Registration Statement on Form S-1 - Solari

<strong>Registration</strong> <strong>Statement</strong> on Form S-1
Table of Contents
http://www.sec.gov/Archives/edgar/data/1318605/000119312510017054/ds1.htm#toc51863_17
2/18/10 10:16 AM
Tesla Roadster and our planned future vehicles. These technology innovations have resulted in an extensive intellectual property
portfolio. By utilizing a combination of standard components and innovative technology, we believe we have engineered what is
currently the lowest cost battery pack when measured as a function of cost per kilowatt-hour.
Our electric powertrain is modular and compact, with fewer moving parts than an internal combustion engine, which we
believe will enable us to easily adapt the technology to a variety of vehicle applications. We have developed a relationship with
Daimler AG, or Daimler, since March 2008 to apply our technology in a battery pack and charger for Daimler’s Smart fortwo
electric vehicle. We have been selected by Daimler to supply it with up to 1,000 battery packs and chargers to support a trial of
the Smart fortwo electric vehicle in five European cities. We began shipping the first of these battery packs and chargers in
November 2009 and started to recognize revenue for these sales in the quarter ended December 31, 2009. We intend to expand
our electric powertrain production facility in Palo Alto, California to develop and market powertrain components to Daimler and
other automobile manufacturers.
We have entered into a $465.0 million long-term loan under the United States Department of Energy’s Advanced
Technology Vehicles Manufacturing Incentive Program which will be used to finance the development of a planned integrated
manufacturing facility for the Model S as well as our electric powertrain production facility. We also have been granted up to
approximately $31 million in tax incentives by the California Alternative Energy and Advanced Transportation Financing
Authority. We believe these loans and incentives will help accelerate the time to volume production for both the planned Model S
and our electric powertrain business. In addition, we believe these loans and incentives provide us significant long-term financing
that should enable us to focus more of our resources on the execution of our business plans.
We were incorporated in 2003 and began selling the Tesla Roadster in 2008. As of December 31, 2009 we had 514
employees worldwide.
Since inception through September 30, 2009, we have generated $108.2 million in revenue. As of September 30, 2009, we
had an accumulated deficit of $236.4 million and had experienced net losses of $30.0 million for the year ended December 31,
2006, $78.2 million for the year ended December 31, 2007, $82.8 million for the year ended December 31, 2008, and $31.5
million for the nine months ended September 30, 2009.
Industry Overview
We believe incumbent automobile manufacturers are at a crossroads and face significant industry-wide challenges. The
reliance on the gasoline-powered internal combustion engine as the principal automobile powertrain technology has raised
environmental concerns, created dependence among industrialized and developing nations on oil largely imported from foreign
nations and exposed consumers to volatile fuel prices. In addition, we believe the legacy investments made by incumbent
automobile manufacturers in manufacturing and technology related to the internal combustion engine have to date inhibited rapid
innovation in alternative fuel powertrain technologies.
We believe that shifting consumer preferences together with increasing government regulation and incentives will result in
significant growth in the market for electric vehicles. We believe many consumers are increasingly willing to consider buying
electric-based vehicles due to the environmental, economic and national security consequences of using gasoline-powered
vehicles, as demonstrated by the increased sales of hybrid electric vehicles in recent years. We also believe government
regulations and incentives are accelerating the growth of the electric vehicle market. Many governments in countries throughout
the world are regulating vehicle emissions and fuel economy standards and offering incentives to consumers to purchase more
energy efficient vehicles. According to Frost & Sullivan, a business research and consulting firm, the market for electric-
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