Tesla, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Our mission is to accelerate the world’s transition to sustainable energy. We design, develop, manufacture, lease and sell high-performance fully electric vehicles, solar energy generation systems and energy storage products. We also offer maintenance, installation, operation, charging, insurance, financial and other services related to our products. Additionally, we are increasingly focused on products and services based on AI, robotics and automation.

As a result of rapidly evolving trade and fiscal policy, uncertainty in the automotive and energy markets continues to increase, posing risks to our global supply chain and cost structure which could have a meaningfully adverse impact on demand for our products and our profitability. The current tariff regime will have a relatively larger impact on our energy generation and storage business compared to our automotive business. While we prepare for near-term challenges to our business under current policies, we are focused on long-term growth opportunities as we continue to make prudent investments.

In 2025, we produced approximately 773,000 consumer vehicles and delivered approximately 721,000 consumer vehicles through the second quarter. We are focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products and services, further improving and deploying our FSD (Supervised) capabilities, including future autonomous capabilities through our purpose-built Robotaxi product, Cybercab, reducing costs, increasing vehicle production, utilized capacity and delivery capabilities, improving and developing our vehicles, battery and AI compute technologies, vertically integrating and localizing our supply chain, and expanding our global infrastructure, including our service and charging infrastructure. In June 2025, we launched our Robotaxi service in Austin, capitalizing on our AI investments and scalable mobility infrastructure to advance a service-driven business model.

In 2025, we deployed 20.0 GWh of energy storage products through the second quarter. We are focused on ramping the production, increasing the market penetration of our energy storage products, developing our battery technologies and vertically integrating, localizing and expanding our supply chain.

During the three and six months ended June 30, 2025, we recognized total revenues of $22.50 billion and $41.83 billion, respectively, representing decreases of $3.00 billion and $4.97 billion, respectively, compared to the same periods in the prior year. During the three and six months ended June 30, 2025, our net income attributable to common stockholders was $1.17 billion and $1.58 billion, respectively, representing decreases of $228 million and $1.21 billion, respectively, compared to the same periods in the prior year. We continue to ramp production and build and optimize our manufacturing capacity, expand our operations while focusing on further cost reductions and operational efficiencies to enable increased deliveries and deployments of our products, and invest in research and development to accelerate our AI, software, and fleet-based profits for further revenue growth.

We ended the second quarter of 2025 with $36.78 billion in cash and cash equivalents and investments, representing an increase of $219 million from the end of 2024. Our cash flows provided by operating activities were $4.70 billion during the six months ended June 30, 2025, compared to $3.85 billion during the same period ended June 30, 2024, representing an increase of $842 million. Capital expenditures amounted to $3.89 billion during the six months ended June 30, 2025, compared to $5.05 billion during the same period ended June 30, 2024, representing a decrease of $1.16 billion. Overall growth has allowed our business to generally fund itself, and we will continue to make critical high-value investments while maintaining a strong balance sheet.

Management Opportunities, Challenges and Uncertainties and 2025 Outlook

Automotive—Production

The following is a summary of the status of production of each of our announced vehicle models in production and under development, as of the date of this Quarterly Report on Form 10-Q:

We are focused on growing and optimizing our manufacturing capacity, which includes capacity for manufacturing newer vehicle models and future vehicles utilizing aspects of our next generation platform, while maximizing production rate and efficiency at our Gigafactories. Our factories are also preparing for the release of new models later this year. The next phase of production growth will be initiated by advances in autonomy and the introduction of new products, including those built on our next generation vehicle platform, as well as our ability to manufacture our own cells that we are developing to have high-volume output, lower capital and production costs and longer range. Our goals are to improve vehicle performance, decrease production costs and increase affordability and customer awareness.

These plans are subject to uncertainties inherent in establishing and ramping manufacturing operations, which may be exacerbated by new product and manufacturing technologies we introduce, the number of concurrent international projects, any industry-wide component constraints, labor shortages and any future impact from events outside of our control. For example, changes to fiscal and trade policy with respect to tariffs, export controls and other restrictions may impact our global supply chain cost structure and availability, affecting not only vehicle production, but also facility expansions. Moreover, we have set ambitious technological targets with our plans for battery cells as well as for iterative manufacturing and design improvements for our vehicles.

Automotive—Demand, Sales, Deliveries and Infrastructure

Our cost reduction efforts, cost innovation strategies, and additional localized procurement and manufacturing are key to our vehicles’ affordability and have allowed us to competitively price our vehicles. We will also continue to generate demand by improving our vehicles’ performance and functionality, including through product offerings and features utilizing artificial intelligence such as Autopilot, FSD (Supervised), and other software, and delivering new vehicles and vehicle options. In addition, we believe the launch of our Robotaxi service in June 2025 will unlock significant business growth to advance a service-driven business model. We will continue to improve safety and profitability while scaling the network. In addition, we have been increasing awareness, and expanding our vehicle financing programs, including attractive leasing terms for our customers.

However, we operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty, including with respect to trade and the environment, all of which can be compounded by inflationary pressures, rising energy prices, interest rate fluctuations and the liquidity of enterprise customers. For example, as inflationary pressures increased across the markets in which we operate, central banks in developed countries raised interest rates rapidly and substantially, which impacted the affordability of vehicle lease and finance arrangements. Further, sales of vehicles in the automotive industry also tend to be cyclical in many markets, which may expose us to increased volatility as we expand and adjust our operations. Moreover, as additional competitors enter the marketplace and help bring the world closer to sustainable transportation, we will have to adjust and continue to execute well to maintain our momentum. Additionally, our suppliers’ liquidity and allocation plans may be affected by current challenges in the automotive industry, which could reduce our access to components or result in unfavorable changes to cost. These macroeconomic and industry trends have had, and will likely continue to have, an impact on the pricing of, and order rate for our vehicles, and in turn our operating margin.

Changes in government and economic policies, incentives or tariffs may also impact our production, cost structure and the competitive landscape. While the final scope and application of recently announced changes in trade policy remain uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact consumer spending and demand for durable goods and related services. Furthermore, certain provisions of the recently signed OBBBA, including the removal of tax credits for electric vehicles, may also impact consumer demand for electric vehicles in general once effective. We will continue to adjust accordingly to such developments, and we believe our ongoing cost reduction efforts, including through production innovation, process improvements and logistics optimization, and focus on operating leverage, vertical integration and supply chain localization will continue to benefit us in relation to our competitors. Our new products, which will include more affordable options, and our advances in autonomy, position us for future growth.

As our production increases, we must work constantly to similarly increase vehicle delivery capability so that it does not become a bottleneck on our total deliveries. We are also committed to reducing the percentage of vehicles delivered in the third month of each quarter, which will help to reduce the cost per vehicle. As we expand our manufacturing operations globally, we will also have to continue to increase and staff our delivery, servicing and charging infrastructure accordingly, maintain our vehicle reliability and optimize our Supercharger locations to ensure cost effectiveness and customer satisfaction. In particular, as other automotive manufacturers have announced their adoption of the North American Charging Standard (“NACS”) and agreements with us to utilize our Superchargers, we must correspondingly expand our network in order to ensure adequate availability to meet customer demands. We also remain focused on continued enhancements of the capability and efficiency of our servicing operations. In tandem with the launch of our Robotaxi business, we are focused on developing and optimizing dedicated infrastructure, including in relation to vehicle cleaning and maintenance, charging, security, teleoperations and fleet management, to ensure service quality as we continue to scale.

Energy Generation and Storage Demand, Production and Deployment

The long-term success of this business is dependent upon incremental volume growth. We continue to increase the production and capabilities of our energy storage products to meet high levels of demand, including the ramps of our Megafactories in Shanghai and Lathrop, California, and the construction of a new Megafactory near Houston, Texas. For Megapack, energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics. As these product lines grow, we will have to maintain adequate battery cell supply for our energy storage products. At the same time, changes in government and economic incentives or tariffs may also impact our sales, cost structure and the competitive landscape. For instance, the recently announced import tariffs by the US government and the provisions of the OBBBA could significantly increase battery cell expenses and impact costs for our consumers, negatively impacting consumer demand. Despite these challenges, as AI infrastructure drives rapid load growth, we see opportunities for our energy storage products to stabilize the grid, shift energy when it is needed most and provide additional power capacity.

Cash Flow and Capital Expenditure Trends

Our capital expenditures are typically difficult to project beyond the short-term given the number and breadth of our core projects at any given time, and may further be impacted by uncertainties in future global market conditions and shifting global trade and fiscal policy. We are simultaneously developing and ramping new products, building or ramping manufacturing facilities on three continents, piloting the development and manufacture of new battery cell technologies, expanding our Supercharger network and investing in autonomy and other artificial intelligence enabled training and products, and the pace of our capital spend may vary depending on overall priority among projects, the pace at which we meet milestones, production adjustments to and among our various products, increased capital efficiencies and the addition of new projects. While we prepare for near-term challenges to our business under current policies, we are focused on long-term growth opportunities as we continue to make critical, high-value investments while maintaining a strong balance sheet. Owing and subject to the foregoing as well as the pipeline of announced projects under development, all other continuing infrastructure growth and varying levels of inflation, we currently expect our capital expenditures to exceed $9.00 billion in 2025. Changes in fiscal and trade policy may necessitate adjustments to our project timelines, potentially impacting our cash flow and capital expenditure expectations.

Our business has generally been consistently generating cash flow from operations in excess of our level of capital spend, and with better working capital management resulting in shorter days sales outstanding than days payable outstanding, our sales growth is also generally facilitating positive cash generation. We have and will continue to utilize such cash flows, among other things, to invest in autonomy, further vertically integrate our supply chain, expand our product roadmap and provide financing options to our customers. At the same time, we are likely to see heightened levels of capital expenditures during certain periods depending on the specific pace of our capital-intensive projects and other potential variables such as rising material prices and increases in supply chain and labor expenses resulting from changes in global trade conditions and labor availability. Overall, we expect our ability to be self-funding to continue as long as macroeconomic factors support current trends in our sales.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

Revenues

(Dollars in millions)

Automotive & Services and Other Segment

Automotive sales revenue decreased $2.74 billion, or 15%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to a decrease of approximately 45,000 combined Model 3 and Model Y cash deliveries and a decrease of approximately 12,000 deliveries of other models. Additionally, we had a lower average selling price per unit driven by sales mix.

Automotive sales revenue decreased $6.28 billion, or 18%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, due to a decrease of approximately 95,000 combined Model 3 and Model Y cash deliveries in part from bringing down all of our vehicle factories simultaneously for the changeover to New Model Y and a decrease of approximately 16,000 deliveries of other models. Additionally, we had a lower average selling price per unit driven by sales mix and higher customer incentives such as attractive financing options.

Automotive regulatory credits revenue decreased $451 million, or 51%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Automotive regulatory credits revenue decreased $298 million, or 22%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Fluctuations in automotive regulatory credits are impacted by our supply of credits, subject to changes in regulation, production and sales. Furthermore, we are impacted by the demand for credits by other automobile manufacturers.

Services and other revenue increased $438 million, or 17%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Services and other revenue increased $788 million, or 16%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increases were primarily due to increases in paid Supercharging revenue, non-warranty maintenance services and collision revenue, insurance services revenue, used vehicle revenue and part sales revenue.

Energy Generation and Storage Segment

Energy generation and storage revenue decreased $225 million, or 7%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a decrease in average selling price of Megapack, partially offset by an increase in Powerwall deployments compared to the prior year.

Energy generation and storage revenue increased $870 million, or 19%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increase was primarily due to increases in Megapack and Powerwall deployments compared to the prior year, partially offset by a decrease in average selling price of Megapack.

Cost of Revenues and Gross Margin

(Dollars in millions)

Automotive & Services and Other Segment

Cost of automotive sales revenue decreased $2.40 billion, or 15%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 due to the decreases in deliveries year over year as discussed above and lower average cost per unit due to sales mix and lower material costs, partially offset by lower fixed cost absorption and an increase in tariffs compared to the prior period.

Cost of automotive sales revenue decreased $4.83 billion, or 16%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, due to the decreases in deliveries year over year as discussed above and lower average cost per unit due to lower material costs and sales mix, partially offset by lower fixed cost absorption and increase in tariffs compared to the prior period.

Cost of services and other revenue increased $439 million, or 18%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Cost of services and other revenue increased $769 million, or 17%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increases in cost of services and other revenue are generally in line with the changes in services and other revenue as described above.

Gross margin for total automotive decreased from 18.5% to 17.2% in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 primarily due to a decrease in regulatory credits revenue, as discussed above.

Gross margin for total automotive decreased from 18.5% to 16.8% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily due to lower average selling price per unit and a decrease in regulatory credits revenue as described above.

Gross margin for total automotive & services and other segment decreased from 17.1% to 15.4% in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Gross margin for total automotive & services and other segment decreased from 16.9% to 14.9% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The changes in gross margin are primarily due to the automotive gross margin factors discussed above.

Energy Generation and Storage Segment

Cost of energy generation and storage revenue decreased $331 million, or 15%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a decrease in average cost per unit for Megapack and Powerwall from lower raw material costs, partially offset by an increase in Powerwall deployments compared to the prior year.

Cost of energy generation and storage revenue increased $382 million, or 11%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily from increases in Megapack and Powerwall deployments compared to the prior year, partially offset by a decrease in average cost per unit for Megapack and Powerwall primarily from lower raw material costs.

Gross margin for energy generation and storage increased from 24.6% to 30.3% in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Gross margin for energy generation and storage increased from 24.6% to 29.6% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increases were primarily due to a decrease in average cost per unit for Megapack and Powerwall, partially offset by a decrease in average selling price of Megapack.

Research and Development Expense

(Dollars in millions)

Research and development (“R&D”) expenses increased $515 million, or 48%, in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. R&D expenses increased $773 million, or 35%, in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. These increases were primarily due to increases in costs related to AI and other programs as we continue to expand our product roadmap and technologies. Additionally, there were increases in stock-based compensation of $129 million and $194 million in the three and six months ended June 30, 2025 as compared to the same periods ended June 30, 2024, respectively.

R&D expenses as a percentage of revenue increased from 4% to 7% in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. R&D expenses as a percentage of revenue increased from 5% to 7% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. These increases were due to higher R&D expenses and lower total revenues in the current period.

Restructuring and Other

(Dollars in millions)

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 statement of operations during the three months ended June 30, 2024.

Interest Income

(Dollars in millions)

Interest income increased $44 million, or 13%, in the three months ended June 30, 2025 and increased $94 million, or 13%, in the six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively. The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments compared to the prior period due to increases in our average portfolio balance, partially offset by lower average interest rates.

Other Income (Expense), Net

(Dollars in millions)

Other income (expense), net, changed favorably by $400 million in the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Other income (expense), net, changed unfavorably by $162 million in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The changes are due to mark-to-market on our bitcoin digital assets and fluctuations in foreign currency exchange rates on our intercompany balances. As our intercompany balances are significant in nature and we do not typically hedge foreign currency risk, we can experience significant fluctuations in foreign currency exchange rate gains and losses from period to period.

Provision for Income Taxes

(Dollars in millions)

Our provision for income taxes decreased by $12 million in the three months ended June 30, 2025 and decreased by $326 million in the six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively, primarily due to the change in our pre-tax income year over year. Our effective tax rate increased from 21% to 23% in the three months ended June 30, 2025 and increased from 23% to 25% in the six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively, primarily due to the changes in the mix of our jurisdictional earnings.

See Note 9, Income Taxes, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Liquidity and Capital Resources

We expect to continue to generate net positive operating cash flow. The cash we generate from our core operations enables us to fund ongoing operations and production, our research and development projects for new products and technologies including our proprietary battery cells, additional manufacturing ramps at existing manufacturing facilities, the construction of future factories, and the continued expansion of our retail and service locations, body shops, Mobile Service fleet, Supercharger, including to support NACS, energy product installation capabilities and autonomy and other artificial intelligence enabled products.

In addition, because a large portion of our future expenditures will be to fund our growth, we expect that if needed we will be able to adjust our capital and operating expenditures by operating segment. For example, if our near-term manufacturing operations decrease in scale or ramp more slowly than expected, including due to global economic, tax, trade or business conditions, we may choose to correspondingly slow the pace of our capital expenditures. Finally, we continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through drawdowns on existing or new debt facilities or financing funds. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early.

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following June 30, 2025, as well as in the long-term.

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

Material Cash Requirements

From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of components and raw materials to be used in the manufacture of our products. However, due to contractual terms, variability in the precise growth curves of our development and production ramps, and opportunities to renegotiate pricing, we generally do not have binding and enforceable purchase orders under such contracts beyond the short-term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project.

As discussed in and subject to the considerations referenced in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations—Management Opportunities, Challenges and Uncertainties and 2025 Outlook—Cash Flow and Capital Expenditure Trends in this Quarterly Report on Form 10-Q, we currently expect our capital expenditures to support our projects globally to exceed $9.00 billion in 2025. Changes in trade policy may necessitate adjustments to our project timelines, potentially impacting our capital expenditure expectations.

As of June 30, 2025, we and our subsidiaries had outstanding $6.98 billion in aggregate principal amount of indebtedness, of which $1.97 billion is current. For details regarding our indebtedness, refer to Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Sources and Conditions of Liquidity

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

As of June 30, 2025, we had $15.59 billion and $21.20 billion of cash and cash equivalents and short-term investments, respectively. Balances held in foreign currencies had a U.S. dollar equivalent of $2.70 billion and consisted primarily of Chinese yuan and euros. We had $5.00 billion of unused committed credit amounts as of June 30, 2025. For details regarding our indebtedness, refer to Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We continue adapting our strategy to meet our liquidity and risk objectives, such as investing in U.S. government securities and other investments, investing in autonomy, further vertically integrating our supply chain, expanding our product roadmap and providing financing options to our customers.

Summary of Cash Flows

(Dollars in millions)

Cash Flows from Operating Activities

Net cash provided by operating activities increased by $842 million to $4.70 billion during the six months ended June 30, 2025 from $3.85 billion during the six months ended June 30, 2024. This increase was primarily due to favorable changes in net operating assets and liabilities of $1.30 billion, partially offset by a decrease in net income excluding non-cash expenses, gains and losses of $454 million.

Cash Flows from Investing Activities

Net cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $3.89 billion and $5.05 billion for the six months ended June 30, 2025 and 2024, respectively, mainly for AI-related capital expenditures, global factory expansion, machinery and equipment as we expand and enhance our product roadmap. We also purchased $709 million and $3.26 billion of short-term investments, net of proceeds from maturities and sales, for the six months ended June 30, 2025 and 2024, respectively.

Cash Flows from Financing Activities

Net cash flows from financing activities changed by $3.29 billion to $554 million net cash outflows during the six months ended June 30, 2025 from $2.74 billion net cash inflows during the six months ended June 30, 2024. The decrease was primarily due to a $2.91 billion increase in repayments of debt and a $845 million decrease in proceeds from issuances of debt. See Note 7, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details regarding our debt obligations. Additionally, the decrease was partially offset by a $139 million decrease in principal payments on finance leases, a $124 million decrease in payments for buy-outs of noncontrolling interests in subsidiaries and $101 million of proceeds received from directors in shareholder settlement net of payment for related legal fees during the six months ended June 30, 2025.

Foreign Currency Risk

We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue and operating expenses denominated in currencies other than the U.S. dollar (primarily the Chinese yuan and euro in relation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates affect our operating results as expressed in U.S. dollars as we do not typically hedge foreign currency risk.

We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances).

We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at the balance sheet date to compute the impact these changes would have had on our net income before income taxes. These changes would have resulted in a gain or loss of $1.31 billion at June 30, 2025 and $1.15 billion at December 31, 2024, assuming no foreign currency hedging.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that our management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of June 30, 2025, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2025, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, and Part II, Item 1A, Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which could adversely affect our business, financial conditions and future results. Other than the risk factors set forth below, there have been no material changes from the risk factors discussed in our Annual and Quarterly Reports.

Demand for our products and services and our financial results may be impacted by the status of government and economic incentives supporting the development and adoption of such products.

Government and economic incentives that support the development and adoption of electric vehicles in the U.S. and abroad, including certain tax exemptions, tax credits and rebates, may be reduced, eliminated, amended or exhausted from time to time. For example, previously available incentives favoring electric vehicles in certain areas have expired or were cancelled or temporarily unavailable, and in some cases were not eventually replaced or reinstituted, which may have negatively impacted sales. Specifically, recent governmental and regulatory actions have repealed and/or restricted consumer, manufacturing and charging infrastructure tax credits, and certain regulatory credit programs tied to our products. These, and any similar actions in the future, may affect demand for our vehicles, and harm our growth, prospects and operating results, and the loss of previously available tax credits and carbon offset mechanisms may further negatively impact our financial results. In addition, certain government and economic incentives may also be implemented or amended to provide benefits to manufacturers who assemble domestically, have local suppliers or have other characteristics that may not apply to Tesla. Such developments could negatively impact demand for our vehicles, and we and our customers may have to adjust to them, including through pricing modifications.

In addition, certain governmental rebates, tax credits and other financial incentives that are currently available with respect to our solar and energy storage product businesses allow us to lower our costs and encourage customers to buy our products and investors to invest in our solar financing funds. However, these incentives may expire when the allocated funding is exhausted, reduced or terminated as renewable energy adoption rates increase, sometimes without warning. For example, provisions of the OBBBA could affect battery cell expenses and impact costs for our consumers, negatively impacting demand. Likewise, in jurisdictions where net metering is currently available, our customers receive bill credits from utilities for energy that their solar energy systems generate and export to the grid in excess of the electric load they use. The benefit available under net metering has been or has been proposed to be reduced, altered or eliminated in several jurisdictions, and has also been contested and may continue to be contested before the Federal Energy Regulatory Commission. Any reductions or terminations of such incentives may harm our business, prospects, financial condition and operating results by making our products less competitive for customers, increasing our cost of capital and adversely impacting our ability to attract investment partners and to form new financing funds for our solar and energy storage assets.