Stock Pitch-Tesla

1. Tesla Motors Inc,
Shoo-in Stock Pitch Competition-Finale
John Zhang
April, 2016

2. Table of Contents
Section Title
1. Executive Summary
2. Company Profile
3. Industry Overview
4. Catalyst : Gigafactory
5. Catalyst : Tesla Model 3
6. Investment Risk
7. Valuation: Discount Cash Flow Analysis
8. Valuation: Comparable Companies Analysis
9. Final Presentation Summary
10. Appendix(Recommended Investment Strategy)

3. Executive Summary
Investment Thesis
Major Catalysts
Recommendation
While the public is worrying about Tesla's future production,
with the construction of Gigafactory and the future revenue from
Tesla Model 3, Tesla's production cost will be significantly
reduced and the revenue&production will increase exponentially
Model 3
Gigafactory
Recommended Buy for 10 year position with a target price of
$545

4. Company Profile
Tesla Motors, Inc Stock Performance T12M
Summary Financials
FY16E FY15A FY14A FY13A FY12A
Revenue 8,658,800 4,046,000 3,198,400 2,013,500 413,300
Gross Margins 24.1% 22.8% 27.6% 22.7% 7.3%
EBITDA 791,600 -294,000 45,200 44,800 -365,500
Net Income 180,000 -888,700 -294,000 -57,600 -396,200
Free Cash Flow -835,000 -2,159,300 -1,027,000 -6,200 -505,300
EPS ($) 1.18 -6.93 -2.36 -0.48 -3.96
Ticker Symbol: TSLA [NASDAQ]
Headquarter: Palo Auto, California
Industry: Automotive
CEO: Elon Musk
Stock Price: $240.76 [4/29/16 at close]
Market Cap: $33.51B
52 Week Range: $141.05.00 - $286.65
2015 P/E: N/A
Shares Outstanding: 2845M
$TSLA Company Headlines
 Tesla Model 3 launches: The first affordable fully electric vehicle for
Tesla is open for pre-order
 Tesla has received around 400,000 orders of $35,000 worth
Model 3 so far
 Tesla may use new Panasonic battery for Model 3: Once Gigafactory
production begins though, Tesla will be upgrading to new 20700 battery
cells, which will be physically larger, capable of holding more energy
 Gigafactory is planned go online in 2017: Tesla broke ground on the
Gigafactory in June 2014 outside Sparks, Nevada, and we expect to begin
cell production in 2017. By 2020, the Gigafactory will reach full capacity
and produce more lithium ion batteries annually than were produced
worldwide in 2013.
All figures in thousands of dollars [excluding EPS]Sources: Company Press Release | Yahoo Finance | Capital IQ

5. -2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
Revenue EBITDA Net Income
2016
2015
2014
2013
2012
Tesla Motors, Inc
Company Profile
1.18
-6.93
-2.36
-0.48
-3.96
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
EPS ($)
2016 2015 2014 2013 2012
Tesla Motors, Inc
Sources: Capital IQ

6. Industry Overview
Industry Outlook
Major Auto Manufacturer: BMW, Ford, TOYOTA, HONDA, GM
2015 Industry sales: 90 millions
2015 Tesla sales: 50,580
• 17,400 delivered in Q4
Global market projections for 2015 – 2020:
• Annual sales growth = 5.26%
• Consensus: $TSLA revenues will outperform ’15, ’16
expectations
Sources: Company Reports | KPMG Report | Morningstar Inc.
TSLA (%) Industry (%) S&P 500 (%)
YTD Return 5.72 -6.41 2.5
1 Yr Return 16.17 -19.04 -1.27
5 Yr Return 819.38 15.08 53.17
5.72
-6.41
2.516.17
-19.04 -1.27
819.38
15.08
53.17
-100
0
100
200
300
400
500
600
700
800
900
YTD Return 1 Yr Return 5 Yr Return
Tesla, Industry & S&P 500

7. Industry Overview
Tesla's product targets 60% of the auto
market(Compact-size: Model 3, Mid-size, Sport car:
Model S, SUV: Model X)
Annual demand estimation for 2016 is 26.6 millions,
while tesla's sales forecast is 80,000-90,000 for Model
S and Model X. That is 0.3% of the total market
51.01% year-over-year increase in Model S sales
reported between Jan 2015 - Jan 2016 report
• 25,202 in Year 2015 | 16,689 in Year 2014
• Opinion: TSLA Revenue for 2016 will outgrow
average rate of past year
Light Vehicle Sales Forcast by Segment Market Share Interpretation
Sources: Company Reports | KPMG Report | Morningstar Inc.

8. Catalyst: Gigafactory
Gigafactory Outlook
1. Gigafactory is located in Sparks, Nevada.
2. The Gigafactory is currently expected to attain
full production capacity in 2020, which is
anticipated to be sufficient for the production of
approximately 500,000 vehicles annually.
Battery pack production capacity is expected to
reach 50 GWh(Equivalent of 15,000 tons
standard coal consumption per hour for an
effecient power plant).
3. Among the total capital expenditures
associated with the Gigafactory, $2 billion is
expected to come from Tesla.
Battery Supply Approach
 Behind Gigafactory:
• To reduce the cost for power supply(battery)
• To attract more suppliers (see paragraph No.3)
Sources: Tesla 10-K

9. Catalyst: Gigafactory
 Model 3 Power (Based on Model S)
 90KWh ×(215mils/300mils)＝64.5KWh
 Vice-President of Investor Relations, Jeff Evanston:
Tesla’s battery pack cost is already below $190/kWh
and model 3 can use 60KWh battery pack or less.
 Therefore, Panasonic NCA18650 cell is not applicable
for Model 3. That means Panasonic 20700 lithium
battery ( 10% silicon anode ) can be produced in
large scale
Numerical Assumption

10. Catalyst: Model 3
Make BMW i3 Chevrolet Bolt Tesla Model 3
Range per
charge
150 miles 200 miles 215 miles
0 to 60 mph 7 seconds 7 seconds 6 seconds
Seating 5 Adults 5 Adults 5 Adults
Autopilot No No Yes
Supercharging No Yes Yes
Price $42,400 $37,500 $35,000
Similar Product Comparison
Model 3 Overview
Model 3 is the most affordable Tesla EV.
Supercharge station is free of use, and the number of
stations is expected to double by next year
Increasingly easy maintenance, global sales center in 2017
increased to 441
Tesla received over 150,000 orders within 24 hours
• Before April 24th, Tesla received over 400,000
orders
• Means Tesla got 400 million dollars interest-free
loan
Sources: Bloomberg | Company Website | Morningstar Inc.
Tesla's Misson Statement
Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power
generation options
Don't tell anyone.
Reasons to Develope Model 3
 Price of Model 3 can be low as $27,500 after $7,500 tax reduction

11. Catalyst: Model 3
Scenario Analysis

12. Investment Risk
Risk from Production, Delivery &Demand
Tesla's long-term success will be dependent upon its ability to achieve market acceptance of our vehicles,
including Model S and Model X, and new vehicle models such as Model 3
Tesla may experience significant delays or other complications in the design, manufacture, launch and
production ramp of new vehicles such as Model X and future vehicles such as Model 3
Risk from Suppliers
Tesla is dependent on its suppliers, the majority of which are single source suppliers, and the inability of
these suppliers to continue to deliver, or their refusal to deliver, necessary components of Tesla's vehicles in
a timely manner at prices, quality levels, and volumes acceptable to Tesla would have a material adverse
effect on its financial condition and operating results.
Problems or delays in bringing the Gigafactory online and operating it in line with orignial expectations could
negatively affect the production and profitability of Tesla's products, such as Model 3 or Tesla Energy
products.
Sources: Tesla 10-K

13. Valuation: Discount Cash Flow Analysis(High Growth)
All numbers in thousands

14. Valuation: Discount Cash Flow Analysis(High Growth)
All numbers in thousands

15. Valuation: Comparable Company Analysis
Company Comp Set
Company Name LTM Gross Margin % LTM
EBITDA
Margin %
LTM
EBIT
Margin %
LTM Net
Income
Margin %
LTM
Total
Revenue
s, 1 Yr
Growth %
LTM
EBITDA,
1 Yr
Growth %
LTM
EBIT, 1
Yr
Growth %
LTM Net
Income, 1
Yr
Growth %
LTM
Total
Debt/Capi
tal %
LTM
Total
Debt/EBI
TDA
NTM LT
EPS
Growth
Rate
(Capital
IQ)
5 Year
Beta
Ford Motor Co. (NYSE:F) 13% 12% 6.3% 5.65% 7.93% 112.42% 713.50% 521.65% 82.59% 7.6 15.00% 1.39
Asbury Automotive Group, Inc. (NYSE:ABG) 16% 5% 4.5% 2.49% 8.98% 7.53% 7.45% 41.52% 87.98% 5.4 14.67% 1.13
General Motors Company (NYSE:GM) 13% 10% 5.2% 6.95% (0.21%) 48.90% 76.91% 128.48% 63.26% 4.6 15.01% 1.72
Ferrari N.V. (NYSE:RACE) 47% 23% 17.0% 10.08% 3.33% 9.71% 14.29% 10.12% 100.87% 3.5 13.39% -
Nissan Shatai Co., Ltd. (TSE:7222) 3% 4% 1.9% 3.11% 4.29% (42.70%) (12.71%) 112.66% - - - 0.78
Beiqi Foton Motor Co., Ltd. (SHSE:600166) 12% 1% (2.7%) 1.20% 0.91% (39.15%) - (14.82%) 18.63% 19.5 - 0.77
CarMax Inc. (NYSE:KMX) 16% 8% 7.0% 4.12% 6.17% 9.61% 8.47% 4.36% 78.58% 8.9 14.49% 1.44
AutoNation, Inc. (NYSE:AN) 16% 5% 4.1% 2.03% 6.85% 5.46% 3.37% (1.86%) 76.27% 6.7 13.01% 0.97
Dongfeng Automobile Co., Ltd. (SHSE:600006) 15% 0% (2.5%) 1.79% (10.07%) (87.76%) - 36.25% 11.05% 24.5 - 0.37
Yulon Motor Co. Ltd. (TSEC:2201) 15% 6% 0.3% 2.74% 1.59% 4.89% (30.51%) 51.65% 52.14% 11.5 - 0.65
Tesla Motors, Inc. (NasdaqGS:TSLA) 23% (7%) (17.7%) (21.96%) 26.50% - - - 72.82% NM 30.00% 1.31
Summary Statistics LTM Gross Margin % LTM
EBITDA
Margin %
LTM
EBIT
Margin %
LTM Net
Income
Margin %
LTM
Total
Revenue
s, 1 Yr
Growth %
LTM
EBITDA,
1 Yr
Growth %
LTM
EBIT, 1
Yr
Growth %
LTM Net
Income, 1
Yr
Growth %
LTM
Total
Debt/Capi
tal %
LTM
Total
Debt/EBI
TDA
NTM LT
EPS
Growth
Rate
(Capital
IQ)
5 Year
Beta
High 47% 23% 17.0% 10.08% 8.98% 112.42% 713.50% 521.65% 100.87% 24.5 15.01% 1.72
Low 3% 0% (2.7%) 1.20% (10.07%) (87.76%) (30.51%) (14.82%) 11.05% 3.5 13.01% 0.37
Mean 17% 7% 4.1% 4.02% 2.98% 2.89% 97.60% 89.00% 63.49% 10.3 14.26% 1.02
Median 15% 6% 4.3% 2.92% 3.81% 6.50% 7.96% 38.88% 76.27% 7.6 14.58% 0.97

16. Final Presenation Summary
Investment Thesis
Valuation
Mission Statement
Recap
 Tesla valuation implies relatively high expectations
 Reduction of Battery pack cost may increase the gross margin AND
 Gigafactory will in step reduce the production cost and gain excess
production capacity
 Each of these catalysts add value on the $545 valuation using DCF analysis
 Tesla's gross margin is increasing in annual basis
 Tesla outperforms the overall industry in stock prices even with the delay in
2015
 Competitive factors and the endless effort creating a whole system
Tesla's Misson Statement
Don't tell anyone.

17. Appendix: Trading Strategy
 Strategy: put spread
 Investment Amount: 1
million USD
 Backtest Period:
01/02/2015-
02/02/2016
 Period P&L Result:
187,527 Gain
 (18.8% return)
 Applicable Period:
2016-2017 in response
to the uncertainty of
production capacity for
model 3
 Purpose: Hedging the
potential loss occured
(like 2015)

18. WACC&Revenue Projection

19. Implied Equity Value

20. R&D Converter

21. Implied Equity Value
Company Comp Set
Company Name TEV/Total Revenues LTM -
Latest
TEV/EBITD
A LTM -
Latest
TEV/EBIT
LTM - Latest
P/Diluted
EPS Before
Extra LTM -
Latest
P/TangBV
LTM - Latest
NTM
TEV/Forwar
d Total
Revenue
(Capital IQ)
NTM
TEV/Forwar
d EBITDA
(Capital IQ)
NTM
Forward P/E
(Capital IQ)
Ford Motor Co. (NYSE:F) 1.0 7.7 13.7 6.5 1.9 1.08 12.09 7.05
Asbury Automotive Group, Inc. (NYSE:ABG) 0.5 9.4 10.4 9.5 22.4 0.46 9.49 9.73
General Motors Company (NYSE:GM) 0.7 5.8 10.1 4.9 1.4 0.70 5.81 5.68
Ferrari N.V. (NYSE:RACE) 3.5 15.3 20.4 27.2 NM 3.18 12.07 22.96
Nissan Shatai Co., Ltd. (TSE:7222) 0.1 2.2 4.4 10.2 0.9 - - -
Beiqi Foton Motor Co., Ltd. (SHSE:600166) 0.5 78.7 NM 40.0 1.2 0.53 16.14 -
CarMax Inc. (NYSE:KMX) 1.4 17.6 19.9 17.8 3.6 1.30 16.91 16.23
AutoNation, Inc. (NYSE:AN) 0.6 11.9 13.8 13.2 53.1 0.54 11.21 11.50
Dongfeng Automobile Co., Ltd. (SHSE:600006) 0.7 272.5 NM 44.3 2.3 - - -
Yulon Motor Co. Ltd. (TSEC:2201) 1.0 10.0 26.5 12.4 0.6 0.89 10.90 13.00
Tesla Motors, Inc. (NasdaqGS:TSLA) 8.5 NM NM NM 29.9 3.98 40.85 185.70
Summary Statistics TEV/Total Revenues LTM -
Latest
TEV/EBITD
A LTM -
Latest
TEV/EBIT
LTM - Latest
P/Diluted
EPS Before
Extra LTM -
Latest
P/TangBV
LTM - Latest
NTM
TEV/Forwar
d Total
Revenue
(Capital IQ)
NTM
TEV/Forwar
d EBITDA
(Capital IQ)
NTM
Forward P/E
(Capital IQ)
High 3.5 272.5 26.5 44.3 53.1 3.18 16.91 22.96
Low 0.1 2.2 4.4 4.9 0.6 0.46 5.81 5.68
Mean 1.0 43.1 14.9 18.6 9.7 1.08 11.83 12.31
Median 0.7 11.0 13.7 12.8 1.9 0.80 11.64 11.50

22. Model 3