Tesla Motors, Inc.

University of Oregon Investment Group
Net Working Capital
April 18, 2013
Accounting for the new financing option creates a large increase in liabilities
and has no effect on current assets because the firm receives cash when the car
is originally sold. Due to this large relative increase in current liabilities the
change in net working capital year to year is large and negative.
Other line items in the Working Capital Model were calculated based off of
historical percentage of revenue and historical trends.
Restricted Cash is cash reserved for repayments to the Department of Energy
(DOE) for the loan Tesla received. The DOE loan matures in 2017 so we
gradually trended the value in restricted cash down to zero.
We projected that Accounts Payable would decrease as a percentage of revenue.
In the year 2012 the large increase was in relation to the pushing back of
payments for their factory. The company pushed back payments because the
firm was aiming to become cash flow positive for the first time since inception.
Going forward we projected this line item to stay around the level of the prior
three years because the firm will become profitable and will be able to pay its
liabilities quicker.
Capital Expenditures
Capital Expenditures consist of investments in on the Tesla factory and tooling
for their products machinery as well as the building of service and store
networks. In 2013 the firm plans to spend significantly less on capital
expenditures because the majority of the investment in the Tesla factory and
Model S tooling machinery have concluded. The decrease in spending on the
Tesla factory and Model S tooling machinery will be slightly offset by their
increase in service centers and stores.
In 2013 Tesla plans to open 10 new stores and 23 new service centers. Based on
this information we projected 2013 CAPEX based on a nominal value that we
believed to be consistent with management guidance. Going forward, we
projected CAPEX as a percent of revenue relative to the 2013 projection. We
increased the percent of revenue in 2014 because the firm will begin production
of the Model X. Although the Model X will be built on a similar platform as the
Model S, there are significant differences that will force Tesla to incur higher
CAPEX. After 2014 we trended CAPEX down as a percent of revenue until
2017 when we increased CAPEX to represent our projection that Tesla will
begin production of the cheaper Model S. In 2018 we trended down CAPEX to
what we believe is a reasonable terminal percentage of revenue.
UOIG 19