filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
Tesla, Inc.
Consolidated Balance Sheets
(in millions, except per share data)
(unaudited)
| September 30, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 18,111 | $ | 16,398 | |||||||
| Short-term investments | 15,537 | 12,696 | |||||||||
| Accounts receivable, net | 3,313 | 3,508 | |||||||||
| Inventory | 14,530 | 13,626 | |||||||||
| Prepaid expenses and other current assets | 4,888 | 3,388 | |||||||||
| Total current assets | 56,379 | 49,616 | |||||||||
| Operating lease vehicles, net | 5,380 | 5,989 | |||||||||
| Solar energy systems, net | 5,040 | 5,229 | |||||||||
| Property, plant and equipment, net | 36,116 | 29,725 | |||||||||
| Operating lease right-of-use assets | 4,867 | 4,180 | |||||||||
| Digital assets, net | 184 | 184 | |||||||||
| Intangible assets, net | 158 | 178 | |||||||||
| Goodwill | 253 | 253 | |||||||||
| Deferred tax assets | 6,486 | 6,733 | |||||||||
| Other non-current assets | 4,989 | 4,531 | |||||||||
| Total assets | $ | 119,852 | $ | 106,618 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 14,654 | $ | 14,431 | |||||||
| Accrued liabilities and other | 10,601 | 9,080 | |||||||||
| Deferred revenue | 3,031 | 2,864 | |||||||||
| Current portion of debt and finance leases | 2,291 | 2,373 | |||||||||
| Total current liabilities | 30,577 | 28,748 | |||||||||
| Debt and finance leases, net of current portion | 5,405 | 2,857 | |||||||||
| Deferred revenue, net of current portion | 3,350 | 3,251 | |||||||||
| Other long-term liabilities | 9,810 | 8,153 | |||||||||
| Total liabilities | 49,142 | 43,009 | |||||||||
| Commitments and contingencies (Note 10) | |||||||||||
| Redeemable noncontrolling interests in subsidiaries | 70 | 242 | |||||||||
| Equity | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock; $0.001 par value; 100 shares authorized; no shares issued and outstanding | — | — | |||||||||
| Common stock; $0.001 par value; 6,000 shares authorized; 3,207 and 3,185 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 3 | 3 | |||||||||
| Additional paid-in capital | 37,286 | 34,892 | |||||||||
| Accumulated other comprehensive loss | (14) | (143) | |||||||||
| Retained earnings | 32,656 | 27,882 | |||||||||
| Total stockholders’ equity | 69,931 | 62,634 | |||||||||
| Noncontrolling interests in subsidiaries | 709 | 733 | |||||||||
| Total liabilities and equity | $ | 119,852 | $ | 106,618 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Automotive sales | $ | 18,831 | $ | 18,582 | $ | 53,821 | $ | 57,879 | |||||||||||||||
| Automotive regulatory credits | 739 | 554 | 2,071 | 1,357 | |||||||||||||||||||
| Automotive leasing | 446 | 489 | 1,380 | 1,620 | |||||||||||||||||||
| Total automotive revenues | 20,016 | 19,625 | 57,272 | 60,856 | |||||||||||||||||||
| Energy generation and storage | 2,376 | 1,559 | 7,025 | 4,597 | |||||||||||||||||||
| Services and other | 2,790 | 2,166 | 7,686 | 6,153 | |||||||||||||||||||
| Total revenues | 25,182 | 23,350 | 71,983 | 71,606 | |||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Automotive sales | 15,743 | 15,656 | 45,602 | 47,919 | |||||||||||||||||||
| Automotive leasing | 247 | 301 | 761 | 972 | |||||||||||||||||||
| Total automotive cost of revenues | 15,990 | 15,957 | 46,363 | 48,891 | |||||||||||||||||||
| Energy generation and storage | 1,651 | 1,178 | 5,157 | 3,770 | |||||||||||||||||||
| Services and other | 2,544 | 2,037 | 7,192 | 5,723 | |||||||||||||||||||
| Total cost of revenues | 20,185 | 19,172 | 58,712 | 58,384 | |||||||||||||||||||
| Gross profit | 4,997 | 4,178 | 13,271 | 13,222 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 1,039 | 1,161 | 3,264 | 2,875 | |||||||||||||||||||
| Selling, general and administrative | 1,186 | 1,253 | 3,837 | 3,520 | |||||||||||||||||||
| Restructuring and other | 55 | — | 677 | — | |||||||||||||||||||
| Total operating expenses | 2,280 | 2,414 | 7,778 | 6,395 | |||||||||||||||||||
| Income from operations | 2,717 | 1,764 | 5,493 | 6,827 | |||||||||||||||||||
| Interest income | 429 | 282 | 1,127 | 733 | |||||||||||||||||||
| Interest expense | (92) | (38) | (254) | (95) | |||||||||||||||||||
| Other (expense) income, net | (270) | 37 | (142) | 317 | |||||||||||||||||||
| Income before income taxes | 2,784 | 2,045 | 6,224 | 7,782 | |||||||||||||||||||
| Provision for income taxes | 601 | 167 | 1,403 | 751 | |||||||||||||||||||
| Net income | 2,183 | 1,878 | 4,821 | 7,031 | |||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries | 16 | 25 | 47 | (38) | |||||||||||||||||||
| Net income attributable to common stockholders | $ | 2,167 | $ | 1,853 | $ | 4,774 | $ | 7,069 | |||||||||||||||
| Net income per share of common stock attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | 0.68 | $ | 0.58 | $ | 1.51 | $ | 2.23 | |||||||||||||||
| Diluted | $ | 0.62 | $ | 0.53 | $ | 1.38 | $ | 2.03 | |||||||||||||||
| Weighted average shares used in computing net income per share of common stock | |||||||||||||||||||||||
| Basic | 3,198 | 3,176 | 3,192 | 3,171 | |||||||||||||||||||
| Diluted | 3,497 | 3,493 | 3,489 | 3,481 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income | $ | 2,183 | $ | 1,878 | $ | 4,821 | $ | 7,031 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | 445 | (289) | 121 | (343) | |||||||||||||||||||
| Unrealized net gain on investments, net of tax | 8 | 7 | 8 | 8 | |||||||||||||||||||
| Net loss realized and included in net income | — | — | — | 4 | |||||||||||||||||||
| Comprehensive income | 2,636 | 1,596 | 4,950 | 6,700 | |||||||||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries | 16 | 25 | 47 | (38) | |||||||||||||||||||
| Comprehensive income attributable to common stockholders | $ | 2,620 | $ | 1,571 | $ | 4,903 | $ | 6,738 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
(in millions)
(unaudited)
| Three Months Ended September 30, 2024 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | 72 | 3,194 | $ | 3 | $ | 36,443 | $ | (467) | $ | 30,489 | $ | 66,468 | $ | 723 | $ | 67,191 | |||||||||||||||||||||||||||||||||||||||
| Settlement of warrants | — | 9 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 4 | — | 340 | — | — | 340 | — | 340 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 503 | — | — | 503 | — | 503 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (3) | — | — | — | — | — | — | (29) | (29) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 1 | — | — | — | — | 2,167 | 2,167 | 15 | 2,182 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 453 | — | 453 | — | 453 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | 70 | 3,207 | $ | 3 | $ | 37,286 | $ | (14) | $ | 32,656 | $ | 69,931 | $ | 709 | $ | 70,640 |
| Nine Months Ended September 30, 2024 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | 242 | 3,185 | $ | 3 | $ | 34,892 | $ | (143) | $ | 27,882 | $ | 62,634 | $ | 733 | $ | 63,367 | |||||||||||||||||||||||||||||||||||||||
| Settlement of warrants | — | 9 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 13 | — | 787 | — | — | 787 | — | 787 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 1,565 | — | — | 1,565 | — | 1,565 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (11) | — | — | — | — | — | — | (66) | (66) | |||||||||||||||||||||||||||||||||||||||||||||||
| Buy-outs of noncontrolling interests | (166) | — | — | 42 | — | — | 42 | — | 42 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 5 | — | — | — | — | 4,774 | 4,774 | 42 | 4,816 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 129 | — | 129 | — | 129 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | 70 | 3,207 | $ | 3 | $ | 37,286 | $ | (14) | $ | 32,656 | $ | 69,931 | $ | 709 | $ | 70,640 |
| Three Months Ended September 30, 2023 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | 288 | 3,174 | $ | 3 | $ | 33,436 | $ | (410) | $ | 18,101 | $ | 51,130 | $ | 764 | $ | 51,894 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 5 | — | 254 | — | — | 254 | — | 254 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 513 | — | — | 513 | — | 513 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (10) | — | — | — | — | — | — | (33) | (33) | |||||||||||||||||||||||||||||||||||||||||||||||
| Buy-outs of noncontrolling interests | (5) | — | — | (2) | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 4 | — | — | — | — | 1,853 | 1,853 | 21 | 1,874 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (282) | — | (282) | — | (282) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | 277 | 3,179 | $ | 3 | $ | 34,201 | $ | (692) | $ | 19,954 | $ | 53,466 | $ | 752 | $ | 54,218 |
| Nine Months Ended September 30, 2023 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | 409 | 3,164 | $ | 3 | $ | 32,177 | $ | (361) | $ | 12,885 | $ | 44,704 | $ | 785 | $ | 45,489 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 15 | — | 548 | — | — | 548 | — | 548 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 1,473 | — | — | 1,473 | — | 1,473 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (24) | — | — | — | — | — | — | (83) | (83) | |||||||||||||||||||||||||||||||||||||||||||||||
| Buy-outs of noncontrolling interests | (8) | — | — | 3 | — | — | 3 | (12) | (9) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | (100) | — | — | — | — | 7,069 | 7,069 | 62 | 7,131 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (331) | — | (331) | — | (331) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | 277 | 3,179 | $ | 3 | $ | 34,201 | $ | (692) | $ | 19,954 | $ | 53,466 | $ | 752 | $ | 54,218 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 4,821 | $ | 7,031 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and impairment | 3,872 | 3,435 | |||||||||
| Stock-based compensation | 1,420 | 1,328 | |||||||||
| Inventory and purchase commitments write-downs | 247 | 361 | |||||||||
| Foreign currency transaction net unrealized loss (gain) | 197 | (317) | |||||||||
| Deferred income taxes | 418 | (316) | |||||||||
| Non-cash interest and other operating activities | 83 | 94 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 144 | 377 | |||||||||
| Inventory | (1,107) | (1,953) | |||||||||
| Operating lease vehicles | (82) | (1,858) | |||||||||
| Prepaid expenses and other assets | (2,639) | (1,992) | |||||||||
| Accounts payable, accrued and other liabilities | 2,504 | 1,922 | |||||||||
| Deferred revenue | 231 | 774 | |||||||||
| Net cash provided by operating activities | 10,109 | 8,886 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Purchases of property and equipment excluding finance leases, net of sales | (8,556) | (6,592) | |||||||||
| Purchases of solar energy systems, net of sales | (6) | — | |||||||||
| Purchases of investments | (20,797) | (13,221) | |||||||||
| Proceeds from maturities of investments | 17,975 | 8,959 | |||||||||
| Proceeds from sales of investments | 200 | 138 | |||||||||
| Business combinations, net of cash acquired | — | (64) | |||||||||
| Net cash used in investing activities | (11,184) | (10,780) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Proceeds from issuances of debt | 4,360 | 2,526 | |||||||||
| Repayments of debt | (1,783) | (887) | |||||||||
| Proceeds from exercises of stock options and other stock issuances | 788 | 548 | |||||||||
| Principal payments on finance leases | (291) | (340) | |||||||||
| Debt issuance costs | (6) | (23) | |||||||||
| Distributions paid to noncontrolling interests in subsidiaries | (76) | (105) | |||||||||
| Payments for buy-outs of noncontrolling interests in subsidiaries | (124) | (17) | |||||||||
| Net cash provided by financing activities | 2,868 | 1,702 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (8) | (142) | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 1,785 | (334) | |||||||||
| Cash and cash equivalents and restricted cash, beginning of period | 17,189 | 16,924 | |||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 18,974 | $ | 16,590 | |||||||
| Supplemental Non-Cash Investing and Financing Activities | |||||||||||
| Acquisitions of property and equipment included in liabilities | $ | 2,727 | $ | 1,717 | |||||||
| Leased assets obtained in exchange for finance lease liabilities | $ | 32 | $ | 1 | |||||||
| Leased assets obtained in exchange for operating lease liabilities | $ | 1,232 | $ | 1,548 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Note 1 – Overview & Summary of Significant Accounting Policies
Overview
Tesla, Inc. (“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.
Unaudited Interim Financial Statements
The consolidated financial statements, including the consolidated balance sheet as of September 30, 2024, the consolidated statements of operations, the consolidated statements of comprehensive income, the consolidated statements of redeemable noncontrolling interests and equity for the three and nine months ended September 30, 2024 and 2023, and the consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2023 was derived from the audited consolidated financial statements as of that date. The interim consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2023.
The interim consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
Reclassifications
Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.
Revenue Recognition
Revenue by source
The following table disaggregates our revenue by major source (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Automotive sales | $ | 18,831 | $ | 18,582 | $ | 53,821 | $ | 57,879 | |||||||||||||||
| Automotive regulatory credits | 739 | 554 | 2,071 | 1,357 | |||||||||||||||||||
| Energy generation and storage sales | 2,228 | 1,416 | 6,616 | 4,188 | |||||||||||||||||||
| Services and other | 2,790 | 2,166 | 7,686 | 6,153 | |||||||||||||||||||
| Total revenues from sales and services | 24,588 | 22,718 | 70,194 | 69,577 | |||||||||||||||||||
| Automotive leasing | 446 | 489 | 1,380 | 1,620 | |||||||||||||||||||
| Energy generation and storage leasing | 148 | 143 | 409 | 409 | |||||||||||||||||||
| Total revenues | $ | 25,182 | $ | 23,350 | $ | 71,983 | $ | 71,606 |
Automotive Segment
Automotive Sales
Deferred revenue related to the access to our Full Self Driving (Supervised) (“FSD”) Capability features and their ongoing maintenance, internet connectivity, free Supercharging programs and over-the-air software updates primarily on automotive sales amounted to $3.61 billion and $3.54 billion as of September 30, 2024 and December 31, 2023, respectively.
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 balances as of December 31, 2023 and 2022 was $711 million and $360 million for the nine months ended September 30, 2024 and 2023, respectively. Of the total deferred revenue balance as of September 30, 2024, we expect to recognize $821 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.
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our automotive deliveries. As of September 30, 2024 and December 31, 2023, we had current net financing receivables of $245 million and $242 million, respectively, in Accounts receivable, net, and $868 million and $1.04 billion, respectively, in Other non-current assets for the long-term portion.
We offer resale value guarantees to our commercial banking partners in connection with certain vehicle leasing programs. Under these programs, we originate the lease with our end customer and immediately transfer the lease and the underlying vehicle to our commercial banking partner, with the transaction being accounted for as a sale under ASC 606, Revenue from Contracts with Customers. 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 liabilities. The total recorded guarantee liabilities on vehicles sold under this program were immaterial as of September 30, 2024 and December 31, 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 $1.04 billion and $166 million as of September 30, 2024 and December 31, 2023, respectively.
Automotive Regulatory Credits
As of September 30, 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 $4.72 billion. Of this amount, we expect to recognize $683 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
Direct Sales-Type Leasing Program
Lease receivables relating to sales-type leases are presented on the consolidated balance sheets as follows (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Gross lease receivables | $ | 584 | $ | 780 | |||||||
| Unearned interest income | (48) | (78) | |||||||||
| Allowance for expected credit losses | (7) | (6) | |||||||||
| Net investment in sales-type leases | $ | 529 | $ | 696 | |||||||
| Reported as: | |||||||||||
| Prepaid expenses and other current assets | $ | 171 | $ | 189 | |||||||
| Other non-current assets | 358 | 507 | |||||||||
| Net investment in sales-type leases | $ | 529 | $ | 696 |
Energy Generation and Storage Segment
Energy Generation and Storage Sales
We record as deferred revenue any non-refundable amounts that are collected from customers related to prepayments, which is recognized as revenue ratably over the respective customer contract term. As of September 30, 2024 and December 31, 2023, deferred revenue related to such customer payments amounted to $1.73 billion and $1.60 billion, respectively, mainly due to contractual payment terms. Revenue recognized from the deferred revenue balances as of December 31, 2023 and 2022 was $1.09 billion and $511 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 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 $6.61 billion. Of this amount, we expect to recognize $4.23 billion in the next 12 months and the rest over the remaining performance obligation period.
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our energy products. As of September 30, 2024 and December 31, 2023, we had current net financing receivables of $32 million and $31 million, respectively, in Accounts receivable, net, and $641 million and $578 million, respectively, in Other non-current assets for the long-term portion.
Income Taxes
We are subject to income taxes in the U.S. and in many foreign jurisdictions. 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. We also rely on our assessment of the Company’s projected future results of business operations, including uncertainty in future operating results relative to historical results, volatility in the market price of our common stock and its performance over time, variable macroeconomic conditions impacting our ability to forecast future taxable income, and changes in business that may affect the existence and magnitude of future taxable income. Our valuation allowance assessment is based on our best estimate of future results considering all available information.
Our provision for or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
Net Income per Share of Common Stock Attributable to Common Stockholders
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):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income attributable to common stockholders | $ | 2,167 | $ | 1,853 | $ | 4,774 | $ | 7,069 | |||||||||||||||
| Less: Buy-outs of noncontrolling interest | — | 2 | (42) | (3) | |||||||||||||||||||
| Net income used in computing basic and diluted net income per share of common stock | $ | 2,167 | $ | 1,851 | $ | 4,816 | $ | 7,072 |
The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Weighted average shares used in computing net income per share of common stock, basic | 3,198 | 3,176 | 3,192 | 3,171 | |||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Stock-based awards | 290 | 304 | 286 | 297 | |||||||||||||||||||
| Convertible senior notes | — | 2 | 1 | 2 | |||||||||||||||||||
| Warrants | 9 | 11 | 10 | 11 | |||||||||||||||||||
| Weighted average shares used in computing net income per share of common stock, diluted | 3,497 | 3,493 | 3,489 | 3,481 |
The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income per share of common stock attributable to common stockholders, because their effect was anti-dilutive (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Stock-based awards | 15 | 13 | 18 | 12 |
Restricted Cash
Our total cash and cash equivalents and restricted cash, as presented in the consolidated statements of cash flows, was as follows (in millions):
| September 30, 2024 | December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 18,111 | $ | 16,398 | $ | 15,932 | $ | 16,253 | |||||||||||||||
| Restricted cash included in prepaid expenses and other current assets | 483 | 543 | 453 | 294 | |||||||||||||||||||
| Restricted cash included in other non-current assets | 380 | 248 | 205 | 377 | |||||||||||||||||||
| Total as presented in the consolidated statements of cash flows | $ | 18,974 | $ | 17,189 | $ | 16,590 | $ | 16,924 |
Accounts Receivable and Allowance for Doubtful Accounts
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 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 September 30, 2024 and December 31, 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
As of September 30, 2024 and December 31, 2023, the vast majority of our financing receivables were at current status with an immaterial balance being past due. As of September 30, 2024 and December 31, 2023, the majority of our financing receivables, excluding MyPower notes receivable, were originated in 2023 and 2022.
As of September 30, 2024 and December 31, 2023, the total outstanding balance of MyPower customer notes receivable, net of allowance for expected credit losses, was $250 million and $266 million, respectively, of which $5 million was due in the next 12 months. As of September 30, 2024 and December 31, 2023, the allowance for expected credit losses was $36 million.
Concentration of Risk
Credit Risk
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 highly rated, investment-grade securities. These deposits are typically in excess of insured limits. As of September 30, 2024 and December 31, 2023, no entity represented 10% or more of our total receivables balance.
Supply Risk
We are dependent on our suppliers, including single source suppliers, and the inability of these suppliers to deliver necessary components of our products in a timely manner at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components from these suppliers, could have a material adverse effect on our business, prospects, financial condition and operating results.
Warranties
Accrued warranty activity consisted of the following (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Accrued warranty - beginning of period | $ | 5,795 | $ | 4,465 | $ | 5,152 | $ | 3,505 | |||||||||||||||
| Warranty costs incurred | (380) | (335) | (1,048) | (911) | |||||||||||||||||||
| Net changes in liability for pre-existing warranties, including expirations and foreign exchange impact | 231 | 15 | 295 | 426 | |||||||||||||||||||
| Provision for warranty | 717 | 577 | 1,964 | 1,702 | |||||||||||||||||||
| Accrued warranty - end of period | $ | 6,363 | $ | 4,722 | $ | 6,363 | $ | 4,722 |
Recent Accounting Pronouncements
Recently issued accounting pronouncements not yet adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (Subtopic 350-60). This ASU requires certain crypto assets to be measured at fair value separately on the balance sheet with changes reported in the statement of operations 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 asset holding. The ASU is effective for annual periods beginning after December 15, 2024, including interim periods within those fiscal years. Adoption of the ASU requires a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period in which an entity adopts the amendments. Early adoption is also permitted, including adoption in an interim period. However, if the ASU is early adopted in an interim period, an entity must adopt the ASU as of the beginning of the fiscal year that includes the interim period. This ASU will result in gains and losses recorded in the consolidated financial statements and additional disclosures when adopted. We are currently evaluating the adoption of this ASU and it could materially affect the carrying value of our crypto assets held and the gains and losses relating thereto, depending on the fair value at adoption.
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 likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
Note 2 – Fair Value of Financial Instruments
ASC 820, Fair Value Measurements (“ASC 820”) states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. Our assets and liabilities that were measured at fair value on a recurring basis were as follows (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Level I | Level II | Level III | Fair Value | Level I | Level II | Level III | ||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | $ | 10,329 | $ | — | $ | 10,329 | $ | — | $ | 6,996 | $ | — | $ | 6,996 | $ | — | |||||||||||||||||||||||||||||||
| Commercial paper | 4,162 | — | 4,162 | — | 470 | — | 470 | — | |||||||||||||||||||||||||||||||||||||||
| U.S. government securities | 3,393 | — | 3,393 | — | 5,136 | — | 5,136 | — | |||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | 196 | — | 196 | — | 480 | — | 480 | — | |||||||||||||||||||||||||||||||||||||||
| Money market funds | 1,784 | 1,784 | — | — | 109 | 109 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 19,864 | $ | 1,784 | $ | 18,080 | $ | — | $ | 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. Our U.S. government securities, certificates of deposit, commercial paper, time deposits and corporate debt securities are classified within Level II of the fair value hierarchy and the market approach was used to determine fair value of these investments.
Our cash, cash equivalents and investments classified by security type as of September 30, 2024 and December 31, 2023 consisted of the following (in millions):
| September 30, 2024 | |||||||||||||||||||||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||||||||||||||
| Cash | $ | 13,784 | $ | — | $ | — | $ | 13,784 | $ | 13,784 | $ | — | |||||||||||||||||||||||
| Certificates of deposit and time deposits | 10,327 | 2 | — | 10,329 | 600 | 9,729 | |||||||||||||||||||||||||||||
| Commercial paper | 4,160 | 3 | (1) | 4,162 | 945 | 3,217 | |||||||||||||||||||||||||||||
| U.S. government securities | 3,391 | 3 | (1) | 3,393 | 998 | 2,395 | |||||||||||||||||||||||||||||
| Corporate debt securities | 195 | 1 | — | 196 | — | 196 | |||||||||||||||||||||||||||||
| Money market funds | 1,784 | — | — | 1,784 | 1,784 | — | |||||||||||||||||||||||||||||
| Total cash, cash equivalents and short-term investments | $ | 33,641 | $ | 9 | $ | (2) | $ | 33,648 | $ | 18,111 | $ | 15,537 |
| December 31, 2023 | |||||||||||||||||||||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||||||||||||||
| Cash | $ | 15,903 | $ | — | $ | — | $ | 15,903 | $ | 15,903 | $ | — | |||||||||||||||||||||||
| Certificates of deposit and time deposits | 6,995 | 1 | — | 6,996 | — | 6,996 | |||||||||||||||||||||||||||||
| U.S. government securities | 5,136 | 1 | (1) | 5,136 | 277 | 4,859 | |||||||||||||||||||||||||||||
| Corporate debt securities | 485 | 1 | (6) | 480 | — | 480 | |||||||||||||||||||||||||||||
| 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 |
The following table summarizes the fair value of our investments by stated contractual maturities as of September 30, 2024 (in millions):
| Due in 1 year or less | $ | 15,336 | |||
| Due in 1 year through 5 years | 201 | ||||
| Total | $ | 15,537 |
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”), which matured in the second quarter of 2024, and digital assets.
We estimated 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):
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| 2024 Notes | $ | — | $ | — | $ | 37 | $ | 443 | |||||||||||||||
| Digital assets, net | $ | 184 | $ | 729 | $ | 184 | $ | 487 |
Note 3 – Inventory
Our inventory consisted of the following (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Raw materials | $ | 5,555 | $ | 5,390 | |||||||
| Work in process | 1,791 | 2,016 | |||||||||
| Finished goods (1) | 5,950 | 5,049 | |||||||||
| Service parts | 1,234 | 1,171 | |||||||||
| Total | $ | 14,530 | $ | 13,626 |
(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 three and nine months ended September 30, 2024, we recorded write-downs of $46 million and $114 million, respectively, in Cost of revenues in the consolidated statements of operations. During the three and nine months ended September 30, 2023, we recorded write-downs of $43 million and $148 million, respectively, in Cost of revenues in the consolidated statements of operations.
Note 4 – Property, Plant and Equipment, Net
Our property, plant and equipment, net, consisted of the following (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Machinery, equipment, vehicles and office furniture | $ | 18,227 | $ | 16,309 | |||||||
| Land and buildings | 10,680 | 9,498 | |||||||||
| Leasehold improvements | 3,584 | 3,136 | |||||||||
| Tooling | 3,782 | 3,129 | |||||||||
| Computer equipment, hardware and software | 2,818 | 2,409 | |||||||||
| AI infrastructure | 3,693 | 1,510 | |||||||||
| Construction in progress | 8,026 | 5,791 | |||||||||
| 50,810 | 41,782 | ||||||||||
| Less: Accumulated depreciation | (14,694) | (12,057) | |||||||||
| Total | $ | 36,116 | $ | 29,725 |
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.
Depreciation expense during the three and nine months ended September 30, 2024 was $1.05 billion and $2.96 billion, respectively. Depreciation expense during the three and nine months ended September 30, 2023 was $897 million and $2.44 billion, respectively.
Note 5 – Accrued Liabilities and Other
Our accrued liabilities and other current liabilities consisted of the following (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Accrued purchases (1) | $ | 2,424 | $ | 2,721 | |||||||
| Accrued warranty reserve, current portion | 1,839 | 1,546 | |||||||||
| Payroll and related costs | 1,513 | 1,325 | |||||||||
| Taxes payable (2) | 1,265 | 1,204 | |||||||||
| Customer deposits | 994 | 876 | |||||||||
| Operating lease liabilities, current portion | 797 | 672 | |||||||||
| Sales return reserve, current portion | 226 | 219 | |||||||||
| Other current liabilities | 1,543 | 517 | |||||||||
| Total | $ | 10,601 | $ | 9,080 |
(1)Accrued purchases primarily reflects receipts of goods and services for which we had not yet been invoiced. As we are invoiced for these goods and services, this balance will reduce and accounts payable will increase.
(2)Taxes payable primarily includes value added tax, income tax, sales tax, property tax and use tax payables.
Note 6 – Other Long-Term Liabilities
Our other long-term liabilities consisted of the following (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Operating lease liabilities | $ | 4,290 | $ | 3,671 | |||||||
| Accrued warranty reserve | 4,524 | 3,606 | |||||||||
| Other non-current liabilities | 996 | 876 | |||||||||
| Total other long-term liabilities | $ | 9,810 | $ | 8,153 |
Note 7 – Debt
The following is a summary of our debt and finance leases as of September 30, 2024 (in millions):
| Net Carrying Value | Unpaid Principal Balance | Unused Committed Amount (1) | Contractual Interest Rates | Contractual Maturity Date | |||||||||||||||||||||||||||||||
| Current | Long-Term | ||||||||||||||||||||||||||||||||||
| Recourse debt: | |||||||||||||||||||||||||||||||||||
| RCF Credit Agreement | $ | — | $ | — | $ | — | $ | 5,000 | Not applicable | January 2028 | |||||||||||||||||||||||||
| Other | 8 | 3 | 11 | — | 3.96-5.75% | March 2025-January 2031 | |||||||||||||||||||||||||||||
| Total recourse debt | 8 | 3 | 11 | 5,000 | |||||||||||||||||||||||||||||||
| Non-recourse debt: | |||||||||||||||||||||||||||||||||||
| Automotive Asset-backed Notes | 2,073 | 2,107 | 4,195 | — | 3.95-6.57% | August 2025-June 2035 | |||||||||||||||||||||||||||||
| China Working Capital Facility | — | 2,851 | 2,851 | — | 2.27 | % | April 2025 (2) | ||||||||||||||||||||||||||||
| Cash Equity Debt | 30 | 309 | 348 | — | 5.25-5.81% | July 2033-January 2035 | |||||||||||||||||||||||||||||
| Solar Asset-backed Notes | 4 | 5 | 10 | — | 4.80 | % | December 2026 | ||||||||||||||||||||||||||||
| Total non-recourse debt | 2,107 | 5,272 | 7,404 | — | |||||||||||||||||||||||||||||||
| Total debt | 2,115 | 5,275 | $ | 7,415 | $ | 5,000 | |||||||||||||||||||||||||||||
| Finance leases | 176 | 130 | |||||||||||||||||||||||||||||||||
| Total debt and finance leases | $ | 2,291 | $ | 5,405 |
The following is a summary of our debt and finance leases as of December 31, 2023 (in millions):
| Net Carrying Value | Unpaid Principal Balance | Unused Committed Amount (1) | Contractual Interest Rates | Contractual Maturity Date | |||||||||||||||||||||||||||||||
| Current | Long-Term | ||||||||||||||||||||||||||||||||||
| Recourse debt: | |||||||||||||||||||||||||||||||||||
| 2024 Notes | $ | 37 | $ | — | $ | 37 | $ | — | 2.00 | % | May 2024 | ||||||||||||||||||||||||
| RCF Credit Agreement | — | — | — | 5,000 | Not applicable | January 2028 | |||||||||||||||||||||||||||||
| Other | — | 7 | 7 | 28 | 4.70-5.75% | March 2025-January 2031 | |||||||||||||||||||||||||||||
| Total recourse debt | 37 | 7 | 44 | 5,028 | |||||||||||||||||||||||||||||||
| Non-recourse debt: | |||||||||||||||||||||||||||||||||||
| Automotive Asset-backed Notes | 1,906 | 2,337 | 4,259 | — | 0.60-6.57% | July 2024-May 2031 | |||||||||||||||||||||||||||||
| Cash Equity Debt | 28 | 330 | 367 | — | 5.25-5.81% | July 2033-January 2035 | |||||||||||||||||||||||||||||
| Solar Asset-backed Notes | 4 | 8 | 13 | — | 4.80 | % | December 2026 | ||||||||||||||||||||||||||||
| Total non-recourse debt | 1,938 | 2,675 | 4,639 | — | |||||||||||||||||||||||||||||||
| Total debt | 1,975 | 2,682 | $ | 4,683 | $ | 5,028 | |||||||||||||||||||||||||||||
| Finance leases | 398 | 175 | |||||||||||||||||||||||||||||||||
| Total debt and finance leases | $ | 2,373 | $ | 2,857 |
(1)There are no restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our RCF Credit Agreement, except certain specified conditions prior to draw-down. Refer to the notes to the consolidated financial statements included in our reporting on Form 10-K for the year ended December 31, 2023 for the terms of the facility.
(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 sheet.
Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only assets of our subsidiaries. The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred issuance costs. As of September 30, 2024, we were in material compliance with all financial debt covenants.
2024 Notes
During the second quarter of 2024, the 2024 Notes reached maturity and were fully settled. Additionally, during the third quarter of 2024, we settled the warrants entered into in connection with the issuance of the 2024 Notes, resulting in the issuance of 8.5 million shares of our common stock. The remaining warrants were settled in October 2024.
Automotive Asset-backed Notes
During the nine months ended September 30, 2024, we transferred beneficial interests related to certain leased vehicles and financing receivables into special purpose entities and issued $1.57 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 $1.56 billion.
In October 2024, we transferred beneficial interests related to certain leased vehicles into a special purpose entity and issued $783 million in aggregate principal amount of Automotive Asset-backed Notes, with terms similar to our other previously issued Automotive-backed Notes.
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.
Note 8 – Equity Incentive Plans
Other Performance-Based Grants
From time to time, the Compensation Committee of our Board of Directors grants certain employees performance-based restricted stock units and stock options.
As of September 30, 2024, we had unrecognized stock-based compensation expense of $487 million under these grants to purchase or receive an aggregate 4.9 million shares of our common stock. For awards probable of achievement, we estimate the unrecognized stock-based compensation expense of $457 million will be recognized over a weighted-average period of 4.3 years.
For the three and nine months ended September 30, 2024 and 2023, stock-based compensation expense related to these grants, net of forfeitures, were immaterial.
Summary Stock-Based Compensation Information
The following table summarizes our stock-based compensation expense by line item in the consolidated statements of operations (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cost of revenues | $ | 184 | $ | 181 | $ | 566 | $ | 554 | |||||||||||||||
| Research and development | 191 | 189 | 572 | 491 | |||||||||||||||||||
| Selling, general and administrative | 82 | 95 | 280 | 283 | |||||||||||||||||||
| Restructuring and other | — | — | 2 | — | |||||||||||||||||||
| Total | $ | 457 | $ | 465 | $ | 1,420 | $ | 1,328 |
Note 9 – Income Taxes
Our effective tax rate was 22% and 23% for the three and nine months ended September 30, 2024, respectively, compared to 8% and 10% for the three and nine months ended September 30, 2023, respectively. The increase in our effective tax rate is primarily due to the impact of releasing the valuation allowance on our U.S. deferred tax assets in the fourth quarter of 2023 and changes in the mix of our jurisdictional earnings.
Our effective tax rates for the three and nine months of 2024 and 2023 as compared to the U.S. federal statutory rate of 21% were primarily impacted by the mix of our jurisdictional earnings subject to different tax rates, valuation allowances on our deferred tax assets and benefits from our U.S. tax credits and the Inflation Reduction Act of 2022 (“IRA”) manufacturing credits.
We are subject to tax examinations in the U.S. federal, state and foreign jurisdictions. Given the uncertainty in timing and outcome of our tax examinations, an estimate of the range of the reasonably possible change in gross unrecognized tax benefits within twelve months cannot be made at this time.
Note 10 – Commitments and Contingencies
Operating Lease Arrangements in Buffalo, New York and Shanghai, China
For a description of our operating lease arrangements in Buffalo, New York, and Shanghai, China, refer to Note 15, Commitments and Contingencies, in our Annual Report on Form 10-K for the year ended December 31, 2023. As of September 30, 2024, we expect to meet the requirements under these arrangements, as may be modified from time to time, based on our current and anticipated level of operations.
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 (the “2018 CEO Performance Award”). Trial was held November 14-18, 2022. 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 on June 7, 2024, and a hearing was held on July 8, 2024. 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. On June 28, 2024, 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, and a hearing was held on August 2, 2024.
Litigation Related to Directors’ Compensation
On June 17, 2020, a purported Tesla stockholder filed a derivative action in the Delaware Court of Chancery, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors regarding compensation awards granted to Tesla’s directors, other than Elon Musk, between 2017 and 2020. The suit asserts claims for breach of fiduciary duty and unjust enrichment and seeks declaratory and injunctive relief, unspecified damages and other relief. Defendants filed their answer on September 17, 2020.
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 August 14, 2024, the parties submitted a joint letter requesting that the Court approve and enter final judgment with respect to the settlement, and decide the fee request at a later date. The settlement is not expected to have an adverse impact on our results of operations, cash flows or financial position.
Litigation Relating to Potential Going Private Transaction
Between August 10, 2018 and September 6, 2018, nine purported stockholder class actions were filed against Tesla and Elon Musk in connection with Mr. Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private. On January 16, 2019, Plaintiffs filed their consolidated complaint in the United States District Court for the Northern District of California and added as defendants the members of Tesla’s board of directors. The consolidated complaint asserts claims for violations of the federal securities laws and seeks unspecified damages and other relief. The parties stipulated to certification of a class of stockholders, which the court granted on November 25, 2020. Trial started on January 17, 2023, and on February 3, 2023, a jury rendered a verdict in favor of the defendants on all counts. After trial, plaintiffs filed a motion for judgment as a matter of law and a motion for new trial, which the Court denied and judgement was entered in favor of defendants on July 11, 2023. On July 14, 2023, plaintiffs filed a notice of appeal. The appeal, which is pending in the United States Court of Appeals for the Ninth Circuit, has been fully briefed by the parties, and is scheduled for oral argument on October 25, 2024.
Between October 17, 2018 and March 8, 2021, seven derivative lawsuits were filed in the Delaware Court of Chancery, purportedly on behalf of Tesla, against Mr. Musk and the members of Tesla’s board of directors, as constituted at relevant times, in relation to statements made and actions connected to a potential going private transaction, with certain of the lawsuits challenging additional Twitter posts by Mr. Musk, among other things. 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. District Court for the District of Delaware, purportedly on behalf of Tesla, against Mr. 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.
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 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 (“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 on September 12, 2024, the Court denied JP Morgan’s motion.
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, and a hearing on that motion is scheduled for November 18, 2024.
Litigation and Investigations Relating to Alleged Discrimination and Harassment
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. 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 June 16, 2022, two Tesla stockholders filed separate derivative actions in the U.S. District Court for the Western District of Texas, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors. Both suits assert claims for breach of fiduciary duty, unjust enrichment, and violation of the federal securities laws in connection with alleged race and gender discrimination and sexual harassment. Among other things, plaintiffs seek declaratory and injunctive relief, unspecified damages payable to Tesla, and attorneys’ fees. On July 22, 2022, the Court consolidated the two cases and on September 6, 2022, plaintiffs filed a consolidated complaint. On November 7, 2022, the defendants filed a motion to dismiss the case and on September 15, 2023, the Court dismissed the action but granted plaintiffs leave to file an amended complaint. On November 2, 2023, plaintiff filed an amended complaint purportedly on behalf of Tesla, against Elon Musk. On December 19, 2023, the defendants moved to dismiss the amended complaint, 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. Musk. On July 1, 2024, the defendants moved to dismiss the second amended consolidated complaint.
Other Litigation Related to Our Products and Services
We are also subject to various lawsuits that seek monetary and other injunctive relief. These lawsuits include proposed class actions and other consumer claims that allege, among other things, purported defects and misrepresentations related to our products and services. For example, on September 14, 2022, a proposed class action was filed against Tesla, Inc. and related entities in the U.S. District Court for the Northern District of California, alleging various claims about the Company’s driver assistance technology systems under state and federal law. This case was later consolidated with several other proposed class actions, and a Consolidated Amended Complaint was filed on October 28, 2022, which seeks damages and other relief on behalf of all persons who purchased or leased from Tesla between January 1, 2016, to the present. On October 5, 2022, a proposed class action complaint was filed in the U.S. District Court for the Eastern District of New York asserting similar state and federal law claims against the same defendants. On September 30, 2023, the Court dismissed this action with leave to amend the complaint. On November 20, 2023, the plaintiff moved to amend the complaint, which Tesla opposed. On 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. On March 22, 2023, the plaintiffs in the Northern District of California consolidated action filed a motion for a preliminary injunction to order Tesla to (1) cease using the term “Full Self-Driving Capability” (FSD Capability), (2) cease the sale and activation of FSD Capability and deactivate FSD Capability on Tesla vehicles, and (3) provide certain notices to consumers about proposed court-findings about the accuracy of the use of the terms Autopilot and FSD Capability. Tesla opposed the motion. On September 30, 2023, the Court denied the request for a preliminary injunction, compelled four of five plaintiffs to arbitration, and dismissed the claims of the fifth plaintiff with leave to amend the complaint. On October 31, 2023, the remaining plaintiff in the Northern District of California action filed an amended complaint, which Tesla 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. Tesla subsequently removed the San Diego County case to federal court and on January 8, 2024, the federal court granted Tesla’s motion to transfer the case to the U.S. District Court for the Northern District of California. 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. District Court for the Northern District of California against Tesla, Inc., Elon Musk and certain current and former Company executives. The complaint alleges that the defendants made material misrepresentations and omissions about the Company’s Autopilot and FSD Capability technologies and seeks money damages and other relief on behalf of persons who purchased Tesla stock between February 19, 2019, and February 17, 2023. An amended complaint was filed on September 5, 2023, naming only Tesla, Inc. and Elon Musk as defendants. On November 6, 2023, Tesla moved to dismiss the amended complaint. On September 30, 2024, the Court granted Tesla’s motion to dismiss without prejudice.
On March 14, 2023, a proposed class action was filed against Tesla, Inc. in the U.S. District Court for the Northern District of California. 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. On July 17, 2023, these plaintiffs filed a consolidated amended complaint. On September 27, 2023, the court granted Tesla’s motion to compel arbitration as to three of the plaintiffs, and on November 17, 2023, the court granted Tesla’s motion to dismiss without prejudice. The plaintiffs filed a Consolidated Second Amended Complaint on December 12, 2023, which Tesla 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; however, we cannot predict the outcome or impact. We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.
Certain Investigations and Other Matters
We 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, 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. To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. We cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects, cash flows, financial position or brand.
We are also subject to various other legal proceedings, risks and claims that arise from the normal course of business activities. For example, during the second quarter of 2023, a foreign news outlet reported that it obtained certain misappropriated data including, purportedly non-public Tesla business and personal information. Tesla has made notifications to potentially affected individuals (current and former employees) and regulatory authorities and we are working with certain law enforcement and other authorities. On August 5, 2023, a putative class action was filed in the United States District Court for the Northern District of California, purportedly on behalf of all U.S. individuals impacted by the data incident, followed by several additional lawsuits, that each assert claims under various state laws and seeks monetary damages and other relief. If an unfavorable ruling or development were to occur in these or other possible legal proceedings, risks and claims, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.
Note 11 – Variable Interest Entity Arrangements
The aggregate carrying values of the variable interest entities’ assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 51 | $ | 66 | |||||||
| Accounts receivable, net | 28 | 13 | |||||||||
| Prepaid expenses and other current assets | 263 | 361 | |||||||||
| Total current assets | 342 | 440 | |||||||||
| Operating lease vehicles, net | 451 | — | |||||||||
| Solar energy systems, net | 2,524 | 3,278 | |||||||||
| Other non-current assets | 190 | 369 | |||||||||
| Total assets | $ | 3,507 | $ | 4,087 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accrued liabilities and other | $ | 36 | $ | 67 | |||||||
| Deferred revenue | 7 | 6 | |||||||||
| Current portion of debt and finance leases | 1,930 | 1,564 | |||||||||
| Total current liabilities | 1,973 | 1,637 | |||||||||
| Deferred revenue, net of current portion | 81 | 99 | |||||||||
| Debt and finance leases, net of current portion | 1,826 | 2,041 | |||||||||
| Total liabilities | $ | 3,880 | $ | 3,777 |
Note 12 – Segment Reporting and Information about Geographic Areas
We have two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The following table presents revenues and gross profit by reportable segment (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Automotive segment | |||||||||||||||||||||||
| Revenues | $ | 22,806 | $ | 21,791 | $ | 64,958 | $ | 67,009 | |||||||||||||||
| Gross profit | $ | 4,272 | $ | 3,797 | $ | 11,403 | $ | 12,395 | |||||||||||||||
| Energy generation and storage segment | |||||||||||||||||||||||
| Revenues | $ | 2,376 | $ | 1,559 | $ | 7,025 | $ | 4,597 | |||||||||||||||
| Gross profit | $ | 725 | $ | 381 | $ | 1,868 | $ | 827 |
The following table presents revenues by geographic area based on the sales location of our products (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| United States | $ | 12,584 | $ | 10,893 | $ | 35,602 | $ | 33,472 | |||||||||||||||
| China | 5,665 | 5,020 | 14,893 | 15,642 | |||||||||||||||||||
| Other international | 6,933 | 7,437 | 21,488 | 22,492 | |||||||||||||||||||
| Total | $ | 25,182 | $ | 23,350 | $ | 71,983 | $ | 71,606 |
The following table presents long-lived assets by geographic area (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| United States | $ | 32,367 | $ | 26,629 | |||||||
| Germany | 4,447 | 4,258 | |||||||||
| Other international | 4,342 | 4,067 | |||||||||
| Total | $ | 41,156 | $ | 34,954 |
The following table presents inventory by reportable segment (in millions):
| September 30, 2024 | December 31, 2023 | ||||||||||
| Automotive | $ | 12,266 | $ | 11,139 | |||||||
| Energy generation and storage | 2,264 | 2,487 | |||||||||
| Total | $ | 14,530 | $ | 13,626 |
Note 13 – Restructuring and Other
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 September 30, 2024.
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