tesla Motors Netherlands 0 0 0 21 0 0 0 2 48 0 0 0 6 74 66 260 1200 1194 1786 519 1409 1882 964 234 2806 571 1646 2859 1204 1417 2163 1475 2749 2637 1981 3635 2653 18335

Leopold Kostal Gmbh & Co Kg 0 58 43 0 9 0 32 26 0 0 0 0 0 0 0 0 0 0 0 0 3 15 4 0 7 3 4 3 4 1 2 7 2 6386 17626 15491 5480 7305

Panasonic Corporation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 600 1080 1872 3852 3840 1596 0 2220 2400 1140 3840 3480 2112 1536 3636 1320 2652 5160 1716 3732 2928

Rogers Technologies (Suzhou)Co.,Ltd 1760 326 988 356 712 906 916 2113 1240 1195 1740 1395 1546 1382 1465 920 686 631 447 206 2594 2350 1245 0 846 1074 1230 3074 1479 1698 979 1292 1198 2090 1690 2768 2106 1632

Transtek Magnetics Ltd. 0 0 0 0 0 0 0 0 302 389 884 882 1616 812 51 767 964 1287 683 549 1688 1637 4207 0 1195 3346 2606 2506 2106 2390 843 1706 1442 2862 2534 2231 2968 1350

Flextronics International Kft 19 127 85 53 90 85 156 138 55 93 121 33 224 43 88 99 187 66 0 176 222 160 184 61 49 119 376 165 303 233 254 110 1027 8986 8000 7468 13002 4044

Huf Huelsbeck & Fuerst Gmbh & Co Kg 0 0 0 12 10 9 33 11 0 0 0 0 0 0 0 0 0 0 0 0 34 30 26 5 20 18 30 21 27 30 27 22 28 4359 14428 10 15204 10936

Isabellenhuette Heusler Gmbh & Co K 0 0 0 0 10 10 15 15 0 0 0 0 0 0 0 0 0 0 0 0 28 32 27 28 22 12 38 7 7 10 22 26 17 6000 3950 10300 12000 11200

Bizlink Technology Inc 256 619 143 667 311 371 873 324 833 491 392 279 685 1068 315 430 815 918 861 1331 1738 1382 2365 0 569 1790 971 1826 1443 1850 793 1144 2031 2332 2479 2248 3081 1887

Csf Poland Sp Zoo 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 4762 12897 89 14200 8179

Magnetec-Ungarn Kft. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 18 5962 7560 6440 10360 8400

Metalsa Automotive Hainichen 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 10 20 20 0 12 18 20 18 20 8 26 22 16 6726 5760 9120 11520 4806

Halla Visteon Climate Control Corp. 598 605 428 706 760 338 1130 1145 928 1229 920 690 1130 848 1227 943 1649 1735 1385 1321 1386 1308 1458 244 1208 1832 1638 2171 1587 1447 1385 784 0 0 0 0 0 0

U-Shin Slovakia Sro 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8594 2232 15688 4920

Khl Interior Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 8 10 4 8 10 2921 4554 6716 6456 3648

Viasystems Asia Pacific Co Ltd 0 789 416 518 366 106 251 181 493 1175 158 339 246 1084 333 337 1021 818 616 501 952 1185 1266 0 346 218 1136 943 756 483 391 651 769 1676 419 1158 776 753

Tpk Touch Solution(Xiamen)Inc. 7 2 16 15 11 13 312 432 384 500 341 360 413 636 516 874 392 445 609 345 722 720 848 0 449 865 656 1176 624 880 624 768 832 900 1256 1077 1353 89

Hongfujin Precision 138 420 186 120 124 310 260 391 324 373 403 484 416 421 226 376 485 366 307 0 706 594 378 190 743 849 691 247 1178 1095 1685 494 1492 557 548 959 1003 296

Ningbo Yexing Automotive Part Co., 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5579 6821 6357 843

Tesla Motors Hk Ltd 10 0 1 0 0 0 3 0 0 0 0 0 0 0 5 0 0 0 0 0 23 0 0 0 3712 0 0 0 5016 0 0 12 0 5184 0 0 5136 0

Gaoyao Hongxing Precision Casting 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 480 1976 4621 10048 1860

Connor Manufacturing(Suzhou)Co.Ltd. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 63 0 315 630 918 1328 1717 1860 5 21 6 989 2410 2518 2245 1692

Hanon Systems. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 679 1209 3510 3002 3351 2629 1801

Brembo Spa 139 164 88 18 115 142 117 109 81 177 146 2488 106 124 256 134 273 397 322 47 166 301 273 16 101 56 146 136 162 233 142 106 119 2806 154 230 167 5144

“December effect”

Drastic supply shifts October ‘15

Abrupt supply

ramp-ups

Abrupt supply

discontinuations

Top Tesla suppliers, containers per yearTop Tesla suppliers, containers per yearTop Tesla suppliers, containers per yearTop Tesla suppliers, containers per year

Page 25: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla is increasingly dependent on battery and motor imports

25

The “smoking gun”: as deployment of diverse

motor parts increases, the probability of patent

infringement increases

The “smoking gun”: as deployment of diverse

motor parts increases, the probability of patent

infringement increases

Page 26: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Tesla’s cost position is driven by negotiations with suppliers (e.g. Panasonic and

Fukuta) with incentives to charge high prices for advanced technologies

26

Supplier # bills Supplier # bills Supplier # bills

Constellium France Sas 67 Sanyo Electric Co. Ltd. (Panasonic) 521 Fukuta Electric & Machinery Co.,Ltd 251

Constellium Neuf Brisach 40 Lg Electronics Inc 54 Da Horn Refining Co., Ltd. 79

Constellium Singen Gmbh 23 Tesla Motors Netherlands 52 Faurecia (Wuxi) Seating Components 75

Toyota Tsusho Corporation 12 Amtek Plastic (Shenzhen) Ltd 49 Kuen Tong Industrial Co., Ltd. 62

Sanmina-Sci Enclosure System 11 Samsung Sdi Co.,Ltd 19 Ningbo Xusheng Auto Technology 60

Premo Mediterranee Sarl 7 Ningbo Jinyi Automotive Parts 10 Hongfujin Precision 41

King Lai International Co., Ltd. 2 Tesla Motors Ltd 7 Igarashi Electric Works Hk Ltd 38

Aleris Aluminium Duffel Bvba 1 Samsung Sdi Co.,Ltd. 5 Mabuchi Taiwan Co., Ltd. 35

Constellium 1 Tesla Motors Japan Kk 5 Amtek Plastic (Shenzhen) Ltd 34

Hunan Xiangtou Goldsky Titanium 1 Shenzhen Tat Fook Tech Co Ltd 4 Tesla Motors Taiwan Limited 28

Kobe Steel, Ltd. 1 Tesla Automobile Distribution 4 Semyung Industrial, Co., Ltd. 18

Kobe Steel,Ltd. 1 Atlasbx Co., Ltd. 3 Sixxon Precision Machinery Co., Ltd 16

Mga International 1 Tesla Motors Hk Ltd 3 Brembo Spa 15

Odawara Engineerinbg Co.,Ltd. 1 LG Electronics Inc 2 Faurecia (Yancheng) Automotive Syst 12

Sanmina-Sci Enclosure Systems 1 Aig Verpackungs Gmbh 1 Central Corporation 10

Shenzhen Meinie Tool & Die Co Ltd 1 Brabus Gmbh 1 Eaton Automotive Controls Ltd. 10

Srems Zhongshan Cenity Electronic 1 Galliker Transport Ag 1 Jiu-Bor Industrial Co.,Ltd. 9

Aluminum (for doors, hood, etc.) Batteries Motors & motor parts

Tesla does not own its IP, and worse, it doesn’t own the technology within its motors.

As soon as Tesla becomes profitable its margins will be drained by its vendor network

Basic industrial commodity Valuable semi-commodity Critical technology chokepoint

Page 27: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Executive Summary

27

� What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its

valuation multiples (when they can be calculated) lie well above its direct business model comparables

− TSLA is attempting more vertical integration than any auto company has recently tried

− TSLA trades at a higher revenue multiple than any related technology business

− TSLA’s only comparables in terms of multiple are business models that TSLA is not:

− Software companies: TSLA has low / negative margins and heavy fixed asset commitment

− Social media companies: TSLA has no network effects, no platform economics and high scaling costs

− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces

� TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some

valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology

− TSLA’s patents cover battery-related technology and selected components but not battery cells

− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market

where its technology position is modest

− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left

− TSLA’s valuable inventions can be readily copied by its EV competitors

− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to

price aggressively for their advanced technologies

� TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle

− TSLA battery production requires the mining and use of numerous toxic chemicals

− TSLA EV production has a heavier carbon footprint than traditional vehicles

− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants

− Disposal of TSLA batteries at large scale will create a heavy toxic burden

Page 28: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Finally, all-electric vehicles are not as sustainable as they may

seem; this is a serious brand risk and an unknown legal exposure

28

“ ”

Battery Sourcing Battery Charging Battery Disposal

“When a wire is connected to an

electric vehicle at one end and a

coal-fired power plant at the other

end, the environmental

consequences are worse than worse than worse than worse than

driving a normal gasolinedriving a normal gasolinedriving a normal gasolinedriving a normal gasoline----powered powered powered powered

car…allcar…allcar…allcar…all----electric vehicles cause 86% electric vehicles cause 86% electric vehicles cause 86% electric vehicles cause 86%

more deaths from air pollutionmore deaths from air pollutionmore deaths from air pollutionmore deaths from air pollution

than do cars powered by regular

gasoline.“ -- Carnegie Inst. for Sci.

“Graphite…is mined and processed

in China where graphite pollution

has fouled air and water, damaged fouled air and water, damaged fouled air and water, damaged fouled air and water, damaged

crops and raised health crops and raised health crops and raised health crops and raised health

concerns…concerns…concerns…concerns…TeslaTeslaTeslaTesla’’’’s factory alone s factory alone s factory alone s factory alone

could double demandcould double demandcould double demandcould double demand for graphite

in batteries.” -- Bloomberg

“Initial production of the vehicle

and the batteries together make up

something like 40 percent of the 40 percent of the 40 percent of the 40 percent of the

total carbon footprint of an total carbon footprint of an total carbon footprint of an total carbon footprint of an EVEVEVEV—

nearly double that of an equivalent

gasoline-powered vehicle.” -- EC

“The recovery rate of lithium ion

batteries, even in first world

countries, is in the single digit

percent range. Most batteries end Most batteries end Most batteries end Most batteries end

up in landfillup in landfillup in landfillup in landfill.” -- Tech Metals Insider

“The extraction of lithium has

significant environmental and social significant environmental and social significant environmental and social significant environmental and social

impactsimpactsimpactsimpacts, especially due to water

pollution and depletion.” -- EC

“The environmental impacts

include resource depletion, global

warming, and ecological toxicity —

primarily resulting from the

production, processing, and use of use of use of use of

cobalt and nickel metal cobalt and nickel metal cobalt and nickel metal cobalt and nickel metal

compoundscompoundscompoundscompounds, which can cause

adverse respiratory, pulmonary, respiratory, pulmonary, respiratory, pulmonary, respiratory, pulmonary,

and neurological effectsand neurological effectsand neurological effectsand neurological effects in those

exposed.” -- ABT Associates

“A carbon emissions surchargecarbon emissions surchargecarbon emissions surchargecarbon emissions surcharge [was]

slapped on…the Model S [in

Singopore for]…an equivalent CO2

emission of 222g/km. The

emissions were calculated using a

"grid emissions factor" [for]

emissions created by energy useemissions created by energy useemissions created by energy useemissions created by energy use …

when its battery converts electricity

into power” -- CNBC

Page 29: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Pounds of toxic cobalt and unstable lithium are present in each

Tesla EV, and present a serious safety (as well as moral) hazard

29

From US20150111082A1: Cell Module Assemblies

Tesla Battery Pack

LithiumLithiumLithiumLithium

CobaltCobaltCobaltCobalt

� Immediately dangerous to life and health at 20

mg / m3 (microgram / L)

� A Tesla EV contains 18 pounds of cobalt

distributed throughout the battery cells

� This toxic concentration of a dangerous heavy This toxic concentration of a dangerous heavy This toxic concentration of a dangerous heavy This toxic concentration of a dangerous heavy

metal is core to Tesla vehicle performancemetal is core to Tesla vehicle performancemetal is core to Tesla vehicle performancemetal is core to Tesla vehicle performance

� Lithium in damaged battery cells is known to

lead to spontaneous and violent explosions

� The Model S stores 30 pounds of lithium in

cells with reduced individual safety features

� What happens when aging Tesla batteries get What happens when aging Tesla batteries get What happens when aging Tesla batteries get What happens when aging Tesla batteries get

compacted and punctured in landfills?compacted and punctured in landfills?compacted and punctured in landfills?compacted and punctured in landfills?

Just as switching from tobacco cigarettes to e-cigarettes is still bad for your health,

switching from gas automobiles to electric vehicles is still bad for the environment

Page 30: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

On market price adjustments:

30

There’s a man goin’ round takin’ names.

An’ he decides who to free and who to blame.

Everybody won’t be treated all the same.

There’ll be a golden ladder reaching down.

When the man comes around.

-Johnny Cash

Page 31: Tesla Motors, Inc. - ValueWalk · credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of the stock “TSLA” declines over the long run, or

-Attorney Confidential-

Thank you

For more information, please contact Devonshire Research Group, LLC on Bloomberg: SURFHACKER