Tesla
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018 OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number: 001-34756 Tesla, Inc.(Exact name of registrant as specified in its charter) Delaware 91-2197729(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 3500 Deer Creek RoadPalo Alto, California 94304(Address of principal executive offices) (Zip Code)(650) 681-5000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, $0.001 par value The NASDAQ Stock Market LLCSecurities registered pursuant to Section 12(g) of the Act:None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during thepreceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “largeaccelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards providedpursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of voting stock held by non-affiliates of the registrant, as of June 30, 2018, the last day of the registrant’s most recently completed second fiscal quarter, was $46.57 billion(based on the closing price for shares of the registrant’s Common Stock as reported by the NASDAQ Global Select Market on June 30, 2018). Shares of Common Stock held by each executive officer, director,and holder of 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusivedetermination for other purposes.As of February 12, 2019, there were 172,721,487 shares of the registrant’s Common Stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s Proxy Statement for the 2019 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2018.  TESLA, INC.ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2018INDEX PagePART I. Item 1. Business 1Item 1A. Risk Factors 16Item 1B. Unresolved Staff Comments 37Item 2. Properties 38Item 3. Legal Proceedings 38Item 4. Mine Safety Disclosures 38 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39Item 6. Selected Financial Data 41Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42Item 7A. Quantitative and Qualitative Disclosures About Market Risk 68Item 8. Financial Statements and Supplementary Data 69Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139Item 9A. Controls and Procedures 139Item 9B. Other Information 139 PART III. Item 10. Directors, Executive Officers and Corporate Governance 140Item 11. Executive Compensation 140Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 140Item 13. Certain Relationships and Related Transactions, and Director Independence 140Item 14. Principal Accountant Fees and Services 140 PART IV. Item 15. Exhibits and Financial Statement Schedules 140Item 16. Summary 172 Signatures 173 i Forward-Looking StatementsThe discussions in this Annual Report on Form 10-K contain forward-looking statements reflecting our current expectations that involve risks anduncertainties. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financialposition, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for ourtechnologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words“anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intendedto identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve theplans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make.These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-lookingstatements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K and in our other filingswith the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.  PART IITEM 1.BUSINESS OverviewWe design, develop, manufacture and sell high-performance fully electric vehicles (“EVs”) and energy generation and storage systems, and alsoinstall and maintain such energy systems and sell solar electricity. We are the world’s first vertically integrated sustainable energy company, offering end-to-end clean energy products, including generation, storage and consumption. We have established and continue to grow a global network of stores, galleries,vehicle service centers, Mobile Service technicians, body shops, Supercharger stations and Destination Chargers to accelerate the widespread adoption of ourproducts, and we continue to develop self-driving capability in order to improve vehicle safety. Our sustainable energy products, engineering expertise,intense focus to accelerate the world’s transition to sustainable energy, and business model differentiate us from other companies. We currently produce and sell three fully electric vehicles: the Model S sedan, the Model X sport utility vehicle (“SUV”) and the Model 3 sedan. Allof our vehicles offer high performance and functionality as well as attractive styling.We commenced deliveries of Model S in June 2012 and have continued to improve Model S by introducing performance, all-wheel drive dual motor,and Autopilot options, as well as free over-the-air software updates. We commenced deliveries of Model X in September 2015. Model X offers seating for upto seven people, all-wheel drive, and our Autopilot functionality. We commenced deliveries of Model 3, a lower-priced sedan designed for the mass market,in July 2017, and we have significantly ramped its production. We are now embarking on the delivery of Model 3 in international markets and are focusingon lowering manufacturing costs while continuing to increase its production rate.We also intend to bring additional all-electric vehicles to market in the future, including Model Y, the Tesla Semi truck, a pickup truck and a newversion of the Tesla Roadster. The production of fully electric vehicles that meet consumers’ range and performance expectations requires substantial design,engineering, and integration work on almost every system of our vehicles. Our design and vehicle engineering capabilities, combined with the technicaladvancements of our powertrain system, have enabled us to design and develop electric vehicles that we believe overcome the design, styling, andperformance issues that have historically limited broad adoption of electric vehicles. As a result, our customers enjoy several benefits, including: •Long Range and Recharging Flexibility. Our vehicles offer ranges that significantly exceed those of any other commercially availableelectric vehicle. In addition, our vehicles incorporate our proprietary on-board charging system, permitting recharging from almost anyavailable electrical outlet, and also offer fast charging capability from our proprietary Supercharger network. •High-Performance Without Compromised Design or Functionality. Our vehicles deliver instantaneous and sustained acceleration, anadvanced Autopilot system with active safety and convenience features, and over-the-air software updates. •Energy Efficiency and Cost of Ownership. Our vehicles offer an attractive cost of ownership compared to internal combustion engine orhybrid electric vehicles. Using only an electric powertrain enables us to create more energy-efficient vehicles that are mechanically simplerthan currently available hybrid or internal combustion engine vehicles. The cost to charge our vehicles is less compared to fueling internalcombustion vehicles. We also expect our electric vehicles will have lower relative maintenance costs than other vehicles due to fewermoving parts and the absence of certain components, including oil, oil filters, spark plugs and engine valves.We sell our vehicles through our own sales and service network which we are continuing to grow globally. The benefits we receive from distributionownership enable us to improve the overall customer experience, the speed of product development and the capital efficiency of our business. We are alsocontinuing to build our network of Superchargers and Destination Chargers in North America, Europe and Asia to provide alternative convenient options forfast charging.1 In addition, we are leveraging our technological expertise in batteries, power electronics, and integrated systems to manufacture and sell energystorage products. In late 2016, we began production and deliveries of our latest generation energy storage products, Powerwall 2 and Powerpack 2. Powerwall2 is a 14 kilowatt hour (“kWh”) home battery with an integrated inverter. Powerpack 2 is an infinitely scalable energy storage system for commercial,industrial and utility applications, comprised of up to 210 kWh (AC) battery packs and up to 650 kVa (at 480V) inverters. Similar to our electric vehicles, ourenergy storage products have been developed to receive over-the-air firmware and software updates that enable additional features over time.Finally, we sell and lease solar energy systems (with or without accompanying energy storage systems) to residential and commercial customers andsell renewable energy to residential and commercial customers at prices that are typically below utility rates. Since 2006, we have installed solar energysystems for hundreds of thousands of customers. However, the electricity produced by our solar installations represents a very small fraction of total U.S.electricity generation. With tens of millions of single-family homes and businesses in our primary service territories, and many more in other locations, wehave a large opportunity to expand and grow this business. We believe that residential solar energy generation is gaining momentum, as exemplified in partby the state of California recently requiring that new homes be built with solar generation starting in 2020. We also intend to ramp production of ourinnovative Solar Roof product.We manufacture our vehicle products primarily at our facilities in Fremont, California, Lathrop, California, Tilburg, Netherlands and at ourGigafactory 1 near Reno, Nevada. We manufacture our energy storage products at Gigafactory 1 and Tesla solar products at our U.S. facilities including inBuffalo, New York (Gigafactory 2). In January 2019, we began construction of our Gigafactory Shanghai in China, where we intend to commence productionof certain trims of Model 3 for the local market by the end of 2019.Our Products and ServicesVehiclesModel SModel S is a fully electric, four-door, five-adult passenger sedan that offers compelling range and high performance and our all-wheel drive dualmotor system, which we also offer in a performance version. Model S 100D is the longest range all-electric production sedan in the world, and theperformance version with the Ludicrous speed upgrade is the quickest accelerating production vehicle available.Model S introduced a 17 inch touch screen driver interface, our advanced Autopilot hardware to enable both active safety and convenience features,and over-the-air software updates. We believe the combination of performance, safety, styling, convenience and energy efficiency of Model S positions it as acompelling alternative to other vehicles in the luxury and performance segments.Model XModel X is the longest range all-electric production sport utility vehicle in the world, and offers high performance features such as our fully electric,all-wheel drive dual motor system and our Autopilot system. Model X can seat up to seven adults and incorporates a unique falcon wing door system for easyaccess to the second and third seating rows. Model X is sold in all markets where Model S is available.Model 3Model 3 is our third generation electric vehicle, which we began delivering in July 2017. Model 3 and its drive units are currently produced at highvolumes at the Tesla Factory in Fremont, California and at Gigafactory 1, respectively, and we intend to begin production of certain vehicle trims for China atour Gigafactory Shanghai by the end of 2019. We have offered a number of variants of Model 3, including performance, dual motor, single motor, long-rangeand medium-range, and intend to offer in the future a variant of Model 3 at a starting price of $35,000. We are now embarking on the delivery of Model 3 ininternational markets and are focusing on lowering manufacturing costs while continuing to increase its production rate.2 Future Consumer and Commercial EVsIn addition to our volume-produced consumer EVs, including future vehicles such as Model Y and a pickup truck, we are planning to introduceadditional types of vehicles to address a broader cross-section of the vehicle market, including commercial EVs such as the Tesla Semi truck, and a newversion of the Tesla Roadster. We have started to accept reservations for the Tesla Semi truck and the new Tesla Roadster.Energy StorageUsing the energy management technologies and manufacturing processes developed for our vehicle powertrain systems, we developed energystorage products for use in homes, commercial facilities and on the utility grid. Advances in battery architecture, thermal management and power electronicsthat were originally commercialized in our vehicles are now being leveraged in our energy storage products. Our energy storage systems are used fornumerous applications including backup power, grid independence, peak demand reduction, demand response, reducing intermittency of renewablegeneration, replacement of fossil fuel generation and wholesale electric market services.Our energy product portfolio includes systems with a wide range of applications, from residential to large grid-scale projects. Powerwall 2 is a 14kWh rechargeable lithium-ion battery designed to store energy at a home or small commercial facility and can be used to provide seamless backup power in agrid outage and to maximize self-consumption of solar power generation. In addition, we offer the Powerpack 2 system, a fully integrated energy storagesolution comprised of up to 210kWh (AC) battery packs and up to 650 kVa (at 480V) inverters that can be grouped together to form megawatt hour (“MWh”)and gigawatt hour (“GWh”) sized installations. The Powerpack 2 system can be used by commercial and industrial customers for peak shaving, load shifting,self-consumption of solar generation and demand response, as well as to provide backup power during grid outages, and by utilities and independent powerproducers to smooth and firm the output of renewable power generation sources, provide dynamic energy capacity to the grid, defer or eliminate the need toupgrade transmission or distribution infrastructure, and provide a variety of other grid services such as frequency regulation and voltage control. Powerpack 2can also be combined with renewable energy generation sources to create microgrids that provide communities with clean, resilient and affordable power.Along with designing and manufacturing energy storage products, we continue to develop and advance our software capabilities for the control andoptimal dispatch of energy storage systems across a wide range of markets and applications.Solar Energy SystemsThe major components of our solar energy systems include solar panels that convert sunlight into electrical current, inverters that convert theelectrical output from the panels to a usable current compatible with the electric grid, racking that attaches the solar panels to the roof or ground, electricalhardware that connects the solar energy system to the electric grid, and our monitoring device. While we have recently started manufacturing solar panels atGigafactory 2 in collaboration with Panasonic, we currently purchase the majority of system components from vendors, maintaining multiple sources for eachmajor component to ensure competitive pricing and an adequate supply of materials. We also design and manufacture other system components.The residential solar energy systems that we sell enable our customers to take direct advantage of federal tax credits to reduce their electricity costs.Our solar loan offering enables customers to own their solar energy systems with little upfront cost. We also continue to offer lease and power purchaseagreement (“PPA”) options to both residential and commercial customers. Our current standard leases and PPAs have a 20-year term, and we typically offercustomers the opportunity to renew their agreements.In October 2016, we unveiled Solar Roof, which integrates solar energy production with aesthetically pleasing and durable glass roofing tiles and isdesigned to complement the architecture of homes and commercial buildings while turning sunlight into electricity. We have been installing this product at aslow pace to gather learnings about our design and installation processes, and plan to ramp the production of Solar Roof with significantly improvedmanufacturing capabilities during 2019.3 TechnologyVehiclesOur core competencies are powertrain engineering, vehicle engineering, innovative manufacturing and energy storage. Our core intellectual propertyincludes our electric powertrain, our ability to design vehicles that utilize the unique advantages of an electric powertrain and our development of self-driving technologies. Our powertrain consists of our battery pack, power electronics, motor, gearbox and control software. We offer several powertrainvariants for our vehicles that incorporate years of research and development. In addition, we have designed our vehicles to incorporate the latest advances inconsumer technologies, such as mobile computing, sensing, displays, and connectivity.Battery PackWe design our battery packs to achieve high energy density at a low cost while also maintaining safety, reliability and long life. Our proprietarytechnology includes systems for high density energy storage, cooling, safety, charge balancing, structural durability, and electronics management. We havealso pioneered advanced manufacturing techniques to manufacture large volumes of battery packs with high quality at low cost.We have significant expertise in the safety and management systems needed to use lithium-ion cells in the automotive environment, and have furtheroptimized cell designs to increase overall performance. These advancements have enabled us to improve over time the cost and performance of our batteries.Our engineering and manufacturing efforts have been performed with a longer-term goal of building a foundation for further development. Forinstance, we have designed our battery pack to permit flexibility with respect to battery cell chemistry and form factor. We maintain extensive testing andR&D capabilities at the individual cell level, the full battery-pack level and on other critical battery pack systems, and have built an expansive body ofknowledge on lithium-ion cell vendors, chemistry types, and performance characteristics. We believe that the flexibility of our designs, combined with ourresearch and real-world performance data, will enable us to continue to evaluate new battery cells and optimize battery pack system performance and cost forour current and future vehicles.Power ElectronicsThe power electronics in our electric vehicle powertrain govern the flow of high voltage electrical current throughout our vehicles and serve to powerour electric motor to generate torque while driving and deliver energy into the battery pack while charging.The drive inverter converts direct current from the battery pack into alternating current to drive our induction and permanent magnet motors andprovides “regenerative braking” functionality, which captures energy from the wheels to charge the battery pack. The primary technological advantages toour designs include the ability to drive large amounts of current in a small physical package with high efficiency and low cost.The charger charges the battery pack by converting alternating current (usually from a wall outlet or other electricity source) into direct current thatcan be accepted by the battery. Tesla vehicles can recharge on a wide variety of electricity sources due to the design of this charger, from a commonhousehold outlet to high power circuits meant for more industrial uses.Dual Motor PowertrainWe offer dual motor powertrain vehicles, which use two electric motors to maximize traction and performance in an all-wheel drive configuration.Tesla’s dual motor powertrain digitally and independently controls torque to the front and rear wheels. The near-instantaneous response of the motors,combined with low centers of gravity, provides drivers with controlled performance and increased traction control.4 Vehicle Control and Infotainment SoftwareThe performance and safety systems of our vehicles and their battery packs require sophisticated control software. There are numerous processors inour vehicles to control these functions, and we write custom firmware for many of these processors. Software algorithms control traction, vehicle stability, theacceleration and regenerative braking of the vehicle, climate control and thermal management, and are also used extensively to monitor the charge state ofthe battery pack and to manage all of its safety systems. Drivers use the information and control systems in our vehicles to optimize performance, customizevehicle behavior, manage charging modes and times and control all infotainment functions. We develop almost all of this software, including most of theuser interfaces, internally.Self-Driving DevelopmentWe have expertise in developing self-driving systems, and currently offer in our vehicles an advanced driver assist system that we refer to asAutopilot, including auto-steering, traffic aware cruise control, automated lane changing, automated parking, Summon and driver warning systems. InOctober 2016, we began equipping all Tesla vehicles with hardware needed for full self-driving capability, including cameras that provide 360 degreevisibility, updated ultrasonic sensors for object detection, a forward-facing radar with enhanced processing, and a powerful new onboard computer. OurAutopilot systems relieve our drivers of the most tedious and potentially dangerous aspects of road travel. Although, at present, the driver is ultimatelyresponsible for controlling the vehicle, our system provides safety and convenience functionality that allows our customers to rely on it much like the systemthat airplane pilots use when conditions permit. This hardware suite, along with over-the-air firmware updates and field data feedback loops from the onboardcamera, radar, ultrasonics, and GPS, enables the system to continually learn and improve its performance.Additionally, we continue to make significant advancements in the development of fully self-driving technologies.Energy StorageWe are leveraging many of the component-level technologies from our vehicles to advance our energy storage products, including high densityenergy storage, cooling, safety, charge balancing, structural durability, and electronics management. By taking a modular approach to the design of batterysystems, we are able to maximize manufacturing capacity to produce both Powerwall and Powerpack products. Additionally, we are making significantstrides in the area of bi-directional, grid-tied power electronics that enable us to interconnect our battery systems seamlessly with global electricity gridswhile providing fast-acting systems for power injection and absorption.Solar Energy SystemsWe are continually innovating and developing new technologies to facilitate the growth of our solar energy systems business. For example, SolarRoof is being designed to work seamlessly with Tesla Powerwall 2 and we have developed proprietary software to reduce system design and installationtimelines and costs.Design and EngineeringVehiclesIn addition to the design, development and production of the powertrain, we have created significant in-house capabilities in the design andengineering of electric vehicles and their components and systems. We design and engineer bodies, chassis, interiors, heating and cooling and low voltageelectrical systems in-house, and to a lesser extent, in conjunction with our suppliers. Our team has core competencies in computer aided design and crash testsimulations, which reduces the product development time of new models.5 Additionally, our team has expertise in lightweight materials, a very important characteristic for electric vehicles given the impact of mass on range.Model S and Model X are built with a lightweight aluminum body and chassis which incorporate a variety of materials and production methods that helpoptimize the weight of the vehicle. Moreover, we have designed Model 3 with a mix of materials to be lightweight and safe while also increasing cost-effectiveness for this mass-market vehicle. We are designing Model Y on the Model 3 platform and expect that Model Y will share about 75% of itscomponents with Model 3, which we expect will reduce the cost and time to ramp production of Model Y.Energy StorageWe have an in-house engineering team that both designs our energy storage products themselves, and works with our residential, commercial andutility customers to design bespoke systems incorporating our products. Our team’s expertise in electrical, mechanical, civil and software engineering enablesus to create integrated energy storage solutions that meet the particular needs of all customer types.Solar Energy SystemsWe also have an in-house engineering team that designs a customized solar energy system or Solar Roof for each of our customers, and which worksclosely with our energy storage engineering teams to integrate an energy storage system when requested by the customer. We have developed software thatsimplifies and expedites the design process and optimizes the design to maximize the energy production of each system. Our engineers complete a structuralanalysis of each building and produce a full set of structural design and electrical blueprints that contain the specifications for all system components.Additionally, we design complementary mounting and grounding hardware where required.Sales and MarketingVehiclesCompany-Owned Stores and GalleriesWe market and sell our vehicles directly to consumers through an international network of company-owned stores and galleries, which we believeenables us to better control costs of inventory, manage warranty service and pricing, maintain and strengthen the Tesla brand, and obtain rapid customerfeedback. Our Tesla stores and galleries are highly visible, premium outlets in major metropolitan markets, some of which combine retail sales and service.We have also found that opening a service center in a new geographic area can increase demand. As a result, we have complemented our store strategy withsales facilities and personnel in service centers to more rapidly expand our retail footprint. We refer to these as “Service Plus” locations.Used Car SalesOur used car business supports new car sales by integrating the sale of a new Tesla vehicle with a customer’s trade-in needs for their existing Teslaand non-Tesla vehicles. The Tesla and non-Tesla vehicles we acquire through trade-ins are subsequently remarketed, either directly by us or through third-party auto auctions. We also receive used Tesla vehicles to resell through lease returns and other sources.ChargingWhen not charging at home or at work, Tesla customers can also charge using our Supercharger and Destination Charging networks. In addition, ourvehicles can charge at a variety of public charging stations around the world, either natively or through a suite of adapters. This flexibility provides ourcustomers with many charging options to suit various situations.6 We continue to build out our Tesla Supercharger network throughout North America, Europe, Asia and other markets for our customers’ convenience,including to enable long-distance travel and urban ownership. Our Supercharger network is a strategic corporate initiative designed to provide publiclyaccessible fast charging solutions, and remove a barrier to the broader adoption of electric vehicles caused by the perception of limited vehicle range. TheTesla Supercharger is an industrial grade, high speed charger designed to recharge a Tesla vehicle significantly more quickly than other charging options,and we continue to evolve our technology to allow for even faster charging times at lower cost to us. To satisfy growing demand, Supercharger stationstypically have between six and thirty Superchargers and are strategically placed along well-traveled routes and in dense city centers to allow Tesla vehicleowners the ability to enjoy quick, reliable and ubiquitous charging with convenient, minimal stops. Use of the Supercharger network is either free or requiresa competitive fee.We work with a wide variety of hospitality, retail, and public destinations, as well as businesses with commuting employees, to offer additionalcharging options for our customers. These Destination Charging and workplace locations deploy Tesla Wall Connectors to provide charging to Tesla vehicleowners who patronize or are employed at their businesses. We also work with single-family homeowners and multi-family residential entities to deploy homecharging solutions in our communities.Where possible, we are co-locating Superchargers with our solar and energy storage systems to reduce the cost of electricity and promote the use ofrenewable electricity by Tesla vehicle owners. OrdersWe offer our customers the flexibility to order vehicles with their desired trims and options by visiting us online at our website or in person at ourTesla stores.MarketingHistorically, we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so.To date, media coverage and word of mouth have been the primary drivers of our vehicle sales leads and have helped us achieve sales without traditionaladvertising and at relatively low marketing costs.Solar and Energy StorageWe market and sell our solar and energy storage products to individuals, commercial and industrial customers and utilities through a variety ofchannels.In the U.S., we have been transitioning the direct sales channel for residential solar and energy storage products from former partners to our stores andgalleries. We are also continuing to sell residential energy storage products through our network of channel partners. Outside of the U.S., we use ourinternational sales organization and a network of channel partners to market and sell residential energy storage products, and we have recently launched pilotprograms for the sale of residential solar in certain countries. We also sell Powerwall 2 directly to utilities, who then deploy the product in customer homes.We sell Powerpack 2 systems to commercial and utility customers through our international sales organization, which consists of experienced energyindustry professionals in all of our target markets, as well as through our channel partner network. In the U.S and Mexico, we also sell installed solar energysystems (with or without energy storage) to commercial customers through cash, lease and PPA transactions.Service and WarrantyVehiclesServiceWe provide service for our electric vehicles at our company-owned service centers, at our Service Plus locations or through an expanding fleet ofTesla Mobile Service technicians who provide services that do not require a vehicle lift. Performing vehicle service ourselves allows us to identify problems,find solutions, and incorporate improvements faster than incumbent automobile manufacturers.7 Our vehicles are designed with the capability to wirelessly upload data to us via an on-board system with cellular connectivity, allowing us todiagnose and remedy many problems before ever looking at the vehicle. When maintenance or service is required, a customer can schedule service bycontacting one of our Tesla service centers or our Mobile Service technicians can perform an array of services from a customer’s home or other remotelocation.New Vehicle Limited Warranty, Maintenance and Extended Service PlansWe provide a four year or 50,000 mile New Vehicle Limited Warranty with every new vehicle, subject to separate limited warranties for thesupplemental restraint system and battery and drive unit. For the battery and drive unit on our current new Model S and Model X vehicles, we offer an eightyear, infinite mile limited warranty, although the battery’s charging capacity is not covered. For the battery and drive unit on our current new Model 3vehicles, we offer an eight year or 100,000 mile limited warranty for our standard or mid-range battery and an eight year or 120,000 mile limited warranty forour long range battery, with minimum 70% retention of battery capacity over the warranty period.In addition to the New Vehicle Limited Warranty, we currently offer for Model S and Model X a comprehensive maintenance program for every newvehicle, which includes plans covering prepaid maintenance for up to four years or up to 50,000 miles and an Extended Service plan. The maintenance planscover annual inspections and the replacement of certain wear and tear parts, excluding tires and the battery. The Extended Service plan covers the repair orreplacement of vehicle parts for up to an additional four years or up to an additional 50,000 miles after the New Vehicle Limited Warranty.Energy StorageWe generally provide a 10 year “no defect” and “energy retention” warranty with every Powerwall 2 and a 15 year “no defect” and “energyretention” warranty with every Powerpack 2 system. For Powerwall 2, the energy retention warranty involves us guaranteeing that the energy capacity of theproduct will be 70% or 80% (depending on the region of installation) of its nameplate capacity after 10 years of use. For Powerpack 2, the energy retentionwarranty involves us guaranteeing a minimum energy capacity in each of its first 15 years of use. For both products, our warranty is subject to specified userestrictions or kWh throughput caps. In addition, we offer certain extended warranties, which customers are able to purchase from us at the time they purchasean energy storage system, including a 20 year extended protection plan for Powerwall 2 and a selection of 10 or 20 year performance guarantees forPowerpack 2. We agree to repair or replace our energy storage products in the event of a valid warranty claim. In circumstances where we install a Powerwall2 or Powerpack 2 system, we also provide warranties of up to 20 years on our installation workmanship. All of the warranties for our energy storage systemsare subject to customary limitations and exclusions.Solar Energy SystemsFor traditional solar energy systems, we provide a workmanship warranty for up to 20 years from installation and a separate warranty against roofleaks. We also pass-through the inverter and module manufacturer warranties (typically 12 years and 25 years respectively). When we lease a traditional solarenergy system, we compensate the customer if their system produces less energy than guaranteed over a specified period. For Solar Roof, we provide awarranty against glass tile chipping or cracking for the lifetime of the home, a 30 year installation warranty, a 30 year weatherization warranty and a poweroutput warranty. For all systems (traditional and Solar Roof) we also provide service and repair (either under warranty or for a fee) during the entire term of thecustomer relationship.Financial ServicesVehiclesWe offer financing arrangements for our vehicles in North America, Europe and Asia primarily through various financial institutions. We alsocurrently offer Model S and Model X leasing directly through our local subsidiaries in the U.S. and Canada. We intend to broaden our financial servicesofferings during the next few years. 8 Certain of our current financing programs outside of North America provide customers with a resale value guarantee under which those customershave the option of selling their vehicle back to us at a preset future date, generally at the end of the term of the applicable loan or financing program, for apre-determined resale value. In certain markets, we also offer vehicle buyback guarantees to financial institutions, which may obligate us to repurchase thevehicles for a pre-determined price.Solar Energy SystemsWe are an industry leader in offering innovative financing alternatives that allow our customers to take direct advantage of available tax credits andincentives to reduce the cost of owning a solar energy system through a solar loan, or to make the switch to solar energy with little to no upfront costs under alease or PPA. Our solar loan offers third-party financing directly to a qualified customer to enable the customer to purchase and own a solar energy system.We are not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has no recourse against us with respect tothe loan. Our solar lease offers customers a fixed monthly fee, at rates that typically translate into lower monthly utility bills, and an electricity productionguarantee. Our solar PPA charges customers a fee per kWh based on the amount of electricity produced by our solar energy systems. We monetize thecustomer payments we receive from our leases and PPAs through funds we have formed with investors. We also intend to introduce financial servicesofferings for our Solar Roof customers in the future.Energy StorageWe currently offer a loan product to residential customers who purchase Powerwall 2 together with a new solar energy system, and lease and PPAs tocommercial customers who purchase a Powerpack 2 system together with a new solar energy system. We intend to introduce financial services offerings forcustomers who purchase standalone energy storage products in the future.ManufacturingVehiclesWe conduct vehicle manufacturing and assembly operations at our facilities in Fremont, California; Lathrop, California; and Tilburg, Netherlands.We have also built and continue to expand Gigafactory 1, a manufacturing facility for battery cells, modules, packs and storage products and vehiclecomponents, outside of Reno, Nevada. We are also constructing Gigafactory Shanghai, a manufacturing facility in China, for the production of Model 3vehicles for the local market.Manufacturing Facilities in Fremont, CA and Lathrop, CAWe manufacture our vehicles, and certain parts and components that are critical to our intellectual property and quality standards, at ourmanufacturing facilities in Fremont, CA, including the Tesla Factory, and our manufacturing facility in Lathrop, CA. Our Fremont facilities contain severalmanufacturing operations, including stamping, machining, casting, plastics, body assembly, paint operations, drive unit production, seat assembly, finalvehicle assembly and end-of-line testing. In addition, we manufacture lithium-ion battery packs, electric motors, gearboxes and components for Model S andModel X at the Tesla Factory. Some major vehicle component systems are purchased from suppliers; however, we have a high level of vertical integration inour manufacturing processes at the Tesla Factory.The NetherlandsOur European headquarters and manufacturing facilities are located in Amsterdam and Tilburg. Our operations in Tilburg include final assembly,testing and quality control for Model S and Model X vehicles delivered within the European Union, a parts distribution warehouse for service centersthroughout Europe, a center for remanufacturing work and a customer service center.Gigafactory 1 outside of Reno, NevadaGigafactory 1 is a facility where we work together with our suppliers to integrate battery material, cell, module and battery pack production in onelocation. We use the battery packs manufactured at Gigafactory 1 for our vehicles, including Model 3, and energy storage products. We also manufactureModel 3 drive units at Gigafactory 1.9 Gigafactory 1 is being built in phases. Tesla, Panasonic and other partners are currently manufacturing inside the finished sections. Our present planis to continue expanding Gigafactory 1 over the next few years so that its capacity significantly exceeds the approximately 500,000 vehicle per year capacitythat we announced when we first started developing it, and we have additionally added capacity for manufacturing our energy storage products. We have alsoannounced that we will likely manufacture Model Y, which we intend to produce at high volumes by the end of 2020, at Gigafactory 1.We believe that Gigafactory 1 will allow us to achieve a significant reduction in the cost of our battery packs with our volume production of Model3. We have an agreement with Panasonic to partner with us on Gigafactory 1 with investments in production equipment that it is using to manufacture andsupply us with battery cells. Through our ownership of Gigafactory 1 and our partnership with Panasonic, we own sole access to a facility designed to be thehighest-volume and lowest-cost source of lithium-ion batteries in the world.Gigafactory ShanghaiWe are constructing Gigafactory Shanghai in order to significantly increase the affordability of Model 3 for customers in China by reducingtransportation and manufacturing costs and eliminating certain tariffs on vehicles imported from the U.S. We broke ground in January 2019, and subject to anumber of uncertainties, including regulatory approval, supply chain constraints, and the pace of installing production equipment and bringing the factoryonline, we expect to begin production of certain trims of Model 3 at Gigafactory Shanghai by the end of 2019. We expect much of the investment inGigafactory Shanghai to be provided through local debt financing, supported by limited direct capital expenditures by us. Moreover, we are targeting thecapital expenditures per unit of production capacity at this factory to be less than that of our Model 3 production at the Tesla Factory, from which we havedrawn learnings that should allow us to simplify our manufacturing layout and processes at Gigafactory Shanghai.Supply ChainOur vehicles use thousands of purchased parts which we source globally from hundreds of suppliers. We have developed close relationships withseveral key suppliers particularly in the procurement of cells and certain other key system parts. While we obtain components from multiple sources in somecases, similar to other automobile manufacturers, many of the components used in our vehicles are purchased by us from a single source. In addition, whileseveral sources of the battery cell we have selected for our battery packs are available, we have currently fully qualified only one cell supplier for the batterypacks we use in our production vehicles. We are working to fully qualify additional cells from other manufacturers.We use various raw materials in our business including aluminum, steel, cobalt, lithium, nickel and copper. The prices for these raw materialsfluctuate depending on market conditions and global demand for these materials. We believe that we have adequate supplies or sources of availability of theraw materials necessary to meet our manufacturing and supply requirements.Energy StorageOur energy storage products are manufactured at Gigafactory 1. We leverage the same supply chain process and infrastructure as we use for ourvehicles. The battery architecture and many of the components used in our energy storage products are the same or similar to those used in our vehicles’battery pack, enabling us to take advantage of manufacturing efficiencies and supply chain economies of scale. The power electronics and inverters for thePowerwall and Powerpack systems are also manufactured at Gigafactory 1, allowing us to ship deployment-ready systems directly to customers.10 Solar Energy SystemsWe currently purchase major components such as solar panels and inverters directly from multiple manufacturers. We typically purchase solar panelsand inverters on an as-needed basis from our suppliers at then-prevailing prices pursuant to purchase orders issued under our master contractual arrangements.In December 2016, we entered into a long-term agreement with Panasonic to manufacture photovoltaic (“PV”) cells and modules with negotiated pricingprovisions at our Gigafactory 2 in Buffalo, New York with the intended capacity to manufacture at least 1.0 gigawatt (“GW”) of solar products annually. Wehave recently started manufacturing solar panels at this facility in collaboration with Panasonic.Governmental Programs, Incentives and RegulationsVehiclesCalifornia Alternative Energy and Advanced Transportation Financing Authority Tax IncentivesWe have entered into multiple agreements over the past few years with the California Alternative Energy and Advanced Transportation FinancingAuthority (“CAEATFA”) that provide multi-year sales tax exclusions on purchases of manufacturing equipment that will be used for specific purposes,including the expansion and ongoing development of Model S, Model X, Model 3 and future electric vehicles and the expansion of electric vehiclepowertrain production in California.Nevada Tax IncentivesIn connection with the construction of Gigafactory 1, we have entered into agreements with the State of Nevada and Storey County in Nevada thatprovide abatements for sales, use, real property, personal property and employer excise taxes, discounts to the base tariff energy rates and transferable taxcredits. These incentives are available for the applicable periods beginning on October 17, 2014 and ending on either June 30, 2024 or June 30, 2034(depending on the incentive). Under these agreements, we were eligible for a maximum of $195.0 million of transferable tax credits, subject to capitalinvestments by us and our partners for Gigafactory 1 of at least $3.50 billion, which we exceeded during 2017, and specified hiring targets for Gigafactory 1,which we exceeded during 2018. As a result, as of December 31, 2018, we had earned the maximum amount of credits.Tesla Regulatory CreditsIn connection with the production, delivery, placement into service and ongoing operation of our zero emission vehicles, charging infrastructure andsolar systems in global markets, we have earned and will continue to earn various tradable regulatory credits. We have sold these credits, and will continue tosell future credits, to automotive companies and other regulated entities who can use the credits to comply with emission standards and other regulatoryrequirements. For example, under California’s Zero Emission Vehicle Regulation and those of states that have adopted California’s standard, vehiclemanufacturers are required to earn or purchase credits, referred to as ZEV credits, for compliance with their annual regulatory requirements. These lawsprovide that automakers may bank or sell to other regulated parties their excess credits if they earn more credits than the minimum quantity required by thoselaws. Tesla also earns other types of salable regulatory credits in the United States and abroad, including greenhouse gas, fuel economy and clean fuelscredits. Likewise, several U.S. states have adopted procurement requirements for renewable energy production. These requirements enable companiesdeploying solar energy to earn tradable credits known as Solar Renewable Energy Certificates (“SRECs”).Regulation—Vehicle Safety and TestingOur vehicles are subject to, and comply with or are otherwise exempt from, numerous regulatory requirements established by the National HighwayTraffic Safety Administration (“NHTSA”), including all applicable United States Federal Motor Vehicle Safety Standards (“FMVSS”). Our vehicles fullycomply with all applicable FMVSSs without the need for any exemptions, and we expect future Tesla vehicles to either fully comply or comply with limitedexemptions related to new technologies. Additionally, there are regulatory changes being considered for several FMVSS, and while we anticipatecompliance, there is no assurance until final regulation changes are enacted.11 As a manufacturer, we must self-certify that our vehicles meet all applicable FMVSS, as well as the NHTSA bumper standard, or otherwise are exempt,before the vehicles can be imported or sold in the U.S. Numerous FMVSS apply to our vehicles, such as crash-worthiness requirements, crash avoidancerequirements, and electric vehicle requirements. We are also required to comply with other federal laws administered by NHTSA, including the CAFEstandards, Theft Prevention Act requirements, consumer information labeling requirements, Early Warning Reporting requirements regarding warrantyclaims, field reports, death and injury reports and foreign recalls, and owner’s manual requirements.The Automobile Information and Disclosure Act requires manufacturers of motor vehicles to disclose certain information regarding themanufacturer’s suggested retail price, optional equipment and pricing. In addition, this law allows inclusion of city and highway fuel economy ratings, asdetermined by EPA, as well as crash test ratings as determined by NHTSA if such tests are conducted.Our vehicles sold outside of the U.S. are subject to similar foreign safety, environmental and other regulations. Many of those regulations aredifferent from those applicable in the U.S. and may require redesign and/or retesting. The European Union has established new rules regarding additionalcompliance oversight that are scheduled to commence in 2020, and there is also regulatory uncertainty related to the United Kingdom’s impendingwithdrawal from the European Union. These changes could impact the rollout of new vehicle features in Europe.Regulation – Self DrivingThere are no federal U.S. regulations pertaining to the safety of self-driving vehicles; however, NHTSA has established recommended guidelines.Certain U.S. states have legal restrictions on self-driving vehicles, and many other states are considering them. This patchwork increases the legal complexityfor our vehicles. In Europe, certain vehicle safety regulations apply to self-driving braking and steering systems, and certain treaties also restrict the legalityof certain higher levels of self-driving vehicles. Self-driving laws and regulations are expected to continue to evolve in numerous jurisdictions in the U.S. andforeign countries, and may create restrictions on self-driving features that we develop.Regulation—Battery Safety and TestingOur battery pack conforms to mandatory regulations that govern transport of “dangerous goods,” defined to include lithium-ion batteries, which maypresent a risk in transportation. The regulations vary by mode of shipping transportation, such as by ocean vessel, rail, truck, or air. We have completed theapplicable transportation tests for our battery packs, demonstrating our compliance with applicable regulations.We use lithium-ion cells in our high voltage battery packs. The use, storage, and disposal of our battery packs is regulated under federal law. We haveagreements with third party battery recycling companies to recycle our battery packs. Automobile Manufacturer and Dealer RegulationState laws regulate the manufacture, distribution, and sale of automobiles, and generally require motor vehicle manufacturers and dealers to belicensed in order to sell vehicles directly to consumers in the state. As we open additional Tesla stores and service centers, we secure dealer licenses (or theirequivalent) and engage in sales activities to sell our vehicles directly to consumers. A few states, such as Michigan and Connecticut, do not permitautomobile manufacturers to be licensed as dealers or to act in the capacity of a dealer, or otherwise restrict a manufacturer’s ability to deliver or servicevehicles. To sell vehicles to residents of states where we are not licensed as a dealer, we generally conduct the sale out of the state via the Internet, phone ormail. In such states, we have opened “galleries” that serve an educational purpose and are not sales locations.As we expand our retail footprint in the U.S., some automobile dealer trade associations have both challenged the legality of our operations in courtand used administrative and legislative processes to attempt to prohibit or limit our ability to operate existing stores or expand to new locations. We expectthat the dealer associations will continue to mount challenges to our business model. In addition, we expect the dealer associations to actively lobby statelicensing agencies and legislators to interpret existing laws or enact new laws in ways not favorable to Tesla’s ownership and operation of its own retail andservice locations, and we intend to actively fight any such efforts to limit our ability to sell our own vehicles.12 Energy StorageThe regulatory regime for energy storage projects is still under development. Nevertheless, there are various policies, incentives and financialmechanisms at the federal, state and local levels that support the adoption of energy storage. For example, energy storage systems that are charged using solarenergy are eligible for the 30% tax credit under Section 48(a)(3) of the Internal Revenue Code, or the IRC, as described below. In addition, California and anumber of other states have adopted procurement targets for energy storage, and behind the meter energy storage systems qualify for funding under theCalifornia Self Generation Incentive Program.The Federal Energy Regulatory Commission (“FERC”) has also taken steps to enable the participation of energy storage in wholesale energymarkets. In 2011 and 2013, FERC removed many barriers for systems like energy storage to provide frequency regulation service, thus increasing the valuethese systems can obtain in wholesale energy markets. More recently, in late 2016, FERC released a Notice of Proposed Rulemaking that, if it becomes a finalrule, would further break down barriers preventing energy storage from fully participating in wholesale energy markets. Finally, in January 2017, FERCissued a statement supporting the use of energy storage as both electric transmission and as electric generation concurrently, thus enabling energy storagesystems to provide greater value to the electric grid.Solar Energy SystemsGovernment and Utility Programs and IncentivesU.S. federal, state and local governments have established various policies, incentives and financial mechanisms to reduce the cost of solar energyand to accelerate the adoption of solar energy. These incentives include tax credits, cash grants, tax abatements and rebates.The federal government currently provides an uncapped investment tax credit (“ITC”) under two sections of the IRC: Section 48 and Section 25D.Section 48(a)(3) of the IRC allows a taxpayer to claim a credit of 30% of qualified expenditures for a commercial solar energy system that commencesconstruction by December 31, 2019. The credit then declines to 26% in 2020, 22% in 2021, and a permanent 10% thereafter. We claim the Section 48commercial credit when available for both our residential and commercial projects, based on ownership of the solar energy system. The federal governmentalso provides accelerated depreciation for eligible commercial solar energy systems. Section 25D of the IRC allows a homeowner-taxpayer to claim a credit of30% of qualified expenditures for a residential solar energy system owned by the homeowner that is placed in service by December 31, 2019. The credit thendeclines to 26% in 2020 and 22% in 2021, and is scheduled to expire thereafter. Customers who purchase their solar energy systems for cash or through oursolar loan offering are eligible to claim the Section 25D investment tax credit.In addition to the federal ITC, many U.S. states offer personal and corporate tax credits and incentives for solar energy systems.Regulation – GeneralWe are not a “regulated utility” in the U.S. To operate our systems, we obtain interconnection agreements from the utilities. In most cases,interconnection agreements are standard form agreements that have been pre-approved by the public utility commission or other regulatory body. Sales of electricity and non-sale equipment leases by third parties, such as our leases and PPAs, face regulatory challenges in some states andjurisdictions.Regulation – Net MeteringMost states in the U.S. have a regulatory policy known as net energy metering, or net metering, available to solar customers. Net metering typicallyallows solar customers to interconnect their on-site solar energy systems to the utility grid and offset their utility electricity purchases by receiving a billcredit for excess energy generated by their solar energy system that is exported to the grid. In certain jurisdictions, regulators or utilities have reduced oreliminated the benefit available under net metering, or have proposed to do so.13 Regulation – Mandated Renewable CapacityMany states also have adopted procurement requirements for renewable energy production, such as an enforceable renewable portfolio standard, orRPS, or other policies that require covered entities to procure a specified percentage of total electricity delivered to customers in the state from eligiblerenewable energy sources, such as solar energy systems. In SREC state markets, the RPS requires electricity suppliers to secure a portion of their electricityfrom solar generators. The SREC program provides a means for SRECs to be created. A SREC represents the renewable energy associated with 1,000 kWhs ofelectricity produced from a solar energy system. When a solar energy system generates 1,000 kWhs of electricity, one SREC is issued by a governmentagency, which can then be sold separately from the energy produced to covered entities who surrender the SRECs to the state to prove compliance with thestate’s renewable energy mandate.CompetitionVehiclesThe worldwide automotive market is highly competitive and we expect it will become even more competitive in the future as we introduceadditional vehicles in a broader cross-section of the passenger and commercial vehicle market.We believe that our vehicles compete in the market both based on their traditional segment classification as well as based on their propulsiontechnology. For example, Model S and Model X compete primarily with premium sedans and premium SUVs and Model 3 competes with small to medium-sized sedans, which are extremely competitive markets with internal combustion vehicles from more established automobile manufacturers.Moreover, many established and new automobile manufacturers have entered or have announced plans to enter the alternative fuel vehicle market.Overall, we believe these announcements and vehicle introductions promote the development of the alternative fuel vehicle market by highlighting theattractiveness of alternative fuel vehicles, particularly those fueled by electricity, relative to the internal combustion vehicle. Many major automobilemanufacturers have electric vehicles available today, and other current and prospective automobile manufacturers are also developing electric vehicles.Electric vehicles have also already been brought to market in China and other foreign countries and we expect a number of those manufacturers to enter theU.S. market as well. In addition, several manufacturers offer hybrid vehicles, including plug-in versions. Energy StorageThe market for energy storage products is also highly competitive. Established companies, such as AES Energy Storage, Siemens, LG Chem andSamsung, as well as various emerging companies, have introduced products that are similar to our product portfolio. There are several companies providingindividual components of energy storage systems (such as cells, battery modules, and power electronics) as well as others providing integrated systems. Wecompete with these companies based on price, energy density and efficiency. We believe that the specifications of our products, our strong brand, and themodular, scalable nature of our Powerpack 2 product give us a competitive advantage when marketing our products.Solar Energy SystemsThe primary competitors to our solar energy business are the traditional local utility companies that supply energy to our potential customers. Wecompete with these traditional utility companies primarily based on price, predictability of price and the ease by which customers can switch to electricitygenerated by our solar energy systems. We also compete with solar energy companies that provide products and services similar to ours. Many solar energycompanies only install solar energy systems, while others only provide financing for these installations. In the residential solar energy system installationmarket, our primary competitors include Vivint Solar Inc., Sunrun Inc., Trinity Solar, SunPower Corporation, and many smaller local solar companies.14 Intellectual PropertyAs part of our business, we seek to protect our intellectual property rights such as with respect to patents, trademarks, copyrights, trade secrets,including through employee and third party nondisclosure agreements, and other contractual arrangements. Additionally, we previously announced a patentpolicy in which we irrevocably pledged that we will not initiate a lawsuit against any party for infringing our patents through activity relating to electricvehicles or related equipment for so long as such party is acting in good faith. We made this pledge in order to encourage the advancement of a common,rapidly-evolving platform for electric vehicles, thereby benefiting ourselves, other companies making electric vehicles, and the world.Segment InformationWe operate as two reportable segments: automotive and energy generation and storage.The automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotiveregulatory credits. Additionally, the automotive segment is also comprised of services and other, which includes non-warranty after-sales vehicle services,sales of used vehicles, sales of electric vehicle components and systems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries tothird party customers. The energy generation and storage segment includes the design, manufacture, installation, and sale or leasing of stationary energystorage products and solar energy systems, and sale of electricity generated by our solar energy systems to customers.EmployeesAs of December 31, 2018, Tesla, Inc. had 48,817 full-time employees. To date, we have not experienced any work stoppages, and we consider ourrelationship with our employees to be good.Available InformationWe file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q andCurrent Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). In addition, the SEC maintainsa website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically. Our websiteis located at www.tesla.com, and our reports, amendments thereto, proxy statements and other information are also made available, free of charge, on ourinvestor relations website at ir.tesla.com as soon as reasonably practicable after we electronically file or furnish such information with the SEC. Theinformation posted on our website is not incorporated by reference into this Annual Report on Form 10-K. 15 ITEM 1A.RISK FACTORSYou should carefully consider the risks described below together with the other information set forth in this report, which could materially affectour business, financial condition and future results. The risks described below are not the only risks facing our company. Risks and uncertainties notcurrently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operatingresults.Risks Related to Our Business and IndustryWe have experienced in the past, and may experience in the future, delays or other complications in the design, manufacture, launch, production,delivery and servicing ramp of new vehicles and other products such as Model 3, Model Y, our energy storage products and Solar Roof, whichcould harm our brand, business, prospects, financial condition and operating results.We have previously experienced launch, manufacturing, production and delivery ramp delays or other complications in connection with new vehiclemodels such as Model S, Model X and Model 3, new vehicle features such as the all-wheel drive dual motor drivetrain on Model S and the second version ofAutopilot hardware, and a significant increase in automation introduced in the manufacture of Model 3. For example, we encountered unanticipatedchallenges, such as certain supply chain constraints, that led to initial delays in producing Model X. Similarly, we experienced certain challenges in theproduction of Model 3 that led to delays in its ramp. Moreover, in the areas of Model 3 production where we had challenges ramping fully automatedprocesses, such as portions of the battery module assembly line, material flow system and the general assembly line, we reduced the levels of automation andintroduced semi-automated or manual processes. If issues like these arise or recur, if our remediation measures and process changes do not continue to besuccessful, if we experience issues with transitioning to full automation in certain production lines or to other planned manufacturing improvements, or if weexperience issues or delays in building our Gigafactory Shanghai in China or commencing and ramping Model 3 production there, we could experienceissues in sustaining the Model 3 ramp or delays in increasing Model 3 production further. Also, if we encounter difficulties in scaling our delivery orservicing capabilities for Model 3 or future vehicles and products to high volumes in the U.S. or internationally, our financial condition and operating resultscould suffer. In addition, because our vehicle models share certain production facilities with other vehicle models, the volume or efficiency of productionwith respect to one model may impact the production of other models or lead to bottlenecks that impact the production of all models.We may also experience similar future delays or other complications in bringing to market and ramping production of new vehicles, such as ModelY, the Tesla Semi, our planned pickup truck and new Tesla Roadster, our energy storage products and Solar Roof. Any significant additional delay or othercomplication in the production of and delivery capabilities for our current products or the development, manufacture, launch, production and delivery andservicing capability ramp of our future products, including complications associated with expanding our production capacity, supply chain and deliverysystems or obtaining or maintaining regulatory approvals, could materially damage our brand, business, prospects, financial condition and operating results.We have experienced in the past, and may experience in the future, delays in realizing our projected timelines and cost and volume targets for theproduction and ramp of Model 3, which could harm our business, prospects, financial condition and operating results.Our future business depends in large part on our ability to execute on our plans to manufacture, market and sell the Model 3 vehicle, which we areoffering at a lower price point and which we are producing at significantly higher volumes than the Model S or Model X vehicles. We commencedproduction and initial customer deliveries of Model 3 in July 2017, and since then have achieved a stabilized production rate. At the Tesla Factory, weexpect to continue to increase our Model 3 production rate to approximately 7,000 units per week on a sustained basis by the end of 2019. Moreover, inChina, we expect to commence production of certain trims of Model 3 for the local market in China in the initial phase of our Gigafactory Shanghai by theend of 2019, and then progressively increase levels of localization through local sourcing and manufacturing. Inclusive of Gigafactory Shanghai, our goal isto be able to produce 10,000 Model 3 vehicles per week on a sustained basis, and an annualized output rate in excess of 500,000 Model 3 vehicles sometimebetween the fourth quarter of 2019 and the second quarter of 2020. However, the timeframe for commencing Model 3 production at Gigafactory Shanghai issubject to a number of uncertainties, including regulatory approval, supply chain constraints, and the pace of installing production equipment and bringingthe factory online.16 We have limited experience to date in manufacturing vehicles at the high volumes that we recently achieved and to which we anticipate rampingfurther for Model 3, and to be successful, we will need to complete the implementation and ramp of efficient and cost-effective manufacturing capabilities,processes and supply chains necessary to support such volumes, including at Gigafactory Shanghai. We are employing a higher degree of automation in themanufacturing processes for Model 3 than we have previously employed and to continue to implement additional automation. In some cases, we havetemporarily reduced the levels of automation and introduced semi-automated or manual processes, at additional labor cost. Additional bottlenecks may alsoarise as we continue to ramp production at the Tesla Factory and commence the initial phase of Model 3 production at Gigafactory Shanghai, and it will beimportant that we address them promptly and in a cost-effective manner. Moreover, our Model 3 production plan has generally required to date significantinvestments of cash and management resources, and we expect to deploy some level of additional resources as we further progress our ramp and beginproduction in new locations in the future, such as China.Our production plan for Model 3 is based on many key assumptions, including: •that we will be able to sustain and further expand our high-volume production of Model 3 at the Tesla Factory without exceeding ourprojected costs and on our projected timeline; •that we will be able to continue to expand Gigafactory 1 in a timely manner to produce high volumes of quality lithium-ion cells to beintegrated into battery modules and finished battery packs and drive unit components for Model 3, including in part to support production inChina as the level of local sourcing and manufacturing there progressively increases, all at costs that allow us to sell Model 3 at our targetgross margins; •that we will be able to build and commence production at additional future facilities, such as at Gigafactory Shanghai, to support ourinternational ramp for Model 3 in accordance with our projected costs and timeline; •that the equipment and processes which we have selected for Model 3 production will be able to accurately manufacture high volumes ofModel 3 vehicles within specified design tolerances and with high quality; •that we will be able to maintain suppliers for the necessary components on terms and conditions that are acceptable to us and that we will beable to obtain high-quality components on a timely basis and in the necessary quantities to support high-volume production; and •that we will be able to attract, recruit, hire, train and retain skilled employees to operate our planned high-volume production facilities tosupport Model 3, including at the Tesla Factory, Gigafactory 1 and Gigafactory Shanghai.If one or more of the foregoing assumptions turns out to be incorrect, our ability to meet our Model 3 projections on time and at volumes and pricesthat are profitable, the demand for and deliveries of Model 3, as well as our business, prospects, operating results and financial condition, may be materiallyand adversely impacted.We may be unable to meet our growing vehicle production, sales and delivery plans and servicing needs, any of which could harm our business andprospects.Our plans call for sustaining and further ramping from our significant increases in vehicle production and deliveries, particularly for Model 3. Ourability to achieve these plans will depend upon a number of factors, including our ability to utilize installed manufacturing capacity to achieve the plannedproduction yield, further install and increase capacity in accordance with our planned timelines and costs, maintain our desired quality levels and optimizedesign and production changes, as well as our suppliers’ ability to support our needs. In addition, we have used and may use in the future a number of newmanufacturing technologies, techniques and processes for our vehicles, which we must successfully introduce and scale for high-volume production. Forexample, we have introduced highly automated production lines, aluminum spot welding systems and high-speed blow forming of certain difficult to stampvehicle parts. We have also introduced unique design features in our vehicles with different manufacturing challenges, such as large display screens, dualmotor drivetrain, Autopilot hardware and falcon-wing doors. We have limited experience developing, manufacturing, selling and servicing, and allocatingour available resources among, multiple products simultaneously. If we are unable to realize our plans, our brand, business, prospects, financial condition andoperating results could be materially damaged.17 Concurrent with our increasing vehicle production levels, we will also need to continue to significantly increase sales and deliveries of our vehicles.Although we have a plan for selling and delivering increased volumes of vehicles, we have limited experience in marketing, selling and delivering vehiclesat the higher volumes at which we are manufacturing Model 3, and we may face difficulties meeting our sales and delivery goals in both existing markets aswell as new markets into which we expand, such as Europe and China where we are beginning to deliver Model 3 for the first time in the first quarter of 2019.In particular, we are targeting for the first time with Model 3 a mass demographic with a broad range of potential customers, in which we have limitedexperience projecting demand and pricing our products. While we are producing numerous variants (including regional versions) of Model 3 in accordancewith the demand that we expect for them, if our projections are inaccurate, we may not be able to generate sales matched to the specific vehicles that we havethe capacity to produce, based on vehicle production line constraints and long lead times for procuring certain parts.Moreover, because we do not have independent dealer networks, we are responsible for delivering all of our vehicles to our customers and meetingtheir vehicle servicing needs. To date, we have limited experience with such deliveries and servicing at the scale to which we expect to grow, particularly ininternational markets. To accommodate our volumes, we have deployed a number of delivery models, such as deliveries to customers’ homes and workplaces,some of which have not been previously tested at scale and in different geographies. Moreover, significant transit time may be required to transport vehiclessuch as Model 3 in volume into new markets for the first time. To the extent that such factors lead to delays in our deliveries, our results may be negativelyimpacted. Finally, because of our unique expertise with our vehicles, we recommend that our vehicles be serviced by our service centers, Mobile Servicetechnicians or certain authorized professionals that we have specifically trained and equipped. If we experience delays in adding such servicing capacity orexperience unforeseen issues with the reliability of Model 3, which we recently commenced producing at volume, it could overburden our servicingcapabilities. If we are unable to ramp up to meet our sales, delivery and servicing targets globally, or our projections on which such targets are based areinaccurate, this could result in negative publicity and damage to our brand and have a material adverse effect on our business, prospects, financial conditionand operating results.Our future growth and success is dependent upon consumers’ willingness to adopt electric vehicles and specifically our vehicles, especially in themass market demographic which we are targeting with Model 3.Our growth is highly dependent upon the adoption by consumers of alternative fuel vehicles in general and electric vehicles in particular. Althoughwe have successfully grown demand for our vehicles thus far, there is no guarantee of such future demand, or that our vehicles will not compete with oneanother in the market. Moreover, the Model 3 mass market demographic is larger, but more competitive, than the demographic for Model S and Model X, andadditional electric vehicles are entering the market.If the market for electric vehicles in general and Tesla vehicles in particular does not develop as we expect, or develops more slowly than we expect,or if demand for our vehicles decreases in our markets, our business, prospects, financial condition and operating results could be harmed. We have onlyrecently begun high volume production of vehicles, are still at an earlier stage and have limited resources relative to our competitors, and the market foralternative fuel vehicles is rapidly evolving. As a result, the market for our vehicles could be affected by numerous factors, such as: •perceptions about electric vehicle features, quality, safety, performance and cost; •perceptions about the limited range over which electric vehicles may be driven on a single battery charge; •competition, including from other types of alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel-economy internalcombustion engine vehicles; •volatility in the cost of oil and gasoline; •government regulations and economic incentives; •access to charging facilities; and •concerns about our future viability.18 We are dependent on our suppliers, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessarycomponents of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficientlymanage these components, could have a material adverse effect on our financial condition and operating results.Our products contain numerous purchased parts which we source globally from hundreds of direct suppliers, the majority of whom are currentlysingle-source suppliers, although we attempt to qualify and obtain components from multiple sources whenever feasible. Any significant increases in ourproduction may require us to procure additional components in a short amount of time, and in the past we have also replaced certain suppliers because oftheir failure to provide components that met our quality control standards. While we believe that we will be able to secure additional or alternate sources ofsupply for most of our components in a relatively short time frame, there is no assurance that we will be able to do so or develop our own replacements forcertain highly customized components of our products. Moreover, we have signed long-term agreements with Panasonic to be our manufacturing partner andsupplier for lithium-ion cells at Gigafactory 1 in Nevada and PV cells and panels at Gigafactory 2 in Buffalo, New York. If we encounter unexpecteddifficulties with key suppliers such as Panasonic, and if we are unable to fill these needs from other suppliers, we could experience production delays andpotential loss of access to important technology and parts for producing, servicing and supporting our products.This limited, and in many cases single source, supply chain exposes us to multiple potential sources of delivery failure or component shortages forthe production of our products, such as those which we experienced in 2012 and 2016 in connection with our slower-than-planned Model S and Model Xramps. Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, natural disasters such as theMarch 2011 earthquakes in Japan and other factors beyond our and our suppliers’ control, could also affect our suppliers’ ability to deliver components to uson a timely basis. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to productdesign changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity,damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results.Changes in our supply chain have also resulted in the past, and may result in the future, in increased cost. We have also experienced cost increasesfrom certain of our suppliers in order to meet our quality targets and development timelines as well as due to our design changes, and we may experiencesimilar cost increases in the future. Certain suppliers have sought to renegotiate the terms of supply arrangements. Additionally, we are negotiating withexisting suppliers for cost reductions, seeking new and less expensive suppliers for certain parts, and attempting to redesign certain parts to make them lessexpensive to produce. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer. In particular, because we are producing Model 3 at significantly higher volumes than any of our other products to date, the negative impact of anydelays or other constraints with respect to our suppliers for Model 3 could be substantially greater than any supply chain-related issues experienced withrespect to our other products. We need our Model 3 suppliers to sustainably ramp in accordance with our ongoing ramp of Model 3 and deliver according toour schedule. There is no assurance that these suppliers will ultimately be able to sustainably and timely meet our cost, quality and volume needs. Forexample, we may experience issues or delays increasing the level of localization in China through local sourcing and manufacturing at our GigafactoryShanghai. Furthermore, as the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport to ourmanufacturing facilities components at much higher volumes. If we are unable to accurately match the timing and quantities of component purchases to ouractual needs, or successfully implement automation, inventory management and other systems to accommodate the increased complexity in our supplychain, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our financialcondition and operating results.19 Future problems or delays in expanding Gigafactory 1 or ramping operations there could negatively affect the production and profitability of ourproducts, such as Model 3 and our energy storage products.To lower the cost of cell production and produce cells in high volume, we have vertically integrated the production of lithium-ion cells and finishedbattery packs for Model 3 and energy storage products at Gigafactory 1. While Gigafactory 1 began producing lithium-ion cells for energy storage productsin January 2017 and has since begun producing lithium-ion cells for Model 3, we have no other direct experience in the production of lithium-ion cells.Given the size and complexity of this undertaking, it is possible that future events could result in issues or delays in further ramping and expandingproduction at Gigafactory 1. Moreover, we expect that we will need additional production at Gigafactory 1 to support vehicle production at GigafactoryShanghai in part when we commence Model 3 production there. In order to achieve our volume and gross margin targets for Model 3 and the anticipatedramp in production of energy storage products, we must continue to sustain and ramp significant cell production at Gigafactory 1, which, among other things,requires Panasonic to successfully operate and further ramp its cell production lines at significant volumes. Although Panasonic has a long track record ofproducing high-quality cells at significant volume at its factories in Japan, it has limited experience with cell production at Gigafactory 1. In addition, weproduce several components for Model 3, such as battery modules incorporating the lithium-ion cells produced by Panasonic, and drive units, at Gigafactory1. Some of the manufacturing lines for such components took longer than anticipated to ramp to their full capacity. While we have largely overcome thisbottleneck after deploying multiple semi-automated lines and improving our original lines, additional bottlenecks may arise as we continue to increase theproduction rate. Finally, we have announced that we will likely manufacture Model Y at Gigafactory 1. If we are unable to maintain Gigafactory 1production, ramp additionally over time as needed, and do so cost-effectively, or if we or Panasonic are unable to attract, hire and retain a substantial numberof highly skilled personnel, our ability to supply battery packs or other components for Model 3 and our other products could be negatively impacted, whichcould negatively affect our brand and harm our business, prospects, financial condition and operating results.If our vehicles or other products that we sell or install fail to perform as expected, our ability to develop, market and sell our products and servicescould be harmed.If our vehicles or our energy products contain defects in design and manufacture that cause them not to perform as expected or that require repair, orcertain features of our vehicles, such as full self-driving, take longer than expected to become enabled or are legally restricted, our ability to develop, marketand sell our products and services could be harmed. For example, the operation of our vehicles is highly dependent on software, which is inherently complexand may contain latent defects and errors or be subject to external attacks. Issues experienced by vehicle customers have included those related to thesoftware for the 17 inch display screen, the panoramic roof and the 12-volt battery in the Model S and the seats and doors in the Model X. Although weattempt to remedy any issues we observe in our products as effectively and rapidly as possible, such efforts may not be timely, may hamper production or maynot be to the satisfaction of our customers. While we have performed extensive internal testing on the products we manufacture, we currently have a limitedframe of reference by which to evaluate detailed long-term quality, reliability, durability and performance characteristics of our battery packs, powertrains,vehicles and energy storage products. There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale to orinstallation for consumers.Any product defects, delays or legal restrictions on product features, or other failure of our products to perform as expected, could harm ourreputation and result in delivery delays, product recalls, product liability claims, and significant warranty and other expenses, and could have a materialadverse impact on our business, financial condition, operating results and prospects.20 If we fail to scale our business operations and otherwise manage future growth and adapt to new conditions effectively as we rapidly grow ourcompany, including internationally, we may not be able to produce, market, sell and service our products successfully.Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition.We expect to continue to expand our operations significantly, including internationally and with our increasing production of Model 3, and the worldwidesales, delivery and servicing of a significantly higher number of vehicles than our current vehicle fleet in the coming years. Furthermore, we are developingand growing our energy storage product and solar business worldwide, including in countries where we have limited or no previous operating experience.Our future operating results depend to a large extent on our ability to manage our expansion and growth successfully. We may not be successful inundertaking this global expansion if we are unable to control expenses and avoid cost overruns and other unexpected operating costs, establish sufficientworldwide automobile sales, delivery, service and Supercharger facilities in a timely manner, adapt our products and conduct our operations to meet localrequirements, implement required local infrastructure, systems and processes, and find and hire a significant number of additional manufacturing,engineering, service, electrical installation, construction and administrative personnel.In particular, we plan to expand our manufacturing capabilities outside of the U.S., where we have limited experience operating a factory ormanaging related regulatory, financing and other challenges. For example, as part of our continuing work to increase Model 3 production to 10,000 vehiclesper week on a sustained basis and make Model 3 affordable in the markets where we plan to offer it, we expect to commence the initial phase of Model 3production at Gigafactory Shanghai for the local market in China by the end of 2019, although the timeframe for that is subject to a number of uncertainties,including regulatory approval, supply chain constraints, and the pace of installing production equipment and bringing the factory online. As we expect tocommence our manufacturing activities in China using progressively increased levels of localization through local sourcing and manufacturing, we expectthat we will need to initially support manufacturing activities there with production processes at our existing manufacturing facilities, such as Gigafactory 1.Moreover, local manufacturing is critical to our expansion and sales in China, which is the largest market for electric vehicles in the world. Our sales ofModel S and Model X in China have been negatively impacted by certain tariffs on automobiles manufactured in the U.S., such as our vehicles, and our costsfor producing our vehicles in the U.S. have also been affected by import duties on certain components sourced from China. If we are not able to establishmanufacturing activities in China and other jurisdictions to minimize the impact of such unfavorable tariffs, duties or costs, or ramp our productioncapabilities at Gigafactory 1 or other facilities to support such vehicle manufacturing activities, our ability to compete in such jurisdictions, and ouroperating results, business and prospects, will be harmed.If we are unable to achieve our targeted manufacturing costs for our vehicles, including Model 3, our financial condition and operating resultswill suffer.While we are continuing to and expect in the future to realize cost reductions by both us and our suppliers, there is no guarantee we will be able toachieve sufficient cost savings to reach our gross margin and profitability goals, including for the least expensive variant of Model 3 that we ultimatelyexpect to produce, or our other financial targets. We incur significant costs related to procuring the materials required to manufacture our vehicles,assembling vehicles and compensating our personnel. If our efforts to continue to decrease manufacturing costs are not successful, we may incur substantialcosts or cost overruns in utilizing and increasing the production capability of our vehicle manufacturing facilities, such as for Model 3 both in the U.S. andinternationally. Many of the factors that impact our manufacturing costs are beyond our control, such as potential increases in the costs of our materials andcomponents, such as lithium, nickel and other components of our battery cells or aluminum used to produce body panels. If we are unable to continue tocontrol and reduce our manufacturing costs, our operating results, business and prospects will be harmed.21 Increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion cells, could harm our business.We may experience increases in the cost or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption orshortage could materially and negatively impact our business, prospects, financial condition and operating results. We use various materials in our businessincluding aluminum, steel, lithium, nickel, copper and cobalt, as well as lithium-ion cells from suppliers. The prices for these materials fluctuate, and theiravailable supply may be unstable, depending on market conditions and global demand for these materials, including as a result of increased production ofelectric vehicles and energy storage products by our competitors, and could adversely affect our business and operating results. For instance, we are exposedto multiple risks relating to lithium-ion cells. These risks include: •an increase in the cost, or decrease in the available supply, of materials used in the cells; •disruption in the supply of cells due to quality issues or recalls by battery cell manufacturers or any issues that may arise with respect to cellsmanufactured at our own facilities; and •fluctuations in the value of the Japanese yen against the U.S. dollar as our battery-cell purchases for Model S and Model X and some rawmaterials for cells used in Model 3 and energy storage products are currently denominated in Japanese yen. Our business is dependent on the continued supply of battery cells for the battery packs used in our vehicles and energy storage products. While webelieve several sources of the battery cells are available for such battery packs, and expect to eventually rely substantially on battery cells manufactured atour own facilities, we have to date fully qualified only a very limited number of suppliers for the cells used in such battery packs and have very limitedflexibility in changing cell suppliers. Any disruption in the supply of battery cells from such suppliers could disrupt production of our vehicles and of thebattery packs we produce for energy products until such time as a different supplier is fully qualified. Furthermore, fluctuations or shortages in petroleum andother economic conditions may cause us to experience significant increases in freight charges and material costs. Substantial increases in the prices for ourmaterials or prices charged to us, such as those charged by battery cell suppliers, would increase our operating costs, and could reduce our margins if wecannot recoup the increased costs through increased vehicle prices. Any attempts to increase vehicle prices in response to increased material costs couldresult in cancellations of vehicle orders and reservations and therefore materially and adversely affect our brand, image, business, prospects and operatingresults.We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfullydefend or insure against such claims.Although we design our vehicles to be the safest vehicles on the road, product liability claims, even those without merit, could harm our business,prospects, operating results and financial condition. The automobile industry in particular experiences significant product liability claims and we faceinherent risk of exposure to claims in the event our vehicles do not perform or are claimed to not have performed as expected. As is true for other automakers,our cars have been involved and we expect in the future will be involved in crashes resulting in death or personal injury, and such crashes where Autopilot isengaged are the subject of significant public attention. We have experienced and we expect to continue to face claims arising from or related to misuse orclaimed failures of new technologies that we are pioneering, including Autopilot in our vehicles. Moreover, as our solar energy systems and energy storageproducts generate and store electricity, they have the potential to cause injury to people or property. A successful product liability claim against us couldrequire us to pay a substantial monetary award. Our risks in this area are particularly pronounced given the relatively limited number of vehicles and energystorage products delivered to date and limited field experience of our products. Moreover, a product liability claim could generate substantial negativepublicity about our products and business and could have a material adverse effect on our brand, business, prospects and operating results. In mostjurisdictions, we generally self-insure against the risk of product liability claims for vehicle exposure, meaning that any product liability claims will likelyhave to be paid from company funds, not by insurance.22 The markets in which we operate are highly competitive, and we may not be successful in competing in these industries. We currently facecompetition from new and established domestic and international competitors and expect to face competition from others in the future, includingcompetition from companies with new technology.The worldwide automotive market, particularly for alternative fuel vehicles, is highly competitive today and we expect it will become even more soin the future. There is no assurance that our vehicles will be successful in the respective markets in which they compete. A significant and growing number ofestablished and new automobile manufacturers, as well as other companies, have entered or are reported to have plans to enter the alternative fuel vehiclemarket, including hybrid, plug-in hybrid and fully electric vehicles, as well as the market for self-driving technology and applications. In some cases, suchcompetitors have announced an intention to produce electric vehicles exclusively at some point in the future. Most of our current and potential competitorshave significantly greater financial, technical, manufacturing, marketing, vehicle sales resources and networks than we do and may be able to devote greaterresources to the design, development, manufacturing, distribution, promotion, sale and support of their products. In particular, some competitors have alsoannounced plans to compete with us in important and large markets for electric vehicles, such as China. Increased competition could result in lower vehicleunit sales, price reductions, revenue shortfalls, loss of customers and loss of market share, which could harm our business, prospects, financial condition andoperating results. In addition, our Model 3 vehicle faces competition from existing and future automobile manufacturers in the extremely competitive entry-level premium sedan market, including Audi, BMW, Lexus and Mercedes.The solar and energy storage industries are highly competitive. We face competition from other manufacturers, developers and installers of solar andenergy storage systems, as well as from large utilities. Decreases in the retail prices of electricity from utilities or other renewable energy sources could makeour products less attractive to customers and lead to an increased rate of customer defaults under our existing long-term leases and PPAs. Moreover, solarpanel and lithium-ion battery prices have declined and are continuing to decline. As we increase our battery and solar manufacturing capabilities, includingat Gigafactory 1 and Gigafactory 2, future price declines may harm our ability to produce energy storage systems and solar systems at competitive prices.If we are unable to establish and maintain confidence in our long-term business prospects among consumers, analysts and within our industries,then our financial condition, operating results, business prospects and stock price may suffer materially.Consumers may be less likely to purchase our products if they are not convinced that our business will succeed or that our service and support andother operations will continue in the long term. Similarly, suppliers and other third parties will be less likely to invest time and resources in developingbusiness relationships with us if they are not convinced that our business will succeed. Accordingly, in order to build and maintain our business, we mustmaintain confidence among customers, suppliers, analysts, ratings agencies and other parties in our long-term financial viability and business prospects.Maintaining such confidence may be particularly complicated by certain factors, such as our limited operating history, negative press, customer unfamiliaritywith our products, any delays in scaling manufacturing, delivery and service operations to meet demand, competition and uncertainty regarding the future ofelectric vehicles or our other products and services, our quarterly production and sales performance compared with market expectations, and any othernegative publicity related to us. Many of these factors are largely outside our control, and any negative perceptions about our long-term business prospects,even if exaggerated or unfounded, such as speculation regarding the sufficiency or stability of our management team, could harm our business and make itmore difficult to raise additional funds if needed.23 Our plan to generate ongoing growth and demand, including by expanding and optimizing our retail, service and vehicle charging operations, willrequire significant cash investments and management resources and may not meet expectations with respect to additional sales, installations orservicing of our products or availability of public charging solutions.We plan to generate ongoing growth and demand, including by globally expanding and optimizing our retail, service and vehicle chargingoperations. These plans require significant cash investments and management resources and may not meet our expectations with respect to additional sales orinstallations of our products. This ongoing global expansion, which includes planned entry into markets in which we have limited or no experience selling,delivering, installing and/or servicing our products at scale, and which may pose legal, regulatory, labor, cultural and political challenges that we have notpreviously encountered, may not have the desired effect of increasing sales and installations and expanding our brand presence to the degree we areanticipating. Furthermore, the increasing number of Tesla vehicles will require us to continue to increase the number of our Supercharger stations andconnectors significantly in locations throughout the world. If we fail to do so in a timely manner, our customers could become dissatisfied, which couldadversely affect sales of our vehicles. We will also need to ensure we are in compliance with any regulatory requirements applicable to the sale, installationand service of our products, the sale of electricity generated through our solar energy systems and operation of Superchargers in those jurisdictions, whichcould take considerable time and expense. If we experience any delays or cannot meet customer expectations in expanding our customer infrastructurenetwork, or our expansion plans are not successful in continuing to grow demand, this could lead to a decrease or stagnation in sales or installations of ourproducts and could negatively impact our business, prospects, financial condition and operating results.We face risks associated with our global operations and expansion, including unfavorable regulatory, political, economic, tax and laborconditions, and with establishing ourselves in new markets, all of which could harm our business.We currently have a global footprint, with domestic and international operations and subsidiaries in various countries and jurisdictions, and wecontinue to expand and optimize our retail, service and Supercharger capabilities internationally. Accordingly, we are subject to a variety of legal, politicaland regulatory requirements and social and economic conditions over which we have little control. For example, we may be impacted by trade policies,political uncertainty and economic cycles involving geographic regions where we have significant operations. Sales of vehicles in the automotive industryalso tend to be cyclical in many markets, which may expose us to increased volatility as we expand and adjust our operations and retail strategies.We are subject to a number of risks associated in particular with international business activities that may increase our costs, impact our ability to sellour products and require significant management attention. These risks include conforming our products to various international regulatory and safetyrequirements as well as charging and other electric infrastructures, organizing local operating entities, difficulty in establishing, staffing and managingforeign operations, challenges in attracting customers, foreign government taxes, regulations and permit requirements, our ability to enforce our contractualrights; trade restrictions, customs regulations, tariffs and price or exchange controls, and preferences of foreign nations for domestically manufacturedproducts. For example, in China, which is a key market for us, certain products such as automobiles manufactured in the U.S. have become subject to arecently increased tariff imposed by the government. While such increase has been temporarily suspended, the tariff could remain in place for anundetermined length of time, be further increased in the future and/or lead consumers to postpone or choose another vehicle brand subject to lower tariffs orno tariffs. Moreover, recently increased import duties on certain components used in our products that are sourced from China may increase our costs andnegatively impact our operating results. 24 Our vehicles and energy storage products make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame,and such events have raised concerns, and future events may lead to additional concerns, about the batteries used in automotive applications.The battery packs that we produce make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain byventing smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While we have designed the battery pack topassively contain any single cell’s release of energy without spreading to neighboring cells, there can be no assurance that a field or testing failure of ourvehicles or other battery packs that we produce will not occur, which could subject us to lawsuits, product recalls or redesign efforts, all of which would betime consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any futureincident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve our vehicles or energy storage products, couldseriously harm our business.In addition, we store a significant number of lithium-ion cells at our facilities and are producing high volumes of cells and battery modules and packsat Gigafactory 1. Any mishandling of battery cells may cause disruption to the operation of our facilities. While we have implemented safety proceduresrelated to the handling of the cells, there can be no assurance that a safety issue or fire related to the cells would not disrupt our operations. Such damage orinjury could lead to adverse publicity and potentially a safety recall. Moreover, any failure of a competitor’s electric vehicle or energy storage product maycause indirect adverse publicity for us and our products. Such adverse publicity could negatively affect our brand and harm our business, prospects, financialcondition and operating results.If we fail to effectively grow and manage the residual, financing and credit risks related to our vehicle financing programs, our business maysuffer.We offer financing arrangements for our vehicles in North America, Europe and Asia primarily through various financial institutions. We alsocurrently offer Model S and Model X leasing directly through our local subsidiaries in the U.S. and Canada. Under a lease held directly by us, we typicallyreceive only a very small portion of the total vehicle purchase price at the time of lease, followed by a stream of payments over the term of the lease. Theprofitability of any vehicles returned to us at the end of their leases depends on our ability to accurately project our vehicles’ residual values at the outset ofthe leases, and such values may fluctuate prior to the end of their terms depending on various factors such as supply and demand of our used vehicles,economic cycles and the pricing of new vehicles. The leasing program also relies on our ability to secure adequate financing and/or business partners to fundand grow this program, and screen for and manage customer credit risk. We expect the availability of leasing and other financing options will be importantfor our vehicle customers. If we are unable to adequately fund our leasing program with internal funds, or partners or other external financing sources, andcompelling alternative financing programs are not available for our customers, we may be unable to grow our sales. Furthermore, if our leasing business growssubstantially, our business may suffer if we cannot effectively manage the greater levels of residual and credit risks resulting from growth. Finally, if we donot successfully monitor and comply with applicable national, state and/or local financial regulations and consumer protection laws governing leasetransactions, we may become subject to enforcement actions or penalties, either of which may harm our business.Moreover, we have provided resale value guarantees to customers and partners for certain financing programs, under which such counterparties maysell their vehicles back to us at certain points in time at pre-determined amounts. However, actual resale values, as with residual values for leased vehicles, aresubject to similar fluctuations over the term of the financing arrangements. If the actual resale values of any vehicles resold or returned to us pursuant to theseprograms are materially lower than the pre-determined amounts we have offered, our operating results, profitability and/or liquidity could be negativelyimpacted. 25 The unavailability, reduction or elimination of, or unfavorable determinations with respect to, government and economic incentives in the U.S. andabroad supporting the development and adoption of electric vehicles, energy storage products or solar energy could have some impact on demandfor our products and services.We and our customers currently benefit from certain government and economic incentives supporting the development and adoption of electricvehicles. In the U.S. and abroad, such incentives include, among other things, tax credits or rebates that encourage the purchase of electric vehicles. InNorway, for example, the purchase of electric vehicles is not currently subject to import taxes, the 25% value added tax, or the carbon dioxide and weight-based purchase taxes that apply to the purchase of gas-powered vehicles. Notably, the quantum of incentive programs promoting electric vehicles is a tinyfraction of the amount of subsidies that are provided to gas-powered vehicles through the oil and gas industries. Nevertheless, even the limited benefits fromsuch programs could be reduced, eliminated or exhausted. For example, under current regulations, a $7,500 federal tax credit that was available in the U.S. forthe purchase of our vehicles is being reduced in phases during, and will sunset at the end of, 2019. We believe the first reduction in this tax credit may havepulled forward some near-term demand in the U.S. into 2018, and could create similar pull-forwards in 2019 before each further step reduction in the federaltax credit. Moreover, in July 2018, a previously available incentive for purchases of Model 3 in Ontario, Canada was cancelled and Tesla buyers in Germanylost access to electric vehicle incentives for a short period of time beginning late 2017. In April 2017 and January 2016, respectively, previously availableincentives in Hong Kong and Denmark that favored the purchase of electric vehicles expired, negatively impacting sales. Effective March 2016, Californiaimplemented regulations phasing out a $2,500 cash rebate on qualified electric vehicles for high-income consumers. Such developments could have somenegative impact on demand for our vehicles, and we and our customers may have to adjust to them.In addition, certain governmental rebates, tax credits and other financial incentives that are currently available with respect to our solar and energystorage product businesses allow us to lower our installation costs and cost of capital and encourage customers to buy our products and investors to invest inour solar financing funds. However, these incentives may expire on a particular date when the allocated funding is exhausted, reduced or terminated asrenewable energy adoption rates increase, often without warning. For example, the U.S. federal government currently offers a 30% ITC for the installation ofsolar power facilities and energy storage systems that are charged from a co-sited solar power facility. The ITC is currently scheduled to decline in phases,ultimately to 10% for commercial and utility systems and to 0% for customer-owned residential systems by January 2022. Likewise, in jurisdictions wherenet energy metering is currently available, our customers receive bill credits from utilities for energy that their solar energy systems generate and export to thegrid in excess of the electric load they use. Several jurisdictions have reduced or eliminated the benefit available under net energy metering, or haveproposed to do so. Such reductions in or termination of governmental incentives could adversely impact our results by making our products less competitivefor potential customers, increasing our cost of capital and adversely impacting our ability to attract investment partners and to form new financing funds forour solar and energy storage assets. Additionally, the enactment of the Tax Cuts and Jobs Act in the U.S. could potentially increase the cost, and decrease theavailability, of renewable energy financing, by reducing the value of depreciation benefits associated with, and the overall investor tax capacity needed tomonetize, renewable energy projects. Such changes could lower the overall investment willingness and capacity for such projects available in the market.Moreover, we and our fund investors claim the ITC and certain state incentives in amounts based on the fair market value of our solar and energystorage systems. Although we obtain independent appraisals to support the claimed fair market values, the relevant governmental authorities have auditedsuch values and in certain cases have determined that they should be lower, and they may do so again in the future. Such determinations may result inadverse tax consequences and/or our obligation to make indemnification or other payments to our funds or fund investors.26 Any failure by us to realize the expected benefits of our substantial investments and commitments with respect to the manufacture of PV cells andmodules, including if we are unable to comply with the terms of our agreement with the Research Foundation for the State University of New Yorkrelating to our Gigafactory 2, could result in negative consequences for our business.We own certain PV cell and module manufacturing and technology assets, and a build-to-suit lease arrangement with the Research Foundation for theState University of New York (the “SUNY Foundation”). This agreement with the SUNY Foundation provides for the construction of Gigafactory 2 inBuffalo, New York with the intended capacity to produce at least 1.0 GW of solar products annually. Under this agreement, we are obligated to, among otherthings, employ specified minimum numbers of personnel in the State of New York and spend or incur $5.0 billion in combined capital, operational expenses,costs of goods sold and other costs in the State of New York during the 10-year period following the completion of all construction and related infrastructure,the arrival of manufacturing equipment, and the receipt of certain permits and other specified items at Gigafactory 2. If we fail in any year over the course ofthe term of the agreement to meet these obligations, we would be obligated to pay a “program payment” of $41.2 million to the SUNY Foundation in suchyear. Any inability on our part to comply with the requirements of this agreement may result in the payment of significant amounts to the SUNY Foundation,the termination of our lease at Gigafactory 2, and/or the need to secure an alternative supply of PV cells and modules for our solar products. Moreover, if weare unable to utilize our manufacturing and technology assets in accordance with our expectations, we may have to recognize accounting charges pertainingto the write-off of such assets. Any of the foregoing events could have a material adverse effect on our business, prospects, financial condition and operatingresults.If we are unable to attract and/or retain key employees and hire qualified personnel, our ability to compete could be harmed.The loss of the services of any of our key employees could disrupt our operations, delay the development and introduction of our vehicles andservices, and negatively impact our business, prospects and operating results. In particular, we are highly dependent on the services of Elon Musk, our ChiefExecutive Officer, and Jeffrey B. Straubel, our Chief Technology Officer.None of our key employees is bound by an employment agreement for any specific term and we may not be able to successfully attract and retainsenior leadership necessary to grow our business. Our future success depends upon our ability to attract and retain executive officers and other keytechnology, sales, marketing, engineering, manufacturing and support personnel, especially to support our high-volume manufacture of vehicles andexpansion plans, and any failure or delay in doing so could adversely impact our business, prospects, financial condition and operating results.Key talent may leave Tesla due to various factors, such as a very competitive labor market for talented individuals with automotive or technologyexperience, or any negative publicity related to us. In California, Nevada and other regions where we have operations, there is increasing competition forindividuals with skillsets needed for our business, including specialized knowledge of electric vehicles, software engineering, manufacturing engineering,and other skills such as electrical and building construction expertise. This competition affects both our ability to retain key employees and hire new ones.Moreover, we have in the past conducted reductions in force in order to optimize our organizational structure and reduce costs, and certain senior personnelhave also departed for various reasons. Our continued success depends upon our continued ability to hire new employees in a timely manner, especially tosupport our expansion plans, and to retain current employees or replace departed senior employees with qualified and experienced individuals, which istypically a time-consuming process. Additionally, we compete with both mature and prosperous companies that have far greater financial resources than wedo and start-ups and emerging companies that promise short-term growth opportunities. Difficulties in retaining current employees or recruiting new onescould have an adverse effect on our performance and results.27 Finally, our compensation philosophy for all of our personnel reflects our startup origins, with an emphasis on equity-based awards and benefits inorder to closely align their incentives with the long-term interests of our stockholders. Each of our current equity incentive plan and employee stock purchaseplan provides for an “evergreen” provision that permits our board of directors to increase on an annual basis, subject to specified limits, the number of equity-based awards that may be granted to, and shares of our common stock that may be purchased by, our personnel thereunder. These plans are currentlyscheduled to expire in December 2019, and we will need to extend them or establish new plans in order to continue to compensate our employees followingtheir expiration, which will require the approval of our stockholders. Moreover, there is no assurance that these plans as extended or any future plans willcontain evergreen provisions, which would mean that we would have to periodically seek and obtain approval from our stockholders for future increases tothe number of awards that may be granted and shares that may be purchased under such plans. If we are unable to obtain such stockholder approvals andcompensate our personnel in accordance with our compensation philosophy, our ability to retain and hire qualified personnel would be negatively impacted.We are highly dependent on the services of Elon Musk, our Chief Executive Officer.We are highly dependent on the services of Elon Musk, our Chief Executive Officer and largest stockholder. Although Mr. Musk spends significanttime with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla. Mr. Musk also currently serves as ChiefExecutive Officer and Chief Technical Officer of Space Exploration Technologies Corp., a developer and manufacturer of space launch vehicles, and isinvolved in other emerging technology ventures.We are continuously expanding and improving our information technology systems and use security measures designed to protect our systemsagainst breaches and cyber-attacks. If these efforts are not successful, our business and operations could be disrupted and our operating resultsand reputation could be harmed.We are continuously expanding and improving our information technology systems, including implementing new internally developed systems, toassist us in the management of our business. In particular, our volume production of multiple vehicles necessitates continued development, maintenance andimprovement of our information technology systems in the U.S. and abroad, which include product data management, procurement, inventory management,production planning and execution, sales, service and logistics, dealer management, financial, tax and regulatory compliance systems. We also maintaininformation technology measures designed to protect us against intellectual property theft, data breaches and other cyber-attacks. The implementation,maintenance and improvement of these systems require significant management time, support and cost. Moreover, there are inherent risks associated withdeveloping, improving and expanding our core systems as well as implementing new systems, including the disruption of our data management,procurement, manufacturing execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage our data andinventory, procure parts or supplies or manufacture, sell, deliver and service vehicles, or achieve and maintain compliance with, or realize available benefitsunder, tax laws and other applicable regulations.We cannot be sure that these systems or their required functionality will be effectively implemented, maintained or expanded as planned. If we do notsuccessfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately and/or timely report ourfinancial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify ourfinancial results. Moreover, our proprietary information could be compromised or misappropriated and our reputation may be adversely affected. If thesesystems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternativesources for performing these functions.28 Any unauthorized control or manipulation of our products’ systems could result in loss of confidence in us and our products and harm ourbusiness.Our products contain complex information technology systems. For example, our vehicles and energy storage products are designed with built-indata connectivity to accept and install periodic remote updates from us to improve or update their functionality. We have designed, implemented and testedsecurity measures intended to prevent unauthorized access to our information technology networks, our products and their systems. However, hackers havereportedly attempted, and may attempt in the future, to gain unauthorized access to modify, alter and use such networks, products and systems to gain controlof, or to change, our products’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by our products.We encourage reporting of potential vulnerabilities in the security of our products via our security vulnerability reporting policy, and we aim to remedy anyreported and verified vulnerability. Accordingly, we have received reports of potential vulnerabilities in the past and have attempted to remedy them.However, there can be no assurance that vulnerabilities will not be exploited in the future before they can be identified, or that our remediation efforts are orwill be successful.Any unauthorized access to or control of our products or their systems or any loss of data could result in legal claims or proceedings. In addition,regardless of their veracity, reports of unauthorized access to our products, their systems or data, as well as other factors that may result in the perception thatour products, their systems or data are capable of being “hacked,” could negatively affect our brand and harm our business, prospects, financial condition andoperating results. We have been the subject of such reports in the past.We are subject to various environmental and safety laws and regulations that could impose substantial costs upon us and negatively impact ourability to operate our manufacturing facilities.As a manufacturing company, including with respect to facilities such as the Tesla Factory, Gigafactory 1 and Gigafactory 2, we are subject tocomplex environmental, health and safety laws and regulations at numerous jurisdictional levels in the U.S. and abroad, including laws relating to the use,handling, storage, disposal and human exposure to hazardous materials. The costs of compliance, including remediating contamination if any is found on ourproperties and any changes to our operations mandated by new or amended laws, may be significant. We may also face unexpected delays in obtainingpermits and approvals required by such laws in connection with our manufacturing facilities, which would hinder our operation of these facilities. Such costsand delays may adversely impact our business prospects and operating results. Furthermore, any violations of these laws may result in substantial fines andpenalties, remediation costs, third party damages, or a suspension or cessation of our operations.Our business may be adversely affected by any disruptions caused by union activities.It is common for employees at companies with significant manufacturing operations such as us to belong to a union, which can result in higheremployee costs and increased risk of work stoppages. Moreover, regulations in some jurisdictions outside of the U.S. mandate employee participation inindustrial collective bargaining agreements and work councils with certain consultation rights with respect to the relevant companies’ operations. Althoughwe work diligently to provide the best possible work environment for our employees, they may still decide to join or seek recognition to form a labor union,or we may be required to become a union signatory. The United Automobile Workers (“UAW”) has been engaged in a campaign to organize manufacturingoperations at Tesla. As part of that campaign, the UAW has filed with the National Labor Relations Board (“NLRB”) a series of unfair labor practice chargesagainst Tesla on which a hearing recently concluded. We cannot predict the timing of the NLRB’s decision, and an unfavorable outcome for Tesla may havea negative impact on the perception of Tesla’s treatment of our employees. Furthermore, we are directly or indirectly dependent upon companies withunionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have amaterial adverse impact on our business, financial condition or operating results. If a work stoppage occurs, it could delay the manufacture and sale of ourproducts and have a material adverse effect on our business, prospects, operating results or financial condition.29 Our products and services are subject to substantial regulations, which are evolving, and unfavorable changes or failure by us to comply with theseregulations could substantially harm our business and operating results.Motor vehicles are subject to substantial regulation under international, federal, state and local laws. We incur significant costs in complying withthese regulations and may be required to incur additional costs to comply with any changes to such regulations, and any failures to comply could result insignificant expenses, delays or fines. We are subject to laws and regulations applicable to the supply, manufacture, import, sale and service of automobilesinternationally. For example, in countries outside of the U.S., we are required to meet standards relating to vehicle safety, fuel economy and emissions, amongother things, that are often materially different from requirements in the U.S., thus resulting in additional investment into the vehicles and systems to ensureregulatory compliance in those countries. This process may include official review and certification of our vehicles by foreign regulatory agencies prior tomarket entry, as well as compliance with foreign reporting and recall management systems requirements.Additionally, our vehicles are equipped with a suite of driver-assistance features called Autopilot, which help assist drivers with certain tedious andpotentially dangerous aspects of road travel, but require drivers to remain engaged. There is a variety of international, federal and state regulations that mayapply to self-driving vehicles, which include many existing vehicle standards that were not originally intended to apply to vehicles that may not have adriver. Such regulations continue to rapidly change, which increases the likelihood of a patchwork of complex or conflicting regulations, or may delayproducts or restrict self-driving features and availability, any of which could adversely affect our business.Moreover, as a manufacturer and installer of solar generation and energy storage systems and a supplier of electricity generated and stored by thesolar energy and energy storage systems we install for customers, we are impacted by federal, state and local regulations and policies concerning electricitypricing, the interconnection of electricity generation and storage equipment with the electric grid, and the sale of electricity generated by third-party ownedsystems. For example, existing or proposed regulations and policies would permit utilities to limit the amount of electricity generated by our customers withtheir solar energy systems, charge fees and penalties to our customers relating to the purchase of energy other than from the grid, adjust electricity ratedesigns such that the price of our solar products may not be competitive with that of electricity from the grid, restrict us and our customers from transactingunder our PPAs or qualifying for government incentives and benefits that apply to solar power, and limit or eliminate net energy metering. If such regulationsand policies remain in effect or are adopted in other jurisdictions, or if other regulations and policies that adversely impact the interconnection or use of oursolar and energy storage systems are introduced, they could deter potential customers from purchasing our solar and energy storage products, threaten theeconomics of our existing contracts and cause us to cease solar and energy storage system sales and operations in the relevant jurisdictions, which could harmour business, prospects, financial condition and results of operations.Failure to comply with various privacy and consumer protection laws to which we are subject could harm the Company.Our privacy policy is posted on our website, and any failure by us or our vendor or other business partners to comply with it or with federal, state orinternational privacy, data protection or security laws or regulations could result in regulatory or litigation-related actions against us, legal liability, fines,damages and other costs. Substantial expenses and operational changes may be required in connection with maintaining compliance with such laws, and inparticular certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application. For example, in May 2018,the General Data Protection Regulation (the “GDPR”) began to fully apply to the processing of personal information collected from individuals located inthe European Union. The GDPR has created new compliance obligations and has significantly increased fines for noncompliance. Although we take steps toprotect the security of our customers’ personal information, we may be required to expend significant resources to comply with data breach requirements ifthird parties improperly obtain and use the personal information of our customers or we otherwise experience a data loss with respect to customers’ personalinformation. A major breach of our network security and systems could have negative consequences for our business and future prospects, including possiblefines, penalties and damages, reduced customer demand for our vehicles and harm to our reputation and brand.30 We may choose to or be compelled to undertake product recalls or take other similar actions, which could adversely affect our brand image andfinancial performance.Any product recall with respect to our products may result in adverse publicity, damage our brand and adversely affect our business, prospects,operating results and financial condition. For example, certain vehicle recalls that we initiated have resulted from various causes, including a component thatcould prevent the parking brake from releasing once engaged, a concern with the firmware in the restraints control module in certain right-hand-drivevehicles, industry-wide issues with airbags from a particular supplier, Model X seat components that could cause unintended seat movement during acollision, and concerns of corrosion in Model S power steering assist motor bolts. Furthermore, testing of our products by government regulators or industrygroups may require us to initiate product recalls or may result in negative public perceptions about the safety of our products. In the future, we may at varioustimes, voluntarily or involuntarily, initiate a recall if any of our products or our electric vehicle powertrain components that we have provided to othervehicle OEMs, including any systems or parts sourced from our suppliers, prove to be defective or noncompliant with applicable laws and regulations, suchas federal motor vehicle safety standards. Such recalls, whether voluntary or involuntary or caused by systems or components engineered or manufactured byus or our suppliers, could involve significant expense and could adversely affect our brand image in our target markets, as well as our business, prospects,financial condition and results of operations.Our current and future warranty reserves may be insufficient to cover future warranty claims which could adversely affect our financialperformance.Subject to separate limited warranties for the supplemental restraint system, battery and drive unit, we provide four-year or 50,000-mile limitedwarranties for the purchasers of new Model 3, Model S and Model X vehicles and either a four-year or 50,000-mile limited warranty or a two-year or 100,000-mile maximum odometer limited warranty for the purchasers of used Model S or Model X vehicles certified and sold by us. The limited warranty for thebattery and drive unit for new Model S and Model X vehicles covers the drive unit for eight years, as well as the battery for a period of eight years (or forcertain older vehicles, 125,000 miles if reached sooner than eight years), although the battery’s charging capacity is not covered under any of our warrantiesor Extended Service plans; the limited warranty for used Model S and Model X vehicles does not extend or otherwise alter the terms of the original batteryand drive unit limited warranty for such used vehicles specified in their original New Vehicle Limited Warranty. For the battery and drive unit on our currentnew Model 3 vehicles, we offer an eight-year or 100,000-mile limited warranty for our standard or mid-range battery and an eight-year or 120,000-milelimited warranty for our long-range battery, with minimum 70% retention of battery capacity over the warranty period. In addition, customers of new Model Sand Model X vehicles have the opportunity to purchase an Extended Service plan for the period after the end of the limited warranty for their new vehicles tocover additional services for up to an additional four years or 50,000 miles.For energy storage products, we provide limited warranties against defects and to guarantee minimum energy retention levels. For example, wecurrently guarantee that each Powerwall 2 product will maintain at least 70 or 80% (depending on the region of installation) of its stated energy capacity after10 years, and that each Powerpack 2 product will retain specified minimum energy capacities in each of its first 15 years of use. For our Solar Roof, wecurrently offer a warranty on the glass tiles for the lifetime of a customer’s home and a separate warranty for the energy generation capability of the solar tiles.We also offer extended warranties, availability guarantees and capacity guarantees for periods of up to 20 years at an additional cost at the time of purchase,as well as workmanship warranties to customers who elect to have us install their systems.Finally, customers who lease solar energy system leases or buy energy from us under PPAs are covered by warranties equal to the length of theagreement term, which is typically 20 years. Systems purchased for cash are covered by a workmanship warranty of up to 20 years. In addition, we passthrough to our customers the inverter and panel manufacturers’ warranties, which generally range from 10 to 25 years. Finally, we provide a performanceguarantee with our leased solar energy systems that compensates a customer on an annual basis if their system does not meet the electricity productionguarantees set forth in their lease. Under these performance guarantees, we bear the risk of production shortfalls resulting from an inverter or panelfailure. These risks are exacerbated in the event the panel or inverter manufacturers cease operations or fail to honor their warranties.31 If our warranty reserves are inadequate to cover future warranty claims on our products, our business, prospects, financial condition and operatingresults could be materially and adversely affected. Warranty reserves include our management’s best estimate of the projected costs to repair or to replaceitems under warranty. These estimates are based on actual claims incurred to-date and an estimate of the nature, frequency and costs of future claims. Suchestimates are inherently uncertain and changes to our historical or projected experience, especially with respect to products such as Model 3 and Solar Roofthat we have recently introduced and/or that we expect to produce at significantly greater volumes than our past products, may cause material changes to ourwarranty reserves in the future.Our insurance strategy may not be adequate to protect us from all business risks.We may be subject, in the ordinary course of business, to losses resulting from products liability, accidents, acts of God and other claims against us,for which we may have no insurance coverage. As a general matter, we do not maintain as much insurance coverage as many other companies do, and in somecases, we do not maintain any at all. Additionally, the policies that we do have may include significant deductibles or self-insured retentions, and we cannotbe certain that our insurance coverage will be sufficient to cover all future losses or claims against us. A loss that is uninsured or which exceeds policy limitsmay require us to pay substantial amounts, which could adversely affect our financial condition and operating results.Our financial results may vary significantly from period-to-period due to fluctuations in our operating costs and other factors.We expect our period-to-period financial results to vary based on our operating costs, which we anticipate will fluctuate as the pace at which wecontinue to design, develop and manufacture new products and increase production capacity by expanding our current manufacturing facilities and addingfuture facilities such as Gigafactory Shanghai may not be consistent or linear between periods. Additionally, our revenues from period-to-period mayfluctuate as we introduce existing products to new markets for the first time and as we develop and introduce new products. As a result of these factors, webelieve that quarter-to-quarter comparisons of our financial results, especially in the short term, are not necessarily meaningful and that these comparisonscannot be relied upon as indicators of future performance. Moreover, our financial results may not meet expectations of equity research analysts, ratingsagencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of our stock could fall substantially,either suddenly or over time.Servicing our indebtedness requires a significant amount of cash, and there is no guarantee that we will have sufficient cash flow from our businessto pay our substantial indebtedness.As of December 31, 2018, we and our subsidiaries had outstanding $11.00 billion in aggregate principal amount of indebtedness (see Note 13, Long-Term Debt Obligations, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Our substantial consolidatedindebtedness may increase our vulnerability to any generally adverse economic and industry conditions. We and our subsidiaries may, subject to thelimitations in the terms of our existing and future indebtedness, incur additional debt, secure existing or future debt or recapitalize our debt.Pursuant to their terms, holders of our 0.25% Convertible Senior Notes due 2019, 1.25% Convertible Senior Notes due 2021 and 2.375% ConvertibleSenior Notes due 2022 (collectively, the “Tesla Convertible Notes”) may convert their respective Tesla Convertible Notes at their option prior to thescheduled maturities of the respective Tesla Convertible Notes under certain circumstances. Upon conversion of the applicable Tesla Convertible Notes, wewill be obligated to deliver cash and/or shares in respect of the principal amounts thereof and the conversion value in excess of such principal amounts onsuch Tesla Convertible Notes. Moreover, our subsidiary’s 1.625% Convertible Senior Notes due 2019 and Zero-Coupon Convertible Senior Notes due 2020(together, the “Subsidiary Convertible Notes”) are convertible into shares of our common stock at conversion prices ranging from $300.00 to $759.36 pershare. Finally, holders of the Tesla Convertible Notes and the Subsidiary Convertible Notes will have the right to require us to repurchase their notes uponthe occurrence of a fundamental change at a purchase price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest, if any, to,but not including, the fundamental change purchase date.32 Our ability to make scheduled payments of the principal and interest on our indebtedness when due or to make payments upon conversion orrepurchase demands with respect to our convertible notes, or to refinance our indebtedness as we may need or desire, depends on our future performance,which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow fromoperations in the future sufficient to satisfy our obligations under our existing indebtedness, and any future indebtedness we may incur, and to makenecessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing ordelaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highlydilutive. Our ability to refinance existing or future indebtedness will depend on the capital markets and our financial condition at such time. In addition, ourability to make payments may be limited by law, by regulatory authority or by agreements governing our future indebtedness. We may not be able to engagein any of these activities or engage in these activities on desirable terms or at all, which could result in a default on our existing or future indebtedness andhave a material adverse effect on our business, results of operations and financial condition.Our debt agreements contain covenant restrictions that may limit our ability to operate our business.The terms of certain of our credit facilities, including our senior secured asset based revolving credit agreement, contain, and any of our other futuredebt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to, among other things,incur additional debt or issue guarantees, create liens, repurchase stock or make other restricted payments, and make certain voluntary prepayments ofspecified debt. In addition, under certain circumstances we are required to comply with a fixed charge coverage ratio. As a result of these covenants, ourability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed,may be restricted. Furthermore, our failure to comply with our debt covenants could result in a default under our debt agreements, which could permit theholders to accelerate our obligation to repay the debt. If any of our debt is accelerated, we may not have sufficient funds available to repay it.We may need or want to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional fundswhen we need or want them, our operations and prospects could be negatively affected.The design, manufacture, sale, installation and/or servicing of automobiles, energy storage products and solar products is a capital intensive business,and the specific timing of cash inflows and outflows may fluctuate substantially from period to period. Until we are consistently generating positive free cashflows, we may need or want to raise additional funds through the issuance of equity, equity-related or debt securities or through obtaining credit fromfinancial institutions to fund, together with our principal sources of liquidity, the costs of developing and manufacturing our current or future vehicles,energy storage products and/or solar products, to pay any significant unplanned or accelerated expenses or for new significant strategic investments, or torefinance our significant consolidated indebtedness, even if not required to do so by the terms of such indebtedness. We need sufficient capital to fund ourongoing operations, ramp vehicle production, continue research and development projects, establish sales, delivery and service centers, build and deploySuperchargers, expand Gigafactory 1, ramp production at Gigafactory 2, build and commence Model 3 production at Gigafactory Shanghai and to make theinvestments in tooling and manufacturing capital required to introduce new vehicles, energy storage products and solar products. We cannot be certain thatadditional funds will be available to us on favorable terms when required, or at all. If we cannot raise additional funds when we need them, our financialcondition, results of operations, business and prospects could be materially and adversely affected.33 Additionally, we use capital from third-party investors to enable our customers’ access to our solar energy systems with little or no upfront cost. Theavailability of this financing depends upon many factors, including the confidence of the investors in the solar energy industry, the quality and mix of ourcustomer contracts, any regulatory changes impacting the economics of our existing customer contracts, changes in law (including tax law), risks orgovernment incentives associated with these financings, and our ability to compete with other renewable energy companies for the limited number ofpotential investors. Moreover, while interest rates remain at low levels, they have risen in recent periods. If the rate of return required by investors rises as aresult of a rise in interest rates, it will reduce the present value of the customer payment streams underlying, and therefore the total value of, our financingstructures, increasing our cost of capital. If we are unable to establish new financing funds on favorable terms for third-party ownership arrangements, we maybe unable to finance the installation of our solar energy systems for our lease or PPA customers’ systems, or our cost of capital could increase and ourliquidity may be negatively impacted, which would have an adverse effect on our business, financial condition and results of operations.We could be subject to liability, penalties and other restrictive sanctions and adverse consequences arising out of certain governmentalinvestigations and proceedings.We are cooperating with certain government investigations as discussed in Note 17, Commitments and Contingencies, to the consolidated financialstatements included elsewhere in this Annual Report on Form 10-K. Aside from the settlement with the SEC discussed below relating to Elon Musk’sstatement that he was considering taking Tesla private, to our knowledge no government agency in any ongoing investigation has concluded that anywrongdoing occurred. However, we cannot predict the outcome or impact of any ongoing matters, and there exists the possibility that we could be subject toliability, penalties and other restrictive sanctions and adverse consequences if the SEC, the DOJ, or any other government agency were to pursue legal actionin the future. Moreover, we expect to incur costs in responding to related requests for information and subpoenas, and if instituted, in defending against anygovernmental proceedings.For example, on October 16, 2018, the U.S. District Court for the Southern District of New York entered a final judgment approving the terms of asettlement filed with the Court on September 29, 2018, in connection with the actions taken by the SEC relating to Mr. Musk’s statement on August 7, 2018that he was considering taking Tesla private. Pursuant to the settlement, we, among other things, paid a civil penalty of $20 million, appointed anindependent director as the Chair of the Board, appointed two additional independent directors to the Board, and made further enhancements to ourdisclosure controls and other corporate governance-related matters. Although we intend to continue to comply with the terms and requirements of thesettlement, if there is a lack of compliance, additional enforcement actions or other legal proceedings may be instituted against us.If we update or discontinue the use of our manufacturing equipment more quickly than expected, we may have to shorten the useful lives of anyequipment to be retired as a result of any such update, and the resulting acceleration in our depreciation could negatively affect our financialresults.We have invested and expect to continue to invest significantly in what we believe is state of the art tooling, machinery and other manufacturingequipment for our various product lines, and we depreciate the cost of such equipment over their expected useful lives. However, manufacturing technologymay evolve rapidly, and we may decide to update our manufacturing process with cutting-edge equipment more quickly than expected. Moreover, we arecontinually implementing learnings as our engineering and manufacturing expertise and efficiency increase, which may result in our ability to manufactureour products using less of our currently installed equipment. Alternatively, as we ramp production of Model 3 to higher levels, our learnings may cause us todiscontinue the use of already installed equipment in favor of different or additional equipment. The useful life of any equipment that would be retired earlyas a result would be shortened, causing the depreciation on such equipment to be accelerated, and our results of operations could be negatively impacted.34 We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial results.Our revenues and costs denominated in foreign currencies are not completely matched. As we have increased vehicle deliveries in markets outside ofthe U.S., we have much higher revenues than costs denominated in other currencies such as the euro, Canadian dollar, Chinese yuan and Norwegian krone.Any strengthening of the U.S. dollar would tend to reduce our revenues as measured in U.S. dollars, as we have historically experienced. In addition, a portionof our costs and expenses have been, and we anticipate will continue to be, denominated in foreign currencies, including the Japanese yen. If we do not havefully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S.dollars as a percent of our revenues will correspondingly increase and our margins will suffer. Moreover, while we undertake limited hedging activitiesintended to offset the impact of currency translation exposure, it is impossible to predict or eliminate such impact. As a result, our operating results could beadversely affected.We may face regulatory limitations on our ability to sell vehicles directly which could materially and adversely affect our ability to sell our electricvehicles.We sell our vehicles directly to consumers using means that we believe will maximize our reach, currently including through our website and ourown stores. While we intend to continue to leverage our most effective sales strategies, we may not be able to sell our vehicles through our own stores in eachstate in the U.S., as some states have laws that may be interpreted to impose limitations on this direct-to-consumer sales model. In certain states in which weare not able to obtain dealer licenses, we have opened galleries, which are not full sales locations.The application of these state laws to our operations continues to be difficult to predict. Laws in some states have limited our ability to obtain dealerlicenses from state motor vehicle regulators and may continue to do so.In addition, decisions by regulators permitting us to sell vehicles may be challenged by dealer associations and others as to whether such decisionscomply with applicable state motor vehicle industry laws. We have prevailed in many of these lawsuits and such results have reinforced our continuing beliefthat state laws were not designed to prevent our distribution model. In some states, there have also been regulatory and legislative efforts by dealerassociations to propose laws that, if enacted, would prevent us from obtaining dealer licenses in their states given our current sales model. A few states havepassed legislation that clarifies our ability to operate, but at the same time limits the number of dealer licenses we can obtain or stores that we can operate. Wehave also filed a lawsuit in federal court in Michigan challenging the constitutionality of the state’s prohibition on direct sales as applied to our business.Internationally, there may be laws in jurisdictions we have not yet entered or laws we are unaware of in jurisdictions we have entered that may restrictour sales or other business practices. Even for those jurisdictions we have analyzed, the laws in this area can be complex, difficult to interpret and may changeover time. Continued regulatory limitations and other obstacles interfering with our ability to sell vehicles directly to consumers could have a negative andmaterial impact our business, prospects, financial condition and results of operations.We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incursubstantial costs.Others, including our competitors, may hold or obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interferewith our ability to make, use, develop, sell or market our products and services, which could make it more difficult for us to operate our business. From timeto time, the holders of such intellectual property rights may assert their rights and urge us to take licenses, and/or may bring suits alleging infringement ormisappropriation of such rights. We may consider the entering into licensing agreements with respect to such rights, although no assurance can be given thatsuch licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses could significantly increase our operating expenses. Inaddition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to cease making, selling or incorporatingcertain components or intellectual property into the goods and services we offer, to pay substantial damages and/or license royalties, to redesign our productsand services, and/or to establish and maintain alternative branding for our products and services. In the event that we were required to take one or more suchactions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims,whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.35 Tesla is a highly-visible public company whose products, business, results of operations, statements and actions are often scrutinized by criticswhose influence could negatively impact the perception of our brand and the market value of our common stock.Tesla is a highly-visible public company whose products, business, results of operations, statements and actions are well-publicized. Such attentionincludes frequent criticism of us by a range of third-parties. Our continued success depends on our ability to focus on executing on our mission and businessplan while maintaining the trust of our current and potential customers, employees, stockholders and business partners. Any negative perceived actions ofours could influence the perception of our brand or our leadership by our customers, suppliers or investors, which could adversely impact our businessprospects, operating results and the market value of our common stock.Our facilities or operations could be damaged or adversely affected as a result of disasters.Our corporate headquarters, the Tesla Factory and Gigafactory 1 are located in seismically active regions in Northern California and Nevada. If majordisasters such as earthquakes or other events occur, or our information system or communications network breaks down or operates improperly, ourheadquarters and production facilities may be seriously damaged, or we may have to stop or delay production and shipment of our products. We may incurexpenses relating to such damages, which could have a material adverse impact on our business, operating results and financial condition.Risks Related to the Ownership of Our Common StockThe trading price of our common stock is likely to continue to be volatile.The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors,some of which are beyond our control. Our common stock has experienced an intra-day trading high of $387.46 per share and a low of $244.59 per share overthe last 52 weeks. The stock market in general, and the market for technology companies in particular, has experienced extreme price and volumefluctuations that have often been unrelated or disproportionate to the operating performance of those companies. In particular, a large proportion of ourcommon stock has been and may continue to be traded by short sellers which may put pressure on the supply and demand for our common stock, furtherinfluencing volatility in its market price. Public perception and other factors outside of our control may additionally impact the stock price of companies likeus that garner a disproportionate degree of public attention, regardless of actual operating performance. In addition, in the past, following periods ofvolatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted againstthese companies. Moreover, stockholder litigation like this has been filed against us in the past. While we are continuing to defend such actions vigorously,any judgment against us or any future stockholder litigation could result in substantial costs and a diversion of our management’s attention and resources.We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline.We provide guidance regarding our expected financial and business performance, such as projections regarding sales and production, as well asanticipated future revenues, gross margins, profitability and cash flows. Correctly identifying key factors affecting business conditions and predicting futureevents is inherently an uncertain process and our guidance may not ultimately be accurate. Our guidance is based on certain assumptions such as thoserelating to anticipated production and sales volumes (which generally are not linear throughout a given period), average sales prices, supplier andcommodity costs, and planned cost reductions. If our guidance is not accurate or varies from actual results due to our inability to meet our assumptions or theimpact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could declinesignificantly.36 Transactions relating to our convertible notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of ourcommon stock.The conversion of some or all of the Tesla Convertible Notes or the Subsidiary Convertible Notes would dilute the ownership interests of existingstockholders to the extent we deliver shares upon conversion of any of such notes. Our Subsidiary Convertible Notes have been historically, and the otherTesla Convertible Notes may become in the future, convertible at the option of their holders prior to their scheduled terms under certain circumstances. Ifholders elect to convert their convertible notes, we could be required to deliver to them a significant number of shares of our common stock. Any sales in thepublic market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, theexistence of the convertible notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy shortpositions, or anticipated conversion of such notes into shares of our common stock could depress the price of our common stock.Moreover, in connection with each issuance of the Tesla Convertible Notes, we entered into convertible note hedge transactions, which are expectedto reduce the potential dilution and/or offset potential cash payments we are required to make in excess of the principal amount upon conversion of theapplicable Tesla Convertible Notes. We also entered into warrant transactions with the hedge counterparties, which could separately have a dilutive effect onour common stock to the extent that the market price per share of our common stock exceeds the applicable strike price of the warrants on the applicableexpiration dates. In addition, the hedge counterparties or their affiliates may enter into various transactions with respect to their hedge positions, which couldalso cause or prevent an increase or a decrease in the market price of our common stock or the convertible notes.Elon Musk has pledged shares of our common stock to secure certain bank borrowings. If Mr. Musk were forced to sell these shares pursuant to amargin call that he could not avoid or satisfy, such sales could cause our stock price to decline.Certain banking institutions have made extensions of credit to Elon Musk, our Chief Executive Officer, a portion of which was used to purchaseshares of common stock in certain of our public offerings and private placements at the same prices offered to third party participants in such offerings andplacements. We are not a party to these loans, which are partially secured by pledges of a portion of the Tesla common stock currently owned by Mr. Musk. Ifthe price of our common stock were to decline substantially and Mr. Musk were unable to avoid or satisfy a margin call with respect to his pledged shares,Mr. Musk may be forced by one or more of the banking institutions to sell shares of Tesla common stock in order to remain within the margin limitationsimposed under the terms of his loans. Any such sales could cause the price of our common stock to decline further.Anti-takeover provisions contained in our governing documents, applicable laws and our convertible notes could impair a takeover attempt.Our certificate of incorporation and bylaws afford certain rights and powers to our board of directors that could contribute to the delay or preventionof an acquisition that it deems undesirable. We are also subject to Section 203 of the Delaware General Corporation Law and other provisions of Delawarelaw that limit the ability of stockholders in certain situations to effect certain business combinations. In addition, the terms of our convertible notes require usto repurchase such notes in the event of a fundamental change, including a takeover of our company. Any of the foregoing provisions and terms that has theeffect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock,and could also affect the price that some investors are willing to pay for our common stock. ITEM 1B.UNRESOLVED STAFF COMMENTSNone. 37 ITEM 2.PROPERTIESThe following table sets forth the location, approximate current occupancy size and primary use of our principal leased and owned facilities: Location ApproximateSize of Facilities(in Square Feet) Primary Use LeaseExpirationDateFremont, California 5,500,000 Manufacturing, administration, engineering, service, deliveryand warehouse Owned buildingSparks, Nevada 5,024,350 *Gigafactory 1, production of lithium-ion battery cells andvehicle drive units Owned buildingTilburg, Netherlands 1,688,217 Manufacturing, administration, engineering and service November 2023 - June 2028Fremont, California 1,237,772 Administration, manufacturing and engineering October 2025 - June 2030Livermore, California 1,002,703 Warehouse October 2026Lathrop, California 885,867 Warehouse and manufacturing September 2024 - February 2030Sparks, Nevada 632,445 Warehouse December 2019 - December 2020Lathrop, California 496,888 Manufacturing Owned buildingPalo Alto, California 350,000 Administration and engineering January 2022Taipei City, Taiwan 283,790 Warehouse, administration and service February 2022Elkridge, Maryland 176,651 Warehouse October 2023Grand Rapids, Michigan 176,606 Manufacturing May 2025Draper, Utah 154,846 Administration October 2027Hawthorne, California 132,250 Engineering December 2022Bethlehem, Pennsylvania 130,971 Warehouse April 2022 * These facilities are currently in construction and the approximate square footage as presented represent the current occupancy as of December 31, 2018.In addition to the properties included in the table above, we also lease a large number of properties in North America, Europe and Asia for our retailand service locations, Supercharger sites, solar installation and maintenance warehouses and regional administrative and sales offices for our solar business.Our properties are used to support both of our reporting segments.We will begin leasing a 1.1 million square feet solar manufacturing facility (Gigafactory 2 in Buffalo, New York) for an initial term of 10 years and a0.9 million square feet warehouse and manufacturing facility in Lathrop, California for an initial term of 11.5 years upon construction completion of thefacilities. Additionally, we purchased the land use rights with an initial term of 50 years for Gigafactory Shanghai in December 2018 and began constructionof the facility in January 2019. Once construction has completed, we expect the building to have a capacity of 4.5 million square feet. ITEM 3.LEGAL PROCEEDINGSFor a description of our material pending legal proceedings, please see Note 17, Commitments and Contingencies, to the consolidated financialstatements included elsewhere in this Annual Report on Form 10-K. ITEM 4.MINE SAFETY DISCLOSURESNot applicable 38 PART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket InformationOur common stock has traded on The NASDAQ Global Select Market under the symbol “TSLA” since it began trading on June 29, 2010. Our initialpublic offering was priced at $17.00 per share on June 28, 2010.HoldersAs of January 31, 2018, there were 1,145 holders of record of our common stock. A substantially greater number of holders of our common stock are“street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.Dividend PolicyWe have never declared or paid cash dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeablefuture. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will dependon our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deemrelevant.Stock Performance GraphThis performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), or incorporated by reference into any filing of Tesla, Inc. under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act,except as shall be expressly set forth by specific reference in such filing.39 The following graph shows a comparison, from January 1, 2014 through December 31, 2018, of the cumulative total return on our common stock,The NASDAQ Composite Index and a group of all public companies sharing the same SIC code as us, which is SIC code 3711, “Motor Vehicles andPassenger Car Bodies” (Motor Vehicles and Passenger Car Bodies Public Company Group). Such returns are based on historical results and are not intendedto suggest future performance. Data for The NASDAQ Composite Index and the Motor Vehicles and Passenger Car Bodies Public Company Group assumes aninvestment of $100 on January 1, 2014 and reinvestment of dividends. We have never declared or paid cash dividends on our common stock nor do weanticipate paying any such cash dividends in the foreseeable future. Unregistered Sales of Equity SecuritiesExercises of WarrantsIn connection with the offering in 2013 of our 1.50% Convertible Senior Notes due 2018, we sold warrants to each of Goldman, Sachs & Co. andMorgan Stanley & Co. LLC (the “Warrantholders”). Between October 1, 2018 and October 31, 2018, we issued an aggregate of 132,977 shares of ourcommon stock to the Warrantholders pursuant to their exercise of such warrants, which were net of the applicable exercise prices. Such shares were issuedpursuant to an exemption from registration provided by Rule 3(a)(9) of the Securities Act.Private Placement to CEOOn November 9, 2018, we sold 56,915 shares of our common stock to our CEO in a private placement pursuant to an exemption from registrationprovided by Rule 4(a)(2) of the Securities Act, at a per share price equal to the last closing price of our stock prior to the execution of the purchase agreement,and received total cash proceeds of $20.0 million.Conversion of Convertible Senior NotesOn December 17, 2018, we issued 10 shares of our common stock to a former holder of the 1.625% Convertible Senior Notes due in 2019 issued byour subsidiary in connection with such holder’s conversion of $8,000 in principal amount of such notes. Such shares were issued pursuant to an exemptionfrom registration provided by Rule 3(a)(9) of the Securities Act. 40 Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone ITEM 6.SELECTED CONSOLIDATED FINANCIAL DATAThe following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and the consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K to fully understand factors that may affect the comparability of the information presented below (in thousands, except per share data). Year Ended December 31, 2018 (2) 2017 2016 (1) 2015 2014 Consolidated Statements of Operations Data: Total revenues $21,461,268 $11,758,751 $7,000,132 $4,046,025 $3,198,356 Gross profit $4,042,021 $2,222,487 $1,599,257 $923,503 $881,671 Loss from operations $(388,073) $(1,632,086) $(667,340) $(716,629) $(186,689)Net loss attributable to common stockholders $(976,091) $(1,961,400) $(674,914) $(888,663) $(294,040)Net loss per share of common stock attributable to common stockholders, basic and diluted $(5.72) $(11.83) $(4.68) $(6.93) $(2.36)Weighted average shares used in computing net loss per share of common stock, basic and diluted 170,525 165,758 144,212 128,202 124,539 As of December 31, 2018 (2) 2017 2016 (1) 2015 2014 Consolidated Balance Sheet Data: Working (deficit) capital $(1,685,828) $(1,104,150) $432,791 $(29,029) $1,072,907 Total assets 29,739,614 28,655,372 22,664,076 8,067,939 5,830,667 Total long-term obligations 13,433,874 15,348,310 10,923,162 4,125,915 2,753,595 (1)We acquired SolarCity Corporation (“SolarCity”) on November 21, 2016. SolarCity’s financial positions have been included in our financialpositions from the acquisition date. See Note 3, Business Combinations, of the notes to the consolidated financial statements for additionalinformation regarding this transaction. (2)Includes the impact of the adoption of the new revenue recognition accounting standard in 2018. Prior periods have not been revised. See Note2, Summary of Significant Accounting Policies, of the notes to the consolidated financial statements for further details. 41 ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes includedelsewhere in this Annual Report on Form 10-K.Overview and 2018 HighlightsOur mission is to accelerate the world’s transition to sustainable energy. We design, develop, manufacture, lease and sell high-performance fullyelectric vehicles, solar energy generation systems and energy storage products. We also offer maintenance, installation, operation and other services related toour products.AutomotiveOur production vehicle fleet includes our Model S premium sedan and our Model X SUV, which are our highest-performance vehicles, and ourModel 3, a lower-priced sedan designed for the mass market. We continue to enhance our vehicle offerings with enhanced Autopilot options, internetconnectivity and free over-the-air software updates to provide additional safety, convenience and performance features. In addition, we have several futureelectric vehicles in our product pipeline, including Model Y, Tesla Semi, a pickup truck and a new version of the Tesla Roadster.In 2018, we continued to scale our automotive operations, particularly our ramp of Model 3, and achieved total production of 254,530 vehicles anddelivered 245,506 vehicles, representing year-over-year increases of approximately 152% and 138%, respectively.Energy Generation and StorageWe lease and sell retrofit solar energy systems and sell renewable energy and energy storage products to our customers, and are ramping our SolarRoof product that combines solar energy generation with attractive, integrated styling. Our energy storage products, which we manufacture at Gigafactory 1,consist of Powerwall, mostly for residential applications, and Powerpack, for commercial, industrial and utility-scale applications.During 2018, we deployed 1.04 GWh of energy storage products, nearly tripling our 358 MWh of energy storage deployments during 2017. We alsodeployed 326 megawatts (“MW”) of solar energy generation during 2018.Management Opportunities, Challenges and Risks and 2019 OutlookAutomotive Demand, Production and DeliveriesOur goal is to produce the world’s highest quality vehicles as quickly and as cost-effectively as possible with a priority on workplace health andsafety. The worldwide automotive markets for alternative fuel vehicles and self-driving technology are highly competitive and we expect them to becomeeven more so. A growing number of companies, including established automakers, have announced plans to expand, and in some cases fully transition to,production of electric or environmentally friendly vehicles, and/or to develop self-driving technologies. However, we believe that the unique features of ourvehicles, the safety aspects of each of our vehicles, our constant innovation, our growing brand, the increased affordability introduced with Model 3, theinnovation and expansion of our global retail, service and charging operations and infrastructure and our future vehicles will continue to generateincremental demand for our vehicles by making our vehicles accessible to larger and previously untapped consumer and commercial markets.42 Model 3 was the best-selling premium vehicle in the United States in 2018. Vehicles traded in to us by Model 3 customers continue to suggest theexistence of a wider addressable market for this vehicle than existing owners of mid-sized premium sedans. Moreover, as we have offered only the long-range,mid-range and performance variants of Model 3 thus far, we believe that we will see increased demand with the introduction of less expensive variants, suchas a version with a base price of $35,000 that we intend to offer in the future, and additional financing options. We commenced in January 2019 productionof Model 3 for Europe and China, each of which we believe has a much larger mid-sized premium sedan market than North America, where we haveexclusively delivered Model 3 to date. We also believe that we have an advantage over our competitors with respect to our battery and powertraintechnology, as our vehicles’ EPA-rated range per kWh is expected to be superior to that of other electric vehicles to be introduced in the near term, and wehave the ability to improve our vehicles through over-the-air software updates. We are producing variants (including regional versions) of Model 3 inaccordance with the demand that we expect for them, however, and we have finite production capabilities with long lead times associated with procuringcertain parts. If our Model 3 demand expectations prove inaccurate or we experience delays in introducing planned additional variants, including as webegin offering Model 3 in new markets, we may not be able to timely generate sales matched to the specific vehicles that we have the capacity to produce.We may also be impacted by trade policies, political uncertainty and economic cycles involving geographic regions where we have significant operations.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 adjustour operations and retail strategies. In addition, the federal tax credit for the purchase of a qualified electric vehicle in the U.S. was reduced to $3,750 for anyTesla vehicle delivered during the first or second quarter of 2019, and will be further reduced to $1,875 for each Tesla vehicle delivered in the third or fourthquarter of 2019 and to $0 for each Tesla vehicle delivered thereafter. We believe that this phase-out likely pulled forward some vehicle demand into 2018and could create similar pull-forwards in 2019 before each further step reduction in the federal tax credit. In the long run, we do not expect a meaningfulimpact to our sales in the U.S., as we believe that each of our vehicle models offers a compelling proposition even without incentives. Globally, we are alsoworking to, and in some cases have already begun to, increase the value proposition and affordability of our offerings to customers and offer other financingarrangements over time. For example, we intend to introduce leasing options for Model 3.Our Model 3 production ramped dramatically during 2018, and we expect to continue to grow Model 3 production to a sustained rate of 7,000vehicles per week at our Tesla Factory by the end of 2019 as we ramp international deliveries. We remain focused on further cost improvements and onincreasing the affordability of Model 3. Furthermore, in January 2019 we commenced construction of our Gigafactory Shanghai in China. We expect to builda production process that is optimized and simplified for Model 3 production, comprised of stamping, body joining and paint shops and general assembly, atGigafactory Shanghai to begin production of certain trims of Model 3 for China by the end of 2019. We believe that the efficiencies of local production, aswell as avoiding certain tariffs on U.S.-manufactured vehicles, will allow us to offer Model 3 at a lower average selling price in the largest market for electricvehicles in the world. Inclusive of Gigafactory Shanghai, our goal is to be able to produce 10,000 Model 3 vehicles per week on a sustained basis, and anannualized output rate in excess of 500,000 Model 3 vehicles sometime between the fourth quarter of 2019 and the second quarter of 2020. However, thetimeframe for Gigafactory Shanghai is subject to a number of uncertainties, including regulatory approval, supply chain constraints, and the pace ofinstalling production equipment and bringing the factory online. Ultimately, achieving increased Model 3 production cost-effectively will require that wetimely address any additional bottlenecks that may arise as we continue to ramp, and establish sustained supplier capacity, including locally at GigafactoryShanghai.We also recently discontinued new custom orders for the 75 kWh versions of Model S and Model X to focus on longer range versions of our highest-performance flagship vehicles and further differentiate them from Model 3. We have gradually increased the level of option standardization across thesemodels, and this latest step and our increasing production efficiency have allowed us to reduce the production hours for them while preserving the flexibilityto increase output as necessary. As Model S and Model X are produced in the U.S., for the foreseeable future we could be impacted by increased import dutieson components sourced from China, as well as by tariffs on vehicles exported to China, although we intend to partially divert such deliveries to NorthAmerica and Europe, if necessary.43 Advancing our customer-facing infrastructure remains a top priority. Delivering vehicles to our customers and the related logistics were challengingduring 2018, but we continue to improve these processes to maximize customer satisfaction, including by purchasing our own car-hauling trucks. We are alsoexpanding our servicing capabilities for our rapidly growing customer vehicle fleet, including by growing our service locations and Mobile Service fleet,moving to two-shift operations at service centers where needed, and optimizing our parts distribution network. We are also updating the Tesla mobile app forscheduling service appointments in order to increase customer convenience. As sales of Tesla vehicles ramp further, we plan to continue to open new Teslaretail locations, service centers and body shops around the world, and we plan to continue to expand our Mobile Service fleet. We also plan to continue tosignificantly increase the number of Superchargers and Destination Charging connectors globally, as well as evolve our Supercharger technology to enablefaster charging times while reducing our related costs. However, we will have to stabilize and sustain our delivery and logistics model to deliver an increasingnumber of vehicles, and we have only limited experience with this at scale, particularly in markets outside of North America. Moreover, if our growing fleetof customer vehicles, particularly Model 3, experiences unexpected reliability issues, it could overburden our servicing capabilities. Finally, we are making progress with our self-driving technology, as well as the Autopilot features in our vehicles. Our neural net and functionalitycontinue to improve, and we frequently release minor software updates and from time to time release key version updates. Recently, we launched a “Navigateon Autopilot” feature that allows enabled Tesla vehicles under appropriate circumstances and driver input to change lanes, transition between freeways andexit freeways. While we are subject to regulatory constraints over which we have no control, our ultimate goal is to achieve full autonomy. Additionally,there is growing competition from other automobile and technology companies in the area of self-driving.Energy Generation and Storage Demand, Production and DeploymentWe are continuing to reduce customer acquisition costs of our energy generation products, transitioning away from former channel partners andshifting our sales strategy significantly to sell these products in Tesla stores and on our website and through cross-selling opportunities to our expandingbase of vehicle owners. As we continue to implement this strategy, we expect that our retrofit solar system deployments will decrease slightly beforestabilizing and growing in the second half of the year, including through cross-selling opportunities to our expanding base of vehicle owners. Our emphasisfor retrofit solar products remains on executing projects for upfront cash generation and profitability, rather than absolute volume growth, such as byreducing the mix of leased systems and prioritizing residential installations that are combined with our energy storage products.We are continuing with the design iterations and testing on our Solar Roof product, and we are continuing installations at a slow pace with theexpectation that we will ramp production with significantly improved manufacturing capabilities during 2019.We expect our energy storage products to continue to experience significant growth, and we are targeting to more than double our deployments toover 2 GWh in 2019. We see opportunities in North America as well as in Australia and Europe, where energy storage coupled with solar generation maymitigate typically higher electricity rates, as well as for projects to increase energy grid reliability. We are continuing to ramp production for these products atGigafactory 1, including through a new production line, and we have seen further manufacturing efficiencies and improvements in our installation processesas we ramp.Trends in Cash Flow, Capital Expenditures and Operating ExpensesCapital expenditures in 2019 are projected to be approximately $2.5 billion, mostly to support increases in Model 3 production capacity atGigafactory 1 and the Tesla Factory, the establishment of Model 3 production capacity at Gigafactory Shanghai, and the addition of manufacturing capacityfor Model Y, which we intend to produce in volume by the end of 2020, as well as the ongoing expansion of our retail locations, service centers, body shops,Mobile Service fleet, and Supercharger stations.Generally, we expect operating expenses as a percentage of revenue to continue to decrease in the future due to increases in expected revenues and aswe focus on increasing operational efficiency. In addition, due to our cost management efforts to maximize operational efficiency, we expect operatingexpenses in 2019 to grow by less than 10% from 2018.44 In March 2018, our stockholders approved a new 10-year CEO performance award for Elon Musk with vesting contingent on achieving marketcapitalization and operational milestones (the “2018 CEO Performance Award”). Consequently, we may incur significant additional non-cash stock-basedcompensation expense over the term of the award as each operational milestone becomes probable of vesting.Automotive Financing OptionsWe offer financing arrangements for our vehicles in certain markets in North America, Europe and Asia primarily through various financialinstitutions. We offer resale value guarantees or similar buy-back terms to certain customers who purchase vehicles and who finance their vehicles throughone of our specified commercial banking partners. We also offer resale value guarantees in connection with automotive sales to certain leasing partners.Currently, both programs are available only in certain international markets. Resale value guarantees available for exercise within the 12 months followingDecember 31, 2018 totaled $149.7 million in value.We have adopted the new revenue recognition standard ASC 606 effective January 1, 2018. This impacts the way we account for vehicle sales with aresale value guarantee and vehicles leased through our leasing partners, which now generally qualify to be accounted for as sales with a right of return. Inaddition, for certain vehicles sales with a resale value guarantee and vehicles leased through leasing partners prior to 2018, we have ceased recognizing leaserevenue starting in 2018 and record the associated cumulative adjustment to equity under the modified retrospective approach.Vehicle deliveries with the resale value guarantee do not impact our near-term cash flows and liquidity, since we receive the full amount of cash forthe vehicle sales price at delivery. While we do not assume any credit risk related to the customer, if a customer exercises the option to return the vehicle tous, we are exposed to liquidity risk that the resale value of vehicles under these programs may be lower than our guarantee, or the volume of vehicles returnedto us may be higher than our estimates or we may be unable to resell the used vehicles in a timely manner, all of which could adversely impact our cash flows.To date, we have only had an insignificant number of customers who exercised their resale value guarantees and returned their vehicles to us. Based oncurrent market demand for our vehicles, we estimate the resale prices for our vehicles will continue to be above our resale value guarantee amounts, but resaleprices may inherently fluctuate depending on various factors such as supply and demand of our used vehicles, economic cycles and the pricing of newvehicles. Should market values of our vehicles or customer demand decrease, these estimates may be impacted materially.We currently offer Model S and Model X leasing directly through our local subsidiaries in the U.S. and Canada. We also offer leasing through leasingpartners in certain jurisdictions. Leasing through our captive financing entities and our leasing partners exposes us to residual value risk. In addition, forleases offered directly from our captive financing entities, we assume customer credit risk. We plan to continue expanding our financing offerings, includingour lease financing options and the financial sources to support them, and to support the overall financing needs of our customers. To the extent that we areunable to arrange such options for our customers on terms that are attractive, our sales, financial results and cash flows could be negatively impacted.Energy Generation and Storage Financing OptionsWe offer our customers the choice to either purchase and own solar energy systems or to purchase the energy that our solar energy systems producethrough various contractual arrangements. These contractual arrangements include long-term leases and PPAs. In both structures, we install our solar energysystems at our customer’s premises and charge the customer a monthly fee. In the lease structure, this monthly payment is fixed with a minimum productionguarantee. In the PPA structure, we charge customers a fee per kilowatt-hour, or kWh, based on the amount of electricity the solar energy system actuallyproduces. The leases and PPAs are typically for 20 years with a renewal option, and the specified monthly fees are subject to annual escalations.For customers who want to purchase and own solar energy systems, we also offer solar loans, whereby a third-party lender provides financing directlyto a qualified customer to enable the customer to purchase and own a solar energy system designed, installed and serviced by us. We enter into a standardsolar energy system sale and installation agreement with the customer. Separately, the customer enters into a loan agreement with a third-party lender, whofinances the full purchase price. We are not a party to the loan agreement between the customer and the third-party lender, and the third-party lender has norecourse against us with respect to the loan.45 Gigafactory 1We continue to develop Gigafactory 1 as a facility where we work together with our suppliers to integrate production of battery material, cells,modules, battery packs and drive units in one location for vehicles and energy storage products. We also continue to invest in the future expansion ofGigafactory 1 and in additional production capacity there. For example, we have announced that we will likely manufacture Model Y at Gigafactory 1.Panasonic has partnered with us on Gigafactory 1 with investments in the production equipment that it uses to manufacture and supply us withbattery cells. Under our arrangement with Panasonic, we plan to purchase the full output from their production equipment at negotiated prices. As these termsconvey to us the right to use, as defined in ASC 840, Leases, their production equipment, we consider them to be leased assets when production commences.This results in us recording the value of their production equipment within property, plant and equipment, net, on the consolidated balance sheets with acorresponding liability recorded to financing obligations. For all suppliers and partners for which we plan to purchase the full output from their productionequipment located at Gigafactory 1, we will apply similar accounting. During the year ended December 31, 2018, we recorded $766.6 million on theconsolidated balance sheet.While we currently believe that our progress at Gigafactory 1 will allow us to reach our production targets, our ultimate ability to do so will requireus to resolve the types of challenges that are typical of a production ramp. For example, we have in the past experienced bottlenecks in the assembly ofbattery modules at Gigafactory 1, which negatively affected our production of Model 3. While we continue to resolve such issues at Gigafactory 1 as theyarise, given the size and complexity of this undertaking, it is possible that future events could result in the cost of building and operating Gigafactory 1exceeding our current expectations and Gigafactory 1 taking longer to expand than we currently anticipate.Gigafactory 2We have an agreement with the SUNY Foundation for the construction of a factory with the intended capacity to produce at least 1.0 GW of solarproducts annually in Buffalo, New York, referred to as Gigafactory 2. In December 2016, we entered into an agreement with Panasonic under which itmanufactures custom PV cells and modules for us, primarily at Gigafactory 2, and we purchase certain quantities of PV cells and modules from Panasonicduring the 10-year term.The terms of our agreement with the SUNY Foundation require us to comply with a number of covenants, and any failure to comply with thesecovenants could obligate us to pay significant amounts to the SUNY Foundation and result in termination of the agreement. Although we remain on trackwith our progress at Gigafactory 2, our expectations as to the cost of building the facility, acquiring manufacturing equipment and supporting ourmanufacturing operations may prove incorrect, which could subject us to significant expenses to achieve the desired benefits.Gigafactory ShanghaiWe are constructing Gigafactory Shanghai in order to significantly increase the affordability of Model 3 for customers in China by reducingtransportation and manufacturing costs and eliminating certain tariffs on vehicles imported from the U.S. We broke ground in January 2019, and subject to anumber of uncertainties, including regulatory approval, supply chain constraints, and the pace of installing production equipment and bringing the factoryonline, we expect to begin production of certain trims of Model 3 at Gigafactory Shanghai by the end of 2019. We expect much of the investment inGigafactory Shanghai to be provided through local debt financing, supported by limited direct capital expenditures by us. Moreover, we are targeting thecapital expenditures per unit of production capacity at this factory to be less than that of our Model 3 production at the Tesla Factory, from which we havedrawn learnings that should allow us to simplify our manufacturing layout and processes at Gigafactory Shanghai.Other ManufacturingWe continue to expand production capacity at our existing facilities and construct our planned facilities, and continually explore additionalproduction capacity internationally. 46 Critical Accounting Policies and EstimatesThe consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Thepreparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities,revenues, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions thatwe believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly,actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To theextent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results ofoperations and cash flows will be affected. We believe that the following critical accounting policies involve a greater degree of judgment and complexitythan our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating the consolidatedfinancial condition and results of operations.Revenue RecognitionAdoption of new revenue standardOn January 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers, (“new revenue standard”) using the modified retrospectivemethod. The new revenue standard had a material impact in our consolidated financial statements. For further discussion, refer to Note 2, Summary ofSignificant Accounting Policies, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.Automotive SegmentAutomotive Sales RevenueAutomotive Sales without Resale Value GuaranteeAutomotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services that meet the definition of aperformance obligation under the new revenue standard, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving andover-the-air software updates. We recognize revenue on automotive sales upon delivery to the customer, which is when the control of a vehicle transfers.Payments are typically received at the point control transfers or in accordance with payment terms customary to the business. Other features and services suchas access to our Supercharger network, internet connectivity and over-the-air software updates are provisioned upon control transfer of a vehicle andrecognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer. We recognize revenue related tothese other features and services over the performance period, which is generally the expected ownership life of the vehicle or the eight-year life of thevehicle. Revenue related to Autopilot and full self-driving features is recognized when functionality is delivered to the customer. For our obligations relatedto automotive sales, we estimate standalone selling price by considering costs used to develop and deliver the service, third-party pricing of similar optionsand other information that may be available.At the time of revenue recognition, we reduce the transaction price and record a reserve against revenue for estimated variable consideration relatedto future product returns. Such estimates are based on historical experience and are immaterial in all periods presented. In addition, any fees that are paid orpayable by us to a customer’s lender when we arrange the financing are recognized as an offset against automotive sales revenue.Costs to obtain a contract mainly relate to commissions paid to our sales personnel for the sale of vehicles. Commissions are not paid on otherobligations such as access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates. As our contractcosts related to automotive sales are typically fulfilled within one year, the costs to obtain a contract are expensed as incurred. Amounts billed to customersrelated to shipping and handling are classified as automotive revenue, and we have elected to recognize the cost for freight and shipping when control overvehicles, parts, or accessories have transferred to the customer as an expense in cost of revenues. Our policy is to exclude taxes collected from a customer fromthe transaction price of automotive contracts.47 Automotive Sales with Resale Value GuaranteeWe offer resale value guarantees or similar buy-back terms to certain international customers who purchase vehicles and who finance their vehiclesthrough one of our specified commercial banking partners. We also offer resale value guarantees in connection with automotive sales to certain leasingpartners. Under these programs, we receive full payment for the vehicle sales price at the time of delivery and our counterparty has the option of selling theirvehicle back to us during the guarantee period, which currently is generally at the end of the term of the applicable loan or financing program, for a pre-determined resale value.With the exception of two programs which are discussed within the Automotive Leasing section, we now recognize revenue when control transfersupon delivery to customers in accordance with the new revenue standard as a sale with a right of return as we do not believe the customer has a significanteconomic incentive to exercise the resale value guarantee provided to them. The process to determine whether there is a significant economic incentiveincludes a comparison of a vehicle’s estimated market value at the time the option is exercisable with the guaranteed resale value to determine the customer’seconomic incentive to exercise. The performance obligations and the pattern of recognizing automotive sales with resale value guarantees are consistent withautomotive sales without resale value guarantees with the exception of our estimate for sales return reserve. Sales return reserves for automotive sales withresale value guarantees are estimated based on historical experience plus consideration for expected future market values. The two programs that are stillbeing recorded as operating leases are discussed in further detail below in Vehicle Sales to Leasing Partners with a Resale Value Guarantee and a BuybackOption and Vehicle Sales to Customers with a Resale Value Guarantee where Exercise is Probable.Prior to the adoption of the new revenue standard, all transactions with resale value guarantees were recorded as operating leases. The amount of saleproceeds equal to the resale value guarantee was deferred until the guarantee expired or was exercised. For certain transactions that were considered interestbearing collateralized borrowings as required under ASC 840, Leases, we also accrued interest expense based on our borrowing rate. The remaining saleproceeds were deferred and recognized on a straight-line basis over the stated guarantee period to automotive leasing revenue. The guarantee period expiredat the earlier of the end of the guarantee period or the pay-off of the initial loan. We capitalized the cost of these vehicles on the consolidated balance sheet asoperating lease vehicles, net, and depreciated their value, less estimated residual value, to cost of automotive leasing revenue over the same period.In cases where our counterparty retained ownership of the vehicle at the end of the guarantee period, the resale value guarantee liability and anyremaining deferred revenue balances related to the vehicle were settled to automotive leasing revenue, and the net book value of the leased vehicle wasexpensed to cost of automotive leasing revenue. If our counterparty returned the vehicle to us during the guarantee period, we purchased the vehicle from ourcounterparty in an amount equal to the resale value guarantee and settled any remaining deferred balances to automotive leasing revenue, and we reclassifiedthe net book value of the vehicle on the consolidated balance sheet to used vehicle inventory.Automotive Regulatory CreditsCalifornia and certain other states have laws in place requiring vehicle manufacturers to ensure that a portion of the vehicles delivered for sale in thatstate during each model year are zero-emission vehicles. These laws and regulations provide that a manufacturer of zero-emission vehicles may earnregulatory credits (“ZEV credits”) and may sell excess credits to other manufacturers who apply such credits to comply with these regulatory requirements.Similar regulations exist at the federal level that require compliance related to greenhouse gas (“GHG”) emissions and also allow for the sale of excess creditsby one manufacturer to other manufacturers. As a manufacturer solely of zero-emission vehicles, we have earned emission credits, such as ZEV and GHGcredits, on our vehicles, and we expect to continue to earn these credits in the future. We enter into contractual agreements with third-parties to purchase ourregulatory credits. Payments for regulatory credits are typically received at the point control transfers to the customer, or in accordance with payment termscustomary to the business. We recognize revenue on the sale of regulatory credits at the time control of the regulatory credits is transferred to the purchasingparty as automotive revenue in the consolidated statement of operations.48 Automotive Leasing RevenueAutomotive leasing revenue includes revenue recognized under lease accounting guidance for our direct leasing programs as well as the twoprograms with resale value guarantees which continue to qualify for operating lease treatment. Prior to the adoption of the new revenue standard, all programswith resale value guarantees were accounted for as operating leases.Direct Vehicle Leasing ProgramWe have outstanding leases under our direct vehicle leasing programs in certain locations in the U.S., Canada and Europe. Currently, the directvehicle leasing program is only offered for new leases to qualified customers in the U.S. and Canada. Qualifying customers are permitted to lease a vehicledirectly from Tesla for up to 48 months. At the end of the lease term, customers have the option of either returning the vehicle to us or purchasing it for a pre-determined residual value. We account for these leasing transactions as operating leases. We record leasing revenues to automotive leasing revenue on astraight-line basis over the contractual term, and we record the depreciation of these vehicles to cost of automotive leasing revenue.We capitalize shipping costs and initial direct costs such as the incremental cost of contract administration, referral fees and sales commissions fromthe origination of automotive lease agreements as an element of operating lease vehicles, net, and subsequently amortize these costs over the term of therelated lease agreement. Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.Vehicle Sales to Leasing Partners with a Resale Value Guarantee and a Buyback OptionWe offer buyback options in connection with automotive sales with resale value guarantees to certain leasing partner sales in the United States.These transactions entail a transfer of leases, which we have originated with an end-customer, to our leasing partner. As control of the vehicles has not beentransferred in accordance with the new revenue standard, these transactions continue to be accounted for as interest bearing collateralized borrowings inaccordance with ASC 840, Leases. Under this program, cash is received for the full price of the vehicle and the collateralized borrowing value is generallyrecorded within resale value guarantees and the customer upfront deposit is recorded within deferred revenue. We amortize the deferred revenue amount toautomotive leasing revenue on a straight-line basis over the option period and accrue interest expense based on our borrowing rate. We capitalize vehiclesunder this program to operating lease vehicles, net, on the consolidated balance sheet, and we record depreciation from these vehicles to cost of automotiveleasing revenue during the period the vehicle is under a lease arrangement. Cash received for these vehicles, net of revenue recognized during the period, isclassified as collateralized lease (repayments) borrowings within cash flows from financing activities in the consolidated statement of cash flows.At the end of the lease term, we settle our liability in cash by either purchasing the vehicle from the leasing partner for the buyback option amount orpaying a shortfall to the option amount the leasing partner may realize on the sale of the vehicle. Any remaining balances within deferred revenue and resalevalue guarantee will be settled to automotive leasing revenue. In cases where the leasing partner retains ownership of the vehicle after the end of our optionperiod, we expense the net value of the leased vehicle to cost of automotive leasing revenue.On a quarterly basis, we assess the estimated market values of vehicles under our buyback options program to determine if we have sustained a losson any of these contracts. As we accumulate more data related to the buyback values of our vehicles or as market conditions change, there may be materialchanges to their estimated values, although we have not experienced any material losses during any period to date.49 Vehicle Sales to Customers with a Resale Value Guarantee where Exercise is ProbableFor certain international programs where we have offered resale value guarantees to certain customers who purchased vehicles and where we expectthe customer has a significant economic incentive to exercise the resale value guarantee provided to them, we continue to recognize these transactions asoperating leases. The process to determine whether there is a significant economic incentive includes a comparison of a vehicle’s estimated market value atthe time the option is exercisable with the guaranteed resale value to determine the customer’s economic incentive to exercise. We have not sold any vehiclesunder this program since the first half of 2017 and all current period activity relates to the exercise or cancellation of active transactions. The amount of saleproceeds equal to the resale value guarantee is deferred until the guarantee expires or is exercised. The remaining sale proceeds are deferred and recognizedon a straight-line basis over the stated guarantee period to automotive leasing revenue. The guarantee period expires at the earlier of the end of the guaranteeperiod or the pay-off of the initial loan. We capitalize the cost of these vehicles on the consolidated balance sheet as operating lease vehicles, net, anddepreciate their value, less salvage value, to cost of automotive leasing revenue over the same period.In cases where a customer retains ownership of a vehicle at the end of the guarantee period, the resale value guarantee liability and any remainingdeferred revenue balances related to the vehicle are settled to automotive leasing revenue, and the net book value of the leased vehicle is expensed to cost ofautomotive leasing revenue. If a customer returns the vehicle to us during the guarantee period, we purchase the vehicle from the customer in an amountequal to the resale value guarantee and settle any remaining deferred balances to automotive leasing revenue, and we reclassify the net book value of thevehicle on the consolidated balance sheet to used vehicle inventory.Services and Other RevenueServices and other revenue consists of non-warranty after-sales vehicle services, sales of used vehicles, sales of electric vehicle components andsystems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers. There were no significant changes to thetiming or amount of revenue recognition as a result of our adoption of the new revenue standard.Revenues related to repair and maintenance services are recognized over time as services are provided and extended service plans are recognizedover the performance period of the service contract as the obligation represents a stand-ready obligation to the customer. We sell used vehicles, services,service plans, vehicle components and merchandise separately and thus use standalone selling prices as the basis for revenue allocation to the extent thatthese items are sold in transactions with other performance obligations. Payment for used vehicles, services, and merchandise are typically received at thepoint when control transfers to the customer or in accordance with payment terms customary to the business. Payments received for prepaid plans arerefundable upon customer cancellation of the related contracts and are included within customer deposits on the consolidated balance sheet.Energy Generation and Storage SegmentEnergy Generation and Storage SalesEnergy generation and storage revenues consists of the sale of solar energy systems and energy storage systems to residential, small commercial, andlarge commercial and utility grade customers. Sales of solar energy systems to residential and small scale commercial customers consist of the engineering,design, and installation of the system. Post-installation, residential and small scale commercial customers receive a proprietary monitoring system thatcaptures and displays historical energy generation data. Residential and small scale commercial customers pay the full purchase price of the solar energysystem upfront. Revenue for the design and installation obligation is recognized when control transfers, which is when we install a solar energy system andthe system passes inspection by the utility or the authority having jurisdiction. Revenue for the monitoring service is recognized ratably as a stand-readyobligation over the warranty period of the solar energy system. Sales of energy storage systems to residential and small scale commercial customers consist ofthe installation of the energy storage system and revenue is recognized when control transfers, which is when the product has been delivered or, if we areperforming installation, when installed and accepted by the customer. Payment for such storage systems is made upon invoice or in accordance with paymentterms customary to the business.50 For large commercial and utility grade solar energy system and energy storage system sales which consist of the engineering, design, and installationof the system, customers make milestone payments that are consistent with contract-specific phases of a project. Revenue from such contracts is recognizedover time using percentage of completion method based on cost incurred as a percentage of total estimated contract costs. Certain large-scale commercial andutility grade solar energy system and energy storage system sales also include operations and maintenance service which are negotiated with the design andinstallation contracts and are thus considered to be a combined contract with the design and installation service. For certain large commercial and utilitygrade solar energy systems and energy storage systems where percentage of completion method does not apply, revenue is recognized when control transfers,which is when the product has been delivered to the customer for energy storage systems and when the project has received permission to operate from theutility for solar energy systems. Operations and maintenance service revenue is recognized ratably over the respective contract term. Customer payments forsuch services are usually paid annually or quarterly in advance.In instances where there are multiple performance obligations in a single contract, we allocate the consideration to the various obligations in thecontract based on the relative standalone selling price method. Standalone selling prices are estimated based on estimated costs plus margin or using marketdata for comparable products. Costs incurred on the sale of residential installations before the solar energy systems are completed are included as work inprocess within inventory in the consolidated balance sheets. However, any fees that are paid or payable by us to a solar loan lender would be recognized as anoffset against revenue. Costs to obtain a contract relate mainly to commissions paid to our sales personnel related to the sale of solar energy systems andenergy storage systems. As our contract costs related to solar energy system and energy storage system sales are typically fulfilled within one year, the coststo obtain a contract are expensed as incurred.As part of our solar energy system and energy storage system contracts, we may provide the customer with performance guarantees that warrant thatthe underlying system will meet or exceed the minimum energy generation or retention requirements specified in the contract. In certain instances, we mayreceive a bonus payment if the system performs above a specified level. Conversely, if a solar energy system or energy storage system does not meet theperformance guarantee requirements, we may be required to pay liquidated damages. Other forms of variable consideration related to our large commercialand utility grade solar energy system and energy storage system contracts include variable customer payments that will be made based on our energy marketparticipation activities. Such guarantees and variable customer payments represent a form of variable consideration and are estimated at contract inception attheir most likely amount and updated at the end of each reporting period as additional performance data becomes available. Such estimates are included inthe transaction price only to the extent that it is probable a significant reversal of revenue will not occur.We record as deferred revenue any non-refundable amounts that are collected from customers related to fees charged for prepayments and remotemonitoring service and operations and maintenance service, which is recognized as revenue ratably over the respective customer contract term. Energy Generation and Storage LeasingFor revenue arrangements where we are the lessor under operating lease agreements for energy generation and storage products, we record leaserevenue from minimum lease payments, including upfront rebates and incentives earned from such systems, on a straight-line basis over the life of the leaseterm, assuming all other revenue recognition criteria have been met. The difference between the payments received and the revenue recognized is recorded asdeferred revenue on the consolidated balance sheet.For solar energy systems where customers purchase electricity from us under PPAs, we have determined that these agreements should be accountedfor as operating leases pursuant to ASC 840. Revenue is recognized based on the amount of electricity delivered at rates specified under the contracts,assuming all other revenue recognition criteria are met.We record as deferred revenue any amounts that are collected from customers, including lease prepayments, in excess of revenue recognized andoperations and maintenance service, which is recognized as revenue ratably over the respective customer contract term. Deferred revenue also includes theportion of rebates and incentives received from utility companies and various local and state government agencies, which is recognized as revenue over thelease term.51 We capitalize initial direct costs from the origination of solar energy system leases or PPAs, which include the incremental cost of contractadministration, referral fees and sales commissions, as an element of solar energy systems, leased and to be leased, net, and subsequently amortize these costsover the term of the related lease or PPA.Inventory ValuationInventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost for vehicles and energy storage products,which approximates actual cost on a first-in, first-out basis. In addition, cost for solar energy systems is recorded using actual cost. We record inventory write-downs for excess or obsolete inventories based upon assumptions about on current and future demand forecasts. If our inventory on-hand is in excess of ourfuture demand forecast, the excess amounts are written-off.We also review our inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. Thisrequires us to determine the estimated selling price of our vehicles less the estimated cost to convert the inventory on-hand into a finished product. Onceinventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in therestoration or increase in that newly established cost basis.Should our estimates of future selling prices or production costs change, additional and potentially material increases to this reserve may be required.A small change in our estimates may result in a material charge to our reported financial results.WarrantiesWe provide a manufacturer’s warranty on all new and used vehicles, production powertrain components and systems and energy storage products wesell. In addition, we also provide a warranty on the installation and components of the solar energy systems we sell for periods typically between 10 to 30years. We accrue a warranty reserve for the products sold by us, which includes our best estimate of the projected costs to repair or replace items underwarranties and recalls when identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of futureclaims. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience maycause material changes to the warranty reserve in the future. The warranty reserve does not include projected warranty costs associated with our vehiclessubject to lease accounting and our solar energy systems under lease contracts or PPAs, as the costs to repair these warranty claims are expensed as incurred.The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while the remainingbalance is included within other long-term liabilities on the consolidated balance sheet. Due to the adoption of the new revenue standard, automotive saleswith resale value guarantees that were previously recorded within operating lease assets require a corresponding warranty accrual. Warranty expense isrecorded as a component of cost of revenues in the consolidated statements of operations.Stock-Based CompensationWe use the fair value method of accounting for our stock options and restricted stock units (“RSUs”) granted to employees and our employee stockpurchase plan (the “ESPP”) to measure the cost of employee services received in exchange for the stock-based awards. The fair value of stock option awardswith only service conditions and ESPP is estimated on the grant or offering date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected term and expected volatility. These inputs are subjective and generally requiresignificant judgment. The fair value of RSUs is measured on the grant date based on the closing fair market value of our common stock. The resulting cost isrecognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which isgenerally four years for stock options and RSUs and six months for the ESPP. Stock-based compensation expense is recognized on a straight-line basis, net ofactual forfeitures in the period (prior to 2017, net of estimated projected forfeitures).52 For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individualperformance milestones when the achievement of each individual performance milestone becomes probable. For performance-based awards with a vestingschedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair ofperformance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point intime that the relevant performance condition is considered probable of achievement. The fair value of such awards is estimated on the grant date using MonteCarlo simulations.As we accumulate additional employee stock-based awards data over time and as we incorporate market data related to our common stock, we maycalculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-basedcompensation expense that we will recognize in future periods. Stock-based compensation expense is recorded in cost of revenues, research and developmentexpense and selling, general and administrative expense in the consolidated statements of operations.Income TaxesWe are subject to federal and state taxes in the U.S. and in many foreign jurisdictions. Significant judgment is required in determining our provisionfor income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We make these estimates andjudgments about our future taxable income that are based on assumptions that are consistent with our future plans. Tax laws, regulations, and administrativepractices may be subject to change due to economic or political conditions including fundamental changes to the tax laws applicable to corporatemultinationals. The U.S., many countries in the European Union and a number of other countries are actively considering changes in this regard. As ofDecember 31, 2018, we had recorded a full valuation allowance on our net U.S. deferred tax assets because we expect that it is more likely than not that ourU.S. deferred tax assets will not be realized in the foreseeable future. Should the actual amounts differ from our estimates, the amount of our valuationallowance could be materially impacted.Furthermore, significant judgment is required in evaluating our tax positions. In the ordinary course of business, there are many transactions andcalculations for which the ultimate tax settlement is uncertain. As a result, we recognize the effect of this uncertainty on our tax attributes based on ourestimates of the eventual outcome. These effects are recognized when, despite our belief that our tax return positions are supportable, we believe that it ismore likely than not that those positions may not be fully sustained upon review by tax authorities. We are required to file income tax returns in the U.S. andvarious foreign jurisdictions, which requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions. Such returns are subject toaudit by the various federal, state and foreign taxing authorities, who may disagree with respect to our tax positions. We believe that our consideration isadequate for all open audit years based on our assessment of many factors, including past experience and interpretations of tax law. We review and update ourestimates in light of changing facts and circumstances, such as the closing of a tax audit, the lapse of a statute of limitations or a change in estimate. To theextent that the final tax outcome of these matters differs from our expectations, such differences may impact income tax expense in the period in which suchdetermination is made. The eventual impact on our income tax expense depends in part if we still have a valuation allowance recorded against our deferredtax assets in the period that such determination is made.On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law making significant changes to the Internal Revenue Code.Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transitionof U.S. international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation offoreign earnings. We were required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring our U.S. deferred tax assetsand liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Tax Act did not give rise to any material impact on theconsolidated balance sheets and consolidated statements of operations due to our historical worldwide loss position and the full valuation allowance on ournet U.S. deferred tax assets.53 In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications ofthe Tax Cuts and Jobs Act (“SAB 118”), which allowed us to record provisional amounts during a measurement period not to extend beyond one year fromthe enactment date. As such, in accordance with SAB 118, we completed our analysis during the fourth quarter of 2018 considering current legislation andguidance resulting in no material adjustments from the provisional amounts recorded during the prior year.Principles of ConsolidationThe consolidated financial statements reflect our accounts and operations and those of our subsidiaries in which we have a controlling financialinterest. In accordance with the provisions of ASC 810, Consolidation, we consolidate any variable interest entity (“VIE”) of which we are the primarybeneficiary. We form VIEs with our financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certainattributes associated with our solar energy systems and leases under our direct vehicle leasing programs. The typical condition for a controlling financialinterest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs,through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has thepower to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE thatcould potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidatea VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We have determined that we are the primarybeneficiary of a number of VIEs. We evaluate our relationships with all the VIEs on an ongoing basis to ensure that we continue to be the primary beneficiary.All intercompany transactions and balances have been eliminated upon consolidation.Noncontrolling Interests and Redeemable Noncontrolling InterestsNoncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements,or funds, that we enter into to finance the costs of solar energy systems and vehicles under operating leases. We have determined that the contractualprovisions of the funds represent substantive profit sharing arrangements. We have further determined that the appropriate methodology for calculating thenoncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit sharing arrangements is a balance sheet approachusing the hypothetical liquidation at book value (“HLBV”) method. We, therefore, determine the amount of the noncontrolling interests and redeemablenoncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balancesheet as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries. Under the HLBV method, the amounts reported asnoncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheet represent the amounts the third-parties wouldhypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at theirrecorded amounts determined in accordance with GAAP and with tax laws effective at the balance sheet date and distributed to the third-parties. The third-parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrollinginterest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactionsbetween the funds and the third-parties. However, the redeemable noncontrolling interest balance is at least equal to the redemption amount. The redeemablenoncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheet since these third-parties have theright to redeem their interests in the funds for cash or other assets.54 Business CombinationsWe account for business acquisitions under ASC 805, Business Combinations. The total purchase consideration for an acquisition is measured as thefair value of the assets given, equity instruments issued and liabilities assumed at the acquisition date. Costs that are directly attributable to the acquisitionare expensed as incurred. Identifiable assets (including intangible assets), liabilities assumed (including contingent liabilities) and noncontrolling interests inan acquisition are measured initially at their fair values at the acquisition date. We recognize goodwill if the fair value of the total purchase consideration andany noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed. We recognize a bargain purchasegain within other income (expense), net, on the consolidated statement of operations if the net fair value of the identifiable assets acquired and the liabilitiesassumed is in excess of the fair value of the total purchase consideration and any noncontrolling interests. We include the results of operations of theacquired business in the consolidated financial statements beginning on the acquisition date.When determining such fair values, we make significant estimates and assumptions. Critical estimates include, but are not limited to, future expectedcash flows from the underlying assets and discount rates. Our estimate of fair values is based on assumptions believed to be reasonable but that are inherentlyuncertain and unpredictable. As a result, actual results may differ from our estimates. Furthermore, our estimates might change as additional informationbecomes available, as more fully discussed in Note 3, Business Combinations, included elsewhere in this Annual Report on Form 10-K. Results of OperationsRevenues Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Automotive sales $17,631,522 $8,534,752 $5,589,007 $9,096,770 107% $2,945,745 53%Automotive leasing 883,461 1,106,548 761,759 (223,087) -20% 344,789 45%Total automotive revenues 18,514,983 9,641,300 6,350,766 8,873,683 92% 3,290,534 52%Services and other 1,391,041 1,001,185 467,972 389,856 39% 533,213 114%Total automotive & services and other segment revenue 19,906,024 10,642,485 6,818,738 9,263,539 87% 3,823,747 56%Energy generation and storage segment revenue 1,555,244 1,116,266 181,394 438,978 39% 934,872 515%Total revenues $21,461,268 $11,758,751 $7,000,132 $9,702,517 83% $4,758,619 68% Automotive & Services and Other SegmentAutomotive sales revenue includes revenues related to sale of new Model S, Model X and Model 3 vehicles, including access to our Superchargernetwork, internet connectivity, Autopilot, full self-driving and over-the-air software updates, as well as sales of regulatory credits to other automotivemanufacturers. Our revenue from non-ZEV regulatory credits generally follows our production and delivery trends as we have long-term contracts withexisting customers for the sale of these credits. However, as we do not have long-term contracts for ZEV credit sales, revenue from sale of ZEV creditsfluctuate by quarter depending on when a contract is executed with a buyer. For example, our revenue from ZEV credit sales in the three months endedDecember 31, 2017 was $179.1 million while it was $0 in the three months ended June 30, 2018.Automotive leasing revenue includes the amortization of revenue for Model S and Model X vehicles under direct lease agreements as well as thosesold with resale value guarantees accounted for as operating leases under lease accounting. We do not yet offer leasing for Model 3 vehicles.Services and other revenue consists of non-warranty after-sales vehicle services, sales of used vehicles, sales of electric vehicle components andsystems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers.55 2018 Compared to 2017Automotive sales revenue increased $9.10 billion, or 107%, in the year ended December 31, 2018 as compared to the year ended December 31, 2017,primarily due to an increase of approximately 144,330 Model 3 deliveries from our significant production ramp in the year ended December 31, 2018,delivered at average selling prices that remained relatively consistent year-over-year. Additionally, we recognized $1.40 billion of additional automotivesales revenue due to the adoption of the new revenue standard and an increase of $58.3 million in sales of regulatory credits to $418.6 million in the yearended December 31, 2018. ZEV credits sales were $103.4 million and non-ZEV regulatory credits sales were $315.2 million in the year ended December 31,2018, compared to $279.7 million ZEV credit sales and $80.6 million in non-ZEV regulatory credit sales in the year ended December 31, 2017. The growthin non-ZEV regulatory credits year-over-year was generally consistent with the delivery volume growth. The above increases in revenue were offset by adecrease of approximately 3,240 Model S and Model X deliveries during the year ended December 31, 2018, excluding the impact of adoption of the newrevenue standard, at average selling prices that remained relatively consistent as compared to the year ended December 31, 2017.Automotive leasing revenue decreased $223.1 million, or 20%, in the year ended December 31, 2018 as compared to the year endedDecember 31, 2017. The decrease was primarily due to a downward adjustment of $832.7 million from the adoption of the new revenue standard, partiallyoffset by an increase in cumulative vehicles under our direct vehicle leasing program and an increase in the number of vehicles under leasing programs whereour counterparty has retained ownership of the vehicle during or at the end of the guarantee period when compared to the year ended December 31, 2017.When our counterparty retains ownership, any remaining balances within deferred revenue and resale value guarantee are settled to automotive leasingrevenue.Services and other revenue increased $389.9 million, or 39%, in the year ended December 31, 2018 as compared to the year ended December 31,2017. The increase was primarily due to an increase in used vehicle sales from an increased volume of trade-in vehicles, partially offset by lower averageselling prices for used vehicles sales due to an increase in trade-ins of relatively lower priced non-Tesla vehicles in the year ended December 31, 2018.Additionally, there was an increase in non-warranty maintenance services revenue as our fleet continues to grow. These increases were partially offset by adecrease in powertrain sales to another automobile manufacturer as we wound down the program in 2017.2017 Compared to 2016Automotive sales revenue increased $2.95 billion, or 53%, in the year ended December 31, 2017 compared to the year ended December 31, 2016,primarily related to a 58% increase in deliveries to 80,060 vehicles resulting from increased sales of Model S and Model X, at average selling prices thatremained relatively consistent as compared to the prior period, as well as sales of 1,764 Model 3 vehicles since its launch in the third quarter of 2017.Additionally, sales of regulatory credits increased by $58.0 million to $360.3 million in the year ended December 31, 2017. ZEV credits sales were $279.7million and non-ZEV regulatory credits sales were $80.6 million in the year ended December 31, 2017, compared to $215.4 million ZEV credit sales and$86.9 million in non-ZEV regulatory credit sales in the year ended December 31, 2016. The increases were partially offset by additional deferrals ofAutopilot 2.0 revenue in the year ended December 31, 2017.Automotive leasing revenue increased $344.8 million, or 45%, in the year ended December 31, 2017 compared to the year ended December 31, 2016.The increase was primarily due to an approximately 30% increase in the number of vehicles under leasing programs or programs with a resale value guaranteecompared to the year ended December 31, 2016. In addition, during the year ended December 31, 2017, we recognized an increase of $23.4 million ofautomotive leasing revenue upon early payoff and expiration of resale value guarantees as compared to the year ended December 31, 2016.Service and other revenue increased $533.2 million, or 114%, in the year ended December 31, 2017 compared to the year ended December 31, 2016.This was primarily due to an increase in used vehicle sales as a result of increased automotive sales as well as from the expansion of our trade-in program.Additionally, there was a $41.1 million increase from the inclusion of engineering service revenue from Grohmann Engineering GmbH (now Tesla GrohmannAutomation GmbH, which we acquired on January 3, 2017, and a $68.4 million increase in non-warranty maintenance services revenue as our fleet continuedto grow during the year ended December 31, 2017.56 Energy Generation and Storage SegmentEnergy generation and storage revenue includes sale of solar energy systems and energy storage products, leasing revenue from solar energy systemsunder operating leases and PPAs and the sale of solar energy systems incentives.2018 Compared to 2017Energy generation and storage revenue increased by $439.0 million, or 39%, in the year ended December 31, 2018 as compared to the year endedDecember 31, 2017. The increase was primarily due to increases in deployments of Powerpack, Powerwall, and cash and loan solar energy systems projects.The increase in Powerpack revenue was significant year-over-year due to increases in revenue recognized for commercial projects, most predominantly $81.2million for the South Australia battery project. Additionally, we increased Powerwall production in the year ended December 31, 2018, which helped us tocontinue to work through our energy storage order backlog.2017 Compared to 2016Energy generation and storage revenue increased by $934.9 million, or 515%, in the year ended December 31, 2017 compared to the year endedDecember 31, 2016, predominantly due to the inclusion of the full-year of revenue from our solar business, which we gained by acquiring SolarCity onNovember 21, 2016.Cost of Revenues and Gross Margin Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Cost of revenues Automotive sales $13,685,572 $6,724,480 $4,268,087 $6,961,092 104% $2,456,393 58%Automotive leasing 488,425 708,224 481,994 (219,799) -31% 226,230 47%Total automotive cost of revenues 14,173,997 7,432,704 4,750,081 6,741,293 91% 2,682,623 56%Services and other 1,880,354 1,229,022 472,462 651,332 53% 756,560 160%Total automotive & services and other segment cost of revenues 16,054,351 8,661,726 5,222,543 7,392,625 85% 3,439,183 66%Energy generation and storage segment 1,364,896 874,538 178,332 490,358 56% 696,206 390%Total cost of revenues $17,419,247 $9,536,264 $5,400,875 $7,882,983 83% $4,135,389 77% Gross profit total automotive $4,340,986 $2,208,596 $1,600,685 Gross margin total automotive 23% 23% 25% Gross profit total automotive & services and other segment $3,851,673 $1,980,759 $1,596,195 Gross margin total automotive & services and other segment 19% 19% 23% Gross profit energy generation and storage segment $190,348 $241,728 $3,062 Gross margin energy generation and storage segment 12% 22% 2% Total gross profit $4,042,021 $2,222,487 $1,599,257 Total gross margin 19% 19% 23% 57 Automotive & Services and Other SegmentCost of automotive sales revenue includes direct parts, material and labor costs, manufacturing overhead, including depreciation costs of tooling andmachinery, shipping and logistic costs, vehicle connectivity costs, allocations of electricity and infrastructure costs related to our Supercharger network, andreserves for estimated warranty expenses. Cost of automotive sales revenues also includes adjustments to warranty expense and charges to write down thecarrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasteddemand.Cost of automotive leasing revenue includes primarily the amortization of operating lease vehicles over the lease term, as well as warranty expensesrecognized as incurred. Cost of automotive leasing revenue also includes vehicle connectivity costs and allocations of electricity and infrastructure costsrelated to our Supercharger network for vehicles under our leasing programs.Costs of services and other revenue includes costs associated with providing non-warranty after-sales services, costs to acquire and certify usedvehicles, and costs for retail merchandise. Cost of services and other revenue also includes direct parts, material and labor costs, manufacturing overheadassociated with the sales of electric vehicle components and systems to other manufacturers and sales by our acquired subsidiaries to third party customers.2018 Compared to 2017Cost of automotive sales revenue increased $6.96 billion, or 104%, in the year ended December 31, 2018 as compared to the year endedDecember 31, 2017. The increase was primarily due to a significantly higher volume of Model 3 vehicles deliveries in 2018 and the recognition of $969.8million of additional cost of automotive sales revenue due to the adoption of the new revenue standard. These increases were partially offset by significantreductions in Model 3 average costs per unit compared to the year ended December 31, 2017 primarily due to temporary under-utilization of manufacturingcapacity at lower production volumes in 2017 and other cost efficiencies. Additionally, there were lower overall costs for Model S and Model X cashdeliveries from approximately 3,240 fewer units delivered year-over-year and reductions in combined Model S and Model X average costs per unit as a resultof increased manufacturing efficiencies.Cost of automotive leasing revenue decreased $219.8 million, or 31%, in the year ended December 31, 2018 compared to the year endedDecember 31, 2017. The decrease was primarily due to a downward adjustment of $624.4 million from the adoption of the new revenue standard, partiallyoffset by increased cost of automotive leasing revenue from an increase in cumulative vehicles under our direct vehicle leasing program and an increase inthe number of vehicles under leasing programs where our counterparty has retained ownership of the vehicle during or at the end of the guarantee periodwhen compared to the year ended December 31, 2017. When our counterparty retains ownership, the net book value of the leased vehicle of the lease vehicleis expensed to cost of automotive leasing revenue.Cost of services and other revenue increased $651.3 million, or 53%, in the year ended December 31, 2018 as compared to the year endedDecember 31, 2017. The increase was primarily due to the increase in the cost of our new service centers, additional service personnel in existing and newservice centers, Mobile Service capabilities, parts distribution centers and investment in new body shops to provide maintenance services to our rapidlygrowing fleet of vehicles. Additionally, there was an overall increase in the cost of used vehicle sales from the increased volume of relatively lower pricednon-Tesla trade-in vehicles. These increases were partially offset by a decrease in cost of powertrain sales to another automobile manufacturer as we wounddown the program in 2017.58 Gross margin for total automotive remained relatively consistent at 23% in the years ended December 31, 2018 and 2017. There were increases fromimproved Model S and Model X combined margins as costs per unit decreased year-over-year from continuing manufacturing efficiencies and an increase inregulatory credits sales, which have no associated costs. The increases were partially offset by margin dilution from Model 3 despite Model 3 marginsimproving year-over-year. The higher proportion of Model 3 as a percentage of our total automotive sales in the year ended December 31, 2018 lowered ouroverall gross margin for total automotive as Model 3 had a lower annualized margin than Model S and Model X due to temporary under-utilization ofmanufacturing capacity at lower production volumes in the first half of 2018 and as we have yet to achieve significant manufacturing efficiencies in theproduction of Model 3.Gross margin for total automotive & services and other segment remained relatively consistent at 19% in the years ended December 31, 2018 and2017 primarily due to the automotive gross margin impacts discussed above. Services and other has historically operated at lower margins than ourautomotive sales and leasing business but has a small impact on the overall segment margin because of its relatively small revenue base.2017 Compared to 2016Cost of automotive sales revenues increased $2.46 billion, or 58%, in the year ended December 31, 2017 compared to the year ended December 31,2016. This was primarily due to a 58% increase in vehicle deliveries resulting from increased sales of Model S and Model X, as well as the commencement ofdeliveries of Model 3 in the third quarter of 2017.Cost of automotive leasing revenue increased $226.2 million, or 47%, in the year ended December 31, 2017 compared to the year ended December31, 2016. This was primarily due to an approximately 30% increase in the number of vehicles under leasing programs or programs with a resale valueguarantee compared to the year ended December 31, 2016. In addition, during the year ended December 31, 2017, we recognized an increase of $23.4 millionin cost of automotive leasing revenue upon early payoff and the expiration of resale value guarantees.Cost of services and other revenue increased $756.6 million, or 160%, in the year ended December 31, 2017 compared to the year ended December31, 2016, primarily due to the increase in cost of used vehicle sales due to increased volume and the increase in cost to provide maintenance services as ourfleet continues to grow.Gross margin for total automotive decreased from 25% to 23% in the year ended December 31, 2017 compared to the year ended December 31, 2016.The commencement of deliveries of Model 3 in the third quarter of 2017 whereby the full operating costs and depreciation were recorded at much lowerproduction volumes as production ramps and increases in early payoffs and expirations of resale value guarantees year-over-year contributed to the lowergross margin. Lower material and manufacturing costs for Model S and Model X, as we further improved our vehicle production processes and the partialrecognition of autopilot 2.0 revenue in the year ended December 31, 2017 partially offset the overall decrease.Gross margin for total automotive & services and other segment decreased from 23% to 19% in the year ended December 31, 2017 compared to theyear ended December 31, 2016. These decreases are driven by the factors impacting gross margin for total automotive, as explained above, as well as highercosts of maintenance service.Energy Generation and Storage SegmentCost of energy generation and storage revenue includes direct and indirect material and labor costs, warehouse rent, freight, warranty expense, otheroverhead costs and amortization of certain acquired intangible assets. In addition, where arrangements are accounted for as operating leases, the cost ofrevenue is primarily comprised of depreciation of the cost of leased solar energy systems, maintenance costs associated with those systems and amortizationof any initial direct costs.59 2018 Compared to 2017Cost of energy generation and storage revenue increased by $490.4 million, or 56%, in the year ended December 31, 2018 as compared to the yearended December 31, 2017 primarily due to increases in deployments of Powerpack, Powerwall, and cash and loan solar energy system projects. The increasein Powerpack cost of revenue was significant year-over-year due to increases in cost of revenue recognized for commercial projects, most predominantly$72.5 million for the South Australia battery project. Additionally, costs for cash and loan solar energy system projects have increased from higherinstallation costs, higher allocation of overhead costs from lower deployment of solar projects overall, and certain warranty related one-time charges. Therewere also higher costs for our solar energy system leasing arrangements due to impairment charges and higher costs from temporary manufacturing under-utilization of our Solar Roof ramp.Gross margin for energy generation and storage decreased from 22% to 12% in the year ended December 31, 2018 compared to the year endedDecember 31, 2017. The decrease was primarily due to the higher proportion of energy storage of our overall energy generation and storage portfolio, due toa three-fold growth of MWh of energy storage deployments in the year ended December 31, 2018. Although energy storage margins have improvedsignificantly as compared to the year ended December 31, 2017, it continues to operate at a lower margin than our solar business, thereby having a greaterdilutive impact on our gross margin in the year ended December 31, 2018. Additionally, increases in costs for our cash and loan solar energy system projects,impairment charges on solar energy system leasing arrangements, and temporary manufacturing under-utilization of our Solar Roof ramp have furthercontributed to the decrease in gross margin.2017 Compared to 2016Cost of energy generation and storage revenue increased by $696.2 million, or 390%, in the year ended December 31, 2017 compared to the yearended December 31, 2016. This was primarily due to the inclusion of the full-year of costs from our solar business, which we gained by acquiring SolarCityon November 21, 2016.Gross margin for energy generation and storage increased from 2% to 22% in the year ended December 31, 2017 compared to the year endedDecember 31, 2016. This was predominantly due to the inclusion of the full-year of revenue and costs from our solar business, which we gained by acquiringSolarCity.Research and Development Expense Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Research and development $1,460,370 $1,378,073 $834,408 $82,297 6% $543,665 65%As a percentage of revenues 7% 12% 12% Research and development (“R&D”) expenses consist primarily of personnel costs for our teams in engineering and research, manufacturingengineering and manufacturing test organizations, prototyping expense, contract and professional services and amortized equipment expense.R&D expenses increased $82.3 million, or 6%, in the year ended December 31, 2018 compared to the year ended December 31, 2017. This increasewas primarily due to an $84.2 million increase in employee and labor related expenses from headcount growth to support our business expansion and $45.2million increase in stock-based compensation expense related to an increase in headcount and number of employee stock awards granted for new hire andrefresher employee stock grants. Additionally, there was an increase of $16.0 million in facilities, freight, and depreciation expenses due to businessexpansion, offset by a $69.7 million decrease in expensed materials as there were higher costs in the year ended December 31, 2017 primarily related toModel 3 development.60 R&D expenses increased $543.7 million, or 65%, in the year ended December 31, 2017 compared to the year ended December 31, 2016.This increase was primarily due to a $274.9 million increase in employee and labor related expenses from increased headcount as a result of our acquisitionsas well as headcount growth from the expansion of our automotive and energy generation and storage businesses, and a $44.3 million increase in stock-basedcompensation expense related to an increase in headcount and number of employee stock awards granted for new hire and refresher employee stockgrants. Additionally, there were increases in facilities expenses, depreciation expenses, professional and outside service expenses and expensed materials tosupport the development of future products.Selling, General and Administrative Expense Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Selling, general and administrative $2,834,491 $2,476,500 $1,432,189 $357,991 14% $1,044,311 73%As a percentage of revenues 13% 21% 20% Selling, general and administrative (“SG&A”) expenses generally consist of personnel and facilities costs related to our stores, marketing, sales,executive, finance, human resources, information technology and legal organizations, as well as fees for professional and contract services and litigationsettlements.SG&A expenses increased $358.0 million, or 14%, in the year ended December 31, 2018 as compared to the year ended December 31, 2017. Theincrease was primarily due to a $193.1 million increase in stock-based compensation expense related to the 2018 CEO Performance Award and stock awardsgranted for new hires and refresher employee stock grants. Additionally, there was a $153.9 million increase in office, information technology and facilities-related expenses and sales and marketing activities to support our business expansion.SG&A expenses increased $1.04 billion, or 73%, in the year ended December 31, 2017 compared to the year ended December 31, 2016. This increasewas primarily due to a $524.0 million increase in employee and labor related expenses from increased headcount as a result of our acquisitions as well asheadcount growth from the expansion of our automotive and energy generation and storage businesses, and a $64.9 million increase in stock-basedcompensation expense related to an increase in headcount and number of employee stock awards granted for new hire and refresher employee stock grants.Additionally, the increase was due to a $310.6 million increase in office, information technology and facilities-related expenses to support the growth of ourbusiness as well as sales and marketing activities to handle our expanding market presence and a $140.6 million increase in professional and outside serviceexpenses to support the growth of our business.Restructuring and other Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change(Dollars in thousands) 2018 2017 2016 $ % $ %Restructuring and other $135,233 $— $— $135,233 N/A $— N/AAs a percentage of revenues 1% 0% 0% During 2018, we carried out certain restructuring actions in order to reduce costs and improve efficiency and recognized $36.6 million of employeetermination expenses and estimated losses from sub-leasing a certain facility. The employee termination cash expenses of $27.3 million were substantiallypaid by the end of 2018, while the remaining amounts were non-cash. Also included within restructuring and other activities was $55.2 million of expenses(materially all of which were non-cash) from restructuring the energy generation and storage segment, which comprised of disposals of certain tangible assets,the shortening of the useful life of a trade name intangible asset and a contract termination penalty. In addition, we concluded that a small portion of the in-process research and development asset is not commercially feasible. Consequently, we recognized an impairment loss of $13.3 million.61 In October 2018, a final court order was entered approving the terms of a settlement in connection with the SEC’s legal actions relating to ElonMusk’s prior consideration during the third quarter of 2018 of a take-private proposal for Tesla. Consequently, we recognized settlement and legal expensesof $30.1 million in the year ended December 31, 2018. These expenses were substantially paid by the end of 2018.There were no restructuring actions in the years ended December 31, 2017 and 2016.Interest Expense Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Interest expense $(663,071) $(471,259) $(198,810) $(191,812) 41% $(272,449) 137%As a percentage of revenues 3% 4% 3% Interest expense increased by $191.8 million, or 41%, in the year ended December 31, 2018 as compared to the year ended December 31, 2017. Theincrease was primarily due to an increase in our average outstanding indebtedness at relatively consistent weighted average interest rates as compared to theyear ended December 31, 2017. Additionally, there was a decrease of $70.0 million in the amount of interest we capitalized from the consolidated statementof operations to property, plant, and equipment on the consolidated balance sheets. Lower capitalization results in higher interest expense. The amount ofinterest we capitalize is driven by our construction in progress balance, which decreased year-over-year due to significant Model 3 capital expenditure rampin the year ended December 31, 2017.Interest expense increased by $272.4 million, or 137%, in the year ended December 31, 2017 as compared to the year ended December 31, 2016. Theincrease was primarily due to the inclusion of the full-year of interest expense from SolarCity of $185.5 million for the year ended December 31, 2017. Inaddition, our average outstanding indebtedness has increased in the year ended December 31, 2017 as compared to the year ended December 31, 2016mainly due to the Convertible Senior Notes due in 2022 and the Senior Notes due in 2025, both of which we issued during 2017.Other Income (Expense), Net Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change(Dollars in thousands) 2018 2017 2016 $ % $ %Other income (expense), net $21,866 $(125,373) $111,272 $147,239 Notmeaningful $(236,645) NotmeaningfulAs a percentage of revenues 0% -1% 2% Other income (expense), net, consists primarily of foreign exchange gains and losses related to our foreign currency-denominated monetary assetsand liabilities and changes in the fair values of our fixed-for-floating interest rate swaps. We expect our foreign exchange gains and losses will varydepending upon movements in the underlying exchange rates.Other income (expense), net, changed favorably by $147.2 million to a gain of $21.9 million in the year ended December 31, 2018 from a loss of$125.4 million in the year ended December 31, 2017. The change was primarily due to favorable fluctuations in foreign currency exchange rates and gainsfrom interest rate swaps related to our debt facilities year-over-year. Additionally, we had $57.7 million of losses in the year ended December 31, 2017 formeasurement period adjustments to the acquisition date fair values of certain SolarCity liabilities as previously reported in our Annual Report on Form 10-Kfor the year ended December 31, 2016, with no corresponding expense in the year ended December 31, 2018.Other income (expense), net, changed unfavorably by $236.7 million to a loss of $125.4 million in the year ended December 31, 2017 from a gain of$111.3 million in the year ended December 31, 2016. The decrease was primarily due to $57.7 million of losses in the year ended December 31, 2017 formeasurement period adjustments to the acquisition date fair value of SolarCity and fluctuations in foreign currency exchange rates.62 Provision for Income Taxes Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Provision for income taxes $57,837 $31,546 $26,698 $26,291 83% $4,848 18%Effective tax rate -6% -1% -4% Our provision for income taxes increased by $26.3 million, or 83%, in the year ended December 31, 2018 as compared to the year endedDecember 31, 2017. The increase was primarily due to the increase in taxable profits in certain foreign jurisdictions year-over-year.Our provision for income taxes increased by $4.9 million, or 18%, in the year ended December 31, 2017 as compared to the year ended December 31,2016. This increase was primarily due to the increase in vehicle deliveries in foreign tax jurisdictions, partially offset by $10.5 million of future U.S.alternative minimum tax refunds as a result of the Tax Act, which previously had an associated valuation allowance.Net Income (Loss) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests Year Ended December 31, 2018 vs. 2017 Change 2017 vs. 2016 Change (Dollars in thousands) 2018 2017 2016 $ % $ % Net loss attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries $(86,491) $(279,178) $(98,132) $192,687 -69% $(181,046) 184% Our net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests was related to financing fund arrangements.Liquidity and Capital ResourcesAs of December 31, 2018, we had $3.69 billion of cash and cash equivalents. Balances held in foreign currencies had a U.S. dollar equivalent of$749.0 million and consisted primarily of Chinese yuan, euros and Japanese yen. Our sources of cash are predominately from our deliveries of vehicles, salesand installations of our energy storage products and solar energy systems, proceeds from debt facilities, proceeds from financing funds and proceeds fromequity offerings.Our sources of liquidity and cash flows enable us to fund ongoing operations, research and development projects for new products, increases inModel 3 production capacity at the Tesla Factory, the establishment of Model 3 production capacity at Gigafactory Shanghai, the continued expansion ofGigafactory 1, the addition of manufacturing capacity for Model Y with the expectation to achieve volume production by the end of 2020, and the continuedexpansion of our retail and service locations, body shops, Mobile Service fleet and Supercharger network. We currently expect total 2019 capitalexpenditures to be approximately $2.5 billion.63 In 2019, we will continue to utilize our increasing experience and learnings from past and current product ramps to do so at a level of capitalefficiency per dollar of spend that we expect to be significantly greater than historical levels. For example, based on our experience with ramping Model 3 atthe Tesla Factory, we expect that the capital spend per unit of Model 3 manufacturing capacity at Gigafactory Shanghai will be less than that of our line inFremont. Likewise, based on such experience and the substantial commonality of components we expect between Model Y and Model 3, we believe that theproduction ramp of Model Y will be significantly faster than that of Model 3 and cost less per unit of manufacturing capacity than that of Model 3 atFremont. Considering the pipeline of new products planned at this point, and consistent with our current strategy of using a partner to manufacture cells, aswell as considering all other infrastructure growth and expansion of Gigafactory 1, Gigafactory 2 and Gigafactory Shanghai, we currently estimate that capitalexpenditures will be between $2.5 to $3.0 billion annually for the next two fiscal years. Moreover, we expect that the cash we generate from our coreoperations will generally be sufficient to cover our future capital expenditures and to pay down our near-term debt obligations (including the repayment of$920.0 million for our 0.25% Convertible Senior Notes due on March 1, 2019), although we may choose to seek alternative financing sources. For example,we expect that much of our investment in Gigafactory Shanghai will be funded through indebtedness arranged through local financial institutions in China.As always, we continually evaluate our capital expenditure needs and may decide it is best to raise additional capital to fund the rapid growth of ourbusiness.We have an agreement to spend or incur $5.0 billion in combined capital, operational expenses, costs of goods sold and other costs in the State ofNew York during the 10-year period following full production at Gigafactory 2. We anticipate meeting these obligations through our operations at thisfacility and other operations within the State of New York, and we do not believe that we face a significant risk of default.We expect that our current sources of liquidity together with our projection of cash flows from operating activities will provide us with adequateliquidity over at least the next 12 months. A large portion of our future expenditures is to fund our growth, and we can adjust our capital and operatingexpenditures by operating segment, including future expansion of our product offerings, retail and service locations, body shops, Mobile Service fleet, andSupercharger network. We may need or want to raise additional funds in the future, and these funds may not be available to us when we need or want them, orat all. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected.In addition, we had $1.50 billion of unused committed amounts under our credit facilities and financing funds as of December 31, 2018, some ofwhich are subject to satisfying specified conditions prior to draw-down (such as pledging to our lenders sufficient amounts of qualified receivables,inventories, leased vehicles and our interests in those leases, solar energy systems and the associated customer contracts, our interests in financing funds orvarious other assets; and contributing or selling qualified solar energy systems and the associated customer contracts or qualified leased vehicles and ourinterests in those leases into the financing funds). Upon the draw-down of any unused committed amounts, there are no restrictions on the use of such fundsfor general corporate purposes. For details regarding our indebtedness and financing funds, refer to Note 13, Long-Term Debt Obligations, and Note 18,Variable Interest Entity Arrangements, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.64 Summary of Cash Flows Year Ended December 31, (Dollars in thousands) 2018 2017 2016 Net cash provided by (used in) operating activities $2,097,802 $(60,654) $(123,829)Net cash used in investing activities $(2,337,428) $(4,195,877) $(1,081,085)Net cash provided by financing activities $573,755 $4,414,864 $3,743,976Cash Flows from Operating ActivitiesOur cash flows from operating activities are significantly affected by our cash investments to support the growth of our business in areas such asresearch and development and selling, general and administrative and working capital, especially inventory, which includes vehicles in transit. Our operatingcash inflows include cash from vehicle sales, lease payments directly from customers, customer deposits, sales of regulatory credits and energy generation andstorage products. These cash inflows are offset by our payments to suppliers for production materials and parts used in our manufacturing process, employeecompensation, operating lease payments and interest payments on our financings.Net cash from operating activities changed favorably by $2.16 billion to net cash provided by operating activities of $2.10 billion during the yearended December 31, 2018 from net cash used in operating activities of $60.7 million during the year ended December 31, 2017. This favorable change wasprimarily due to the increase in net income, excluding non-cash expenses and gains, of $1.60 billion and the decrease in net operating assets and liabilities of$554.6 million. The decrease in net operating assets and liabilities was mainly driven by an increase in accounts payable and accrued liabilities, as a result ofincreased expenditures to support our ramp of Model 3 deliveries and a net decrease in operating lease vehicles and resale value guarantee liability primarilydue to the adoption of the new revenue standard, wherein certain vehicle sales to customer or leasing partners with a resale value guarantee were previouslyaccounted for as an in-substance operating leases are now accounted for as sales with a right of return upon control transfer. The increase in cash from certainoperating activities was partially offset by the increase in accounts receivable and inventory, as a result of increased Model 3 and energy products deliveriesand production. Additionally, there was a decrease in customer deposits primarily due to Model 3 fulfillments and an increase in other assets as we paid$141.3 million for the land use rights for Gigafactory Shanghai.Net cash used in operating activities during the year ended December 31, 2017 decreased by $63.2 million as compared to the year endedDecember 31, 2016 due to the decrease in net operating assets and liabilities of $197.3 million partially offset by the decrease in net loss, excluding non-cashexpenses and gains, of $134.1 million. The decrease in working capital was mainly driven by faster processing of payments for our vehicles and our focus onreducing inventory in the fourth quarter of 2017.During the year ended December 31, 2016, cash used in operating activities was primarily a result of our net loss of $773.0 million, the increase inaccounts payable and accrued liabilities of $750.6 million as our business expanded, the increase in resale value guarantees of $326.9 million and deferredrevenue of $383.0 million as the number of vehicles with a resale value guarantee increased and the increase in customer deposits of $388.4 million primarilydue to Model 3 reservations. These increases were partially offset by the increase in inventories and operating lease vehicles of $2.47 billion as we expandedour program for direct leases and vehicles with a resale value guarantee.Cash Flows from Investing ActivitiesCash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $2.32 billionduring 2018, $4.08 billion during 2017 and $1.44 billion during 2016. Capital expenditures during 2018 were $2.10 billion from purchases of property andequipment, mainly for Model 3 production and the expansion of our customer support infrastructure, and $218.8 million for the design, acquisition andinstallation of solar energy systems under operating leases with customers.65 Capital expenditures during 2017 were $3.41 billion from purchases of property and equipment mainly for Model 3 production and $666.5 millionfor the design, acquisition and installation of solar energy systems under operating leases with customers. We also paid $114.5 million, net of the cashacquired, for acquisitions in 2017.Capital expenditures during 2016 were $1.28 billion from purchases of property and equipment and $159.7 million for the design, acquisition andinstallation of solar energy systems under operating leases with customers. These expenditures were partially offset by the assumed cash of $342.7 million asa result of the SolarCity acquisition in 2016.In 2014, we began construction of Gigafactory 1. We used $687.0 million, $1.45 billion, and $455.3 million of cash towards Gigafactory 1construction during the years ended December 31, 2018, 2017, and 2016 respectively.Cash Flows from Financing ActivitiesCash flows from financing activities during the year ended December 31, 2018 consisted primarily of $1.18 billion of net borrowings underautomobile asset-backed notes, $431.0 million of net borrowings under the senior secured asset-based revolving credit agreement (the “Credit Agreement”),$334.1 million from the issuance of solar asset-backed notes and $295.7 million of proceeds from exercises of stock options and other stock issuances. Thesecash inflows were partially offset by net repayments of $581.9 million under our vehicle lease-backed loan and security agreements (the “WarehouseAgreements”), collateralized lease repayments of $559.2 million, repayments of $230.0 million of the 2.75% Convertible Senior Notes due on November 1,2018, and repayments of $210.2 million under the revolving aggregation credit facility. See Note 13, Long-Term Debt Obligations, and Note 2, Summary ofSignificant Accounting Policies, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detailsregarding our debt obligations and collateralized borrowings, respectively.Cash flows from financing activities during the year ended December 31, 2017 consisted primarily of $966.4 million from the issuance of the 2.375%Convertible Senior Notes due in 2022, $1.77 billion from the issuance of the 5.3% Senior Notes due in 2025 and $400.2 million from our March 2017 publicoffering of common stock, net of underwriter fees. However, we paid $151.2 million for the purchase of bond hedges net of the amount we received from thesale of warrants. Furthermore, we received $511.3 million of net proceeds from collateralized lease borrowings and $527.5 million of net proceeds from fundinvestors.Cash flows from financing activities during the year ended December 31, 2016 consisted primarily of $1.70 billion from our May 2016 publicoffering of common stock, net of underwriter fees, $995.4 million of proceeds from issuances of debt net of repayments and $769.7 million of net proceedsfrom collateralized lease borrowings. The net proceeds from issuances of debt consisted primarily of $834.0 million of net borrowings under the CreditAgreement and $390.0 million of borrowings under the Warehouse Agreements, partially offset by settlements of $454.7 million for certain conversions ofthe 1.50% Convertible Senior Notes due in June 2018. Furthermore, we received $180.3 million of net proceeds from fund investors.66 Contractual ObligationsWe are party to contractual obligations involving commitments to make payments to third parties, including certain debt financing arrangements andleases, primarily for stores, service centers, certain manufacturing and corporate offices. These also include, as part of our normal business practices, contractswith suppliers for purchases of certain raw materials, components and services to facilitate adequate supply of these materials and services and capacityreservation contracts. The following table sets forth, as of December 31, 2018, certain significant obligations that will affect our future liquidity (inthousands): Year Ended December 31, Total 2019 2020 2021 2022 2023 Thereafter Operating lease obligations $1,628,154 $275,654 $256,931 $230,406 $182,911 $157,662 $524,590 Capital lease obligations, including interest 1,461,236 416,952 503,545 506,197 23,828 4,776 5,938 Purchase obligations (1) 18,088,100 4,860,431 3,255,968 3,391,637 3,985,336 2,570,730 23,998 Long-term debt, including scheduled interest (2) 12,570,082 2,583,160 2,485,372 2,260,528 1,629,556 302,345 3,309,121 Total $33,747,572 $8,136,197 $6,501,816 $6,388,768 $5,821,631 $3,035,513 $3,863,647 (1)These amounts represent (i) purchase orders of $2.40 billion issued under binding and enforceable agreements with all vendors as of December 31,2018 and (ii) $15.69 billion in other estimable purchase obligations pursuant to such agreements, primarily relating to the purchase of lithium-ioncells produced by Panasonic at Gigafactory 1, including any additional amounts we may have to pay vendors if we do not meet certain minimumpurchase obligations. In cases where no purchase orders were outstanding under binding and enforceable agreements as of December 31, 2018, wehave included estimated amounts based on our best estimates and assumptions or discussions with the relevant vendors as of such date or, whereapplicable, on amounts or assumptions included in such agreements for purposes of discussion or reference. In certain cases, such estimated amountswere subject to contingent events. Furthermore, these amounts do not include future payments for purchase obligations that were recorded inaccounts payable or accrued liabilities as of December 31, 2018.(2)Long-term debt, including scheduled interest, includes our non-recourse indebtedness of $3.61 billion. Non-recourse debt refers to debt that isrecourse to only specified assets of our subsidiaries. Short-term scheduled interest payments and amortization of convertible senior note conversionfeatures, debt discounts and deferred financing costs for the year ended December 31, 2019 is $361.2 million. Long-term scheduled interest paymentsand amortization of convertible senior note conversion features, debt discounts and deferred financing costs for the years thereafter is $1.58 billion.The table above excludes unrecognized tax benefits of $243.8 million because if recognized, they would be an adjustment to our deferred tax assets.Off-Balance Sheet ArrangementsDuring the periods presented, we did not have relationships with unconsolidated entities or financial partnerships, such as entities often referred to asstructured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements or other contractuallynarrow or limited purposes.Recent Accounting PronouncementsSee Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included elsewhere in this Annual Report onForm 10-K. 67 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency RiskWe transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue and operatingexpenses denominated in currencies other than the U.S. dollar (primarily the euro, Japanese yen, Canadian dollar, Chinese yuan and Norwegian krone). Ingeneral, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates and, in particular, astrengthening of the U.S. dollar have in the past, and may in the future, negatively affect our revenue and other operating results as expressed in U.S. dollars.We have also experienced, and will continue to experience, fluctuations in our net income (loss) as a result of gains (losses) on the settlement and there-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany andcash and cash equivalents balances). For the year ended December 31, 2018, we recognized a net foreign currency gain of $1.5 million in other income(expense), net, with our largest re-measurement exposures from the euro, New Taiwan dollar and Canadian dollar. For the year ended December 31, 2017, werecognized a net foreign currency loss of $52.3 million in other income (expense), net, with our largest re-measurement exposures from the euro, Canadiandollar and Norwegian krone.We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreigncurrency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets andliabilities denominated in currencies other than our local currencies at the balance sheet dates to compute the impact these changes would have had on ournet income (loss) before income taxes. These changes would have resulted in an adverse impact of $175.7 million at December 31, 2018 and $116.0 millionat December 31, 2017.Interest Rate RiskWe are exposed to interest rate risk on our borrowings that bear interest at floating rates. Pursuant to our risk management policies, in certain cases,we utilize derivative instruments to manage some of this risk. We do not enter into derivative instruments for trading or speculative purposes. A hypothetical10% change in our interest rates would have increased our interest expense for the years ended December 31, 2018 and 2017 by $8.5 million and $7.6million, respectively. 68 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements PageReport of Independent Registered Public Accounting Firm 70Consolidated Balance Sheets 72Consolidated Statements of Operations 73Consolidated Statements of Comprehensive Loss 74Consolidated Statements of Redeemable Noncontrolling Interests and Equity 75Consolidated Statements of Cash Flows 76Notes to Consolidated Financial Statements 77 69 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Tesla, Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Tesla, Inc. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, andthe related consolidated statements of operations, of comprehensive loss, of redeemable noncontrolling interests and equity, and of cash flows for each of thethree years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We alsohave audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenue from contracts withcustomers in 2018.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over FinancialReporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company'sinternal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting OversightBoard (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.70 Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. /s/PricewaterhouseCoopers LLPSan Jose, CaliforniaFebruary 19, 2019We have served as the Company’s auditor since 2005. 71 Tesla, Inc.Consolidated Balance Sheets(in thousands, except per share data) December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $3,685,618 $3,367,914 Restricted cash 192,551 155,323 Accounts receivable, net 949,022 515,381 Inventory 3,113,446 2,263,537 Prepaid expenses and other current assets 365,671 268,365 Total current assets 8,306,308 6,570,520 Operating lease vehicles, net 2,089,758 4,116,604 Solar energy systems, leased and to be leased, net 6,271,396 6,347,490 Property, plant and equipment, net 11,330,077 10,027,522 Intangible assets, net 282,492 361,502 Goodwill 68,159 60,237 MyPower customer notes receivable, net of current portion 421,548 456,652 Restricted cash, net of current portion 398,219 441,722 Other assets 571,657 273,123 Total assets $29,739,614 $28,655,372 Liabilities Current liabilities Accounts payable $3,404,451 $2,390,250 Accrued liabilities and other 2,094,253 1,731,366 Deferred revenue 630,292 1,015,253 Resale value guarantees 502,840 787,333 Customer deposits 792,601 853,919 Current portion of long-term debt and capital leases 2,567,699 796,549 Current portion of promissory notes issued to related parties — 100,000 Total current liabilities 9,992,136 7,674,670 Long-term debt and capital leases, net of current portion 9,403,672 9,418,319 Deferred revenue, net of current portion 990,873 1,177,799 Resale value guarantees, net of current portion 328,926 2,309,222 Other long-term liabilities 2,710,403 2,442,970 Total liabilities 23,426,010 23,022,980 Commitments and contingencies (Note 17) Redeemable noncontrolling interests in subsidiaries 555,964 397,734 Convertible senior notes (Note 13) — 70 Equity Stockholders' equity Preferred stock; $0.001 par value; 100,000 shares authorized; no shares issued and outstanding — — Common stock; $0.001 par value; 2,000,000 shares authorized; 172,603 and 168,797 shares issued and outstanding as of December 31, 2018 and 2017, respectively 173 169 Additional paid-in capital 10,249,120 9,178,024 Accumulated other comprehensive (loss) income (8,218) 33,348 Accumulated deficit (5,317,832) (4,974,299)Total stockholders' equity 4,923,243 4,237,242 Noncontrolling interests in subsidiaries 834,397 997,346 Total liabilities and equity $29,739,614 $28,655,372 The accompanying notes are an integral part of these consolidated financial statements. 72 Tesla, Inc. Consolidated Statements of Operations(in thousands, except per share data) Year Ended December 31, 2018 2017 2016 Revenues Automotive sales $17,631,522 $8,534,752 $5,589,007 Automotive leasing 883,461 1,106,548 761,759 Total automotive revenues 18,514,983 9,641,300 6,350,766 Energy generation and storage 1,555,244 1,116,266 181,394 Services and other 1,391,041 1,001,185 467,972 Total revenues 21,461,268 11,758,751 7,000,132 Cost of revenues Automotive sales 13,685,572 6,724,480 4,268,087 Automotive leasing 488,425 708,224 481,994 Total automotive cost of revenues 14,173,997 7,432,704 4,750,081 Energy generation and storage 1,364,896 874,538 178,332 Services and other 1,880,354 1,229,022 472,462 Total cost of revenues 17,419,247 9,536,264 5,400,875 Gross profit 4,042,021 2,222,487 1,599,257 Operating expenses Research and development 1,460,370 1,378,073 834,408 Selling, general and administrative 2,834,491 2,476,500 1,432,189 Restructuring and other 135,233 — — Total operating expenses 4,430,094 3,854,573 2,266,597 Loss from operations (388,073) (1,632,086) (667,340)Interest income 24,533 19,686 8,530 Interest expense (663,071) (471,259) (198,810)Other income (expense), net 21,866 (125,373) 111,272 Loss before income taxes (1,004,745) (2,209,032) (746,348)Provision for income taxes 57,837 31,546 26,698 Net loss (1,062,582) (2,240,578) (773,046)Net loss attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries (86,491) (279,178) (98,132)Net loss attributable to common stockholders $(976,091) $(1,961,400) $(674,914)Net loss per share of common stock attributable to common stockholders Basic $(5.72) $(11.83) $(4.68)Diluted $(5.72) $(11.83) $(4.68)Weighted average shares used in computing net loss per share of common stock Basic 170,525 165,758 144,212 Diluted 170,525 165,758 144,212 The accompanying notes are an integral part of these consolidated financial statements. 73 Tesla, Inc.Consolidated Statements of Comprehensive Loss(in thousands) Year Ended December 31, 2018 2017 2016 Net loss attributable to common stockholders $(976,091) $(1,961,400) $(674,914)Unrealized gains (losses) on derivatives: Change in net unrealized gain — — 43,220 Less: Reclassification adjustment for net gains into net loss — (5,570) (44,904)Net unrealized loss on derivatives — (5,570) (1,684)Foreign currency translation adjustment (41,566) 62,658 (18,500)Other comprehensive (loss) income (41,566) 57,088 (20,184)Comprehensive loss $(1,017,657) $(1,904,312) $(695,098) The accompanying notes are an integral part of these consolidated financial statements. 74 Tesla, Inc.Consolidated Statements of Redeemable Noncontrolling Interests and Equity(in thousands, except per share data) Accumulated Redeemable Additional Other Total Noncontrolling Noncontrolling Common Stock Paid-In Accumulated Comprehensive Stockholders' Interests in Total Interests Shares Amount Capital Deficit Loss Equity Subsidiaries Equity Balance as of December 31, 2015 $— 131,425 $131 $3,409,452 $(2,322,323) $(3,556) $1,083,704 $— $1,083,704 Reclassification from mezzanine equity to equity for 1.50%Convertible Senior Notes due in 2018 — — — 38,501 — — 38,501 — 38,501 Exercises of conversion feature of convertible senior notes — — — (15,056) — — (15,056) — (15,056)Common stock issued, net of shares withheld for employee taxes — 11,096 11 163,817 — — 163,828 — 163,828 Issuance of common stock in May 2016 public offering at $215.00per share, net of issuance costs of $14,595 — 7,915 8 1,687,139 — — 1,687,147 — 1,687,147 Issuance of common stock upon acquisition of SolarCity andassumed awards — 11,125 11 2,145,977 — — 2,145,988 — 2,145,988 Stock-based compensation — — — 347,357 — — 347,357 — 347,357 Assumption of capped calls — — — (3,460) — — (3,460) — (3,460)Assumption of noncontrolling interests through acquisition 315,943 — — — — — — 750,574 750,574 Contributions from noncontrolling interests through acquisition 100,996 — — — — — — 100,531 100,531 Distributions to noncontrolling interests through acquisition (7,137) — — — — — — (10,561) (10,561)Net loss (42,763) — — — (674,914) — (674,914) (55,369) (730,283)Other comprehensive loss — — — — — (20,184) (20,184) — (20,184)Balance as of December 31, 2016 367,039 161,561 161 7,773,727 (2,997,237) (23,740) 4,752,911 785,175 5,538,086 Adjustment of prior periods due to adoption of AccountingStandards Update No. 2016-09 — — — 15,662 (15,662) — — — — Conversion feature of Convertible Senior Notes due in 2022 — — — 145,613 — — 145,613 — 145,613 Purchases of bond hedges — — — (204,102) — — (204,102) — (204,102)Sales of warrants — — — 52,883 — — 52,883 — 52,883 Reclassification from mezzanine equity to equity for 1.50%Convertible Senior Notes due in 2018 — — — 8,714 — — 8,714 — 8,714 Exercises of conversion feature of convertible senior notes — 1,408 2 230,151 — — 230,153 — 230,153 Common stock issued, net of shares withheld for employee taxes — 4,257 4 259,381 — — 259,385 — 259,385 Issuance of common stock in March 2017 public offering at $262.00per share, net of issuance costs of $2,854 — 1,536 2 399,645 — — 399,647 — 399,647 Issuance of common stock upon acquisitions and assumed awards — 35 0 10,528 — 10,528 — 10,528 Stock-based compensation — — — 485,822 — — 485,822 — 485,822 Contributions from noncontrolling interests 192,421 — — — — — — 597,282 597,282 Distributions to noncontrolling interests (100,703) — — — — — — (163,626) (163,626)Buy-outs of noncontrolling interests (2,921) — — — — — — (409) (409)Net loss (58,102) — — — (1,961,400) — (1,961,400) (221,076) (2,182,476)Other comprehensive income — — — — — 57,088 57,088 — 57,088 Balance as of December 31, 2017 397,734 168,797 169 9,178,024 (4,974,299) 33,348 4,237,242 997,346 5,234,588 Adjustments for prior periods from adopting ASC 606 8,101 — — — 623,172 — 623,172 (89,084) 534,088 Adjustments for prior periods from adopting Accounting StandardsUpdate No. 2017-05 — — — — 9,386 — 9,386 — 9,386 Reclassification from mezzanine equity to equity for 1.50%Convertible Senior Notes due in 2018 — — — 70 — — 70 — 70 Exercises of conversion feature of convertible senior notes — 238 0 (40) — — (40) — (40)Common stock issued, net of shares withheld for employee taxes — 3,568 4 295,719 — — 295,723 — 295,723 Stock-based compensation — — — 775,554 — — 775,554 — 775,554 Contributions from noncontrolling interests 275,736 — — — — — — 161,399 161,399 Distributions to noncontrolling interests (61,557) — — — — — — (209,994) (209,994)Buy-outs of noncontrolling interests (2,829) — — (207) — — (207) — (207)Net loss (61,221) — — — (976,091) — (976,091) (25,270) (1,001,361)Other comprehensive loss — — — — — (41,566) (41,566) — (41,566)Balance as of December 31, 2018 $555,964 172,603 $173 $10,249,120 $(5,317,832) $(8,218) $4,923,243 $834,397 $5,757,640 The accompanying notes are an integral part of these consolidated financial statements. 75 Tesla, Inc.Consolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2018 2017 2016 Cash Flows from Operating Activities Net loss $(1,062,582) $(2,240,578) $(773,046)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, amortization and impairment 1,901,050 1,636,003 947,099 Stock-based compensation 749,024 466,760 334,225 Amortization of debt discounts and issuance costs 158,730 91,037 94,690 Inventory write-downs 85,272 131,665 65,520 Loss on disposals of fixed assets 161,361 105,770 34,633 Foreign currency transaction (gains) losses (1,511) 52,309 (29,183)Loss (gain) related to SolarCity acquisition — 57,746 (88,727)Non-cash interest and other operating activities 48,507 135,237 (15,179)Changes in operating assets and liabilities, net of effect of business combinations: Accounts receivable (496,732) (24,635) (216,565)Inventory (1,023,264) (178,850) (632,867)Operating lease vehicles (214,747) (1,522,573) (1,832,836)Prepaid expenses and other current assets (82,125) (72,084) 56,806 Other assets and MyPower customer notes receivable (207,409) (15,453) (49,353)Accounts payable and accrued liabilities 1,722,850 388,206 750,640 Deferred revenue 406,661 468,902 382,962 Customer deposits (96,685) 170,027 388,361 Resale value guarantee (110,564) 208,718 326,934 Other long-term liabilities 159,966 81,139 132,057 Net cash provided by (used in) operating activities 2,097,802 (60,654) (123,829)Cash Flows from Investing Activities Purchases of property and equipment excluding capital leases, net of sales (2,100,724) (3,414,814) (1,280,802)Maturities of short-term marketable securities — — 16,667 Purchases of solar energy systems, leased and to be leased (218,792) (666,540) (159,669)Business combinations, net of cash acquired (17,912) (114,523) 342,719 Net cash used in investing activities (2,337,428) (4,195,877) (1,081,085)Cash Flows from Financing Activities Proceeds from issuances of common stock in public offerings — 400,175 1,701,734 Proceeds from issuances of convertible and other debt 6,176,173 7,138,055 2,852,964 Repayments of convertible and other debt (5,247,057) (3,995,484) (1,857,594)Repayments of borrowings issued to related parties (100,000) (165,000) — Collateralized lease (repayments) borrowings (559,167) 511,321 769,709 Proceeds from exercises of stock options and other stock issuances 295,722 259,116 163,817 Principal payments on capital leases (180,805) (103,304) (46,889)Common stock and debt issuance costs (14,973) (63,111) (20,042)Purchases of convertible note hedges — (204,102) — Proceeds from settlement of convertible note hedges — 287,213 — Proceeds from issuances of warrants — 52,883 — Payments for settlements of warrants (11) (230,385) — Proceeds from investments by noncontrolling interests in subsidiaries 437,134 789,704 201,527 Distributions paid to noncontrolling interests in subsidiaries (227,304) (261,844) (21,250)Payments for buy-outs of noncontrolling interests in subsidiaries (5,957) (373) — Net cash provided by financing activities 573,755 4,414,864 3,743,976 Effect of exchange rate changes on cash and cash equivalents and restricted cash (22,700) 39,726 (6,553)Net increase in cash and cash equivalents and restricted cash 311,429 198,059 2,532,509 Cash and cash equivalents and restricted cash, beginning of period 3,964,959 3,766,900 1,234,391 Cash and cash equivalents and restricted cash, end of period $4,276,388 $3,964,959 $3,766,900 Supplemental Non-Cash Investing and Financing Activities Shares issued in connection with business combinations and assumed vested awards $— $10,528 $2,145,977 Acquisitions of property and equipment included in liabilities $249,141 $914,108 $663,771 Estimated fair value of facilities under build-to-suit leases $94,445 $313,483 $307,879 Supplemental Disclosures Cash paid during the period for interest, net of amounts capitalized $380,836 $182,571 $38,693 Cash paid during the period for taxes, net of refunds $35,409 $65,695 $16,385 The accompanying notes are an integral part of these consolidated financial statements. 76 Tesla, Inc.Notes to Consolidated Financial Statements Note 1 – OverviewTesla, Inc. (“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003. We design, develop,manufacture and sell high-performance fully electric vehicles and design, manufacture, install and sell solar energy generation and energy storage products.Our Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes the Company, manages resource allocations and measuresperformance among two operating and reportable segments: (i) automotive and (ii) energy generation and storage. Note 2 – Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles(“GAAP”) and reflect our accounts and operations and those of our subsidiaries in which we have a controlling financial interest. In accordance with theprovisions of Accounting Standards Codification (“ASC”) 810, Consolidation, we consolidate any variable interest entity (“VIE”) of which we are theprimary beneficiary. We form VIEs with financing fund investors in the ordinary course of business in order to facilitate the funding and monetization ofcertain attributes associated with solar energy systems and leases under our direct vehicle leasing programs. The typical condition for a controlling financialinterest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs,through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has thepower to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE thatcould potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidatea VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We have determined that we are the primarybeneficiary of a number of VIEs (see Note 18, Variable Interest Entity Arrangements). We evaluate our relationships with all the VIEs on an ongoing basis toensure that we continue to be the primary beneficiary. All intercompany transactions and balances have been eliminated upon consolidation.ReclassificationsCertain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and theaccompanying notes as a result of the adoption of the Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets, liabilities and disclosures in the accompanying notes. Estimates are used for, but not limited to, determining the transaction price ofproducts and services in arrangements with multiple performance obligations and determining the amortization period of these obligations, significanteconomic incentive for residual value guarantee arrangements, sales return reserves, the collectability of accounts receivable, inventory valuation, fair valueof long-lived assets, goodwill, fair value of financial instruments, residual value of operating lease vehicles, depreciable lives of property and equipment andsolar energy systems, fair value and residual value of solar energy systems subject to leases, warranty liabilities, income taxes, contingencies, the accruedliability for solar energy system performance guarantees, determining lease pass-through financing obligations, the discount rates used to determine the fairvalue of investment tax credits, the valuation of build-to-suit lease assets, fair value of interest rate swaps and inputs used to value stock-based compensation.In addition, estimates and assumptions are used for the accounting for business combinations, including the fair values and useful lives of acquired assets,assumed liabilities and noncontrolling interests. Management bases its estimates on historical experience and on various other assumptions believed to bereasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from thoseestimates.77 Revenue RecognitionAdoption of new accounting standardsASU 2014-09, Revenue - Revenue from Contracts with Customers. On January 1, 2018, we adopted the new accounting standard ASC 606, Revenuefrom Contracts with Customers and all the related amendments (“new revenue standard”) using the modified retrospective method. As a policy election, thenew revenue standard was applied only to contracts that were not substantially completed as of the date of adoption. We recognized the cumulative effect ofinitially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of accumulated deficit. The prior period consolidatedfinancial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods.A majority of our automotive sales revenue is recognized when control transfers upon delivery to customers. For certain vehicle sales where revenuewas previously deferred as an in-substance operating lease, such as certain vehicle sales to customers or leasing partners with a resale value guarantee, we nowrecognize revenue when the vehicles are shipped as a sale with a right of return. As a result, the corresponding operating lease asset, deferred revenue, andresale value guarantee balances as of December 31, 2017, were reclassified to accumulated deficit as part of our adoption entry. Furthermore, the warrantyliability related to such vehicles has been accrued as a result of the change from in-substance operating leases to vehicle sales. Prepayments on contracts thatcan be cancelled without significant penalties, such as vehicle maintenance plans, have been reclassified from deferred revenue to customer deposits. Refer tothe Automotive Revenue and Automotive Leasing Revenue sections below for further discussion of the impact on various categories of vehicle sales.Following the adoption of the new revenue standard, the revenue recognition for our other sales arrangements, including sales of solar energysystems, energy storage products, services, and sales of used vehicles, remained consistent with our historical revenue recognition policy. Under our leasepass-through fund arrangements, we do not have any further performance obligations and therefore reclassified all investment tax credit (“ITC”) deferredrevenue as of December 31, 2017, to accumulated deficit as part of our adoption entry. The corresponding effects of the changes to lease pass-through fundarrangements are also reflected in our non-controlling interests in subsidiaries. Additionally, we have considered the impact from any new revenuearrangements in the current year that would have been accounted for differently under ASC 605, Revenue Recognition, as an adjustment from adoption of thenew revenue standard.78 Accordingly, the cumulative effect of the changes made to our consolidated January 1, 2018 consolidated balance sheet for the adoption of the newrevenue standard was as follows (in thousands): Balances atDecember 31, 2017 Adjustmentsfrom Adoptionof New RevenueStandard Balances atJanuary 1, 2018 Assets Inventory $2,263,537 $(27,009) $2,236,528 Prepaid expenses and other current assets 268,365 51,735 320,100 Operating lease vehicles, net 4,116,604 (1,808,932) 2,307,672 Other assets 273,123 68,355 341,478 Liabilities Accrued liabilities and other 1,731,366 74,487 1,805,853 Deferred revenue 1,015,253 (436,737) 578,516 Resale value guarantees 787,333 (295,909) 491,424 Customer deposits 853,919 56,081 910,000 Deferred revenue, net of current portion 1,177,799 (429,771) 748,028 Resale value guarantees, net of current portion 2,309,222 (1,346,179) 963,043 Other long-term liabilities 2,442,970 104,767 2,547,737 Redeemable noncontrolling interests in subsidiaries 397,734 8,101 405,835 Equity Accumulated other comprehensive income 33,348 15,221 48,569 Accumulated deficit (4,974,299) 623,172 (4,351,127)Noncontrolling interests in subsidiaries 997,346 (89,084) 908,262 79 In accordance with the new revenue standard requirements, the impact of adoption on our consolidated balance sheet was as follows (in thousands): December 31, 2018 As Reported Balances WithoutAdoption of NewRevenue Standard Effect of ChangeHigher / (Lower) Assets Inventory 3,113,446 3,183,615 (70,169)Prepaid expenses and other current assets 365,671 278,929 86,742 Operating lease vehicles, net 2,089,758 4,103,277 (2,013,519)Other assets 571,657 463,558 108,099 Liabilities Accrued liabilities and other 2,094,253 2,005,180 89,073 Deferred revenue 630,292 1,122,427 (492,135)Resale value guarantees 502,840 831,350 (328,510)Customer deposits 792,601 734,241 58,360 Deferred revenue, net of current portion 990,873 1,432,566 (441,693)Resale value guarantees, net of current portion 328,926 1,994,442 (1,665,516)Other long-term liabilities 2,710,403 2,587,794 122,609 Redeemable noncontrolling interests in subsidiaries 555,964 549,520 6,444 Equity Accumulated other comprehensive loss (8,218) 6,314 (14,532)Accumulated deficit (5,317,832) (6,163,834) 846,002 Noncontrolling interests in subsidiaries 834,397 903,346 (68,949) 80 In accordance with the new revenue standard requirements, the impact of adoption on our consolidated statement of operations and consolidatedstatement of comprehensive loss was as follows (in thousands): Year Ended December 31, 2018 As Reported Balances WithoutAdoption of NewRevenue Standard Effect ofChangeHigher /(Lower) Revenues Automotive sales $17,631,522 $16,228,508 $1,403,014 Automotive leasing 883,461 1,716,136 (832,675)Energy generation and storage 1,555,244 1,540,419 14,825 Cost of revenues Automotive sales 13,685,572 12,715,818 969,754 Automotive leasing 488,425 1,112,828 (624,403) Provision for income taxes 57,837 59,332 (1,495)Net loss (1,062,582) (1,303,890) 241,308 Net loss attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries (86,491) (104,969) 18,478 Net loss attributable to common stockholders (976,091) (1,198,921) 222,830 Foreign currency translation adjustment (41,566) (11,813) (29,753)Comprehensive loss (1,017,657) (1,210,734) 193,077 In accordance with the new revenue standard requirements, the impact of adoption on our consolidated statement of cash flows for the year endedDecember 31, 2018 was an increase in collateralized lease repayments of $474.2 million, from a net financing cash outflow of $84.9 million to a netfinancing cash outflow of $559.2 million as presented, with an offsetting increase to cash outflows from operations. Additionally, the adjustments to theconsolidated balance sheet, consolidated statement of operations and consolidated statement of comprehensive income (loss) identified above would havecorresponding impacts within the operating section of the consolidated statement of cash flows.Automotive SegmentAutomotive Sales RevenueAutomotive Sales without Resale Value GuaranteeAutomotive sales revenue includes revenues related to deliveries of new vehicles, and specific other features and services that meet the definition of aperformance obligation under the new revenue standard, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving andover-the-air software updates. We recognize revenue on automotive sales upon delivery to the customer, which is when the control of a vehicle transfers.Payments are typically received at the point control transfers or in accordance with payment terms customary to the business. Other features and services suchas access to our Supercharger network, internet connectivity and over-the-air software updates are provisioned upon control transfer of a vehicle andrecognized over time on a straight-line basis as we have a stand-ready obligation to deliver such services to the customer. We recognize revenue related tothese other features and services over the performance period, which is generally the expected ownership life of the vehicle or the eight-year life of thevehicle. Revenue related to Autopilot and full self-driving features is recognized when functionality is delivered to the customer. For our obligations relatedto automotive sales, we estimate standalone selling price by considering costs used to develop and deliver the service, third-party pricing of similar optionsand other information that may be available.81 At the time of revenue recognition, we reduce the transaction price and record a reserve against revenue for estimated variable consideration relatedto future product returns. Such estimates are based on historical experience and are immaterial in all periods presented. In addition, any fees that are paid orpayable by us to a customer’s lender when we arrange the financing are recognized as an offset against automotive sales revenue.Costs to obtain a contract mainly relate to commissions paid to our sales personnel for the sale of vehicles. Commissions are not paid on otherobligations such as access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates. As our contractcosts related to automotive sales are typically fulfilled within one year, the costs to obtain a contract are expensed as incurred. Amounts billed to customersrelated to shipping and handling are classified as automotive revenue, and we have elected to recognize the cost for freight and shipping when control overvehicles, parts, or accessories have transferred to the customer as an expense in cost of revenues. Our policy is to exclude taxes collected from a customer fromthe transaction price of automotive contracts.Automotive Sales with Resale Value GuaranteeWe offer resale value guarantees or similar buy-back terms to certain international customers who purchase vehicles and who finance their vehiclesthrough one of our specified commercial banking partners. We also offer resale value guarantees in connection with automotive sales to certain leasingpartners. Under these programs, we receive full payment for the vehicle sales price at the time of delivery and our counterparty has the option of selling theirvehicle back to us during the guarantee period, which currently is generally at the end of the term of the applicable loan or financing program, for a pre-determined resale value.With the exception of two programs which are discussed within the Automotive Leasing section, we now recognize revenue when control transfersupon delivery to customers in accordance with the new revenue standard as a sale with a right of return as we do not believe the customer has a significanteconomic incentive to exercise the resale value guarantee provided to them. The process to determine whether there is a significant economic incentiveincludes a comparison of a vehicle’s estimated market value at the time the option is exercisable with the guaranteed resale value to determine the customer’seconomic incentive to exercise. The performance obligations and the pattern of recognizing automotive sales with resale value guarantees are consistent withautomotive sales without resale value guarantees with the exception of our estimate for sales return reserve. Sales return reserves for automotive sales withresale value guarantees are estimated based on historical experience plus consideration for expected future market values. The two programs that are stillbeing recorded as operating leases are discussed in further detail below in Vehicle Sales to Leasing Partners with a Resale Value Guarantee and a BuybackOption and Vehicle Sales to Customers with a Resale Value Guarantee where Exercise is Probable.Prior to the adoption of the new revenue standard, all transactions with resale value guarantees were recorded as operating leases. The amount of saleproceeds equal to the resale value guarantee was deferred until the guarantee expired or was exercised. For certain transactions that were considered interestbearing collateralized borrowings as required under ASC 840, Leases, we also accrued interest expense based on our borrowing rate. The remaining saleproceeds were deferred and recognized on a straight-line basis over the stated guarantee period to automotive leasing revenue. The guarantee period expiredat the earlier of the end of the guarantee period or the pay-off of the initial loan. We capitalized the cost of these vehicles on the consolidated balance sheet asoperating lease vehicles, net, and depreciated their value, less estimated residual value, to cost of automotive leasing revenue over the same period.In cases where our counterparty retained ownership of the vehicle at the end of the guarantee period, the resale value guarantee liability and anyremaining deferred revenue balances related to the vehicle were settled to automotive leasing revenue, and the net book value of the leased vehicle wasexpensed to cost of automotive leasing revenue. If our counterparty returned the vehicle to us during the guarantee period, we purchased the vehicle from ourcounterparty in an amount equal to the resale value guarantee and settled any remaining deferred balances to automotive leasing revenue, and we reclassifiedthe net book value of the vehicle on the consolidated balance sheet to used vehicle inventory.82 Deferred revenue activity related to the access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-airsoftware updates on automotive sales with and without resale value guarantee consisted of the following (in thousands): Year Ended December 31,2018 Deferred revenue on automotive sales with and without resale value guarantee— beginning of period (post adoption of new revenue standard) $475,919 Additions 532,294 Net changes in liability for pre-existing contracts (13,248)Revenue recognized (112,214)Deferred revenue on automotive sales with and without resale value guarantee— end of period $882,751 Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as ofDecember 31, 2018. From the deferred revenue balance as of January 1, 2018, revenue recognized during the year ended December 31, 2018 was$81.0 million. Of the total deferred revenue on automotive sales with and without resale value guarantees, we expect to recognize $326.7 million of revenuein the next 12 months. The remaining balance will be recognized over the performance period as discussed above in Automotive Sales without Resale ValueGuarantee.Automotive Regulatory CreditsCalifornia and certain other states have laws in place requiring vehicle manufacturers to ensure that a portion of the vehicles delivered for sale in thatstate during each model year are zero-emission vehicles. These laws and regulations provide that a manufacturer of zero-emission vehicles may earnregulatory credits (“ZEV credits”) and may sell excess credits to other manufacturers who apply such credits to comply with these regulatory requirements.Similar regulations exist at the federal level that require compliance related to greenhouse gas (“GHG”) emissions and also allow for the sale of excess creditsby one manufacturer to other manufacturers. As a manufacturer solely of zero-emission vehicles, we have earned emission credits, such as ZEV and GHGcredits, on our vehicles, and we expect to continue to earn these credits in the future. We enter into contractual agreements with third-parties to purchase ourregulatory credits. Payments for regulatory credits are typically received at the point control transfers to the customer, or in accordance with payment termscustomary to the business.We recognize revenue on the sale of regulatory credits at the time control of the regulatory credits is transferred to the purchasing party as automotiverevenue in the consolidated statement of operations. Revenue from the sale of regulatory credits totaled $418.6 million, $360.3 million and $302.3 millionfor the years ended December 31, 2018, 2017 and 2016, respectively. We had no deferred revenue related to sales of automotive regulatory credits as ofDecember 31, 2018 and 2017.Automotive Leasing RevenueAutomotive leasing revenue includes revenue recognized under lease accounting guidance for our direct leasing programs as well as the twoprograms with resale value guarantees which continue to qualify for operating lease treatment. Prior to the adoption of the new revenue standard, all programswith resale value guarantees were accounted for as operating leases.83 Direct Vehicle Leasing ProgramWe have outstanding leases under our direct vehicle leasing programs in certain locations in the U.S., Canada and Europe. Currently, the directvehicle leasing program is only offered for new leases to qualified customers in the U.S. and Canada. Qualifying customers are permitted to lease a vehicledirectly from Tesla for up to 48 months. At the end of the lease term, customers have the option of either returning the vehicle to us or purchasing it for a pre-determined residual value. We account for these leasing transactions as operating leases. We record leasing revenues to automotive leasing revenue on astraight-line basis over the contractual term, and we record the depreciation of these vehicles to cost of automotive leasing revenue. For the years endedDecember 31, 2018, 2017 and 2016, we recognized $393.2 million, $220.6 million and $112.7 million, respectively. As of December 31, 2018 and 2017, wehad deferred $109.8 million and $96.6 million, respectively, of lease-related upfront payments, which will be recognized on a straight-line basis over thecontractual terms of the individual leases.We capitalize shipping costs and initial direct costs such as the incremental cost of contract administration, referral fees and sales commissions fromthe origination of automotive lease agreements as an element of operating lease vehicles, net, and subsequently amortize these costs over the term of therelated lease agreement. Our policy is to exclude taxes collected from a customer from the transaction price of automotive contracts.Vehicle Sales to Leasing Partners with a Resale Value Guarantee and a Buyback OptionWe offer buyback options in connection with automotive sales with resale value guarantees with certain leasing partner sales in the United States.These transactions entail a transfer of leases, which we have originated with an end-customer, to our leasing partner. As control of the vehicles has not beentransferred in accordance with the new revenue standard, these transactions continue to be accounted for as interest bearing collateralized borrowings inaccordance with ASC 840, Leases. Under this program, cash is received for the full price of the vehicle and the collateralized borrowing value is generallyrecorded within resale value guarantees and the customer upfront deposit is recorded within deferred revenue. We amortize the deferred revenue amount toautomotive leasing revenue on a straight-line basis over the option period and accrue interest expense based on our borrowing rate. We capitalize vehiclesunder this program to operating lease vehicles, net, on the consolidated balance sheet, and we record depreciation from these vehicles to cost of automotiveleasing revenue during the period the vehicle is under a lease arrangement. Cash received for these vehicles, net of revenue recognized during the period, isclassified as collateralized lease (repayments) borrowings within cash flows from financing activities in the consolidated statement of cash flows.At the end of the lease term, we settle our liability in cash by either purchasing the vehicle from the leasing partner for the buyback option amount orpaying a shortfall to the option amount the leasing partner may realize on the sale of the vehicle. Any remaining balances within deferred revenue and resalevalue guarantee will be settled to automotive leasing revenue. In cases where the leasing partner retains ownership of the vehicle after the end of our optionperiod, we expense the net value of the leased vehicle to cost of automotive leasing revenue. The maximum amount we could be required to pay under thisprogram, should we decide to repurchase all vehicles, was $479.8 million as of December 31, 2018, including $309.8 million within a 12-month period. As ofDecember 31, 2018, we had $558.3 million of such borrowings recorded in resale value guarantees and $92.5 million recorded in deferred revenue liability.For the year ended December 31, 2018, we recognized $332.4 million of leasing revenue related to this program.On a quarterly basis, we assess the estimated market values of vehicles under our buyback options program to determine if we have sustained a losson any of these contracts. As we accumulate more data related to the buyback values of our vehicles or as market conditions change, there may be materialchanges to their estimated values, although we have not experienced any material losses during any period to date.84 Vehicle Sales to Customers with a Resale Value Guarantee where Exercise is ProbableFor certain international programs where we have offered resale value guarantees to certain customers who purchased vehicles and where we expectthe customer has a significant economic incentive to exercise the resale value guarantee provided to them, we continue to recognize these transactions asoperating leases. The process to determine whether there is a significant economic incentive includes a comparison of a vehicle’s estimated market value atthe time the option is exercisable with the guaranteed resale value to determine the customer’s economic incentive to exercise. We have not sold any vehiclesunder this program since the first half of 2017 and all current period activity relates to the exercise or cancellation of active transactions. The amount of saleproceeds equal to the resale value guarantee is deferred until the guarantee expires or is exercised. The remaining sale proceeds are deferred and recognizedon a straight-line basis over the stated guarantee period to automotive leasing revenue. The guarantee period expires at the earlier of the end of the guaranteeperiod or the pay-off of the initial loan. We capitalize the cost of these vehicles on the consolidated balance sheet as operating lease vehicles, net, anddepreciate their value, less salvage value, to cost of automotive leasing revenue over the same period.In cases where a customer retains ownership of a vehicle at the end of the guarantee period, the resale value guarantee liability and any remainingdeferred revenue balances related to the vehicle are settled to automotive leasing revenue, and the net book value of the leased vehicle is expensed to cost ofautomotive leasing revenue. If a customer returns the vehicle to us during the guarantee period, we purchase the vehicle from the customer in an amountequal to the resale value guarantee and settle any remaining deferred balances to automotive leasing revenue, and we reclassify the net book value of thevehicle on the consolidated balance sheet to used vehicle inventory. As of December 31, 2018, $149.7 million of the guarantees were exercisable bycustomers within the next 12 months. For the year ended December 31, 2018, we recognized $157.9 million of leasing revenue related to this program. Services and Other RevenueServices and other revenue consists of non-warranty after-sales vehicle services, sales of used vehicles, sales of electric vehicle components to othermanufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers. There were no significant changes to the timing or amountof revenue recognition as a result of our adoption of the new revenue standard.Revenues related to repair and maintenance services are recognized over time as services are provided and extended service plans are recognizedover the performance period of the service contract as the obligation represents a stand-ready obligation to the customer. We sell used vehicles, services,service plans, vehicle components and merchandise separately and thus use standalone selling prices as the basis for revenue allocation to the extent thatthese items are sold in transactions with other performance obligations. Payment for used vehicles, services, and merchandise are typically received at thepoint when control transfers to the customer or in accordance with payment terms customary to the business. Payments received for prepaid plans arerefundable upon customer cancellation of the related contracts and are included within customer deposits on the consolidated balance sheet. Deferredrevenue related to services and other revenue was immaterial as of December 31, 2018 and 2017. Energy Generation and Storage SegmentEnergy Generation and Storage SalesEnergy generation and storage revenues consists of the sale of solar energy systems and energy storage systems to residential, small commercial, andlarge commercial and utility grade customers. Sales of solar energy systems to residential and small scale commercial customers consist of the engineering,design, and installation of the system. Post installation, residential and small scale commercial customers receive a proprietary monitoring system thatcaptures and displays historical energy generation data. Residential and small scale commercial customers pay the full purchase price of the solar energysystem upfront. Revenue for the design and installation obligation is recognized when control transfers, which is when we install a solar energy system andthe system passes inspection by the utility or the authority having jurisdiction. Revenue for the monitoring service is recognized ratably as a stand-readyobligation over the warranty period of the solar energy system. Sales of energy storage systems to residential and small scale commercial customers consist ofthe installation of the energy storage system and revenue is recognized when control transfers, which is when the product has been delivered or, if we areperforming installation, when installed and accepted by the customer. Payment for such storage systems is made upon invoice or in accordance with paymentterms customary to the business.85 For large commercial and utility grade solar energy system and energy storage system sales which consist of the engineering, design, and installationof the system, customers make milestone payments that are consistent with contract-specific phases of a project. Revenue from such contracts is recognizedover time using the percentage of completion method based on cost incurred as a percentage of total estimated contract costs. Certain large-scale commercialand utility grade solar energy system and energy storage system sales also include operations and maintenance service which are negotiated with the designand installation contracts and are thus considered to be a combined contract with the design and installation service. For certain large commercial and utilitygrade solar energy systems and energy storage systems where the percentage of completion method does not apply, revenue is recognized when controltransfers, which is when the product has been delivered to the customer for energy storage systems and when the project has received permission to operatefrom the utility for solar energy systems. Operations and maintenance service revenue is recognized ratably over the respective contract term. Customerpayments for such services are usually paid annually or quarterly in advance.In instances where there are multiple performance obligations in a single contract, we allocate the consideration to the various obligations in thecontract based on the relative standalone selling price method. Standalone selling prices are estimated based on estimated costs plus margin or using marketdata for comparable products. Costs incurred on the sale of residential installations before the solar energy systems are completed are included as work inprocess within inventory in the consolidated balance sheets. However, any fees that are paid or payable by us to a solar loan lender would be recognized as anoffset against revenue. Costs to obtain a contract relate mainly to commissions paid to our sales personnel related to the sale of solar energy systems andenergy storage systems. As our contract costs related to solar energy system and energy storage system sales are typically fulfilled within one year, the coststo obtain a contract are expensed as incurred.As part of our solar energy system and energy storage system contracts, we may provide the customer with performance guarantees that warrant thatthe underlying system will meet or exceed the minimum energy generation or retention requirements specified in the contract. In certain instances, we mayreceive a bonus payment if the system performs above a specified level. Conversely, if a solar energy system or energy storage system does not meet theperformance guarantee requirements, we may be required to pay liquidated damages. Other forms of variable consideration related to our large commercialand utility grade solar energy system and energy storage system contracts include variable customer payments that will be made based on our energy marketparticipation activities. Such guarantees and variable customer payments represent a form of variable consideration and are estimated at contract inception attheir most likely amount and updated at the end of each reporting period as additional performance data becomes available. Such estimates are included inthe transaction price only to the extent that it is probable a significant reversal of revenue will not occur.We record as deferred revenue any non-refundable amounts that are collected from customers related to fees charged for prepayments and remotemonitoring service and operations and maintenance service, which is recognized as revenue ratably over the respective customer contract term. As ofDecember 31, 2018 and 2017, deferred revenue related to such customer payments amounted to $148.7 million and $124.0 million, respectively. Revenuerecognized from the deferred revenue balance as of January 1, 2018, was $41.4 million for the year ended December 31, 2018. We have elected the practicalexpedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for energy generation and storage saleswith an original expected contract length of one year or less. As of December 31, 2018, total transaction price allocated to performance obligations that wereunsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $117.9 million. Of this amount, we expect torecognize $7.0 million in the next 12 months and the remaining over a period up to 30 years.Energy Generation and Storage LeasingFor revenue arrangements where we are the lessor under operating lease agreements for energy generation and storage products, we record leaserevenue from minimum lease payments, including upfront rebates and incentives earned from such systems, on a straight-line basis over the life of the leaseterm, assuming all other revenue recognition criteria have been met. The difference between the payments received and the revenue recognized is recorded asdeferred revenue on the consolidated balance sheet.86 For solar energy systems where customers purchase electricity from us under power purchase agreements (“PPAs”), we have determined that theseagreements should be accounted for as operating leases pursuant to ASC 840. Revenue is recognized based on the amount of electricity delivered at ratesspecified under the contracts, assuming all other revenue recognition criteria are met.We record as deferred revenue any amounts that are collected from customers, including lease prepayments, in excess of revenue recognized andoperations and maintenance service, which is recognized as revenue ratably over the respective customer contract term. As of December 31, 2018 and 2017,deferred revenue related to such customer payments amounted to $225.4 million and $206.8 million, respectively. Deferred revenue also includes the portionof rebates and incentives received from utility companies and various local and state government agencies, which is recognized as revenue over the leaseterm. As of December 31, 2018 and December 31, 2017, deferred revenue from rebates and incentives amounted to $36.8 million and $27.2 million,respectively.We capitalize initial direct costs from the origination of solar energy system leases or PPAs, which include the incremental cost of contractadministration, referral fees and sales commissions, as an element of solar energy systems, leased and to be leased, net, and subsequently amortize these costsover the term of the related lease or PPA.Revenue by sourceThe following table disaggregates our revenue by major source (in thousands): Year Ended December 31, 2018 Automotive sales without resale value guarantee $15,809,890 Automotive sales with resale value guarantee 1,403,014 Automotive regulatory credits 418,618 Energy generation and storage sales 1,056,543 Services and other 1,391,041 Total revenues from sales and services 20,079,106 Automotive leasing 883,461 Energy generation and storage leasing 498,701 Total revenues $21,461,268 Cost of RevenuesAutomotive SegmentAutomotive SalesCost of automotive sales revenue includes direct parts, material and labor costs, manufacturing overhead, including depreciation costs of tooling andmachinery, shipping and logistic costs, vehicle connectivity costs, allocations of electricity and infrastructure costs related to our Supercharger network, andreserves for estimated warranty expenses. Cost of automotive sales revenues also includes adjustments to warranty expense and charges to write down thecarrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasteddemand.Automotive LeasingCost of automotive leasing revenue includes primarily the amortization of operating lease vehicles over the lease term, as well as warranty expensesrecognized as incurred. Cost of automotive leasing revenue also includes vehicle connectivity costs and allocations of electricity and infrastructure costsrelated to our Supercharger network for vehicles under our leasing programs.Services and OtherCosts of services and other revenue includes costs associated with providing non-warranty after-sales services, costs to acquire and certify usedvehicles, and costs for retail merchandise. Cost of services and other revenue also includes direct parts, material and labor costs, manufacturing overheadassociated with the sales of electric vehicle components and systems to other manufacturers and sales by our acquired subsidiaries to third party customers.87 Energy Generation and Storage SegmentEnergy Generation and StorageEnergy generation and storage cost of revenue includes direct and indirect material and labor costs, warehouse rent, freight, warranty expense, otheroverhead costs and amortization of certain acquired intangible assets. In addition, where arrangements are accounted for as operating leases, the cost ofrevenue is primarily comprised of depreciation of the cost of leased solar energy systems, maintenance costs associated with those systems and amortizationof any initial direct costs. Research and Development CostsResearch and development costs are expensed as incurred.Marketing, Promotional and Advertising CostsMarketing, promotional and advertising costs are expensed as incurred and are included as an element of selling, general and administrative expensein the consolidated statement of operations. We incurred marketing, promotional and advertising costs of $70.0 million, $66.5 million and $48.0 million inthe years ended December 31, 2018, 2017 and 2016, respectively.Income TaxesIncome taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the differencebetween the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected toaffect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.We record liabilities related to uncertain tax positions when, despite our belief that our tax return positions are supportable, we believe that it is morelikely than not that those positions may not be fully sustained upon review by tax authorities. Accrued interest and penalties related to unrecognized taxbenefits are classified as income tax expense.Comprehensive Income (Loss)Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) consistsof unrealized gains and losses on cash flow hedges and available-for-sale marketable securities and foreign currency translation adjustments that have beenexcluded from the determination of net income (loss).Stock-Based CompensationWe recognize compensation expense for costs related to all share-based payments, including stock options, restricted stock units (“RSUs”) and ouremployee stock purchase plan (the “ESPP”). The fair value of stock option awards with only service conditions and the ESPP is estimated on the grant oroffering date using the Black-Scholes option-pricing model. The fair value of RSUs is measured on the grant date based on the closing fair market value ofour common stock. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, net of actual forfeitures in theperiod (prior to 2017, net of estimated projected forfeitures). Stock-based compensation associated with awards assumed from the acquisition of SolarCityCorporation (“SolarCity”) is measured as of the acquisition date using the relevant assumptions and recognized on a straight-line basis over the remainingrequisite service period, net of actual forfeitures in the period (prior to 2017, net of estimated projected forfeitures).88 For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individualperformance milestones when the achievement of each individual performance milestone becomes probable. For performance-based awards with a vestingschedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair ofperformance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point intime that the relevant performance condition is considered probable of achievement. The fair value of such awards is estimated on the grant date using MonteCarlo simulations (see Note 15, Equity Incentive Plans).As we accumulate additional employee stock-based awards data over time and as we incorporate market data related to our common stock, we maycalculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-basedcompensation expense that we will recognize in future periods. Stock-based compensation expense is recorded in cost of revenues, research and developmentexpense and selling, general and administrative expense in the consolidated statements of operations.Noncontrolling Interests and Redeemable Noncontrolling InterestsNoncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements,or funds, that we enter into to finance the costs of solar energy systems and vehicles under operating leases. We have determined that the contractualprovisions of the funds represent substantive profit sharing arrangements. We have further determined that the appropriate methodology for calculating thenoncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit sharing arrangements is a balance sheet approachusing the hypothetical liquidation at book value (“HLBV”) method. We, therefore, determine the amount of the noncontrolling interests and redeemablenoncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balancesheet as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries. Under the HLBV method, the amounts reported asnoncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheet represent the amounts the third-parties wouldhypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at theirrecorded amounts determined in accordance with GAAP and with tax laws effective at the balance sheet date and distributed to the third-parties. The third-parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrollinginterest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactionsbetween the funds and the third-parties. However, the redeemable noncontrolling interest balance is at least equal to the redemption amount. The redeemablenoncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheet since these third-parties have theright to redeem their interests in the funds for cash or other assets.Net Income (Loss) per Share of Common Stock Attributable to Common StockholdersBasic net income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable tocommon stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on theweighted-average shares of common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock methodor the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to commonstockholders when their effect is dilutive. Since we intend to settle in cash the principal outstanding under the 0.25% Convertible Senior Notes due in 2019,the 1.25% Convertible Senior Notes due in 2021 and the 2.375% Convertible Senior Notes due in 2022, we use the treasury stock method when calculatingtheir potential dilutive effect, if any. Furthermore, in connection with the offerings of our bond hedges, we entered into convertible note hedges (see Note 13,Long-Term Debt Obligations). However, our convertible note hedges are not included when calculating potentially dilutive shares since their effect is alwaysanti-dilutive. 89 The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income (loss) per share ofcommon stock attributable to common stockholders, because their effect was anti-dilutive: Year Ended December 31, 2018 2017 2016 Stock-based awards 9,928,789 10,456,363 12,091,473 Convertible senior notes 1,432,656 2,315,463 841,191 Warrants 214,213 579,137 262,702 Business CombinationsWe account for business acquisitions under ASC 805, Business Combinations. The total purchase consideration for an acquisition is measured as thefair value of the assets given, equity instruments issued and liabilities assumed at the acquisition date. Costs that are directly attributable to the acquisitionare expensed as incurred. Identifiable assets (including intangible assets), liabilities assumed (including contingent liabilities) and noncontrolling interests inan acquisition are measured initially at their fair values at the acquisition date. We recognize goodwill if the fair value of the total purchase consideration andany noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed. We recognize a bargain purchasegain within other income (expense), net, on the consolidated statement of operations if the net fair value of the identifiable assets acquired and the liabilitiesassumed is in excess of the fair value of the total purchase consideration and any noncontrolling interests. We include the results of operations of theacquired business in the consolidated financial statements beginning on the acquisition date.Cash and Cash EquivalentsAll highly liquid investments with an original maturity of three months or less at the date of purchase are considered cash equivalents. Our cashequivalents are primarily comprised of money market funds.Restricted CashWe maintain certain cash balances restricted as to withdrawal or use. Our restricted cash is comprised primarily of cash as collateral for our sales tolease partners with a resale value guarantee, letters of credit, real estate leases, insurance policies, credit card borrowing facilities and certain operating leases.In addition, restricted cash includes cash received from certain fund investors that have not been released for use by us and cash held to service certainpayments under various secured debt facilities.The following table totals cash and cash equivalents and restricted cash as reported on the consolidated balance sheets; the sums are presented in theconsolidated statements of cash flows (in thousands): December 31, December 31, December 31, December 31, 2018 2017 2016 2015 Cash and cash equivalents $3,685,618 $3,367,914 $3,393,216 $1,196,908 Restricted cash (1) 192,551 155,323 105,519 5,961 Restricted cash, net of current portion 398,219 441,722 268,165 31,522 Total as presented in the consolidated statements of cash flows $4,276,388 $3,964,959 $3,766,900 $1,234,391 (1)In the consolidated balance sheet as of December 31, 2015, the restricted cash and marketable securities balance of $22.6 million included$16.7 million of marketable securities. This balance of marketable securities has been excluded in the table above. 90 Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable primarily include amounts related to sales of powertrain systems, sales of energy generation and storage products, receivablesfrom financial institutions and leasing companies offering various financing products to our customers, sales of regulatory credits to other automotivemanufacturers and maintenance services on vehicles owned by leasing companies. We provide an allowance against accounts receivable to the amount wereasonably believe will be collected. We write-off accounts receivable when they are deemed uncollectible.We typically do not carry significant accounts receivable related to our vehicle and related sales as customer payments are due prior to vehicledelivery, except for amounts due from commercial financial institutions for approved financing arrangements between our customers and the financialinstitutions.MyPower Customer Notes ReceivableWe have customer notes receivable under the legacy MyPower loan program. MyPower was offered by SolarCity to provide residential customerswith the option to finance the purchase of a solar energy system through a 30-year loan. The outstanding balances, net of any allowance for potentiallyuncollectible amounts, are presented on the consolidated balance sheet as a component of prepaid expenses and other current assets for the current portionand as MyPower customer notes receivable, net of current portion, for the long-term portion. In determining the allowance and credit quality for customernotes receivable, we identify significant customers with known disputes or collection issues and also consider our historical level of credit losses and currenteconomic trends that might impact the level of future credit losses. Customer notes receivable that are individually impaired are charged-off as a write-off ofthe allowance for losses. Since acquisition, there have been no new significant customers with known disputes or collection issues, and the amount ofpotentially uncollectible amounts has been insignificant. In addition, there were no material non-accrual or past due customer notes receivable as ofDecember 31, 2018.Concentration of RiskCredit RiskFinancial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, restricted cash, accountsreceivable, convertible note hedges, and interest rate swaps. Our cash balances are primarily invested in money market funds or on deposit at high creditquality financial institutions in the U.S. These deposits are typically in excess of insured limits. As of December 31, 2018 and 2017, no entity represented10% or more of our total accounts receivable balance. The risk of concentration for our interest rate swaps is mitigated by transacting with several highly-rated multinational banks.Supply RiskWe are dependent on our suppliers, the majority of which are single source suppliers, and the inability of these suppliers to deliver necessarycomponents of our products in a timely manner at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage thesecomponents from these suppliers, could have a material adverse effect on our business, prospects, financial condition and operating results.Inventory ValuationInventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost for vehicles and energy storage products,which approximates actual cost on a first-in, first-out basis. In addition, cost for solar energy systems is recorded using actual cost. We record inventory write-downs for excess or obsolete inventories based upon assumptions about on current and future demand forecasts. If our inventory on-hand is in excess of ourfuture demand forecast, the excess amounts are written-off.We also review our inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. Thisrequires us to determine the estimated selling price of our vehicles less the estimated cost to convert the inventory on-hand into a finished product. Onceinventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in therestoration or increase in that newly established cost basis.91 Should our estimates of future selling prices or production costs change, additional and potentially material increases to this reserve may be required.A small change in our estimates may result in a material charge to our reported financial results.Operating Lease VehiclesVehicles that are leased as part of our direct vehicle leasing program, vehicles delivered to leasing partners with a resale value guarantee and abuyback option, as well as vehicles delivered to customers with resale value guarantee where exercise is probable are classified as operating lease vehicles asthe related revenue transactions are treated as operating leases (refer to the Automotive Leasing Revenue section above for details). Operating lease vehiclesare recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the expected operating lease term. The totalcost of operating lease vehicles recorded on the consolidated balance sheets as of December 31, 2018 and 2017 was $2.55 billion and $4.85 billion,respectively. Accumulated depreciation related to leased vehicles as of December 31, 2018 and 2017 was $457.6 million and $733.3 million, respectively.Solar Energy Systems, Leased and To Be LeasedWe are the lessor of solar energy systems under leases that qualify as operating leases. Our leases are accounted for in accordance with ASC 840. Todetermine lease classification, we evaluate the lease terms to determine whether there is a transfer of ownership or bargain purchase option at the end of thelease, whether the lease term is greater than 75% of the useful life or whether the present value of the minimum lease payments exceed 90% of the fair value atlease inception. We utilize periodic appraisals to estimate useful lives and fair values at lease inception and residual values at lease termination. Solar energysystems are stated at cost less accumulated depreciation.Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the respective assets, as follows: Solar energy systems leased to customers 30 to 35 yearsInitial direct costs related to customer solar energy system lease acquisition costs Lease term (up to 25years) Solar energy systems held for lease to customers are installed systems pending interconnection with the respective utility companies and will bedepreciated as solar energy systems leased to customers when they have been interconnected and placed in-service. Solar energy systems under constructionrepresents systems that are under installation, which will be depreciated as solar energy systems leased to customers when they are completed, interconnectedand leased to customers. Initial direct costs related to customer solar energy system lease acquisition costs are capitalized and amortized over the term of therelated customer lease agreements.Property, Plant and EquipmentProperty, plant and equipment, including leasehold improvements, are recognized at cost less accumulated depreciation. Depreciation is generallycomputed using the straight-line method over the estimated useful lives of the respective assets, as follows: Machinery, equipment, vehicles and office furniture 2 to 12 yearsBuilding and building improvements 15 to 30 yearsComputer equipment and software 3 to 10 years Depreciation for tooling is computed using the units-of-production method whereby capitalized costs are amortized over the total estimatedproductive life of the respective assets. As of December 31, 2018, the estimated productive life for Model S and Model X tooling was 325,000 vehicles basedon our current estimates of production. As of December 31, 2018, the estimated productive life for Model 3 tooling was 1,000,000 vehicles based on ourcurrent estimates of production.92 Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the terms of the related leases.Upon the retirement or sale of our property, plant and equipment, the cost and associated accumulated depreciation are removed from theconsolidated balance sheet, and the resulting gain or loss is reflected on the consolidated statement of operations. Maintenance and repair expenditures areexpensed as incurred while major improvements that increase the functionality, output or expected life of an asset are capitalized and depreciated ratablyover the identified useful life.Interest expense on outstanding debt is capitalized during the period of significant capital asset construction. Capitalized interest on construction-in-progress is included within property, plant and equipment and is amortized over the life of the related assets.Furthermore, we are deemed to be the owner, for accounting purposes, during the construction phase of certain long-lived assets under build-to-suitlease arrangements because of our involvement with the construction, our exposure to any potential cost overruns or our other commitments under thearrangements. In these cases, we recognize build-to-suit lease assets under construction and corresponding build-to-suit lease liabilities on the consolidatedbalance sheet, in accordance with ASC 840. Once construction is completed, if a lease meets certain “sale-leaseback” criteria, we remove the asset andliability and account for the lease as an operating lease. Otherwise, the lease is accounted for as a capital lease.Long-Lived Assets Including Acquired Intangible AssetsWe review our property, plant and equipment, long-term prepayments and intangible assets for impairment whenever events or changes incircumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. We measure recoverability by comparing the carryingamount to the future undiscounted cash flows that the asset is expected to generate. If the asset is not recoverable, its carrying amount would be adjusted-down to its fair value. For the year ended December 31, 2018, we have recognized certain material impairments of our long-lived assets (refer to Note 4,Intangible Assets, for further details). For the years ended December 31, 2017 and 2016, we have recognized no material impairments of our long-lived assets.Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from two to thirty years.Capitalization of Software CostsFor costs incurred in development of internal use software, we capitalize costs incurred during the application development stage. Costs related topreliminary project activities and post-implementation activities are expensed as incurred. Internal use software is amortized on a straight-line basis over itsestimated useful life of three to ten years. We evaluate the useful lives of these assets on an annual basis, and we test for impairment whenever events orchanges in circumstances occur that could impact the recoverability of these assets.Foreign CurrencyWe determine the functional and reporting currency of each of our international subsidiaries and their operating divisions based on the primarycurrency in which they operate. In cases where the functional currency is not the U.S. dollar, we recognize a cumulative translation adjustment created by thedifferent rates we apply to accumulated deficits, including current period income or loss, and the balance sheet. For each subsidiary, we apply the monthlyaverage functional currency rate to its income or loss and the month-end functional currency rate to translate the balance sheet.Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other thanthe functional currency. Transaction gains and losses are recognized in other income (expense), net, in the consolidated statement of operations. For the yearsended December 31, 2018, 2017 and 2016, we recorded foreign currency transaction gains of $1.5 million, losses of $52.3 million and gains of $26.1 million,respectively.93 WarrantiesWe provide a manufacturer’s warranty on all new and used vehicles, production powertrain components and systems and energy storage products wesell. In addition, we also provide a warranty on the installation and components of the solar energy systems we sell for periods typically between 10 to30 years. We accrue a warranty reserve for the products sold by us, which includes our best estimate of the projected costs to repair or replace items underwarranties and recalls when identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of futureclaims. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience maycause material changes to the warranty reserve in the future. The warranty reserve does not include projected warranty costs associated with our vehiclessubject to lease accounting and our solar energy systems under lease contracts or PPAs, as the costs to repair these warranty claims are expensed as incurred.The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while the remainingbalance is included within other long-term liabilities on the consolidated balance sheet. Due to the adoption of the new revenue standard, automotive saleswith resale value guarantees that were previously recorded within operating lease assets require a corresponding warranty accrual, which is included in thetable below. Warranty expense is recorded as a component of cost of revenues in the consolidated statements of operations. Accrued warranty activityconsisted of the following (in thousands): Year Ended December 31, 2018 2017 2016 Accrued warranty—beginning of period $401,790 $266,655 $180,754 Assumed warranty liability from acquisition — 4,737 31,366 Warranty costs incurred (209,124) (122,510) (79,147)Net changes in liability for pre-existing warranties, including expirations and foreign exchange impact (26,294) 4,342 (20,084)Additional warranty accrued from adoption of the new revenue standard 37,139 — — Provision for warranty 544,315 248,566 153,766 Accrued warranty—end of period $747,826 $401,790 $266,655 For the years ended December 31, 2018, 2017, and 2016, warranty costs incurred for vehicles accounted for as operating leases or collateralized debtarrangements were $21.9 million, $35.5 million and $19.0 million, respectively.Solar Energy System Performance GuaranteesWe guarantee a specified minimum solar energy production output for certain solar energy systems leased or sold to customers, generally for a term ofup to 30 years. We monitor the solar energy systems to ensure that these outputs are being achieved. We evaluate if any amounts are due to our customers andmake any payments periodically as specified in the customer agreements. As of December 31, 2018 and 2017, we had recognized a liability of $7.5 millionand $6.3 million, respectively, within accrued liabilities and other on the consolidated balance sheets, related to these guarantees based on our assessment ofthe exposures.Solar Renewable Energy CreditsWe account for solar renewable energy credits (“SRECs”) when they are purchased by us or sold to third-parties. For SRECs generated by solarenergy systems owned by us and minted by government agencies, we do not recognize any specifically identifiable costs as there are no specific incrementalcosts incurred to generate the SRECs. For SRECs purchased by us, we record these SRECs at their cost, subject to impairment testing. We recognize revenuefrom the sale of an SREC when the SREC is transferred to the buyer, and the cost of the SREC, if any, is then recorded to cost of revenue.94 Deferred Investment Tax Credit RevenueWe have solar energy systems that are eligible for ITCs that accrue to eligible property under the Internal Revenue Code (“IRC”). UnderSection 50(d)(5) of the IRC and the related regulations, a lessor of qualifying property may elect to treat the lessee as the owner of such property for thepurposes of claiming the ITCs associated with such property. These regulations enable the ITCs to be separated from the ownership of the property and allowthe transfer of the ITCs. Under our lease pass-through fund arrangements, we can make a tax election to pass-through the ITCs to the investors, who are thelegal lessee of the property. Therefore, we are able to monetize these ITCs to the investors who can utilize them in return for cash payments. We consider themonetization of ITCs to constitute one of the key elements of realizing the value associated with solar energy systems. Consequently, we consider theproceeds from the monetization of ITCs to be a component of revenue generated from solar energy systems.In accordance with the relevant FASB guidance, we recognize revenue from the monetization of ITCs when (1) persuasive evidence of anarrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the relatedreceivable is reasonably assured. An ITC is subject to recapture under the IRC if the underlying solar energy system either ceases to be a qualifying propertyor undergoes a change in ownership within five years of its placed-in-service date; the recapture amount decreases on each anniversary of the placed-in-service date. Since we have an obligation to ensure that the solar energy system is in-service and operational for a term of five years in order to avoid anyrecapture of the ITC, we recognize revenue as the recapture amount decreases, assuming the other revenue recognition criteria above have been met. As aresult, the monetized ITC is initially recorded as deferred revenue on the consolidated balance sheets, and subsequently, one-fifth of the monetized ITC isrecognized as energy generation and storage revenue on the consolidated statement of operations on each anniversary of the solar energy system’s placed-in-service date over five years. As discussed in the Revenue Recognition section above, following the adoption of the new revenue standard on January 1, 2018,we no longer defer the monetized ITC as deferred revenue outstanding and have reclassified all ITC deferred revenue as of December 31, 2017 to our openingaccumulated deficit.We indemnify the investors for any recapture of ITCs due to our non-compliance. We have concluded that the likelihood of a recapture event isremote, and consequently, we have not recognized a liability for this indemnification on the consolidated balance sheets.Nevada Tax IncentivesWe have entered into agreements with the State of Nevada and Storey County in Nevada that provide abatements for sales, use, real property,personal property and employer excise taxes, discounts to the base tariff energy rates and transferable tax credits. These incentives are available for theapplicable periods beginning on October 17, 2014 and ending on either June 30, 2024 or June 30, 2034 (depending on the incentive). Under theseagreements, we were eligible for a maximum of $195.0 million of transferable tax credits, subject to capital investments by us and our partners forGigafactory 1 of at least $3.50 billion, which we exceeded during 2017, and specified hiring targets for Gigafactory 1, which we exceeded during 2018. Werecord these credits as earned when we have evidence there is a market for their sale. Credits are applied as a cost offset to either employee expense or tocapital assets, depending on the source of the credits. Credits earned from employee hires or capital spending by our partners at Gigafactory 1 are recorded asa reduction to operating expenses. As of December 31, 2018 and 2017, we had earned $195.0 million and $163.0 million of transferable tax credits underthese agreements, respectively.95 Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, to replace theexisting revenue recognition criteria for contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Deferral of the Effective Date, to deferthe effective date of ASU No. 2014-09 to interim and annual periods beginning after December 15, 2017. Subsequently, the FASB issued ASU No. 2016-08,Principal versus Agent Considerations, ASU No. 2016-10, Identifying Performance Obligations and Licensing, ASU No. 2016-11, Rescission of SECGuidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, ASUNo. 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements, to clarify and amendthe guidance in ASU No. 2014-09. We adopted the ASUs on January 1, 2018 on a modified retrospective basis through a cumulative adjustment toaccumulated deficit. The adoption of the ASUs changed the timing of revenue recognition to be at delivery for certain vehicle sales to customers or leasingpartners with a resale value guarantee, which now qualify to be accounted for as sales with a right of return as opposed to the prior accounting as operatingleases or collateralized lease borrowings. Upon adoption of the ASUs, we recorded a decrease to our beginning accumulated deficit of $623.2 millionincluding income tax effects, which were immaterial. Refer to the Revenue Recognition section above for details.In February 2016, the FASB issued ASU No. 2016-02, Leases, to require lessees to recognize all leases, with limited exceptions, on the balance sheet,while recognition on the statement of operations will remain similar to current lease accounting. The ASU also eliminates real estate-specific provisions andmodifies certain aspects of lessor accounting. Subsequently, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, ASU No. 2018-11,Targeted Improvements, and ASU No. 2018-20, Narrow-Scope Improvements for Lessors, to clarify and amend the guidance in ASU No. 2016-02. The ASUsare effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We will adopt the ASUs on January 1, 2019on a modified retrospective basis through a cumulative adjustment to our beginning accumulated deficit balance. Prior comparative periods will not berestated under this method, and we will adopt all available practical expedients, as applicable. Further, solar leases that commence on or after January 1,2019, where we are the lessor and which are currently accounted for as leases, will no longer meet the definition of a lease. Instead, solar leases commencingon or after January 1, 2019 will be accounted for under ASC 606. In addition to recognizing operating leases that were previously not recognized on theconsolidated balance sheet, we also expect most of our build-to-suit leases to be de-recognized with a net decrease of approximately of $100.0 million to ourbeginning accumulated deficit before income tax effects, as our build-to-suit leases will no longer qualify for build-to-suit accounting and will instead berecognized as operating leases or finance leases. Upon adoption, our consolidated balance sheet will include an overall reduction in assets in the range ofapproximately $400.0 million to $500.0 million and a reduction in liabilities in the range of approximately $500.0 million to $600.0 million. The ASUs arenot expected to have a material impact on the consolidated statement of operations or the consolidated statement of cash flows.In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require financial assets carried atamortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions and forecasts. Subsequently, theFASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of leaseaccounting standards. The ASUs are effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Adoption ofthe ASUs is modified retrospective. We are currently obtaining an understanding of the ASUs and plan to adopt them on January 1, 2020.In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, to reduce the diversity in practicewith respect to the classification of certain cash receipts and cash payments on the statement of cash flows. The ASU is effective for interim and annualperiods beginning after December 15, 2017. Adoption of the ASU is retrospective. We adopted the ASU on January 1, 2018, which did not have a materialimpact on the consolidated financial statements.In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, which requires entities to present the aggregatechanges in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows nowpresents restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. The ASU is effective forinterim and annual periods beginning after December 15, 2017. Adoption of the ASU is retrospective. We adopted the ASU on January 1, 2018, whichresulted in restricted cash being combined with unrestricted cash reconciling beginning and ending balances. Refer to the Restricted Cash section for thereconciliation.96 In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business, to clarify which transactions should be accounted for asacquisitions (or disposals) of assets or businesses. The ASU is effective for interim and annual periods beginning after December 15, 2017. Adoption of theASU is prospective. We adopted the ASU on January 1, 2018, which did not have a material impact on the consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, to simplify the test for goodwill impairment byremoving Step 2. An entity will, therefore, perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount andrecognizing an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocatedto the reporting unit. An entity still has the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary. The ASUis effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Adoption of the ASU is prospective. We havenot yet selected an adoption date, though the ASU is currently not expected to have a material impact on the consolidated financial statements.In February 2017, the FASB issued ASU No. 2017-05, Gains and Losses from the Recognition of Nonfinancial Assets, to clarify the scope of assetderecognition guidance and accounting for partial sales of nonfinancial assets. The ASU is effective for interim and annual periods beginning afterDecember 15, 2017. We adopted the ASU on January 1, 2018 on a modified retrospective basis through a cumulative adjustment to accumulated deficit.Upon adoption of the ASU, we recorded a $9.4 million decrease to our beginning accumulated deficit balance.In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, to provide guidance on which changes to the terms orconditions of a share-based payment award require an entity to apply modification accounting. The ASU is effective for interim and annual periodsbeginning after December 15, 2017. Adoption of the ASU is prospective. We adopted the ASU on January 1, 2018, which did not have a material impact onthe consolidated financial statements.In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, to simplify the application ofcurrent hedge accounting guidance. The ASU expands and refines hedge accounting for both non-financial and financial risk components and aligns therecognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The ASU is effective for interim andannual periods beginning after December 15, 2018, with early adoption permitted. Adoption of the ASU will be prospective for us. We plan to adopt the ASUon January 1, 2019, and the ASU is currently not expected to have a material impact on the consolidated financial statements.In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient Transition to Topic 842, to permit an entity to elect apractical expedient to not re-evaluate land easements that existed or expired before the entity’s adoption of ASU No. 2016-02, Leases, and that are notcurrently accounted for as leases. The ASU is effective for the same periods as ASU No. 2016-02, and the ASU will not have a material impact on theconsolidated financial statements.In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangementthat Is a Service Contract. The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contractwith the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include aninternal-use software license). The ASU is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted.Adoption of the ASU is either retrospective or prospective. We are currently obtaining an understanding of the ASU and plan to adopt the ASU prospectivelyon January 1, 2020. Note 3 – Business CombinationsGrohmann AcquisitionOn January 3, 2017, we completed our acquisition of Grohmann Engineering GmbH (now Tesla Grohmann Automation GmbH or “Grohmann”),which specializes in the design, development and sale of automated manufacturing systems, for $109.5 million in cash. We acquired Grohmann to improvethe speed and efficiency of our manufacturing processes.97 At the time of acquisition, we entered into an incentive compensation arrangement for up to a maximum of $25.8 million of payments contingentupon continued service with us for 36 months after the acquisition date. Such payments would have been accounted for as compensation expense in theperiods earned. However, during the three months ended March 31, 2017, we terminated the incentive compensation arrangement and accelerated thepayments thereunder. As a result, we recorded the entire $25.8 million as compensation expense in the three months ended March 31, 2017, which wasincluded within selling, general and administrative expense in the consolidated statements of operations.Fair Value of Assets Acquired and Liabilities AssumedFair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives and theexpected future cash flows and related discount rates, can materiality impact our results of operations. Significant inputs used included the amount of cashflows, the expected period of the cash flows and the discount rates. During the fourth quarter of 2017, we finalized our estimate of the acquisition date fairvalues of the assets acquired and the liabilities assumed. Prior to finalization, there were no changes to the fair values of the assets acquired and the liabilitiesassumed.The allocation of the purchase consideration was based on management’s estimate of the acquisition date fair values of the assets acquired and theliabilities assumed, as follows (in thousands): Assets acquired: Cash and cash equivalents$334 Accounts receivable 42,947 Inventory 10,031 Property, plant and equipment 44,030 Intangible assets 21,723 Prepaid expenses and other assets, current and non-current 1,998 Total assets acquired 121,063 Liabilities assumed: Accounts payable (19,975)Accrued liabilities (12,403)Debt and capital leases, current and non-current (9,220)Other long-term liabilities (10,049)Total liabilities assumed (51,647)Net assets acquired 69,416 Goodwill 40,065 Total purchase price$109,481 Goodwill represented the excess of the purchase price over the fair value of the net assets acquired and was primarily attributable to the expectedsynergies from potential monetization opportunities and from integrating Grohmann’s technology into our automotive business as well as the acquiredtalent. Goodwill is not deductible for U.S. income tax purposes and is not amortized. Rather, we assess goodwill for impairment annually in the fourth quarter,or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value.98 Identifiable Intangible Assets AcquiredThe determination of the fair values of the identified intangible assets and their respective useful lives as of the acquisition date was as follows (inthousands, except for useful lives): Fair Value Useful Life(in years) Developed technology$12,528 10 Software 3,341 3 Customer relations 3,236 6 Trade name 1,775 7 Other 843 2 Total intangible assets$21,723 Grohmann’s results of operations since the acquisition date have been included within the automotive segment in the consolidated statements ofoperations. Standalone and pro forma results of operations have not been presented because they were not material to the consolidated financial statements.SolarCity AcquisitionOn November 21, 2016 (the “Acquisition Date”), we completed our acquisition of SolarCity. Pursuant to the Agreement and Plan of Merger (the“Merger Agreement”), each issued and outstanding share of SolarCity common stock was converted into 0.110 (the “Exchange Ratio”) shares of our commonstock. In addition, SolarCity’s stock option awards and restricted stock unit awards were assumed by us and converted into corresponding equity awards inrespect of our common stock based on the Exchange Ratio, with the awards retaining the same vesting and other terms and conditions as in effectimmediately prior to the acquisition.Fair Value of Purchase ConsiderationThe Acquisition Date fair value of the purchase consideration was as follows (in thousands, except for share and per share amounts): Total fair value of Tesla common stock issued (11,124,497 shares issued at $185.04 per share) $2,058,477 Fair value of replacement Tesla stock options and restricted stock units for vested SolarCity awards 87,500 Total purchase price $2,145,977Furthermore, the assumed unvested SolarCity awards of $95.9 million are recognized as stock-based compensation expense over the remainingrequisite service period. Per ASC 805, the replacement of stock options or other share-based payment awards in conjunction with a business combinationrepresents a modification of share-based payment awards that must be accounted for in accordance with ASC 718, Stock Compensation. As a result of ourissuance of replacement awards, a portion of the fair-value-based measure of the replacement awards is included in the purchase consideration. To determinethe portion of the replacement awards that is part of the purchase consideration, we measured the fair value of both the replacement awards and the historicalawards as of the Acquisition Date. The fair value of the replacement awards, whether vested or unvested, was included in the purchase consideration to theextent that pre-acquisition services were rendered.Transaction costs of $21.7 million were expensed as incurred to selling, general and administrative expense on the consolidated statements ofoperations.99 Fair Value of Assets Acquired and Liabilities AssumedFair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives and theexpected future cash flows and related discount rates, can materiality impact our results of operations. Specifically, we utilized a discounted cash flow modelto value the acquired solar energy systems, leased and to be leased, as well as the noncontrolling interests in subsidiaries. Significant inputs used includedthe amount of cash flows, the expected period of the cash flows and the discount rates.The allocation of the purchase consideration was based on management’s estimate of the Acquisition Date fair values of the assets acquired and theliabilities assumed, as follows (in thousands): Assets acquired: Cash and cash equivalents $213,523 Accounts receivable 74,619 Inventory 191,878 Solar energy systems, leased and to be leased 5,781,496 Property, plant and equipment 1,056,312 MyPower customer notes receivable, net of current portion 498,141 Restricted cash 129,196 Intangible assets 356,510 Prepaid expenses and other assets, current and non-current 199,864 Total assets acquired 8,501,539 Liabilities assumed: Accounts payable (230,078)Accrued liabilities (284,765)Debt and capital leases, current and non-current (3,403,840)Financing obligations (121,290)Deferred revenue, current and non-current (271,128)Other liabilities (950,423)Total liabilities assumed (5,261,524)Net assets acquired 3,240,015 Noncontrolling interests redeemable and non-redeemable (1,066,517)Capped call options associated with 2014 convertible notes 3,460 Total net assets acquired 2,176,958 Gain on acquisition (30,981)Total purchase price $2,145,977Gain on AcquisitionSince the fair value of the net assets acquired was greater than the purchase price, we recognized a gain on acquisition of $88.7 million in the fourthquarter of 2016, which was recorded within other income (expense), net, on the consolidated statements of operations.During the fourth quarter of 2017, we finalized our estimate of the Acquisition Date fair values of the assets acquired and the liabilities assumed. Priorto finalization, during the year ended December 31, 2017, we recorded an $11.6 million measurement period adjustment to MyPower customer notesreceivable, net of current portion, and a $46.2 million measurement period adjustment to accrued liabilities. The measurement period adjustments wererecorded as losses to other income (expense), net, in the consolidated statement of operations and reduced the gain on acquisition initially recognized in thefourth quarter of 2016.100 Identifiable Intangible Assets AcquiredThe determination of the fair values of the identified intangible assets and their respective useful lives as of the Acquisition Date was as follows (inthousands, except for useful lives): Fair Value Useful Life(in years) Developed technology $113,361 7 Trade name (1) 43,500 3 Favorable contracts and leases, net 112,817 15 IPR&D 86,832 Not applicable Total intangible assets $356,510 (1)Refer to Note 4, Intangible Assets, for discussion over changes to the assumptions of the useful life of this asset post acquisition.Unaudited Pro Forma Financial InformationThe consolidated financial statements for the year ended December 31, 2016 include SolarCity’s results of operations from the Acquisition Datethrough December 31, 2016. Net revenues and operating loss attributable to SolarCity during this period and included in the consolidated statement ofoperations were $84.1 million and $68.2 million, respectively.The following unaudited pro forma financial information for the year ended December 31, 2016 gives effect to our acquisition of SolarCity as if theacquisition had occurred on January 1, 2015 (in thousands, except per share data): Revenue $7,536,876 Net loss attributable to common stockholders (702,868)Net loss per share of common stock, basic and diluted $(4.56)Weighted-average shares used in computing net loss per share of common stock, basic and diluted 154,090 The unaudited pro forma financial information includes adjustments for the depreciation of solar energy systems, leased and to be leased, theintangible assets acquired, the effect of the acquisition on deferred revenue and noncontrolling interests and the transaction costs related to the acquisition.The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of futureperiods. The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, regulatory matters,synergies, operating efficiencies or cost savings that might be associated with the acquisition. Consequently, actual results could differ from the unauditedpro forma financial information presented. 101 Note 4 – Intangible AssetsInformation regarding our acquired intangible assets was as follows (in thousands): December 31, 2018 December 31, 2017 Gross CarryingAmount AccumulatedAmortization Other Net CarryingAmount Gross CarryingAmount AccumulatedAmortization Other Net CarryingAmount Finite-lived intangible assets: Developed technology $152,431 $(40,705) $1,205 $112,931 $125,889 $(19,317) $1,847 $108,419 Trade names 45,275 (44,056) 170 1,389 45,275 (10,924) 261 34,612 Favorable contracts and leases, net 112,817 (16,409) — 96,408 112,817 (8,639) — 104,178 Other 35,559 (11,540) 719 24,738 34,099 (7,775) 1,137 27,461 Total finite- lived intangible assets 346,082 (112,710) 2,094 235,466 318,080 (46,655) 3,245 274,670 Indefinite-lived intangible assets: IPR&D 60,290 — (13,264) 47,026 86,832 — — 86,832 Total indefinite- lived intangible assets 60,290 — (13,264) 47,026 86,832 — — 86,832 Total intangible assets $406,372 $(112,710) $(11,170) $282,492 $404,912 $(46,655) $3,245 $361,502 The in-process research and development (“IPR&D”), which we acquired from SolarCity, is accounted for as an indefinite-lived asset until thecompletion or abandonment of the associated research and development efforts. If the research and development efforts are successfully completed andcommercial feasibility is reached, the IPR&D would be amortized over its then estimated useful life. If the research and development efforts are not completedor are abandoned, the IPR&D might be impaired. The fair value of the IPR&D was estimated using the replacement cost method under the cost approach,based on the historical acquisition costs and expenses of the technology adjusted for estimated developer’s profit, opportunity cost and obsolescence factor.During the year ended December 31, 2018, we concluded that a portion of the IPR&D was not commercially feasible, and consequently recognized anabandonment loss of $13.3 million in restructuring and other expenses in the consolidated statements of operations. Additionally, $26.5 million of IPR&Dwas put into production during the year ended December 31, 2018, and we expect to complete the remaining research and development efforts in the first halfof 2019. The nature of the research and development efforts consists principally of planning, designing and testing the technology for viability inmanufacturing solar cells and modules. If commercial feasibility is not achieved for the remaining IPR&D, we would likely look to other alternativetechnologies.The costs associated with one of the trade names acquired by us has been fully amortized as of December 31, 2018 as we phased out the use of suchtrade name in our sales and marketing efforts.Total future amortization expense for intangible assets was estimated as follows (in thousands): December 31, 2018 2019 $34,637 2020 32,729 2021 32,729 2022 32,729 2023 26,537 Thereafter 76,105 Total $235,466 102 Note 5 – Fair Value of Financial InstrumentsASC 820, Fair Value Measurements, states that fair value is an exit price, representing the amount that would be received to sell an asset or paid totransfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined basedon assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputsshould be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other thanquoted 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 atfair value on a recurring basis were as follows (in thousands): December 31, 2018 December 31, 2017 Fair Value Level I Level II Level III Fair Value Level I Level II Level III Money market funds (cash and cash equivalents & restricted cash) $1,812,828 1,812,828 $— $— $2,163,459 $2,163,459 $— $— Interest rate swaps, net 11,070 — 11,070 — 59 — 59 — Total $1,823,898 $1,812,828 $11,070 $— $2,163,518 $2,163,459 $59 $— All of our money market funds were classified within Level I of the fair value hierarchy because they were valued using quoted prices in activemarkets. Our interest rate swaps were classified within Level II of the fair value hierarchy because they were valued using alternative pricing sources ormodels that utilized market observable inputs, including current and forward interest rates. During the year ended December 31, 2018, there were no transfersbetween the levels of the fair value hierarchy.Interest Rate SwapsWe enter into fixed-for-floating interest rate swap agreements to swap variable interest payments on certain debt for fixed interest payments, asrequired by certain of our lenders. We do not designate our interest rate swaps as hedging instruments. Accordingly, our interest rate swaps are recorded at fairvalue on the consolidated balance sheets within other assets or other long-term liabilities, with any changes in their fair values recognized as other income(expense), net, in the consolidated statements of operations and with any cash flows recognized as investing activities in the consolidated statements of cashflows. Our interest rate swaps outstanding were as follows (in thousands): December 31, 2018 December 31, 2017 Aggregate NotionalAmount Gross Asset at FairValue Gross Liability atFair Value Aggregate NotionalAmount Gross Asset at FairValue Gross Liability atFair Value Interest rate swaps $800,293 $12,159 $1,089 $496,544 $5,304 $5,245 For the years ended December 31, 2018, 2017 and 2016, our interest rate swaps activity was as follows (in thousands): Year Ended December 31, 2018 2017 2016 Gross gains $21,558 $7,192 $6,995 Gross losses $11,670 $13,082 $— 103 Disclosure of Fair ValuesOur financial instruments that are not re-measured at fair value include accounts receivable, MyPower customer notes receivable, rebates receivable,accounts payable, accrued liabilities, customer deposits, the participation interest and debt. The carrying values of these financial instruments other than theparticipation interest, the convertible senior notes, the 5.30% Senior Notes due in 2025, the solar asset-backed notes, the solar loan-backed notes and theautomotive asset-backed notes approximate their fair values.We estimate the fair value of the convertible senior notes and the 5.30% Senior Notes due in 2025 using commonly accepted valuationmethodologies and market-based risk measurements that are indirectly observable, such as credit risk (Level II). In addition, we estimate the fair values of theparticipation interest, the solar asset-backed notes, the solar loan-backed notes and the automotive asset-backed notes based on rates currently offered forinstruments with similar maturities and terms (Level III). The following table presents the estimated fair values and the carrying values (in thousands): December 31, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Convertible senior notes $3,660,316 $4,346,642 $3,722,673 $4,488,651 Senior notes $1,778,756 $1,575,000 $1,775,550 $1,732,500 Participation interest $18,946 $18,431 $17,545 $17,042 Solar asset-backed notes $1,183,675 $1,206,755 $880,415 $898,145 Solar loan-backed notes $203,052 $211,788 $236,844 $248,149 Automotive asset-backed notes $1,172,160 $1,179,910 $— $— Note 6 – InventoryOur inventory consisted of the following (in thousands): December 31, December 31, 2018 2017 Raw materials $931,828 $821,396 Work in process 296,991 243,181 Finished goods 1,581,763 1,013,909 Service parts 302,864 185,051 Total $3,113,446 $2,263,537 Finished goods inventory included vehicles in transit to fulfill customer orders, new vehicles available for immediate sale at our retail and servicecenter locations, used vehicles and energy storage products. During the year ended December 31, 2018, we made the decision to utilize some of our fleet carsas service loaners on a long-term basis. As a result, we reclassified $121.2 million of finished goods inventory to property, plant and equipment.For solar energy systems, leased and to be leased, we commence transferring component parts from inventory to construction in progress, acomponent of solar energy systems, leased and to be leased, once a lease contract with a customer has been executed and installation has been initiated.Additional costs incurred on the leased systems, including labor and overhead, are recorded within construction in progress.We write-down inventory for any excess or obsolete inventories or when we believe that the net realizable value of inventories is less than thecarrying value. During the years ended December 31, 2018, 2017 and 2016, we recorded write-downs of $78.3 million, $124.1 million and $52.8 million,respectively, in cost of revenues. 104 Note 7 – Solar Energy Systems, Leased and To Be Leased, NetSolar energy systems, leased and to be leased, net, consisted of the following (in thousands): December 31, December 31, 2018 2017 Solar energy systems leased to customers $6,430,729 $6,009,977 Initial direct costs related to customer solar energy system lease acquisition costs 99,380 74,709 6,530,109 6,084,686 Less: accumulated depreciation and amortization (495,518) (220,110) 6,034,591 5,864,576 Solar energy systems under construction 67,773 243,847 Solar energy systems to be leased to customers 169,032 239,067 Solar energy systems, leased and to be leased – net (1) $6,271,396 $6,347,490 (1)As of December 31, 2018 and 2017, solar energy systems, leased and to be leased, included $36.0 million of capital leased assets with accumulateddepreciation and amortization of $3.8 million and $1.9 million, respectively. Note 8 – Property, Plant and EquipmentOur property, plant and equipment, net, consisted of the following (in thousands): December 31, December 31, 2018 2017 Machinery, equipment, vehicles and office furniture $6,328,966 $4,251,711 Tooling 1,397,514 1,255,952 Leasehold improvements 960,971 789,751 Land and buildings 4,047,006 2,517,247 Computer equipment, hardware and software 487,421 395,067 Construction in progress 807,297 2,541,588 14,029,175 11,751,316 Less: Accumulated depreciation (2,699,098) (1,723,794)Total $11,330,077 $10,027,522 Construction in progress is primarily comprised of tooling and equipment related to the manufacturing of our vehicles and a portion of Gigafactory 1construction. Completed assets are transferred to their respective asset classes, and depreciation begins when an asset is ready for its intended use.Construction in progress also includes certain build-to-suit lease costs incurred at our Buffalo manufacturing facility, referred to as Gigafactory 2. During theyear ended December 31, 2018, we had significant transfers from construction in progress to the various property, plant and equipment asset classes as assetswere placed in service primarily at Gigafactory 1 and Gigafactory 2. Interest on outstanding debt is capitalized during periods of significant capital assetconstruction and amortized over the useful lives of the related assets. During the years ended December 31, 2018 and 2017, we capitalized $54.9 million and$124.9 million, respectively, of interest.As of December 31, 2018 and 2017, the table above included $1.69 billion and $1.63 billion, respectively, of gross build-to-suit lease assets. As ofDecember 31, 2018 and 2017, the corresponding financing liabilities of $81.7 million and $14.9 million, respectively, were recorded in accrued liabilitiesand $1.66 billion and $1.67 billion, respectively, were recorded in other long-term liabilities on the consolidated balance sheets.Depreciation expense during the years ended December 31, 2018, 2017 and 2016 was $1.11 billion, $769.3 million and $477.3 million, respectively.Gross property and equipment under capital leases as of December 31, 2018 and 2017 was $1.52 billion and $688.3 million, respectively. Accumulateddepreciation on property and equipment under capital leases as of these dates was $231.6 million and $100.6 million, respectively.105 Panasonic has partnered with us on Gigafactory 1 with investments in the production equipment that it uses to manufacture and supply us withbattery cells. Under our arrangement with Panasonic, we plan to purchase the full output from their production equipment at negotiated prices. As these termsconvey to us the right to use, as defined in ASC 840, Leases, their production equipment, we consider them to be leased assets when production commences.This results in us recording the cost of their production equipment within property, plant and equipment, net, on the consolidated balance sheets with acorresponding liability recorded to long-term debt and capital leases. For all suppliers and partners for which we plan to purchase the full output from theirproduction equipment located at Gigafactory 1, we have applied similar accounting. As of December 31, 2018 and 2017, we had cumulatively capitalizedcosts of $1.24 billion and $473.3 million, respectively, on the consolidated balance sheets in relation to the production equipment under our Panasonicarrangement. We had cumulatively capitalized total costs for Gigafactory 1, including costs under our Panasonic arrangement, of $4.62 billion and$3.15 billion as of December 31, 2018 and 2017, respectively. Note 9 – Non-cancellable Operating Lease Payments ReceivableAs of December 31, 2018, future minimum lease payments to be received from customers under non-cancellable operating leases for each of the nextfive years and thereafter were as follows (in thousands): 2019 $501,625 2020 418,299 2021 270,838 2022 186,807 2023 188,809 Thereafter 2,469,732 Total $4,036,110 The above table does not include vehicle sales to customers or leasing partners with a resale value guarantee as the cash payments were receivedupfront. In addition, we assumed through our acquisition of SolarCity and will continue to enter into PPAs with our customers that are accounted for asleases. These customers are charged solely based on actual power produced by the installed solar energy system at a predefined rate per kilowatt-hour ofpower produced. The future payments from such arrangements are not included in the above table as they are a function of the power generated by the relatedsolar energy systems in the future. Furthermore, the above table does not include performance-based incentives receivable from various utility companies.The amount of contingent rentals recognized as revenue for the years presented were not material. Note 10 - Accrued Liabilities and Other As of December 31, 2018 and 2017, accrued liabilities and other current liabilities consisted of the following (in thousands): December 31, December 31, 2018 2017 Accrued purchases $394,216 $753,408 Payroll and related costs 448,836 378,284 Taxes payable 348,663 185,807 Financing obligation, current portion 61,761 67,313 Accrued warranty 200,701 125,502 Sales return reserve, current portion 107,800 — Accrued interest 77,917 75,572 Build-to-suit lease liability, current portion 81,739 14,915 Other current liabilities 372,620 130,565 Total $2,094,253 $1,731,366 Taxes payable included value added tax, sales tax, property tax, use tax and income tax payables.106 Accrued purchases primarily reflected receipts of goods and services that we had not been invoiced yet. As we are invoiced for these goods andservices, this balance will reduce and accounts payable will increase.Due to the adoption of the new revenue standard, automotive sales with resale value guarantees that are now accounted for as sales with a right ofreturn require a corresponding sales return reserve, which is included in accrued liabilities and other when the reserve is current and other long-term liabilitieswhen the reserve is non-current on the consolidated balance sheets. For automotive sales without a resale value guarantee, we record a reserve against revenuefor the estimated variable consideration related to future product returns in accrued liabilities and other on the consolidated balance sheets. See Note 2,Summary of Significant Accounting Policies for details. Note 11 – Other Long-Term LiabilitiesOther long-term liabilities consisted of the following, net of current portion (in thousands): December 31, December 31, 2018 2017 Accrued warranty reserve $547,125 $276,289 Build-to-suit lease liability 1,662,017 1,665,768 Deferred rent expense 59,252 46,820 Financing obligation 50,383 67,929 Liability for receipts from an investor — 29,713 Sales return reserve 84,143 — Other noncurrent liabilities 307,483 356,451 Total other long-term liabilities $2,710,403 $2,442,970 The liability for receipts from an investor represents the amounts received from the investor under a lease pass-through fund arrangement for themonetization of ITCs for solar energy systems not yet placed in service. Due to the adoption of the new revenue standard, automotive sales with resale valueguarantees that are now accounted for as sales with a right of return require a corresponding sales return reserve, which is included in accrued liabilities andother when the reserve is current and other long-term liabilities when the reserve is non-current on the consolidated balance sheets. Note 12 – Customer DepositsCustomer deposits primarily consisted of cash payments from customers at the time they place an order or reservation for a vehicle or an energyproduct and any additional payments up to the point of delivery or the completion of installation, including the fair values of any customer trade-in vehiclesthat are applicable toward a new vehicle purchase. Customer deposit amounts and timing vary depending on the vehicle model, the energy product and thecountry of delivery. In the case of a vehicle, customer deposits are fully refundable up to the point the vehicle is placed into the production cycle. In the caseof an energy generation or storage product, customer deposits are fully refundable prior to the entry into a purchase agreement or in certain cases for a limitedtime thereafter (in accordance with applicable laws). Customer deposits are included in current liabilities until refunded or until they are applied towards thecustomer’s purchase balance. As of December 31, 2018 and December 31, 2017, we held $792.6 million and $853.9 million, respectively, in customerdeposits.Due to the adoption of the new revenue standard, customer deposits now include prepayments on contracts that can be cancelled without significantpenalties, such as vehicle maintenance plans, which were previously reported as deferred revenue. As a result, the adoption of the new revenue standardincreased the customer deposits balance as of December 31, 2018 by $58.4 million as compared to what the balance would have been under ASC 605,Revenue Recognition (see Note 2, Summary of Significant Accounting Policies). 107 Note 13 –Long-Term Debt ObligationsThe following is a summary of our debt as of December 31, 2018 (in thousands): Unpaid Unused Principal Net Carrying Value Committed Contractual Contractual Balance Current Long-Term Amount* Interest Rates Maturity DateRecourse debt: 0.25% Convertible Senior Notes due in 2019 ("2019 Notes") 920,000 912,625 — — 0.25% March 20191.25% Convertible Senior Notes due in 2021 ("2021 Notes") 1,380,000 — 1,243,496 — 1.25% March 20212.375% Convertible Senior Notes due in 2022 ("2022 Notes") 977,500 — 871,326 — 2.375% March 20225.30% Senior Notes due in 2025 ("2025 Notes") 1,800,000 — 1,778,756 — 5.30% August 2025Credit Agreement 1,540,000 — 1,540,000 230,999 1% plus LIBOR June 2020Vehicle and other Loans 76,203 1,203 75,000 — 1.8%-7.6% January 2019-December 20211.625% Convertible Senior Notes due in 2019 565,992 541,070 — — 1.625% November 2019Zero-Coupon Convertible Senior Notes due in 2020 103,000 — 91,799 — 0.0% December 2020Solar Bonds 24,725 119 25,190 — 2.6%-5.8% January 2019-January 2031Total recourse debt 7,387,420 1,455,017 5,625,567 230,999 Non-recourse debt: Warehouse Agreements 92,000 13,604 78,396 1,008,000 3.9%-4.2% September 2020Canada Credit Facility 73,220 31,766 41,454 — 3.6%-5.9% November 2022Term Loan due in 2019 180,624 180,624 — — 6.1% January 2019Term Loan due in 2021 169,050 6,876 161,453 — 6.0% January 2021Cash equity debt 466,837 10,911 441,472 — 5.3%-5.8% July 2033-January 2035Solar asset-backed notes 1,214,071 28,761 1,154,914 — 4.0%-7.7% September 2024-February 2048Solar loan-backed notes 210,249 9,888 193,164 — 4.8%-7.5% September 2048-September 2049Automotive asset-backed notes 1,177,937 467,926 704,234 — 2.3%-7.9% December 2019-June 2022Solar Renewable Energy Credit and other Loans 26,742 16,612 9,836 17,633 5.1%-7.9% December 2019-July 2021Total non-recourse debt 3,610,730 766,968 2,784,923 1,025,633 Total debt $10,998,150 $2,221,985 $8,410,490 $1,256,632 108 The following is a summary of our debt as of December 31, 2017 (in thousands): Unpaid Unused Principal Net Carrying Value Committed Contractual Contractual Balance Current Long-Term Amount* Interest Rates Maturity DateRecourse debt: 1.50% Convertible Senior Notes due in 2018 ("2018 Notes") $5,512 $5,442 $— $— 1.50% June 20182019 Notes 920,000 — 869,092 — 0.25% March 20192021 Notes 1,380,000 — 1,186,131 — 1.25% March 20212022 Notes 977,500 — 841,973 — 2.375% March 20222025 Notes 1,800,000 — 1,775,550 — 5.30% August 2025Credit Agreement 1,109,000 — 1,109,000 729,929 1% plus LIBOR June 2020Vehicle and other Loans 16,205 15,944 261 — 1.8%-7.6% January 2018-September 20192.75% Convertible Senior Notes due in 2018 230,000 222,171 — — 2.75% November 20181.625% Convertible Senior Notes due in 2019 566,000 — 511,389 — 1.625% November 2019Zero-Coupon Convertible Senior Notes due in 2020 103,000 — 86,475 — 0.0% December 2020Related Party Promissory Notes due in February 2018 100,000 100,000 — — 6.5% February 2018Solar Bonds 32,016 7,008 24,940 — 2.6%-5.8% March 2018-January 2031Total recourse debt 7,239,233 350,565 6,404,811 729,929 Non-recourse debt: Warehouse Agreements 673,811 195,382 477,867 426,189 3.1% September 2019Canada Credit Facility 86,708 31,106 55,603 — 3.6%-5.1% November 2021Term Loan due in December 2018 157,095 156,884 — 19,534 4.8% December 2018Term Loan due in January 2021 176,290 5,885 169,352 — 4.9% January 2021Revolving Aggregation Credit Facility 161,796 — 158,733 438,204 4.1%-4.5% December 2019Solar Renewable Energy Credit Loan Facility 38,575 15,858 22,774 — 7.3% July 2021Cash equity debt 482,133 12,334 454,421 — 5.3%-5.8% July 2033-January 2035Solar asset-backed notes 907,241 23,829 856,586 — 4.0%-7.7% November 2038-February 2048Solar loan-backed notes 244,498 8,006 228,838 — 4.8%-7.5% September 2048-September2049Total non-recourse debt 2,928,147 449,284 2,424,174 883,927 Total debt $10,167,380 $799,849 $8,828,985 $1,613,856 *Unused committed amounts under some of our credit facilities and financing funds are subject to satisfying specified conditions prior to draw-down (such as pledging to our lenders sufficient amounts ofqualified receivables, inventories, leased vehicles and our interests in those leases, solar energy systems and the associated customer contracts, our interests in financing funds or various other assets). Upondraw-down of any unused committed amounts, there are no restrictions on use of available funds for general corporate purposes.Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only specified assets of oursubsidiaries. The differences between the unpaid principal balances and the net carrying values are due to convertible senior note conversion features, debtdiscounts or deferred financing costs. As of December 31, 2018, we were in compliance with all financial debt covenants, which include minimum liquidityand expense-coverage balances and ratios.2018 Notes, Bond Hedges and Warrant TransactionsIn May 2013, we issued $660.0 million in aggregate principal amount of 1.50% Convertible Senior Notes due in June 2018 in a public offering. Thenet proceeds from the issuance, after deducting transaction costs, were $648.0 million.109 Each $1,000 of principal of the 2018 Notes is initially convertible into 8.0306 shares of our common stock, which is equivalent to an initialconversion price of $124.52 per share, subject to adjustment upon the occurrence of specified events. Holders of the 2018 Notes may convert, at their option,on or after March 1, 2018. Further, holders of the 2018 Notes may convert, at their option, prior to March 1, 2018 only under the following circumstances: (1)during any quarter beginning after September 30, 2013, if the closing price of our common stock for at least 20 trading days (whether or not consecutive)during the last 30 consecutive trading days immediately preceding the quarter is greater than or equal to 130% of the conversion price; (2) during the five-business day period following any five-consecutive trading day period in which the trading price of the 2018 Notes is less than 98% of the product of theclosing price of our common stock for each day during such five-consecutive trading day period or (3) if we make specified distributions to holders of ourcommon stock or if specified corporate transactions occur. Upon conversion, we would pay cash for the principal amount and, if applicable, deliver shares ofour common stock (subject to our right to deliver cash in lieu of all or a portion of such shares of our common stock) based on a daily conversion value. If afundamental change occurs prior to the maturity date, holders of the 2018 Notes may require us to repurchase all or a portion of their 2018 Notes for cash at arepurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to thematurity date, we would increase the conversion rate for a holder who elects to convert its 2018 Notes in connection with such an event in certaincircumstances.In accordance with GAAP relating to embedded conversion features, we initially valued and bifurcated the conversion feature associated with the2018 Notes. We recorded to stockholders’ equity $82.8 million for the conversion feature. The resulting debt discount is being amortized to interest expenseat an effective interest rate of 4.29%.In connection with the offering of the 2018 Notes, we entered into convertible note hedge transactions whereby we have the option to purchaseinitially (subject to adjustment for certain specified events) 5.3 million shares of our common stock at a price of $124.52 per share. The cost of theconvertible note hedge transactions was $177.5 million. In addition, we sold warrants whereby the holders of the warrants have the option to purchaseinitially (subject to adjustment for certain specified events) 5.3 million shares of our common stock at a price of $184.48 per share. We received$120.3 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and the sale of the warrants areintended to reduce potential dilution from the conversion of the 2018 Notes and to effectively increase the overall conversion price from $124.52 to $184.48per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity and are notaccounted for as derivatives. The net cost incurred in connection with the convertible note hedge and warrant transactions was recorded as a reduction toadditional paid-in capital on the consolidated balance sheet.During the first quarter of 2018, $5.2 million in aggregate principal amount of the 2018 Notes were converted for $5.2 million in cash and25,745 shares of our common stock. As a result, we recognized a loss on debt extinguishment of less than $0.1 million.As of June 30, 2018, the 2018 Notes had been completely settled.2019 Notes, 2021 Notes, Bond Hedges and Warrant TransactionsIn March 2014, we issued $800.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due in March 2019 and $1.20 billion inaggregate principal amount of 1.25% Convertible Senior Notes due in March 2021 in a public offering. In April 2014, we issued an additional $120.0 millionin aggregate principal amount of the 2019 Notes and $180.0 million in aggregate principal amount of the 2021 Notes, pursuant to the exercise in full of theoverallotment options by the underwriters. The total net proceeds from the issuances, after deducting transaction costs, were $905.8 million for the 2019Notes and $1.36 billion for the 2021 Notes.110 Each $1,000 of principal of these notes is initially convertible into 2.7788 shares of our common stock, which is equivalent to an initial conversionprice of $359.87 per share, subject to adjustment upon the occurrence of specified events. Holders of these notes may elect to convert on or after December 1,2018 for the 2019 Notes and December 1, 2020 for the 2021 Notes. The settlement of such an election to convert the 2019 Notes would be in cash and/orshares of our common stock, which we intend to settle in cash, on the maturity date. The settlement of such an election to convert the 2021 Notes would be incash for the principal amount and, if applicable, shares of our common stock (subject to our right to deliver cash in lieu of all or a portion of such shares ofour common stock), on the maturity date. Further, holders of these notes may convert, at their option, prior to the respective dates above only under thefollowing circumstances: (1) during a quarter in which the closing price of our common stock for at least 20 trading days (whether or not consecutive) duringthe last 30 consecutive trading days immediately preceding the quarter is greater than or equal to 130% of the conversion price; (2) during the five-businessday period following any five-consecutive trading day period in which the trading price of these notes is less than 98% of the product of the closing price ofour common stock for each day during such five-consecutive trading day period or (3) if we make specified distributions to holders of our common stock or ifspecified corporate transactions occur. Upon such a conversion of the 2019 Notes, we would pay or deliver (as applicable) cash, shares of our common stockor a combination thereof, at our election. Upon such a conversion of the 2021 Notes, we would pay cash for the principal amount and, if applicable, delivershares of our common stock (subject to our right to deliver cash in lieu of all or a portion of such shares of our common stock) based on a daily conversionvalue. If a fundamental change occurs prior to the applicable maturity date, holders of these notes may require us to repurchase all or a portion of their notesfor cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, if specific corporate events occur priorto the applicable maturity date, we would increase the conversion rate for a holder who elects to convert their notes in connection with such an event incertain circumstances. As of December 31, 2018, none of the conditions permitting the holders of 2021 Notes to early convert had been met. Therefore, 2021Notes were classified as long-term.In accordance with GAAP relating to embedded conversion features, we initially valued and bifurcated the conversion features associated with thesenotes. We recorded to stockholders’ equity $188.1 million for the 2019 Notes’ conversion feature and $369.4 million for the 2021 Notes’ conversion feature.The resulting debt discounts are being amortized to interest expense at an effective interest rate of 4.89% and 5.96%, respectively.In connection with the offering of these notes in March 2014, we entered into convertible note hedge transactions whereby we have the option topurchase initially (subject to adjustment for certain specified events) a total of 5.6 million shares of our common stock at a price of $359.87 per share. Thetotal cost of the convertible note hedge transactions was $524.7 million. In addition, we sold warrants whereby the holders of the warrants have the option topurchase initially (subject to adjustment for certain specified events) 2.2 million shares of our common stock at a price of $512.66 per share for the 2019Notes and 3.3 million shares of our common stock at a price of $560.64 per share for 2021 Notes. We received $338.4 million in total cash proceeds from thesales of these warrants. Similarly, in connection with the issuance of the additional notes in April 2014, we entered into convertible note hedge transactionsand paid a total of $78.7 million. In addition, we sold warrants to purchase initially (subject to adjustment for certain specified events) 0.3 million shares ofour common stock at a price of $512.66 per share for the 2019 Notes and 0.5 million shares of our common stock at a price of $560.64 per share for the 2021Notes. We received $50.8 million in total cash proceeds from the sales of these warrants. Taken together, the purchases of the convertible note hedges and thesales of the warrants are intended to reduce potential dilution and/or cash payments from the conversion of these notes and to effectively increase the overallconversion price from $359.87 to $512.66 per share for the 2019 Notes and from $359.87 to $560.64 per share for the 2021 Notes. As these transactions meetcertain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity and are not accounted for as derivatives. The netcost incurred in connection with the convertible note hedge and warrant transactions was recorded as a reduction to additional paid-in capital on theconsolidated balance sheet.2022 Notes, Bond Hedges and Warrant TransactionsIn March 2017, we issued $977.5 million in aggregate principal amount of 2.375% Convertible Senior Notes due in March 2022 in a public offering.The net proceeds from the issuance, after deducting transaction costs, were $965.9 million.111 Each $1,000 of principal of the 2022 Notes is initially convertible into 3.0534 shares of our common stock, which is equivalent to an initialconversion price of $327.50 per share, subject to adjustment upon the occurrence of specified events. Holders of the 2022 Notes may convert, at their option,on or after December 15, 2021. Further, holders of the 2022 Notes may convert, at their option, prior to December 15, 2021 only under the followingcircumstances: (1) during any quarter beginning after June 30, 2017, if the closing price of our common stock for at least 20 trading days (whether or notconsecutive) during the last 30 consecutive trading days immediately preceding the quarter is greater than or equal to 130% of the conversion price; (2)during the five-business day period following any five-consecutive trading day period in which the trading price of the 2022 Notes is less than 98% of theproduct of the closing price of our common stock for each day during such five-consecutive trading day period or (3) if we make specified distributions toholders of our common stock or if specified corporate transactions occur. Upon a conversion, we would pay cash for the principal amount and, if applicable,deliver shares of our common stock (subject to our right to deliver cash in lieu of all or a portion of such shares of our common stock) based on a dailyconversion value. If a fundamental change occurs prior to the maturity date, holders of the 2022 Notes may require us to repurchase all or a portion of their2022 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, if specific corporate eventsoccur prior to the maturity date, we would increase the conversion rate for a holder who elects to convert its 2022 Notes in connection with such an event incertain circumstances. As of December 31, 2018, none of the conditions permitting the holders of the 2022 Notes to early convert had been met. Therefore,the 2022 Notes are classified as long-term.In accordance with GAAP relating to embedded conversion features, we initially valued and bifurcated the conversion feature associated with the2022 Notes. We recorded to stockholders’ equity $145.6 million for the conversion feature. The resulting debt discount is being amortized to interestexpense at an effective interest rate of 6.00%.In connection with the offering of the 2022 Notes, we entered into convertible note hedge transactions whereby we have the option to purchaseinitially (subject to adjustment for certain specified events) 3.0 million shares of our common stock at a price of $327.50 per share. The cost of theconvertible note hedge transactions was $204.1 million. In addition, we sold warrants whereby the holders of the warrants have the option to purchaseinitially (subject to adjustment for certain specified events) 3.0 million shares of our common stock at a price of $655.00 per share. We received $52.9 millionin cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and the sale of the warrants are intended toreduce potential dilution from the conversion of the 2022 Notes and to effectively increase the overall conversion price from $327.50 to $655.00 per share.As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity and are not accountedfor as derivatives. The net cost incurred in connection with the convertible note hedge and warrant transactions was recorded as a reduction to additionalpaid-in capital on the consolidated balance sheet.2025 NotesIn August 2017, we issued $1.80 billion in aggregate principal amount of unsecured 5.30% Senior Notes due in August 2025 pursuant to Rule 144Aand Regulation S under the Securities Act. The net proceeds from the issuance, after deducting transaction costs, were $1.77 billion.Credit AgreementIn June 2015, we entered into a senior asset-based revolving credit agreement (as amended from time to time, the “Credit Agreement”) with asyndicate of banks. Borrowed funds bear interest, at our option, at an annual rate of (a) 1% plus LIBOR or (b) the highest of (i) the federal funds rate plus0.50%, (ii) the lenders’ “prime rate” or (iii) 1% plus LIBOR. The fee for undrawn amounts is 0.25% per annum. The Credit Agreement is secured by certain ofour accounts receivable, inventory and equipment. Availability under the Credit Agreement is based on the value of such assets, as reduced by certainreserves.On May 3, 2018, the Company entered into the Ninth Amendment (the “Ninth Amendment”) to the Credit Agreement. The Ninth Amendmentamended the Credit Agreement to permit Tesla to include in its discretion: (i) the Fremont Factory facilities in the U.S. borrowing base and/or (ii) vehicles inand in-transit to Belgium in the Dutch borrowing base.112 Vehicle and Other LoansWe have entered into various vehicle and other loan agreements with various financial institutions. The vehicle loans are secured by the vehiclesfinanced and used vehicles owned by us.2.75% Convertible Senior Notes due in 2018In October 2013, SolarCity issued $230.0 million in aggregate principal amount of 2.75% Convertible Senior Notes due on November 1, 2018 in apublic offering.Each $1,000 of principal of the convertible senior notes is now convertible into 1.7838 shares of our common stock, which is equivalent to aconversion price of $560.64 per share (subject to adjustment upon the occurrence of specified events related to dividends, tender offers or exchange offers).Holders of the convertible senior notes may convert, at their option, at any time up to and including the second trading day prior to the maturity date. Ifcertain events that would constitute a make-whole fundamental change (such as significant changes in ownership, corporate structure or tradability of ourcommon stock) occur prior to the maturity date, we would increase the conversion rate for a holder who elects to convert its convertible senior notes inconnection with such an event in certain circumstances. The maximum conversion rate is capped at 2.3635 shares for each $1,000 of principal of theconvertible senior notes, which is equivalent to a minimum conversion price of $423.10 per share. The convertible senior notes do not have a cashconversion option. The convertible senior note holders may require us to repurchase their convertible senior notes for cash only under certain definedfundamental changes.In November 2018, the 2.75% Convertible Senior Notes due in 2018 matured and aggregate outstanding principal of $230.0 million was fully paidoff.1.625% Convertible Senior Notes due in 2019In September 2014, SolarCity issued $500.0 million and in October 2014, SolarCity issued an additional $66.0 million in aggregate principalamount of 1.625% Convertible Senior Notes due on November 1, 2019 in a private placement.Each $1,000 of principal of the convertible senior notes is now convertible into 1.3169 shares of our common stock, which is equivalent to aconversion price of $759.36 per share (subject to adjustment upon the occurrence of specified events related to dividends, tender offers or exchange offers).The maximum conversion rate is capped at 1.7449 shares for each $1,000 of principal of the convertible senior notes, which is equivalent to a minimumconversion price of $573.10 per share. The convertible senior notes do not have a cash conversion option. The convertible senior note holders may require usto repurchase their convertible senior notes for cash only under certain defined fundamental changes.In connection with the issuance of the convertible senior notes in September and October 2014, SolarCity entered into capped call option agreementsto reduce the potential dilution upon the conversion of the convertible senior notes. Specifically, upon the exercise of the capped call options, we would nowreceive shares of our common stock equal to 745,377 shares multiplied by (a) (i) the lower of $1,146.18 or the then market price of our common stock less (ii)$759.36 and divided by (b) the then market price of our common stock. The results of this formula are that we would receive more shares as the market priceof our common stock exceeds $759.36 and approaches $1,146.18, but we would receive less shares as the market price of our common stock exceeds$1,146.18. Consequently, if the convertible senior notes are converted, then the number of shares to be issued by us would be effectively partially offset bythe shares received by us under the capped call options. We can also elect to receive the equivalent value of cash in lieu of shares. The capped call optionsexpire on various dates ranging from September 4, 2019 to October 29, 2019, and the formula above would be adjusted in the event of a merger; a tenderoffer; nationalization; insolvency; delisting of our common stock; changes in law; failure to deliver; insolvency filing; stock splits, combinations, dividends,repurchases or similar events or an announcement of certain of the preceding actions. Although intended to reduce the net number of shares issued after aconversion of the convertible senior notes, the capped call options were separately negotiated transactions, are not a part of the terms of the convertiblesenior notes, do not affect the rights of the convertible senior note holders and take effect regardless of whether the convertible senior notes are actuallyconverted. The capped call options meet the criteria for equity classification because they are indexed to our common stock and we always control whethersettlement will be in shares or cash.113 Zero-Coupon Convertible Senior Notes due in 2020In December 2015, SolarCity issued $113.0 million in aggregate principal amount of Zero-Coupon Convertible Senior Notes due on December 1,2020 in a private placement. $13.0 million of the convertible senior notes were issued to related parties (see Note 21, Related Party Transactions).Each $1,000 of principal of the convertible senior notes is now convertible into 3.3333 shares of our common stock, which is equivalent to aconversion price of $300.00 per share (subject to adjustment upon the occurrence of specified events related to dividends, tender offers or exchange offers).The maximum conversion rate is capped at 4.2308 shares for each $1,000 of principal of the convertible senior notes, which is equivalent to a minimumconversion price of $236.36 per share. The convertible senior notes do not have a cash conversion option. The convertible senior note holders may require usto repurchase their convertible senior notes for cash only under certain defined fundamental changes. On or after June 30, 2017, the convertible senior notesare redeemable by us in the event that the closing price of our common stock exceeds 200% of the conversion price for 45 consecutive trading days endingwithin three trading days of such redemption notice at a redemption price equal to 100% of the principal amount plus any accrued and unpaid interest.Related Party Promissory NotesIn April, 2017, our CEO, SolarCity’s former CEO and SolarCity’s former Chief Technology Officer exchanged their $100.0 million (collectively) inaggregate principal amount of 6.50% Solar Bonds due in February 2018 for promissory notes in the same amounts and with substantially the same terms.During the year ended December 31, 2018, we fully repaid the $100.0 million in aggregate principal amount of 6.50% promissory notes held by ourCEO, SolarCity’s former CEO and SolarCity’s former Chief Technology Officer.Solar BondsSolar Bonds are senior unsecured obligations that are structurally subordinate to the indebtedness and other liabilities of our subsidiaries. SolarBonds were issued under multiple series with various terms and interest rates. See Note 21, Related Party Transactions, for Solar Bonds issued to relatedparties.Warehouse AgreementsIn August 2016, our subsidiaries entered into the a loan and security agreement (the “2016 Warehouse Agreement”) for borrowings secured by thefuture cash flows arising from certain leases and the associated leased vehicles. On August 17, 2017, the 2016 Warehouse Agreement was amended to modifythe interest rates and extend the availability period and the maturity date, and our subsidiaries entered into another loan and security agreement (the “2017Warehouse Agreement”) with substantially the same terms as and that shares the same committed amount with the 2016 Warehouse Agreement. OnAugust 16, 2018, the 2016 Warehouse Agreement and 2017 Warehouse Agreement were amended to extend the availability period from August 17, 2018 toAugust 16, 2019 and extend the maturity date from September 2019 to September 2020. On December 28, 2018, our subsidiaries terminated the 2017Warehouse Agreement after having fully repaid all obligations thereunder, and entered into a third loan and security agreement with substantially the sameterms as and that shares the same committed amount with the 2016 Warehouse Agreement. We refer to these agreements together as the “WarehouseAgreements.” Amounts drawn under the Warehouse Agreements generally bear interest at a fixed margin above (i) LIBOR or (ii) the commercial paper rate.The Warehouse Agreements are non-recourse to our other assets.Pursuant to the Warehouse Agreements, an undivided beneficial interest in the future cash flows arising from certain leases and the related leasedvehicles has been sold for legal purposes but continues to be reported in the consolidated financial statements. The interest in the future cash flows arisingfrom these leases and the related vehicles is not available to pay the claims of our creditors other than pursuant to obligations to the lenders under theWarehouse Agreements. Any excess cash flows not required to pay obligations under the Warehouse Agreements are available for distributions.During the year ended December 31, 2018, we repaid $1.16 billion of the principal outstanding under the Warehouse Agreements.114 Canada Credit FacilityIn December 2016, one of our subsidiaries entered into a credit agreement (the “Canada Credit Facility”) with a bank for borrowings secured by ourinterests in certain vehicle leases. In December 2017 and December 2018, the Canada Credit Facility was amended to add our interests in additional vehicleleases as collateral, allowing us to draw additional funds. Amounts drawn under the Canada Credit Facility bear interest at fixed rates. The Canada CreditFacility is non-recourse to our other assets.Term Loan due in 2019In March 2016, a subsidiary of SolarCity entered into an agreement for a term loan. The term loan bears interest at an annual rate of the lender’s costof funds plus 3.25%. The fee for undrawn commitments is 0.85% per annum. On March 31, 2017, the agreement was amended to upsize the committedamount, extend the availability period and extend the maturity date. The term loan is secured by substantially all of the assets of the subsidiary and is non-recourse to our other assets. The term loan had an original maturity date of December 2018 and on December 19, 2018, the maturity date was extended toJanuary 2019. On January 30, 2019, the maturity date of the term loan was further extended to April 2019.Term Loan due in 2021In January 2016, a subsidiary of SolarCity entered into an agreement with a syndicate of banks for a term loan. The term loan bears interest at anannual rate of three-month LIBOR plus 3.50%. The term loan is secured by substantially all of the assets of the subsidiary, including its interests in certainfinancing funds, and is non-recourse to our other assets.Revolving Aggregation Credit FacilityIn May 2015, a subsidiary of SolarCity entered into an agreement with a syndicate of banks for a revolving aggregation credit facility. On March 23,2016 and June 23, 2017, the agreement was amended to modify the interest rates and extend the availability period and the maturity date. The revolvingaggregation credit facility bears interest at an annual rate of 2.75% plus (i) for commercial paper loans, the commercial paper rate and (ii) for LIBOR loans, atour option, three-month LIBOR or daily LIBOR. The revolving aggregation credit facility is secured by certain assets of certain of our subsidiaries and wasnon-recourse to our other assets. On December 28, 2018, the aggregate outstanding principal amount of $210.2 million was repaid and the RevolvingAggregation Credit Facility was terminated.Cash Equity Debt IIn connection with the cash equity financing on May 2, 2016, SolarCity issued $121.7 million in aggregate principal amount of debt that bearsinterest at a fixed rate. This debt is secured by, among other things, our interests in certain financing funds and is non-recourse to our other assets.Cash Equity Debt IIIn connection with the cash equity financing on September 8, 2016, SolarCity issued $210.0 million in aggregate principal amount of debt that bearsinterest at a fixed rate. This debt is secured by, among other things, our interests in certain financing funds and is non-recourse to our other assets.Cash Equity Debt IIIIn connection with the cash equity financing on December 16, 2016, we issued $170.0 million in aggregate principal amount of debt that bearsinterest at a fixed rate. This debt is secured by, among other things, our interests in certain financing funds and is non-recourse to our other assets.115 Solar Asset-backed Notes, Series 2013-1In November 2013, SolarCity pooled and transferred qualifying solar energy systems and the associated customer contracts into a Special PurposeEntity (“SPE”) and issued $54.4 million in aggregate principal amount of Solar Asset-backed Notes, Series 2013-1, backed by these solar assets to investors.The SPE is wholly owned by us and is consolidated in the financial statements. As of December 31, 2018, these solar assets had a carrying value of$85.1 million and are included within solar energy systems, leased and to be leased, net, on the consolidated balance sheets. The Solar Asset-backed Noteswere issued at a discount of 0.05%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on theSolar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. We recognizerevenue earned from the associated customer contracts in accordance with our revenue recognition policy. The SPE’s assets and cash flows are not availableto our other creditors, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to our other assets. SolarCity contractedwith the SPE to provide operations & maintenance and administrative services for the solar energy systems.In connection with the pooling of the solar assets that were transferred to the SPE in November 2013, SolarCity terminated a lease pass-througharrangement with an investor. The lease pass-through arrangement had been accounted for as a borrowing, and the amount outstanding under the lease pass-through arrangement was recorded as a lease pass-through financing obligation. The balance that was then outstanding under the lease pass-througharrangement was $56.4 million. SolarCity paid the investor an aggregate of $40.2 million, and the remaining balance is paid over time using the net cashflows generated by the assets previously leased under the lease pass-through arrangement, after payment of the principal and interest on the Solar Asset-backed Notes and expenses related to the assets and the Solar Asset-backed Notes; this was contractually documented as a right to participate in the futurecash flows of the SPE (“participation interest”). The participation interest was recorded as a component of other long-term liabilities for the non-currentportion and accrued liabilities for the current portion. We account for the participation interest as a liability because the investor has no voting ormanagement rights in the SPE, the participation interest would terminate upon the investor achieving a specified return and the investor has the option to putthe participation interest to us on August 3, 2021 for the amount necessary for the investor to achieve the specified return, which would require us to settlethe participation interest in cash. In addition, under the terms of the participation interest, we have the option to purchase the participation interest from theinvestor for the amount necessary for the investor to achieve the specified return.Solar Asset-backed Notes, 2014-1In April 2014, SolarCity pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued$70.2 million in aggregate principal amount of Solar Asset-backed Notes, Series 2014-1, backed by these solar assets to investors. The SPE is wholly ownedby us and is consolidated in the financial statements. As of December 31, 2018, these solar assets had a carrying value of $104.4 million and are includedwithin solar energy systems, leased and to be leased, net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of0.01%. The cash flows generated by these solar assets are used to service the monthly principal and interest payments on the Solar Asset-backed Notes andsatisfy the SPE’s expenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associatedcustomer contracts in accordance with our revenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and thecreditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to our other assets. SolarCity contracted with the SPE to provideoperations & maintenance and administrative services for the solar energy systems.116 Solar Asset-backed Notes, Series 2014-2In July 2014, SolarCity pooled and transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued$160.0 million in aggregate principal amount of Solar Asset-backed Notes, Series 2014-2, Class A, and $41.5 million in aggregate principal amount of SolarAsset-backed Notes, Series 2014-2, Class B, backed by these solar assets to investors. The SPE is wholly owned by us and is consolidated in the financialstatements. As of December 31, 2018, these solar assets had a carrying value of $244.5 million and are included within solar energy systems, leased and to beleased, net, in the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01%. These solar assets and the associatedcustomer contracts are leased to an investor under a lease pass-through arrangement that we have accounted for as a borrowing. The rent paid by the investorunder the lease pass-through arrangement is used (and following the expiration of the lease pass-through arrangement, the cash generated by these solar assetswill be used) to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remainingcash is distributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customer contracts in accordance with ourrevenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the Solar Asset-backed Note holders, have no recourse to our other assets. SolarCity contracted with the SPE to provide operations & maintenance and administrativeservices for certain of the solar energy systems.Solar Asset-backed Notes, Series 2015-1In August 2015, SolarCity pooled and transferred its interests in certain financing funds into a SPE and issued $103.5 million in aggregate principalamount of Solar Asset-backed Notes, Series 2015-1, Class A, and $20.0 million in aggregate principal amount of Solar Asset-backed Notes, Series 2015-1,Class B, backed by these solar assets to investors. The SPE is wholly owned by us and is consolidated in the financial statements. The Solar Asset-backedNotes were issued at a discount of 0.05% for Class A and 1.46% for Class B. The cash distributed by the underlying financing funds to the SPE are used toservice the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash isdistributed to one of our wholly owned subsidiaries. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE,including the Solar Asset-backed Note holders, have no recourse to our other assets.Solar Asset-backed Notes, Series 2016-1In February 2016, SolarCity transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $52.2 million inaggregate principal amount of Solar Asset-backed Notes, Series 2016-1, backed by these solar assets to investors. The SPE is wholly owned by us and isconsolidated in the financial statements. As of December 31, 2018, these solar assets had a carrying value of $80.3 million and are included within solarenergy systems, leased and to be leased, net, on the consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 6.71%. Thesesolar assets and the associated customer contracts are leased to an investor under a lease pass-through arrangement that we have accounted for as a borrowing.The rent paid by the investor under the lease pass-through arrangement is used (and following the expiration of the lease pass-through arrangement, the cashgenerated by these solar assets will be used) to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’sexpenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customercontracts in accordance with our revenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of theSPE, including the Solar Asset-backed Note holders, have no recourse to our other assets. SolarCity contracted with the SPE to provide operations &maintenance and administrative services for certain of the solar energy systems.117 Solar Asset-backed Notes, Series 2017-1In November 2017, we pooled and transferred our interests in certain financing funds into a SPE and issued $265.0 million in aggregate principalamount of Solar Asset-backed Notes, Series 2017-1, Class A, and $75.0 million in aggregate principal amount of Solar Asset-backed Notes, Series 2017-1,Class B, backed by these solar assets to investors. The SPE is wholly owned by us and is consolidated in the financial statements. The Solar Asset-backedNotes were issued at a discount of 0.01% for Class A and 0.04% for Class B. The cash distributed by the underlying financing funds to the SPE are used toservice the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash isdistributed to one of our wholly owned subsidiaries. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE,including the Solar Asset-backed Note holders, have no recourse to our other assets.Solar Asset-backed Notes, Series 2017-2In December 2017, we transferred qualifying solar energy systems and the associated customer contracts into a SPE and issued $99.0 million inaggregate principal amount of Solar Asset-backed Notes, Series 2017-2, Class A, and $31.9 million in aggregate principal amount of Solar Asset-backedNotes, Series 2017-2, Class B, backed by these solar assets to investors. The SPE is wholly owned by us and is consolidated in the financial statements. As ofDecember 31, 2018, these solar assets had a carrying value of $204.7 million and are included within solar energy systems, leased and to be leased, net, onthe consolidated balance sheets. The Solar Asset-backed Notes were issued at a discount of 0.01% for Class A and 0.04% for Class B. Most of these solarassets and the associated customer contracts are leased to investors under lease pass-through arrangements that we have accounted for as borrowings. The rentpaid by the investors under the lease pass-through arrangements is used (and following the expiration of the lease pass-through arrangements, the cashgenerated by these solar assets will be used) to service the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’sexpenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customercontracts in accordance with our revenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of theSPE, including the Solar Asset-backed Note holders, have no recourse to our other assets. We contracted with the SPE to provide operations & maintenanceand administrative services for certain of the solar energy systems.Solar Asset-backed Notes, Series 2018-1In December 2018, we pooled and transferred our interests in certain financing funds into a SPE and issued $334.1 million in aggregate principalamount of Solar Asset-backed Notes, Series 2018-1 backed by these solar assets to investors. The SPE is wholly owned by us and is consolidated in thefinancial statements. The Solar Asset-backed Notes were issued at par value. The cash distributed by the underlying financing funds to the SPE are used toservice the semi-annual principal and interest payments on the Solar Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash isdistributed to one of our wholly owned subsidiaries. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE,including the Solar Asset-backed Note holders, have no recourse to our other assets.Solar Loan-backed Notes, Series 2016-AIn January 2016, SolarCity pooled and transferred certain MyPower customer notes receivable into a SPE and issued $151.6 million in aggregateprincipal amount of Solar Loan-backed Notes, Series 2016-A, Class A, and $33.4 million in aggregate principal amount of Solar Loan-backed Notes,Series 2016-A, Class B, backed by these notes receivable to investors. The SPE is wholly owned by us and is consolidated in the financial statements. TheSolar Loan-backed Notes were issued at a discount of 3.22% for Class A and 15.90% for Class B. The payments received by the SPE from these notesreceivable are used to service the semi-annual principal and interest payments on the Solar Loan-backed Notes and satisfy the SPE’s expenses, and anyremaining cash is distributed to one of our wholly owned subsidiaries. The SPE’s assets and cash flows are not available to our other creditors, and thecreditors of the SPE, including the Solar Loan-backed Note holders, have no recourse to our other assets.118 Solar Loan-backed Notes, Series 2017-AIn January 2017, we pooled and transferred certain MyPower customer notes receivable into a SPE and issued $123.0 million in aggregate principalamount of Solar Loan-backed Notes, Series 2017-A, Class A; $8.8 million in aggregate principal amount of Solar Loan-backed Notes, Series 2017-A, Class B,and $13.2 million in aggregate principal amount of Solar Loan-backed Notes, Series 2017-A, Class C, backed by these notes receivable to investors. The SPEis wholly owned by us and is consolidated in the financial statements. Accordingly, we did not recognize a gain or loss on the transfer of these notesreceivable. The Solar Loan-backed Notes were issued at a discount of 1.87% for Class A, 1.86% for Class B and 8.13% for Class C. The payments received bythe SPE from these notes receivable are used to service the semi-annual principal and interest payments on the Solar Loan-backed Notes and satisfy the SPE’sexpenses, and any remaining cash is distributed to one of our wholly owned subsidiaries. The SPE’s assets and cash flows are not available to our othercreditors, and the creditors of the SPE, including the Solar Loan-backed Note holders, have no recourse to our other assets.Automotive Asset-backed Notes, Series 2018-AIn February 2018, we transferred receivables related to certain leased vehicles into a SPE and issued $546.1 million in aggregate principal amount ofAutomotive Asset-backed Notes, Series 2018-A, backed by these automotive assets to investors. The SPE is wholly owned by us and is consolidated in thefinancial statements. The proceeds from the issuance, net of discounts and fees, were $543.1 million. The cash flows generated by these automotive assets areused to service the monthly principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash isdistributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customer lease contracts in accordance with ourrevenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the AutomotiveAsset-backed Note holders, have no recourse to our other assets. A third-party contracted with us to provide administrative and collection services for theseautomotive assets.Automotive Asset-backed Notes, Series 2018-BIn December 2018, we transferred receivables related to certain leased vehicles into a SPE and issued $837.4 million in aggregate principal amount ofAutomotive Asset-backed Notes, Series 2018-B, backed by these automotive assets to investors. The SPE is wholly owned by us and is consolidated in thefinancial statements. The proceeds from the issuance, net of discounts and fees, were $833.1 million. The cash flows generated by these automotive assets areused to service the monthly principal and interest payments on the Automotive Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash isdistributed to one of our wholly owned subsidiaries. We recognize revenue earned from the associated customer lease contracts in accordance with ourrevenue recognition policy. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the AutomotiveAsset-backed Note holders, have no recourse to our other assets. A third-party contracted with us to provide administrative and collection services for theseautomotive assets.Solar Renewable Energy Credit and other LoansWe have entered into various solar renewable energy credit and other loan agreements with various financial institutions. The solar renewable energycredit loan facility is secured by substantially all of the assets of one of our wholly owned subsidiaries, including its rights under forward contracts to sellsolar renewable energy credits, and is non-recourse to our other assets.119 Interest ExpenseThe following table presents the interest expense related to the contractual interest coupon, the amortization of debt issuance costs and theamortization of debt discounts on our convertible senior notes with cash conversion features, which include the 2018 Notes, the 2019 Notes, the 2021 Notesand the 2022 Notes (in thousands): Year Ended December 31, 2018 2017 2016 Contractual interest coupon $42,694 $39,129 $27,060 Amortization of debt issuance costs 6,629 6,932 8,567 Amortization of debt discounts 123,560 114,023 99,811 Total $172,883 $160,084 $135,438 Pledged AssetsAs of December 31, 2018 and 2017, we had pledged or restricted $5.23 billion and $4.05 billion of our assets (consisted principally of restricted cash,receivables, inventory, SRECs, solar energy systems, property and equipment) as collateral for our outstanding debt. Note 14 – Common StockIn May 2016, we completed a public offering of common stock and sold a total of 7,915,004 shares of our common stock for total cash proceeds ofapproximately $1.7 billion, net of underwriting discounts and offering costs.On November 21, 2016, we completed the acquisition of SolarCity (see Note 3, Business Combinations) and exchanged 11,124,497 shares of ourcommon stock for 101,131,791 shares of SolarCity common stock in accordance with the terms of the Merger Agreement.In March 2017, we completed a public offering of our common stock and issued a total of 1,536,259 shares for total cash proceeds of $399.6 million(including 95,420 shares purchased by our CEO for $25.0 million), net of underwriting discounts and offering costs.In April 2017, our CEO exercised his right under the indenture to convert all of his Zero-Coupon Convertible Senior Notes due in 2020, which hadan aggregate principal amount of $10.0 million. As a result, on April 26, 2017, we issued 33,333 shares of our common stock to our CEO in accordance withthe specified conversion rate, and we recorded an increase to additional paid-in capital of $10.3 million (see Note 13, Long-Term Debt Obligations).During 2017, we issued 1,510,274 shares of our common stock and paid $32.7 million in cash pursuant to conversions by or exchange agreementsentered into with holders of $199.5 million in aggregate principal amount of the 2018 Notes (see Note 13, Long-Term Debt Obligations). As a result, werecorded an increase to additional paid-in capital of $163.0 million. In addition, we settled portions of the bond hedges and warrants entered into inconnection with the 2018 Notes, resulting in a net cash inflow of $56.8 million (which was recorded as an increase to additional paid-in capital), the issuanceof 34,393 shares of our common stock and the receipt of 169,890 shares of our common stock.During the fourth quarter of 2017, we issued 34,772 shares of our common stock as part of the purchase consideration for an acquisition.During the year ended 2018, $5.2 million in aggregate principal amount of the 2018 Notes were converted for $5.2 million in cash and 25,745 sharesof our common stock. We also settled bond hedges entered into in connection with the 2018 Notes, resulting in the receipt of 25,745 shares of our commonstock. Additionally, we settled the remaining warrants entered into in connection with the 2018 Notes by issuing 238,195 shares of our common stock.In November 2018, our CEO purchased from us 56,915 shares of our common stock in a private placement at a per share price equal to the lastclosing price of our stock prior to the execution of the purchase agreement for an aggregate $20.0 million. 120 Note 15 – Equity Incentive PlansIn 2010, we adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan provides for the granting of stock options, RSUs and stockpurchase rights to our employees, directors and consultants. Stock options granted under the 2010 Plan may be either incentive stock options or nonqualifiedstock options. Incentive stock options may only be granted to our employees. Nonqualified stock options may be granted to our employees, directors andconsultants. Generally, our stock options and RSUs vest over four years and are exercisable over a maximum period of 10 years from their grant dates. Vestingtypically terminates when the employment or consulting relationship ends. In addition, as a result of our acquisition of SolarCity, we assumed its equityaward plans and its outstanding equity awards as of the Acquisition Date. SolarCity’s outstanding equity awards were converted into equity awards to acquireour common stock in share amounts and prices based on the Exchange Ratio, with the equity awards retaining the same vesting and other terms andconditions as in effect immediately prior to the acquisition. The vesting and other terms and conditions of the assumed equity awards are substantially thesame as those of the 2010 Plan.As of December 31, 2018, 9,089,194 shares were reserved and available for issuance under the 2010 Plan.The following table summarizes our stock option and RSU activity: Stock Options RSUs Weighted- Weighted- Weighted- Average Aggregate Average Average Remaining Intrinsic Grant Number of Exercise Contractual Value Number Date Fair Options Price Life (Years) (Billions) of RSUs Value Balance, December 31, 2017 10,881,025 $105.56 4,689,310 $265.43 Granted 22,535,566 $346.56 3,043,155 $316.46 Exercised or released (1,386,509) $120.40 (1,724,395) $258.51 Cancelled (822,228) $315.48 (1,349,156) $278.10 Balance, December 31, 2018 31,207,854 $273.40 7.6 $2.25 4,658,914 $294.63 Vested and expected to vest, December 31, 2018 15,312,577 $206.44 6.4 $2.07 4,656,864 $294.62 Exercisable and vested, December 31, 2018 7,877,652 $83.45 3.9 $1.99 The weighted-average grant date fair value of RSUs in the years ended December 31, 2018, 2017, and 2016 was $316.46, $308.71 and $202.59,respectively. The aggregate release date fair value of RSUs in the years ended December 31, 2018, 2017 and 2016 was $545.6 million, $491.0 million and$203.9 million, respectively.The aggregate intrinsic value of options exercised in the years ended December 31, 2018, 2017, and 2016 was $293.2 million, $544.1 million and$1.68 billion, respectively.121 Fair Value AssumptionsWe use the fair value method in recognizing stock-based compensation expense. Under the fair value method, we estimate the fair value of each stockoption award with service or service and performance conditions and the ESPP on the grant date generally using the Black-Scholes option pricing model andthe weighted-average assumptions in the following table: Year Ended December 31, 2018 2017 2016 Risk-free interest rate: Stock options 2.5% 1.8% 1.5%ESPP 2.0% 1.1% 0.6%Expected term (in years): Stock options 4.7 5.1 6.2 ESPP 0.5 0.5 0.5 Expected volatility: Stock options 42% 42% 47%ESPP 43% 35% 41%Dividend yield: Stock options 0.0% 0.0% 0.0%ESPP 0.0% 0.0% 0.0%Grant date fair value per share: Stock options $121.92 $122.25 $98.70 ESPP $84.37 $75.05 $51.31 The fair value of RSUs with service or service and performance conditions is measured on the grant date based on the closing fair market value of ourcommon stock. The risk-free interest rate is based on the U.S. Treasury yield for zero-coupon U.S. Treasury notes with maturities approximating each grant’sexpected life. Prior to the fourth quarter of 2017, given our then limited history with employee grants, we used the “simplified” method in estimating theexpected term of our employee grants; the simplified method utilizes the average of the time-to-vesting and the contractual life of the employee grant.Beginning with the fourth quarter of 2017, we use our historical data in estimating the expected term of our employee grants. The expected volatility is basedon the average of the implied volatility of publicly traded options for our common stock and the historical volatility of our common stock.122 2018 CEO Performance AwardIn March 2018, our stockholders approved the Board of Directors’ grant of 20,264,042 stock option awards to our CEO (the “2018 CEO PerformanceAward”). The 2018 CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operationalmilestones (performance conditions) and market conditions, assuming continued employment either as the CEO or as both Executive Chairman and ChiefProduct Officer and service through each vesting date. Each of the 12 vesting tranches of the 2018 CEO Performance Award will vest upon certification bythe Board of Directors that both (i) the market capitalization milestone for such tranche, which begins at $100 billion for the first tranche and increases byincrements of $50 billion thereafter, and (ii) any one of the following eight operational milestones focused on revenue or eight operational milestonesfocused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters on an annualized basis. Adjusted EBITDA is defined as netincome (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation and amortization and stock-based compensation. Total Annualized Revenue(in billions) Annualized Adjusted EBITDA(in billions)$20.0 $1.5$35.0 $3.0$55.0 $4.5$75.0 $6.0$100.0 $8.0$125.0 $10.0$150.0 $12.0$ 175.0 $14.0 As of December 31, 2018, the following operational milestones were considered probable of achievement: •Total revenue of $20.0 billion; •Adjusted EBITDA of $1.5 billion; and •Adjusted EBITDA of $3.0 billion.Stock-based compensation expense associated with the 2018 CEO Performance Award is recognized over the longer of the expected achievementperiod for each pair of market capitalization or operational milestones, beginning at the point in time when the relevant operational milestone is consideredprobable of being met. If additional operational milestones become probable, stock-based compensation expense will be recorded in the period it becomesprobable including cumulative catch-up expense for the service provided since the grant date. The market capitalization milestone period and the valuationof each tranche are determined using a Monte Carlo simulation and is used as the basis for determining the expected achievement period. The probability ofmeeting an operational milestone is based on a subjective assessment of our future financial projections. Even though no tranches of the 2018 CEOPerformance Award vest unless a market capitalization and a matching operational milestone are both achieved, stock-based compensation expense isrecognized only when an operational milestone is considered probable of achievement regardless of how much additional market capitalization must beachieved in order for a tranche to vest. At our current market capitalization, even the first tranche of the 2018 CEO Performance Award will not vest unlessour market capitalization were to approximately double from the current level and stay at that increased level for a sustained period of time. Additionally,stock-based compensation represents a non-cash expense and is recorded as a selling, general, and administrative operating expense in our consolidatedstatement of operations.As of December 31, 2018, we had $598.0 million of total unrecognized stock-based compensation expense for the operational milestones that wereconsidered probable of achievement, which will be recognized over a weighted-average period of 3.1 years. As of December 31, 2018, we had unrecognizedstock-based compensation expense of $1.51 billion for the operational milestones that were considered not probable of achievement. From March 21, 2018,when the grant was approved by our stockholders, through December 31, 2018, we recorded stock-based compensation expense of $174.9 million related tothe 2018 CEO Performance Award.123 2014 Performance-Based Stock Option AwardsIn 2014, to create incentives for continued long-term success beyond the Model S program and to closely align executive pay with our stockholders’interests in the achievement of significant milestones by us, the Compensation Committee of our Board of Directors granted stock option awards to certainemployees (excluding our CEO) to purchase an aggregate of 1,073,000 shares of our common stock. Each award consisted of the following four vestingtranches with the vesting schedule based entirely on the attainment of the future performance milestones, assuming continued employment and servicethrough each vesting date: •1/4th of each award vests upon completion of the first Model X production vehicle; •1/4th of each award vests upon achieving aggregate production of 100,000 vehicles in a trailing 12-month period; •1/4th of each award vests upon completion of the first Model 3 production vehicle; and •1/4th of each award vests upon achieving an annualized gross margin of greater than 30% for any three-year period.As of December 31, 2018, the following performance milestones had been achieved: •Completion of the first Model X production vehicle; •Completion of the first Model 3 production vehicle; and •Aggregate production of 100,000 vehicles in a trailing 12-month period.We begin recognizing stock-based compensation expense as each performance milestone becomes probable of achievement. As of December 31,2018, we had unrecognized stock-based compensation expense of $10.9 million for the performance milestone that was considered not probable ofachievement. For the year ended December 31, 2018, we did not record any additional stock-based compensation related to these awards. For the years endedDecember 2017 and 2016, we recorded stock-based compensation expense of $6.8 million and $25.3 million, respectively, related to these awards.2012 CEO Performance AwardIn August 2012, our Board of Directors granted 5,274,901 stock option awards to our CEO (the “2012 CEO Performance Award”). The 2012 CEOPerformance Award consists of 10 vesting tranches with a vesting schedule based entirely on the attainment of both performance conditions and marketconditions, assuming continued employment and service through each vesting date. Each vesting tranche requires a combination of a pre-determinedperformance milestone and an incremental increase in our market capitalization of $4.00 billion, as compared to our initial market capitalization of$3.20 billion at the time of grant. As of December 31, 2018, the market capitalization conditions for all of the vesting tranches and the following performancemilestones had been achieved: •Successful completion of the Model X alpha prototype; •Successful completion of the Model X beta prototype; •Completion of the first Model X production vehicle; •Aggregate production of 100,000 vehicles; •Successful completion of the Model 3 alpha prototype; •Successful completion of the Model 3 beta prototype; •Completion of the first Model 3 production vehicle; •Aggregate production of 200,000 vehicles; and •Aggregate production of 300,000 vehicles.124 We begin recognizing stock-based compensation expense as each milestone becomes probable of achievement. As of December 31, 2018, we hadunrecognized stock-based compensation expense of $5.7 million for the performance milestone that was considered not probable of achievement. For theyears ended December 31, 2018, 2017 and 2016, we recorded stock-based compensation expense of $0.1 million, $5.1 million and $15.8 million,respectively, related to the 2012 CEO Grant.Our CEO earns a base salary that reflects the currently applicable minimum wage requirements under California law, and he is subject to income taxesbased on such base salary. However, he has never accepted and currently does not accept his salary.Summary Stock-Based Compensation InformationThe following table summarizes our stock-based compensation expense by line item in the consolidated statements of operations (in thousands): Year Ended December 31, 2018 2017 2016 Cost of revenues $85,742 $43,845 $30,400 Research and development 261,079 217,616 154,632 Selling, general and administrative 398,326 205,299 149,193 Restructuring and other 3,877 — — Total $749,024 $466,760 $334,225 We realized no income tax benefit from stock option exercises in each of the periods presented due to cumulative losses and valuation allowances.As of December 31, 2018, we had $1.57 billion of total unrecognized stock-based compensation expense related to non-performance awards, which will berecognized over a weighted-average period of 3.0 years.ESPPOur employees are eligible to purchase our common stock through payroll deductions of up to 15% of their eligible compensation, subject to anyplan limitations. The purchase price would be 85% of the lower of the fair market value on the first and last trading days of each six-month offering period.During the years ended December 31, 2018, 2017 and 2016, we issued 399,936, 370,173 and 321,788 shares under the ESPP for $108.8 million,$71.0 million and $51.7 million, respectively. There were 2,023,954 shares available for issuance under the ESPP as of December 31, 2018. Note 16 – Income TaxesA provision for income taxes of $57.8 million, $31.5 million and $26.7 million has been recognized for the years ended December 31, 2018, 2017and 2016, respectively, related primarily to our subsidiaries located outside of the U.S. Our loss before provision for income taxes for the years endedDecember 31, 2018, 2017 and 2016 was as follows (in thousands): Year Ended December 31, 2018 2017 2016 Domestic $412,133 $993,113 $130,718 Noncontrolling interest and redeemable noncontrolling interest 86,491 279,178 98,132 Foreign 506,121 936,741 517,498 Loss before income taxes $1,004,745 $2,209,032 $746,348 125 The components of the provision for income taxes for the years ended December 31, 2018, 2017 and 2016 consisted of the following (in thousands): Year Ended December 31, 2018 2017 2016 Current: Federal $(901) $(9,552) $— State 2,792 2,029 568 Foreign 23,622 42,715 53,962 Total current 25,513 35,192 54,530 Deferred: Federal — — — State — — — Foreign 32,324 (3,646) (27,832)Total deferred 32,324 (3,646) (27,832)Total provision for income taxes $57,837 $31,546 $26,698 On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law making significant changes to the Internal Revenue Code.Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transitionof U.S. international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation offoreign earnings. We were required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring our U.S. deferred tax assetsand liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Tax Act did not give rise to any material impact on theconsolidated balance sheets and consolidated statements of operations due to our historical worldwide loss position and the full valuation allowance on ournet U.S. deferred tax assets.In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications ofthe Tax Cuts and Jobs Act (“SAB 118”), which allowed us to record provisional amounts during a measurement period not to extend beyond one year fromthe enactment date. As such, in accordance with SAB 118, we completed our analysis during the fourth quarter of 2018 considering current legislation andguidance resulting in no material adjustments from the provisional amounts recorded during the prior year.126 Deferred tax assets (liabilities) as of December 31, 2018 and 2017 consisted of the following (in thousands): December 31, December 31, 2018 2017 Deferred tax assets: Net operating loss carry-forwards $1,759,716 $1,575,952 Research and development credits 376,556 306,808 Other tax credits 127,813 117,997 Deferred revenue 155,757 200,531 Inventory and warranty reserves 165,262 74,578 Stock-based compensation 102,256 96,916 Investment in certain financing funds — 24,471 Accruals and others 28,295 26,416 Total deferred tax assets 2,715,655 2,423,669 Valuation allowance (1,805,648) (1,843,713)Deferred tax assets, net of valuation allowance 910,007 579,956 Deferred tax liabilities: Depreciation and amortization (860,611) (537,613)Other (23,850) (18,734)Investment in certain financing funds (33,493) — Total deferred tax liabilities (917,954) (556,347)Deferred tax liabilities, net of valuation allowance and deferred tax assets $(7,947) $23,609 As of December 31, 2018, we recorded a valuation allowance of $1.81 billion for the portion of the deferred tax asset that we do not expect to berealized. The valuation allowance on our net deferred taxes decreased by $38.1 million, increased by $821.0 million, and increased by $354.3 million duringthe years ended December 31, 2018, 2017 and 2016, respectively. The changes in valuation allowance are primarily due to additional U.S. deferred tax assetsand liabilities incurred in the respective year. The 2017 additional U.S. deferred tax assets are net of re-measurement from 35% to 21% as a result of the TaxAct. There have been no material releases of the valuation allowance. Management believes that based on the available information, it is more likely than notthat the U.S. deferred tax assets will not be realized, such that a full valuation allowance is required against all U.S. deferred tax assets. We have net $30.2million of deferred tax assets in foreign jurisdictions, which management believes are more-likely-than-not to be fully realized given the expectation offuture earnings in these jurisdictions. 127 The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2018, 2017 and 2016 wasas follows (in thousands): Year Ended December 31, 2018 2017 2016 Tax at statutory federal rate $(210,996) $(773,162) $(261,222)State tax, net of federal benefit 2,792 2,029 568 Nondeductible expenses 65,375 30,138 26,547 Excess tax benefits related to stock based compensation (1) (43,977) (1,013,196) — Foreign income rate differential 160,370 364,699 206,470 U.S. tax credits (79,565) (109,501) (162,865)Noncontrolling interests and redeemable noncontrolling interests adjustment 31,858 65,920 21,964 Effect of U.S. tax law change (2) — 722,646 — Bargain in purchase gain — 20,211 (31,055)Other reconciling items 960 3,178 785 Change in valuation allowance 131,020 718,584 225,506 Provision for income taxes $57,837 $31,546 $26,698(1)As of January 1, 2017, upon the adoption of ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, excess tax benefitsfrom share-based award activity incurred from the prior and current years are reflected as a reduction of the provision for income taxes. The excess taxbenefits result in an increase to our gross U.S. deferred tax assets that is offset by a corresponding increase to our valuation allowance.(2)Due to the Tax Act, our U.S. deferred tax assets and liabilities as of December 31, 2017 were re-measured from 35% to 21%. The change in tax rateresulted in a decrease to our gross U.S. deferred tax assets which is offset by a corresponding decrease to our valuation allowance.As of December 31, 2018, we had $7.30 billion of federal and $5.37 billion of state net operating loss carry-forwards available to offset future taxableincome, which will not begin to significantly expire until 2024 for federal and 2028 for state purposes. A portion of these losses were generated by SolarCityprior to our acquisition in 2016 and, therefore, are subject to change of control provisions, which limit the amount of acquired tax attributes that can beutilized in a given tax year. We do not expect these change of control limitations to significantly impact our ability to utilize these attributes.As of December 31, 2018, we had research and development tax credits of $256.1 million and $276.2 million for federal and state income taxpurposes, respectively. If not utilized, the federal research and development tax credits will expire in various amounts beginning in 2024. However, the stateresearch and development tax credits can be carried forward indefinitely. In addition, we have other general business tax credits of $126.8 million for federalincome tax purposes, which will not begin to significantly expire until 2033.Collectively, we had no foreign earnings as of December 31, 2018 and therefore was not subject to the mandatory repatriation tax provisions of theTax Act. However, some of our foreign subsidiaries do have accumulated earnings. No deferred tax liabilities for foreign withholding taxes have beenrecorded relating to the earnings of our foreign subsidiaries since all such earnings are intended to be indefinitely reinvested. The amount of theunrecognized deferred tax liability associated with these earnings is immaterial.Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an“ownership change”, as defined in Section 382 of the Internal Revenue Code. We have determined that no significant limitation would be placed on theutilization of our net operating loss and tax credit carry-forwards due to prior ownership changes.128 Uncertain Tax PositionsThe changes to our gross unrecognized tax benefits were as follows (in thousands): December 31, 2015 $99,127 Increases in balances related to prior year tax positions 28,677 Increases in balances related to current year tax positions 62,805 Assumed uncertain tax positions through acquisition 13,327 December 31, 2016 203,936 Decrease in balances related to prior year tax positions (31,493)Increases in balances related to current year tax positions 84,352 Change in balances related to effect of U.S. tax law change (58,050)December 31, 2017 198,745 Decrease in balances related to prior year tax positions (6,347)Increases in balances related to current year tax positions 60,960 December 31, 2018 $253,357 As of December 31, 2018, accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and wereimmaterial. Unrecognized tax benefits of $243.8 million, if recognized, would not affect our effective tax rate since the tax benefits would increase a deferredtax asset that is currently fully offset by a full valuation allowance.We file income tax returns in the U.S., California and various state and foreign jurisdictions. We are currently under examination by the IRS for theyears 2015 and 2016. Additional tax years within the period 2004 to 2017 remain subject to examination for federal income tax purposes, and tax years 2004to 2017 remain subject to examination for California income tax purposes. All net operating losses and tax credits generated to date are subject to adjustmentfor U.S. federal and California income tax purposes. Tax years 2008 to 2017 remain subject to examination in other U.S. state and foreign jurisdictions.The potential outcome of the current examination could result in a change to unrecognized tax benefits within the next twelve months. However, wecannot reasonably estimate possible adjustments at this time. The U.S. Tax Court issued a decision in Altera Corp v. Commissioner related to the treatment of stock-based compensation expense in a cost-sharingarrangement. As this decision can be overturned upon appeal, we have not recorded any impact as of December 31, 2018. In addition, any potential taxbenefits would increase our U.S. deferred tax asset, which is currently offset with a full valuation allowance. Note 17 – Commitments and ContingenciesNon-Cancellable LeasesWe have entered into various non-cancellable operating lease agreements for certain of our offices, manufacturing and warehouse facilities, retail andservice locations, equipment, vehicles, solar energy systems and Supercharger sites, throughout the world. Included within the lease commitment table beloware payments due under operating leases that have been accounted for as build-to-suit lease arrangements, which are included in property, plant andequipment on the consolidated balance sheets. Rent expense for the years ended December 31, 2018, 2017, and 2016 was $182.6 million, $177.7 million and$116.8 million, respectively.We have entered into various agreements to lease equipment under capital leases up to 60 months. The equipment under the leases are collateral forthe lease obligations and are included within property, plant and equipment on the consolidated balance sheets.129 Future minimum commitments for leases as of December 31, 2018 were as follows (in thousands): Operating Capital Leases Leases 2019 $275,654 $416,952 2020 256,931 503,545 2021 230,406 506,197 2022 182,911 23,828 2023 157,662 4,776 Thereafter 524,590 5,938 Total minimum lease payments $1,628,154 1,461,236 Less: Amounts representing interest not yet incurred 122,340 Present value of capital lease obligations 1,338,896 Less: Current portion 345,714 Long-term portion of capital lease obligations $993,182 Build-to-Suit Lease Arrangement in Buffalo, New YorkWe have a build-to-suit lease arrangement with the Research Foundation for the State University of New York (the “SUNY Foundation”) where theSUNY Foundation will construct a solar cell and panel manufacturing facility, referred to as Gigafactory 2, with our participation in the design andconstruction, install certain utilities and other improvements and acquire certain manufacturing equipment designated by us to be used in the manufacturingfacility. The SUNY Foundation covers (i) construction costs related to the manufacturing facility up to $350.0 million, (ii) the acquisition andcommissioning of the manufacturing equipment in an amount up to $274.7 million and (iii) $125.3 million for additional specified scope costs, in cases (i)and (ii) only, subject to the maximum funding allocation from the State of New York; and we are responsible for any construction or equipment costs inexcess of such amounts. The SUNY Foundation will own the manufacturing facility and the manufacturing equipment purchased by the SUNY Foundation.Following completion of the manufacturing facility, we will lease the manufacturing facility and the manufacturing equipment owned by the SUNYFoundation for an initial period of 10 years, with an option to renew, for $2.00 per year plus utilities. During the three months ended March 31, 2018, webegan production at the manufacturing facility, although construction has not been fully completed as of December 31, 2018.Under the terms of the build-to-suit lease arrangement, we are required to achieve specific operational milestones during the initial lease term; whichinclude employing a certain number of employees at the manufacturing facility, within western New York and within the State of New York within specifiedperiods following the completion of the manufacturing facility. We are also required to spend or incur $5.00 billion in combined capital, operationalexpenses and other costs in the State of New York within 10 years following the achievement of full production. On an annual basis during the initial leaseterm, as measured on each anniversary of the commissioning of the manufacturing facility, if we fail to meet these specified investment and job creationrequirements, then we would be obligated to pay a $41.2 million “program payment” to the SUNY Foundation for each year that we fail to meet theserequirements. Furthermore, if the arrangement is terminated due to a material breach by us, then additional amounts might become payable by us.The non-cash investing and financing activities related to the arrangement during the years ended December 31, 2018 and 2017 amounted to$8.0 million and $86.1 million. The non-cash investing and financing activities related to the arrangement from the Acquisition Date through December 31,2016 amounted to $5.6 million.Environmental LiabilitiesIn connection with our factory located in Fremont, California, we are obligated to pay for the remediation of certain environmental conditionsexisting at the time we purchased the property from New United Motor Manufacturing, Inc. (“NUMMI”). In particular, we are responsible for the first$15.0 million of remediation costs, any remediation costs in excess of $30.0 million and any remediation costs incurred after 10 years from the purchase date.NUMMI is responsible for any remediation costs between $15.0 million and $30.0 million for up to 10 years after the purchase date.130 Legal ProceedingsSecurities Litigation Relating to SolarCity’s Financial Statements and GuidanceOn March 28, 2014, a purported stockholder class action was filed in the U.S. District Court for the Northern District of California against SolarCityand two of its officers. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages and other relief on behalf of apurported class of purchasers of SolarCity’s securities from March 6, 2013 to March 18, 2014. After a series of amendments to the original complaint, theDistrict Court dismissed the amended complaint and entered a judgment in our favor on August 9, 2016. The plaintiffs filed a notice of appeal, and onDecember 4, 2017, the Court heard oral argument on the appeal. On March 8, 2018, the Court upheld the District Court ruling of dismissal and judgment inour favor. The case is concluded.Securities Litigation Relating to the SolarCity AcquisitionBetween September 1, 2016 and October 5, 2016, seven lawsuits were filed in the Court of Chancery of the State of Delaware by purportedstockholders of Tesla challenging our acquisition of SolarCity. Following consolidation, the lawsuit names as defendants the members of Tesla’s board ofdirectors as then constituted and alleges, among other things, that board members breached their fiduciary duties in connection with the acquisition. Thecomplaint asserts both derivative claims and direct claims on behalf of a purported class and seeks, among other relief, unspecified monetary damages,attorneys’ fees, and costs. On January 27, 2017, defendants filed a motion to dismiss the operative complaint. Rather than respond to the defendants’ motion,the plaintiffs filed an amended complaint. On March 17, 2017, defendants filed a motion to dismiss the amended complaint. On December 13, 2017, theCourt heard oral argument on the motion. On March 28, 2018, the Court denied defendants’ motion to dismiss. Defendants filed a request for interlocutoryappeal, but the Delaware Supreme Court denied that request, electing not to hear an appeal at this early stage of the case. Defendants filed their answer onMay 18, 2018. The parties are proceeding with discovery. The case is set for trial in March 2020.These plaintiffs and others filed parallel actions in the U.S. District Court for the District of Delaware on April 21, 2017. Those actions have beenconsolidated and are stayed pending the Chancery Court litigation. They include claims for violations of the federal securities laws and breach of fiduciaryduties by Tesla’s board of directors. That action is stayed pending the Chancery Court litigation.We believe that claims challenging the SolarCity acquisition are without merit and intend to defend against them vigorously. We are unable toestimate the possible loss or range of loss, if any, associated with these claims.Securities Litigation Relating to Production of Model 3 VehiclesOn October 10, 2017, a purported stockholder class action was filed in the U.S. District Court for the Northern District of California against Tesla, twoof its current officers, and a former officer. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages and otherrelief on behalf of a purported class of purchasers of Tesla securities from May 4, 2016 to October 6, 2017. The lawsuit claims that Tesla supposedly madematerially false and misleading statements regarding the Company’s preparedness to produce Model 3 vehicles. Plaintiffs filed an amended complaint onMarch 23, 2018, and defendants filed a motion to dismiss on May 25, 2018. The court granted defendant’s motion to dismiss with leave to amend. Plaintiffsfiled their amended complaint on September 28, 2018. We will file a motion to dismiss the amended complaint on February 15, 2019. The hearing on themotion to dismiss is set for March 1, 2019. We believe that the claims are without merit and intend to defend against this lawsuit vigorously. We are unableto estimate the possible loss or range of loss, if any, associated with this lawsuit.131 On October 26, 2018, in a similar action, a purported stockholder class action was filed in the Superior Court of California in Santa Clara Countyagainst Tesla, Elon Musk and seven initial purchasers in an offering of debt securities by Tesla in August 2017. The complaint alleges misrepresentationsmade by Tesla regarding the number of Model 3 vehicles Tesla expected to produce by the end of 2017 in connection with such offering, and seeksunspecified compensatory damages and other relief on behalf of a purported class of purchasers of Tesla securities in such offering. Tesla thereafter removedthe case to federal court. On January 22, 2019, plaintiff abandoned its effort to proceed in state court, instead filing an amended complaint against Tesla,Elon Musk and seven initial purchasers in the debt offering before the same judge in the U.S. District Court for the Northern District of California who ishearing the above-referenced earlier filed federal court case. On February 5, 2019, the Court stayed this new case pending a ruling on the motion to dismissthe complaint in the above earlier filed case. We believe that the claims are without merit and intend to defend against this lawsuit vigorously. We are unableto estimate the possible loss or range of loss, if any, associated with this lawsuit.Litigation Relating to 2018 CEO Performance AwardOn June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Mr. Musk andthe members of Tesla’s board of directors as then constituted, alleging that such board members breached their fiduciary duties by approving the stock-basedcompensation plan. The complaint seeks, among other things, monetary damages and rescission or reformation of the stock-based compensation plan. OnAugust 31, 2018, defendants filed a motion to dismiss the complaint; plaintiff filed its opposition brief on November 1, 2018 and defendants filed a replybrief on December 13, 2018. The hearing on the motion to dismiss is set for May 9, 2019. We believe the claims asserted in this lawsuit are without meritand intend to defend against them vigorously.Securities Litigation related to Potential Going Private TransactionBetween August 10, 2018 and September 6, 2018, nine purported stockholder class actions were filed against Tesla and Elon Musk in connectionwith Elon Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private. All of the suits are now pending in the United States DistrictCourt for the Northern District of California. Although the complaints vary in certain respects, they each purport to assert claims for violations of federalsecurities laws related to Mr. Musk’s statement and seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers ofTesla’s securities. Plaintiffs filed their consolidated complaint on January 16, 2019 and added as defendants the members of Tesla’s board ofdirectors. Defendants plan to file a motion to dismiss the complaint on or before March 7, 2019. The hearing on the motion to dismiss is tentatively set forJune 20, 2019. We believe that the claims have no merit and intend to defend against them vigorously. We are unable to estimate the potential loss, or rangeof loss, associated with these claims.Between October 17, 2018 and November 9, 2018, five derivative lawsuits were filed in the Delaware Court of Chancery against Mr. Musk and themembers of Tesla’s board of directors as then constituted in relation to statements made and actions connected to a potential going private transaction. Thesecases have been stayed pending resolution of the stockholder class action. In addition to these cases, on October 25, 2018, another derivative lawsuit wasfiled in federal court in Delaware against Mr. Musk and the members of the Tesla board of directors as then constituted, and the parties have agreed to alsostay this case pending resolution of the stockholder class action; the parties’ proposed stipulation regarding the stay is pending with the Court. We believethat the claims have no merit and intend to defend against them vigorously. The Company is unable to estimate the potential loss, or range of loss, associatedwith these claims.Settlement with SEC related to Potential Going Private TransactionOn October 16, 2018, the U.S. District Court for the Southern District of New York entered a final judgment approving the terms of a settlement filedwith the Court on September 29, 2018, in connection with the actions taken by the U.S. Securities and Exchange Commission (the “SEC”) relating to ElonMusk’s prior statement that he was considering taking Tesla private. Without admitting or denying any of the SEC’s allegations, and with no restriction onMr. Musk’s ability to serve as an officer or director on the Board (other than as its Chair), among other things, we and Mr. Musk paid civil penalties of $20million each and agreed that an independent director will serve as Chair of the Board for at least three years, and we appointed such an independent Chair ofthe Board and two additional independent directors to the Board, and further enhanced our disclosure controls and other corporate governance-relatedmatters. 132 Certain Investigations and Other MattersWe receive requests for information from regulators and governmental authorities, such as the National Highway Traffic Safety Administration, theNational Transportation Safety Board, the SEC, the Department of Justice (“DOJ”) and various state, federal and international agencies. We routinelycooperate with such regulatory and governmental requests.In particular, the SEC has issued subpoenas to Tesla in connection with (a) Mr. Musk’s prior statement that he was considering taking Tesla privateand (b) certain projections that we made for Model 3 production rates during 2017 and other public statements relating to Model 3 production. The DOJ hasalso asked us to voluntarily provide it with information about each of these matters and is investigating. Aside from the settlement with the SEC relating toMr. Musk’s statement that he was considering taking Tesla private, there have not been any developments in these matters that we deem to be material, and toour knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. As is our normal practice, we have beencooperating and will continue to cooperate with government authorities. We cannot predict the outcome or impact of any ongoing matters. Should thegovernment decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operation, prospects,cash flows, and financial position.We are also subject to various other legal proceedings and claims that arise from the normal course of business activities. If an unfavorable ruling ordevelopment were to occur, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financialposition and brand.Indemnification and Guaranteed ReturnsWe are contractually obligated to compensate certain fund investors for any losses that they may suffer in certain limited circumstances resultingfrom reductions in U.S. Treasury grants or ITCs. Generally, such obligations would arise as a result of reductions to the value of the underlying solar energysystems as assessed by the U.S. Treasury Department for purposes of claiming U.S. Treasury grants or as assessed by the IRS for purposes of claiming ITCs orU.S. Treasury grants. For each balance sheet date, we assess and recognize, when applicable, a distribution payable for the potential exposure from thisobligation based on all the information available at that time, including any guidelines issued by the U.S. Treasury Department on solar energy systemvaluations for purposes of claiming U.S. Treasury grants and any audits undertaken by the IRS. We believe that any payments to the fund investors in excessof the amounts already recognized by us, which were immaterial, for this obligation are not probable based on the facts known at the filing date.The maximum potential future payments that we could have to make under this obligation would depend on the difference between the fair values ofthe solar energy systems sold or transferred to the funds as determined by us and the values that the U.S. Treasury Department would determine as fair valuefor the systems for purposes of claiming U.S. Treasury grants or the values the IRS would determine as the fair value for the systems for purposes of claimingITCs or U.S. Treasury grants. We claim U.S. Treasury grants based on guidelines provided by the U.S. Treasury department and the statutory regulations fromthe IRS. We use fair values determined with the assistance of independent third-party appraisals commissioned by us as the basis for determining the ITCsthat are passed-through to and claimed by the fund investors. Since we cannot determine future revisions to U.S. Treasury Department guidelines governingsolar energy system values or how the IRS will evaluate system values used in claiming ITCs or U.S. Treasury grants, we are unable to reliably estimate themaximum potential future payments that it could have to make under this obligation as of each balance sheet date.We are eligible to receive certain state and local incentives that are associated with renewable energy generation. The amount of incentives that canbe claimed is based on the projected or actual solar energy system size and/or the amount of solar energy produced. We also currently participate in onestate’s incentive program that is based on either the fair market value or the tax basis of solar energy systems placed in service. State and local incentivesreceived are allocated between us and fund investors in accordance with the contractual provisions of each fund. We are not contractually obligated toindemnify any fund investor for any losses they may incur due to a shortfall in the amount of state or local incentives actually received.Our lease pass-through financing funds have a one-time lease payment reset mechanism that occurs after the installation of all solar energy systems ina fund. As a result of this mechanism, we may be required to refund master lease prepayments previously received from investors. Any refunds of master leaseprepayments would reduce the lease pass-through financing obligation.133 Letters of CreditAs of December 31, 2018, we had $219.6 million of unused letters of credit outstanding. Note 18 – Variable Interest Entity ArrangementsWe have entered into various arrangements with investors to facilitate the funding and monetization of our solar energy systems and vehicles. Inparticular, our wholly owned subsidiaries and fund investors have formed and contributed cash and assets into various financing funds and entered intorelated agreements. We have determined that the funds are variable interest entities (“VIEs”) and we are the primary beneficiary of these VIEs by reference tothe power and benefits criterion under ASC 810, Consolidation. We have considered the provisions within the agreements, which grant us the power tomanage and make decisions that affect the operation of these VIEs, including determining the solar energy systems or vehicles and the associated customercontracts to be sold or contributed to these VIEs, redeploying solar energy systems or vehicles and managing customer receivables. We consider that therights granted to the fund investors under the agreements are more protective in nature rather than participating.As the primary beneficiary of these VIEs, we consolidate in the financial statements the financial position, results of operations and cash flows ofthese VIEs, and all intercompany balances and transactions between us and these VIEs are eliminated in the consolidated financial statements. Cashdistributions of income and other receipts by a fund, net of agreed upon expenses, estimated expenses, tax benefits and detriments of income and loss and taxcredits, are allocated to the fund investor and our subsidiary as specified in the agreements.Generally, our subsidiary has the option to acquire the fund investor’s interest in the fund for an amount based on the market value of the fund or theformula specified in the agreements.Upon the sale or liquidation of a fund, distributions would occur in the order and priority specified in the agreements.Pursuant to management services, maintenance and warranty arrangements, we have been contracted to provide services to the funds, such asoperations and maintenance support, accounting, lease servicing and performance reporting. In some instances, we have guaranteed payments to the fundinvestors as specified in the agreements. A fund’s creditors have no recourse to our general credit or to that of other funds. None of the assets of the funds hadbeen pledged as collateral for their obligations.134 The aggregate carrying values of the VIEs’ assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidatedbalance sheets were as follows (in thousands): December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $75,203 $55,425 Restricted cash 130,927 33,656 Accounts receivable, net 18,702 18,204 Prepaid expenses and other current assets 10,262 9,018 Total current assets 235,094 116,303 Operating lease vehicles, net 155,439 337,089 Solar energy systems, leased and to be leased, net 5,116,728 5,075,321 Restricted cash, net of current portion 65,262 36,999 Other assets 55,554 29,555 Total assets $5,628,077 $5,595,267 Liabilities Current liabilities Accounts payable $32 $32 Accrued liabilities and other 132,774 51,652 Deferred revenue 21,345 59,412 Customer deposits — 726 Current portion of long-term debt and capital leases 662,988 196,531 Total current liabilities 817,139 308,353 Deferred revenue, net of current portion 177,451 323,919 Long-term debt and capital leases, net of current portion 1,237,707 625,934 Other long-term liabilities 26,400 30,536 Total liabilities $2,258,697 $1,288,742 Note 19 – Lease Pass-Through Financing ObligationThrough December 31, 2018, we had entered into eight transactions referred to as “lease pass-through fund arrangements”. Under these arrangements,our wholly owned subsidiaries finance the cost of solar energy systems with investors through arrangements contractually structured as master leases for aninitial term ranging between 10 and 25 years. These solar energy systems are subject to lease or PPAs with customers with an initial term not exceeding25 years. These solar energy systems are included within solar energy systems, leased and to be leased, net on the consolidated balance sheet.The cost of the solar energy systems under lease pass-through fund arrangements as of December 31, 2018 and 2017 was $1.05 billion and$1.09 billion, respectively. The accumulated depreciation on these assets as of December 31, 2018 and 2017 was $66.1 million and $30.9 million,respectively. The total lease pass-through financing obligation as of December 31, 2018 was $111.9 million, of which $61.8 million was classified as acurrent liability. The total lease pass-through financing obligation as of December 31, 2017 was $134.8 million, of which $67.3 million was classified as acurrent liability. Lease pass-through financing obligation is included in accrued liabilities and other for the current portion and other long-term liabilities forthe long-term portion on the consolidated balance sheet.Under a lease pass-through fund arrangement, the investor makes a large upfront payment to the lessor, which is one of our subsidiaries, and in somecases, subsequent periodic payments. We allocate a portion of the aggregate investor payments to the fair value of the assigned ITCs, which is estimated bydiscounting the projected cash flow impact of the ITCs using a market interest rate and is accounted for separately (see Note 2, Summary of SignificantAccounting Policies). We account for the remainder of the investor payments as a borrowing by recording the proceeds received as a lease pass-throughfinancing obligation, which is repaid from the future customer lease payments and any incentive rebates. A portion of the amounts received by the investor isallocated to interest expense using the effective interest rate method.135 The lease pass-through financing obligation is non-recourse once the associated solar energy systems have been placed in-service and the associatedcustomer arrangements have been assigned to the investors. However, we are required to comply with certain financial covenants specified in the contractualagreements, which we had met as of December 31, 2018. In addition, we are responsible for any warranties, performance guarantees, accounting andperformance reporting. Furthermore, we continue to account for the customer arrangements and any incentive rebates in the consolidated financialstatements, regardless of whether the cash is received by us or directly by the investors.As of December 31, 2018, the future minimum master lease payments to be received from investors, for each of the next five years and thereafter, wereas follows (in thousands): 2019 $42,775 2020 42,100 2021 41,147 2022 33,055 2023 26,152 Thereafter 468,490 Total $653,719For two of the lease pass-through fund arrangements, our subsidiaries have pledged its assets to the investors as security for its obligations under thecontractual agreements.Each lease pass-through fund arrangement has a one-time master lease prepayment adjustment mechanism that occurs when the capacity and theplaced-in-service dates of the associated solar energy systems are finalized or on an agreed-upon date. As part of this mechanism, the master lease prepaymentamount is updated, and we may be obligated to refund a portion of a master lease prepayment or entitled to receive an additional master lease prepayment.Any additional master lease prepayments are recorded as an additional lease pass-through financing obligation while any master lease prepayment refundswould reduce the lease pass-through financing obligation. Note 20 – Defined Contribution PlanWe have a 401(k) savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k)savings plan, participating employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. Participants are fullyvested in their contributions. We did not make any contributions to the 401(k) savings plan during the years ended December 31, 2018, 2017 and 2016. Note 21 – Related Party TransactionsRelated party balances were comprised of the following (in thousands): December 31, December 31, 2018 2017 Solar Bonds issued to related parties $100 $100 Convertible senior notes due to related parties $2,674 $2,519 Promissory notes due to related parties $— $100,000 The related party transactions were primarily from debt held by our CEO, SolarCity’s former CEO and SolarCity’s former Chief Technology Officer.During the year ended December 31, 2018, the promissory notes payable to such parties were fully repaid. Refer to Note 13, Long-Term Debt Obligations.Our convertible senior notes are not re-measured at fair value (refer to Note 5, Fair Value of Financial Instruments). As of December 31, 2018 and2017, the unpaid principal balance of convertible senior notes due to related parties is $3.0 million.136 In November 2018, our CEO purchased from us 56,915 shares of our common stock in a private placement at a per share price equal to the lastclosing price of our stock prior to the execution of the purchase agreement for an aggregate $20.0 million. Note 22 – Segment Reporting and Information about Geographic AreasWe have two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The automotive segment includes the design,development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment isalso comprised of services and other, which includes non-warranty after-sales vehicle services, sales of used vehicles, sales of electric vehicle components andsystems to other manufacturers, retail merchandise, and sales by our acquired subsidiaries to third party customers. The energy generation and storagesegment includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products. Our CODM does notevaluate operating segments using asset or liability information. The following table presents revenues and gross margins by reportable segment (inthousands): Year Ended December 31, 2018 2017 2016 Automotive segment Revenues $19,906,024 $10,642,485 $6,818,738 Gross profit $3,851,673 $1,980,759 $1,596,195 Energy generation and storage segment Revenues $1,555,244 $1,116,266 $181,394 Gross profit $190,348 $241,728 $3,062 The following table presents revenues by geographic area based on the sales location of our products (in thousands): Year Ended December 31, 2018 2017 2016 United States $14,871,507 $6,221,439 $4,200,706 China 1,757,147 2,027,062 1,065,255 Netherlands 965,596 330,343 305,184 Norway 812,730 823,081 335,572 Other 3,054,288 2,356,826 1,093,415 Total $21,461,268 $11,758,751 $7,000,132 The following table presents long-lived assets by geographic area (in thousands): December 31, December 31, 2018 2017 United States $16,741,409 $15,587,979 International 860,064 787,033 Total $17,601,473 $16,375,012 137 Note 23 – Restructuring and OtherDuring 2018, we carried-out certain restructuring actions in order to reduce costs and improve efficiency and recognized $36.6 million of employeetermination expenses and estimated losses from sub-leasing a certain facility. The employee termination cash expenses of $27.3 million were substantiallypaid by the end of 2018, while the remaining amounts were non-cash. Also included within restructuring and other activities was $55.2 million of expenses(materially all of which were non-cash) from restructuring the energy generation and storage segment, which comprised of disposals of certain tangible assets,the shortening of the useful life of a trade name intangible asset and a contract termination penalty. In addition, we concluded that a small portion of theIPR&D asset is not commercially feasible. Consequently, we recognized an impairment loss of $13.3 million (see Note 4, Intangible Assets).In October 2018, a final court order was entered approving the terms of a settlement in connection with the SEC’s legal actions relating to ElonMusk’s prior consideration during the third quarter of 2018 of a take-private proposal for Tesla. Consequently, we recognized settlement and legal expensesof $30.1 million in the year ended December 31, 2018 (see Note 17, Commitments and Contingencies). These expenses were substantially paid by the end of2018. Note 24 – Subsequent EventsOn February 3, 2019, we entered into a definitive agreement to acquire Maxwell Technologies, Inc. (“Maxwell”). Pursuant to the definitiveagreement, each issued and outstanding share of Maxwell common stock will be exchanged for a fraction of a share of our common stock equal to the lesserof: (i) $4.75 divided by an average value of one share of our common stock as calculated pursuant to the definitive agreement, and (ii) 0.0193, provided thatcash will be paid in lieu of any fractional shares of our common stock. The closing of the transaction is subject to the successful tender of a specifiedminimum number of Maxwell common stock in an exchange offer to be commenced by our wholly-owned subsidiary, certain regulatory approvals andcustomary closing conditions. Note 25 – Quarterly Results of Operations (Unaudited)The following table presents selected quarterly results of operations data for the years ended December 31, 2018 and 2017 (in thousands, except pershare amounts): Three Months Ended March 31 June 30 September 30 December 31 2018 Total revenues $3,408,751 $4,002,231 $6,824,413 $7,225,873 Gross profit $456,526 $618,930 $1,523,665 $1,442,900 Net (loss) income attributable to common stockholders $(709,551) $(717,539) $311,516 $139,483 Net (loss) income per share of common stock attributable to common stockholders, basic $(4.19) $(4.22) $1.82 $0.81 Net (loss) income per share of common stock attributable to common stockholders, diluted $(4.19) $(4.22) $1.75 $0.78 2017 Total revenues $2,696,270 $2,789,557 $2,984,675 $3,288,249 Gross profit $667,946 $666,615 $449,140 $438,786 Net loss attributable to common stockholders $(330,277) $(336,397) $(619,376) $(675,350)Net loss per share of common stock attributable to common stockholders, basic $(2.04) $(2.04) $(3.70) $(4.01)Net loss per share of common stock attributable to common stockholders, diluted $(2.04) $(2.04) $(3.70) $(4.01) 138 ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENoneITEM 9A.CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresWe conducted an evaluation as of December 31, 2018, under the supervision and with the participation of our management, including our ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon thatevaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2018, our disclosure controls and procedures wereeffective to provide reasonable assurance.During the fourth quarter of 2018, we further enhanced our disclosure controls in accordance with the September 29, 2018 settlement with the SECregarding Elon Musk’s social media posts on August 7, 2018.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financialreporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordancewith authorizations of our management and directors and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effect on the financial statements.Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control – IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our management concluded that ourinternal control over financial reporting was effective as of December 31, 2018.Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of our internal control over financialreporting as of December 31, 2018, as stated in their report which is included herein.Limitations on the Effectiveness of ControlsBecause of inherent limitations, internal control over financial reporting may not prevent or detect misstatements and projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.Changes in Internal Control over Financial ReportingThere was no change in our internal control over financial reporting that occurred during the fourth fiscal quarter of the year ended December 31,2018, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B.OTHER INFORMATIONNone 139 PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this Item 10 of Form 10-K will be included in our 2019 Proxy Statement to be filed with the Securities and ExchangeCommission in connection with the solicitation of proxies for our 2019 Annual Meeting of Stockholders and is incorporated herein by reference. The 2019Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.ITEM 11.EXECUTIVE COMPENSATIONThe information required by this Item 11 of Form 10-K will be included in our 2019 Proxy Statement and is incorporated herein by reference.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required by this Item 12 of Form 10-K will be included in our 2019 Proxy Statement and is incorporated herein by reference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information required by this Item 13 of Form 10-K will be included in our 2019 Proxy Statement and is incorporated herein by reference.ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information required by this Item 14 of Form 10-K will be included in our 2019 Proxy Statement and is incorporated herein by reference.ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES1.Financial statements (see Index to Consolidated Financial Statements in Part II, Item 8 of this report)2.All financial statement schedules have been omitted since the required information was not applicable or was not present in amounts sufficient torequire submission of the schedules, or because the information required is included in the consolidated financial statements or the accompanyingnotes3.The exhibits listed in the following Index to Exhibits are filed or incorporated by reference as part of this report 140 INDEX TO EXHIBITS Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 3.1 Amended and Restated Certificate ofIncorporation of the Registrant. 10-K 001-34756 3.1 March 1, 2017 3.2 Certificate of Amendment to the Amended andRestated Certificate of Incorporation of theRegistrant. 10-K 001-34756 3.2 March 1, 2017 3.3 Amended and Restated Bylaws of the Registrant. 8-K 001-34756 3.2 February 1, 2017 4.1 Specimen common stock certificate of theRegistrant. 10-K 001-34756 4.1 March 1, 2017 4.2 Fifth Amended and Restated Investors’ RightsAgreement, dated as of August 31, 2009, betweenRegistrant and certain holders of the Registrant’scapital stock named therein. S-1 333-164593 4.2 January 29, 2010 4.3 Amendment to Fifth Amended and RestatedInvestors’ Rights Agreement, dated as of May 20,2010, between Registrant and certain holders ofthe Registrant’s capital stock named therein. S-1/A 333-164593 4.2A May 27, 2010 4.4 Amendment to Fifth Amended and RestatedInvestors’ Rights Agreement between Registrant,Toyota Motor Corporation and certain holders ofthe Registrant’s capital stock named therein. S-1/A 333-164593 4.2B May 27, 2010 4.5 Amendment to Fifth Amended and RestatedInvestor’s Rights Agreement, dated as of June 14,2010, between Registrant and certain holders ofthe Registrant’s capital stock named therein. S-1/A 333-164593 4.2C June 15, 2010 4.6 Amendment to Fifth Amended and RestatedInvestor’s Rights Agreement, dated as ofNovember 2, 2010, between Registrant and certainholders of the Registrant’s capital stock namedtherein. 8-K 001-34756 4.1 November 4, 2010 4.7 Waiver to Fifth Amended and Restated Investor’sRights Agreement, dated as of May 22, 2011,between Registrant and certain holders of theRegistrant’s capital stock named therein. S-1/A 333-174466 4.2E June 2, 2011 141 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.8 Amendment to Fifth Amended and RestatedInvestor’s Rights Agreement, dated as of May 30,2011, between Registrant and certain holders ofthe Registrant’s capital stock named therein. 8-K 001-34756 4.1 June 1, 2011 4.9 Sixth Amendment to Fifth Amended and RestatedInvestors’ Rights Agreement, dated as of May 15,2013 among the Registrant, the Elon MuskRevocable Trust dated July 22, 2003 and certainother holders of the capital stock of the Registrantnamed therein. 8-K 001-34756 4.1 May 20, 2013 4.10 Waiver to Fifth Amended and Restated Investor’sRights Agreement, dated as of May 14, 2013,between the Registrant and certain holders of thecapital stock of the Registrant named therein. 8-K 001-34756 4.2 May 20, 2013 4.11 Waiver to Fifth Amended and Restated Investor’sRights Agreement, dated as of August 13, 2015,between the Registrant and certain holders of thecapital stock of the Registrant named therein. 8-K 001-34756 4.1 August 19, 2015 4.12 Waiver to Fifth Amended and Restated Investors’Rights Agreement, dated as of May 18, 2016,between the Registrant and certain holders of thecapital stock of the Registrant named therein. 8-K 001-34756 4.1 May 24, 2016 4.13 Waiver to Fifth Amended and Restated Investors’Rights Agreement, dated as of March 15, 2017,between the Registrant and certain holders of thecapital stock of the Registrant named therein. 8-K 001-34756 4.1 March 17, 2017 4.14 Indenture, dated as of May 22, 2013, by andbetween the Registrant and U.S. Bank NationalAssociation. 8-K 001-34756 4.1 May 22, 2013 4.15 Second Supplemental Indenture, dated as of March5, 2014, by and between the Registrant and U.S.Bank National Association. 8-K 001-34756 4.2 March 5, 2014 4.16 Form of 0.25% Convertible Senior Note DueMarch 1, 2019 (included in Exhibit 4.17). 8-K 001-34756 4.2 March 5, 2014 142 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.17 Third Supplemental Indenture, dated as of March5, 2014, by and between the Registrant and U.S.Bank National Association. 8-K 001-34756 4.4 March 5, 2014 4.18 Form of 1.25% Convertible Senior Note DueMarch 1, 2021 (included in Exhibit 4.19). 8-K 001-34756 4.4 March 5, 2014 4.19 Fourth Supplemental Indenture, dated as ofMarch 22, 2017, by and between the Registrantand U.S. Bank National Association. 8-K 001-34756 4.2 March 22, 2017 4.20 Form of 2.375% Convertible Senior Note DueMarch 15, 2022 (included in Exhibit 4.21). 8-K 001-34756 4.2 March 22, 2017 4.21 Indenture, dated as of August 18, 2017, by andamong the Registrant, SolarCity, and U.S. BankNational Association, as trustee. 8-K 001-34756 4.1 August 23, 2017 4.22 Form of 5.30% Senior Note due August 15, 2025. 8-K 001-34756 4.2 August 23, 2017 4.23 Indenture, dated as of September 30, 2014,between SolarCity and Wells Fargo Bank,National Association 8-K(1) 001-35758 4.1 October 6, 2014 4.24 First Supplemental Indenture, dated as ofNovember 21, 2016, between SolarCity and WellsFargo Bank, National Association, as trustee to theIndenture, dated as of September 30, 2014,between SolarCity and Wells Fargo Bank,National Association, as trustee. 8-K 001-34756 4.2 November 21, 2016 4.25 Indenture, dated as of December 7, 2015, betweenSolarCity and Wells Fargo Bank, NationalAssociation 8-K(1) 001-35758 4.1 December 7, 2015 4.26 First Supplemental Indenture, dated as ofNovember 21, 2016, between SolarCity and WellsFargo Bank, National Association, as trustee to theIndenture, dated as of December 7, 2015, betweenSolarCity and Wells Fargo Bank, NationalAssociation, as trustee. 8-K 001-34756 4.3 November 21, 2016 4.27 Indenture, dated as of October 15, 2014, betweenSolarCity and U.S. Bank National Association, astrustee. S-3ASR(1) 333-199321 4.1 October 15, 2014 143 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.28 Third Supplemental Indenture, dated as of October15, 2014, by and between SolarCity and theTrustee, related to SolarCity’s 3.00% Solar Bonds,Series 2014/3-3. 8-K(1) 001-35758 4.4 October 15, 2014 4.29 Fourth Supplemental Indenture, dated as ofOctober 15, 2014, by and between SolarCity andthe Trustee, related to SolarCity’s 4.00% SolarBonds, Series 2014/4-7 8-K(1) 001-35758 4.5 October 15, 2014 4.30 Seventh Supplemental Indenture, dated as ofJanuary 29, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 3.00% SolarBonds, Series 2015/3-3. 8-K(1) 001-35758 4.4 January 29, 2015 4.31 Eighth Supplemental Indenture, dated as ofJanuary 29, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 4.00% SolarBonds, Series 2015/4-7. 8-K(1) 001-35758 4.5 January 29, 2015 4.32 Ninth Supplemental Indenture, dated as of March9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.00% Solar Bonds,Series 2015/5-5. 8-K(1) 001-35758 4.2 March 9, 2015 4.33 Tenth Supplemental Indenture, dated as of March9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.00% Solar Bonds,Series 2015/6-10. 8-K(1) 001-35758 4.3 March 9, 2015 4.34 Eleventh Supplemental Indenture, dated as ofMarch 9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.75% Solar Bonds,Series 2015/7-15. 8-K(1) 001-35758 4.4 March 9, 2015 4.35 Thirteenth Supplemental Indenture, dated as ofMarch 19, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.60% Solar Bonds,Series 2015/C2-3. 8-K(1) 001-35758 4.3 March 19, 2015 4.36 Fourteenth Supplemental Indenture, dated as ofMarch 19, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C3-5. 8-K(1) 001-35758 4.4 March 19, 2015 144 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.37 Fifteenth Supplemental Indenture, dated as ofMarch 19, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C4-10. 8-K(1) 001-35758 4.5 March 19, 2015 4.38 Sixteenth Supplemental Indenture, dated as ofMarch 19, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C5-15. 8-K(1) 001-35758 4.6 March 19, 2015 4.39 Eighteenth Supplemental Indenture, dated as ofMarch 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C7-3. 8-K(1) 001-35758 4.3 March 26, 2015 4.40 Nineteenth Supplemental Indenture, dated as ofMarch 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C8-5. 8-K(1) 001-35758 4.4 March 26, 2015 4.41 Twentieth Supplemental Indenture, dated as ofMarch 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C9-10. 8-K(1) 001-35758 4.5 March 26, 2015 4.42 Twenty-First Supplemental Indenture, dated as ofMarch 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C10-15. 8-K(1) 001-35758 4.6 March 26, 2015 4.43 Twenty-Fourth Supplemental Indenture, dated asof April 2, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C12-3. 8-K(1) 001-35758 4.3 April 2, 2015 4.44 Twenty-Fifth Supplemental Indenture, dated as ofApril 2, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C13-5. 8-K(1) 001-35758 4.4 April 2, 2015 4.45 Twenty-Sixth Supplemental Indenture, dated as ofApril 2, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C14-10. 8-K(1) 001-35758 4.5 April 2, 2015 145 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.46 Twenty-Eighth Supplemental Indenture, dated asof April 9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C17-3. 8-K(1) 001-35758 4.3 April 9, 2015 4.47 Twenty-Ninth Supplemental Indenture, dated as ofApril 9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C18-5. 8-K(1) 001-35758 4.4 April 9, 2015 4.48 Thirtieth Supplemental Indenture, dated as ofApril 9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C19-10. 8-K(1) 001-35758 4.5 April 9, 2015 4.49 Thirty-First Supplemental Indenture, dated as ofApril 9, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C20-15. 8-K(1) 001-35758 4.6 April 9, 2015 4.50 Thirty-Third Supplemental Indenture, dated as ofApril 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C22-3. 8-K(1) 001-35758 4.3 April 14, 2015 4.51 Thirty-Fourth Supplemental Indenture, dated as ofApril 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C23-5. 8-K(1) 001-35758 4.4 April 14, 2015 4.52 Thirty-Fifth Supplemental Indenture, dated as ofApril 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C24-10. 8-K(1) 001-35758 4.5 April 14, 2015 4.53 Thirty-Sixth Supplemental Indenture, dated as ofApril 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C25-15. 8-K(1) 001-35758 4.6 April 14, 2015 4.54 Thirty-Eighth Supplemental Indenture, dated as ofApril 21, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C27-10. 8-K(1) 001-35758 4.3 April 21, 2015 146 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.55 Thirty-Ninth Supplemental Indenture, dated as ofApril 21, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C28-15. 8-K(1) 001-35758 4.4 April 21, 2015 4.56 Forty-First Supplemental Indenture, dated as ofApril 27, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C30-3. 8-K(1) 001-35758 4.3 April 27, 2015 4.57 Forty-Second Supplemental Indenture, dated as ofApril 27, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C31-5. 8-K(1) 001-35758 4.4 April 27, 2015 4.58 Forty-Third Supplemental Indenture, dated as ofApril 27, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C32-10. 8-K(1) 001-35758 4.5 April 27, 2015 4.59 Forty-Fourth Supplemental Indenture, dated as ofApril 27, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C33-15. 8-K(1) 001-35758 4.6 April 27, 2015 4.60 Forty-Sixth Supplemental Indenture, dated as ofMay 1, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.00% Solar Bonds,Series 2015/10-3. 8-K(1) 001-35758 4.3 May 1, 2015 4.61 Forty-Seventh Supplemental Indenture, dated as ofMay 1, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.00% Solar Bonds,Series 2015/11-5. 8-K(1) 001-35758 4.4 May 1, 2015 4.62 Forty-Eighth Supplemental Indenture, dated as ofMay 1, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.00% Solar Bonds,Series 2015/12-10. 8-K(1) 001-35758 4.5 May 1, 2015 4.63 Forty-Ninth Supplemental Indenture, dated as ofMay 1, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.75% Solar Bonds,Series 2015/13-15. 8-K(1) 001-35758 4.6 May 1, 2015 147 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.64 Fiftieth Supplemental Indenture, dated as of May11, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C34-3. 8-K(1) 001-35758 4.2 May 11, 2015 4.65 Fifty-First Supplemental Indenture, dated as ofMay 11, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C35-5. 8-K(1) 001-35758 4.3 May 11, 2015 4.66 Fifty-Second Supplemental Indenture, dated as ofMay 11, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C36-10. 8-K(1) 001-35758 4.4 May 11, 2015 4.67 Fifty-Third Supplemental Indenture, dated as ofMay 11, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C37-15. 8-K(1) 001-35758 4.5 May 11, 2015 4.68 Fifty-Fourth Supplemental Indenture, dated as ofMay 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.50% Solar Bonds,Series 2015/14-2. 8-K(1) 001-35758 4.2 May 14, 2015 4.69 Fifty-Fifth Supplemental Indenture, dated as ofMay 18, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C38-3. 8-K(1) 001-35758 4.2 May 18, 2015 4.70 Fifty-Sixth Supplemental Indenture, dated as ofMay 18, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C39-5. 8-K(1) 001-35758 4.3 May 18, 2015 4.71 Fifty-Seventh Supplemental Indenture, dated as ofMay 18, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C40-10. 8-K(1) 001-35758 4.4 May 18, 2015 4.72 Fifty-Eighth Supplemental Indenture, dated as ofMay 18, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C41-15. 8-K(1) 001-35758 4.5 May 18, 2015 148 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.73 Fifty-Ninth Supplemental Indenture, dated as ofMay 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C42-3. 8-K(1) 001-35758 4.2 May 26, 2015 4.74 Sixtieth Supplemental Indenture, dated as of May26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C43-5. 8-K(1) 001-35758 4.3 May 26, 2015 4.75 Sixty-First Supplemental Indenture, dated as ofMay 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C44-10. 8-K(1) 001-35758 4.4 May 26, 2015 4.76 Sixty-Second Supplemental Indenture, dated as ofMay 26, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C45-15. 8-K(1) 001-35758 4.5 May 26, 2015 4.77 Sixty-Fourth Supplemental Indenture, dated as ofJune 8, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C46-3. 8-K(1) 001-35758 4.2 June 10, 2015 4.78 Sixty-Fifth Supplemental Indenture, dated as ofJune 8, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C47-5. 8-K(1) 001-35758 4.3 June 10, 2015 4.79 Sixty-Sixth Supplemental Indenture, dated as ofJune 8, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C48-10. 8-K(1) 001-35758 4.4 June 10, 2015 4.80 Sixty-Seventh Supplemental Indenture, dated as ofJune 8, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C49-15. 8-K(1) 001-35758 4.5 June 10, 2015 4.81 Sixty-Eighth Supplemental Indenture, dated as ofJune 16, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C50-3. 8-K(1) 001-35758 4.2 June 16, 2015 149 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.82 Sixty-Ninth Supplemental Indenture, dated as ofJune 16, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C51-5. 8-K(1) 001-35758 4.3 June 16, 2015 4.83 Seventieth Supplemental Indenture, dated as ofJune 16, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C52-10. 8-K(1) 001-35758 4.4 June 16, 2015 4.84 Seventy-First Supplemental Indenture, dated as ofJune 16, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C53-15. 8-K(1) 001-35758 4.5 June 16, 2015 4.85 Seventy-Second Supplemental Indenture, dated asof June 22, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 2.65% SolarBonds, Series 2015/C54-3. 8-K(1) 001-35758 4.2 June 23, 2015 4.86 Seventy-Third Supplemental Indenture, dated as ofJune 22, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C55-5. 8-K(1) 001-35758 4.3 June 23, 2015 4.87 Seventy-Fourth Supplemental Indenture, dated asof June 22, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 4.70% SolarBonds, Series 2015/C56-10. 8-K(1) 001-35758 4.4 June 23, 2015 4.88 Seventy-Fifth Supplemental Indenture, dated as ofJune 22, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C57-15. 8-K(1) 001-35758 4.5 June 23, 2015 4.89 Seventy-Eighth Supplemental Indenture, dated asof June 29, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 2.65% SolarBonds, Series 2015/C59-3. 8-K(1) 001-35758 4.3 June 29, 2015 4.90 Seventy-Ninth Supplemental Indenture, dated asof June 29, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 3.60% SolarBonds, Series 2015/C60-5. 8-K(1) 001-35758 4.4 June 29, 2015 150 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.91 Eightieth Supplemental Indenture, dated as ofJune 29, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C61-10. 8-K(1) 001-35758 4.5 June 29, 2015 4.92 Eighty-First Supplemental Indenture, dated as ofJune 29, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C62-15. 8-K(1) 001-35758 4.6 June 29, 2015 4.93 Eighty-Third Supplemental Indenture, dated as ofJuly 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C64-3. 8-K(1) 001-35758 4.3 July 14, 2015 4.94 Eighty-Fourth Supplemental Indenture, dated as ofJuly 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C65-5. 8-K(1) 001-35758 4.4 July 14, 2015 4.95 Eighty-Fifth Supplemental Indenture, dated as ofJuly 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C66-10. 8-K(1) 001-35758 4.5 July 14, 2015 4.196 Eighty-Sixth Supplemental Indenture, dated as ofJuly 14, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C67-15. 8-K(1) 001-35758 4.6 July 14, 2015 4.97 Eighty-Eighth Supplemental Indenture, dated as ofJuly 20, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C69-3. 8-K(1) 001-35758 4.3 July 21, 2015 4.98 Eighty-Ninth Supplemental Indenture, dated as ofJuly 20, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C70-5. 8-K(1) 001-35758 4.4 July 21, 2015 4.99 Ninetieth Supplemental Indenture, dated as of July20, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.70% Solar Bonds,Series 2015/C71-10. 8-K(1) 001-35758 4.5 July 21, 2015 151 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.100 Ninety-First Supplemental Indenture, dated as ofJuly 20, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.45% Solar Bonds,Series 2015/C72-15. 8-K(1) 001-35758 4.6 July 21, 2015 4.101 Ninety-Third Supplemental Indenture, dated as ofJuly 31, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.00% Solar Bonds,Series 2015/18-3. 8-K(1) 001-35758 4.3 July 31, 2015 4.102 Ninety-Fourth Supplemental Indenture, dated as ofJuly 31, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 4.00% Solar Bonds,Series 2015/19-5. 8-K(1) 001-35758 4.4 July 31, 2015 4.103 Ninety-Fifth Supplemental Indenture, dated as ofJuly 31, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.00% Solar Bonds,Series 2015/20-10. 8-K(1) 001-35758 4.5 July 31, 2015 4.104 Ninety-Sixth Supplemental Indenture, dated as ofJuly 31, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 5.75% Solar Bonds,Series 2015/21-15. 8-K(1) 001-35758 4.6 July 31, 2015 4.105 Ninety-Eighth Supplemental Indenture, dated as ofAugust 3, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 2.65% Solar Bonds,Series 2015/C74-3. 8-K(1) 001-35758 4.3 August 3, 2015 4.106 Ninety-Ninth Supplemental Indenture, dated as ofAugust 3, 2015, by and between SolarCity and theTrustee, related to SolarCity’s 3.60% Solar Bonds,Series 2015/C75-5. 8-K(1) 001-35758 4.4 August 3, 2015 4.107 One Hundredth Supplemental Indenture, dated asof August 3, 2015, by and between SolarCity andthe Trustee, related to SolarCity’s 4.70% SolarBonds, Series 2015/C76-10. 8-K(1) 001-35758 4.5 August 3, 2015 4.108 One Hundred-and-First Supplemental Indenture,dated as of August 3, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s5.45% Solar Bonds, Series 2015/C77-15. 8-K(1) 001-35758 4.6 August 3, 2015 152 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.109 One Hundred-and-Third Supplemental Indenture,dated as of August 10, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s2.65% Solar Bonds, Series 2015/C79-3. 8-K(1) 001-35758 4.3 August 10, 2015 4.110 One Hundred-and-Fourth Supplemental Indenture,dated as of August 10, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s3.60% Solar Bonds, Series 2015/C80-5. 8-K(1) 001-35758 4.4 August 10, 2015 4.111 One Hundred-and-Fifth Supplemental Indenture,dated as of August 10, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s4.70% Solar Bonds, Series 2015/C81-10. 8-K(1) 001-35758 4.5 August 10, 2015 4.112 One Hundred-and-Sixth Supplemental Indenture,dated as of August 10, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s5.45% Solar Bonds, Series 2015/C82-15. 8-K(1) 001-35758 4.6 August 10, 2015 4.113 One Hundred-and-Eighth Supplemental Indenture,dated as of August 17, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s2.65% Solar Bonds, Series 2015/C84-3. 8-K(1) 001-35758 4.3 August 17, 2015 4.114 One Hundred-and-Ninth Supplemental Indenture,dated as of August 17, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s3.60% Solar Bonds, Series 2015/C85-5. 8-K(1) 001-35758 4.4 August 17, 2015 4.115 One Hundred-and-Tenth Supplemental Indenture,dated as of August 17, 2015, by and betweenSolarCity and the Trustee, related to SolarCity’s4.70% Solar Bonds, Series 2015/C86-10. 8-K(1) 001-35758 4.5 August 17, 2015 4.116 One Hundred-and-Eleventh SupplementalIndenture, dated as of August 17, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C87-15. 8-K(1) 001-35758 4.6 August 17, 2015 153 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.117 One Hundred-and-Thirteenth SupplementalIndenture, dated as of August 24, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C89-3. 8-K(1) 001-35758 4.3 August 24, 2015 4.118 One Hundred-and-Fourteenth SupplementalIndenture, dated as of August 24, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C90-5. 8-K(1) 001-35758 4.4 August 24, 2015 4.119 One Hundred-and-Fifteenth SupplementalIndenture, dated as of August 24, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C91-10. 8-K(1) 001-35758 4.5 August 24, 2015 4.120 One Hundred-and-Sixteenth SupplementalIndenture, dated as of August 24, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C92-15. 8-K(1) 001-35758 4.6 August 24, 2015 4.121 One Hundred-and-Eighteenth SupplementalIndenture, dated as of August 31, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C94-3. 8-K(1) 001-35758 4.3 August 31, 2015 4.122 One Hundred-and-Nineteenth SupplementalIndenture, dated as of August 31, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C95-5. 8-K(1) 001-35758 4.4 August 31, 2015 4.123 One Hundred-and-Twentieth SupplementalIndenture, dated as of August 31, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C96-10. 8-K(1) 001-35758 4.5 August 31, 2015 4.124 One Hundred-and-Twenty-First SupplementalIndenture, dated as of August 31, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C97-15. 8-K(1) 001-35758 4.6 August 31, 2015 154 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.125 One Hundred-and-Twenty-Second SupplementalIndenture, dated as of September 11, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s Solar Bonds, Series 2015/R1. 8-K(1) 001-35758 4.2 September 11, 2015 4.126 One Hundred-and-Twenty-Third SupplementalIndenture, dated as of September 11, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s Solar Bonds, Series 2015/R2. 8-K(1) 001-35758 4.3 September 11, 2015 4.127 One Hundred-and-Twenty-Fourth SupplementalIndenture, dated as of September 11, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s Solar Bonds, Series 2015/R3. 8-K(1) 001-35758 4.4 September 11, 2015 4.128 One Hundred-and-Twenty-Sixth SupplementalIndenture, dated as of September 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C99-3. 8-K(1) 001-35758 4.3 September 15, 2015 4.129 One Hundred-and-Twenty-Seventh SupplementalIndenture, dated as of September 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C100-5. 8-K(1) 001-35758 4.4 September 15, 2015 4.130 One Hundred-and-Twenty-Eighth SupplementalIndenture, dated as of September 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C101-10. 8-K(1) 001-35758 4.5 September 15, 2015 4.131 One Hundred-and-Twenty-Ninth SupplementalIndenture, dated as of September 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C102-15. 8-K(1) 001-35758 4.6 September 15, 2015 4.132 One Hundred-and-Thirty-First SupplementalIndenture, dated as of September 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C104-3. 8-K(1) 001-35758 4.3 September 29, 2015 155 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.133 One Hundred-and-Thirty-Second SupplementalIndenture, dated as of September 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C105-5. 8-K(1) 001-35758 4.4 September 29, 2015 4.134 One Hundred-and-Thirty-Third SupplementalIndenture, dated as of September 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C106-10. 8-K(1) 001-35758 4.5 September 29, 2015 4.135 One Hundred-and-Thirty-Fourth SupplementalIndenture, dated as of September 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C107-15. 8-K(1) 001-35758 4.6 September 29, 2015 4.136 One Hundred-and-Thirty-Sixth SupplementalIndenture, dated as of October 13, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C109-3. 8-K(1) 001-35758 4.3 October 13, 2015 4.137 One Hundred-and-Thirty-Seventh SupplementalIndenture, dated as of October 13, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C110-5. 8-K(1) 001-35758 4.4 October 13, 2015 4.138 One Hundred-and-Thirty-Eighth SupplementalIndenture, dated as of October 13, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C111-10. 8-K(1) 001-35758 4.5 October 13, 2015 4.139 One Hundred-and-Thirty-Ninth SupplementalIndenture, dated as of October 13, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C112-15. 8-K(1) 001-35758 4.6 October 13, 2015 4.140 One Hundred-and-Forty-First SupplementalIndenture, dated as of October 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.00% Solar Bonds, Series 2015/23-3. 8-K(1) 001-35758 4.3 October 30, 2015 156 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.141 One Hundred-and-Forty-Second SupplementalIndenture, dated as of October 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.00% Solar Bonds, Series 2015/24-5. 8-K(1) 001-35758 4.4 October 30, 2015 4.142 One Hundred-and-Forty-Third SupplementalIndenture, dated as of October 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.00% Solar Bonds, Series 2015/25-10. 8-K(1) 001-35758 4.5 October 30, 2015 4.143 One Hundred-and-Forty-Fourth SupplementalIndenture, dated as of October 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.75% Solar Bonds, Series 2015/26-15. 8-K(1) 001-35758 4.6 October 30, 2015 4.144 One Hundred-and-Forty-Sixth SupplementalIndenture, dated as of November 4, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C114-3. 8-K(1) 001-35758 4.3 November 4, 2015 4.145 One Hundred-and-Forty-Seventh SupplementalIndenture, dated as of November 4, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C115-5. 8-K(1) 001-35758 4.4 November 4, 2015 4.146 One Hundred-and-Forty-Eighth SupplementalIndenture, dated as of November 4, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C116-10. 8-K(1) 001-35758 4.5 November 4, 2015 4.147 One Hundred-and-Forty-Ninth SupplementalIndenture, dated as of November 4, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C117-15. 8-K(1) 001-35758 4.6 November 4, 2015 4.148 One Hundred-and-Fifty-First SupplementalIndenture, dated as of November 16, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C119-3. 8-K(1) 001-35758 4.3 November 17, 2015 157 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.149 One Hundred-and-Fifty-Second SupplementalIndenture, dated as of November 16, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C120-5. 8-K(1) 001-35758 4.4 November 17, 2015 4.150 One Hundred-and-Fifty-Third SupplementalIndenture, dated as of November 16, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C121-10. 8-K(1) 001-35758 4.5 November 17, 2015 4.151 One Hundred-and-Fifty-Fourth SupplementalIndenture, dated as of November 16, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C122-15. 8-K(1) 001-35758 4.6 November 17, 2015 4.152 One Hundred-and-Fifty-Sixth SupplementalIndenture, dated as of November 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C124-3. 8-K(1) 001-35758 4.3 November 30, 2015 4.153 One Hundred-and-Fifty-Seventh SupplementalIndenture, dated as of November 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C125-5. 8-K(1) 001-35758 4.4 November 30, 2015 4.154 One Hundred-and-Fifty-Eighth SupplementalIndenture, dated as of November 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C126-10. 8-K(1) 001-35758 4.5 November 30, 2015 4.155 One Hundred-and-Fifty-Ninth SupplementalIndenture, dated as of November 30, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C127-15. 8-K(1) 001-35758 4.6 November 30, 2015 4.156 One Hundred-and-Sixty-First SupplementalIndenture, dated as of December 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C129-3. 8-K(1) 001-35758 4.3 December 14, 2015 158 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.157 One Hundred-and-Sixty-Second SupplementalIndenture, dated as of December 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C130-5. 8-K(1) 001-35758 4.4 December 14, 2015 4.158 One Hundred-and-Sixty-Third SupplementalIndenture, dated as of December 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C131-10. 8-K(1) 001-35758 4.5 December 14, 2015 4.159 One Hundred-and-Sixty-Fourth SupplementalIndenture, dated as of December 14, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C132-15. 8-K(1) 001-35758 4.6 December 14, 2015 4.160 One Hundred-and-Sixty-Sixth SupplementalIndenture, dated as of December 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 2.65% Solar Bonds, Series 2015/C134-3. 8-K(1) 001-35758 4.3 December 28, 2015 4.161 One Hundred-and-Sixty-Seventh SupplementalIndenture, dated as of December 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.60% Solar Bonds, Series 2015/C135-5. 8-K(1) 001-35758 4.4 December 28, 2015 4.162 One Hundred-and-Sixty-Eighth SupplementalIndenture, dated as of December 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.70% Solar Bonds, Series 2015/C136-10. 8-K(1) 001-35758 4.5 December 28, 2015 4.163 One Hundred-and-Sixty-Ninth SupplementalIndenture, dated as of December 28, 2015, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.45% Solar Bonds, Series 2015/C137-15. 8-K(1) 001-35758 4.6 December 28, 2015 4.164 One Hundred-and-Seventy-First SupplementalIndenture, dated as of January 29, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 3.00% Solar Bonds, Series 2016/2-3. 8-K(1) 001-35758 4.3 January 29, 2016 159 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.165 One Hundred-and-Seventy-Second SupplementalIndenture, dated as of January 29, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.00% Solar Bonds, Series 2016/3-5. 8-K(1) 001-35758 4.4 January 29, 2016 4.166 One Hundred-and-Seventy-Third SupplementalIndenture, dated as of January 29, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.00% Solar Bonds, Series 2016/4-10. 8-K(1) 001-35758 4.5 January 29, 2016 4.167 One Hundred-and-Seventy-Fourth SupplementalIndenture, dated as of January 29, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.75% Solar Bonds, Series 2016/5-15. 8-K(1) 001-35758 4.6 January 29, 2016 4.168 One Hundred-and-Seventy-Sixth SupplementalIndenture, dated as of February 26, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.50% Solar Bonds, Series 2016/7-3. 8-K(1) 001-35758 4.3 February 26, 2016 4.169 One Hundred-and-Seventy-Seventh SupplementalIndenture, dated as of February 26, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.25% Solar Bonds, Series 2016/8-5. 8-K(1) 001-35758 4.4 February 26, 2016 4.170 One Hundred-and-Seventy-Eighth SupplementalIndenture, dated as of March 21, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.40% Solar Bonds, Series 2016/9-1. 8-K(1) 001-35758 4.2 March 21, 2016 4.171 One Hundred-and-Seventy-Ninth SupplementalIndenture, dated as of March 21, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.25% Solar Bonds, Series 2016/10-5. 8-K(1) 001-35758 4.3 March 21, 2016 4.172 One Hundred-and-Eightieth SupplementalIndenture, dated as of June 10, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 4.40% Solar Bonds, Series 2016/11-1. 8-K(1) 001-35758 4.2 June 10, 2016 160 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 4.173 One Hundred-and-Eighty-First SupplementalIndenture, dated as of June 10, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 5.25% Solar Bonds, Series 2016/12-5. 8-K(1) 001-35758 4.3 June 10, 2016 4.174 One Hundred-and-Eighty-Second SupplementalIndenture, dated as of August 17, 2016, by andbetween SolarCity and the Trustee, related toSolarCity’s 6.50% Solar Bonds, Series 2016/13-18M. 8-K(1) 001-35758 4.2 August 17, 2016 10.1** Form of Indemnification Agreement between theRegistrant and its directors and officers. S-1/A 333-164593 10.1 June 15, 2010 10.2** 2003 Equity Incentive Plan. S-1/A 333-164593 10.2 May 27, 2010 10.3** Form of Stock Option Agreement under 2003Equity Incentive Plan. S-1 333-164593 10.3 January 29, 2010 10.4** Amended and Restated 2010 Equity IncentivePlan. 10-K 001-34756 10.4 February 23, 2018 10.5** Form of Stock Option Agreement under 2010Equity Incentive Plan. 10-K 001-34756 10.6 March 1, 2017 10.6** Form of Restricted Stock Unit Award Agreementunder 2010 Equity Incentive Plan. 10-K 001-34756 10.7 March 1, 2017 10.7** Amended and Restated 2010 Employee StockPurchase Plan, effective as of February 1, 2017. 10-K 001-34756 10.8 March 1, 2017 10.8** 2007 SolarCity Stock Plan and form of agreementsused thereunder. S-1(1) 333-184317 10.2 October 5, 2012 10.9** 2012 SolarCity Equity Incentive Plan and form ofagreements used thereunder. S-1(1) 333-184317 10.3 October 5, 2012 10.10** 2010 Zep Solar, Inc. Equity Incentive Plan andform of agreements used thereunder. S-8(1) 333-192996 4.5 December 20, 2013 10.11** Offer Letter between the Registrant and Elon Muskdated October 13, 2008. S-1 333-164593 10.9 January 29, 2010 10.12** Performance Stock Option Agreement between theRegistrant and Elon Musk dated January 21, 2018. DEF 14A 001-34756 Appendix A February 8, 2018 161 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.13** Offer Letter between the Registrant and Jeffrey B.Straubel dated May 6, 2004. S-1 333-164593 10.12 January 29, 2010 10.14** Offer Letter between the Registrant and DeepakAhuja dated February 21, 2017. 10-Q 001-34756 10.7 May 10, 2017 10.15 Indemnification Agreement, dated as of February27, 2014, by and between the Registrant and J.P.Morgan Securities LLC. 8-K 001-34756 10.1 March 5, 2014 10.16 Form of Call Option Confirmation relating to0.25% Convertible Senior Notes Due March 1,2019. 8-K 001-34756 10.2 March 5, 2014 10.17 Form of Call Option Confirmation relating to1.25% Convertible Senior Notes Due March 1,2021. 8-K 001-34756 10.3 March 5, 2014 10.18 Form of Warrant Confirmation relating to 0.25%Convertible Senior Notes Due March 1, 2019. 8-K 001-34756 10.4 March 5, 2014 10.19 Form of Warrant Confirmation relating to 1.25%Convertible Senior Notes Due March 1, 2021. 8-K 001-34756 10.5 March 5, 2014 10.20 Form of Call Option Confirmation relating to2.375% Convertible Notes due March 15, 2022. 8-K 001-34756 10.1 March 22, 2017 10.21 Form of Warrant Confirmation relating to 2.375%Convertible Notes due March 15, 2022. 8-K 001-34756 10.2 March 22, 2017 10.22† Supply Agreement between PanasonicCorporation and the Registrant dated October 5,2011. 10-K -001-34756 10.50 February 27, 2012 10.23† Amendment No. 1 to Supply Agreement betweenPanasonic Corporation and the Registrant datedOctober 29, 2013. 10-K 001-34756 10.35A February 26, 2014 10.24 Agreement between Panasonic Corporation andthe Registrant dated July 31, 2014. 10-Q 001-34756 10.1 November 7, 2014 10.25† General Terms and Conditions between PanasonicCorporation and the Registrant dated October 1,2014. 8-K 001-34756 10.2 October 11, 2016 162 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.26 Letter Agreement, dated as of February 24, 2015,regarding addition of co-party to General Termsand Conditions, Production Pricing Agreementand Investment Letter Agreement betweenPanasonic Corporation and the Registrant. 10-K 001-34756 10.25A February 24, 2016 10.27† Amendment to Gigafactory General Terms, datedMarch 1, 2016, by and among the Registrant,Panasonic Corporation and Panasonic EnergyCorporation of North America. 8-K 001-34756 10.1 October 11, 2016 10.28† Production Pricing Agreement between PanasonicCorporation and the Registrant dated October 1,2014. 10-Q 001-34756 10.3 November 7, 2014 10.29† Investment Letter Agreement between PanasonicCorporation and the Registrant dated October 1,2014. 10-Q 001-34756 10.4 November 7, 2014 10.30 Amendment to Gigafactory Documents, datedApril 5, 2016, by and among the Registrant,Panasonic Corporation, Panasonic Corporation ofNorth America and Panasonic Energy Corporationof North America. 10-Q 001-34756 10.2 May 10, 2016 10.31 ABL Credit Agreement, dated as of June 10, 2015,by and among the Registrant, Tesla MotorsNetherlands B.V., certain of the Registrant’s andTesla Motors Netherlands B.V.’s direct or indirectsubsidiaries from time to time party thereto, asborrowers, Wells Fargo Bank, NationalAssociation, as documentation agent, JPMorganChase Bank, N.A., Goldman Sachs Bank USA,Morgan Stanley Senior Funding Inc. and Bank ofAmerica, N.A., as syndication agents, the lendersfrom time to time party thereto, and DeutscheBank AG New York Branch, as administrativeagent and collateral agent. 8-K 001-34756 10.1 June 12, 2015 163 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.32 First Amendment, dated as of November 3, 2015,to ABL Credit Agreement, dated as of June 10,2015, by and among the Registrant, Tesla MotorsNetherlands B.V., certain of the Registrant’s andTesla Motors Netherlands B.V.’s direct or indirectsubsidiaries from time to time party thereto, asborrowers, and the documentation agent,syndication agents, administrative agent,collateral agent and lenders from time to timeparty thereto. 10-Q 001-34756 10.1 November 5, 2015 10.33 Second Amendment, dated as of December 31,2015, to ABL Credit Agreement, dated as of June10, 2015, by and among the Registrant, TeslaMotors Netherlands B.V., certain of theRegistrant’s and Tesla Motors Netherlands B.V.’sdirect or indirect subsidiaries from time to timeparty thereto, as borrowers, and the documentationagent, syndication agents, administrative agent,collateral agent and lenders from time to timeparty thereto. 10-K 001-34756 10.28B February 24, 2016 10.34 Third Amendment, dated as of February 9, 2016, toABL Credit Agreement, dated as of June 10, 2015,by and among the Registrant, Tesla MotorsNetherlands B.V., certain of the Registrant’s andTesla Motors Netherlands B.V.’s direct or indirectsubsidiaries from time to time party thereto, asborrowers, and the documentation agent,syndication agents, administrative agent,collateral agent and lenders from time to timeparty thereto. 10-K 001-34756 10.28C February 24, 2016 10.35 Fourth Amendment to Credit Agreement, dated asof July 31, 2016, by and among the Registrant,Tesla Motors Netherlands B.V., the lenders partythereto and Deutsche Bank AG New York Branch,as administrative agent and collateral agent. 8-K 001-34756 10.1 August 1, 2016 164 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.36 Fifth Amendment to Credit Agreement, dated as ofDecember 15, 2016, among the Registrant, TeslaMotors Netherlands B.V., the lenders party theretoand Deutsche Bank AG, New York Branch, asadministrative agent and collateral agent. 8-K 001-34756 10.1 December 20, 2016 10.37 Sixth Amendment to Credit Agreement, dated as ofJune 19, 2017, among the Registrant, Tesla MotorsNetherlands B.V., the lenders party thereto andDeutsche Bank AG, New York Branch, asadministrative agent and collateral agent. 10-Q 001-34756 10.1 August 4, 2017 10.38 Seventh Amendment to the ABL CreditAgreement, dated as of August 11, 2017, by andamong the Registrant, Tesla Motors NetherlandsB.V., Deutsche Bank AG New York Branch, asadministrative agent and collateral agent, and theother agents party thereto. 8-K 001-34756 10.2 August 23, 2017 10.39 Eighth Amendment to the ABL Credit Agreement,dated as of March 12, 2018, by and among theRegistrant, Tesla Motors Netherlands B.V.,Deutsche Bank AG New York Branch, asadministrative agent and collateral agent, and theother agents party thereto. 10-Q 001-34756 10.2 May 7, 2018 10.40 Ninth Amendment to the ABL Credit Agreement,dated as of May 3, 2018, by and among theRegistrant, Tesla Motors Netherlands B.V.,Deutsche Bank AG New York Branch, asadministrative agent and collateral agent, and theother agents party thereto. 10-Q 001-34756 10.3 May 7, 2018 10.41 Tenth Amendment to the ABL Credit Agreement,dated as of December 10, 2018, by and among theRegistrant, Tesla Motors Netherlands B.V.,Deutsche Bank AG New York Branch, asadministrative agent and collateral agent, and theother agents party thereto. — — — — X 165 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.42† Agreement for Tax Abatement and Incentives,dated as of May 7, 2015, by and between TeslaMotors, Inc. and the State of Nevada, acting byand through the Nevada Governor’s Office ofEconomic Development. 10-Q 001-34756 10.1 August 7, 2015 10.43† Amended and Restated Loan and SecurityAgreement, dated as of August 17, 2017, by andamong Tesla 2014 Warehouse SPV LLC, TeslaFinance LLC, the Lenders and Group Agents fromtime to time party thereto, and Deutsche Bank AG,New York Branch, as Administrative Agent. 10-Q 001-34756 10.3 November 3, 2017 10.44† Amendment No. 1 to Amended and Restated Loanand Security Agreement, dated as of October 18,2017, by and among Tesla 2014 Warehouse SPVLLC, Tesla Finance LLC, the Lenders and GroupAgents from time to time party thereto, DeutscheBank AG, New York Branch, as AdministrativeAgent, and Deutsche Bank Trust CompanyAmericas, as Paying Agent. 10-K 001-34756 10.44 February 23, 2018 10.45 Amendment No. 2 to Amended and Restated Loanand Security Agreement, dated as of March 23,2018, by and among Tesla 2014 Warehouse SPVLLC, Tesla Finance LLC, the Lenders and GroupAgents from time to time party thereto, DeutscheBank AG, New York Branch, as AdministrativeAgent, and Deutsche Bank Trust CompanyAmericas, as Paying Agent. 10-Q 001-34756 10.4 May 7, 2018 10.46 Amendment No. 3 to Amended and Restated Loanand Security Agreement, dated as of May 4, 2018,by and among Tesla 2014 Warehouse SPV LLC,Tesla Finance LLC, the Lenders and Group Agentsfrom time to time party thereto, Deutsche BankAG, New York Branch as Administrative Agent,and Deutsche Bank Trust Company Americas, asPaying Agent. 10-Q 001-34756 10.1 November 2, 2018 166 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.47† Amendment No. 4 to Amended and Restated Loanand Security Agreement, dated as of August 16,2018, by and among Tesla 2014 Warehouse SPVLLC, Tesla Finance LLC, the Lenders and GroupAgents from time to time party thereto, DeutscheBank AG, New York Branch as AdministrativeAgent and Deutsche Bank Trust CompanyAmericas, as Paying Agent. 10-Q 001-34756 10.3 November 2, 2018 10.48† Amendment No. 5 to Amended and Restated Loanand Security Agreement, executed on December28, 2018, by and among Tesla 2014 WarehouseSPV LLC, Tesla Finance LLC, the Lenders andGroup Agents from time to time party thereto,Deutsche Bank AG, New York Branch asAdministrative Agent and Deutsche Bank TrustCompany Americas, as Paying Agent. — — — — X 10.49† Loan and Security Agreement, dated as of August17, 2017, by and among LML Warehouse SPV,LLC, Tesla Finance LLC, the Lenders and GroupAgents from time to time party thereto, andDeutsche Bank AG, New York Branch, asAdministrative Agent. 10-Q 001-34756 10.4 November 3, 2017 10.50† Amendment No. 1 to Loan and SecurityAgreement, dated as of October 18, 2017, by andamong LML Warehouse SPV, LLC, Tesla FinanceLLC, the Lenders and Group Agents from time totime party thereto, Deutsche Bank AG, New YorkBranch, as Administrative Agent, and DeutscheBank Trust Company Americas, as Paying Agent. 10-K 001-34756 10.46 February 23, 2018 10.51 Amendment No. 2 to Loan and SecurityAgreement, dated as of March 23, 2018, by andamong LML Warehouse SPV, LLC, Tesla FinanceLLC, the Lenders and Group Agents from time totime party thereto, Deutsche Bank AG, New YorkBranch, as Administrative Agent, and DeutscheBank Trust Company Americas, as Paying Agent. 10-Q 001-34756 10.5 May 7, 2018 167 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.52 Amendment No. 3 to Loan and SecurityAgreement, dated as of May 4, 2018, by andamong LML Warehouse SPV, LLC, the Lendersand Group Agents from time to time party thereto,and Deutsche Bank AG, New York Branch, asAdministrative Agent. 10-Q 001-34756 10.2 November 2, 2018 10.53† Amendment No. 4 to Loan and SecurityAgreement, dated as of August 16, 2018, by andamong LML Warehouse SPV, LLC, the Lendersand Group Agents from time to time party thereto,and Deutsche Bank AG, New York Branch, asAdministrative Agent. 10-Q 001-34756 10.4 November 2, 2018 10.54† Payoff and Termination Letter, executed onDecember 28, 2018, by and among LMLWarehouse SPV, LLC, the Lenders and GroupAgents from time to time party thereto, andDeutsche Bank AG, New York Branch, asAdministrative Agent, relating to Loan andSecurity Agreement. — — — — X 10.55† Loan and Security Agreement, executed onDecember 28, 2018, by and among LML 2018Warehouse SPV, LLC, Tesla Finance LLC, theLenders and Group Agents from time to time partythereto, Deutsche Bank Trust Company Americas,as Paying Agent, and Deutsche Bank AG, NewYork Branch, as Administrative Agent. — — — — X 10.56 Purchase Agreement, dated as of August 11, 2017,by and among the Registrant, SolarCity andGoldman Sachs & Co. LLC and Morgan Stanley &Co. LLC as representatives of the several initialpurchasers named therein. 8-K 001-34756 10.1 August 23, 2017 168 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.57 Amended and Restated Agreement For Research &Development Alliance on Triex ModuleTechnology, effective as of September 2, 2014, byand between The Research Foundation For TheState University of New York, on behalf of theCollege of Nanoscale Science and Engineering ofthe State University of New York, and Silevo, Inc. 10-Q(1) 001-35758 10.16 November 6, 2014 10.58 First Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofOctober 31, 2014, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, Inc. 10-K(1) 001-35758 10.16a February 24, 2015 10.59 Second Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofDecember 15, 2014, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, Inc. 10-K(1) 001-35758 10.16b February 24, 2015 10.60 Third Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofFebruary 12, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, Inc. 10-Q(1) 001-35758 10.16c May 6, 2015 169 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.61 Fourth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofMarch 30, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, Inc. 10-Q(1) 001-35758 10.16d May 6, 2015 10.62 Fifth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofJune 30, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, LLC. 10-Q(1) 001-35758 10.16e July 30, 2015 10.63 Sixth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofSeptember 1, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, LLC. 10-Q(1) 001-35758 10.16f October 30, 2015 10.64 Seventh Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofOctober 9, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, LLC. 10-Q(1) 001-35758 10.16g October 30, 2015 170 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 10.65 Eighth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofOctober 26, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, LLC. 10-Q(1) 001-35758 10.16h October 30, 2015 10.66 Ninth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofDecember 9, 2015, by and between The ResearchFoundation For The State University of New York,on behalf of the College of Nanoscale Science andEngineering of the State University of New York,and Silevo, LLC. 10-K(1) 001-35758 10.16i February 10, 2016 10.67 Tenth Amendment to Amended and RestatedAgreement For Research & Development Allianceon Triex Module Technology, effective as ofMarch 31, 2017, by and between The ResearchFoundation For The State University of New York,on behalf of the Colleges of Nanoscale Scienceand Engineering of the State University of NewYork, and Silevo, LLC. 10-Q 001-34756 10.8 May 10, 2017 21.1 List of Subsidiaries of the Registrant — — — — X 23.1 Consent of PricewaterhouseCoopers LLP,Independent Registered Public Accounting Firm — — — — X 31.1 Rule 13a-14(a) / 15(d)-14(a) Certification ofPrincipal Executive Officer — — — — X 31.2 Rule 13a-14(a) / 15(d)-14(a) Certification ofPrincipal Financial Officer — — — — X 32.1* Section 1350 Certifications — — — — 101.INS XBRL Instance Document 171 Exhibit Incorporated by Reference FiledNumber Exhibit Description Form File No. Exhibit Filing Date Herewith 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation LinkbaseDocument. 101.DEF XBRL Taxonomy Extension Definition LinkbaseDocument 101.LAB XBRL Taxonomy Extension Label LinkbaseDocument 101.PRE XBRL Taxonomy Extension PresentationLinkbase Document *Furnished herewith**Indicates a management contract or compensatory plan or arrangement†Confidential treatment has been requested for portions of this exhibit(1)Indicates a filing of SolarCityITEM 16.SUMMARYNone 172 SIGNATURESPursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Tesla, Inc. Date: February 19, 2019 /s/ Elon Musk Elon Musk Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date /s/ Elon Musk Chief Executive Officer and Director (Principal ExecutiveOfficer) February 19, 2019 Elon Musk /s/ Deepak Ahuja Chief Financial Officer (Principal Financial Officer andPrincipal Accounting Officer) February 19, 2019 Deepak Ahuja /s/ Brad W. Buss Director February 19, 2019 Brad W. Buss /s/ Robyn Denholm Director February 19, 2019 Robyn Denholm /s/ Ira Ehrenpreis Director February 19, 2019 Ira Ehrenpreis /s/ Lawrence J. Ellison Director February 19, 2019 Lawrence J. Ellison /s/ Antonio J. Gracias Director February 19, 2019 Antonio J. Gracias /s/ James Murdoch Director February 19, 2019 James Murdoch /s/ Kimbal Musk Director February 19, 2019 Kimbal Musk /s/ Linda Johnson Rice Director February 19, 2019 Linda Johnson Rice /s/ Kathleen Wilson-Thompson Director February 19, 2019 Kathleen Wilson-Thompson Director Stephen T. Jurvetson 173Exhibit 10.41TENTH AMENDMENT TO CREDIT AGREEMENTTENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 10, 2018, in respect of theABL Credit Agreement, dated as of June 10, 2015 (as amended, supplemented or otherwise modified prior to the date hereof, the“Credit Agreement”), among Tesla, Inc. (the “Company”, and together with each Wholly-Owned Domestic Subsidiary of the Companythat becomes a U.S. Borrower pursuant to the terms of the Credit Agreement, collectively, the “U.S. Borrowers”), Tesla MotorsNetherlands B.V. (“Tesla B.V.”, and together with each Wholly-Owned Dutch Subsidiary of Tesla B.V. that becomes a Dutch Borrowerpursuant to the terms of the Credit Agreement, collectively, the “Dutch Borrowers”; and the Dutch Borrowers, together with the U.S.Borrowers, collectively, the “Borrowers”), the lenders from time to time party thereto (the “Lenders”), Deutsche Bank AG New YorkBranch, as administrative agent and collateral agent (in such capacities, the “Administrative Agent”) and as Collateral Agent, and theother agents party thereto.RECITALS:WHEREAS, the Company has requested an amendment to the Credit Agreement;WHEREAS, pursuant to Section 13.12 of the Credit Agreement, the Credit Agreement may be amended with the writtenconsent of the Required Lenders and each Credit Party thereto; andWHEREAS, the parties now wish to amend the Credit Agreement in certain respects.AGREEMENT:NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree asfollows:Section 1.Defined Terms. Unless otherwise specifically defined herein, each term used herein (including in therecitals above) has the meaning assigned to such term in the Credit Agreement.Section 2.Amendments to Credit Agreement.(a)Amendment to Section 1.01 of the Credit Agreement. The following defined terms shall be inserted intoSection 1.01 of the Credit Agreement in appropriate alphabetical order:“Attributes Buyer” shall mean that Person separately identified in writing by the Company to the AdministrativeAgent.“Energy Environmental Attribute” shall mean any credit, benefit, reduction, offset or allowance (such as so-calledrenewable energy certificates, green tags, green certificates, and renewable energy credits), howsoever entitled ornamed, resulting from, attributable to or associated with the storage or generation of energy, other than the actualelectric energy produced, and that is capable of being measured, verified or calculated and in any case may belawfully marketed to third parties. By way of illustration, Energy Environmental Attributes may result from: thegeneration system’s use of a particular renewable energy source; avoided NOx, SOx, CO2 or greenhouse gasemissions and other carbon credits and offsets; avoided water use or as otherwise specified under any applicableenergy-related private or governmental program. Notwithstanding any of the foregoing in this definition or anyother provision of the Tenth Amendment or the Credit Agreement, Energy Environmental Attributes shall not inany case include: (i) any of the foregoing obtained by, provided to, used by or necessary for the Company or any of its Subsidiaries to conduct any of itsoperations at any location (and shall not include any water rights or other rights or credits obtained pursuant torequirements of applicable law in order to site and develop any facility); or (ii) any production tax credits. “Environmental Attribute” shall mean an Energy Environmental Attribute or a Vehicle Environmental Attribute. “Tenth Amendment” shall mean that certain Tenth Amendment, dated as of December 10, 2018, among theCompany, Tesla B.V., the Administrative Agent and the Lenders party thereto. “Tenth Amendment Effective Date” shall mean December 10, 2018.“Used Motor Vehicles” shall mean all Used motor vehicles owned by the Company or any of its Subsidiaries.“Vehicle Environmental Attribute” shall mean any credit, benefit, reduction, offset or allowance, howsoeverentitled or named, relating to the emissions or environmental impacts that result from, are attributable to, or areassociated with a vehicle, a vehicle’s use, or a vehicle charging station that is capable of being measured, verifiedor calculated and in any case may be lawfully marketed to third parties. By way of illustration, VehicleEnvironmental Attributes may result from: new energy vehicles; zero emission vehicles; fuel economy; avoidedcriteria air pollutants, CO2 or greenhouse gas emissions; low carbon, renewable or clean fuel; and other credits andoffsets defined under any applicable vehicle and charging-related private or governmental program, including,without limitation, the following credits: California LEV III NMOG + NOx, US CAFE, US GHG, US Tier 3 NMOG+ NOx, Canada GHG, Quebec ZEV, EU CO2 Pooling, and Switzerland GHG Credits. Notwithstanding any of theforegoing in this definition or any other provision of the Tenth Amendment or the Credit Agreement, VehicleEnvironmental Attributes shall not include: (i) any of the foregoing obtained by, provided to, used by or necessaryfor the Company or any of its Subsidiaries to conduct any of its operations at any location; or (ii) any automotivetax credits.(b)Amendment to the definition of Capitalized Lease Obligation. The definition of “Capitalized LeaseObligation” in Section 1.01 of the Credit Agreement shall be amended and restated in its entirety to read as follows:“Capitalized Lease Obligations” shall mean, with respect to any Person, all rental obligations of such Person which,under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at theamount thereof accounted for as indebtedness in accordance with such principles; provided that Capitalized LeaseObligations shall not include (i) any obligations in respect of leases that would be treated as operating leases inaccordance with GAAP as in effect on the Tenth Amendment Effective Date and (ii) any obligations in respect ofoperating leases that are capitalized as a result build-to-suit lease accounting rules.(c)Amendment to Section 10.01 of the Credit Agreement. Section 10.01 of the Credit Agreement shall beamended by (i) deleting “and” at the end of clause (dd) thereof, (ii) replacing “.” at the end of clause (ee) thereof with “;” and (iii)adding the following new clauses (ff) and (gg) at the end thereof: “(ff)Liens on Used Vehicles and related assets (such as documents of title in respect thereof, that in thereasonable opinion of the Company are customary for financing transactions related to such assets), in each casesecuring Indebtedness permitted by Section 10.04(z); and (gg)Liens of the Attributes Buyer or any of its Affiliates on Environmental Attributes and their relatedintangible rights in connection with the sale of such Environmental Attributes to the Attributes Buyer or any of itsAffiliates.” (d)Amendment to Section 10.04 of the Credit Agreement. Section 10.04 of the Credit Agreement shall beamended by (i) deleting “and” at the end of clause (x) thereof, (ii) replacing “.” at the end of clause (y) thereof with “; and” and (iii)adding the following new clause (z) at the end thereof:“(z)Indebtedness of the Company or any of its Subsidiaries secured by a Lien on Used Motor Vehicles andrelated assets; provided, that such Indebtedness shall not be secured by any assets other than Used Motor Vehiclesand other related assets, such as documents of title in respect thereof, that in the reasonable opinion of theCompany are customary for financing transactions related to such assets; provided further that the aggregateamount of Indebtedness outstanding at any time pursuant to this clause (z) shall not exceed $200,000,000.” (e)Amendment to Section 10.09 of the Credit Agreement. Section 10.09 of the Credit Agreement shall beamended by (i) replacing “or (ee)” in clause (viii) thereof with “, (ee), (ff) or (gg)”, and (ii) replacing “or 10.04(x)” in clause (ix)(B)each time it appears therein with “, 10.04(x) or 10.04(z)”. Section 3.Conditions. This Amendment shall become effective on the date on which the following conditionsprecedent have been satisfied or waived (the date on which such conditions shall have been so satisfied or waived, the “AmendmentEffective Date”):(a)The Administrative Agent shall have received a counterpart of this Amendment, executed and deliveredby the Credit Parties, the Administrative Agent and the Required Lenders.(b) Each of the representations and warranties made by the Credit Parties in or pursuant to the CreditAgreement or in or pursuant to the other Credit Documents shall be true and correct in all material respects (except that anyrepresentation and warranty that is qualified or subject to “materiality”, “Material Adverse Effect” or similar language shall be true andcorrect in all respects) on and as of the Amendment Effective Date as if made on and as of such date except for such representationsand warranties expressly stated to be made as of an earlier date (in which case such representations and warranties shall be true andcorrect in all material respects as of such earlier date).(c)No Default or Event of Default shall exist on the Amendment Effective Date.(d)The Administrative Agent shall have received an officer’s certificate from an Authorized Officer of theCompany and dated as of the Amendment Effective Date, certifying that each condition set forth in Sections 3(b) and (c) hereof havebeen satisfied on and as of the Amendment Effective Date.Section 4.Representations and Warranties, etc. The Borrowers hereby confirm, reaffirm and restate that each of therepresentations and warranties made by any Credit Party in the Credit Documents is true and correct in all material respects on and as ofthe Amendment Effective Date (it being understood and agreed that (x) any representation or warranty which by its terms is made as ofa specified date shall be required to be true and correct in all material respects only as of such specified date and (y) any representation or warranty that isqualified by “materiality”, “Material Adverse Effect” or similar language shall be true and correct in all respects). The Borrowersrepresent and warrant that, immediately after giving effect to the occurrence of the Amendment Effective Date, no Default or Event ofDefault has occurred and is continuing. The Borrowers represent and warrant that each Credit Party (i) has the Business power andauthority to execute, deliver and perform the terms and provisions of this Amendment and has taken all necessary Business action toauthorize the execution, delivery and performance by such Credit Party thereof and (ii) has duly executed and delivered thisAmendment, and that this Amendment constitutes a legal, valid and binding obligation of the Borrowers enforceable against eachBorrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whetherenforcement is sought by proceedings in equity or at law).Section 5.Reaffirmation. Each Guarantor and each Credit Party hereby agrees that (i) all of its Obligations under theCredit Documents shall remain in full force and effect on a continuous basis after giving effect to this Amendment and (ii) each CreditDocument is ratified and affirmed in all respects.Section 6. Vehicle Environmental Attributes not Collateral. Each Lender acknowledges and agrees thatnotwithstanding any provision of this Agreement or any Security Document, Vehicle Environmental Attributes and their relatedintangible rights are not General Intangibles relating to Inventory and therefore do not constitute Collateral.Section 7.Governing Law. This Amendment and the rights of the parties hereunder shall be governed by andconstrued in accordance with the laws of the State of New York (without regard to conflicts of law principles that would result in theapplication of any law other than the law of the State of New York).Section 8.Effect of This Amendment. Except as expressly set forth herein, this Amendment shall not by implication orotherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any Lender or Agent under the CreditAgreement or any other Credit Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions,obligations, covenants or agreements contained in the Credit Agreement or any other Credit Document, all of which are ratified andaffirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle any party to a consent to,or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements containedin the Credit Agreement or any other Credit Document in similar or different circumstances. Section 9.Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be anoriginal, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed signaturepage of this Amendment by facsimile transmission or electronic transmission (e.g., “pdf” or “tif”) shall be effective as delivery of amanually executed counterpart hereof.Section 10.Miscellaneous. This Amendment shall constitute a Credit Document for all purposes of the CreditAgreement. The Borrowers shall pay all reasonable fees, costs and expenses of the Administrative Agent incurred in connection withthe negotiation, preparation and execution of this Amendment and the transactions contemplated hereby.[remainder of page intentionally left blank]  IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first abovewritten. TESLA, INC. By: /s/ Yaron KleinName: Yaron KleinTitle: Treasurer TESLA MOTORS NETHERLANDS B.V. By: /s/ Marc CerdaName: Marc CerdaTitle: Managing Director [Tenth Amendment – Signature Page]  DEUTSCHE BANK AG NEW YORK BRANCH, asAdministrative Agent, Collateral Agent, Swingline Lenderand a Lender By: /s/ Maria GuinchardName: Maria GuinchardTitle: Vice President By: /s/ Marguerite SuttonName: Marguerite SuttonTitle: Vice President [Tenth Amendment – Signature Page]  Goldman Sachs Bank USA, as a Lender By: /s/ Jamie MinieriName: Jamie MinieriTitle: Authorized Signatory [Tenth Amendment – Signature Page]  BARCLAYS BANK PLC, as a Lender By: /s/ Komal RamkirathName: Komal RamkirathTitle: Assistant Vice President [Tenth Amendment – Signature Page]  CITIBANK, N.A., as a Lender By: /s/ David L. SmithName: David L. SmithTitle: Vice President and Director [Tenth Amendment – Signature Page]  Morgan Stanley Bank, N.A., as a Lender By: /s/ Emanuel MaName: Emanuel MaTitle: Authorized Signatory [Tenth Amendment – Signature Page]  Morgan Stanley Senior Funding, Inc., as a Lender By: /s/ Emanuel MaName: Emanuel MaTitle: Vice President [Tenth Amendment – Signature Page]  ROYAL BANK OF CANADA, as a Lender By: /s/ Benjamin LennonName: Benjamin LennonTitle: Authorized Signatory [Tenth Amendment – Signature Page]  Bank of America, N.A., as an Issuing Lender and a Lender By: /s/ James FallahayName: James FallahayTitle: Senior Vice President [Tenth Amendment – Signature Page]  SOCIETE GENERALE, as a Lender By: /s/ John HoganName: John HoganTitle: Direector [Tenth Amendment – Signature Page]  Wells Fargo Bank, N.A., as a Lender By: /s/ Jake ElliottName: Jake ElliottTitle: Authorized Signatory [Tenth Amendment – Signature Page] Exhibit 10.48Confidential Treatment Requested by Tesla, Inc.AMENDMENT NO. 5TOAMENDED AND RESTATEDLOAN AND SECURITY AGREEMENTTHIS AMENDMENT NO. 5 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this“Amendment”), dated as of December 27, 2018, is entered into by and among TESLA 2014 WAREHOUSE SPV LLC, a Delawarelimited liability company (the “Borrower”), TESLA FINANCE LLC, a Delaware limited liability company (“TFL”), the Lendersparty hereto, the Group Agents party hereto, DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York bankingcorporation, as paying agent (the “Paying Agent”) and DEUTSCHE BANK AG, NEW YORK BRANCH, as administrative agent(in such capacity, the “Administrative Agent”) and is made in respect of the Amended and Restated Loan and Security Agreement,dated as of August 17, 2017, as amended on October 18, 2017, as further amended on March 23, 2018, as further amended on May 4,2018, as further amended on August 16, 2018 (the “Loan Agreement”) among the Borrower, TFL, the Lenders party thereto, theGroup Agents party thereto, the Administrative Agent and the Paying Agent. Defined terms used herein and not otherwise definedherein shall have the respective meanings given to them in the Loan Agreement as amended hereby.WHEREAS, the Borrower, the Lenders, the Group Agents, the Paying Agent and the Administrative Agent have agreed toamend the Loan Agreement on the terms and conditions set forth herein;NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders, the Group Agents, the Paying Agent and theAdministrative Agent agree as follows:1.Amendments to Loan Agreement. Effective as of the Amendment Effective Date (as defined below) and subjectto the satisfaction of the conditions precedent set forth in Section 2 hereof:(a)Section 1.01 of the Loan Agreement is hereby amended by deleting in its entirety the followingdefinitions (i) “Finco Administrative Agent”, (ii) “Finco Borrower”, (iii)“Finco Commitment”, (iv)“Finco Facility Limit”, (v) “FincoGroup Agent”, (vi) “Finco Lender”, (vii) “Finco Loan” (viii) “Finco Loan Balance”, (ix) “Finco Paying Agent”, (x) “FincoTransaction Documents” and (xi) “Finco Warehouse Agreement”.(b)Section 1.01 of the Loan Agreement is hereby amended by adding the following definitions thereto inthe appropriate alphabetical order:“2018 Administrative Agent” shall mean the “Administrative Agent,” as such term is defined in the 2018Warehouse Agreement.[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.“2018 Borrower” shall mean LML 2018 Warehouse SPV, LLC.“2018 Borrower Default” shall mean the occurrence of any “Event of Default”, as such term is defined in the2018 Warehouse Agreement.“2018 Facility Limit” shall mean the “Facility Limit,” as such term is defined in the 2018 Warehouse Agreement.“2018 Group Agent” shall mean a “Group Agent,” as such term is defined in the 2018 Warehouse Agreement.“2018 Loan Balance” shall mean the “Loan Balance,” as such term is defined in the 2018 Warehouse Agreement.“2018 Paying Agent” shall mean the “Paying Agent,” as such term is defined in the 2018 Warehouse Agreement.“2018 Transaction Documents” shall mean the “Transaction Documents,” as such term is defined in the 2018Warehouse Agreement.“2018 Warehouse Agreement” shall mean the Loan and Security Agreement, dated as of December 27, 2018,among the 2018 Borrower, TFL, the 2018 Administrative Agent and the lenders and group agents party thereto, as the same may beamended from time to time.(c)Section 1.01 of the Loan Agreement is hereby amended by amending the definition of “RetentionRequirements” to read as follows:“Retention Requirements” shall mean each of: (a) Article 405 of the CRR, together with (i) the CommissionDelegated Regulation (EU) 625/2014 of 13 March 2014 and any regulatory technical standards, implementing technical standards orrelated documents published by the European Banking Authority, European Central Bank (or any other successor or replacementagency or authority) and any delegated regulations of the European Commission; and (ii) to the extent informing the interpretation ofArticle 405 of the CRR, the guidelines and related documents previously published in relation to the preceding European Union riskretention legislation by the European Banking Authority (and/or its predecessor, the Committee of European Banking Supervisors); (b)Article 17 of the AIFMD, as supplemented by Article 51 of the AIFM Regulation; (c) Article 254 Commission Delegated Regulation(EU) 2015/35 (the Solvency II Regulation), (d) in relation to each of the foregoing, any guidance published in relation thereto and anyimplementing laws or regulations in force in any Member State of the European Union and (e) in each case, any law or regulationsuperseding or replacing such requirements (or regulatory guidance published in relation thereto).(d)Section 1.01 of the Loan Agreement is hereby amended by amending the definition of “TransactionDocuments” to read as follows:“Transaction Documents” shall mean the Trust Agreement, the Warehouse SUBI Supplement, the WarehouseSUBI Servicing Agreement, the [***] Subservicing Agreement, the eVault Letter Agreement, the Warehouse SUBI Sale Agreement,this Agreement, the Collateral2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Agency and Security Agreement, the Fee Letter, each Loan Request, each Settlement Statement, each Notice of Warehouse SUBILease Allocation, each Interest Rate Hedge and each other agreement, report, certificate or other document delivered by any TeslaParty, Tesla, Inc. or TFL pursuant to or in connection with this Agreement. For the avoidance of doubt, the 2018 TransactionDocuments shall not constitute Transaction Documents under this Agreement.(e)Section 2.11(a) of the Loan Agreement is hereby amended by:(i)Deleting the lead-in in its entirety and inserting in lieu thereof a new lead-in reading in itsentirety as follows:“So long as no Default or Event of Default shall have occurred and be continuing, TFL may, at thewritten directions of the Borrower and , the 2018 Borrower, increase the Maximum Facility Limitsubject to the following terms and conditions:”(ii)Deleting clause(i) in its entirety and inserting in lieu thereof a new clause (i) reading in itsentirety as follows:“(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Increase Notice”) to theAdministrative Agent (who shall forward the same to the Group Agents) and the 2018 Administrative Agent,which notice shall specify:(A)the amount by which the Maximum Facility Limit is proposed to be increased (the“Maximum Facility Limit Increase Amount”);(B)the date on which such increase is proposed to occur (the “Maximum Facility Limit IncreaseDate”), which Maximum Facility Limit Increase Date shall be not less than thirty (30) days after the date of suchMaximum Facility Limit Increase Notice; and(C)the amount of the Maximum Facility Limit Increase Amount to be allocated to the FacilityLimit and the 2018 Facility Limit.”(f)Section 2.11(b) of the Loan Agreement is hereby amended by deleting Section 2.11(b) in its entirety andinserting in lieu thereof a new Section 2.11(b) reading in its entirety as follows:“(b)TFL may, at the written directions of the Borrower and the 2018 Borrower, reduce the MaximumFacility Limit subject to the following terms and conditions:(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Reduction Notice”)signed by an Authorized Signatory to the Administrative Agent (who shall forward the same to the Group Agents)and the 2018 Administrative Agent, which notice shall specify:3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.(A)the amount by which the Maximum Facility Limit is proposed to be reduced (the“Maximum Facility Limit Reduction Amount”); provided that, the resulting Maximum Facility Limitafter taking into account the Maximum Facility Limit Reduction Amount shall not be less than the sumof the Loan Balance and the 2018 Loan Balance on the Maximum Facility Limit Reduction Date;(B)the date on which such reduction is proposed to occur (the “Maximum FacilityLimit Reduction Date”), which Maximum Facility Limit Reduction Date shall be not less than five (5)Business Days after the date of such Maximum Facility Limit Reduction Notice; and(C)the amount of the Maximum Facility Limit Reduction Amount that shall reducethe Facility Limit and the 2018 Facility Limit, respectively, provided that the Facility Limit shall not beless than the Loan Balance on the Maximum Facility Limit Reduction Date.(ii)On each Maximum Facility Limit Reduction Date, the Facility Limit will be reduced by theamount specified in the related Maximum Facility Limit Reduction Notice and each such reduction shall reduceeach Lender’s Commitment by its ratable share (based on the Commitments of the Lenders) of the MaximumFacility Limit Reduction Amount.(iii)No reduction in the Maximum Facility Limit shall occur if after giving effect to suchreduction and any repayments of the Loan Balance, the Facility Limit will be less than the Loan Balance.(iv)On each Maximum Facility Limit Reduction Date, the Administrative Agent shall update itsbooks and records to reflect the updated Maximum Facility Limit, Facility Limit and Commitment of eachLender.”(g)Section 2.12 of the Loan Agreement is hereby amended by deleting Section 2.12 in its entirety andinserting in lieu thereof a new Section 2.12 reading in its entirety as follows:“(a)TFL may from time to time, at the written directions of the Borrower and the 2018 Borrower,reallocate the Maximum Facility Limit between the Facility Limit and the 2018 Facility Limit subject to thefollowing terms and conditions:(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Reallocation Notice”) to theAdministrative Agent (who shall forward the same to the Group Agents) and the 2018 Administrative Agent (who shallforward the same to the 2018 Group Agents), which notice shall specify:(A)the amount of the Maximum Facility Limit that is to be allocated to the Facility Limit and theamount of the Maximum Facility Limit that is to be allocated to the 2018 Facility Limit; provided that, the sum ofthe Facility Limit and the 2018 Facility Limit shall be equal to the Maximum Facility Limit on the MaximumFacility Limit Reallocation Date (as defined below); and provided,4[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.further, that the Facility Limit shall not be less than the Loan Balance and the 2018 Facility Limit shall not be lessthan the 2018 Loan Balance; and(B)the date on which such reallocation is proposed to occur (the “Maximum Facility LimitReallocation Date”), which Maximum Facility Limit Reallocation Date shall be not less than ten (10) BusinessDays after the date of such Maximum Facility Limit Reallocation Notice.(ii)On each Maximum Facility Limit Reallocation Date, the Facility Limit, and/or the 2018 FacilityLimit will be increased or decreased, as applicable, by the amount specified in the related Maximum Facility LimitReallocation Notice.(iii)No reduction in the Facility Limit shall occur in connection with the reallocation of the MaximumFacility Limit if after giving effect to such reduction and any repayments of the Loan Balance, the Facility Limit will beless than the Loan Balance. On each Maximum Facility Limit Reallocation Date, the Administrative Agent shall updateits books and records to reflect the updated Maximum Facility Limit, Facility Limit and Commitment of each Lender..(iv)Except as provided in Section 2.12(b), TFL may not reallocate any portion of the 2018 FacilityLimit to the Facility Limit without the prior written consent of all Group Agents.(b)In addition, on the Recommenced Borrowing Date and on each Payment Date occurring afterthe Recommenced Borrowing Date, the excess of the 2018 Facility Limit over the aggregate principal amount ofthe 2018 Loan Balance shall automatically be reallocated from the 2018 Facility Limit to the Facility Limit.(h)Section 9.01 of the Loan Agreement is hereby amended by deleting the last sentence of Section 9.01 inits entirety and inserting in lieu thereof a new last sentence reading in its entirety as follows:“The Administrative Agent shall at all times also be the 2018 Administrative Agent.”(i)Section 9.11(a)(i) of the Loan Agreement is hereby amended by deleting Section 9.11(a)(i) in its entiretyand inserting in lieu thereof a new Section 9.11(a)(i) reading in its entirety as follows:“(i)The Administrative Agent may, upon at least thirty (30) days’ notice to the Borrower, the Servicer andeach Group Agent, resign as Administrative Agent; provided it also resigns as the 2018 Administrative Agent. Except asprovided below, such resignation shall not become effective until a successor Administrative Agent is appointed by theGroup Agents as a successor Administrative Agent and as a successor 2018 Administrative Agent and has accepted suchappointment. If no successor Administrative Agent shall have been so appointed by the Group Agents, within thirty (30)days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may, onbehalf of the Secured Parties, appoint a successor Administrative Agent. If no successor Administrative Agent shall havebeen so appointed by the Group Agents within5[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.sixty (60) days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agentmay, on behalf of the Group Agents, petition a court of competent jurisdiction to appoint a successor Administrative Agent,which successor Administrative Agent shall be either (i) a commercial bank having a combined capital and surplus of at least$250,000,000 and short-term debt ratings of at least “A-1” from S&P and “P-1” from Moody’s or (ii) an Affiliate of such aninstitution, and in either case shall also be the 2018 Administrative Agent.(j)Section 9.11(b)(iv) of the Loan Agreement is hereby amended by deleting Section 9.11(b)(iv) in itsentirety and inserting in lieu thereof a new Section 9.11(b)(iv) reading in its entirety as follows:“(iv)Any successor Paying Agent hereunder, if other than the Borrower, shall be a bank or trustcompany organized and doing business under the laws of the United States of America or of the State of NewYork, in good standing, authorized under such laws to exercise corporate trust powers and having a combinedcapital and surplus in excess of US $250,000,000, and in either case shall also be the 2018 Paying Agent.”(k)Section 10.09 of the Loan Agreement is hereby amended by deleting the last sentence in its entiretyand inserting in lieu thereof a new last sentence reading in its entirety as follows:“Each Group Agent shall also act in the same role as a group agent under the 2018 WarehouseAgreement.”(l)Section 12.10(j) of the Loan Agreement is hereby amended by deleting Section 12.10(j) in its entiretyand inserting in lieu thereof a new Section 12.10(j) reading in its entirety as follows:“(j)Limitation on Assignments and Participations. Notwithstanding anything to the contrary contained in theTransaction Documents, none of the Administration Agent, any Group Agent or any Lender may assign orparticipate all or any portion of its rights and obligations hereunder unless, contemporaneous with such assignmentor participation, such Person makes a pro rata assignment or participation to the same assignee or participant, asthe case may be, of the same rights and obligations under the 2018 Warehouse Agreement.”2.Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment EffectiveDate”) upon satisfaction or waiver of the following conditions precedent:(a)the receipt by the Administrative Agent or its counsel of counterpart signature pages to this Amendmentand each other document and certificate to be executed or delivered in connection with this Amendment;(b)no Default, Event of Default or Potential Servicer Default shall have occurred or be continuing, theTermination Date shall not have occurred and no Event of Bankruptcy shall have occurred with respect to TFL or Tesla,Inc.; and6[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.(c)the Administrative Agent and each Group Agent shall have received such other documents, instrumentsand agreements as the Administrative Agent or such Group Agent may have reasonably requested.3.Representations and Warranties of the Borrower. The Borrower hereby represents and warrants to theAdministrative Agent, each Group Agent and each Lender as of the date hereof that:(a)This Amendment and the Loan Agreement, as amended hereby, constitute the legal, valid and bindingobligations of the Borrower and are enforceable against the Borrower in accordance with their respective terms, except assuch enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to orlimiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).(b)Upon the effectiveness of this Amendment, the Borrower hereby affirms that all representations andwarranties made by it in Article IV of the Loan Agreement, as amended, are correct in all material respects on the datehereof as though made as of the effective date of this Amendment, unless and to the extent that any such representation andwarranty is stated to relate solely to an earlier date, in which case such representation and warranty shall have been true andcorrect in all material respects as of such earlier date.(c)As of the date hereof, no Default, Event of Default or Potential Servicer Default shall have occurred orbe continuing, the Termination Date shall not have occurred and no Event of Bankruptcy shall have occurred with respect toTFL or Tesla, Inc.4.Reference to and Effect on the Loan Agreement.(a)Upon the effectiveness of Section 1 hereof, each reference in the Loan Agreement to “this Agreement”,“hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Loan Agreement as amendedhereby.(b)The Loan Agreement, as amended hereby, and all other documents, instruments and agreementsexecuted and/or delivered in connection therewith, shall remain in full force and effect until hereafter terminated inaccordance with their respective terms, and the Loan Agreement and such documents, instruments and agreements arehereby ratified and confirmed.(c)Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shallnot operate as a waiver of any right, power or remedy of the Administrative Agent, any Agent or any Lender, nor constitutea waiver of any provision of the Loan Agreement or any other documents, instruments and agreements executed and/ordelivered in connection therewith.5.Costs and Expenses. The Borrower agrees to pay all reasonable and actual costs, fees, and out‑of‑pocket expenses(including the reasonable attorneys’ fees, costs and expenses of Morgan, Lewis & Bockius LLP, counsel to the Administrative Agent,the Group Agents and the7[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Lenders) incurred by the Administrative Agent, each Group Agent and each Lender in connection with the preparation, review,execution and enforcement of this Amendment.6.Consent to Amendment of Warehouse SUBI Servicing Agreement. By execution of this Amendment, theBorrower, the Administrative Agent and the Lenders hereby consent to Amendment No. 2 to Second Amended and RestatedWarehouse SUBI Servicing Agreement, dated the date hereof, among Tesla Lease Trust, TFL, as Servicer, and Wells Fargo Bank,National Association, as Back-Up Servicer.7.GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OFLAWS PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONSLAW).8.Headings. Section headings in this Amendment are included herein for convenience of reference only and shallnot constitute a part of this Amendment for any other purpose.9.Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on any numberof separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Deliveryof an executed counterpart of a signature page to this Amendment by facsimile (transmitted by telecopier or by email) shall be effectiveas delivery of a manually executed counterpart of this Amendment. Remainder of page left intentionally blank8[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered by their dulyauthorized signatories as of the date first above written. TESLA 2014 WAREHOUSE SPV LLC,as Borrower By: /s/ Yaron KleinName: Yaron KleinTitle: Chief Financial Officer/Treasurer Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK TRUST COMPANY AMERICAS,as Paying Agent By: /s/ Rosemary CabreraName: Rosemary CabreraTitle: Associate By: /s/ Diana VasconezName: Diana VasconezTitle: Assistant Vice President Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK AG, NEW YORK BRANCH,as Administrative Agent, as a Group Agent and as aCommitted Lender By: /s/ Brendon GirardiName: Brendon GirardiTitle: Director By: /s/ Kevin FaganName: Kevin FaganTitle: Vice President Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.CITIBANK, N.A.,as a Group Agent and as a Committed Lender By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CAFCO, LLC,as Conduit Lender By: Citibank, N.A., as Attorney-in-Fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CHARTA, LLC,as Conduit Lender By: Citibank, N.A., as Attorney-in-Fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CIESCO, LLC,as Conduit Lender By: Citibank, N.A., as Attorney-in-Fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CRC FUNDING, LLC,as Conduit Lender By: Citibank, N.A., as Attorney-in-Fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. ROYAL BANK OF CANADA,as a Group Agent and as a Committed Lender By: /s/ Thomas C. DeanName: Thomas C. DeanTitle: Authorized Signatory By: /s/ Lisa WangName: Lisa WangTitle: Authorized Signatory Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CREDIT SUISSE AG, NEW YORK BRANCH,as a Group Agent By: /s/ Patrick DugganName: Patrick DugganTitle: Vice President By: /s/ Michael EatonName: Michael EatonTitle: Vice President CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,as a Committed Lender By: /s/ Patrick DugganName: Patrick DugganTitle: Authorized Signatory GIFS CAPITAL COMPANY LLC,as a Conduit Lender By: /s/ Carey D. FearName: Carey D. FearTitle: Authorized Signer Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. BARCLAYS BANK PLC,as a Group Agent By: /s/ Chin-Yong ChoeName: Chin-Yong ChoeTitle: Director SALISBURY RECEIVABLES COMPANY LLC,as a Conduit Lender By: Barclays Bank PLC, as attorney-in-fact By: /s/ Chin-Yong ChoeName: Chin-Yong ChoeTitle: Director Signature Page to Amendment No. 5 to Amended and Restated Loan and Security Agreement[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Exhibit 10.54Confidential Treatment Requested by Tesla, Inc.PAYOFF AND TERMINATION LETTERDecember 28, 2018LML Warehouse SPV, LLCc/o Tesla, Inc.6800 Dumbarton CircleFremont, California 94455Attention: Legal, Finance Ladies and Gentlemen:Reference is hereby made to the Loan and Security Agreement, dated as of August 17, 2017 (as amended, restated,supplemented or modified, the “Agreement”) among LML Warehouse SPV, LLC, a Delaware limited liability company (the“Borrower”), Tesla Finance LLC (“TFL”), the Lenders and Group Agents party thereto, Deutsche Bank Trust Company Americas, aspaying agent (in such capacity, the “Paying Agent”) and Deutsche Bank AG, New York Branch, as administrative agent (in suchcapacity, the “Administrative Agent”). Capitalized terms used and not otherwise defined herein are used as defined in the Agreement.The Borrower hereby notifies the Administrative Agent and the Lenders that, on December 28, 2018 (the “Payoff Date”), itwill pay the outstanding principal amount of the Loans in full, together with all accrued and unpaid interest, fees, costs, expenses,indemnities and other Secured Obligations owing by the Borrower to the Administrative Agent and the Lenders under the Agreementand the other Transaction Documents (collectively, the “Obligations”).The amount required to reduce the Obligations to zero (the “Payoff Amount”) at or before 5:00 p.m. (New York time) onthe Payoff Date is $158,883.34 in immediately available funds. The components of the Payoff Amount are described on Schedule Iattached hereto. On the Payoff Date, the Borrower will remit (or cause to be remitted) the Payoff Amount to the Paying Agent for theaccount of the Lenders by wire transfer of immediately available funds in accordance with the wiring instructions set forth on ScheduleI attached hereto.Upon receipt of the Payoff Amount, the amounts specified on Schedule I attached hereto shall be immediately applied to theObligations in accordance with the terms of the Agreement and the other Transaction Documents. To the extent any TransactionDocument requires any prior notice as a condition to the payment of the Obligations (or any part thereof) or the application of thePayoff Amount to the Obligations, such requirement is hereby waived.[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Immediately upon receipt of the Payoff Amount in full as provided above: (a) the Obligations under the Agreement and theother Transaction Documents shall be reduced to zero, (b) the Commitments of the Lenders shall terminate and, except as set forthherein, none of the Borrower, any Lender or the Administrative Agent shall have any further obligations or liabilities under anyTransaction Document to which it is party and the Transaction Documents shall be terminated and cease to be of further force or effect;provided, that that obligations of the Borrower and any other party to the Agreement that expressly survive termination of theAgreement or any other Transaction Document (including, without limitation, the indemnification provisions of the Agreement) shallsurvive termination of the Agreement and the other Transaction Documents and (c) the Agreement and each other TransactionDocument shall terminate and cease to be of further force or effect.In consideration of the payment in full of the Payoff Amount, each of the Administrative Agent and each Lender (each a“Secured Party” and collectively, the “Secured Parties”), upon receipt of the Payoff Amount, hereby agrees that:(a)all security interests, liens or other rights which each Secured Party may have on or in the WarehouseSUBI Assets, the Warehouse SUBI Certificate, the Collections, the Warehouse SUBI Collection Account, the ReserveAccount and other Collateral under the Transaction Documents will be deemed to be terminated and released and of nofurther force and effect (including “control” for purposes of the applicable UCC with respect to any deposit or securitiesaccount that are part of the Collateral);(b)at the Borrower’s expense, the Borrower (or its designee) is authorized to file UCC terminationstatements and other appropriate documents to terminate the security interests, liens and other rights on or in the Collateralunder the Transaction Documents, and the Administrative Agent shall deliver to the Borrower all possessory collateral (ifany) held by the Administrative Agent in accordance with the Transaction Documents;(c) at the Borrower’s expense, the Administrative Agent shall deliver to the Borrower other appropriatedocuments reasonably requested in writing by the Borrower in order to notify the applicable financial institutions of thetermination of the security interest and control of the Administrative Agent in any deposit or securities accounts that are partof the Collateral and to otherwise effectuate the release of liens contemplated herein.The Administrative Agent and the below undersigned Lenders (constituting 100% beneficial owners of the Obligations),hereby authorize, direct and instruct each of the Administrative Agent and the Paying Agent to execute and deliver this Payoff Letter,and to take any and all actions necessary to give effect to the terms of this Payoff Letter. 2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.IN WITNESS WHEREOF, the parties have caused this Payoff Letter to be duly executed by their respective officers as ofthe day and year first above written. LML WAREHOUSE SPV, LLC,as Borrower By: /s/ Yaron KleinName: Yaron KleinTitle: Chief Financial Officer/Treasurer Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK TRUST COMPANYAMERICAS,as Paying Agent By: /s/ Rosemary CabreraName: Rosemary CabreraTitle: Associate By: /s/ Diana VasconezName: Diana VasconezTitle: Assistant Vice President Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK AG, NEW YORK BRANCH,as Administrative Agent, a Group Agent and a CommittedLender By: /s/ Brendon GirardiName: Brendon GirardiTitle: Director By: /s/ Kevin FaganName: Kevin FaganTitle: Vice President Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CITIBANK, N.A.,as Group Agent and as a Committed Lender By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CAFCO LLC,as a Conduit LenderBy: Citibank, N.A., as attorney-in fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CHARTA LLC,as a Conduit Lender By: Citibank, N.A., as attorney-in fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CIESCO LLC,as a Conduit Lender By: Citibank, N.A., as attorney-in fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President CRC FUNDING LLC,as a Conduit LenderBy: Citibank, N.A., as attorney-in fact By: /s/ Amy Jo PittsName: Amy Jo PittsTitle: Vice President Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.ROYAL BANK OF CANADA,as a Group Agent and as a Committed Lender By: /s/ Thomas C. DeanName: Thomas C. DeanTitle: Authorized Signatory By: /s/ Lisa WangName: Lisa WangTitle: Authorized Signatory Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CREDIT SUISSE AG, NEW YORK BRANCH,as a Group Agent By: /s/ Patrick DugganName: Patrick DugganTitle: Vice President By: /s/ Michael EatonName: Michael EatonTitle: Vice President CREDIT SUISSE AG, CAYMAN ISLANDSBRANCH,as a Committed Lender By: /s/ Patrick DugganName: Patrick DugganTitle: Authorized Signatory By: /s/ Michael EatonName: Michael EatonTitle: Authorized Signatory GIFS CAPITAL COMPANY,as a Conduit Lender By: /s/ Chris J. MurrayName: Chris J. MurrayTitle: Authorized Signer Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. BARCLAYS BANK PLC,as a Group Agent and a Committed Lender By: /s/ Chin-Yong ChoeName: Chin-Yong ChoeTitle: Director SALISBURY RECEIVABLES COMPANY LLC,as a Conduit Lender By: Barclays Bank PLC, as attorney-in-fact By: /s/ Chin-Yong ChoeName: Chin-Yong ChoeTitle: Director Signature Page to Payoff Letter[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.SCHEDULE I Payoff Amount Aggregate outstanding principal:$0.00Accrued interest and fees (Unused Fees):$158,883.34Other costs, expenses and Obligations:$0.00TOTAL:$158,883.34 Wire Instructions [***][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Exhibit 10.55 Confidential Treatment Requested by Tesla, Inc. _____________________________________________________________________LOAN AND SECURITY AGREEMENT(Warehouse SUBI Certificate)amongLML 2018 WAREHOUSE SPV, LLC, as Borrower,TESLA FINANCE LLC,THE PERSONS FROM TIME TO TIME PARTY HERETO,as Lenders and as Group Agents,DEUTSCHE BANK TRUST COMPANY AMERICAS, as Paying AgentandDEUTSCHE BANK AG, NEW YORK BRANCH,as Administrative Agent Dated as of December 27, 2018_____________________________________________________________________ [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Table of Contents SectionHeadingPage ARTICLE I DEFINITIONS1 SECTION 1.01 Certain Defined Terms1 SECTION 1.02 Computation of Time Periods38 SECTION 1.03 Interpretive Provisions38 SECTION 1.04 Acknowledgement and Consent to Bail-In of EEA Financial Institutions39 ARTICLE II THE FACILITY39 SECTION 2.01 Loans; Payments39 SECTION 2.02 Interest; Breakage Fees42 SECTION 2.03 Invoices; Payments42 SECTION 2.04 Deposits; Distributions43 SECTION 2.05 Payments and Computations, Etc45 SECTION 2.06 Reserve Account and Paying Agent Account45 SECTION 2.07 Withdrawals from Reserve Account46 SECTION 2.08 Reports46 SECTION 2.09 Reallocation and Repurchase of Warehouse SUBI Assets47 SECTION 2.10 Procedures for Extension of Scheduled Expiration Date49 SECTION 2.11 Increase of Maximum Facility Limit and Reduction of Maximum Facility Limit49 SECTION 2.12 Reallocation of Maximum Facility Limit51 SECTION 2.13 Optional Prepayment52 SECTION 2.14 Intended Tax Treatment52 ARTICLE III COLLATERAL AND SECURITY INTEREST53 SECTION 3.01 Grant of Security Interest; Collateral53 SECTION 3.02 Protection of the Administrative Agent’s Security Interest54 SECTION 3.03 Termination of Security Interest and Release of Collateral under Certain Circumstances55 ARTICLE IV REPRESENTATIONS AND WARRANTIES56 SECTION 4.01 Representations and Warranties of Borrower56 ARTICLE V CONDITIONS PRECEDENT60 SECTION 5.01 Conditions to Closing60 SECTION 5.02 Conditions to Loan Increases62 ARTICLE VI COVENANTS64 SECTION 6.01 Covenants of the Borrower64 SECTION 6.02 Negative Covenants of the Borrower70 SECTION 6.03 Certain Covenants of TFL72 -i-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Table of Contents ARTICLE VII SERVICING AND COLLECTIONS73 SECTION 7.01 Maintenance of Information and Computer Lease Documents73 SECTION 7.02 Protection of the Interests of the Secured Parties72 SECTION 7.03 Maintenance of Writings and Lease Documents74 SECTION 7.04 Administration and Collections74 ARTICLE VIII EVENTS OF DEFAULT75 SECTION 8.01 Events of Default75 SECTION 8.02 Remedies Upon the Occurrence of an Event of Default77 ARTICLE IX THE ADMINISTRATIVE AGENT79 ARTICLE X THE GROUP AGENTS84 SECTION 10.01 Authorization and Action84 SECTION 10.02 Group Agent’s Reliance, Etc85 SECTION 10.03 Group Agent and Affiliates85 SECTION 10.04 Indemnification of Group Agents85 SECTION 10.05 Delegation of Duties85 SECTION 10.06 Action or Inaction by Group Agent85 SECTION 10.07 Notice of Events of Default86 SECTION 10.08 Non-Reliance on Group Agent and Other Parties86 SECTION 10.09 Successor Group Agent86 SECTION 10.10 Reliance on Group Agent87 ARTICLE XI INDEMNIFICATION87 SECTION 11.01 Indemnification87 SECTION 11.02 Tax Indemnification89 SECTION 11.03 Additional Costs92 SECTION 11.04 Procedures for Indemnification; Etc94 SECTION 11.05 Other Costs and Expenses94 ARTICLE XII MISCELLANEOUS94 SECTION 12.01 Term of Agreement94 SECTION 12.02 Waivers; Amendments94 SECTION 12.03 No Implied Waiver; Cumulative Remedies95 SECTION 12.04 No Discharge96 SECTION 12.05 Notices96 SECTION 12.06 Governing Law; Submission to Jurisdiction97 SECTION 12.07 Integration97 SECTION 12.08 Counterparts; Severability97 SECTION 12.09 Set-Off98 SECTION 12.10 Successors and Assigns98 SECTION 12.11 Confidentiality101 SECTION 12.12 Payments Set Aside102 SECTION 12.13 No Petition102 SECTION 12.14 Characterization of the Transactions Contemplated by this Agreement102-ii-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Table of Contents SECTION 12.15 WAIVER OF JURY TRIAL102 SECTION 12.16 Loans102 SECTION 12.17 TBM, TFL or Tesla, Inc103 SECTION 12.18 Limitation on Consequential, Indirect and Certain Other Damages103 SECTION 12.19 Ratable Payments103 SECTION 12.20 No Third Party Beneficiaries; Hedge Counterparties103 SECTION 12.21 Back-Up Servicing103 SECTION 12.22 Limited Recourse Against Conduit Lenders104 Schedule 1Schedule of LitigationSchedule 2Schedule of Corporate and Limited Liability Company Names, Trade Names or Assumed NamesSchedule 3Description of Electronic Lease VaultSchedule 4Ineligible AssigneesSchedule 5Insurance RequirementsSchedule 6Notice AddressesSchedule 7Credit and Collection PolicySchedule 8Commitments of LendersSchedule 9Short-Term Note Rate Exhibit AForm of Loan RequestExhibit BForm of Control AgreementExhibit CForm of Compliance CertificateExhibit DForm of Notice of Warehouse SUBI Lease AllocationExhibit EForm of Pool Cut ReportExhibit FForm of Notice of Securitization Take-OutExhibit GForm of Securitization Take-Out CertificateExhibit H[Reserved]Exhibit I[Reserved]Exhibit J[Reserved]Exhibit K[Reserved]Exhibit L[Reserved]Exhibit MForm of Assignment and Acceptance AgreementExhibit NForm of Assumption Agreement -iii-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of December 27, 2018 by andamong the following parties: (i)LML 2018 WAREHOUSE SPV, LLC, a Delaware limited liability company, as Borrower (the“Borrower”); (ii)Solely for purposes of Sections 2.11, 2.12, 6.03, 12.01, 12.13 and 12.22, TESLA FINANCE LLC, aDelaware limited liability company (“TFL”); (iii)DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as PayingAgent; (iv)DEUTSCHE BANK AG, NEW YORK BRANCH, as Administrative Agent; and (v)THE LENDERS AND GROUP AGENTS PARTY HERETO.R E C I T A L S:WHEREAS, the Borrower desires to purchase or otherwise acquire from TBM Partnership II, LLC, a Delawarelimited liability company (“TBM”), the Warehouse SUBI Certificate (as defined below) and the Warehouse SUBI represented therebyfrom time to time pursuant to the Warehouse SUBI Sale Agreement (as defined below);WHEREAS, the Borrower desires to fund such purchases and acquisitions through the borrowing of Loans (asdefined below) from the Lenders subject to the terms of this Agreement;WHEREAS, to provide assurance for the repayment of the Loans and the other Obligations of the Borrowerhereunder, the Borrower will provide or will cause to be provided to the Administrative Agent, for the benefit of the Secured Parties, asecurity interest in the Collateral pursuant to Article 3 hereof;NOW, THEREFORE, the parties hereto hereby agree as follows:ARTICLE IDEFINITIONSSECTION 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have thefollowing respective meanings:“48+ Month Limit” shall have the meaning specified in the Fee Letter.“Additional Costs” shall have the meaning specified in Section 11.03.“Additional Warehouse SUBI Assets” shall mean those Trust Assets allocated by the Trust to the Warehouse SUBIfrom time to time after the Closing Date in accordance with the Warehouse SUBI Supplement.“Administrative Agent” shall mean Deutsche Bank AG, New York Branch, in its capacity as contractualrepresentative for the Group Agents and the Lenders hereunder, and any successor thereto in such capacity appointed pursuant toArticle IX. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.“Administrative Charge” shall mean, with respect to any Lease, any payment (whether or not part of the fixedmonthly payment) payable by the applicable Lessee representing an Excess Mileage Fee or Excess Wear and Tear Fee.“Administrative Trustee” shall have the meaning specified in the Trust Agreement.“Advance Rate” has the meaning specified in the Fee Letter.“Adverse Claim” shall mean a lien, security interest, charge or encumbrance, or other similar right or claim in, of oron any Person’s assets or properties in favor of any other Person.“Affected Person” shall mean the Administrative Agent, each Group Agent, each Lender, each Program SupportProvider and their respective Affiliates, permitted assignees, successors and participants.“Affiliate” shall mean with respect to any Person, any other Person directly or indirectly controlling, controlled by, orunder direct or indirect common control with, another Person or a Subsidiary of such other Person. A Person shall be deemed tocontrol another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of themanagement or policies of the controlled Person, whether through ownership of stock or otherwise. No Lender Party shall, solely as aresult of its status as a Lender Party, be deemed to be an Affiliate of the Borrower or TFL.“AIFM Regulation” shall mean Regulation (EU) No 231/2013.“AIFMD” shall mean the European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU).“Alternate Base Rate” shall mean, for any day, a fluctuating interest rate per annum as shall be in effect from time totime, which rate shall at all times be equal to the greatest of (i) the Prime Rate on such day, (ii) (x) the rate equal to the weightedaverage of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal fundsbrokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal ReserveBank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such dayfor such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it, plus(y) one-half of one percent (1/2%) and (iii) (x) the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitutepage of such service, providing rate quotations comparable to those currently provided on such page of such service, as determined bythe Administrative Agent from time to time in accordance with its customary practices for purposes of providing quotations of interestrates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m. (London time) on such day as the ratefor U.S. dollar deposits with a maturity of thirty (30) days, plus (y) one percent (1.00%).“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Tesla Partiesor their respective Subsidiaries from time to time concerning or relating to bribery or corruption.-2-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Assignment and Acceptance Agreement” shall mean an assignment and acceptance agreement entered into by aCommitted Lender, an Eligible Assignee, such Committed Lender’s Group Agent and the Administrative Agent, and, if required, theBorrower, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit Mhereto.“Assumption Agreement” has the meaning set forth in Section 12.10.“Authorized Signatory” shall have the meaning set forth in Section 9.02.“Automotive Lease Guide” shall mean (a) if available, the publication of such name which includes residual factorsor any successor to such publication consented to by the Administrative Agent and the Required Group Agents or (b) if suchpublication described in clause (a) is not available, any other publication reasonably acceptable to the Borrower, the AdministrativeAgent and the Required Group Agents.“Available Amounts” shall mean, with respect to any Payment Date and the related Settlement Period, the sum of thefollowing amounts, without duplication: (i) Collections, (ii) amounts transferred from the Reserve Account for such Payment Date, (iii)Repurchase Amounts, (iv) Reallocation Proceeds, (v) Interest Rate Hedge Receipts received for such Payment Date, and (vi) after anEvent of Default, all other amounts available in the Warehouse SUBI Collection Account on such Payment Date (other than fundsdeposited by the Borrower that are not proceeds of the Warehouse SUBI Assets or payable pursuant to the Warehouse SUBI ServicingAgreement or the Warehouse SUBI Sale Agreement to satisfy the minimum balance requirements of the depository institution holdingthe Reserve Account).“Available Facility Limit” shall mean the Facility Limit minus the Loan Balance.“Back-Up Servicer” shall mean, initially, Wells Fargo Bank, N.A., in its capacity as back-up servicer under theTransaction Documents, and any successor thereto in such capacity appointed pursuant to the Warehouse SUBI Servicing Agreement;provided, however, that if the Back-Up Servicer is terminated as provided in Section 5.3(b) of the Warehouse SUBI ServicingAgreement, then thereafter no Back-Up Servicer shall be required, no Back-up Servicing Fee shall be payable and all references to theBack-Up Servicer shall be ignored (except to the extent provided in Section 5.3(b) of the Warehouse SUBI Servicing Agreement).“Back-Up Servicing Fee” shall mean, with respect to the Warehouse SUBI, if there is a Back-Up Servicer, the feepayable on each Payment Date with respect to each Settlement Period equal to the “Back-Up Servicing Fee” specified in theWarehouse SUBI Servicing Agreement; provided that, during any period when a Back-Up Servicer is acting as Servicer, the Back-UpServicing Fee with respect to such Back-Up Servicer shall be zero.“Back-Up Servicing Fee Rate” shall mean the “Back-Up Servicing Fee Rate” specified in the Warehouse SUBIServicing Agreement.“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEAResolution Authority in respect of any liability of an EEA Financial Institution.“Bail-In Legislation” shall mean, with respect to any EEA Member Country implementing Article 55 of Directive2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA MemberCountry from time to time which is described in the EU Bail-In Legislation Schedule.-3-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Bank Interest Rate” shall mean, for any day during any Interest Period for any Loan (or any portion thereof), aninterest rate per annum equal to the Eurodollar Rate on such day; provided, however, that if any Lender shall have notified theBorrower that the introduction of or any change in, or in the interpretation of, any law or regulation makes it unlawful, or any centralbank or other governmental authority asserts that it is unlawful, for such Lender to fund such Loan at the Bank Interest Rate set forthabove (and such Lender shall not have subsequently notified the Borrower that such circumstances no longer exist), the Bank InterestRate for each day on and after such notice that has not been withdrawn by such Lender shall be an interest rate per annum equal to theAlternate Base Rate in effect on such day; and provided, further, however, that at all times following the occurrence and during thecontinuation of an Event of Default the Bank Interest Rate shall be the Default Rate.“Bankruptcy Code” shall mean the United States Bankruptcy Code, Title 11 United States Code.“Base Residual Value” shall mean, with respect to any Leased Vehicle and the related Lease, the lesser of (i) theTFL Residual Value, and (ii) the Mark-to-Market MRM Residual Value.“Base RV Limit” shall have the meaning specified in the Fee Letter.“Borrower” shall have the meaning specified in the preamble to this Agreement.“Breakage Fee” shall mean (i) for any Interest Period for which a repayment of a Loan is made for any reason onany day other than a Payment Date, or (ii) to the extent that the Borrower shall, for any reason, fail to borrow on the date specified bythe Borrower in connection with any request for funding pursuant to Article II of this Agreement, the amount, if any, by which (A) theadditional Interest and Usage Fee Amount (calculated without taking into account any Breakage Fee or any shortened duration of suchInterest Period pursuant to the definition thereof) which would have accrued during such Interest Period on the repaid principal amountof such Loan relating to such Interest Period had such reductions not been made (or, in the case of clause (ii) above, the amounts sofailed to be borrowed in connection with any such request for funding by the Borrower), exceeds (B) the income, if any, received bythe related Lender from the investment of the proceeds of such repaid principal amount of such Loan (or such amounts failed to beborrowed by the Borrower). A certificate as to the amount of any Breakage Fee (including the computation of such amount) shall besubmitted by such Lender to the Borrower and the Administrative Agent and shall be conclusive and binding for all purposes, absentmanifest error.“Business Day” shall mean (i) with respect to any matters relating to the determination of the Eurodollar Rate, a dayon which banks are open for business in the City of New York and on which dealings in Dollars are carried on in the Londoninterbank market, and (ii) for all other purposes, any day other than a Saturday, Sunday or other day on which banking institutions ortrust companies in the State of New York generally, the City of New York, Chicago, Illinois or Palo Alto, California, are authorized orobligated by law, executive order or governmental decree to be closed.“Certificate of Title” shall mean any certificate, instrument or other document or record issued or maintained by astate or other governmental authority in respect of any motor vehicle for the purpose of evidencing the ownership of, or any AdverseClaim in or against, such motor vehicle.“Change in Control” shall mean if TBM ceases to directly or indirectly own 100% of the equity and voting interestsof the Borrower free and clear of all Adverse Claims.-4-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Closing Date” shall mean the date on which the conditions precedent to the effectiveness of this Agreementcontained in Section 5.01 are satisfied or waived.“Collateral” shall have the meaning specified in Section 3.01(a).“Collateral Agency and Security Agreement” shall mean the Collateral Agency and Security Agreement, dated as ofAugust 16, 2018, among the Trust, TFL and the Collateral Agent.“Collateral Agent” means TLT Leasing Corp., a Delaware corporation.“Collection Account Bank” shall mean the depository institution at which the Warehouse SUBI Collection Accountis established.“Collections” shall mean, with respect to any Settlement Period, all amounts, whether in the form of wire transfer orother form of electronic transfer or payment, cash, checks or other instruments received by the Borrower or the Servicer or in aPermitted Lockbox, a Permitted Account or the Warehouse SUBI Collection Account received on or with respect to the WarehouseSUBI Leases and Warehouse SUBI Leased Vehicles during such Settlement Period, (a) including the following: (i) Monthly LeasePayments, Payments Ahead, Pull-Forward Payments, Prepayments, Administrative Charges and any other payments under theWarehouse SUBI Leases (other than Supplemental Servicing Fees); (ii) Net Liquidation Proceeds; (iii) any Net Insurance Proceeds notincluded in Net Liquidation Proceeds, and (iv) all payments made by the Servicer arising from a breach of its representations andwarranties made in the Warehouse SUBI Servicing Agreement or from a breach of any covenant of the Servicer made in theWarehouse SUBI Servicing Agreement, but (b) excluding such amounts received following such Settlement Period in respect ofWarehouse SUBI Leases and Warehouse SUBI Leased Vehicles that have been repurchased or reallocated on or prior to the relatedPayment Date pursuant to a Securitization Takeout or Section 2.7 of the Warehouse SUBI Sale Agreement and funds deposited by theBorrower that are not proceeds of the Warehouse SUBI Assets or payable pursuant to the Warehouse SUBI Servicing Agreement orthe Warehouse SUBI Sale Agreement to satisfy the minimum balance requirements of the depository institution holding an EligibleAccount shall not constitute Collections.“Commitment” or “Commitment Amount” of any Committed Lender shall mean:(i)with respect to each Committed Lender as of the date hereof, the “Commitment Amount" set forth for suchCommitted Lender on Schedule 8, as such amount may be reduced or increased in accordance with this Agreement from time to time;and(ii)with respect to any other Committed Lender, an amount equal to the amount set forth as its “CommitmentAmount” in the Assignment and Acceptance Agreement or Assumption Agreement pursuant to which such Committed Lenderbecame a party hereto or as otherwise agreed in writing by such Lender, in each case as such amount may be reduced or increased inaccordance with this Agreement from time to time; provided that, (x) the Commitment Amount of a Lender may be (x) increased ordecreased pursuant to the terms of this Agreement pursuant to Section 2.11 or Section 2.12 and (y) any termination of the FacilityLimit pursuant to Section 8.02 or Section 12.1 shall terminate ratably each Committed Lender’s then current Commitment.“Committed Lenders” shall mean each Committed Lender set forth on Schedule 8, and each other Person thatbecomes a party hereto as a Committed Lender pursuant to an Assignment and Acceptance Agreement, an Assumption Agreement orotherwise in accordance with this Agreement.-5-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Commitment Percentage” shall mean, with respect to each Lender on the relevant date of determination, thequotient (expressed as a percentage) obtained by dividing (a) the Commitment of such Lender (in each case, after giving effect to anyincrease or reduction of Commitment on such date) by (b) the Maximum Facility Limit (after giving effect to any increase or reductionin Maximum Facility Limit on such date).“Competitor” shall mean any Person that has as a majority of its business the manufacture of automobiles, or anyAffiliate of that entity.“Conduit Lender” shall mean each commercial paper conduit that becomes a party hereto as a Conduit Lenderpursuant to an Assumption Agreement or otherwise in accordance with this Agreement.“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income(however denominated) or that are franchise Taxes or branch profits Taxes. “Control” shall have the meaning specified in Section 8-106 (or other section of similar content as Section 8-106 ofthe UCC) of the Relevant UCC.“Control Agreement” shall mean a control agreement substantially in the form of Exhibit B hereto or otherwise inform and substance reasonably satisfactory to the Administrative Agent among the Borrower, the Servicer or the Administrative Agent,as secured party, and the depositary institution at which one or more Eligible Accounts subject to the Control Agreement aremaintained, as securities intermediary or deposit bank.“Credit and Collection Policy” shall mean the credit and collection policies and practices related to the WarehouseSUBI Leases and Warehouse SUBI Leased Vehicles maintained by the Servicer on behalf of the Trust pursuant to the WarehouseSUBI Servicing Agreement and attached hereto as Schedule 7, as such credit and collection policies and practices may be amendedfrom time to time in accordance with Section 4.1(b)(iv) of the Warehouse SUBI Servicing Agreement. If the Back-Up Servicerbecomes the Successor Servicer under the Warehouse SUBI Servicing Agreement, the Credit and Collection Policy shall be, withrespect to such Successor Servicer, those collection policies that the Back-Up Servicer uses to service similar assets and which at alltimes shall be consistent with the collection practices used by servicers of comparable size and experience.“Credit Loss” shall mean, with respect to any Settlement Period, the aggregate Securitization Value (determined as ofthe first day of such Settlement Period) of Warehouse SUBI Leases that became Defaulted Leases during such Settlement Period, netof all Net Liquidation Proceeds received during such Settlement Period with respect to Warehouse SUBI Leases that are DefaultedLeases.“Credit Loss Ratio” shall mean, for any Settlement Period, a fraction, expressed as a percentage, the numerator ofwhich equals the Credit Loss for such Settlement Period and the denominator of which equals the aggregate Securitization Value of allWarehouse SUBI Leases as of the first day of such Settlement Period.“Credit Loss Ratio Trigger” shall have the meaning specified in the Fee Letter.“CRR” shall mean Regulation No 575/2013 of the European Parliament and of the Council as published in theOfficial Journal of the European Union on 27 June 2013 as amended from time to time and as implemented by the Member States ofthe European Union, together with the Corrigendum to Regulation 575/2013.-6-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Cut-Off Date” shall mean, with respect to the Leases and Leased Vehicles allocated to the Warehouse SUBI, theclose of business on the last day of the calendar month immediately preceding the calendar month during which such Leases andLeased Vehicles are allocated to the Warehouse SUBI, or such other date agreed to by the Borrower and the Administrative Agent inconnection with the foregoing.“Debt” shall mean, as to any Person, at any date, without duplication, (i) all obligations of such Person for borrowedmoney, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations ofsuch Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course ofbusiness, (iv) all obligations of such Person as lessee under capital leases, (v) all Debt of others secured by a Lien on any asset of suchPerson, whether or not such Debt is assumed by such Person, (vi) all net obligations of such Person in respect of interest rate orcurrency hedges, (vii) all reimbursement obligations of such Person in respect of any letters of credit and (viii) all Debt of othersGuaranteed by such Person.“Default” shall mean an event which, but for the lapse of time or the giving of notice, or both, would constitute anEvent of Default. For the avoidance of doubt, a Default arising from a Change in Control shall not occur until the Change in Controlactually occurs.“Default Rate” shall mean, on any date, an interest rate per annum equal to the sum of the Alternate Base Rate onsuch date plus 2.0%.“Defaulted Lease” shall mean (x) any Lease for which an amount at least equal to 5% of any Monthly LeasePayment remains unpaid for more than 180 days from the original payment due date, or (y) with respect to any Lease that is delinquentless than 180 days, the Servicer has (i) determined, in accordance with the Credit and Collection Policy, that eventual payment in full isunlikely, or (ii) repossessed the related Leased Vehicle, or (z) a Lease with respect to which the Servicer has received notification thatthe related Lessee is the subject of a bankruptcy proceeding.“Defaulted Vehicle” shall mean a Warehouse SUBI Leased Vehicle the related Lease for which is a DefaultedLease.“Delaware Trustee” shall have the meaning specified in the Trust Agreement.“Delayed Amount” shall have the meaning specified in Section 2.01.“Delayed Funding Date” shall have the meaning specified in Section 2.01.“Delayed Funding Notice” shall have the meaning specified in Section 2.01.“Delayed Funding Notice Date” shall have the meaning specified in Section 2.01.“Delaying Group” shall have the meaning specified in Section 2.01.“Delaying Lender” shall have the meaning specified in Section 2.01.“Delinquency Ratio” shall mean, for any Settlement Period, the ratio (expressed as a percentage) of (i) the aggregateSecuritization Value of Warehouse SUBI Leases that are Delinquent Leases as of the last day of such Settlement Period to (ii) theaggregate Securitization Value of all Warehouse SUBI Leases as of the last day of such Settlement Period.-7-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Delinquency Ratio Trigger” shall have the meaning specified in the Fee Letter.“Delinquent Lease” shall mean a Lease which is not a Defaulted Lease and with respect to which an amount at leastequal to 5% of any Monthly Lease Payment remains unpaid for more than 60 days from the original due date of such payment.“Deposit Date” shall mean, with respect to a Settlement Period, the Business Day immediately preceding the relatedPayment Date.“Designated Ineligible Lease” shall mean a Lease as to which the Servicer has breached any of its covenants orobligations set forth in Section 2.2(d) or (e) of the Servicing Agreement.“Designated Person” shall mean a person or entity: (i)listed in the annex to, or otherwise the subject of the provisions of, any Executive Order; (ii)named as a “Specially Designated National and Blocked Person” (“SDN”) on the most current listpublished by OFAC at its official website or any replacement website or other replacement official publication of such list(“SDN List”) or is otherwise the subject of any Sanctions Laws and Regulations; or (iii)in which an entity or person on the SDN List has 50% or greater ownership interest or that is otherwisecontrolled by an SDN. “Determination Date” shall mean, with respect to any Payment Date, the 15th day of the calendar month in whichsuch Payment Date occurs, or, if such 15th day is not a Business Day, the next succeeding Business Day.“Dollars” or “$” shall mean the lawful currency of the United States of America.“Early Lease Termination Date” shall mean, with respect to any Lease, the date on which such Lease is terminatedprior to its Lease Maturity Date (including in connection with a Lease Pull-Forward) for a reason other than becoming a DefaultedLease.“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA MemberCountry which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Countrywhich is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEAMember Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidatedsupervision with its parent.“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein andNorway.“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with publicadministrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEAFinancial Institution.-8-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Electronic Chattel Paper” shall have the meaning specified in Section 9-102(a) of the UCC (or other section ofsimilar content of the Relevant UCC).“Electronic Lease Vault” shall mean the Electronic Chattel Paper vault system described in Schedule 3, using theeOriginal process for all vehicle leases originated by or for the Trust, including the Leases.“Eligible Account” shall mean either (i) a segregated trust account with the trust department of a depository institutionorganized under the laws of the United States of America or any State thereof or the District of Columbia (or any domestic branch of aforeign bank), having a short-term deposit rating of at least “A-1” by S&P and at least “P-1” by Moody’s, having trust powers andacting as trustee for funds deposited in such account, or (ii) a segregated deposit account with a depository institution organized underthe laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) the long-term depositobligations of which are rated “AA+” or higher by S&P and “Aa3” or higher by Moody’s and the short-term debt obligations of whichare rated “A-1” by S&P and “P-1” by Moody’s, (iii) a segregated securities account with a securities intermediary organized under thelaws of the United States of America or any State thereof (or any domestic branch of a foreign bank) the long-term deposit obligationsof which are rated “AA+” or higher by S&P and “Aa3” or higher by Moody’s and the short-term debt obligations of which are rated“A-1” by S&P and “P-1” by Moody’s or (iv) a segregated, non-interest bearing trust account established with the Paying Agent.“Eligible Assignee” shall mean a Person that is neither a Competitor nor a Person listed on Schedule 4 hereto nor anAffiliate thereof.“Eligible Interest Rate Hedge” shall mean an Interest Rate Hedge in form and substance acceptable to theAdministrative Agent which is entered into pursuant to and in compliance with Section 6.01(n) and which (i) in the case of an interestrate swap, designates “USD-LIBOR-BBA” (as defined in the ISDA Definitions) as the floating rate option with a designated maturityof one month; (ii) provides that any payments made by the Eligible Interest Rate Hedge Provider shall be made directly to theWarehouse SUBI Collection Account; (iii) includes an acknowledgment by the Eligible Interest Rate Hedge Provider of the collateralassignment of the applicable Interest Rate Hedge by the Borrower to the Administrative Agent, (iv) provides that it may not beamended, terminated, waived or assigned by the Eligible Interest Rate Hedge Provider without the prior written consent of theAdministrative Agent and each Group Agent, (v) has an amortizing notional amount in accordance with an amortization scheduleacceptable to the Administrative Agent, and (vi) which is not required to be “cleared” and does not require any posting of “margin.” “Eligible Interest Rate Hedge Provider” shall mean, with respect to an Interest Rate Hedge, (a) Deutsche Bank AG,Citibank, N.A. and any other Lender or Affiliate thereof, or (b) a financial institution that has applicable ratings equal to at least theRequired Ratings.“Eligible Investments” shall mean book-entry securities, negotiable instruments or securities represented byinstruments in bearer or registered form which evidence:(i)obligations of the United States or any agency thereof, provided such obligations are guaranteed as to thetimely payment of principal and interest by the full faith and credit of the United States;(ii)general obligations of or obligations guaranteed by any state of the United States or the District ofColumbia that at the time of acquisition thereof are assigned the highest ratings by S&P and Moody’s;-9-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(iii)interests in any money market mutual fund which at the date of investment in such fund has the highestfund rating by each of Moody’s and S&P which has issued a rating for such fund (which, for S&P, shall mean a rating of “AAAm” or“AAAmg”);(iv)commercial paper which at the date of investment has ratings of at least “A‑1” by S&P and “P-1” byMoody’s (including commercial paper meeting the foregoing criteria issued by a Committed Lender);(v)certificates of deposit, demand or time deposits, Federal funds or banker’s acceptances issued by anydepository institution or trust company incorporated under the laws of the United States or of any state thereof (or any U.S. branch oragency of a foreign bank) and subject to supervision and examination by Federal or state banking authorities, provided that the short-term unsecured deposit obligations of such depository institution or trust company at the date of investment are then rated at least “P-1”by Moody’s and “A-1” by S&P;(vi)demand or time deposits of, or certificates of deposit issued by, any bank, trust company, savings bank orother savings institution, which deposits are fully insured by the Federal Deposit Insurance Corporation, provided that the long-termunsecured debt obligations of such bank, trust company, savings bank or other savings institution are rated at the date of investment atleast “Aa2” by Moody’s and “AA-” by S&P; and(viii)such other investments approved by the Administrative Agent and each Group Agent.“Eligible Lease” shall mean a Lease as to which the following are true:(i)was originated in the United States by or for the Trust (A) in the ordinary course of the Trust’s businesswithout the involvement of any motor vehicle dealer that is not an Affiliate of Tesla, Inc., TFL or a Tesla Party, and (B) pursuant to aLease Origination Agreement which provides for recourse to Tesla, Inc. in the event of certain defects in the Lease, but not for defaultby the Lessee;(ii)the Lease and the related Leased Vehicle are owned by the Trust or a Trustee (or a co-trustee) on behalf ofthe Trust, free of all Liens;(iii)the Lease was originated in compliance with, and complies with, all material applicable legalrequirements, including, to the extent applicable, the Federal Consumer Credit Protection Act, Regulation M of the Board ofGovernors of the Federal Reserve, all federal and state leasing and consumer protection laws and all state and federal usury laws;(iv)all material consents, licenses, approvals or authorizations of, or registrations or declarations with, anyGovernmental Authority required to be obtained, effected or given by the originator of such Lease in connection with (A) theorigination of such Lease, (B) the execution, delivery and performance by such originator of such Lease and (C) the acquisition by theTrust or a Trustee (or a co-trustee) on behalf of the Trust of such Lease and the related Leased Vehicle, have been duly obtained,effected or given and are in full force and effect as of such date of origination or acquisition;-10-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(v)the Lease (A) is the legal, valid and binding full-recourse payment obligation of the related Lessee,enforceable against such Lessee in accordance with its terms, except as such enforceability may be limited by (I) applicablebankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement ofcreditors’ rights in general, or (II) general principles of equity (whether considered in a suit at law or in equity) and (B) is ElectronicChattel Paper and is not Tangible Chattel Paper, and there exists a single, authoritative copy of the record or records comprising suchElectronic Chattel Paper, which copy is unique and identifiable (all within the meaning of Section 9-105 of the UCC (or other sectionof similar content of the Relevant UCC)), held in the Electronic Lease Vault;(vi)(A) no right of rescission, setoff, counterclaim or any other defense (including defenses arising out ofviolations of usury laws) of the related Lessee to payment of the amounts due thereunder has been asserted or threatened with respectthereto and (B) the Lease has not been satisfied, subordinated, rescinded, canceled or terminated;(vii)the Lease is a closed-end Lease that (A) requires equal monthly payments to be made within not less than24, and not more than 60 months of the date of origination of such Lease, and (B) requires such payments to be made by the relatedLessee within 30 days after the billing date for such payment;(viii)the Lease is payable solely in Dollars;(ix)the related Lessee is a Person located in one or more of the 50 states of the United States or the District ofColumbia and is not (i) TFL or any of its Affiliates, or (ii) the United States of America or any State or local government or any agencyor political subdivision thereof;(x)the Lease requires the related Lessee to maintain insurance against loss or damage to the related LeasedVehicle under an insurance policy that names the Trust or a Trustee (or a co-trustee) on behalf of the Trust as a loss payee;(xi)the related Leased Vehicle is titled in the name of the Trust or a Trustee (or a co-trustee) on behalf of theTrust or such other name (which may be an abbreviation of any of the foregoing or other designation) as may be required by therelated registrar of title or applicable requirements of Law to reflect the interest of the Trust therein (or properly completed applicationsfor such title have been submitted to the appropriate titling authority) and all transfer and similar taxes imposed in connection therewithhave been paid;(xii)the Lease is fully assignable by the originator and does not require the consent of the related Lessee as acondition to any transfer, sale or assignment of the rights of the originator under such Lease;(xiii)(A) the original Lease Maturity Date has not been extended to a date more than six (6) months after suchoriginal Lease Maturity Date and, if such original Lease Maturity Date has been extended, such extension was made in accordancewith the Credit and Collection Policy and, at the time of such extension, there were no more than three scheduled payments remainingunder such Lease and all scheduled payments due by the related Lessee prior to the date of such extension have been paid in full and(B) the other provisions of such Lease have not been adjusted, waived or modified, in each case in any material respect, except inaccordance with the Credit and Collection Policy;(xiv)the Lease was originated in accordance with all material requirements of the Credit and CollectionPolicy;-11-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(xv)the Lease is not (a) solely for the date of determination when such Lease is to be allocated to theWarehouse SUBI on a Warehouse SUBI Lease Allocation Date, a Lease for which, as of the related Cut-Off Date, an amount at leastequal to 5% of any Monthly Lease Payment remains unpaid for more than 29 days, (b) a Delinquent Lease, (c) a Defaulted Lease or(d) a Lease as to which any of the payments shall have been waived (other than deferrals and waivers of late payment charges or feesowing to the Servicer as Supplemental Servicing Fees permitted under the Warehouse SUBI Servicing Agreement or for whichServicer has made or is obligated to make a corresponding deposit in the SUBI Collection Account (as defined in the WarehouseSUBI Servicing Agreement) under the Warehouse SUBI Servicing Agreement);(xvi)the Lease is a “true lease”, as opposed to a lease intended as security, under the laws of the State inwhich it was originated;(xvii)the Lease fully amortizes to an amount equal to the TFL Residual Value based on the related lease rate,which is calculated on a constant yield basis, and provides for level payments over its term (except for the payment of such TFLResidual Value);(xviii)the Securitization Value of the Lease, as of its origination date, is greater than $[***] but not greaterthan $200,000;(xix)no selection procedures reasonably anticipated to be adverse to the Lender Parties were utilized inselecting such Lease from among the Leases allocated to the TBM SUBI meeting the other selection criteria set forth in this definition;(xx)the related Leased Vehicle was sold by Tesla, Inc. to the Trust or by a Subsidiary of Tesla, Inc.originating the Lease to the Trust, in each case without any fraud or material misrepresentation by Tesla, Inc. or such Subsidiary;(xxi)the Lease does not contain a confidentiality provision that purports to restrict the ability of theAdministrative Agent or any Lender to exercise its rights under this Agreement, including its right to review the Lease;(xxii)with respect to which the related Lessee has not been identified on the records of TFL as currentlybeing the subject of an Event of Bankruptcy;(xxiii)with respect to which there is no material breach, default, violation or event of acceleration existingunder the Lease, and there is no event which, with the passage of time, or with notice and the expiration of any grace or cure period,would constitute a material default, breach, violation or event of acceleration;(xxiv)the Lessee of which (x) receives a statement, invoice or other instruction directing payment to aPermitted Lockbox or a Permitted Account or (y) authorizes the Servicer to debit the Lessee’s account for each scheduled payment;(xxv)[Reserved];(xxvi)with respect to which TFL is not required to perform any additional service for, or perform or incur anyadditional obligation to, the related Lessee in order to enforce the related Lease;-12-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(xxvii)the related Leased Vehicle is new on the date of origination of such Lease;(xxviii)a Lessee of which (or, if the Lessee is an entity, a natural person who is the co-lessee or guarantorunder the Lease and an owner of the Lessee) has a FICO Score of not less than 600;(xxix)the Lessee of which is a Lessee of no more than two other existing Leases; and(xxx)the Lease provides that the Excess Mileage Fee applies if mileage exceeds a threshold not greater than15,000 miles per year.“Entitlement Holder” shall have the meaning specified in Section 8-102(a)(7) of the UCC (or other section of similarcontent of the Relevant UCC).“ERISA” shall mean the Employee Retirement Income Security Act of 1974.“ERISA Affiliate” shall mean, with respect to any Person, any other Person which is a member of any group oforganizations (i) described in Section 414(b) or (c) of the Internal Revenue Code of which such initial Person is a member, or (ii) solelyfor the purposes of potential liability under Section 412 of the Internal Revenue Code, described in Section 414(m) or (o) of theInternal Revenue Code of which such initial Person is a member.“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan MarketAssociation (or any successor person), as in effect from time to time.“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of theFederal Reserve System, as in effect from time to time.“Eurodollar Rate” shall mean:(i)with respect to any Lender in the Group for which Royal Bank of Canada is the Group Agent for each dayduring any Interest Period, (a) the rate per annum (carried out to the fifth decimal place) equal to the rate determined by Royal Bank ofCanada to be the offered rate that appears on the page of the Reuters Screen on such day that displays an average British BankersAssociation Interest Settlement Rate (such page currently being LIBOR01) for deposits in United States dollars with a term equivalentto one month; (b) in the event the rate referenced in the preceding subsection (a) does not appear on such page or service or such pageor service shall cease to be available, the rate per annum (carried to the fifth decimal place) equal to the rate determined by Royal Bankof Canada to be the offered rate on such day on such other page or other service that displays an average British Bankers AssociationInterest Settlement Rate for deposits in United States dollars (or, if such rate is not available on a successor or substitute service, suchcomparable rate published on such other service as selected by Royal Bank of Canada from time to time for purposes of providingquotations of interest rates applicable to United States dollar deposits in the London interbank market) with a term equivalent to onemonth; or (c) in the event the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determinedby Royal Bank of Canada on such day as the rate of interest at which Dollar deposits (for delivery on a date two Business days laterthan such day) in same day funds in the approximate amount of the applicable investment to be funded by reference to the LIBORRate and with a term equivalent to one month would be offered by its London Branch to major banks in the London interbankeurodollar market at their request; or-13-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(ii)with respect to any Lender in any other Group, with respect to an Interest Period, an interest rate perannum equal to the rate for one-month deposits in Dollars, which rate is designated as “LIBOR01” on the Reuters Money 3000Service as of 11:00 a.m., London time, two (2) LIBOR Business Days prior to the first day of such Interest Period; provided, however,that (a) in the event that no such rate is shown, the LIBOR Rate shall be determined by reference to such other comparable availableservice for displaying Eurodollar rates as may be reasonably selected by the Administrative Agent; (b) in the event that the rateappearing on such page or as so determined by the Administrative Agent shall be less than zero, such rate shall be deemed to be zerofor the purposes of this Agreement, and (c) if no such service is available, the LIBOR Rate shall be the rate per annum equal to theaverage (rounded upward to the nearest 1/100th of 1%) of the rate at which the Administrative Agent offers deposits in Dollars at orabout 10:00 a.m., New York City time, two (2) LIBOR Business Days prior to the beginning of the related Interest Period, in theinterbank eurocurrency market where the eurocurrency and foreign currency and exchange operations in respect of its Eurodollar loansare then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in anamount comparable to the applicable portion of the Loan Balance to be accruing interest at the LIBOR Rate during such InterestPeriod.“European Union” shall mean the supranational organization of states established with that name by the Treaty onEuropean Union (signed in Maastricht on 7 February 1992) as enlarged or reduced by the Treaty of Accession (signed in Athens on 16April 2003), and as may be enlarged from time to time by the agreement of the member states thereof.“eVault Letter Agreement” shall mean that certain letter agreement relating to Warehouse SUBI Leases dated on orabout December 27, 2018, by and among TFL, the Trust, the Administrative Agent and eOriginal, Inc.“Event of Bankruptcy” shall mean, for any Person:(i)that such Person shall admit in writing its inability to, pay its debts as they become due; or(ii)a proceeding shall have been instituted seeking a decree or order for relief in respect of such Person in aninvoluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the appointment ofa receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person or for all orsubstantially all of its property, or for the winding-up or liquidation of its affairs and (A) an order for relief is entered or (B) suchproceeding remains unstayed or undismissed for a period of 60 days in a court having jurisdiction in the premises; or(iii)the commencement by such Person of a voluntary case under any applicable bankruptcy, insolvency orother similar law now or hereafter in effect, or such Person’s consent to the entry of an order for relief in an involuntary case under anysuch law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator,conservator or other similar official of such Person or for all or substantially all of its property, or any general assignment for the benefitof creditors; or(iv)the holders of the equity of such Person or the board of directors or board of managers or other governingbody of such Person shall adopt any resolution for such Person authorizing any of the actions set forth in the preceding clause (iii).“Event of Default” shall mean an event described in Section 8.01.-14-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Excess Concentration Amount” shall mean, with respect to all Warehouse SUBI Leases that are Eligible Leases onsuch date, the sum of, without duplication, the amounts (if any) by which:(i)the aggregate Securitization Value of all Warehouse SUBI Leases that are Eligible Leases with LeaseMaturity Dates occurring more than 48 months from the date of origination of such Leases exceeds the 48+ Month Limit;(ii)if such date is on or after April 30, 2019, the aggregate Base Residual Value of all Warehouse SUBILeases that are Eligible Leases scheduled to reach their Lease Maturity Date in any one (1) month exceeds the Single Month MaturityLimit;(iii)if such date is on or after June 30, 2019, the aggregate Base Residual Value of all Warehouse SUBILeases that are Eligible Leases scheduled to reach their Lease Maturity Date in any 6 consecutive months exceeds the Six MonthMaturity Limit;(iv)if such date is on or after the 90th day after the Closing Date, the amount by which the aggregate BaseResidual Value of all Warehouse SUBI Leases that are Eligible Leases exceeds the Base RV Limit;(v)the aggregate Securitization Value of all Warehouse SUBI Leases that are Eligible Leases that cause theweighted average FICO Score of all Lessees (or, if a Lessee is an entity, the natural person who is the co-lessee or guarantor under theapplicable Lease and an owner of such Lessee) of all Warehouse SUBI Leases that are Eligible Leases to be less than the WA FICOLimit; in determining which Warehouse SUBI Lease causes such weighted average FICO Score to be less than the WA FICO Limit,the Warehouse SUBI Lease or Warehouse SUBI Leases most recently originated or purchased by the Trust shall be treated as causingsuch breach;(vi)the aggregate Securitization Value of all Warehouse SUBI Leases that are Eligible Leases with respect towhich the FICO Score of the related Lessee (or, if a Lessee is an entity, the natural person who is the co-lessee or guarantor under theapplicable Lease and an owner of such Lessee) of such Eligible Leases is less than the Minimum FICO Limit Score exceeds theMinimum FICO Limit;(vii) the aggregate Securitization Value of all Warehouse SUBI Leases originated in any state (other than California)that are Eligible Leases exceeds the Single State (Non-CA) Limit;(viii)if such date is on or after the 90th day after the Closing Date, the aggregate Securitization Value of allWarehouse SUBI Leases originated in the State of California that are Eligible Leases exceeds the Single State (CA) Limit; and(ix)the aggregate Securitization Value of all Warehouse SUBI Leases that are Extended Leases exceeds theExtended Lease Limit.“Excess Mileage Fee” shall mean, with respect to any Lease or Leased Vehicle, any applicable charge for excessmileage.“Excess Wear and Tear Fee” shall mean, with respect to any Lease or Leased Vehicle, any applicable charge forexcess wear and tear.-15-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to bewithheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated),franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, orhaving its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (orany political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amountspayable to or for the account of such Recipient with respect to an interest in a Loan or Commitment (or its interest as an agenthereunder) pursuant to a law in effect on the date on which (i) such Recipient acquires such interest in the Loan or Commitment (oragency interest) or (ii) such Recipient changes its lending office, except in each case to the extent that, pursuant to Section 11.02,amounts with respect to such Taxes were payable either to such Recipient's assignor immediately before such Lender became a partyhereto or to such Recipient immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to complywith Section 11.02(f) and (d) any Taxes imposed under FATCA.“Extended Lease” shall mean an Eligible Lease as to which the original Lease Maturity Date has been extended.“Extended Lease Limit” shall have the meaning specified in the Amended and Restated Fee Letter.“Facility Limit” shall mean, initially, $1,100,000,000, and thereafter, such amount may be increased or decreasedfrom time to time in accordance with Section 2.11 and Section 2.12 or terminated in accordance with Section 8.02 or Section 12.01.“FATCA” shall mean Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (orany amended or successor version that is substantively comparable and not materially more onerous to comply with), any current orfuture regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal RevenueCode, any published intergovernmental agreement entered into in connection with the implementation of such sections of the InternalRevenue Code and any fiscal or regulatory legislation adopted pursuant to such published intergovernmental agreements.“Fee Letter” shall mean the Fee Letter dated as of December 27, 2018 among the Borrower, the AdministrativeAgent, the Group Agents and the Lenders.“FICO Score” shall mean statistical credit scores based on methodology developed by Fair, Isaac & Company, andwhich are obtained by lenders in connection with lease applications to help assess a lessee’s creditworthiness.“Financial Asset” shall have the meaning specified in Section 8-102(a)(9) of the UCC (or other section of similarcontent of the Relevant UCC).“Finco Warehouse” shall mean the Loan and Security Agreement dated as of August 17, 2017 among the LMLWarehouse SPV, LLC, TFL, Deutsche Bank AG, New York Branch, as administrative agent and the lenders and group agents partythereto, as amended from time to time.“Foreign Lender” shall mean a Lender that is not a U.S. Person.-16-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of theAccounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of theFinancial Accounting Standards Board or in such other statements or pronouncements by such other entity as approved by a significantsegment of the accounting profession, which are in effect from time to time.“Governmental Authority” shall mean any nation or government, any state, county, city, town, district, board,bureau, office commission, any other municipality or other political subdivision thereof (including any educational facility, utility orother Person operated thereby), and any agency, department or other entity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government.“Group” shall mean, for any Committed Lender, Conduit Lender or Group Agent from time to time party hereto, (a)in the case of any Committed Lender, such Committed Lender, its Related Conduit Lender(s) (if any) and its Group Agent, (b) in thecase of any Conduit Lender, such Conduit Lender, its Related Committed Lender’s other Related Conduit Lender(s) (if any), itsRelated Committed Lender and its Group Agent and (c) in the case of any Group Agent, such Group Agent and the CommittedLender and Conduit Lender(s) (if any) for whom such Group Agent acts as agent hereunder.“Group Agent” shall mean each Person acting as agent on behalf of a Group and designated as the Group Agent forsuch Group on the signature pages to this Agreement or any other Person who becomes a party to this Agreement as a Group Agentfor any Group pursuant to an Assumption Agreement, an Assignment and Acceptance Agreement or otherwise in accordance with thisAgreement.“Group Agent Account” shall mean, with respect to any Group, the account(s) designated in writing by theapplicable Group Agent to the Borrower, the Servicer and the Administrative Agent for purposes of receiving payments to or for theaccount of the members of such Group hereunder.“Guarantee” shall mean, as to any Person, any obligation, contingent or otherwise, of such Person directly orindirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct orindirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of)such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities orservices, to take-or-pay, or to maintain financial statement conditions or otherwise), or (ii) entered into for the purpose of assuring inany other manner the obligee of such Debt the payment thereof or to protect such obligee against loss in respect thereof (in whole or inpart); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course ofbusiness. The term “Guarantee” used as a verb has a corresponding meaning.“Indemnified Amounts” shall have the meaning specified in Section 11.01.“Indemnified Parties” shall mean the Administrative Agent, the Group Agents, the Lenders, the Paying Agent, theAffected Persons and their respective assigns (if such assign is permitted under the Transaction Documents), officers, directors, agentsand employees.“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any paymentmade by or on account of any obligation of the Borrower hereunder and (b) to the extent not otherwise described in (a), Other Taxes.-17-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Initial Loan Balance” shall mean the principal amount of the initial Loans made by the Lenders to the Borrower onthe Initial Loan Date.“Initial Loan Date” shall mean the first Business Day on which Leases are allocated to the Warehouse SUBI and theLenders fund the initial Loans under this Agreement.“Insurance Expenses” shall mean any Insurance Proceeds (i) applied to the repair of the related Warehouse SUBILeased Vehicle, or (ii) released to the related Lessee in accordance with applicable law.“Insurance Policy” shall mean any insurance policy (including any self-insurance), including any residual valueinsurance policy, guaranteed automobile protection policy, comprehensive, collision, public liability, physical damage, personalliability, contingent and excess liability, accident, health, credit, life or unemployment insurance or any other form of insurance orself‑insurance, to the extent that any such policy or self‑insurance covers or applies to the Trust, the Warehouse SUBI, any WarehouseSUBI Lease, any Warehouse SUBI Leased Vehicle, any Lease or the ability of a Lessee to make required payments with respect to therelated Warehouse SUBI Lease or the related Warehouse SUBI Leased Vehicle.“Insurance Proceeds” shall mean, with respect to any Warehouse SUBI Leased Vehicle, Warehouse SUBI Lease orLessee, amounts paid to the Servicer, the Trust or a Trustee on behalf of the Trust under an Insurance Policy and any rights thereunderor proceeds therefrom (including any self‑insurance or applicable deductible).“Interest” shall mean, for any Interest Period (or portion thereof), the amount of interest accrued on the Loan Balanceduring such Interest Period (or portion thereof) in accordance with Section 2.02.“Interest Carryover Shortfall” shall mean, with respect to any Payment Date, the sum of (a) the excess of (i) theInterest Distributable Amount for the preceding Payment Date over (ii) the amount that was actually paid to the Lenders in respect ofInterest, Usage Fee Amount and Unused Fee Amount on such preceding Payment Date, and (b) interest on such excess, to the extentpermitted by applicable law, by reference to the Default Rate for the period from such preceding Payment Date to but excluding thecurrent Payment Date.“Interest Distributable Amount” shall mean, with respect to any Payment Date, an amount equal to the sum of (i) theaggregate amount of Interest, Usage Fee Amount and Unused Fee Amount accrued during the related Interest Period and (ii) theInterest Carryover Shortfall for such Payment Date.“Interest Period” shall mean each period commencing on the first day of each calendar month (or, in the case of theinitial Interest Period hereunder, the Closing Date) and ending on the last day of such calendar month (or in the case of the initialInterest Period, the last day of December, 2018, or in the case of the final Interest Period hereunder, the final Payment Date).“Interest Rate” shall mean, for any day during any Interest Period for any Loan (or any portion thereof):(i)if such Loan (or such portion thereof) is being funded by a Conduit Lender on such day through theissuance of Short-Term Notes, the applicable Short-Term Note Rate; or-18-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(ii)if such Loan (or such portion thereof) is being funded on such day by any Lender other than a ConduitLender, or by a Conduit Lender other than through the issuance of Short-Term Notes (including if a Conduit Lender is then fundingsuch Loan (or such portion thereof) under a Program Support Agreement or if a Committed Lender is then funding such Loan (or suchportion thereof)), the applicable Bank Interest Rate.“Interest Rate Hedge” shall mean interest rate swap or interest rate cap transactions between the Borrower and one ormore Eligible Interest Rate Hedge Providers which satisfies the definition of Eligible Interest Rate Hedge.“Interest Rate Hedge Payment” shall mean, with respect to an Interest Rate Hedge and any Payment Date, any netamount required to be paid (other than an Interest Rate Hedge Termination Payment) under such Interest Rate Hedge by the Borrowerto an Interest Rate Hedge provider in respect of such Payment Date.“Interest Rate Hedge Provider” means any Person that has entered into an Interest Rate Hedge with the Borrower.“Interest Rate Hedge Receipt” shall mean any net payment made to the Warehouse SUBI Collection Account by anInterest Rate Hedge provider pursuant to an Interest Rate Hedge.“Interest Rate Hedge Termination Payment” shall mean, with respect to an Interest Rate Hedge, the payment due bythe Borrower to the related Interest Rate Hedge provider or by such Interest Rate Hedge provider to the Borrower, including anyinterest that may accrue thereon, upon the occurrence of an “early termination date” under such Interest Rate Hedge.“Interest Rate Hedge Trigger Event” shall mean the Eurodollar Rate is greater than 2.5% per annum for a period offive consecutive Business Days (measured at the close of each such Business Day).“Internal Revenue Code” shall mean the U.S. Internal Revenue Code of 1986.“Lease” shall mean any lease contract for a Leased Vehicle entered into for or by the Trust or a Trustee on behalf ofthe Trust.“[***]” shall mean [***], an [***] corporation.“[***] Subservicing Agreement” shall mean the Servicing Agreement dated as of December 18, 2013 between [***]as subservicer and the Servicer.“Lease Documents” shall mean, with respect to each Lease, (i) the Lease (the electronic authoritative copy beingheld in the Electronic Lease Vault), (ii) any documentation of the Lessee’s insurance coverage customarily aintained by the Servicer,(iii) a copy of the application or application information of the related Lessee, together with supporting information customarilymaintained by the Servicer which may include the following: factory invoices related to new vehicles, credit scoring information orTrust purchase documentation, and odometer statements required by applicable law, (iv) the original Certificate of Title (or a copy ofthe application therefor if the Certificate of Title has not yet been delivered by the applicable Registrar of Titles) or such otherdocuments, if any, that the Servicer keeps on file in accordance with its customary practices indicating that title to the related LeasedVehicle is in the name of the Trust (or such other name as directed by the Servicer pursuant to Section 1(d) of the Warehouse SUBIServicing Agreement), and (v) any and all other-19-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.documents that the Servicer keeps on file in accordance with its customary practices related to such Lease or the related LeasedVehicle or Lessee, including any written agreements modifying such Lease (including any extension agreements). Any of the items setforth in (i) through (v) may be photocopies or other images thereof (including in electronic form) that the Servicer may keep on file inaccordance with its customary servicing procedures.“Lease Implicit Rate” shall mean, with respect to any Lease, the annual rate of finance charges used to determine theperiodic rental payments stated in such Lease.“Lease Maturity Date” shall mean with respect to any Lease, the date on which such Lease is scheduled to terminateas set forth in such Lease at its date of origination, as such date may be extended.“Lease Origination Agreement” shall mean an agreement between TFL and Tesla, Inc. or a Subsidiary of Tesla, Inc.under which Tesla, Inc. or such Subsidiary originates Leases for the Trust, as the designee of TFL.“Lease Pool” shall mean the Leases allocated to the Warehouse SUBI on any Warehouse SUBI Lease AllocationDate.“Lease Pull-Forward” shall mean, as of any date, any Lease that has been terminated by the related Lessee beforethe related Lease Maturity Date under any “pull-forward”, “pull-ahead” or other marketing program in order to allow such Lessee,among other things, (i) to enter into a new lease contract for a new Tesla vehicle, or (ii) to purchase a new Tesla vehicle; provided thatthe Lessee is not in default on any of its obligations under the related Lease.“Leased Vehicle” shall mean a Tesla automobile, together with all accessories, parts and additions constituting a partthereof, and all accessions thereto, leased to a Lessee pursuant to a Lease.“Lender Party” shall mean any Lender, any Group Agent, the Administrative Agent or any Program SupportProvider.“Lenders” shall mean the Conduit Lenders and the Committed Lenders.“Lessee” shall mean each Person that is a lessee under a Lease, including any Person that executes a guarantee onbehalf of such lessee.“Lessor” shall mean the Trust, as lessor under a Lease.“LIBOR Business Day” shall mean any day of the year other than a Saturday, Sunday or any day on which bankinginstitutions in San Francisco, California, New York, New York or London, England generally are required or authorized to be closed.“Lien” shall mean any security interest, lien, charge, pledge, equity or encumbrance of any kind, other than tax liens,mechanics’ liens, any liens that attach to property by operation of law and statutory purchase liens to the extent not past due.-20-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Limited Liability Company Agreement” shall mean the Limited Liability Company Agreement of the Borrowerdated as of December 27, 2018.“Liquidation Expenses” shall mean reasonable out-of-pocket expenses (not to exceed, for any vehicle, theLiquidation Proceeds for such vehicle) incurred by the Servicer in connection with the attempted realization of the full amounts due orto become due under any Lease, including expenses of any collection effort (whether or not resulting in a lawsuit against the Lesseeunder such Lease) or other expenses incurred prior to repossession, recovery or return of the Leased Vehicle, expenses incurred inconnection with the sale or other disposition of a Leased Vehicle that has been repossessed or recovered or has become a TerminatedLease and expenses incurred in connection with making claims under any related Insurance Policy.“Liquidation Proceeds” shall mean gross amounts received by the Servicer (including Excess Mileage Fees, ExcessWear and Tear Fees and sales proceeds referred to in clause (i) of the definition of Off-Lease Net Liquidation Proceeds) in connectionwith the attempted realization of the full amounts due or to become due under any Lease and of the full value of the related LeasedVehicle, whether from the sale or other disposition of the related Leased Vehicle (irrespective of whether or not such proceeds exceedthe related Base Residual Value), the proceeds of any repossession, recovery or collection effort, the proceeds of recourse or similarpayments payable under the related Lease Origination Agreement, receipt of Insurance Proceeds, application of the related SecurityDeposit, the proceeds of any disposition fees or otherwise.“Liquidity Agent” shall mean any Person acting as the administrator, administrative agent, program administrator orin any similar capacity with respect to a Conduit Lender’s Short-Term Note issuance program.“Liquidity Agreement” shall mean any agreement entered into in connection with this Agreement pursuant to which aLiquidity Provider agrees to make purchases or advances to, or purchase assets from, a Conduit Lender in order to provide liquidity forsuch Conduit Lender’s interests hereunder.“Liquidity Provider” shall mean each bank or other financial institution that provides liquidity support to a ConduitLender pursuant to a Liquidity Agreement.“Loan” shall mean a loan made under this Agreement by a Lender to the Borrower.“Loan Balance” shall mean at any time the outstanding principal amount of all Loans.“Loan Increase Date” shall mean, (i) with respect to the Warehouse SUBI Assets allocated to the Warehouse SUBIon the Initial Loan Date, the Initial Loan Date, and (ii) with respect to any subsequent Loan, the date on which such Loan is madepursuant to Section 2.01(b) and 5.02.“Loan Maturity Date” shall mean the Payment Date in September 2020.“Loan Request” shall mean a loan request in substantially the form of Exhibit A to this Agreement.“Mark to Market Adjustment Date” shall mean (i) the last day of each of February, May, August and November,commencing on February 28, 2019, (ii) during the continuance of an Event of Bankruptcy with respect to Tesla, Inc. or TFL, the lastday of the month on which such Event of Bankruptcy occurs, and the last day of every second month thereafter and (iii) the last day ofany month in which a Servicer Default described in clauses (h) or (i) of the definition thereof shall have occurred and is continuing.-21-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Mark-to-Market MRM Residual Value” shall mean, with respect to any Warehouse SUBI Leased Vehicle and therelated Lease, as of any date, the lesser of (i) the expected value of such Leased Vehicle at the related Lease Maturity Date using aresidual value estimate produced by Automotive Lease Guide (assuming that the vehicle is in “average” condition) based on the“Maximum Residualizable MSRP,” which consists of the MSRP of the typically equipped vehicle and value adding options, givingonly partial credit or no credit for those options that add little or no value to the resale price of the vehicle, calculated as of the last dayof the calendar month immediately preceding the most recent Mark to Market Adjustment Date prior to and, if applicable, includingsuch date and (ii) the residual value estimate produced by Automotive Lease Guide (based as above) calculated as of the contract dateof the related Lease; provided, however, that if the contract date of the related Lease for a Warehouse SUBI Lease is after the last dayof the calendar month immediately preceding the most recent Mark to Market Adjustment Date, as of any date, then the initial Mark-to-Market MRM Residual Value for such Warehouse SUBI Lease shall be equal to the amount in clause (ii) above; provided further,however, that for an Extended Lease (a) the amount in clause (ii) above shall be adjusted downward by the total amount of additionalscheduled principal payments in the extended term and (b) until the next Mark to Market Adjustment Date after the date such Leasebecomes an Extended Lease, the amount in clause (i) above shall be adjusted downward by the total amount of additional scheduledprincipal payments in the extended term. “Material Adverse Effect” shall mean a material adverse effect on (i) the financial condition or operations of the TeslaParties and TFL, taken as a whole, (ii) the ability of any Tesla Party or TFL to perform its material obligations under this Agreement orany other Transaction Document, (iii) the legality, validity or enforceability of any material provision of this Agreement or any otherTransaction Document, (iv) the Administrative Agent’s security interest in all or any significant portion of the Collateral, or (v) thecollectability of all or any significant portion of the Warehouse SUBI Assets; provided, that, for purposes of clause (i), a MaterialAdverse Effect shall not include effects arising out of acts of terrorism or war or the escalation or worsening thereof, weatherconditions, or other force majeure events.“Matured Vehicle” as of any date shall mean any Leased Vehicle the related Lease of which has reached its LeaseMaturity Date, which Leased Vehicle has been returned to the Servicer.“Maximum Facility Limit” shall mean $1,100,000,000, as such amount may be increased or reduced from time totime in accordance with Section 2.11 or terminated in accordance with Section 8.02 and Section 12.01.“Maximum Facility Limit Increase Amount” shall have the meaning specified in Section 2.11.“Maximum Facility Limit Increase Date” shall have the meaning specified in Section 2.11.“Maximum Facility Limit Increase Notice” shall have the meaning specified in Section 2.11.“Maximum Facility Limit Reallocation Date” shall have the meaning specified in Section 2.12.“Maximum Facility Limit Reallocation Notice” shall have the meaning specified in Section 2.12.“Maximum Facility Limit Reduction Amount” shall have the meaning specified in Section 2.11.“Maximum Facility Limit Reduction Date” shall have the meaning assigned such term in Section 2.11.-22-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Maximum Facility Limit Reduction Notice” shall have the meaning assigned such term in Section 2.11.“Maximum Loan Balance” shall mean, as of any date, the product of:(x) the Advance Rate,multiplied by(y) the amount equal to:(A) the Securitization Value of all Warehouse SUBI Leases on such date (determined as of the last day ofthe Settlement Period immediately preceding such date or, with respect to any new Lease Pool allocated to the Warehouse SUBI onsuch date, as of the related Cut-Off Date),minus(B) without duplication, the sum of (1) the aggregate Securitization Value of all Warehouse SUBI Leasesthat are Defaulted Leases, (2) the aggregate Securitization Value of all Terminated Leases, (3) the aggregate Securitization Value of allWarehouse SUBI Leases that are Delinquent Leases, (4) the aggregate Securitization Value of all Warehouse SUBI Leases that are notEligible Leases, (5) the Excess Concentration Amount as of such date, (6) the aggregate Securitization Value of all DesignatedIneligible Leases as of such date, and (7) the aggregate Securitization Value of all Warehouse SUBI Leases and/or Warehouse SUBILeased Vehicles required to be purchased by the Servicer or required to be reallocated by the Borrower to the TBM SUBI on suchdate, to the extent included in clause (y)(A).“Member State” shall mean a member state of the European Union.“Minimum FICO Limit” shall have the meaning specified in the Fee Letter.“Minimum FICO Limit Score” shall have the meaning specified in the Fee Letter.“Monthly Lease Payment” shall mean, with respect to any Lease, the amount of each fixed monthly payment payableby the related Lessee in accordance with the terms thereof, net of any portion of such fixed monthly payment that represents anAdministrative Charge.“Monthly Remittance Condition” shall mean (i) TFL is the Servicer, (ii) no Event of Default or Servicer Default hasoccurred, and (iii) TFL has the Required Ratings.“Moody’s” shall mean Moody’s Investors Service, Inc., together with its successors.“MSRP” shall mean, with respect to any Leased Vehicle, the manufacturer’s suggested retail price.“Multiemployer Plan” shall mean, with respect to any Person, a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding five years contributed to by suchPerson or any of its ERISA Affiliates on behalf of its employees and which is covered by Title IV of ERISA.-23-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Net Insurance Proceeds” shall mean Insurance Proceeds net of related Insurance Expenses.“Net Liquidation Proceeds” shall mean Liquidation Proceeds net of related Liquidation Expenses.“Notice of Termination” shall have the meaning specified in Section 8.02(a).“Notice of Warehouse SUBI Lease Allocation” shall have the meaning specified in the Warehouse SUBI SaleAgreement.“OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets Control.“Official Body” shall mean any government or political subdivision or any agency, authority, bureau, central bank,commission, department or instrumentality of either, or any court, federal or state regulatory authority, tribunal, grand jury or arbitrator,in each case, whether foreign or domestic.“Off-Lease Net Liquidation Proceeds” shall mean for each Terminated Vehicle sold during or prior to any SettlementPeriod, (i) the sales proceeds received in such Settlement Period from the sale of the Terminated Vehicle, minus (ii) related LiquidationExpenses.“Off-Lease Residual Value Net Liquidation Proceeds” shall mean, for each Warehouse SUBI Lease that has reachedits Turn In Date during any of the three consecutive Settlement Periods ended on the last day of the calendar month immediatelypreceding any RVLR Calculation Date, an amount equal to (i) the sum of (A) the proceeds received during such three consecutiveSettlement Periods resulting solely from the sale of the related Leased Vehicle at auction, or from a sale to the related Lessee, butexcluding, in each case, any such proceeds arising from a sale or other disposition to TFL or any Affiliate of TFL other than to Tesla,Inc., on an arms-length basis, or advances made by, TFL or any Affiliate of TFL, and (B) any applicable Excess Wear and Tear Feesand Excess Mileage Fees received during such three consecutive Settlement Periods, but excluding any such fees paid or advanced byor on behalf of TFL or any Affiliate of TFL, minus (ii) any reconditioning expenses related to the foregoing. Notwithstanding theforegoing, the “Off-Lease Residual Value Net Liquidation Proceeds” of any Leased Vehicle the Turn In Date for which is more than60 days after the related Lease Maturity Date shall be zero. For the avoidance of doubt, “Off-Lease Residual Value Net LiquidationProceeds” do not relate to (or include) any Lease that has reached its Turn In Date if, at any time of determination, the related LeasedVehicle has remained in TFL’s auction inventory.“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present orformer connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from suchRecipient having executed, delivered, become a party to, performed its obligations under, received payments under, received orperfected a security interest under, engaged in any other transaction pursuant to or enforced this Agreement, or sold or assigned aninterest in any Loan or this Agreement).“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similarTaxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from thereceipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are OtherConnection Taxes imposed with respect to an assignment.“Participant” shall have the meaning specified in Section 12.10(g).-24-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Participant Register” shall have the meaning specified in Section 12.10(h).“Paying Agent” shall mean the Person appointed as such pursuant to Section 9.01.“Paying Agent Account” shall mean the account with such name established and maintained pursuant to Section2.06.“Payments Ahead” shall mean any payment of all or a part of one or more Monthly Lease Payments remitted by aLessee with respect to a Lease in excess of the Monthly Lease Payment due with respect to such Lease, which amount the Lessee hasinstructed the Servicer to apply to Monthly Lease Payments due in one or more subsequent Settlement Periods; provided, however,that Payments Ahead shall exclude Pull-Forward Payments.“Payment Date” shall mean the twentieth (20th) day of each calendar month or, if such day is not a Business Day,the next succeeding Business Day, commencing on January 22, 2019.“Payoff Date” shall mean the first date following the Termination Date on which the Loan Balance has beenindefeasibly reduced to zero and all accrued Interest, Usage Fee Amount, Unused Fee Amount and all other Secured Obligations havebeen indefeasibly paid in full.“PBGC” shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of itsfunctions under ERISA.“Percentage” shall mean, at any time with respect to any Committed Lender, a fraction (expressed as a percentage),(a) the numerator of which is (i) prior to the termination of all Commitments hereunder, its Commitment Amount at such time or (ii) ifall Commitments hereunder have been terminated, the aggregate principal amount of all Loans being funded by the Lenders in suchCommitted Lender’s Group at such time, and (b) the denominator of which is (i) prior to the termination of all Commitmentshereunder, the aggregate Commitment Amounts of all Committed Lenders at such time or (ii) if all Commitments hereunder have beenterminated, the aggregate principal amount of all Loans at such time.“Permitted Account” shall mean each demand deposit or other account approved by the Administrative Agent andeach Group Agent and maintained in the United States with a bank for depositing payments made by (or on behalf of) Lesseesincluding payments made by wire transfer or other methods of electronic payment or transfer.“Permitted Lockbox” shall mean a post office box approved by the Administrative Agent and each Group Agent andlocated in the United States maintained by a bank for the purpose of receiving payments made by (or on behalf of) the Lessees.“Person” shall mean any legal person, including any individual, corporation, partnership, joint venture, association,limited liability company, joint stock company, trust, business trust, bank, trust company, estate (including any beneficiaries thereof),unincorporated organization or government or any agency or political subdivision thereof.-25-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Plan” shall mean a “defined benefit plan” (as defined in Section 3(35) of ERISA), which is subject to Title IV ofERISA or Section 412 of the Internal Revenue Code (other than a Multiemployer Plan) with respect to which the Borrower or any ofits ERISA Affiliates was an “employer” (as defined in Section 3(5) of ERISA) during the current year or immediately preceding fiveyears.“Pool Cut Report” shall mean a report substantially in the form of Exhibit E hereto.“Portfolio Performance Condition” shall mean, on any date of determination, the occurrence of any one or more ofthe following events:(i)the annualized average of the Delinquency Ratios for any three (3) consecutive Settlement Periods shallexceed [***]%; or(ii)the Residual Value Loss Ratio, as of any Statistically Significant RVLR Calculation Date shall be greaterthan [***]%; or(iii)the annualized average of the Credit Loss Ratios for the three (3) most recent Settlement Periods shallexceed [***]%;provided, however, that a Portfolio Performance Condition shall no longer be deemed to be continuing if:(x)with respect to the Portfolio Performance Condition referred to in clause (i), the annualized average of theDelinquency Ratios for the three (3) most recent consecutive Settlement Periods subsequent to the occurrence of such Condition shallbe less than or equal to [***]%,(y)with respect to the Portfolio Performance Condition referred to in clause (ii), the Residual Value LossRatio as of the first Statistically Significant RVLR Calculation Date subsequent to the occurrence of such Condition shall be less thanor equal to [***]%,(z)with respect to the Portfolio Performance Condition referred to in clause (iii), the annualized average of theCredit Loss Ratios for the three (3) most recent Settlement Periods subsequent to the occurrence of such Condition shall be less than orequal to [***]%.“Potential Servicer Default” shall mean an event which, but for the lapse of time or the giving of notice, or both,would constitute a Servicer Default.“Prepayment” shall mean payment by a Lessee or other obligor in connection with an early termination of a Lease.“Prime Rate” shall mean, as of any date of determination, a per annum rate equal to the “Prime Rate” listed in“Money Rates” section of The Wall Street Journal (Northeast edition), changing when and as such rate changes.“Principal Carryover Shortfall” shall mean, with respect to any Payment Date, the excess of the PrincipalDistributable Amount for the preceding Payment Date over the amount that was actually paid to the Lenders in reduction of the LoanBalance on such preceding Payment Date, plus interest thereon at the Default Rate for the period from the preceding Payment Date tosuch Payment Date.-26-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Principal Distributable Amount” shall mean, for any Payment Date, the aggregate amount of principal payable onthe Loans, equal to the sum of (i) the Principal Distribution Amount and (ii) the Principal Carryover Shortfall for such PaymentDate. Notwithstanding the above, the Principal Distributable Amount shall not exceed the Loan Balance.“Principal Distribution Amount” shall mean, with respect to any Payment Date:(i)with respect to any Payment Date that is not during a Turbo Amortization Period, the amount (if any) bywhich the Loan Balance (before giving effect to any payment pursuant to Section 2.04(c) in respect thereof on such Payment Date, butafter giving effect to any increase in respect thereof if such Payment Date is a Loan Increase Date) exceeds the Maximum LoanBalance for such Payment Date; or(ii)with respect to any Payment Date during a Turbo Amortization Period, all remaining Available Amountsafter giving effect to the payments pursuant to Sections 2.04(c)(i) through (v) on such Payment Date.“Proceeds” shall mean “proceeds” as defined in Section 9-102(a) of the UCC (or other section of similar content ofthe Relevant UCC).“Program Support Agreement” shall mean any Liquidity Agreement and any other agreement entered into by anyProgram Support Provider providing for: (a) the issuance of one or more letters of credit for the account of a Conduit Lender, (b) theissuance of one or more surety bonds for which a Conduit Lender is obligated to reimburse the applicable Program Support Providerfor any drawings thereunder, (c) the sale by any Conduit Lender to any Program Support Provider of any Loan (or portions thereof orparticipation interest therein) and/or (d) the making of loans and/or other extensions of credit to a Conduit Lender in connection withsuch Conduit Lender’s Short-Term Note issuance program, together with any letter of credit, surety bond or other instrument issuedthereunder.“Program Support Provider” shall mean any Liquidity Agent, any Liquidity Provider and any other Person now orhereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, a ConduitLender pursuant to any Program Support Agreement.“Pull-Forward Payment” shall mean, with respect to any Lease Pull-Forward, the Monthly Lease Payments not yetdue with respect to the affected Lease.“Quarterly Report Date” shall mean the Determination Date in each of the months of March, June, September andDecember.“Rating Agency” shall mean S&P, Moody’s, Fitch Inc., DBRS, Inc., Kroll Bond Rating Agency, or any othernationally recognized statistical rating organization.“Reallocation Proceeds” shall mean (a) the proceeds allocated from the TBM SUBI to the Warehouse SUBI inconnection with a Securitization Take-Out (if any), or (b) the payment by TBM (or by TFL on TBM’s behalf pursuant to Section3.1A(c) of the Warehouse SUBI Servicing Agreement) in connection with the reallocation of any Lease from the Warehouse SUBI tothe TBM SUBI (such payment to be not less than the Securitization Value of such Lease) arising from a breach of TBM’s statementsand representations made in the Warehouse SUBI Sale Agreement.-27-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Recipient” shall mean (a) the Administrative Agent, (b) each Group Agent and (c) each Lender.“Recommenced TFL Facility Borrowing Date” shall mean the first TFL Loan Increase Date to occur after theClosing Date.“Register” shall have the meaning set forth in Section 12.10.“Regulatory Requirement” shall mean (i) the adoption after the date hereof of any applicable law, rule or regulation(including any applicable law, rule or regulation regarding capital adequacy or liquidity coverage) or any change therein after the datehereof, (ii) any change after the date hereof in the interpretation or administration thereof by any governmental authority, central bankor comparable agency charged with the interpretation or administration thereof, or compliance with any request or directive (whether ornot having the force of law) of any such authority, central bank or comparable agency; provided that for purposes of this definition, (x)the United States bank regulatory rule titled Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance:Regulatory Capital; Impact of Modification to Generally Accepted Accounting Principles; Consolidation of Asset-Backed CommercialPaper Programs; and Other Related Issues, adopted on December 15, 2009, (y) the Dodd-Frank Wall Street Reform and ConsumerProtection Act and all requests, rules, guidelines or directives thereunder, issued in connection therewith or in implementation thereof,and (z) all requests, rules, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee onBanking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case bedeemed to be a “Regulatory Requirement”, regardless of the date enacted, adopted, issued or implemented.“Related Committed Lender” shall mean, with respect to any Conduit Lender, each Committed Lender which is, orpursuant to any Assignment and Acceptance Agreement or Assumption Agreement or otherwise pursuant to this Agreement becomes,included as a Committed Lender in such Conduit Lender’s Group, as designated on its signature page hereto or in such Assignmentand Acceptance Agreement, Assumption Agreement or other agreement executed by such Committed Lender, as the case may be.“Related Conduit Lender” shall mean, with respect to any Committed Lender, each Conduit Lender which is, orpursuant to any Assignment and Acceptance Agreement or Assumption Agreement or otherwise pursuant to this Agreement becomes,included as a Conduit Lender in such Committed Lender’s Group, as designated on its signature page hereto or in such Assignmentand Acceptance Agreement, Assumption Agreement or other agreement executed by such Committed Lender, as the case may be.“Relevant UCC” shall mean the Uniform Commercial Code as in effect from time to time in all applicablejurisdictions.“Repurchase Amount” shall mean, with respect to any Lease to be repurchased by TBM pursuant to Section 2.7 ofthe Warehouse SUBI Sale Agreement (or by TFL on TBM’s behalf pursuant to Section 3.1A(c) of the Warehouse SUBI ServicingAgreement), the Securitization Value of such Lease as of the end of the Settlement Period preceding the Deposit Date in which suchrepurchase occurs.“Required Aggregate Notional Principal Amount” shall mean, at any time with respect to all Eligible Interest RateHedges in full force and effect at such time, an aggregate notional amount at such time and at all future Payment Dates equal to (a)upon the occurrence of the Interest Rate Hedge Trigger Event or upon-28-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.entering into or terminating any Interest Rate Hedge thereafter pursuant to Section 6.01(n), the Loan Balance at such time and theexpected Loan Balance on each future Payment Date, in accordance with an amortization schedule agreed between the Borrower andthe Administrative Agent, and (b) at any other time after the occurrence of the Interest Rate Hedge Trigger Event, an amount not lessthan 90% and not greater than 110% of the Loan Balance on such date and not less than 90% and not greater than 110% of theexpected Loan Balance on such future Payment Date.“Required Discount Rate” shall have the meaning specified in the Fee Letter.“Required Group Agents” shall mean at any time (a) if there are two or fewer Group Agents, then all Group Agents,and (b) if there are more than two Group Agents, (i) Group Agents for Lenders then holding more than fifty percent (50%) of theCommitments then in effect, or (ii) if the Commitments have terminated, Group Agents for Lenders then holding more than fiftypercent (50%) of the Loans (Group Agents that are Affiliates of one another being considered as one Group Agent for purposes of thisproviso).“Required Ratings” shall mean both of (1) either a short term rating from S&P of at least “A-1” or a long-termunsecured rating from S&P of at least “AA+” and (2) either a short term rating from Moody’s of at least “P-1” or a long-termunsecured rating from Moody’s of at least “Aa1.”“Required Reserve Account Balance” shall mean, as of any date, an amount equal to (x) the product of (a) 1.0%times (b) the aggregate Securitization Value of all outstanding Warehouse SUBI Leases on such date, after giving effect to theallocation (if any) of a Lease Pool to the Warehouse SUBI on such date and a Securitization Take-Out (if any) on such date plus (y)the amount of funds deposited by the Borrower that are not proceeds of the Warehouse SUBI Assets or payable pursuant to theWarehouse SUBI Servicing Agreement or the Warehouse SUBI Sale Agreement to satisfy the minimum balance requirements of thedepository institution holding the Reserve Account; provided that (1) on any date on and after the date on which any Commitmentsterminate, the Required Reserve Account Balance shall be an amount equal to the Required Reserve Account Balance in effect on theday immediately preceding such date on which such Commitments terminate, and (2) on any date on and after the payment of all fundsin the Reserve Account to the Lenders following the maturity of the Loan Balance has been accelerated after the occurrence of anEvent of Default, the Required Reserve Account Balance shall be the amount of funds needed to satisfy the minimum balancerequirements of the depository institution holding the Reserve Account, or if there is no such requirement, zero.“Required Supermajority Group Agents” shall mean at any time (a) if there are two or fewer Group Agents, then allGroup Agents, and (b) if there are more than two Group Agents, (i) Group Agents for Lenders then holding more than sixty-six andtwo-thirds percent (66-2/3%) of the Commitments then in effect, or (ii) if the Commitments have terminated, Group Agents for Lendersthen holding more than sixty-six and two-thirds percent (66-2/3%) of the Loans (Group Agents that are Affiliates of one another beingconsidered as one Group Agent for purposes of this proviso).“Requirements of Law” shall mean, for any Person, any law, treaty, rule or regulation, or determination of anarbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject,whether federal, state or local (including usury laws and the federal Truth in Lending Act).-29-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Reserve Account” shall mean the account with such name established and maintained pursuant to Section 2.06.“Residual Value Loss Ratio” shall mean, for any RVLR Calculation Date, and with respect to those WarehouseSUBI Leases which reached their respective Lease Maturity Dates during or prior to such three consecutive Settlement Periods and forwhich Off-Lease Residual Value Net Liquidation Proceeds were received during the three consecutive Settlement Periods ended onthe last day of the calendar month immediately preceding such RVLR Calculation Date, a fraction expressed as a percentage, (a) thenumerator of which is the difference between the aggregate Base Residual Values of such Warehouse SUBI Leases and the aggregateOff-Lease Residual Value Net Liquidation Proceeds received with respect to such Warehouse SUBI Leases, and (b) the denominatorof which is the aggregate Base Residual Values of such Warehouse SUBI Leases.“Residual Value Loss Ratio Trigger” shall have the meaning specified in the Fee Letter.“Response Date” shall have the meaning specified in Section 2.10.“Responsible Officer” shall mean with respect to (i) the Borrower or TFL, any of the president, chief executiveofficer, chief financial officer, treasurer or any vice president of the Borrower or TFL, as the case may be or (ii) the Paying Agent, anymanaging director, director, vice president, assistant vice president, associate or trust officer of the Paying Agent customarilyperforming functions with respect to corporate trust matters and, with respect to a particular matter under this Agreement, any otherofficer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, in each case,having direct responsibility for the administration of this Agreement.“Retained Interest” shall mean, to the extent required by the Retention Requirements, a material net economicinterest of not less than five percent (5.0%) of the aggregate Securitization Value of all Warehouse SUBI Leases.“Retention Requirements” shall mean each of: (a) Article 405 of the CRR, together with (i) the CommissionDelegated Regulation (EU) 625/2014 of 13 March 2014 and any regulatory technical standards, implementing technical standards orrelated documents published by the European Banking Authority, European Central Bank (or any other successor or replacementagency or authority) and any delegated regulations of the European Commission; and (ii) to the extent informing the interpretation ofArticle 405 of the CRR, the guidelines and related documents previously published in relation to the preceding European Union riskretention legislation by the European Banking Authority (and/or its predecessor, the Committee of European Banking Supervisors); (b)Article 17 of the AIFMD, as supplemented by Article 51 of the AIFM Regulation; (c) Article 254 Commission Delegated Regulation(EU) 2015/35 (the Solvency II Regulation), (d) in relation to each of the foregoing, any guidance published in relation thereto and anyimplementing laws or regulations in force in any Member State of the European Union and (e) in each case, any law or regulationsuperseding or replacing such requirements (or regulatory guidance published in relation thereto).“RVLR Calculation Date” shall mean the last day of each February, May, August and November, commencing onFebruary 28, 2019.“S&P” shall mean Standard & Poor’s Rating Group, together with its successors.-30-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Sanctioned Country” shall mean, at any time, a country or territory which is the subject or target of any Sanctions.“Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Personsmaintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by theUnited Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in aSanctioned Country or (c) any Person controlled by any such Person.“Sanctions” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced fromtime to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Departmentof the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’sTreasury of the United Kingdom.“Scheduled Expiration Date” shall mean August 16, 2019, unless such date shall be extended from time to time inaccordance with Section 2.10.“Secured Obligations” shall mean, at any time, (i) all accrued and unpaid Interest Distributable Amounts at suchtime, (ii) the Loan Balance at such time, (iii) the Borrower’s obligations under all Interest Rate Hedges, and (iv) all other fees andamounts (whether due or accrued) owing to the Secured Parties under this Agreement or the Fee Letter or any other TransactionDocument at such time.“Secured Parties” shall mean the Lenders, the Group Agents, the Administrative Agent, the Interest Rate Hedgeproviders and each other Indemnified Party and Affected Person.“Securitization Take-Out” shall have the meaning specified in Section 2.09(b).“Securitization Take-Out Certificate” shall have the meaning specified in Section 2.09(b).“Securitization Take-Out Collateral” shall mean, with respect to any Securitization Take-Out, all or a portion of theWarehouse SUBI Leases selected by the Borrower and satisfying the conditions set forth in Section 2.09(b) and employing no adverseselection procedures in connection with such Securitization Take-Out (excluding, however, any Lease subject to a repurchase orreallocation obligation) that the Borrower has agreed to reallocate to the TBM SUBI in connection with a securitization or other type offinancing or refinancing and that are designated by the Borrower and specified in the related Securitization Take-Out Certificate.“Securitization Take-Out Date” shall mean, with respect to any Securitization Take-Out, the date on which suchSecuritization Take-Out occurs.“Securitization Take-Out Price” shall mean, with respect to Warehouse SUBI Leases reallocated to the TBM SUBIpursuant to a Securitization Take-Out, the amount by which the Loan Balance must be reduced such that, after giving effect to therelated Securitization Take-Out, the Loan Balance does not exceed the Maximum Loan Balance.“Securitization Value” shall mean, with respect to any Lease and any date, determined as of the last day of theSettlement Period immediately preceding such date (or, with respect to any Lease allocated to the Warehouse SUBI on such date, as ofthe related Cut-Off Date), until reset on the last day of the succeeding-31-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Settlement Period, an amount equal to the sum of the present values of (i) all remaining Monthly Lease Payments scheduled to be dueafter the day on which such Securitization Value is determined (or, in the case of the Securitization Value of any Lease allocated to theWarehouse SUBI on such date, after the related Cut-Off Date), calculated in each case assuming that such Monthly Lease Paymentswill be paid on a timely basis and (ii) the Base Residual Value (discounted from the date that is one month after the Lease MaturityDate of such Lease), in each case calculated by discounting such sum by the Required Discount Rate applicable on the day on whichsuch Securitization Value is determined.“Security Deposit” shall mean, with respect to any Lease, the refundable security deposit specified in such Lease.“Servicer” shall mean TFL, in its capacity as Servicer under the Warehouse SUBI Servicing Agreement and thisAgreement, together with its successors and assigns in such capacity.“Servicer Default” shall have the meaning specified in the Warehouse SUBI Servicing Agreement.“Servicing Agreement” shall mean the Servicing Agreement dated as of November 6, 2013 between the Trust andTFL as Servicer.“Servicing Fee” shall mean, with respect to the Warehouse SUBI, the fee payable on each Payment Date withrespect to each Settlement Period equal to one-twelfth of the product of (i) the Servicing Fee Rate and (ii) the daily averageSecuritization Value of the Warehouse SUBI Leases during such Settlement Period.“Servicing Fee Rate” shall mean 1.0% per annum.“Settlement Period” shall mean with respect to any Determination Date, any Payment Date or any other date, theimmediately preceding calendar month. With respect to any Determination Date or Payment Date, the “related Settlement Period”shall mean the Settlement Period ending on the last day of the month preceding the month in which such Determination Date orPayment Date occurs.“Settlement Statement” shall mean the monthly statement prepared by the Servicer substantially in the form ofExhibit A to the Fee Letter.“Short-Term Note Rate” shall mean, with respect to any Conduit Lender for any period (including any day, InterestPeriod or portion thereof) for any Loan, the rate identified on Schedule 9 hereto or the rate designated as the “Short-Term Note Rate”for such Conduit Lender in an Assignment and Acceptance Agreement or Assumption Agreement in each case which is agreed to bythe Borrower and pursuant to which such Person became or becomes a party hereto as a Conduit Lender, or any other writing oragreement provided by such Conduit Lender to the Borrower, the Servicer, the Administrative Agent and the applicable Group Agentand agreed to by the Borrower from time to time. Notwithstanding the foregoing, at all times following the occurrence and during thecontinuation of an Event of Default, the Short-Term Note Rate shall be an interest rate per annum equal to the Default Rate.“Short-Term Notes” shall mean the short-term commercial paper notes issued or to be issued by or on behalf of aConduit Lender (or, solely in the case of Salisbury Receivables Company LLC, by or on behalf of Sheffield Receivables CompanyLLC) to fund or maintain the Loans or investments in other financial assets.-32-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Single Month Maturity Limit” shall have the meaning specified in the Fee Letter.“Single State (CA) Limit” shall have the meaning specified in the Fee Letter.“Single State (Non-CA) Limit” shall have the meaning specified in the Fee Letter.“Six Month Maturity Limit” shall have the meaning specified in the Fee Letter.“Solvent” shall mean, as to any Person at any time, having a state of affairs such that (i) the fair value of the propertyowned by such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities)as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code; (ii) the present fairsalable value of the property owned by such Person in an orderly liquidation of such Person is not less than the amount that will berequired to pay the probable liability of such Person on its debts as they become absolute and matured; (iii) such Person is able torealize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as theymature in the normal course of business; (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilitiesbeyond such Person’s ability to pay as such debts and liabilities mature; and (v) such Person is not engaged in business or a transaction,and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital.“State” shall mean any state of the United States of America or the District of Columbia.“Statistically Significant RVLR Calculation Date” shall mean any RVLR Calculation Date if, during the threeSettlement Periods ended on the last day of the calendar month immediately preceding such RVLR Calculation Date, at least fifty (50)Leases reached their Turn In Dates during such three Settlement Periods.“SUBI Trustee” shall have the meaning specified in the Trust Agreement.“Subsidiary” shall mean, for any Person, any corporation or other business organization more than 50% of theoutstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or moresuch corporations or organizations owned or controlled, directly or indirectly, by such Person and one or more of its Subsidiaries, andany partnership of which such Person or any such corporation or organization is a general partner.“Successor Servicer” shall have the meaning specified in the Warehouse SUBI Servicing Agreement.“Successor Servicer Engagement Fee” shall mean the fee payable to the Back-Up Servicer upon its becoming theSuccessor Servicer under the Warehouse SUBI Servicing Agreement.“Supermajority Terms” shall mean (i) the definition of “Base Residual Value”; (ii) the definition of “Change inControl”; (iii) the definition of “Credit Loss Ratio Trigger”; (iv) the definition of “Delinquency Ratio Trigger”; (v) the definition of“Eligible Lease”; (vi) the individual limits in the definition of “Excess Concentration Amount”; (vii) the definition of “Interest RateHedge Trigger Event”; (viii) the definition of “Mark-to-Market MRM Residual Value”; (ix) the definition of “Maximum LoanBalance”; (x) the definition of “Portfolio Performance Condition”; (xi) the definition of “Required Discount Rate”; (xii) the definitionof “Required-33-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Reserve Account Balance”; (xiii) the definition of “Residual Value Loss Ratio Trigger”; (xiv) the definition of “Securitization Value”;(xv) the definition of “Servicer Default”; (xvi) the definition of “Tesla Change in Control”; (xvii) the definition of “Turbo AmortizationPeriod”; (xviii) Section 2.04; (xix) Section 6.01(n); (xx) Section 6.03; and (xxi) Section 8.01.“Supplemental Servicing Fees” shall mean all late payments, NSF check fees and other similar administrative feespayable by a Lessee under the terms of a Lease.“Tangible Chattel Paper” shall have the meaning specified in Section 9-102(a) of the UCC (or other section ofsimilar content of the Relevant UCC).“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backupwithholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax orpenalties applicable thereto.“TBM” shall mean TBM Partnership II, LLC, a Delaware limited liability company.“TBM Partnership Agreement” shall mean the limited liability company agreement of TBM, dated as of November21, 2018, as the same may be amended from time to time.“TBM SUBI” shall mean the special unit of beneficial interest in the Trust created by the TBM SUBI Supplementand identified as the “TBM II SUBI.”“TBM SUBI Holder” shall mean the beneficiary of the TBM SUBI, initially TBM.“TBM SUBI Servicing Agreement” shall mean the TBM II SUBI Servicing Agreement, dated November 21, 2018,between the Trust, TFL and the back-up servicer party thereto.“TBM SUBI Supplement” shall mean the TBM II SUBI Supplement to Trust Agreement, dated as of November 21,2018, by and among TFL, as Settlor and Initial Beneficiary, U.S. Bank Trust, as SUBI Trustee, Administrative Trustee and UTITrustee, and TBM.“TBM SUBI Trustee” shall mean the SUBI Trustee of the TBM SUBI.“Terminated Lease” shall mean a Warehouse SUBI Lease that has reached its Lease Maturity Date or Early LeaseTermination Date.“Terminated Vehicle” shall mean a Warehouse SUBI Leased Vehicle the related Lease for which is a TerminatedLease.“Termination Date” shall mean the earlier to occur of (i) the occurrence of an Event of Default, and (ii) theScheduled Expiration Date.“Tesla Change in Control” shall mean the occurrence of any of the following:-34-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(i)an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d)and 14(d) of the Securities Exchange Act of 1934, but excluding Elon Musk and any of his heirs, beneficiaries or trusts), becomes the“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or groupshall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right isexercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of equity interestsrepresenting a majority of the voting power for election of members of the board of directors or equivalent governing body of Tesla,Inc. on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant toany option right); or(ii)Tesla, Inc. ceases to directly or indirectly own and control, 80% of the equity and voting interests of TFLfree and clear of all Adverse Claims.“Tesla Party” shall mean the Borrower or the Trust.“TFL” shall have the meaning specified in the preamble to this Agreement“TFL Administrative Agent” shall mean the “Administrative Agent,” as such term is defined in the TFL WarehouseAgreement.“TFL Borrower” shall mean Tesla 2014 Warehouse SPV LLC.“TFL Borrower Default” shall mean the occurrence of any “Event of Default,” as such term is defined in the TFLWarehouse Agreement.“TFL Facility Limit” shall mean the “Facility Limit,” as such term is defined in the TFL Warehouse Agreement.“TFL Group Agent” shall mean a “Group Agent,” as such term is defined in the TFL Warehouse Agreement.“TFL Loan Balance” shall mean the “Loan Balance,” as such term is defined in the TFL Warehouse Agreement.“TFL Loan Increase Date” shall mean a “Loan Increase Date,” as such term is defined in the TFL WarehouseAgreement.“TFL Paying Agent” shall mean the “Paying Agent” as such term is defined in the TFL Warehouse Agreement.“TFL Residual Value” shall mean, with respect to any Leased Vehicle, the expected value of such Leased Vehicle atthe Lease Maturity Date of the related Lease as determined by TFL and set forth in such Lease.“TFL Transaction Documents” shall mean the “Transaction Documents,” as such term is defined in the TFLWarehouse Agreement.-35-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“TFL Warehouse Agreement” shall mean the Amended and Restated Loan and Security Agreement dated as ofAugust 17, 2017 among the TFL Borrower, TFL, the Administrative Agent and the lenders and group agents party thereto, as thesame may be amended from time to time.“Transaction Documents” shall mean the Trust Agreement, the Warehouse SUBI Supplement, the Warehouse SUBIServicing Agreement, the [***] Subservicing Agreement, the eVault Letter Agreement, the Warehouse SUBI Sale Agreement, thisAgreement, the Collateral Agency and Security Agreement, the Fee Letter, each Loan Request, each Settlement Statement, eachNotice of Warehouse SUBI Lease Allocation, each Interest Rate Hedge and each other agreement, report, certificate or other documentdelivered by any Tesla Party, Tesla, Inc. or TFL (other than in its capacity as managing member of TBM) pursuant to or in connectionwith this Agreement. For the avoidance of doubt, the TFL Transaction Documents, the TBM Partnership Agreement and the TBMSUBI Supplement shall not constitute Transaction Documents under this Agreement.“Trust” shall mean Tesla Lease Trust, a Delaware statutory trust, together with its successors and assigns.“Trust Agreement” shall mean that certain Trust Agreement, dated as of November 6, 2013, between TFL, as Settlorand Initial Beneficiary, and U.S. Bank Trust National Association, as UTI Trustee, Administrative Trustee and Delaware Trustee, asthe same may be amended from time to time.“Trust Assets” shall have the meaning specified in the Trust Agreement.“Trustee” shall mean U.S. Bank Trust in its capacity as Administrative Trustee, Delaware Trustee, UTI Trustee orany SUBI Trustee of the Trust.“Trustee Bank” shall mean U.S. Bank Trust in its individual capacity.“Turbo Amortization Period” shall mean (i) a period commencing on the occurrence of a Servicer Default andending on (x) if Lenders have not delivered a Warehouse SUBI Servicer Termination Notice to the Servicer pursuant to Section 5.1 ofthe Warehouse SUBI Servicing Agreement on or prior to the 30th day after the occurrence of such Servicer Default, then on such 30thday, (y) if the Lenders have delivered a Warehouse SUBI Servicer Termination Notice to the Servicer pursuant to Section 5.1 of theWarehouse SUBI Servicing Agreement on or prior to the 30th day after the occurrence of such Servicer Default and a SuccessorServicer is appointed pursuant to Section 5.2 of the Warehouse SUBI Servicing Agreement on or prior to the 45th day (or such laterdate specified in writing by the Group Agents in their sole and absolute discretion) after the date such Warehouse SUBI ServicerTermination Notice has been delivered, the date on which such Successor Servicer is so appointed, and (z) if neither of clauses (x) or(y) is applicable, then the date on which all Secured Obligations have been paid in full, and (ii) the period commencing on theTermination Date and ending on the date on which all Secured Obligations have been paid in full.“Turn In Date” shall mean, with respect to any Lease, (a) the date on which the related Leased Vehicle is returned toTFL by the related Lessee if (but only if) such date is (i) no earlier than 90 days prior to the Lease Maturity Date for such Lease, or (ii)on, or any date after, the Lease Maturity Date for such Lease, or (b) the Lease Maturity Date if the related Leased Vehicle has not beenpurchased by the related Lessee or returned to TFL by such date.-36-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.“Unused Fee” shall mean, with respect to any Commitment of any Committed Lender, an amount equal to theproduct of (i) the Unused Fee Rate, times (ii) the excess, if any, of (x) such Committed Lender’s Commitment Amount on such day,over (y) the outstanding principal amount of Loans of the Lenders in such Committed Lender’s Group on such day times (iii) 1/360.“Unused Fee Amount” shall mean, for any Interest Period (or portion thereof) the amount of the Unused Fee accruedduring such Interest Period (or portion thereof).“Unused Fee Rate” shall have the meaning specified in the Fee Letter.“U.S. Bank Trust” shall mean U.S. Bank Trust National Association, a national banking association.“U.S. Person” shall mean a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.“Usage Fee” shall mean, with respect to any Lender, for each day an amount equal to the product of (i) the UsageFee Rate on such day, times (ii) the outstanding principal amount of such Lender’s Loans on such day, times (iii) 1/360.“Usage Fee Amount” shall mean, for any Interest Period (or portion thereof) the amount of the Usage Fee accruedduring such Interest Period (or portion thereof).“Usage Fee Rate” shall have the meaning specified in the Fee Letter.“UTI” shall mean the undivided interest in the Trust, excluding any special units of beneficial interest.“UTI Beneficiary” shall mean the beneficiary of the UTI.“UTI Trustee” shall have the meaning specified in the Trust Agreement.“WA FICO Limit” shall have the meaning specified in the Fee Letter.“Warehouse SUBI” shall mean the special unit of beneficial interest in the Trust created by the Warehouse SUBISupplement and identified as the “LML 2018 Warehouse SUBI.”“Warehouse SUBI Assets” shall mean: (i) cash related to the Warehouse SUBI or the Warehouse SUBI Assets,including all Collections; (ii) the Warehouse SUBI Leases; (iii) the Warehouse SUBI Leased Vehicles; (iv) all other Trust Assets to theextent related to or associated with the foregoing; and (v) all proceeds of the foregoing, including (A) payments made in respect of theTerminated Vehicles and Defaulted Vehicles, (B) proceeds of the sale or other disposition of the Warehouse SUBI Leased Vehicles toLessees or others upon expiration or termination of the Warehouse SUBI Leases, (C) payments in respect of the Warehouse SUBILeased Vehicles under any Insurance Policy, (D) the Certificates of Title relating to the Warehouse SUBI Leased Vehicles, (E) allrights (but not obligations) of the Trust, TFL and the related Lessor with respect to the Warehouse SUBI Leases and the WarehouseSUBI Leased Vehicles, including rights to (1) any incentive or other payments made by any Person to fund a portion of the paymentsmade related to a Warehouse SUBI Lease or a Warehouse-37-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SUBI Leased Vehicle (including Pull-Forward Payments) and (2) proceeds arising from any repurchase obligations arising under anyWarehouse SUBI Lease, (F) any Security Deposit related to a Warehouse SUBI Lease to the extent not payable to the Lessee pursuantto such lease, (G) all Insurance Proceeds and Liquidation Proceeds, (H) such other assets as may be designated “Warehouse SUBIAssets” in the Warehouse SUBI Supplement and identified by the Servicer in Notices of Warehouse SUBI Lease Allocation deliveredfrom time to time pursuant to the Warehouse SUBI Supplement, and (I) all proceeds of the foregoing.“Warehouse SUBI Certificate” shall mean a certificate representing the beneficial interest in the Warehouse SUBI.“Warehouse SUBI Collection Account” shall mean the Warehouse SUBI Collection Account established andmaintained pursuant to Section 7.04(a).“Warehouse SUBI Lease” shall mean a Lease allocated to the Warehouse SUBI.“Warehouse SUBI Lease Allocation Date” shall mean each date on which TFL, at the direction of the TBM SUBIHolder, directs the TBM SUBI Trustee to allocate Leases and the related Leased Vehicles from the TBM SUBI to the WarehouseSUBI pursuant to the TBM SUBI Supplement and the Warehouse SUBI Supplement.“Warehouse SUBI Leased Vehicle” shall mean a Leased Vehicle allocated to the Warehouse SUBI.“Warehouse SUBI Sale Agreement” shall mean the LML 2018 Warehouse SUBI Sale Agreement, dated as of theClosing Date, by and between TBM, as seller, and the Borrower, as buyer.“Warehouse SUBI Servicing Agreement” shall mean the LML 2018 Warehouse SUBI Servicing Agreement dated asof the date hereof by and among the Trust, the Servicer and the Back-Up Servicer.“Warehouse SUBI Supplement” shall mean the LML 2018 Warehouse SUBI Supplement to Trust Agreement, datedas of the Closing Date, by and among TFL, as Settlor and Initial Beneficiary, U.S. Bank Trust, as SUBI Trustee, AdministrativeTrustee and UTI Trustee, and Borrower (for the limited purposes set forth therein).“Withholding Agent” shall mean the Borrower, the Paying Agent and the Administrative Agent.“Write-Down and Conversion Powers” shall mean, with respect to any EEA Resolution Authority, the write-downand conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEAMember Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.SECTION 1.02 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of aperiod of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and“until” each means “to but excluding.”SECTION 1.03 Interpretive Provisions. For all purposes of this Agreement, the singular includes the plural and theplural the singular; words importing gender include other genders; references to “writing” include printing, typing, lithography andother means of reproducing words in a visible form; the term “including”-38-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.means “including without limitation;” the term “or” is not exclusive; and references to the article and section headings of anyTransaction Document are for convenience of reference only, and shall not define or limit or otherwise affect the terms and provisionsthereof. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. If the due date of anynotice, certificate or report required to be delivered by any party to any of the Transaction Documents falls on a day that is not aBusiness Day, the due date for such notice, certificate or report shall be automatically extended to the next succeeding day that is aBusiness Day. Any reference in this Agreement to any agreement means such agreement as it may be amended, restated,supplemented or otherwise modified from time to time. Any reference in this Agreement to any law, statute, regulation, rule or otherlegislative action shall mean such law, statute, regulation, rule or other legislative action (and any successor thereto) as amended,supplemented or otherwise modified from time to time, and shall include any rule or regulation promulgated thereunder. Any referencein this Agreement to a Person shall include the permitted successors or assignees of such Person.SECTION 1.04 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anythingto the contrary in any Transaction Document or in any other agreement, arrangement or understanding among any such parties, eachparty hereto acknowledges that any liability of any EEA Financial Institution arising under any Transaction Document, to the extentsuch liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees andconsents to, and acknowledges and agrees to be bound by:(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any suchliabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and(b)the effects of any Bail-in Action on any such liability, including, if applicable;(i)a reduction in full or in part or cancellation of any such liability;(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in suchEEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and thatsuch shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under thisAgreement or any other Transaction Document; or(iii)the variation of the terms of such liability in connection with the exercise of the write-down andconversion powers of any EEA Resolution Authority.ARTICLE IITHE FACILITYSECTION 2.01 Loans; Payments.(a)On the terms and subject to the conditions hereinafter set forth (including in Sections 2.01(b) and 2.01(e)and Article V, the Conduit Lenders, ratably, in accordance with the aggregate of the Commitments of the Related Committed Lenderswith respect to each such Conduit Lender, severally and not jointly, may, in their sole discretion, make Loans to the Borrower on arevolving basis, and if and to the extent any Conduit Lender does not make any such requested Loan or if any Group does not includea Conduit Lender,-39-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.the Related Committed Lender(s) for such Conduit Lender or the Committed Lender for such Group, as the case may be, shall, ratablyin accordance with their respective Commitments, severally and not jointly, make such Loans to the Borrower from time to time on theInitial Loan Date and, until the occurrence of the Scheduled Expiration Date or an Event of Default, on each subsequent Loan IncreaseDate. Each Lender shall make available the proceeds of any Loan it makes to the Borrower by wire transfer of immediately availablefunds. (b)Subject to the conditions specified in this Section and in Sections 5.01 and 5.02 (as applicable), on anyLoan Increase Date, the Loan Balance may be increased through the funding of additional Loans, up to a Loan Balance at any onetime not to exceed the Facility Limit (after giving effect to any increase in the Facility Limit on or prior to such Loan Increase Date);provided, however, that (i) the aggregate principal amount of any Loans to be made on any Loan Increase Date shall not exceed theAvailable Facility Limit (after giving effect to any increase in Facility Limit on or prior to such Loan Increase Date) on such LoanIncrease Date, (ii) the aggregate outstanding principal amount of the Loans of the Lenders in any Group shall not exceed theCommitment Amount of the Related Committed Lenders of such Group, (iii) the aggregate outstanding principal amount of the Loansof any Committed Lender shall not exceed its Commitment Amount, and (iv) the aggregate outstanding principal amount of all Loansshall not exceed the Maximum Loan Balance, determined after giving effect to (x) such additional Loans on such date and (y) anyincrease or decrease in the Facility Limit on such date. Each Loan shall be in a minimum amount equal to the lesser of (i) $1,000,000and (ii) the Available Facility Limit (before giving effect to such Loan).(c)The principal of the Loans shall be payable in installments equal to the Principal Distributable Amount oneach Payment Date subject to and in accordance with Section 2.04(c). Notwithstanding the foregoing, the entire unpaid principalamount of the Loans shall be due and payable, if not previously paid, on the Loan Maturity Date.(d)On each Warehouse SUBI Lease Allocation Date, Leases and the related Leased Vehicles shall beallocated from the TBM SUBI to the Warehouse SUBI pursuant to the TBM SUBI Supplement and Warehouse SUBISupplement. In furtherance of the foregoing:(i)at least two (2) Business Days preceding each Warehouse SUBI Lease Allocation Date (or, in the case ofthe initial Warehouse SUBI Lease Allocation Date, on the Initial Loan Date), the Borrower and the Servicer shall deliver to theAdministrative Agent an executed Notice of Warehouse SUBI Lease Allocation in substantially the form of Exhibit D to thisAgreement, signed by an Authorized Signatory together with a Pool Cut Report as to the related Lease Pool;(ii)the Borrower and the Servicer shall have taken any actions necessary or advisable, and reasonablyrequested in writing by the Administrative Agent as soon as practicable, to maintain the Administrative Agent’s perfected securityinterest in the Collateral; and(iii)solely with respect to any Leases and Leased Vehicles to be allocated to the Warehouse SUBI on anyWarehouse SUBI Lease Allocation Date, the Administrative Agent shall have received a copy of a report produced by AutomotiveLease Guide (in form and substance reasonably satisfactory to the Lenders) setting forth the Mark-to-Market MRM Residual Value ofthe Leased Vehicle related to each such Lease, in each case, as of the most recent Mark to Market Adjustment Date;-40-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.provided that, notwithstanding the foregoing, if any Warehouse SUBI Lease Allocation Date is a Loan Increase Date, this Section2.01(d) shall apply with respect to such Warehouse SUBI Lease Allocation Date and the related Lease Pool and the Borrower and theServicer, as applicable, in addition to the conditions set forth in Section 5.02 with respect to such Warehouse SUBI Lease AllocationDate and the related Lease Pool.(e)If any Loan Request is delivered to the Administrative Agent, the Group Agents, the Lenders and thePaying Agent after noon, New York City time, two Business Days prior to the proposed Loan Increase Date, such Loan Request shallbe deemed to be received prior to noon, New York City time, on the next succeeding Business Day and the proposed Loan IncreaseDate of such proposed Loan shall be deemed to be the second Business Day following such deemed receipt. Any Loan Request shallbe irrevocable and the Borrower may not request that more than one Loan be funded on any Business Day.(f)If a Conduit Lender shall have elected not to make all or a portion of such Loan, the related CommittedLender shall make available on the applicable Loan Increase Date an amount equal to the portion of the Loan that such ConduitLender has not elected to fund.(g)Each Group’s ratable share of a Loan shall be made available to the Paying Agent, subject to thefulfillment of the applicable conditions set forth in Section 5.02, at or prior to 1:00 p.m., New York City time, on the applicable LoanDate, by deposit of immediately available funds to the Paying Agent Account. The Paying Agent shall promptly notify the Borrowerin the event that any Lender either fails to make its portion of such funds available before such time or notifies the Paying Agent that itwill not make its portion of such funds available before such time. Subject to the fulfillment of the applicable conditions set forth inSection 5.02, as determined by the Paying Agent, the Paying Agent will not later than 3:00 p.m., New York City time, on such LoanIncrease Date make such funds available, in the same type of funds received, by wire transfer thereof to the account specified inwriting by the Borrower. If any Lender makes available to the Paying Agent funds for any Loan to be made by such Lender asprovided in the foregoing provisions of this Article, and such funds are not made available to the Borrower by the Paying Agentbecause the conditions to the applicable Loan set forth in Section 5.02 are not satisfied or waived in accordance with the terms hereof,the Paying Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.(h)In the event that, notwithstanding the fulfillment of the applicable conditions set forth in Section 5.02hereof with respect to a Loan, a Conduit Lender elected to make an advance on a Loan Increase Date but failed to make its portion ofthe Loan available to the Paying Agent when required by this Section 2.01, such Conduit Lender shall be deemed to have rescinded itselection to make such advance, and neither the Borrower nor any other party shall have any claim against such Conduit Lender byreason of its failure to timely make such purchase. In any such case, the Paying Agent shall give notice of such failure not later than1:30 p.m., New York City time, on the Loan Increase Date to the Borrower, which notice shall specify (i) the identity of such ConduitLender and (ii) the amount of the Loan which it had elected but failed to make. Subject to receiving such notice, the related CommittedLender shall advance a portion of the Loan in an amount equal to the amount described in clause (ii) above, at or before 2:00 p.m.,New York City time, on such Loan Increase Date and otherwise in accordance with this Section 2.01. Subject to the Paying Agent’sreceipt of such funds, the Paying Agent will not later than 4:00 p.m., New York City time, on such Loan Increase Date make suchfunds available, in the same type of funds received, by wire transfer thereof to the account specified in writing by the Borrower.-41-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(i)The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender ofits obligations hereunder; provided, that the Commitments of the Lenders are several and no Lender shall be responsible for any otherLender’s failure to make Loans as required.(j)After the Borrower delivers a Loan Request pursuant to Section 5.02, a Lender (or its Group Agent) may,not later than 4:00 p.m. (New York time) on the Business Day after the Borrower’s delivery of such Loan Request, deliver a writtennotice (a “Delayed Funding Notice”, the date of such delivery, the “Delayed Funding Notice Date” and such Lender, a “DelayingLender”) signed by an Authorized Signatory to the Borrower, the Paying Agent and the Administrative Agent of its intention to fundits share of the related Loan Increase (such share, the “Delayed Amount”) on a date (the date of such funding, the “Delayed FundingDate”) that is on or before the thirty-fifth (35th) day following the date of the proposed Loan Increase Date (or if such day is not aBusiness Day, then on the next succeeding Business Day) rather than on the requested Loan Increase Date. Any Group containing aDelaying Lender shall be referred to as a “Delaying Group” with respect to such Loan Increase Date. On each Delayed FundingDate, subject to the satisfaction of the conditions set forth in Section 5.02, the Committed Lenders shall (or, in the case of a Group witha Conduit Lender, the Conduit Lender in such Group may in its sole discretion) fund their ratable amounts of such requestedLoans. Notwithstanding anything to the contrary contained in this Agreement or any other Related Document, the partiesacknowledge and agree that the failure of any Lender to fund its Loan on the requested Loan Increase Date will not constitute a defaulton the part of such Lender if any Delaying Lender has timely delivered a Delayed Funding Notice signed by an Authorized Signatoryto the Borrower with respect to such Loan Request. Nothing contained herein shall prevent the Borrower from revoking any LoanRequest related to any Delayed Funding Notice. SECTION 2.02 Interest; Breakage Fees.(a)The outstanding principal amount of each Loan shall accrue interest on each day at the then applicableInterest Rate. Whether any Loan is funded or maintained hereunder at the Short-Term Note Rate or Bank Interest Rate shall bedetermined in the sole discretion of the applicable Group Agent for the Lender funding or maintaining such Loan. The Borrower shallpay all Interest, Usage Fees, Unused Fees and Breakage Fees accrued during each Interest Period on the immediately followingPayment Date in accordance with the terms and priorities for payment set forth in Section 2.04; provided, however, that all Interest,Usage Fees, Unused Fees and Breakage Fees accrued during any Interest Period shall be due and payable by the Borrower on theimmediately following Payment Date without regard to whether Collections or other funds of the Borrower are then available forpayment thereof. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall not require the payment orpermit the collection of Interest in excess of the maximum permitted by applicable law; and Interest shall not be considered paid by anydistribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.(b)If any portion of any Loan is repaid other than on a Payment Date or the Borrower fails to borrow anyportion of any Loan requested in a Loan Request, the Borrower shall pay to the Lenders any Breakage Fees incurred by the Lenders.SECTION 2.03 Invoices; Payments. No later than the second Business Day of each month, each Group Agent willprovide the Borrower, the Servicer, the Paying Agent and the Administrative Agent with an invoice showing the Interest, Usage FeeAmount, Unused Fee Amount and other Secured Obligations due (or estimated to be due) to each Lender in its Group pursuant to thisAgreement and the Fee Letter on the Payment-42-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Date occurring in such month. The Borrower hereby agrees to pay to such Group Agent for the account of its related Secured Parties,as and when due in accordance with this Agreement and the Fee Letter, the Interest Distributable Amount, the Principal DistributableAmount and the other Secured Obligations payable to such Group. Nothing in this Agreement shall limit in any way the obligations ofthe Borrower to pay the amounts set forth in this Section 2.03.SECTION 2.04 Deposits; Distributions.(a)All Collections shall be deposited into the Warehouse SUBI Collection Account as provided in theWarehouse SUBI Servicing Agreement. All Repurchase Amounts, and Reallocation Proceeds shall also be deposited into theWarehouse SUBI Collection Account as provided in the Warehouse SUBI Servicing Agreement.(b)On each Payment Date, subject to Section 2.07, the Servicer shall cause to be deposited to the WarehouseSUBI Collection Account from the Reserve Account, an amount equal to the lesser of (i) the amount of cash or other immediatelyavailable funds on deposit in the Reserve Account on such Payment Date and (ii) the amount, if any, by which (x) the amountsrequired to be applied pursuant to clauses first through sixth of Section 2.04(c) on such Payment Date and for any preceding PaymentDate (to the extent not previously paid) exceeds (y) the Available Amounts for such Payment Date (other than Available Amountsattributable to amounts transferred from the Reserve Account for such Payment Date); provided, however, that on the first PaymentDate to occur after the Termination Date, the Servicer shall transfer the entire amount in the Reserve Account (other than fundsdeposited by the Borrower that are not proceeds of the Warehouse SUBI Asset or payable pursuant to the Warehouse SUBI ServicingAgreement or the Warehouse SUBI Sale Agreement to satisfy the minimum balance requirements of the depository institution holdingthe Reserve Account) to the Warehouse SUBI Collection Account.(c)On each Payment Date, the Servicer (or, if the Administrative Agent has revoked the Servicer’s power todirect payments from the Warehouse SUBI Collection Account pursuant to the Transaction Documents, the Administrative Agent)shall cause the monies in the Warehouse SUBI Collection Account attributable to Available Amounts for such Payment Date to beapplied in the following amounts and order of priority pursuant to instructions of the Servicer approved by the Administrative Agent(as confirmed by the Administrative Agent to the Servicer and the Collection Account Bank):(i)first, [Intentionally Omitted];(ii)second, to the Servicer for the payment of the accrued Servicing Fees payable for the immediatelypreceding Settlement Period (plus, if applicable, the amount of Servicing Fees payable for any prior Settlement Period to the extentsuch amount has not been distributed to the Servicer); and, if the Back-Up Servicer is the Successor Servicer under the WarehouseSUBI Servicing Agreement, for the payment of the Successor Servicer Engagement Fee (to the extent not paid by TFL) and theunpaid out-of-pocket expenses and indemnities owed to it as Successor Servicer; provided, however, that the aggregate amountdistributed on any Payment Date for out-of-pocket expenses and indemnities pursuant to this clause shall not exceed $200,000 percalendar year unless approved by the Administrative Agent and the Borrower;-43-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(iii)third, on a pari passu basis, (x) to the Trustee Bank (to the extent not previously paid by TFL), for thepayment of accrued and unpaid fees of the Trustee Bank of $2,000 per annum, (y) to the depositary institutions where the ReserveAccount and the Warehouse SUBI Collection Account are maintained for payment of accrued and unpaid maintenance fee of up to$500 per month, (z) to the Back-Up Servicer for the payment of the accrued and unpaid Back-Up Servicing Fees and (xx) to thePaying Agent for the payment of accrued and unpaid fees of the Paying Agent of $875 per month;(iv)fourth, on a pari passu basis, (w) to the Trustee Bank (to the extent not previously paid by TFL), for thepayment of out-of-pocket expenses incurred by the Trustee Bank and the indemnities owed to the Trustee Bank, provided, that theaggregate amount distributed pursuant to this subclause (w) shall not exceed $100,000 per calendar year; (x) to the Back-Up Servicerfor the payment of out-of-pocket expenses incurred by the Back-Up Servicer and the indemnities owed to the Back-Up Servicer;provided, that the aggregate amount distributed pursuant to this subclause (x) shall not exceed $25,000 per calendar year; (y) to thedepositary institution where the Reserve Account and the Warehouse SUBI Collection Account are maintained, for the payment ofout-of-pocket expenses incurred by such depositary institution and the indemnities owed to such depositary institution, provided, thatthe aggregate amount distributed pursuant to this subclause (y) shall not exceed $25,000 per calendar year; (z) to the Paying Agent forthe payment of out-of-pocket expenses incurred by the Paying Agent and the indemnities owed to the Paying Agent; provided, that theaggregate amount distributed pursuant to subclause (z) shall not exceed $25,000 per calendar year;(v)fifth, on a pari passu basis and pro rata based on the applicable amounts payable under subclauses (x) and(y) of this clause fifth, (x) to the Paying Agent (for the account of the Lenders), the Interest Distributable Amount, and (y) to eachapplicable provider of an Interest Rate Hedge, any Interest Rate Hedge Payments and Interest Rate Hedge Termination Paymentrequired to be paid by the Borrower, to the extent not previously paid;(vi)sixth, on a pari passu basis and pro rata to the Paying Agent (for the account of the Lenders), the PrincipalDistributable Amount;(vii)seventh, for deposit in the Reserve Account, the amount necessary to cause the amount on deposit thereinto equal to the Required Reserve Account Balance for such Payment Date;(viii)eighth, on a pari passu basis, to the payment of all other Secured Obligations then due and owing by theBorrower to the Lender Parties and the Paying Agent;(ix)ninth, on a pari passu basis, to the payment of all other costs, expenses, fees, indemnities and otheramounts payable at such time to the Trustee Bank and the Back-Up Servicer or Successor Servicer pursuant to the Trust Agreementand this Agreement, as applicable, in each case, solely to the extent such costs, expenses, fees, indemnities and other amounts arepayable in respect of the Collateral and not otherwise paid to the Trustee Bank, the Back-Up Servicer, the Paying Agent or SuccessorServicer, as applicable; and(x)tenth, if (A) no Default is continuing and has not been waived or (B) if the Termination Date has occurred,the balance, if any, to be paid to the Borrower for its own account.-44-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Any Available Amounts remaining in the Warehouse SUBI Collection Account after the distribution of such amountspursuant to this Section 2.04(c) on a Payment Date shall remain in the Warehouse SUBI Collection Account to be distributed asAvailable Amounts for the following Payment Date.In approving or giving any distribution instructions under this Section 2.04(c), each of the Administrative Agent and thePaying Agent shall be entitled to rely conclusively on the most recent Settlement Statement provided to it pursuant to Section 2.08 andshall incur no liability to any Person in connection with relying on such Settlement Statements or if the Administrative Agent or thePaying Agent makes different payments or makes no payments if the Administrative Agent or the Paying Agent has concerns that theSettlement Statement might be incorrect.(d)For so long as the Monthly Remittance Condition is satisfied, the deposits into the Warehouse SUBICollection Account pursuant to Section 2.04(a) may be made net of the Servicing Fee to be distributed to the Servicer pursuant toSection 2.04(c). Nonetheless, the Servicer shall account for the Servicing Fee in the Settlement Statement as if such amount wasdeposited into the Warehouse SUBI Collection Account and/or transferred separately.SECTION 2.05 Payments and Computations, Etc. All amounts to be paid or deposited by the Borrower or theServicer to a Lender Party (whether for its own account or for the account of another Lender Party) shall be paid or deposited to thePaying Agent Account no later than 10:00 a.m. (New York time) on the day when due in such coin or currency of the United States ofAmerica as at the time of payment shall be legal tender for the payment of public and private debts, in an amount in immediatelyavailable funds which (together with any amounts then held by the Paying Agent and available for that purpose) shall be sufficient topay the amount becoming due on such date; provided that any such payment or deposit received after 10:00 a.m. (New York time) onany day shall be deemed to be paid by the Borrower or the Servicer on the next Business Day. The Paying Agent shall promptlydistribute the amount received to the applicable Lender. The Borrower shall confirm by facsimile or electronically in PDF format onthe day payment is due to be made to the Paying Agent that it has issued irrevocable payment instructions for the transfer of therelevant sum due to the Paying Agent Account. The Paying Agent acknowledges that it does not have any interest in any such fundsheld by it in trust deposited hereunder but is serving as Paying Agent only. The Paying Agent shall be under no liability for interest onany money received by it hereunder. The Paying Agent shall not be required to use or risk its own funds in making any payment onthe Loans. All sums to be paid or deposited by the Borrower or the Servicer to the Paying Agent hereunder shall be paid to the PayingAgent Account or such account with such bank as the Paying Agent may from time to time notify the Borrower in writing not less thanthree Business Days before any such sum is due and payable. The Borrower shall, to the extent permitted by law, pay to each LenderParty, on the first Payment Date that is at least ten (10) days after demand therefor, interest on all amounts not paid or deposited whendue to such Lender Party hereunder at a rate equal to the Default Rate. The Paying Agent shall remit funds to each Lender inaccordance with this Agreement and the wiring instructions provided by such Lender (or its related Group Agent) to the Paying Agent.SECTION 2.06 Reserve Account and Paying Agent Account.(a)The Borrower shall cause to be established and maintained in the name of the Administrative Agent (or inthe name of the Borrower for the benefit of the Administrative Agent) the Reserve Account. The Reserve Account will be an EligibleAccount established pursuant to a Control Agreement with respect to which the Administrative Agent shall, at all times, be anEntitlement Holder or purchaser with Control-45-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.and will bear a designation to clearly indicate that the funds and Financial Assets deposited therein are held for the benefit of theAdministrative Agent. If the Reserve Account ceases to be an Eligible Account, the Borrower shall within ten days of receipt of noticeof such change in eligibility transfer such account to an account that meets the requirements of an Eligible Account and that isestablished pursuant to a substitute Control Agreement with respect to which the Administrative Agent shall be an Entitlement Holderor purchaser with Control and which bears a designation to indicate clearly that the funds and Financial Assets deposited therein areheld for the benefit of the Administrative Agent. The Borrower may, with the consent of the Administrative Agent and each GroupAgent, establish a new Reserve Account subject to a new Control Agreement in replacement of the existing Reserve Account andrelated Control Agreement.(b)The Borrower shall cause to be established and maintained in the name of the Borrower for the benefit ofthe Secured Parties with the Paying Agent an Eligible Account as the Paying Agent Account. Funds on deposit in the Paying AgentAccount shall remain uninvested.(c)The Servicer may invest the funds, if any, in the Reserve Account in Eligible Investments, held in thename of the Administrative Agent, which shall mature no later than the day prior to the Payment Date following such investment. Anyincome or other gain from such Eligible Investments in the Reserve Account shall be retained in the Reserve Account to the extent theamount on deposit in the Reserve Account is less than the Required Reserve Account Balance and the excess, if any, shall, subject toSection 2.04(b), be paid on each Payment Date to the Borrower. Any losses on Eligible Investments shall be made up by the Serviceron each Payment Date. SECTION 2.07 Withdrawals from Reserve Account. Moneys in the Reserve Account shall, on each Payment Date,be transferred to the Warehouse SUBI Collection Account as and to the extent required in Section 2.04(b). Upon the appointment ofthe Back-Up Servicer as successor servicer pursuant to Section 4.2 of the Warehouse SUBI Servicing Agreement, the SuccessorServicer Engagement Fee shall be withdrawn from the Reserve Account and distributed to the Back-Up Servicer, if TFL has compliedwith the obligation to deposit such amount into the Reserve Account in accordance with the Warehouse SUBI ServicingAgreement. On each Payment Date, to the extent that the funds in the Reserve Account exceed the Required Reserve AccountBalance, the Servicer may, subject to Section 2.04(b), cause the amount of such excess to be withdrawn from the Reserve Account anddistributed to the Borrower; provided, however, that if the Successor Servicer Engagement Fee is deposited into the Reserve Accountand until such fee amount is withdrawn therefrom, any such excess amount distributable to the Borrower shall be net of the SuccessorServicer Engagement Fee. On the first Payment Date occurring on or after the Termination Date, all funds in the Reserve Accountshall be withdrawn and transferred to the Warehouse SUBI Collection Account. To the extent that any funds remain in the ReserveAccount after the Secured Obligations have been reduced to zero after the Termination Date, such funds shall be withdrawn anddistributed to, or as directed by, the Borrower. Each Settlement Statement shall specify the amount, if any, which is scheduled to bewithdrawn from the Reserve Account and distributed to the Borrower on the next succeeding Payment Date.SECTION 2.08 Reports. On or before the Determination Date in each month, the Servicer shall prepare andforward to the Administrative Agent and the Paying Agent a Settlement Statement, calculated as of the close of business of theBorrower on the last day of the related Settlement Period and including information for the next succeeding Payment Date. TheServicer shall include, without limitation, in the Settlement Statement whether any Portfolio Performance Condition shall haveoccurred or shall be continuing during the related Settlement Period, shall describe any such Portfolio Performance Condition, andshall evidence the calculations used to make such determination.-46-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.For the avoidance of doubt:(i)each Settlement Statement shall include a calculation (in detail reasonably satisfactory to the Lender) of theaverage of the Delinquency Ratios and annualized average of the Credit Loss Ratios for the three (3) most recent Settlement Periodsended on the last day of the calendar month preceding the related Determination Date;(ii)each Settlement Statement delivered on a Quarterly Report Date shall include a calculation of the ResidualValue Loss Ratio with respect to the three consecutive Settlement Periods ended on the last day of the calendar month immediatelypreceding the most recent RVLR Calculation Date and, without limiting the generality of the foregoing, the Servicer shall, upon theAdministrative Agent’s request delivered at least five (5) Business Days prior to a Quarterly Report Date, furnish to the AdministrativeAgent an updated calculation of the Residual Value Loss Ratio furnished to the Administrative Agent on the immediately precedingQuarterly Report Date, it being understood and agreed that any such updated calculation of the Residual Value Loss Ratio shall besolely for informational purposes; and(iii)each Settlement Statement delivered on a Quarterly Report Date shall include a calculation of the mostrecent Mark-to-Market MRM Residual Values of the Warehouse SUBI Leases.In addition, the Servicer shall deliver to the Administrative Agent (i) on each Quarterly Report Date, unauditedreports (substantially in the form of Exhibits I , J and K hereto, respectively) containing delinquency, loss and residual value data as of,and for the for the Servicer’s fiscal year to date ended on, the last day of the calendar quarter immediately preceding such QuarterlyReport Date with respect to all leases owned by the Trust and serviced by TFL (regardless of whether such leases are allocated to theWarehouse SUBI) and (ii) on each Quarterly Report Date occurring in the months of March, June, September and December, a copyof a report produced by Automotive Lease Guide (in form and substance reasonably satisfactory to the Administrative Agent) settingforth the Mark-to-Market MRM Residual Value of each Leased Vehicle related to each Warehouse SUBI Lease, in each case, as ofthe Mark to Market Adjustment Date immediately preceding such Quarterly Report Date. The Borrower shall, or shall cause theServicer to, furnish to the Administrative Agent at any time and from time to time, such other or further information in respect of theLeases, the Borrower and the Servicer as the Administrative Agent or any Lender may reasonably request.SECTION 2.09 Reallocation and Repurchase of Warehouse SUBI Assets.(a)Upon the occurrence of an event requiring TBM to reallocate a Lease and the related Leased Vehiclepursuant to Section 2.7 of the Warehouse SUBI Sale Agreement, the Borrower shall cause the Repurchase Amount paid by TBM tobe deposited or shall deposit the Repurchase Amount paid by it, as applicable, into the Warehouse SUBI Collection Account. Uponsuch payment, the applicable Lease and Leased Vehicle shall be reallocated to the TBM SUBI in accordance with the terms of theWarehouse SUBI Sale Agreement.(b)From time to time in its sole discretion, the Borrower may provide notice, signed by an AuthorizedSignatory, to the Administrative Agent, the Paying Agent and each Group Agent that it wishes to remove from the Collateral andreallocate to the UTI or another SUBI (including the TBM SUBI) the Securitization Take-Out Collateral. Any such removal andreallocation of Securitization Take-Out Collateral (each a “Securitization Take-Out”) shall be subject to the following additional termsand conditions.-47-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(i)(A) The Borrower shall have given the Administrative Agent, the Paying Agent and each Group Agent atleast five (5) Business Days’ prior written notice in the form of Exhibit F hereto, signed by an Authorized Signatory, of its desire toeffect a Securitization Take-Out, and (B) the Servicer shall have delivered to the Administrative Agent and each Group Agent at leastthree (3) Business Days prior to the proposed Securitization Take-Out Date a certificate in the form of Exhibit G hereto (each a“Securitization Take-Out Certificate”);(ii)Any such Securitization Take-Out shall be in connection with a reallocation of Warehouse SUBI Leasesand the related Leased Vehicles to the UTI or another SUBI (including the TBM SUBI) in connection with a securitization transactionor other type of financing or refinancing and shall relate to the removal of Leases with a minimum Securitization Value of $75 million;(iii)The Borrower shall have sufficient funds on the related Securitization Take-Out Date to effect thecontemplated Securitization Take-Out in accordance with this Agreement. In effecting any such Securitization Take-Out, theBorrower may (A) give effect to Available Amounts on deposit in the Warehouse SUBI Collection Account at such time to the extentconsistent with the requirements of clause (v) below (as evidenced by the related Securitization Take-Out Certificate), (B) based on therelated Securitization Take-Out Certificate, give effect to the amounts on deposit in the Reserve Account, to the extent the amount ondeposit therein exceeds the Required Reserve Account Balance (after giving effect to such Securitization Take-Out and to any Loan onthe related Securitization Take-Out Date); provided that such excess may be used by the Borrower on the related Securitization Take-Out Date to pay a portion of the Securitization Take-Out Price and/or (C) use its own funds not in the Collection Account or theReserve Account;(iv)In connection with any such Securitization Take-Out that does not constitute a removal and reallocationof all of the Warehouse SUBI Assets, the Warehouse SUBI Assets constituting part of the Securitization Take-Out Collateral withrespect to such Securitization Take-Out shall be selected in a manner not involving any adverse selection procedures (excluding,however, any Leases subject to a repurchase obligation);(v)After giving effect to any Securitization Take-Out, on the related Securitization Take-Out Date, (A) ifsuch Securitization Take-Out does not include all of the Warehouse SUBI Leases, no Default or Event of Default shall have occurredand be continuing and the Scheduled Expiration Date shall not have occurred, (B) each Interest Rate Hedge then in effect shall satisfythe requirements contained in the definition of Eligible Interest Rate Hedge Agreement and the aggregate notional principal amount ofall such Eligible Interest Rate Hedge Agreements shall satisfy the requirements contained in the definition of “Required AggregateNotional Principal Amount,” such that the aggregate notional amount of all Interest Rate Hedges thereafter in effect shall be equal tothe Loan Balance, and the Borrower shall have terminated any Interest Rate Hedges (terminating interest rate swap transactions indescending order from the interest rate swap transaction with the highest fixed rate to the Interest Rate Hedge with the next highestfixed rate and so on) and shall have paid all Interest Rate Hedge Termination Payments due and owing in connection with thetermination thereof, provided that in no event shall any interest rate cap be required to be terminated, (C) the Loan Balance shall notexceed the Maximum Loan Balance (determined on the basis of the remaining Warehouse SUBI Leases not included in theSecuritization Take-Out Collateral that constitute Eligible Leases on the Securitization Take-Out Date, determining whether suchWarehouse SUBI Leases are Eligible Leases as if they were then being first allocated to the Warehouse SUBI), and (D) sufficientfunds will be available in the Warehouse SUBI Collection Account on the next Payment Date for payments in accordance with and tothe extent required by clauses first through ninth of Section 2.04(c);-48-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(vi)On the related Securitization Take-Out Date, the Paying Agent (for the account of the Lenders) shall havereceived in the Paying Agent Account, in immediately available funds, an amount equal to the Securitization Take-Out Price;(vii)No later than three (3) Business Days prior to any Securitization Take-Out Date, the Borrower shall havedelivered to the Administrative Agent and each Group Agent a list of Leases (which list may be in an electronic format) subject to suchSecuritization Take-Out; and(viii)The Borrower shall have paid (or shall pay promptly following receipt of an invoice therefor) thereasonable legal fees and expenses (including fees and expenses of counsel) of the Lender Parties and the Paying Agent in connectionwith such Securitization Take-Out.SECTION 2.10 Procedures for Extension of Scheduled Expiration Date. So long as no Default or Event ofDefault shall have occurred and be continuing, no more than ninety (90) and no less than sixty (60) days prior to the then currentScheduled Expiration Date, the Borrower may request that each Lender consent to the extension of the Scheduled Expiration Date forup to a 364-day period as provided in this Section 2.10, which decision shall be made by each Lender in its sole discretion. EachLender shall use reasonable efforts to notify the Borrower of its willingness or its determination not to consent to such extension of theScheduled Expiration Date as soon as practical after receiving such notice, and in any event by the thirtieth (30th) day preceding thethen current Scheduled Expiration Date (the “Response Date”), it being understood that any Lender that fails to provide such noticeshall be deemed not to consent to such extension. If (i) a Lender has agreed by the Response Date to the extension of the ScheduledExpiration Date, (ii) as of the Response Date, no Default or Event of Default shall have occurred and be continuing, and (iii) all Loansand accrued interest thereon and other Secured Obligations owing to non-extending Lenders shall have been paid by the Borrower infull on the current Scheduled Expiration Date, then, in such event, the Scheduled Expiration Date shall be extended to the date whichis such requested number of days (but in no event more than 364 days) following the Response Date or, if such day is not a BusinessDay, the next preceding Business Day and, to the extent any Committed Lenders did not consent to such extension, the Facility Limitshall be reduced by the amount of such Committed Lenders’ Commitments (except to the extent concurrently replaced by increases inthe Commitments of consenting Lenders or new Lenders).SECTION 2.11 Increase of Maximum Facility Limit and Reduction of Maximum Facility Limit.(a)So long as no Default or Event of Default shall have occurred and be continuing, TFL may, at the writtendirections of the Borrower and TFL Borrower increase the Maximum Facility Limit subject to the following terms and conditions:(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Increase Notice”) signed by anAuthorized Signatory to the Administrative Agent (who shall forward the same to the Group Agents) and TFL Administrative Agent,which notice shall specify:(A)the amount by which the Maximum Facility Limit is proposed to be increased (the “MaximumFacility Limit Increase Amount”);-49-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(B)the date on which such increase is proposed to occur (the “Maximum Facility Limit IncreaseDate”), which Maximum Facility Limit Increase Date shall be not less than thirty (30) days after the date of suchMaximum Facility Limit Increase Notice; and(C)the amount of the Maximum Facility Limit Increase Amount to be allocated to the Facility Limitand the TFL Facility Limit.(ii)Each existing Committed Lender may in its discretion agree to all or part of such pro rata increase of itsCommitment. If any existing Committed Lender does not agree to increase its Commitment Amount or agrees to increase itsCommitment Amount by an amount that is less than its Commitment Percentage of the Maximum Facility Limit Increase Amount, thenTFL and the Borrower may effect such portion of the requested Maximum Facility Limit Increase Amount not agreed to by an existingCommitted Lender by adding additional Persons as Lenders (either to an existing Group or by creating new Groups) to undertakeCommitments or obtaining the agreement of another existing Committed Lender to increase its Commitment Amount on a greater thanpro rata basis; provided, however, that the Commitment of any existing Lender may only be increased with the prior written consentof such Lender.(iii)In order to cause each Lender (including existing Lenders, if any, whose Commitments are increasing onthe applicable Maximum Facility Limit Increase Date and new Lenders, if any, who are becoming parties to this Agreement on suchMaximum Facility Limit Increase Date) to own its respective Commitment Percentage of the Facility Limit, and Loans, on anyMaximum Facility Limit Increase Date (after giving effect to the increase of the Maximum Facility Limit on such Maximum FacilityLimit Increase Date), each existing Lender shall sell, transfer and assign pursuant to one or more Assignment and AssumptionAgreements, on such Maximum Facility Limit Increase Date, the appropriate portion, if any, of its Commitment and Loan, asapplicable, to one or more Lenders such that each Lender’s Loan and Commitment, as applicable, will be proportionate to itsCommitment Percentage.(iv)On each Maximum Facility Limit Increase Date, the Maximum Facility Limit will be increased by theMaximum Facility Limit Increase Amount specified in the related Maximum Facility Limit Increase Notice if (x) each of the applicableexisting Lender, and new Lenders has taken all of the actions specified in clause (iii) above, (y) each existing Lender whose Loans arebeing reduced have received payment therefor, and (z) each Lender who is accepting Loans and Commitment from another Lender onsuch Maximum Facility Limit Increase Date has executed a new signature page to this Agreement, which signature page will evidencesuch Lender’s acceptance of such Loans, and/or Commitment, as applicable, on such Maximum Facility Limit Increase Date.(v)On each Maximum Facility Limit Increase Date, the Administrative Agent shall update its books andrecords to reflect the updated Maximum Facility Limit, Facility Limit and Commitment of each Lender.(b)TFL may, at the written directions of the Borrower and TFL Borrower reduce the Maximum FacilityLimit subject to the following terms and conditions:(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Reduction Notice”) signed by anAuthorized Signatory to the Administrative Agent (who shall forward the same to the Group Agents) and TFL Administrative Agent,which notice shall specify:-50-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(A)the amount by which the Maximum Facility Limit is proposed to be reduced (the “MaximumFacility Limit Reduction Amount”); provided that, the resulting Maximum Facility Limit after taking into account theMaximum Facility Limit Reduction Amount shall not be less than the sum of the Loan Balance and the TFL LoanBalance on the Maximum Facility Limit Reduction Date;(B)the date on which such reduction is proposed to occur (the “Maximum Facility Limit ReductionDate”), which Maximum Facility Limit Reduction Date shall be not less than five (5) Business Days after the date ofsuch Maximum Facility Limit Reduction Notice; and(C)the amount of the Maximum Facility Limit Reduction Amount that shall reduce the Facility Limitand the TFL Facility Limit, respectively, provided that the Facility Limit shall not be less than the Loan Balance onthe Maximum Facility Limit Reduction Date.(ii)On each Maximum Facility Limit Reduction Date, the Facility Limit will be reduced by the amountspecified in the related Maximum Facility Limit Reduction Notice and each such reduction shall reduce each Lender’s Commitment byits ratable share (based on the Commitments of the Lenders) of the Maximum Facility Limit Reduction Amount; provided, however,that if the Maximum Facility Limit Reduction Notice reduces the DB Supplemental Commitment, then such reduction shall onlyreduce Deutsche Bank AG, New York Branch’s Commitment and shall not reduce each Lender’s Commitment by its ratable share.(iii)No reduction in the Maximum Facility Limit shall occur if after giving effect to such reduction and anyrepayments of the Loan Balance, the Facility Limit will be less than the Loan Balance.(iv)On each Maximum Facility Limit Reduction Date, the Administrative Agent shall update its books andrecords to reflect the updated Maximum Facility Limit, Facility Limit and Commitment of each Lender.SECTION 2.12 Reallocation of Maximum Facility Limit.(a)TFL may from time to time, at the written directions of the Borrower and the TFL Borrower, reallocate theMaximum Facility Limit between the Facility Limit and the TFL Facility Limit, subject to the following terms and conditions:(i)TFL shall send a written notice (such notice, “Maximum Facility Limit Reallocation Notice”) signed byan Authorized Signatory to the Administrative Agent (who shall forward the same to the Group Agents) and the TFLAdministrative Agent (who shall forward the same to the TFL Group Agents), which notice shall specify:(A)the amount of the Maximum Facility Limit that is to be allocated to the Facility Limit, the amountof the Maximum Facility Limit that is to be allocated to the TFL Facility Limit; provided that, the sum of the FacilityLimit and the TFL Facility Limit shall be equal to the Maximum Facility Limit on the Maximum Facility LimitReallocation Date (as defined below); and provided, further, that the Facility Limit shall not be less than the LoanBalance and the TFL Facility Limit shall not be less than the TFL Loan; and-51-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(B)the date on which such reallocation is proposed to occur (the “Maximum Facility LimitReallocation Date”), which Maximum Facility Limit Reallocation Date shall be not less than ten (10) Business Daysafter the date of such Maximum Facility Limit Reallocation Notice.(ii)On each Maximum Facility Limit Reallocation Date, the Facility Limit and/or the TFL Facility Limit willbe increased or decreased, as applicable, by the amount specified in the related Maximum Facility Limit Reallocation Notice.(iii)No reduction in the Facility Limit shall occur in connection with the reallocation of the Maximum FacilityLimit if after giving effect to such reduction and any repayments of the Loan Balance, the Facility Limit will be less than the LoanBalance. On each Maximum Facility Limit Reallocation Date, the Administrative Agent shall update its books and records to reflectthe updated Maximum Facility Limit, Facility Limit and Commitment of each Lender.(iv)Following the Recommenced TFL Facility Borrowing Date, TFL may not reallocate any portion of theTFL Facility Limit to the Facility Limit without the prior written consent of all Group Agents.(b)In addition, on the Recommenced TFL Facility Borrowing Date and on each Payment Date occurringafter the Recommenced TFL Facility Borrowing Date, the excess of the Facility Limit over the aggregate principal amount of theLoans shall automatically be reallocated from the Facility Limit to the TFL Facility Limit.SECTION 2.13 Optional Prepayment. The Borrower may prepay the Loans, ratably as among the Lenders inaccordance with the respective outstanding principal amount of their respective Loans, on any day, in whole or in part, on threeBusiness Days’ prior notice to the Administrative Agent, the Paying Agent and each Group Agent, provided that (i) the principalamount prepaid is at least $500,000 (unless otherwise agreed to in writing by the Administrative Agent and each Group Agent), and(ii) the Borrower pays, on the date of prepayment (a) accrued unpaid Interest on the amount so prepaid, and (b) except with respect to aprepayment made on a Payment Date, any Breakage Fee incurred by the Lender Parties as a result of such prepayment as reasonablydetermined by such Lender. Reference is made to Sections 2.09 and 3.03 for the procedure for the release, if applicable, of Leases andLeased Vehicles from the Warehouse SUBI in connection with any such prepayment. The Borrower may rescind any notice deliveredpursuant to this Section at any time up to 3:00 p.m. on the Business Day immediately prior to the date specified in Borrower’s noticefor such prepayment, or extend the date specified in such notice for such prepayment for a period of up to three additional BusinessDays.SECTION 2.14 Intended Tax Treatment. Notwithstanding anything to the contrary herein or in any otherTransaction Document, all parties to this Agreement covenant and agree to treat the Loans hereunder as debt for all federal, state, localand franchise tax purposes and agree not to take any position on any tax return inconsistent with the foregoing.SECTION 2.15 Register.(a)On or prior to the Amendment No. 1 Effective Date, the Administrative Agent will provide to the PayingAgent a complete and correct list of the Lenders, which list shall be provided in a format agreed to by the Administrative Agent and thePaying Agent and shall include the following information: (i) full name of the Lender; (ii) complete mailing address of the Lender; (iii)payment instructions for making payments to the-52-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Lender in respect of the Loans and (iv) appropriate Tax ID form. The Paying Agent shall be entitled to conclusively rely on theaccuracy of such information provided by the Administrative Agent. At any time after the Amendment No. 1 Effective Date, thePaying Agent shall provide to the Borrower, TFL, the Administrative Agent or any Group Agent from time to time at its reasonablerequest a complete and correct list of the Lenders and shall include the following information: (i) full name of the Lender; (ii) completemailing address of the Lender; (iii) payment instructions for making payments to the Lender in respect of the Loans and (iv)appropriate Tax ID form. Each Lender agrees that all notices from such Lender for changes of name, address, contact details orpayment details of the Lenders shall be sent to the Paying Agent at the Paying Agent’s address as set forth in Section 12.05.(b)From and after the Amendment No. 1 Effective Date, the Paying Agent shall, acting solely for thispurpose as an agent of the Borrower, maintain at its address referred to in Section 12.05 (or such other address of the Paying Agentnotified by the Paying Agent to the other parties hereto) a copy of each Assignment and Acceptance Agreement delivered to andaccepted by it and a register for the recordation of the names and addresses of the Committed Lenders and the Conduit Lenders, theCommitment Amount of each Committed Lender and the aggregate outstanding principal amount (and stated interest) of the Loans ofeach Conduit Lender and Committed Lender from time to time (the “Register”). The entries in the Register shall be conclusive andbinding for all purposes, absent manifest error, and the Borrower, the Servicer, the Administrative Agent, the Paying Agent, the GroupAgents, the Conduit Lenders and the Committed Lenders shall treat each Person whose name is recorded in the Register as aCommitted Lender or Conduit Lender, as the case may be, under this Agreement for all purposes of this Agreement. Any of theBorrower, the Servicer, the Administrative Agent, any Group Agent, any Conduit Lender or any Committed Lender may request acopy of the Register from the Paying Agent at any reasonable time and from time to time upon reasonable prior notice.ARTICLE IIICOLLATERAL AND SECURITY INTERESTSECTION 3.01 Grant of Security Interest; Collateral.(a)In order to secure the Loans, the Interest Rate Hedges, all other Secured Obligations and compliance withthis Agreement, the Borrower hereby pledges and grants to the Administrative Agent for the benefit of the Secured Parties a validcontinuing security interest in all of the Borrower’s right, title and interest, whether now owned or hereafter acquired or arising andwherever located, in and to all of the following (collectively, the “Collateral”):(i)all accounts, general intangibles, chattel paper, instruments, documents, money, deposit accounts,certificates of deposit, goods (together with all embedded software, accessions, additions, attachments, improvements, substitutions andreplacements thereto and therefor), letters of credit, letter-of-credit rights, commercial tort claims, uncertificated securities, securitiesaccounts, security entitlements, Financial Assets, other investment property and supporting obligations, including (A) the WarehouseSUBI Certificate and the interests in the Warehouse SUBI Assets represented thereby, (B) all Collections, including all cash collectionsand other cash proceeds of the Warehouse SUBI Certificate and the Warehouse SUBI Assets represented thereby, with respect to, andother proceeds of, such Warehouse SUBI Certificate, (C) the Warehouse SUBI Collection Account and the Reserve Account, (D) theWarehouse SUBI Sale Agreement, (E) each Interest Rate Hedge and all rights to payments thereunder, and (F) all the Borrower’srights and claims under the Warehouse SUBI-53-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Servicing Agreement, the Warehouse SUBI Sale Agreement, Warehouse SUBI Supplement and all other Transaction Documents; and(ii)all cash and non-cash Proceeds and other proceeds of all of the foregoing; and(iii)all books, records, writings, data bases, information and other property relating to, used or useful inconnection with, evidencing, embodying, incorporating or referring to any of the foregoing, all claims and/or insurance proceedsarising out of the loss, nonconformity or any interference with the use of, or any defect or infringement of rights in, or damage to, anyof the foregoing, and all proceeds, products, offspring, rents, issues, profits and returns of and from, and all distributions on and rightsarising out of, any of the foregoing.The possession by the Administrative Agent of notes and such other goods, letters of credit, money, documents, chattel paperor certificated securities shall be deemed to be “possession by the secured party,” for purposes of perfecting the security interestpursuant to the Relevant UCC (including Section 9-313(c)(1) (or other section of similar content as Section 9-313(c)(1) of the UCC)thereof). Without limiting the generality of the foregoing, for purposes of Section 9-313 (or other section of similar content) of theRelevant UCC, the Administrative Agent hereby notifies the Servicer of the Administrative Agent’s security interest in theCollateral. The Servicer acknowledges such notification, agrees to act as the bailee of the Administrative Agent with respect to theCollateral in its possession from time to time and acknowledges that possession of Collateral by the Servicer is deemed to bepossession by the Administrative Agent.(b)The security interest granted in the Collateral pursuant to this Agreement does not constitute and is notintended to result in an assumption by the Administrative Agent of any obligation (except for the obligation not to disturb a Lessee’sright of quiet enjoyment) of the Trust, the Borrower or the Servicer to any Lessee or other Person in connection with the WarehouseSUBI Certificate, the Warehouse SUBI Assets or the other Collateral.Without limiting the generality of the foregoing, an executed original of the Warehouse SUBI Certificate and eachother document that constitutes a part of the Warehouse SUBI has been delivered to the Administrative Agent on the Closing Date andshall be held by the Administrative Agent.Each of the Borrower and the Administrative Agent represents and warrants with respect to itself that eachremittance of Collections by the Borrower to the Administrative Agent hereunder will have been (i) in payment of a debt incurred bythe Borrower in the ordinary course of business or financial affairs of the Borrower and (ii) made in the ordinary course of business orfinancial affairs of the Borrower and the Administrative Agent.SECTION 3.02 Protection of the Administrative Agent’s Security Interest.(a)The Borrower agrees that from time to time, at its expense, it will promptly execute and deliver allinstruments and documents and take all action that the Administrative Agent may reasonably request in order to perfect or protect theAdministrative Agent’s security interest in the Collateral or to enable the Administrative Agent, to exercise or enforce any of its rightshereunder. Without limiting the foregoing, the Borrower authorizes the filing of such financing or continuation statements oramendments thereto or assignments thereof as may be required by the Administrative Agent and, without limiting any other provisionof this Agreement, (i) agrees to deliver to the Administrative Agent the Warehouse SUBI Certificate together with an assignment inblank signed by the Borrower, and (ii) agrees to mark its master data processing records with a-54-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.notation describing the Administrative Agent’s security interest in the Collateral. Carbon, photographic or other reproduction of thisAgreement or any financing statement shall be sufficient as a financing statement. The Borrower will, promptly upon acquiring anycommercial tort claim with a value exceeding $100,000, notify the Administrative Agent of the details thereof and promptly grant tothe Administrative Agent a security interest therein and in the proceeds thereof to secure the Secured Obligations pursuant todocumentation in form and substance satisfactory to the Administrative Agent.(b)Without limiting the preceding clause (a), the Servicer and the Borrower, as applicable, agree to take allactions reasonably necessary, including the filing of appropriate financing statements and the giving of proper registration instructionsrelating to any investments, to protect the Administrative Agent’s interest in the Warehouse SUBI Collection Account, the ReserveAccount and any Eligible Investments acquired with moneys therein (and any investment earnings thereon) and to enable theAdministrative Agent to exercise and enforce its rights under the Control Agreement relating to the Warehouse SUBI CollectionAccount and the Reserve Account. Any such financing statement or amendment may describe the Collateral in the same manner asdescribed in this Agreement or any other agreement entered into by the parties in connection herewith, or may contain an indication ordescription of collateral that describes such property in any other manner as the Administrative Agent may determine, in its solediscretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral, including describing suchproperty as “all assets of the debtor whether now owned or hereafter acquired or arising and wheresoever located, including allaccessions thereto and all products and proceeds thereof” or words of similar import.SECTION 3.03 Termination of Security Interest and Release of Collateral under Certain Circumstances.(a)The Administrative Agent’s security interest in monies, if any, from time to time paid to the Borrower inaccordance with clause tenth of Section 2.04(c) or 2.07 shall be released at the time of such payment.(b)Upon the repayment in full of the Loan Balance, reduction of the Facility Limit to zero, the novation of orthe termination and payment in full of all obligations of the Borrower under all Interest Rate Hedges, the satisfaction in full of all otherSecured Obligations in accordance with this Agreement and the termination of this Agreement, the Administrative Agent’s securityinterest in the Collateral shall terminate.(c)Upon the termination of the Administrative Agent’s security interest in all or any portion of the Collateralas provided in this Section 3.03, the Administrative Agent will, at the request and expense of the Borrower, (i) execute and deliver tothe Borrower such instruments of release with respect to such Collateral, in recordable form if necessary, in favor of the Borrower, asthe Borrower may reasonably request, (ii) deliver any such Collateral in its possession to the Borrower, and (iii) take such other actionsas the Borrower may reasonably request (all without recourse to, and without representation or warranty by, the Administrative Agent,other than a representation to the effect that no Adverse Claim in the Collateral has been created by such Person) to evidence thetermination of the Administrative Agent’s security interest in the Collateral or the portion thereof in which the Administrative Agent’ssecurity interest has been released.-55-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.ARTICLE IVREPRESENTATIONS AND WARRANTIESSECTION 4.01 Representations and Warranties of Borrower. The Borrower represents and warrants to theAdministrative Agent, the Group Agents and the Lenders on and as of the Closing Date, the Initial Loan Date, each subsequent LoanIncrease Date and each Warehouse SUBI Lease Allocation Date that:(a)Organization and Power. The Borrower is a limited liability company duly organized, validly existingand in good standing under the laws of the State of Delaware. The Borrower has all requisite power and all governmental licenses,authorizations, consents and approvals required to carry on its business, including its business relating to the Borrower’s purchasingand selling of receivables relating to sales of automobiles in each jurisdiction in which its business is now conducted except where thefailure to have any of the foregoing does not, and is not reasonably expected to, have a Material Adverse Effect.(b)Due Qualification. The Borrower is duly qualified to do business as a foreign limited liability company ingood standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property orthe conduct of its business shall require such qualifications except where the failure to do so does not, and is not reasonably expectedto, have a Material Adverse Effect.(c)Authorization and Non-Contravention. The execution, delivery and performance by the Borrower of thisAgreement and the other Transaction Documents to which it is a party are within the Borrower’s limited liability company powers,have been duly authorized by all necessary limited liability company action, require no action by or in respect of, or filing with, anyOfficial Body or official (except as contemplated by Section 3.02), and do not contravene or violate, or constitute a default under,(i) any provision of applicable law, (ii) any order, rule or regulation applicable to the Borrower, (iii) the Certificate of Formation or theOperating Agreement of the Borrower, as the case may be, (iv) any agreement, judgment, injunction, order, decree or other instrumentbinding upon the Borrower or (v) result in the creation or imposition of any lien on assets of the Borrower (except as contemplated bySection 3.02); except, in the case of clauses (i), (ii), (iv) or (v), where such contravention, violation, default or lien does not and is notreasonably expected to have a Material Adverse Effect.(d)Binding Effect. This Agreement and the other Transaction Documents to which the Borrower is a partyconstitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with theirrespective terms, subject to the effect of bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement ofcreditors’ rights generally.(e)Accuracy of Information. As of the Initial Loan Date, the list of Warehouse SUBI Leases delivered to theAdministrative Agent, any Group Agent or any Lender on or prior to the Initial Loan Date, the list of Warehouse SUBI Leasesdelivered to the Administrative Agent, any Group Agent or any Lender as of each applicable Warehouse SUBI Lease Allocation Datethereafter, and all other information heretofore furnished in writing by the Borrower to the Administrative Agent, any Group Agent orany Lender for purposes of or in connection with this Agreement or any other Transaction Document or any transaction contemplatedhereby or thereby is, and all such information hereafter furnished in writing by the Borrower to the Administrative Agent, any GroupAgent or any Lender, taken as a whole, contained or will contain as of the date so furnished, no untrue statement of a material fact oromitted or will omit to state a material fact necessary to make the statements contained herein or therein materially misleading in light ofthe circumstances in which such statements were-56-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.made; provided that, with respect to projected financial information, the Borrower represents only that such information was preparedin good faith based upon assumptions believed to be reasonable at the time and information available to it at such time, it beingunderstood that the Borrower is under no obligation to update such projections or underlying information.(f)Actions, Suits. Except as set forth in Schedule 1, there are no actions, suits or proceedings pending, or tothe knowledge of the Borrower threatened, against or affecting the Borrower or its properties, in or before any court, arbitrator or otherbody, which (i) are individually or collectively reasonably expected to have a Material Adverse Effect, or (ii) assert the invalidity ofthis Agreement or any other Transaction Document to which the Borrower is a party or seek to prevent the consummation of thetransactions contemplated hereby or thereby.(g)Place of Business. The chief place of business and chief executive office of the Borrower are located inPalo Alto, California, and the offices where the Borrower keeps its records regarding the Collateral and the Electronic Lease Vault arelocated in the United States in jurisdictions where all action required by Section 6.02(a) has been taken and completed during the timeperiods required therein. Within the last five years, the Borrower has not changed its type of entity or jurisdiction of organization andhas not merged or consolidated with any other Person or been the subject of any bankruptcy proceeding.(h)Names. Except as described in Schedule 2, the Borrower has not used any limited liability companynames, trade names or assumed names other than its name set forth on the signature pages of this Agreement.(i)Use of Proceeds. No proceeds of the Loans will be used for a purpose which violates, or would beinconsistent with regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System.(j)Credit and Collection Policy. The Borrower has complied in all material respects with the Credit andCollection Policy in regard to each Warehouse SUBI Lease. The Borrower has not extended or modified in any material respect theterms of any Warehouse SUBI Lease except in all material respects in accordance with the Credit and Collection Policy.(k)Absence of Certain Events. No Default, Event of Default, Potential Servicer Default or Servicer Defaulthas occurred and is continuing on the applicable Loan Increase Date.(l)Permitted Lockboxes and Permitted Accounts. The Borrower has instructed Lessees to make all paymentson the related Leases or on behalf of Lessees directly to a Permitted Lockbox or a Permitted Account. Each Permitted Lockbox islocated in the United States and each Permitted Account is maintained in the United States by a bank.(m)Investment Company; Volcker Rule. Neither the Borrower nor the Trust is an “investment company” or acompany “controlled by an investment company” within the meaning of the Investment Company Act of 1940, and neither relies onSection 3(c)(1) or Section 3(c)(7) thereof to reach such determination. The Borrower is not a “covered fund” within the meaning ofthe final regulations issued December 20, 2013, implementing Section 619 of the Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010.-57-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(n)Financial Condition. The Borrower is Solvent and is not the subject of an Event of Bankruptcy and thepledge of the Warehouse SUBI Certificate is not being made in contemplation of the occurrence thereof.(o)Good Title; Perfection. Immediately prior to the pledge hereunder, the Borrower shall be the legal andbeneficial owner of the Warehouse SUBI Certificate and the beneficial owner of the Warehouse SUBI Assets with respect thereto, freeand clear of any Adverse Claim (other than the interest of the Collateral Agent under the Collateral Agency and SecurityAgreement). This Agreement is effective to create, and shall transfer to the Administrative Agent a valid security interest in theWarehouse SUBI Certificate and the Borrower’s beneficial interest in the Warehouse SUBI Assets and Collections (to the extentprovided by Section 9-315 of the UCC (or other section of similar content of the Relevant UCC) with respect thereto and in the otherCollateral free and clear of any Adverse Claim (except as created by this Agreement and the Collateral Agency and SecurityAgreement), which security interest is perfected (except as to the Warehouse SUBI Leased Vehicles in which the Collateral Agent isnoted as the lienholder on the related Certificate of Title) and of first priority. On or prior to the Closing Date (and, with respect toAdditional Warehouse SUBI Assets, on the applicable Warehouse SUBI Lease Allocation Date, including a Warehouse SUBI LeaseAllocation Date which is a Loan Increase Date), all financing statements and other documents required to be recorded or filed in orderto perfect and protect the Administrative Agent’s security interest in and to the Collateral against all creditors of and transferees fromthe Borrower will have been duly filed in each filing office necessary for such purpose (other than any notation of the security interestof the Administrative Agent on any Certificates of Title for Warehouse SUBI Leased Vehicles) and all filing fees and taxes, if any,payable in connection with such filings shall have been paid in full. No effective financing statement or other instrument similar ineffect covering any Collateral with respect thereto is on file in any recording office, except those filed pursuant to this Agreement or theCollateral Agency and Security Agreement.(p)Electronic Chattel Paper and Electronic Lease Vault. Each such Lease is Electronic Chattel Paper and isnot Tangible Chattel Paper, and there exists a single, authoritative copy of the record or records comprising such Electronic ChattelPaper, which copy is unique and identifiable (all within the meaning of Section 9-105 of the UCC (or other section of similar contentof the Relevant UCC)), that has been communicated to and maintained in the Electronic Lease Vault. The description of theElectronic Lease Vault attached hereto as Schedule 3 is complete and accurate.(q)Insurance Policies. The Borrower, in accordance with its normal and customary procedures, shall havedetermined that the related Lessee has obtained or agreed to obtain physical damage insurance covering each Warehouse SUBI LeasedVehicle, and such Lessee is required under the terms of its related Warehouse SUBI Lease to maintain such insurance.(r)Anti-Corruption Laws and Sanctions. The Borrower or Tesla, Inc. has implemented and maintains ineffect policies and procedures designed to ensure compliance by the Borrower and its directors, officers, employees and agents withAnti-Corruption Laws and applicable Sanctions, and the Borrower and its Affiliates, officers and employees and to the knowledge ofthe Borrower, its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all materialrespects. None of (a) the Borrower or its Affiliates, directors, officers or employees, or (b) to the knowledge of the Borrower, anyagent of the Borrower that will act in any capacity in connection with or benefit from the facility established hereby, is a SanctionedPerson. No Loans, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws orapplicable Sanctions.-58-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(s)No ERISA Liability. Neither the Borrower nor any of its ERISA Affiliates maintains or has any obligationto contribute to any Plan or Multiemployer Plan.(t)Not a Designated Person. Neither the Borrower nor any of its directors, officers, brokers or other agentsacting or benefiting in any capacity in connection with this Agreement or the other Transaction Documents, or any of its parents orsubsidiaries, is a Designated Person.(u)Ownership. TBM owns, directly or indirectly, 100% of the equity interests of the Borrower free and clearof all Liens. Such equity interests of the Borrower are validly issued and fully paid, and there are no options, warrants or other rightsto acquire equity securities of the Borrower.(v)Compliance with Law. The Borrower has complied with all applicable Requirements of Laws to which itmay be subject, except for where the failure to so comply could not reasonably be expected to have a Material Adverse Effect.(w)Eligible Leases. Each Lease allocated to the Warehouse SUBI on the applicable Warehouse SUBI LeaseAllocation Date is an Eligible Lease as of the related Cut-Off Date. (x)Eligible Asset. The Loans are an “eligible asset” as defined in Rule 3a-7 of the Investment Company Actof 1940, as amended.(y)Taxes; Tax Status. All Tesla Parties have (i) timely filed all material tax returns they are required to file and (ii) paid, or caused to be paid, allmaterial taxes, assessments and other governmental charges, which are shown to be due and payable on such returns, otherthan taxes, assessments and other governmental charges being contested in good faith. Adequate provisions in accordancewith GAAP for taxes on the books of the applicable Tesla Party have been made for all open years and for the current fiscalperiod.The Borrower has not elected to be treated as a corporation under U.S. Treasury Regulation § 301.7701-3 for U.S. federalincome tax purposes.None of the Borrower, the Warehouse SUBI or the Trust (or any portion thereof) is or will at any relevant time become anassociation (or a publicly traded partnership) taxable as a corporation for U.S. federal income tax purposes.(z)Permitted Accounts. The Borrower has not entered into any agreement with any Person which grants tosuch Person an interest in, or rights to, any Permitted Lockbox or Permitted Account, it being understood that certain collections fromtime to time received in a Permitted Lockbox or Permitted Account may relate to Leases that are not Warehouse SUBI Leases and towhich the Secured Parties may not have an interest.If any breach of the statements and representations made in this Section 4.01 materially and adversely affects the interests ofany Lender Party or of any Lender Party in any Warehouse SUBI Lease or Warehouse SUBI Leased Vehicle, then, if the Borrower isunable to remedy such breach by the Payment Date next succeeding the earlier of the date on which the Borrower knows of suchbreach and the Borrower receives notice of such breach, the Borrower shall enforce its rights, if any, to cause TBM to cause suchLeases and related Leased Vehicles to be reallocated to the TBM SUBI pursuant to Section 2.7 of the Warehouse SUBI SaleAgreement and-59-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.to remit to the Warehouse SUBI Collection Account on the Deposit Date next succeeding such knowledge or notice an amount equalto the aggregate of the Repurchase Amounts with respect to all such Leases at the time of such removal in accordance with theWarehouse SUBI Sale Agreement, and all such Leases and Leased Vehicles removed from the Collateral shall no longer constituteWarehouse SUBI Assets and Collateral hereunder.If any breach of the statements and representations made in this Section 4.01, together with all prior such breaches, affectWarehouse SUBI Leases and the repurchases required by the preceding paragraph have occurred, then, except for the indemnificationrights of the Indemnified Parties under this Agreement, following the reallocation by the Borrower required under the precedingparagraph, the Lender Parties shall have no further remedy against the Borrower with respect to such removed Leases and LeasedVehicles and such breaches shall not constitute an Event of Default.ARTICLE V CONDITIONS PRECEDENTSECTION 5.01 Conditions to Closing. On or prior to the Closing Date, the Borrower shall deliver (or cause to bedelivered) to the Administrative Agent and each Group Agent the following documents and instruments, all of which shall be in formand substance acceptable to the Administrative Agent and each Group Agent:(a)A certificate of an authorized signatory of each of the Borrower, TFL and the Trust, certifying (i) thenames and signatures of the officers or other persons authorized on its behalf to execute each of this Agreement and the otherTransaction Documents to be delivered by it hereunder (on which Certificate the Lender Parties may conclusively rely until such timeas the Administrative Agent and each Group Agent shall receive from such Person a revised Certificate meeting the requirements ofthis clause (a)(i)), (ii) a copy of such Person’s certificate of incorporation, certificate of formation, certificate of trust or charter, as thecase may be, as amended or restated, certified as of the date reasonably near the Effective Date by the Secretary of State of the State ofsuch Person’s jurisdiction of formation or incorporation, as the case may be, (iii) a copy of such Person’s Operating Agreement, By-laws or declaration of trust, as and if applicable, as amended, (iv) a copy of resolutions of the managers, the Board of Directors (or anyexecutive committee designated by the Board of Directors) or other governing body of such Person approving the transactionscontemplated hereby, (v) a certificate as of a date reasonably near the Effective Date of the Secretary of State of such Person’sjurisdiction of incorporation or formation, as the case may be, certifying such Person’s good standing under the laws of suchjurisdiction and (vi) certificates of qualification as a foreign corporation, trust or limited liability company, as the case may be, issued bythe Secretaries of State or other similar officials of each jurisdiction where such qualification is material to the transactionscontemplated by this Agreement and the other Transaction Documents;(b)An officer’s certificate for each of the Borrower and Servicer dated the Closing Date, to the effect that (i)the representations and warranties of the Borrower and the Servicer, as the case may be, in Article IV are true and correct in allmaterial respects as of the Effective Date, (ii) the Borrower and the Servicer, as the case may be, are in compliance in all materialrespects with the covenants and agreements contained herein, the Warehouse SUBI Servicing Agreement and in the Warehouse SUBISale Agreement, (iii) no Default, Event of Default or Servicer Default exists on the Closing Date and (iv) except for financingstatements filed pursuant to this Agreement or the Warehouse SUBI Sale Agreement, no financing statements have been filed orrecorded against the Borrower or TFL, as applicable, relating to the Collateral;-60-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(c)Proper financing statements (Form UCC-1) naming the Borrower, as debtor, and the AdministrativeAgent, as secured party, or other similar instruments or documents, as may be necessary or in the opinion of the Administrative Agentdesirable under the Relevant UCC or any comparable law to perfect the security interest of the Administrative Agent in all Collateral;(d)Proper financing statements (Form UCC-1), naming TBM as the transferor (debtor) of the WarehouseSUBI and the Warehouse SUBI Certificate, the Borrower as transferee (assignor secured party) and the Administrative Agent asassignee, or other similar instruments or documents, as may be necessary or in the opinion of the Administrative Agent and each GroupAgent desirable under the Relevant UCC or other comparable law to perfect the Administrative Agent’s interest in the WarehouseSUBI and the Warehouse SUBI Certificate;(e)Each of the TFL Transaction Documents has been executed and delivered by the parties thereto;(f)Proper financing statements (Form UCC-3), if any, necessary to release all security interests and otherrights of any Person in the Collateral previously granted by the Borrower, TBM or TFL;(g)Certified copies of request for information or copies (Form UCC-11) (or a similar search report certified byparties acceptable to the Administrative Agent and each Group Agent) dated a date reasonably near the Closing Date listing alleffective financing statements which name the Borrower or TBM (under its present name or any previous name) as transferor or debtorand which are filed in jurisdictions in which the filings are to be made pursuant to item (c) or (d) above, together with copies of suchfinancing statements (none of which shall cover any Collateral);(h)Favorable opinions of Katten Muchin Rosenman LLP, special counsel for the Borrower and TFL,addressed to the Borrower, TFL, the Administrative Agent, the Group Agents and the Lenders as to true sale, non-consolidation, noconflicts, enforceability, and creation, perfection and priority of security interests, in forms reasonably acceptable to the AdministrativeAgent and each Group Agent;(i)A favorable opinion of Todd Maron, General Counsel for Tesla, Inc., addressed to the Borrower, TFL, theAdministrative Agent, the Group Agents and the Lenders, as to such matters as the Administrative Agent and each Group Agent mayreasonably request;(j)A favorable opinion of Richards, Layton & Finger, P.A., Delaware counsel for the Borrower, TFL and theTrust, addressed to the Borrower, TFL, the Administrative Agent, the Group Agents and the Lenders as to such matters as theAdministrative Agent and each Group Agent may reasonably request;(k)Representative forms of Leases;(l)Fully executed copies of the Warehouse SUBI Sale Agreement and the other Transaction Documents;(m)A favorable opinion of Richards, Layton & Finger, P.A., counsel to U.S. Bank Trust, as Trustee,addressed to the Administrative Agent, the Group Agents and the Lenders, as to such matters as the Administrative Agent and eachGroup Agent may reasonably request;-61-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(n)[Reserved].(o)An Officer’s certificate of U.S. Bank Trust, certifying as to (i) the names and signatures of the officersauthorized on its behalf to execute each of the Transaction Documents to be delivered by it hereunder (on which certificate the LenderParties may conclusively rely until such time as the Administrative Agent and each Group Agent shall receive from such Person arevised certificate meeting the requirements of this clause (n)(i)), (ii) a copy of its By-laws, as amended, and (iii) a certificate as of adate reasonably near the Closing Date of the office of the Comptroller of the Currency, certifying its good standing under the laws ofsuch jurisdiction;(p)A favorable opinion of Richards, Layton & Finger, P.A., special counsel to the Borrower, addressed to theAdministrative Agent, the Group Agents and the Lenders, as to perfection and priority of security interest under Delaware law;(q)A favorable opinion of Katten Muchin Rosenman LLP, counsel to the Borrower, addressed to theAdministrative Agent, the Group Agents and the Lenders as to perfection and priority of security interests in the Warehouse SUBICollection Account and the Reserve Account under applicable law;(r)A schedule of Warehouse SUBI Leases, if any, as of the Cut-Off Date (which schedule may be inelectronic form);(s)Evidence of the payment in full of all fees payable on the Closing Date of all fees payable to the LenderParties on the Effective Date pursuant to the Fee Letter and all fees and expenses of the Lender Parties (including legal fees andexpenses) incurred in the negotiation, documentation and closing of this Agreement and the other Transaction Documents; and(t)Evidence of the payment in full and termination of the Finco Warehouse.SECTION 5.02 Conditions to Loan Increases. Each Lender’s obligation to fund its initial Loan on the Initial LoanDate and each Loan on each subsequent Loan Increase Date shall be subject to satisfaction of the following applicable conditionsprecedent:(a)The Borrower shall have complied in all material respects with the covenants and agreements containedherein and in each other Transaction Document;(b)No Default, Event of Default or Potential Servicer Default shall have occurred and be continuing and theTermination Date shall not have occurred, and no Event of Bankruptcy shall have occurred with respect to TFL or Tesla, Inc.;(c)Such Loan Increase Date does not occur during a Turbo Amortization Period;(d)Not later than 12:00 p.m. New York City time on the Business Day preceding each Loan Increase Datefollowing the Initial Loan Date, the Borrower shall have delivered (i) to the Administrative Agent, the Paying Agent, each GroupAgent and each Lender set forth on the Register an electronic copy of (A) a Loan Request in substantially the form of Exhibit A to thisAgreement (without the Pool Cut Report referenced therein) and (B) if such Loan Increase Date is also a Warehouse SUBI LeaseAllocation Date, a “Notice of Warehouse SUBI Lease Allocation” in substantially the form of Exhibit D to this Agreement, and (ii) tothe Administrative-62-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Agent, the Paying Agent and each Group Agent (A) a duly executed copy of the Loan Request and, if applicable, the Notice ofWarehouse SUBI Lease Allocation given pursuant to preceding clause (i) (which notice may be delivered by email with hard copy tofollow promptly) and (B) a Pool Cut Report as to all Leases included in the Warehouse SUBI (including the Lease Pool (if any) to beallocated to the Warehouse SUBI on such Loan Increase Date if such Loan Increase Date is a Warehouse SUBI Lease AllocationDate);(e)After giving effect to the related Loan, (i) the Loan Balance shall not exceed the Maximum Loan Balanceand (ii) the Loan Balance shall be less than or equal to the aggregate Commitment Amount of all Lenders.(f)The Borrower and the Servicer shall have taken any actions necessary or advisable, and reasonablyrequested in writing by the Administrative Agent and any Group Agent as soon as practicable, to maintain the Administrative Agent’sperfected security interest in the Collateral;(g)If such Loan Increase Date is a Warehouse SUBI Lease Allocation Date, then solely with respect to anyLeases and Leased Vehicles to be allocated to the Warehouse SUBI on such date, the Administrative Agent and each Group Agentshall have received a copy of a report produced by Automotive Lease Guide (in form and substance reasonably satisfactory to theAdministrative Agent and each Group Agent) setting forth the residual value estimate used to determine the Mark-to-Market MRMResidual Value of the Leased Vehicle related to each Lease, in each case, as of the related Mark to Market Adjustment Date, theBorrower shall have provided evidence, in form and substance reasonably satisfactory to the Administrative Agent and each GroupAgent, of the purchase of an Eligible Interest Rate Hedges, including the related Eligible Interest Rate Hedge Providers’acknowledgment of the collateral assignment by the Borrower to the Administrative Agent of such Eligible Interest Rate Hedges asrequired by Section 6.01(n); provided that the Borrower shall not be required to enter into a new Eligible Interest Rate Hedge on suchLoan Increase Date if, after giving effect to the funding on such Loan Increase Date, there are already in full force and effect one ormore Interest Rate Hedges (i) which satisfy the requirements contained in Section 6.01(n) and (ii) the aggregate notional principalamount of which (when taken together) satisfies the requirements contained in the definition of Required Aggregate Notional PrincipalAmount;(h)The Borrower shall have deposited (or caused to be deposited) into the Reserve Account an amount equalto the amount, if any, necessary to cause the amount in the Reserve Account to equal the Required Reserve Account Balance;provided that the Reserve Account may be funded following the making of the Loan so long as the Reserve Account is funded on thesame date as of the Loan;(i)The representations and warranties of the Borrower and the Servicer contained in Article IV are true andcorrect in all material respects except to the extent that such representations and warranties specifically refer to an earlier date, in whichcase they are true and correct in all material respects as of such earlier date;(j)No TFL Borrower Default shall have occurred and be continuing; and(k)No Tesla Change in Control shall have occurred and be continuing, unless such Tesla Change in Controlhas been approved by the Required Group Agents.-63-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.ARTICLE VICOVENANTSSECTION 6.01 Covenants of the Borrower. At all times from the date hereof to the date on which this Agreementterminates in accordance with Section 12.01, unless the Administrative Agent and each Group Agent shall otherwise consent inwriting:(a)Compliance Certificate and Certain Notices and Information. The Borrower will furnish to theAdministrative Agent and each Group Agent:(i)Compliance Certificate. Together with the annual report required to be delivered by the Servicerpursuant to the Warehouse SUBI Servicing Agreement, a compliance certificate in substantially the form of Exhibit Chereto signed by the chief accounting officer or treasurer of the Borrower stating that no Default, Event of Default or, tohis or her knowledge, no Servicer Default exists, or if any Default, Event of Default or to his or her knowledge ServicerDefault exists, stating the nature and status thereof.(ii)Other Information. Such other information (including non-financial information) as the AdministrativeAgent or any Group Agent may from time to time reasonably request.(b)Conduct of Business. The Borrower will do all things necessary to remain duly organized, validly existingand in good standing as a domestic limited liability company in its jurisdiction of formation. The Borrower will maintain all requisiteauthority to conduct its business in each jurisdiction in which its business requires such authority, except, in each case, where thefailure to do so does not, and is not reasonably expected to, have a Material Adverse Effect.(c)Compliance with Laws. The Borrower will comply in all material respects with all Requirements of Lawto which it may be subject or which are applicable to the Collateral, except where the failure to comply does not, and is not reasonablyexpected to, have a Material Adverse Effect(d)Notice of Certain Events. The Borrower shall furnish to the Administrative Agent:(i)As soon as practicable, and in any event within five (5) Business Days after any Responsible Officer of theBorrower obtains knowledge of the occurrence of each Default, Event of Default, Potential Servicer Default or ServicerDefault, a statement of the chief financial officer or chief accounting officer of the Borrower setting forth the details of suchDefault, Event of Default, Potential Servicer Default or Servicer Default, and the action which the Borrower and, if known tothe Borrower, the Servicer, proposes to take with respect thereto.(ii)Promptly and in no event more than five (5) Business Days after any Responsible Officer of the Borrowerobtains knowledge of the occurrence of any Lien with respect to the Collateral, the statement of a Responsible Officer of theBorrower setting forth the details of such Lien and the action which the Borrower and, if known to the Borrower, theServicer, is taking or proposes to take with respect thereto.-64-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(iii)Promptly and in no event more than five (5) Business Days after any Responsible Officer of the Borrowerobtains knowledge of any matter or the occurrence of any event concerning the Borrower, the Servicer, the Trust or theCollateral which would reasonably be expected to have a Material Adverse Effect, the statement of a Responsible Officer ofthe Borrower setting forth the details of such default and the action which the Borrower and, if known to the Borrower, theServicer, is taking or proposes to take with respect thereto.(iv)Promptly and in no event more than five (5) Business Days after any Responsible Officer of the Borrowerobtains knowledge of (a) any action, suit, proceeding or investigation pending or, to the best knowledge of the Borrower,threatened, against the Borrower, the Servicer or the Trust or their respective property, or (b) any order, judgment, decree,injunction, stipulation or consent order of or with any Governmental Authority, in each case adversely affecting (x) the Trustin excess of $15,000,000, or (y) the Borrower in excess of $2,000,000, the statement of a Responsible Officer of theBorrower setting forth the details of such default and the action which the Borrower and, if known to the Borrower, theServicer, is taking or proposes to take with respect thereto.(v)Promptly and in no event more than five (5) Business Days after any Responsible Officer of the Borrowerobtains knowledge of any amendment, modification, supplement or other change to the Credit and Collection Policy thatwould reasonably be expected to have a material adverse effect on the collectability of the Warehouse SUBI Leases or theinterests of the Lenders, the statement of a Responsible Officer of the Borrower setting forth the details of such amendment,modification or supplement.(e)The Borrower will furnish to the Administrative Agent and each Group Agent, as soon as reasonablypracticable after receiving a request therefor, such information with respect to the Collateral as the Administrative Agent or any GroupAgent may reasonably request, including listings identifying the outstanding remaining Monthly Lease Payments and the BaseResidual Value for each Warehouse SUBI Lease. Without limiting the generality of the foregoing, the Borrower will furnish to theAdministrative Agent and each Group Agent, as soon as reasonably practicable after receiving a request therefor, (i) the names andaddresses of all banks which maintain one or more Permitted Lockboxes and the addresses of all related Permitted Lockboxes and theaccount holder, the account number and the bank at which each Permitted Account is maintained and (ii) the name and address of eachPerson in possession of any Lease Documents (including the street address at which such Lease Documents are located). At therequest of any Group Agent, the Borrower agrees to reasonably cooperate in providing information to any rating agency in connectionwith such Group Agent’s seeking, at the expense of such Group Agent, of a rating of the Loans under this Agreement.(f)Fulfillment of Obligations. The Borrower will duly observe and perform, or cause to be observed orperformed, all material obligations and undertakings on its part to be observed and performed by it under or in connection with thisAgreement, the other Transaction Documents to which it is a party and the Warehouse SUBI Leases, will duly observe and perform allmaterial provisions, covenants and other promises required to be observed by it under the Warehouse SUBI Leases, will do nothing tomaterially impair the security interest of the Administrative Agent in and to the Collateral and will pay when due (or contest in goodfaith) all taxes, including any sales tax, excise tax or other similar tax or charge, payable by it in connection with the Collateral andtheir creation and satisfaction.(g)Enforcement. The Borrower shall take all commercially reasonable actions necessary and appropriate toenforce its rights and claims under the Warehouse SUBI Sale Agreement.-65-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(h)No Other Business. The Borrower shall engage in no business other than the business contemplated underits Certificate of Formation and its Limited Liability Company Agreement and shall comply in all material respects with the terms of itsLimited Liability Company Agreement.(i)Separate Existence. The Borrower shall do (or refrain from doing) all things necessary to maintain its legalexistence separate and apart from TBM, Tesla, Inc., TFL and all other Affiliates of the Borrower. Without limiting the generality ofthe foregoing, the Borrower shall:(i)observe all corporate and limited liability company procedures required by its Certificate of Formation andits Limited Liability Company Agreement;(ii)maintain adequate capitalization to engage in the transactions and activities contemplated in its Certificateof Formation, its Limited Liability Company Agreement, the Warehouse SUBI Sale Agreement and this Agreement;(iii)provide for the payment of its operating expenses and liabilities from its own funds (except that certain ofthe organizational expenses of the Borrower have been paid by TFL or TBM);(iv)maintain an arm’s length relationship with its Affiliates, and shall not (A) lend money to, or borrowmoney from, any of its Affiliates or any unaffiliated third party or (B) transact any business, or enter into any transaction with any of itsAffiliates, except, in each case, pursuant to binding and enforceable written agreements the terms of which, on the whole, are arm’s-length and commercially reasonable and, in the case of money borrowed by the Borrower from any of its Affiliates, the subordinationand payment provisions of all such indebtedness shall be satisfactory in form and substance to the Administrative Agent and eachGroup Agent;(v)not (A) perform any of its Affiliates’ duties or obligations, (B) commingle assets with those of anyaffiliated or unaffiliated third party (except for the temporary commingling of Collections), (C) guarantee or become obligated for thedebts of any affiliated or unaffiliated third party or hold out its credit as being available to satisfy the obligations of others, (D) operateor purport to operate as a single integrated entity with respect to its Affiliates or any affiliated or unaffiliated third party, (E) endeavor toobtain credit or incur any obligation to any affiliated or unaffiliated third party based upon the assets or creditworthiness of the other,(F) acquire any obligations or securities of any of its partners, members or shareholders, (G) pledge its assets for the benefit of anyentity (except pursuant to this Agreement), or (H) fail to correct any known misunderstanding or misrepresentation with respect to anyof the foregoing;(vi)maintain bank accounts and books of account separate from those of its Affiliates;(vii)to the extent it shares its office with any of its Affiliates, maintain separate records storage space and filesin the building they share, and maintain and use separate telephone capacity and business forms;(viii)(A) ensure that at least one manager of the Borrower shall be an “Independent Manager” (as defined inthe Limited Liability Company Agreement) and cause its Operating Agreement to provide that (x) at least one manager of theBorrower shall be an Independent Manager, (y) the managers of the Borrower shall not approve, or take any other action to cause thefiling of, a voluntary bankruptcy petition with respect to the Borrower or, to the fullest extent provided by applicable law, thedissolution of the Borrower unless a unanimous vote of all of the Borrower’s managers (which vote shall include the affirmative voteof the Independent Manager) shall approve the taking of such action in writing prior to the taking of such action and (z) the provisionsrequiring at least one Independent Manager and the provisions described in clauses (x) and (y) of this paragraph (viii) cannot beamended without the prior written consent of the Independent Manager; and-66-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(B)in addition to the requirements set forth in preceding clause (A), ensure that the “Independent Manager”(as defined in the Limited Liability Company Agreement) (x) has prior experience as an independent director for a corporationor limited liability company whose charter documents required the unanimous consent of all independent directors thereofbefore such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedingsagainst it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (y) has atleast three years of employment experience with one or more entities that provide, in the ordinary course of their respectivebusinesses, advisory, management or placement services to issuers of securitization or structured finance instruments,agreements or securities;(ix)take such actions as are necessary to ensure that no Independent Manager shall at any time serve as atrustee in bankruptcy for the Borrower or any Affiliate thereof;(x)take such actions as are necessary to ensure that any financial statements of TBM, TFL or any Affiliate ofeither of them which are consolidated to include the Borrower (a) will contain notes clearly stating that securitization transactions of thekind contemplated in the Warehouse SUBI Sale Agreement are structured legally as sales (although the Borrower may be consolidatedwith TBM, TFL or either of their Affiliates for financial accounting purposes) and (b) will not suggest in any way that (1) the assets ofthe Borrower will be available to pay the claims of creditors of TFL, TBM or any Affiliate of TFL or TBM other than the Borrower or(2) the Borrower is not a separate limited liability company (although in each case, it being understood that the Borrower may beconsolidated with TFL or TBM or either of their Affiliates for financial accounting purposes); and(xi)to the fullest extent permitted by applicable law, take no action to dissolve itself, including applying (orconsenting to the application) for judicial dissolution.(j)Compliance with Opinion Assumptions. Without limiting the generality of Section 6.01(h) above, in allmaterial respects, the Borrower shall (as to itself) maintain in place all policies and procedures, and take and continue to take allactions, described in the assumptions as to facts set forth in, and forming the basis of, the opinions set forth in the opinion delivered tothe Administrative Agent, the Group Agents and the Lenders pursuant to Section 5.01(h).(k)Payment of Taxes. The Borrower will, and will cause the Trust to, pay and discharge all material taxes,assessments, and governmental charges or levies imposed upon it, or upon its income or profits, or upon any property belonging to it,or them, before delinquent, other than taxes, assessments and other governmental charges being contested in good faith.(l)Maintenance of Security Interests in Warehouse SUBI. The Borrower shall take such steps as arenecessary to preserve and maintain the security interest of the Administrative Agent (for the benefit of the Secured Parties) in theWarehouse SUBI and other Collateral as a valid and enforceable first priority perfected security interest, subject to no Adverse Claims(other than the interest of the Collateral Agent under the Collateral Agency and Security Agreement).(m)Electronic Chattel Paper. The Borrower shall take such actions as are necessary to cause all vehicleleases of the Trust and the Borrower (including all Warehouse SUBI Leases) to constitute Electronic Chattel Paper (and not toconstitute Tangible Chattel Paper) held in the Electronic Lease Vault.-67-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(n)Interest Rate Hedges. The Borrower shall, at all times beginning thirty (30) days after an Interest RateHedge Trigger Event occurs, maintain in full force and effect one or more Eligible Interest Rate Hedges which, together with theaggregate notional amount of such Eligible Interest Rate Hedges, when taken together, at all times satisfy the requirements contained inthe definition of Required Aggregate Notional Principal Amount, and shall comply with the terms thereof; provided that:(i)if any interest rate hedge provider party to an Interest Rate Hedge ceases to satisfy the requirements setforth in the definition of “Eligible Interest Rate Hedge Provider,” the Borrower shall within thirty (30) days (x) cause such Person toassign its obligations under the related Interest Rate Hedge to a new Eligible Interest Rate Hedge Provider (or such person shall havethirty (30) days to again satisfy the requirements set forth in the definition of “Eligible Interest Rate Hedge Provider”), or (y) obtain asubstitute Eligible Interest Rate Hedge, including the related Eligible Interest Rate Hedge Provider’s acknowledgment of the collateralassignment by the Borrower to the Administrative Agent of such Eligible Interest Rate Hedge;(ii)if any provider of an Interest Rate Hedge fails to make a payment when due under the applicable InterestRate Hedge, the Borrower shall within thirty (30) days (x) cause such Person to assign its obligations under the related Interest RateHedge to a new Eligible Interest Rate Hedge Provider or (y) obtain a substitute Eligible Interest Rate Hedge, including the relatedEligible Interest Rate Hedge Provider’s acknowledgment of the collateral assignment by the Borrower to the Administrative Agent ofsuch Eligible Interest Rate Hedge;(iii)the Borrower may not, without the prior written consent of the Administrative Agent and each GroupAgent, exercise any rights (including any termination rights) under any Interest Rate Hedge that could reasonably be expected toadversely affect the right of the Lenders to receive payments hereunder or under such Interest Rate Hedge;(iv)on each Payment Date from and after the Interest Rate Hedge Trigger Date, if the aggregate notionalamount of all Interest Rate Hedges is then less than 90%, of the Loan Balance (after giving effect to any Loan Increase on such date),the Borrower shall enter into one or more Eligible Interest Rate Hedges such that the aggregate notional amount of all Interest RateHedges, including the new Interest Rate Hedge, is equal to the Loan Balance;(v)notwithstanding the foregoing, one or more Interest Rate Hedges may be combined into a single InterestRate Hedge which, in the aggregate, satisfies the requirements set forth in this Section 6.01(n);(vi)if, on any Payment Date the aggregate notional amount of all Interest Rate Hedges that are interest rateswaps is greater than 110% of the Loan Balance on such date (after giving effect to any payments or Loan Increase on such date), theServicer shall cause the Borrower to amend or terminate existing Interest Rate Hedges that are interest rate swaps such that theaggregate notional amount of all Interest Rate Hedges that are interest rate swaps at such time shall be equal to the Loan Balance atsuch time (terminating those Interest Rate Hedges that are interest rate swaps in descending order from those Interest Rate Hedges withthe highest fixed rate to those Interest Rate Hedge with the next highest fixed rate and so on); and all Interest Rate Hedge TerminationPayments owed by the Borrower and other costs incurred in connection with the termination contemplated by this paragraph shall bepaid by the Servicer; and-68-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(vii)the Administrative Agent at any time on or after the Termination Date shall have the right to amend orterminate any Interest Rate Hedges in its sole discretion; and all Interest Rate Hedge Termination Payments owed by the Borrower andother costs incurred in connection with the termination contemplated by this paragraph shall be paid by the Servicer.On or prior to the effective date of any Interest Rate Hedge, the Borrower shall establish and thereafter maintain an Eligible Account inthe name of the Borrower with respect to each Interest Rate Hedge Counterparty, other than Deutsche Bank AG, Citibank, N.A. andany other Lender or Affiliate thereof (a “Hedge Counterparty Collateral Account”) in trust and for the benefit of the Lenders and therelated Interest Rate Hedge Counterparty. In the event that pursuant to the terms of the applicable Interest Rate Hedge, the relatedInterest Rate Hedge Counterparty is required to deposit cash or securities as collateral to secure its obligations (“Hedge Collateral”),the Borrower shall deposit all Hedge Collateral received from the Interest Rate Hedge Counterparty into the Hedge CounterpartyCollateral Account. All sums on deposit and securities held in any Hedge Counterparty Collateral Account shall be used only for thepurposes set forth in the related credit support annex (“Credit Support Annex”) to the Interest Rate Hedge. The only permittedwithdrawal from or application of funds on deposit in, or otherwise to the credit of, a Hedge Counterparty Collateral Account shall be(i) for application to the obligations of the applicable Interest Rate Hedge Counterparty under the related Interest Rate Hedge inaccordance with the terms of the Credit Support Annex and (ii) to return collateral to the Interest Rate Hedge Counterparty when andas required by the Credit Support Annex. Amounts on deposit in each Hedge Counterparty Collateral Account shall be invested at thewritten direction of the related Interest Rate Hedge Counterparty, and all investment earnings actually received on amounts on depositin a Hedge Counterparty Collateral Account or distributions on securities held as Hedge Collateral shall be distributed or held inaccordance with the terms of the related Credit Support Annex. Any amounts applied by the Borrower to the obligations of an InterestRate Hedge Counterparty under an Interest Rate Hedge in accordance with the terms of the related Credit Support Annex shallconstitute Interest Rate Hedge Receipts and be deposited in the Collection Account and applied in accordance with Section2.04(c). The Borrower agrees to give the applicable Interest Rate Hedge Counterparty prompt notice if it obtains knowledge that theHedge Counterparty Collateral Account or any funds on deposit therein or otherwise to the credit of the Hedge Counterparty CollateralAccount, shall or have become subject to any writ, order, judgment, warrant of attachment, execution or similar process.(o)Anti-Corruption Laws and Sanctions. The Borrower will maintain in effect and enforce policies andprocedures designed to ensure compliance by the Borrower and each of its Affiliates and their respective directors, officers, employeesand agents with Anti-Corruption Laws and applicable Sanctions.(p)Keeping of Lease Documents and Books of Account. The Borrower will maintain and implementadministrative and operating procedures, including an ability to recreate Lease Documents evidencing the Warehouse SUBI Leases inthe event of the destruction of the originals thereof, and keep and maintain, or obtain, as and when required, all documents, books,Lease Documents and other information reasonably necessary or advisable for the collection of all Warehouse SUBI Leases (includingLease Documents adequate to permit the daily identification of all Collections of and adjustments to each existing Warehouse SUBILease). The Borrower will give the Administrative Agent and each Group Agent prompt notice of any material change in theadministrative and operating procedures referred to in the previous sentence, to the extent such change is likely to have a MaterialAdverse Effect.-69-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(q)Mark-to-Market. Effective as of each Mark-to-Market Adjustment Date, the Borrower shall recalculatethe Mark-to-Market MRM Residual Value of each Warehouse SUBI Lease for which there is a Mark-to-Market MRM Residual Valueat the end of the calendar month which preceded such Mark-to-Market Adjustment Date, and thereafter shall use such value in thecalculation of the Base Residual Value for such Warehouse SUBI Lease until the next Mark-to-Market Adjustment Date.SECTION 6.02 Negative Covenants of the Borrower. At all times from the date hereof to the date on which thisAgreement terminates in accordance with Section 12.01, unless the Administrative Agent and each Group Agent shall otherwiseconsent in writing:(a)Name Change and Offices. The Borrower shall not change its name, identity or organizational structure(within the meaning of Section 9-506, 9-507 or 9-508 of the UCC (or other sections of similar content of the Relevant UCC)) norrelocate its chief executive office or its jurisdiction of formation nor change its “location” under Section 9-307 of the Relevant UCC,unless, within (30) days after such change or relocation it shall have: (i) given the Administrative Agent and each Group Agent writtennotice thereof and (ii) delivered to the Administrative Agent and each Group Agent all financing statements, instruments and otherdocuments requested by the Administrative Agent or any Group Agent in connection with such change or relocation. The Borrowershall at all times maintain its chief executive office and its jurisdiction of formation within a jurisdiction in the United States and inwhich Article 9 of the Relevant UCC is in effect and in the event it moves its chief executive office or its jurisdiction of formation to alocation which may charge taxes, fees, costs, expenses or other charges to perfect the security interest of the Administrative Agent inthe Collateral, it shall pay all taxes, fees, costs, expenses and other charges associated with perfecting the security interest of theAdministrative Agent in the Collateral and any other costs and expenses incurred in order to maintain the enforceability of thisAgreement and the security interest of the Administrative Agent in the Collateral.(b)Transfers, Liens, Etc. Except for the Adverse Claims of the Administrative Agent created by thisAgreement, of the Collateral Agent created by the Collateral Agency and Security Agreement and except for other transfers permittedunder this Agreement, the Borrower shall not transfer, assign (by operation of law or otherwise) or otherwise dispose of, or create orsuffer to exist any Adverse Claim (including the filing of any financing statement) upon or with respect to the Collateral (or any portionthereof), or upon or with respect to any account to which any Collections are sent, or assign any right to receive income in respectthereto.(c)Limited Liability Company Membership Interests. The Borrower shall not issue any membership interests(other than non-economic “special membership interests”) except to Tesla, Inc., TFL, a Tesla Party, TBM or one of their respectiveSubsidiaries or create any Subsidiary. The Borrower shall not pay or make any distributions to any owner of its membership interestsif, at the time or as a result of such payment or the making of such distribution, a Default, an Event of Default or the ScheduledExpiration Date shall have occurred and be continuing under this Agreement.(d)Amendments to Certificate of Formation and Limited Liability Company Agreement. The Borrower shallnot materially amend, alter or change or repeal (and shall not permit the material amendment, alteration or change or repeal of) itsCertificate of Formation or its Limited Liability Company Agreement.(e)Change to other Agreements. The Borrower shall not (i) terminate, amend, supplement, modify or waive,or grant or consent to any such termination, amendment, waiver or consent, or permit to become effective any amendment, supplement,waiver or other modification to the Warehouse SUBI Servicing-70-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Agreement, the Warehouse SUBI Sale Agreement, the Warehouse SUBI Supplement, the Trust Agreement (except to the extent suchtermination, amendment, waiver or consent (i) relates solely to the UTI or a special unit of beneficial interest other than the WarehouseSUBI and (ii) does not have any adverse effect on the Lenders, the Administrative Agent or any other Secured Party, the Collateral orthe SUBI Assets) or the eVault Letter Agreement, or (ii) terminate, amend, supplement, modify or waive, or grant or consent to anysuch termination, amendment, waiver or consent, or permit to become effective any amendment, supplement, waiver or othermodification to any other Transaction Documents that could reasonably be expected to have a Material Adverse Effect, without, ineach case, the consent of the Administrative Agent and the Required Group Agents (or the Required Supermajority Group Agents inthe case of an amendment to the Warehouse SUBI Servicing Agreement that amends the definition of “Servicer Default”), in eachcase, such consents not to be unreasonably withheld, delayed or conditioned.(f)ERISA Matters. Neither the Borrower nor any of its ERISA Affiliates shall establish or have anyobligation to contribute to any Plan or Multiemployer Plan.(g)[Reserved].(h)Consolidations and Mergers. The Borrower shall not consolidate or merge with or into any other Person.(i)Tax Matters.(i)No Tesla Party shall take or cause any action to be taken that could result in the Borrower being treated asa corporation or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.(ii)No Tesla Party shall take or cause any action to be taken that could result in the Borrower, the WarehouseSUBI or the Trust (or any portion thereof) becoming an association (or a publicly traded partnership) taxable as a corporation for U.S.federal income tax purposes.(j)Anti-Corruption Laws and Sanctions. The Borrower shall not request any Loan, and shall not use, andshall ensure that its Affiliates and its and their respective directors, officers, employees and agents not use, the proceeds of any Loan(A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value,to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, businessor transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would result in the violationof any Sanctions applicable to any party hereto.(k)Debt. The Borrower shall not create, incur, assume or suffer to exist any Debt except for Debt expresslycontemplated under the Transaction Documents.(l)Guarantees. The Borrower shall not guarantee, endorse or otherwise be or become contingently liable(including by agreement to maintain balance sheet tests) in connection with the obligations of any other Person, except endorsementsof negotiable instruments for collection in the ordinary course of business and reimbursement and indemnification obligations in favorof the Administrative Agent, any Group Agent, any Lender or any Indemnified Party as provided for under the TransactionDocuments.-71-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(m)Limitation on Transactions with Affiliates. The Borrower shall not enter into, or be a party to anytransaction with any Affiliate of the Borrower, except for: (i) the transactions contemplated hereby, by the Transaction Documents and(ii) capital contributions by TBM to the Borrower which are in compliance with all applicable Requirements of Law and theTransaction Documents.(n)Limitation on Investments. The Borrower shall not make or suffer to exist any loans or advances to, orextend any credit to, or make any investments (by way of transfer of property, contributions to capital, purchase of stock or securitiesor evidences of indebtedness, acquisition of the business or assets, or otherwise) in, any Affiliate or any other Person, except forEligible Investments and the Warehouse SUBI Certificate.(o)Change in Business. The Borrower shall not make any change in the character of its business.(p)Subsidiaries. The Borrower shall not form or own any Subsidiary.SECTION 6.03 Certain Covenants of TFL.(a)[***]. If, after the date hereof, TFL or any Affiliate of TFL enters into (x) any [***] with respect to a[***] in the [***] having [***] ([***]) a [***] (including [***],[***],[***] and [***] of [***] of [***]) (any such [***], other than (a)any such [***] that TFL in good faith believes not to be a [***], (b) any such [***] where a [***] of such [***] is [***] by a [***]that is also a [***] in such [***], or (c) any such [***] that is [***] by [***] or [***], a “[***]”), (y) any amendment, modification orsupplement to, or waiver or consent under, any [***] governing or evidencing a [***] or (z) any other [***] or [***] relating to oraffecting any [***], in each case, the effect of which is to [***] the [***] of the [***] to [***]:(i)[***] (other than [***] arising from a different [***] (e.g., [***] based on a [***] or [***] based on a[***], or a [***])), and excluding [***] in the [***] of [***]) when considered together with other relevant aspects of the [***] whichcustomarily affect [***];(ii)[***] when considered together with other relevant aspects of the [***] which customarily affect [***]; or(iii)the [***] of [***] or [***] or [***] howsoever denominated that [***] the [***] to [***] under such[***],[***] the [***] of [***] or [***] the [***] or [***] of such [***] or the ability of the [***] of the [***] in connection with such[***] to [***] or [***] and [***], which [***], taken as a whole, together with the [***] and [***] of such [***], are [***] to [***];(each of the foregoing clauses (i) through (iii), a [***]”);then, TFL, as applicable, shall promptly notify the Administrative Agent and the Group Agents thereof and, not later than [***] daysafter the effectiveness of any such [***], deliver an [***] of the relevant [***] such [***] to the Administrative Agent and each GroupAgent and, unless the Administrative Agent notifies TFL within [***] days after receipt of such [***] to the contrary, within [***]days after receipt of such request, [***] into [***] to [***] and each other [***] as may be necessary to [***] such [***] into [***]and the [***]. Notwithstanding the foregoing, nothing set forth in this Section 6.03(b) shall be construed to limit the ability of the TFLor the Trust to [***] a [***] in the [***] or enter into a [***].-72-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.ARTICLE VIISERVICING AND COLLECTIONSSECTION 7.01 Maintenance of Information and Computer Lease Documents. The Borrower will, or will causethe Servicer to, hold in trust and keep safely for the Administrative Agent all evidence of the Administrative Agent’s security interest inand to the Warehouse SUBI and other Collateral.SECTION 7.02 Protection of the Interests of the Secured Parties.(a)The Borrower shall, from time to time and at the Borrower’s sole expense, do and perform any and allnecessary acts and execute any and all necessary documents, including the obtaining of additional search reports, the delivery of furtheropinions of counsel, the execution, amendment or supplementation of any financing statements, continuation statements and otherinstruments and documents for filing under the provisions of the Relevant UCC of any applicable jurisdiction, the execution,amendment or supplementation of any instrument of transfer and the making of notations on the Lease Documents of the Borrower orTFL as may be reasonably requested by the Administrative Agent or any Group Agent in order to effect the purposes of thisAgreement and the creation, perfection and priority of the Administrative Agent’s security interest in the Collateral, to protect theAdministrative Agent’s security interest in and to the Collateral (other than a Lease which has been removed from the Collateralpursuant to Section 2.09, 4.01 (the last two paragraphs thereof) or 4.02 (the last two paragraphs thereof) or Section 2.2 of theWarehouse SUBI Servicing Agreement) against all Persons whomsoever or to enable the Administrative Agent to exercise or enforceany of their respective rights hereunder.(b)To the fullest extent permitted by applicable law, the Borrower hereby irrevocably grants to theAdministrative Agent an irrevocable power of attorney, with full power of substitution, coupled with an interest, to authorize and file inthe name of the Borrower, or in its own name, such financing statements and continuation statements and amendments thereto orassignments thereof as the Administrative Agent deems necessary to protect the Collateral or perfect the Administrative Agent’ssecurity interest therein; provided, however, that such power of attorney may only be exercised without the prior written consent of theBorrower if (i) the Borrower or the Servicer fails to perform any act required hereunder after receiving five (5) Business Days writtennotice of such failure from the Administrative Agent or (ii)(A) a Servicer Default, or (B) an Event of Default shall have occurred andbe continuing.(c)Once during each calendar year, in the case of the Administrative Agent and one or more times duringeach calendar year, in the case of each Group Agent, at such times during normal business hours as are reasonably convenient to theBorrower, and upon reasonable request of the Administrative Agent or such Group Agent, and prior written notice to the Borrower,the Administrative Agent or such Group Agent (or a Person engaged by the Administrative Agent or such Group Agent) may conductaudits and/or visit and inspect any of the properties of the Borrower (including the Servicer and [***] as subservicer) where LeaseDocuments are located, to examine the Lease Documents, to confirm and verify the existence, amount and status of the WarehouseSUBI Leases, to examine internal controls and procedures maintained by the Borrower, and take copies and extracts therefrom, and todiscuss the Borrower’s affairs with its officers and employees, servicers, subservicers (including [***]) and upon prior written notice tothe Borrower , independent accountants. In addition to the audits and/or visits and inspections permitted under the preceding sentence,prior to the date that is 60 days following the Closing Date, the Group Agents (or Persons engaged by the Group Agents) may conduct-73-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.an audit and/or visit and inspect any of the properties of the Borrower (including the Servicer and [***] as subservicer) where LeaseDocuments are located, during normal business hours as are reasonably convenient to the Borrower, at the expense of the Borrower ,to examine the Lease Documents, to confirm and verify the existence, amount and status of the Warehouse SUBI Leases, to examineinternal controls and procedures maintained by the Borrower, and take copies and extracts therefrom, and to discuss the Borrower’saffairs with its officers and employees, servicers, subservicers (including [***]) and upon prior written notice to the Borrower,independent accountants. The Borrower hereby authorizes such officers, employees, servicers, subservicers and independentaccountants to discuss with the Administrative Agent, the Group Agents and the Back-Up Servicer, the affairs of the Borrower. TheBorrower shall reimburse the Administrative Agent, the Group Agents and the Back-Up Servicer for all reasonable out-of-pocket fees,costs and expenses incurred by or on behalf of the Administrative Agent, the Group Agents or the Back-Up Servicer in connectionwith the foregoing actions promptly upon receipt of a written invoice therefor in connection with the initial post-closing audit, visit andinspection, the initial audit, visit and inspection by the Administrative Agent (or a Person engaged by the Administrative Agent) in anycalendar year, and all audits, visits and inspections made after the occurrence and during the continuation of a Default or an Event ofDefault. Any audit provided for herein shall be conducted in accordance with Borrower’s reasonable rules respecting safety andsecurity on its premises and without materially disrupting operations. Nothing in this Section 7.02(c) shall affect the obligation of theBorrower to observe any applicable law prohibiting the disclosure of information regarding the Lessees, and the failure of theBorrower to provide access to information as a result of such obligation shall not constitute a breach of this Section 7.02(c).(d)To the fullest extent permitted by applicable law, the Borrower hereby irrevocably grants during the termof this Agreement to the Administrative Agent (or its designated agent) or the successor Servicer, if any, an irrevocable power ofattorney, with full power of substitution, coupled with an interest, to take in the name of the Borrower all steps and actions permitted tobe taken under this Agreement with respect to the Collateral which the Administrative Agent may deem necessary or advisable tonegotiate or otherwise realize on any right of any kind held or owned by the Borrower or transmitted to or received by theAdministrative Agent or its designated agent (whether or not from the Borrower or any Lessee) in connection with the Collateral;provided, however, that such power of attorney may not be exercised without the prior written consent of the Borrower, unless (A) anEvent of Default shall have occurred and be continuing, or (B) the Borrower or the Servicer fails to perform any act required hereunderafter receiving ten (10) Business Days written notice of such failure from the Administrative Agent. The Administrative Agent willprovide such periodic accounting and other information related to the disposition of funds so collected as the Borrower may reasonablyrequest.SECTION 7.03 Maintenance of Writings and Lease Documents. The Borrower will at all times keep or cause to bekept at its Chief Executive Office or at an office of the Servicer designated in advance to the Administrative Agent, each writing orwritten Lease Document which evidences, and which is necessary or desirable to establish or protect, including such books of accountand other Lease Documents as will enable the Administrative Agent or its designee to determine at any time the status of, the securityinterest of the Administrative Agent in the Collateral..SECTION 7.04 Administration and Collections.(a)Warehouse SUBI Collection Account. The Borrower shall cause to be established and maintained in thename of the Borrower for the benefit of the Administrative Agent the Warehouse SUBI Collection Account for the purpose ofreceiving and disbursing all Collections on the Collateral, all payments made by the Borrower pursuant to this Agreement, all InterestRate Hedge Receipts and all other payments to be-74-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.made into the Warehouse SUBI Collection Account. The Warehouse SUBI Collection Account shall be an Eligible Account usedonly for the collection of the amounts and for application of such amounts as described in Section 2.04 of this Agreement. TheWarehouse SUBI Collection Account will be an Eligible Account established pursuant to a Control Agreement with respect to whichthe Administrative Agent shall, at all times, be an Entitlement Holder or purchaser with Control and will bear a designation to clearlyindicate that the funds and Financial Assets deposited therein are held for the benefit of the Administrative Agent. The Borroweragrees to deposit in the Warehouse SUBI Collection Account (a) at least 95% of all Collections received by the Borrower during eachSettlement Period that are not received directly in the Warehouse SUBI Collection Account no later than two (2) Business Days afterreceipt, and (b) the remainder of such Collections as soon as reasonably practical but not later than two (2) Business Days afteridentification. If the Warehouse SUBI Collection Account ceases to be an Eligible Account, the Borrower shall within thirty (30)calendar days of receipt of notice of such change in eligibility transfer the Warehouse SUBI Collection Account to an account thatmeets the requirements of an Eligible Account and that is established pursuant to a substitute Control Agreement with respect to whichthe Administrative Agent shall be an Entitlement Holder or purchaser with Control and which bears a designation to indicate clearlythat the funds and Financial Assets deposited therein are held for the benefit of the Administrative Agent. If there shall have beendeposited in the Warehouse SUBI Collection Account any amount not required to be deposited therein and so identified to theAdministrative Agent, such amount shall be withdrawn from the Warehouse SUBI Collection Account, any provision herein to thecontrary notwithstanding, and any such amounts shall not be deemed to be a part of the Warehouse SUBI Collection Account. TheBorrower may, with the consent of the Administrative Agent and each Group Agent, establish a new Warehouse SUBI CollectionAccount subject to a new Control Agreement in replacement of the existing Warehouse SUBI Collection Account and ControlAgreement.(b)Security Deposits. The Borrower shall cause all Security Deposits to be held in a Permitted Accountpledged to the Administrative Agent for the benefit of the Secured Parties to secure the Secured Obligations, which security interestshall be perfected by control pursuant to a Control Agreement.(c)Investment. The Borrower may cause the funds in the Warehouse SUBI Collection Account to beinvested in Eligible Investments, held in the name of the Administrative Agent, which shall mature no later than the Payment Datefollowing such investment. Any income or other gain from such Eligible Investments (i) shall be transferred to the Reserve Account ifnecessary to satisfy the Required Reserve Account Balance, if any, and (ii) shall, to the extent there remains any balance after givingeffect to preceding clause (i), be paid to the Borrower.ARTICLE VIIIEVENTS OF DEFAULTSECTION 8.01 Events of Default. The occurrence of any one or more of the following events shall constitute anEvent of Default:(a)any Tesla Party shall fail to perform or observe any term, covenant, agreement or undertaking hereunder orunder any other Transaction Document (other than as described elsewhere in this Section 8.01), which failure could reasonably beexpected to materially and adversely affect the interests of the Lender Parties, and such failure shall remain unremedied for:-75-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(i)in the case of any covenant set forth in any of Sections 2.06(a), 7.04(a) or 6.01(l), five (5) Business Daysafter the earlier of (x) any Responsible Officer of the Borrower becomes aware thereof or (y) written notice thereof has been given tothe Borrower by a Lender Party; or(ii)in the case of any other covenant thirty (30) calendar days after the earlier of (i) any Responsible Officer ofthe Borrower becomes aware thereof or (ii) written notice thereof has been given to the Borrower by a Lender Party; or(b)any representation, warranty, certification or statement made by any Tesla Party in this Agreement or inany other Transaction Document shall have been untrue or incorrect when made or deemed made and which incorrectness couldreasonably be expected to materially and adversely affect the interests of the Lender Parties, and, if capable of being cured, shallremain unremedied for thirty (30) calendar days after the earlier of (i) any Responsible Officer of the Borrower becomes aware thereofor (ii) written notice thereof has been given to the Borrower by a Lender Party; or(c)the Borrower shall fail to pay or shall fail to cause to be paid to the Lender Parties (i) the Loan Balance infull, together with all other Secured Obligations, on the Loan Maturity Date, or (ii) the Interest Distributable Amount, Usages Fees orUnused Fees in full for any Payment Date on such Payment Date and such failure to pay the Interest Distributable Amount in full shallcontinue for three (3) Business Days; or(d)(i) any Repurchase Amount fails to be paid when due, and such failure shall continue for three (3)Business Days or (ii) Section 3.1A(c) of the TBM SUBI Servicing Agreement shall be amended, modified or waived without the priorwritten consent of the Administrative Agent; or(e)any Tesla Party shall fail to pay or fail to cause to be paid when due any other amount due hereunder orunder any other Transaction Document (other than any amount described in any other clause of this Section 8.01) when due and suchfailure shall continue for three (3) Business Days after written notice thereof by any Lender Party to the Borrower; or(f)an Event of Bankruptcy shall occur with respect to any Tesla Party; or(g)there shall be entered against (x) the Trust one or more final judgments or orders for the payment of moneyin an individual amount exceeding $[***] or an aggregate amount (as to all such judgments or orders) exceeding $[***], or (y) theBorrower one or more final judgments or orders for the payment of money in an individual or aggregate amount exceeding $[***], ineach case to the extent not paid or covered by insurance (other than customary reservation of rights letters) or third partyindemnification), and any such judgment or order shall not have been fully paid or otherwise satisfied, vacated, dismissed, discharged,appealed (and bonded pending such appeal if and to the extent required by law) or stayed within sixty (60) days (or such earlier datewhen valid enforcement proceedings are commenced by any creditor upon such judgment or order) from the entry thereof; or(h)a Change in Control shall have occurred and shall be continuing for at least thirty (30) consecutive days;or(i)the average of the Delinquency Ratios for any three (3) consecutive Settlement Periods shall exceed theDelinquency Ratio Trigger; or-76-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(j)the annualized average of the Credit Loss Ratios for any three (3) consecutive Settlement Periods shallexceed the Credit Loss Ratio Trigger; or(k)the Residual Value Loss Ratio, as of any Statistically Significant RVLR Calculation Date, shall be greaterthan the Residual Value Loss Ratio Trigger; or(l)on any Payment Date, the Loan Balance, after giving effect to all increases and decreases in the LoanBalance on such Payment Date, shall exceed the Maximum Loan Balance for such Payment Date and such condition shall continue forthree (3) Business Days; or(m)the outstanding balance of the Reserve Account shall be less than the Required Reserve Account Balanceand such condition shall continue for three (3) Business Days; or(n)a Responsible Officer of the Borrower shall become aware of any breach any of the covenants inSection 6.01(n) relating to Interest Rate Hedges or the Borrower shall have been given written notice of any such breach by a LenderParty; or(o)the Administrative Agent shall have delivered a Warehouse SUBI Servicer Termination Notice to theServicer pursuant to Section 5.1 of the Warehouse SUBI Servicing Agreement and no successor Servicer (including the Back-UpServicer) shall have been appointed to replace the Servicer under the Warehouse SUBI Servicing Agreement within 45 days (or suchlater date specified in writing by the Group Agents in their sole and absolute discretion) after the date on which such Warehouse SUBIServicer Termination Notice is delivered; or(p)the Borrower or the Trust shall become an “investment company” within the meaning of the InvestmentCompany Act or a “covered fund” under the Volcker Rule.SECTION 8.02 Remedies Upon the Occurrence of an Event of Default.(a)If an Event of Default has occurred and has not been waived, the Administrative Agent shall, at therequest, or may with the consent, of the Group Agents, by notice to the Borrower (a “Notice of Termination”), declare all of theSecured Obligations to be immediately due and payable (except that, in the case of any event described in Section 8.01(f), all of theSecured Obligations shall automatically become immediately due and payable) and the Facility Limit and Commitments shall beterminated without presentment, demand, protest or notice of any kind (except as expressly required in this Section 8.02), all of whichare hereby expressly waived by the Borrower. On and after the occurrence of an Event of Default that has not been waived, theLenders shall fund no further Loan Increases. In addition, (i) following the occurrence of an Event of Default, the AdministrativeAgent shall, at the request, or may with the consent, of the Group Agents, terminate TFL or any Affiliate thereof as Servicer pursuantto Section 4.1 of the Warehouse SUBI Servicing Agreement (but may, at the Administrative Agent’s option, retain the services of[***] as subservicer), and (ii) following the occurrence of an Event of Default (and in no event before the occurrence of an Event ofDefault), the Administrative Agent shall, at the request, or may with the consent, of the Group Agents, exercise its rights and remediesunder the Control Agreements relating to the Reserve Account and the Warehouse SUBI Collection Account and as otherwisecontemplated herein. In addition, following the occurrence of an Event of Default, the Loan Balance shall accrue interest at theDefault Rate in accordance with Section 2.02. -77-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(b)In addition to all rights and remedies under this Agreement or otherwise, the Administrative Agent shallhave all other rights and remedies provided under the Relevant UCC and under other applicable laws, which rights shall becumulative. Without limiting the generality of the foregoing, if an Event of Default has occurred and has not been waived, theAdministrative Agent may, with prior written consent from each Group Agent, and shall, at the written direction of each Group Agent,sell the Collateral or any part thereof in any commercially reasonable manner at public or private sale, for cash, upon credit or for futuredelivery, and at such price or prices as the Administrative Agent may deem satisfactory. The Borrower will execute and deliver suchdocuments and take such other action as the Administrative Agent reasonably deems necessary or advisable in order that any such salemay be made in compliance with applicable law. Upon any such sale, the Administrative Agent shall have the right to deliver, assignand transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the Collateral so sold to itabsolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of the Borrower whichmay be waived, and the Borrower, to the extent permitted by applicable law, hereby specifically waives all rights of redemption, stayor appraisal which it has or may have under any law now existing or hereafter adopted. The Administrative Agent, instead ofexercising the power of sale herein conferred upon it, shall, at the direction, or may with the consent, of the Group Agents proceed bya suit or suits at law or in equity to foreclose the security interests in the Collateral and sell the Collateral, or any portion thereof, undera judgment or decree of a court or courts of competent jurisdiction.(c)In furtherance of the rights, powers and remedies of the Administrative Agent, the Borrower herebyirrevocably appoints the Administrative Agent as its true and lawful attorney, with full power of substitution, in the name of theBorrower, or otherwise, for the sole use and benefit of the Administrative Agent (for the further benefit of the Secured Parties), but atthe Borrower’s expense, to the extent permitted by law to exercise, at any time and from time to time if an Event of Default hasoccurred and has not been waived, all or any of the following powers with respect to all or any of the Collateral:(i)to demand, sue for, collect, receive and give acquittance for any and all monies due or to become duethereon or by virtue thereof,(ii)to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto,(iii)to sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds or avails thereof, as fullyand effectually as if the Administrative Agent were the absolute owner thereof, and(iv)to extend the time of payment of any or all thereof and to make any allowance and other adjustments withreference thereto;provided that the Administrative Agent shall give the Borrower at least ten (10) days prior written notice of the time and place of anypublic sale or the time after which any private sale or other intended disposition of any of the Collateral is to be made. The Borroweragrees that such notice constitutes “reasonable authenticated notification” within the meaning of Section 9-611(b) of the UCC (or othersection of similar content of the Relevant UCC).-78-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(d)Notwithstanding anything to the contrary contained in this Agreement, if at any time the rights, powersand privileges of the Administrative Agent following the occurrence of an Event of Default conflict (or are inconsistent) with the rightsand obligations of the Servicer, the rights, powers and privileges of the Administrative Agent shall supersede the rights and obligationsof the Servicer to the extent of such conflict (or inconsistency), with the express intent of maximizing the rights, powers and privilegesof the Administrative Agent following the occurrence of an Event of Default.(e)The Administrative Agent agrees with the Borrower, with respect to any Control Agreement and therelated deposit or securities account, that the Administrative Agent will not deliver a “Notice of Exclusive Control” or “AccessTermination Notice” (as defined in such Control Agreement) to the applicable securities intermediary or account bank except after anEvent of Default has occurred that has not been waived.(f)The parties hereto acknowledge that this Agreement is, and is intended to be, a contract to extend financialaccommodations to the Borrower within the meaning of Section 365(e)(2)(B) of the Bankruptcy Code (or any amended or successorprovision thereof or any amended or successor code).ARTICLE IXTHE ADMINISTRATIVE AGENTSECTION 9.01 Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agentto take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the AdministrativeAgent by the terms hereof, together with such powers as are reasonably incidental thereto. Effective as of the Amendment No. 1Effective Date, the Borrower hereby appoints Deutsche Bank Trust Company Americas, acting through its office at 60 Wall Street,New York, New York 10005, as the registrar and paying agent in respect of the Loans (together with any successor or successors assuch registrar and paying agent qualified and appointed in accordance with this Article IX, the “Paying Agent”), upon the terms andsubject to the conditions set forth herein, and Deutsche Bank Trust Company Americas hereby accepts such appointment. The PayingAgent shall have the powers and authority granted to and conferred upon it herein, and such further powers and authority to act onbehalf of the Borrower as the Borrower and the Paying Agent may hereafter mutually agree in writing. Neither the AdministrativeAgent nor the Paying Agent shall have any duties other than those expressly set forth in the Transaction Documents, and no impliedobligations or liabilities shall be read into any Transaction Document, or otherwise exist, against the Administrative Agent or thePaying Agent. The Administrative Agent and the Paying Agent do not assume, nor shall either of them be deemed to have assumed,any obligation to, or relationship of trust or agency with, Tesla, Inc., TFL, TBM or any Tesla Party, the Conduit Lenders, theCommitted Lenders or the Group Agents, except for any obligations expressly set forth herein; provided that all funds held by thePaying Agent for payment of principal of or interest (and any additional amounts) on the Loans shall be held in trust by the PayingAgent, and applied as set forth herein. Notwithstanding any provision of this Agreement or any other Transaction Document, in noevent shall the Administrative Agent or the Paying Agent ever be required to take any action which exposes the Administrative Agentor the Paying Agent, respectively, to personal liability or which is contrary to any provision of any Transaction Document orapplicable law. Upon receiving a notice, report, statement, document or other communication from the Borrower or the Servicerpursuant to Section 2.01(d)(i), Section 2.01(d)(iii), Section 2.08, Section 6.03(a), Section 6.03(c) or Section 7.02(c), the AdministrativeAgent shall promptly deliver to each Group Agent a copy of such notice, report, statement, document or communication. TheAdministrative Agent shall at all times also be the TFL Administrative Agent. The Paying Agent shall at all times also be the TFLPaying Agent. The Paying Agent shall-79-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of theBorrower or the Lenders, unless such Borrower or Lender shall have offered to the Paying Agent security or indemnity reasonablysatisfactory to the Paying Agent against the costs, expenses and liabilities that might be incurred by it in compliance with such requestor direction. The Paying Agent shall not be responsible for, and makes no representation as to the existence, genuineness, value orprotection of any Collateral, for the legality, effectiveness or sufficiency of any documents or other instruments, or for the creation,perfection, filing, priority, sufficiency or protection of any liens securing the Loans. The Paying Agent shall incur no liability for notperforming any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of thePaying Agent (including, but not limited to, any act or provision of any present or future law or regulation or governmental authority,any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism or the unavailability of the FederalReserve Bank wire or facsimile or other wire or communication facility).SECTION 9.02 Administrative Agent’s and Paying Agent’s Reliance, Etc. Neither the Administrative Agent northe Paying Agent or any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to betaken by it or them as Administrative Agent or as Paying Agent under or in connection with this Agreement (including theAdministrative Agent’s servicing, administering or collecting Warehouse SUBI Assets in the event it replaces the Servicer in suchcapacity pursuant to Article VII), in the absence of its or their own gross negligence or willful misconduct. Without limiting thegenerality of the foregoing, each of the Administrative Agent and Paying Agent: (a) may consult with legal counsel (including counselfor a Group Agent, the Borrower or the Servicer), independent certified public accountants and other experts selected by it and shallnot be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountantsor experts; (b) makes no warranty or representation to any Group Agent or Lender (whether written or oral) and shall not beresponsible to any Group Agent or Lender for any statements, warranties or representations (whether written or oral) made by anyother party in or in connection with this Agreement; (c) shall not have any duty to ascertain or to inquire as to the performance orobservance of any of the terms, covenants or conditions of this Agreement on the part of any Tesla Party, TBM, TFL or Tesla, Inc. orto inspect the property (including the books and records) of any Tesla Party, TBM, TFL or Tesla, Inc.; (d) shall not be responsible toany Group Agent or Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of thisAgreement or any other instrument or document furnished pursuant hereto; and (e) shall be entitled to rely, and shall be fully protectedin so relying, upon any notice, consent, certificate, report, Settlement Statement, information, direction or other instrument or writing(which may be by telecopier or electronic mail) signed by an authorized signatory of the Borrower, TFL, the Administrative Agent,any Group Agent or any Lender, respectively (each, an “Authorized Signatory”) reasonably believed by it to be genuine and signed orsent by the proper party or parties.SECTION 9.03 Administrative Agent and Paying Agent and Their Affiliates. With respect to any Loan or intereststherein owned by any Lender that is also the Administrative Agent or also the Paying Agent, such Lender shall have the same rightsand powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent. TheAdministrative Agent, the Paying Agent and any of their respective Affiliates may generally engage in any kind of business withTesla, Inc., TFL, TBM and each Tesla Party, any of their respective Affiliates and any Person who may do business with or ownsecurities of Tesla. Inc., TFL, TBM or any Tesla Party or any of their respective Affiliates, all as if the Administrative Agent were notthe Administrative Agent and as if the Paying Agent were not the Paying Agent hereunder and without any duty to account therefor toany other Secured Party.-80-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 9.04 Indemnification of Administrative Agent and Paying Agent. Each Committed Lender agrees toindemnify the Administrative Agent and the Paying Agent (to the extent not reimbursed by the Tesla Parties), ratably according to therespective Percentage of such Committed Lender, from and against any and all liabilities, obligations, losses, damages, penalties,actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, orasserted against the Administrative Agent or the Paying Agent, as applicable, in any way relating to or arising out of this Agreement orany other Transaction Document or any action taken or omitted by the Administrative Agent or the Paying Agent under thisAgreement or any other Transaction Document, including, without limitation, any claim commenced by the Administrative Agent orthe Paying Agent to enforce such indemnification obligation and any liability, obligation, loss, damage, penalty, action, judgment, suit,cost, expense or disbursement of any kind incurred by the Administrative Agent or the Paying Agent, as applicable, in connection withtaking action or omitting to take any action at the direction of any Group Agent or Lender; provided that no Committed Lender shall beliable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements resulting from the Administrative Agent’s or the Paying Agent’s gross negligence or willful misconduct. Theobligations under this Section shall survive the termination of this Agreement and the resignation or removal of the AdministrativeAgent or Paying Agent, as applicable.SECTION 9.05 Delegation of Duties. Each of the Administrative Agent and the Paying Agent may execute any oftheir respective duties through agents or attorneys-in-fact and shall each be entitled to advice of counsel concerning all matterspertaining to such duties. Neither the Administrative Agent nor the Paying Agent shall be responsible for the negligence ormisconduct of any agents or attorneys-in-fact selected by it with reasonable care.SECTION 9.06 Action or Inaction by Administrative Agent or Paying Agent. Each of the Administrative Agent andthe Paying Agent shall in all cases be fully justified in failing or refusing to take action under any Transaction Document unless it shallfirst receive such advice or concurrence of the Group Agents and assurance of its indemnification by the Committed Lenders, as itdeems appropriate. Each of the Administrative Agent and the Paying Agent shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement or any other Transaction Document in accordance with a request or at the direction of theGroup Agents and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon all Lendersand the Group Agents.SECTION 9.07 Notice of Certain Information or Events of Default; Action by Administrative Agent or PayingAgent. Neither the Administrative Agent nor the Paying Agent shall be deemed to have knowledge or notice of any fact, claim ordemand or the occurrence of any Servicer Default, Default or Event of Default unless the Administrative Agent or a ReponsibleOfficer of the Paying Agent has received notice from any Group Agent, Lender or the Borrower of such fact, claim or demand orstating that a Servicer Default, Default or Event of Default has occurred hereunder and describing such Servicer Default, Default orEvent of Default. If the Administrative Agent or a Responsible Officer of the Paying Agent receives such a notice, either shallpromptly give notice thereof to each Group Agent, whereupon each Group Agent shall promptly give notice thereof to its respectiveConduit Lender(s) and Related Committed Lenders. The Administrative Agent may (but shall not be obligated to) take such action, orrefrain from taking such action, concerning a Servicer Default, Default or Event of Default or any other matter hereunder as theAdministrative Agent deems advisable and in the best interests of the Secured Parties. Any other provision of this Agreement to thecontrary notwithstanding, the Paying Agent shall have no notice of and shall not be bound by the terms and conditions of any otherdocument or agreement unless the Paying Agent is a signatory party to such document or agreement.-81-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 9.08 Non-Reliance on Administrative Agent, Paying Agent and Other Parties. Each Group Agent andLender expressly acknowledges that neither the Administrative Agent nor the Paying Agent or any of their respective directors,officers, agents or employees has made any representations or warranties to it and that no act by the Administrative Agent or thePaying Agent hereafter taken, including any review of the affairs of Tesla, Inc., TFL, TBM and the Tesla Parties, shall be deemed toconstitute any representation or warranty by the Administrative Agent or the Paying Agent. Each Lender represents and warrants toeach of the Administrative Agent and the Paying Agent that, independently and without reliance upon either the Administrative Agent,the Paying Agent or any Group Agent or any other Lender and based on such documents and information as it has deemedappropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property,prospects, financial and other conditions and creditworthiness of Tesla, Inc., TFL, TBM and each Tesla Party and the WarehouseSUBI Assets and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Exceptfor items expressly required to be delivered under any Transaction Document by either the Administrative Agent or the Paying Agent,as applicable, to any Group Agent or Lender, neither the Administrative Agent nor the Paying Agent shall have any duty orresponsibility to provide any Group Agent or Lender with any information concerning Tesla, Inc., TFL, TBM and the Tesla Parties orany of their Affiliates that comes into the possession of the Administrative Agent, the Paying Agent or any of their respective directors,officers, agents, employees, attorneys-in-fact or Affiliates.SECTION 9.09 Compensation. Each of the Administrative Agent and the Paying Agent shall be entitled to thecompensation to be agreed upon with the Borrower in writing, as may be amended from time to time as the parties hereto may agree,for all services rendered by it, and the Borrower agrees promptly to pay such compensation and to reimburse the Administrative Agentand the Paying Agent for out-of-pocket expenses (including legal fees and expenses) incurred by it in connection with the servicesrendered by it hereunder, as and to the extent agreed upon with the Borrower and subject to the terms of this Agreement, includingSection 2.04 . The obligations of the Borrower under this Section 9.09 shall survive the payment of the Loans and the resignation orremoval of either the Administrative Agent or the Paying Agent and the termination of this Agreement.SECTION 9.10 Authorized Signatory. Except as otherwise specifically provided herein, any order, certificate,notice, request, direction or other communication from the Borrower, TFL, the Administrative Agent, any Group Agent or any Lendermade or given under any provision of this Agreement, shall be sufficient if signed by an Authorized Signatory. From time to time theBorrower and TFL will furnish the Paying Agent with a certificate as to the incumbency and specimen signatures of persons who arethen Authorized Signatories. Until the Paying Agent receives a subsequent certificate from the Borrower or TFL, the Paying Agentshall be entitled to conclusively rely on the last such certificate delivered to them for purposes of determining the AuthorizedSignatories.SECTION 9.11 Successor Administrative Agent or Paying Agent.(a)Resignation of Administrative Agent(i)The Administrative Agent may, upon at least thirty (30) days’ notice to the Borrower, the Servicer andeach Group Agent, resign as Administrative Agent; provided it also resigns as TFL Administrative Agent. Except as provided below,such resignation shall not become effective until a successor Administrative Agent is appointed by the Group Agents as a successorAdministrative Agent, as a successor TFL Administrative Agent and has accepted such appointment. If no successor AdministrativeAgent shall have been so appointed-82-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.by the Group Agents, within thirty (30) days after the departing Administrative Agent’s giving of notice of resignation, the departingAdministrative Agent may, on behalf of the Secured Parties, appoint a successor Administrative Agent. If no successor AdministrativeAgent shall have been so appointed by the Group Agents within sixty (60) days after the departing Administrative Agent’s giving ofnotice of resignation, the departing Administrative Agent may, on behalf of the Group Agents, petition a court of competentjurisdiction to appoint a successor Administrative Agent, which successor Administrative Agent shall be either (i) a commercial bankhaving a combined capital and surplus of at least $250,000,000 and short-term debt ratings of at least “A-1” from S&P and “P-1” fromMoody’s or (ii) an Affiliate of such an institution, and in either case shall also be the TFL Administrative Agent.(b)Resignation or Removal of Paying Agent(i)The Paying Agent may at any time resign by giving written notice of its resignation to the Borrower, theAdministrative Agent and the Group Agents specifying the date on which its resignation shall become effective, subject to theconditions set forth below; provided that such date shall be at least 30 days after the receipt of such notice by the Borrower, theAdministrative Agent and the Group Agents unless such parties agree in writing to accept shorter notice. The Borrower may, at anytime and for any reason with the written consent of the Administrative Agent and upon at least 30 days written notice to that effect(provided that no such notice shall expire less than 15 days before or 15 days after any Payment Date) remove the Paying Agent andappoint a successor Paying Agent by written instrument in duplicate signed on behalf of the Borrower, one copy of which shall bedelivered to the Paying Agent being removed and one copy to the successor Paying Agent. Upon resignation or removal, the PayingAgent shall be entitled to the payment by the Borrower of its compensation for the services rendered hereunder and to thereimbursement of all reasonable out-of-pocket expenses (including reasonable legal fees and expenses) incurred in connection with theservices rendered by it hereunder, as and to the extent agreed upon with the Borrower.(ii)In case at any time the Paying Agent shall resign, or shall be removed, or shall become incapable ofacting, or be adjudged bankrupt or insolvent, or shall file a voluntary petition in bankruptcy, or shall make an assignment for the benefitof its creditors, or shall consent to the appointment of a receiver of all or any substantial part of its property, or shall admit in writing itsinability to pay or meet its debts as they mature, or if an order of any court shall be entered approving any petition filed by or against itunder the provisions of any applicable bankruptcy or insolvency law, or if a receiver of it or of all or any substantial part of its propertyshall be appointed, or if any public officer shall take charge or control of it or of its property or affairs for the purpose of rehabilitation,conservation or liquidation, a successor to the Paying Agent shall be appointed by the Borrower by an instrument in writing that isconsented to in writing by the Administrative Agent (which consent shall not be unreasonably withheld or delayed). Upon theappointment as aforesaid of a successor to the Paying Agent and acceptance by it of such appointment, the Paying Agent sosuperseded shall cease to be Paying Agent hereunder. If, after 90 days from the resignation or removal of the Paying Agent, nosuccessor to such Paying Agent shall have been so appointed, or if so appointed, shall not have accepted appointment as hereinafterprovided, any Lender or Group Agent, or such Paying Agent (at the expense of the Borrower) may petition any court of competentjurisdiction for the appointment of a successor to such Paying Agent.(iii)Any corporation or bank into which the Paying Agent may be merged or converted, or with which thePaying Agent may be consolidated, or any corporation or bank resulting from any merger, conversion or consolidation to which thePaying Agent shall be a party, or any corporation or bank to which the Paying Agent shall sell or otherwise transfer all or substantiallyall of its assets and business, or any corporation or bank-83-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.succeeding to the corporate trust business of the Paying Agent shall be the successor to the Paying Agent hereunder, without theexecution or filing of any document or any further act on the part of the parties hereto.(iv)Any successor Paying Agent hereunder, if other than the Borrower, shall be a bank or trust companyorganized and doing business under the laws of the United States of America or of the State of New York, in good standing,authorized under such laws to exercise corporate trust powers and having a combined capital and surplus in excess of US$250,000,000, and in either case shall also be the TFL Paying Agent. (c)Successor Requirements and Responsibilities.(i)The Borrower and any Administrative Agent or Paying Agent that resigns or is terminated pursuant toclause (a) or clause (b) above shall cooperate with the applicable successor Administrative Agent or successor Paying Agent, asapplicable, and shall use commercially reasonable efforts, in each case, to facilitate the appointment of such successor as theAdministrative Agent or the Paying Agent hereunder (including by entering into such amendments to the Control Agreements andother Transaction Documents and authorizing the filing of amendments to financing statements, in each case, as are reasonablyrequested by the successor Administrative Agent or the successor Paying Agent to reflect such succession).(ii)Upon such acceptance of its appointment as Administrative Agent or Paying Agent hereunder by asuccessor Administrative Agent or successor Paying Agent, as applicable, such successor Administrative Agent or successor PayingAgent shall succeed to and become vested with all the rights and duties of the resigning or terminated Administrative Agent or PayingAgent, as applicable, and the resigning or terminated Administrative Agent or resigning or termination Paying Agent shall bedischarged from its duties and obligations under the Transaction Documents. After the resignation or termination of the AdministrativeAgent or the Paying Agent under this Section 9.11, the provisions of Article XI and this Article IX shall (i) inure to its benefit as to anyactions taken or omitted to be taken by it while it was either the Administrative Agent or the Paying Agent, respectively and (ii) survivewith respect to any indemnification claim it may have relating to this Agreement, notwithstanding such resignation or removal ortermination of this Agreement.ARTICLE XTHE GROUP AGENTSSECTION 10.01 Authorization and Action. Each Lender that belongs to a Group hereby appoints and authorizesthe Group Agent for such Group to take such action as agent on its behalf and to exercise such powers under this Agreement as aredelegated to such Group Agent by the terms hereof, together with such powers as are reasonably incidental thereto. No Group Agentshall have any duties other than those expressly set forth in the Transaction Documents, and no implied obligations or liabilities shall beread into any Transaction Document, or otherwise exist, against any Group Agent. No Group Agent assumes, nor shall it be deemedto have assumed, any obligation to, or relationship of trust or agency with Tesla, Inc., TFL, TBM, any Tesla Party or any Lenderexcept for any obligations expressly set forth herein. Notwithstanding any provision of this Agreement or any other TransactionDocument, in no event shall any Group Agent ever be required to take any action which exposes such Group Agent to personalliability or which is contrary to any provision of any Transaction Document or applicable law.-84-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 10.02 Group Agent’s Reliance, Etc. No Group Agent nor any of its directors, officers, agents oremployees shall be liable for any action taken or omitted to be taken by it or them as a Group Agent under or in connection with thisAgreement or the other Transaction Documents in the absence of its or their own gross negligence or willful misconduct. Withoutlimiting the generality of the foregoing, a Group Agent: (a) may consult with legal counsel (including counsel for the AdministrativeAgent, the Borrower or the Servicer), independent certified public accountants and other experts selected by it and shall not be liablefor any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b)makes no warranty or representation to any Lender (whether written or oral) and shall not be responsible to any Lender for anystatements, warranties or representations (whether written or oral) made by any other party in or in connection with this Agreement orany other Transaction Document; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any ofthe terms, covenants or conditions of this Agreement or any other Transaction Document on the part of Tesla, Inc., TFL, TBM, anyTesla Party or any other Person or to inspect the property (including the books and records) of Tesla, Inc., TFL, TBM or any TeslaParty; (d) shall not be responsible to any Committed Lender for the due execution, legality, validity, enforceability, genuineness,sufficiency or value of this Agreement, any other Transaction Documents or any other instrument or document furnished pursuanthereto; and (e) shall be entitled to rely, and shall be fully protected in so relying, upon any notice (including notice by telephone),consent, certificate or other instrument or writing (which may be by telecopier or telex) believed by it to be genuine and signed or sentby the proper party or parties.SECTION 10.03 Group Agent and Affiliates. With respect to any Loan or interests therein owned by any Lenderthat is also a Group Agent, such Lender shall have the same rights and powers under this Agreement as any other Lender and mayexercise the same as though it were not a Group Agent. A Group Agent and any of its Affiliates may generally engage in any kind ofbusiness with Tesla, Inc., TFL, TBM, any Tesla Party, any of their respective Affiliates and any Person who may do business with orown securities of Tesla, Inc., TFL, TBM, any Tesla Party or any of their respective Affiliates, all as if such Group Agent were not aGroup Agent hereunder and without any duty to account therefor to any other Secured Party.SECTION 10.04 Indemnification of Group Agents. Each Committed Lender in any Group agrees to indemnify theGroup Agent for such Group (to the extent not reimbursed by the Tesla Parties), ratably according to the proportion of the Percentageof such Committed Lender to the aggregate Percentages of all Committed Lenders in such Group, from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or naturewhatsoever which may be imposed on, incurred by, or asserted against such Group Agent in any way relating to or arising out of thisAgreement or any other Transaction Document or any action taken or omitted by such Group Agent under this Agreement or anyother Transaction Document; provided that no Committed Lender shall be liable for any portion of such liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Group Agent’s gross negligence orwillful misconduct.SECTION 10.05 Delegation of Duties. Each Group Agent may execute any of its duties through agents orattorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Group Agent shall beresponsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.SECTION 10.06 Action or Inaction by Group Agent. Each Group Agent shall in all cases be fully justified infailing or refusing to take action under any Transaction Document unless it shall first receive such-85-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.advice or concurrence of the Conduit Lenders and Committed Lenders in its Group and assurance of its indemnification by theCommitted Lenders in its Group, as it deems appropriate. Each Group Agent shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement or any other Transaction Document in accordance with a request or at the direction of theCommitted Lenders in its Group representing a majority of the Commitments in such Group, and such request or direction and anyaction taken or failure to act pursuant thereto shall be binding upon all Conduit Lenders and Committed Lenders in its Group.SECTION 10.07 Notice of Events of Default. No Group Agent shall be deemed to have knowledge or notice of theoccurrence of any Servicer Default, Default or Event of Default unless such Group Agent has received notice from the AdministrativeAgent, any other Group Agent, any Lender, the Servicer or the Borrower stating that a Servicer Default, Default or Event of Defaulthas occurred hereunder and describing such Servicer Default, Default or Event of Default. If a Group Agent receives such a notice, itshall promptly give notice thereof to the Lenders in its Group and to the Administrative Agent (but only if such notice received by suchGroup Agent was not sent by the Administrative Agent). A Group Agent may take such action concerning a Servicer Default, Defaultor Event of Default as may be directed by Committed Lenders in its Group representing a majority of the Commitments in such Group(subject to the other provisions of this Article X), but until such Group Agent receives such directions, such Group Agent may (butshall not be obligated to) take such action, or refrain from taking such action, as such Group Agent deems advisable and in the bestinterests of the Conduit Lenders and Committed Lenders in its Group.SECTION 10.08 Non-Reliance on Group Agent and Other Parties. Except to the extent otherwise agreed to inwriting between a Lender and its Group Agent, each Lender expressly acknowledges that neither the Group Agent for its Group norany of such Group Agent’s directors, officers, agents or employees has made any representations or warranties to it and that no act bysuch Group Agent hereafter taken, including any review of the affairs of the Tesla Parties, shall be deemed to constitute anyrepresentation or warranty by such Group Agent. Each Lender represents and warrants to the Group Agent for its Group that,independently and without reliance upon such Group Agent, any other Group Agent, the Administrative Agent or any other Lenderand based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal ofand investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the TeslaParties and the Warehouse SUBI Assets and its own decision to enter into this Agreement and to take, or omit, action under anyTransaction Document. Except for items expressly required to be delivered under any Transaction Document by a Group Agent toany Lender in its Group, no Group Agent shall have any duty or responsibility to provide any Lender in its Group with anyinformation concerning the Tesla Parties or any of their Affiliates that comes into the possession of such Group Agent or any of itsdirectors, officers, agents, employees, attorneys-in-fact or Affiliates.SECTION 10.09 Successor Group Agent. Any Group Agent may, upon at least thirty (30) days’ notice to theAdministrative Agent, the Borrower, the Servicer and the Lenders in its Group, resign as Group Agent for its Group. Such resignationshall not become effective until a successor Group Agent is appointed in the manner prescribed by the relevant Liquidity Agreement (ifany) or, in the absence of any provisions in such Liquidity Agreement providing for the appointment of a successor Group Agent, untila successor Group Agent is appointed by the Conduit Lender(s) in such Group (with the consent of Committed Lenders representing amajority of the Commitments in such Group) and such successor Group Agent has accepted such appointment. If no successor GroupAgent shall have been so appointed within thirty (30) days after the departing Group Agent’s giving of notice of resignation, then thedeparting Group Agent may, on behalf of the Lenders in its Group, appoint a successor Group Agent for such Group, which successorGroup Agent shall have short-term-86-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.debt ratings of at least “A-1” from S&P and “P-1” from Moody’s and shall be either a commercial bank having a combined capital andsurplus of at least $250,000,000 or an Affiliate of such an institution. Upon such acceptance of its appointment as Group Agent forsuch Group hereunder by a successor Group Agent, such successor Group Agent shall succeed to and become vested with all therights and duties of the resigning Group Agent, and the resigning Group Agent shall be discharged from its duties and obligationsunder the Transaction Documents. After any resigning Group Agent’s resignation hereunder, the provisions of Article XI and thisArticle X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was a Group Agent. Each Group Agentshall also act in the same role as a group agent under the TFL Warehouse Agreement.SECTION 10.10 Reliance on Group Agent. Unless otherwise advised in writing by a Group Agent or by anyLender in such Group Agent’s Group, each party to this Agreement may assume that (i) such Group Agent is acting for the benefit andon behalf of each of the Lenders in its Group, as well as for the benefit of each assignee or other transferee from any such Person, and(ii) each action taken by such Group Agent has been duly authorized and approved by all necessary action on the part of the Lendersin its Group.ARTICLE XIINDEMNIFICATIONSECTION 11.01 Indemnification. (a) Without limiting any other rights that any Lender Party may have hereunderor under applicable law, the Borrower hereby agrees to indemnify each Indemnified Party from and against any and all damages,losses, claims, liabilities, documented and reasonable costs and expenses (other than any damages, losses, claims, liabilities, costs andexpenses in respect of taxes, which shall be governed by Section 11.02), including reasonable attorneys’ fees and disbursements (all ofthe foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or asa result of this Agreement, the other Transaction Documents or the ownership of the Loans, or their respective interests in theCollateral, excluding, however, Indemnified Amounts to the extent resulting from the fraud, bad faith, gross negligence or willfulmisconduct on the part of the applicable Indemnified Party. Without limiting the generality of the foregoing, the Borrower shallindemnify each Indemnified Party for Indemnified Amounts relating to or resulting from:(i)reliance on any representation or warranty made by the Borrower (or any officers of the Borrower) underor in connection with this Agreement, any other Transaction Document or any other information or report delivered by the Borrowerpursuant hereto, which shall have been false or incorrect in any material respect when made or deemed made; (ii)the failure by the Borrower to comply in all material respects with any applicable law, rule or regulationwith respect to any Lease or any portion thereof, or the nonconformity of any Lease, or any portion thereof, with any such applicablelaw, rule or regulation;(iii)the failure to vest and maintain vested in the Administrative Agent, a first priority perfected securityinterest in the Collateral free and clear of any Adverse Claim;(iv)the failure to file, or delay in filing, financing statements or other similar instruments or documents underthe Relevant UCC or other applicable laws with respect to any portion of the Collateral or the Warehouse SUBI Leases;-87-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(v)any dispute, claim, offset or defense of a Lessee (other than discharge in bankruptcy of a Lessee or arisingfrom the financial inability of a Lessee to pay) to the payment of any Lease (including a defense based on the related Lease not being alegal, valid and binding obligation of such Lessee enforceable against it in accordance with its terms), or any other claim resulting fromthe lease of a Leased Vehicle or furnishing of services related to such Leases or Leased Vehicles, or the failure to furnish such services;(vi)any failure of the Borrower to perform its respective duties or obligations in accordance with theprovisions of this Agreement or the other Transaction Documents;(vii)any products liability claim or personal injury or property damage suit arising out of or in connection withLeased Vehicles or services that are the subject of any Leases or Leased Vehicles;(viii)the commingling of Collections; or(ix)any litigation, proceeding or investigation (a) before any Governmental Authority in respect of anyWarehouse SUBI Lease or Warehouse SUBI Leased Vehicle (1) that is not commenced by such Indemnified Party or (2) ifcommenced by an Indemnified Party, in which such Indemnified Party is the prevailing party; or (b) relating to or arising from theTransaction Documents, the transactions contemplated hereby and thereby, the use of proceeds of the Loans by the Borrower or anyother investigation, litigation or proceeding relating to the Borrower in which any Indemnified Person becomes involved as a result ofany of the transactions contemplated by the Transaction Documents, excluding, however, in each case, Indemnified Amounts to theextent resulting from the fraud, bad faith, gross negligence or willful misconduct on the part of the applicable Indemnified Party.(b)Promptly upon receipt by an Indemnified Party under this Section 11.01 of notice of the commencementof any suit, action, claim, proceeding or governmental investigation against such Indemnified Party, such Indemnified Party shall, if aclaim in respect thereof is to be made against the Borrower under this Section, promptly notify the Borrower in writing of thecommencement. Such Indemnified Party’s failure or delay to so promptly notify the Borrower shall not limit the obligations of theBorrower to such Indemnified Party in respect of such claim except to the extent the Borrower is actually prejudiced in its defense ofsuch claim by such failure or delay. The Borrower may participate in and assume the defense of any such suit, action, claim,proceeding or investigation at its expense, and no settlement thereof shall be made without the approval of the Borrower and suchIndemnified Party. The approval of the Borrower shall not be unreasonably withheld or delayed. After notice from the Borrower tosuch Indemnified Party of its intention to assume the defense thereof with counsel reasonably satisfactory to such Indemnified Party,and so long as the Borrower so assumes the defense thereof in a manner reasonably satisfactory to such Indemnified Party, theBorrower shall not be liable for any legal expenses of counsel for such Indemnified Party unless there shall be a conflict between theinterests of the Borrower and such Indemnified Party, in which case such Indemnified Party shall have the right to employ counsel torepresent it at the Borrower’s expense. If the Borrower shall have made any indemnity payments pursuant to this Section 11.01 andsuch Indemnified Party thereafter collects any of such amounts from others, such Indemnified Party shall promptly repay such amountsto the Borrower, without interest (except to the extent interest is received by such Indemnified Party).The obligations under this Section shall survive the termination of this Agreement and the resignation or removal of theAdministrative Agent or Paying Agent, as applicable.-88-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 11.02 Tax Indemnification. (a)Any and all payments by or on account of any obligation of the Borrower hereunder shall be made withoutdeduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in thegood faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any suchpayment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction orwithholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordancewith applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased asnecessary so that after such deduction or withholding has been made (including such deductions and withholdings applicableto additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would havereceived had no such deduction or withholding been made.(b)The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law,or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.(c)The Borrower shall indemnify each Recipient and the Paying Agent, within 10 days after demand therefor,for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amountspayable under this Section) payable or paid by such Recipient or the Paying Agent, as applicable, or required to be withheldor deducted from a payment to such Recipient or the Paying Agent and any reasonable expenses arising therefrom or withrespect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevantGovernmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender(with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of another LenderParty, shall be conclusive absent manifest error.(d)Each Lender shall severally indemnify the Administrative Agent and the Paying Agent, within 10 daysafter demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower hasnot already indemnified the Administrative Agent or the Paying Agent for such Indemnified Taxes and without limiting theobligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions ofSection 12.10(h) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to suchLender, in each case, that are payable or paid by the Administrative Agent or the Paying Agent in connection with thisAgreement, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctlyor legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment orliability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender herebyauthorizes the Administrative Agent and the Paying Agent to set off and apply any and all amounts at any time owing to suchLender under this Agreement or otherwise payable by the Administrative Agent or the Paying Agent to the Lender from anyother source against any amount due to the Administrative Agent or the Paying Agent under this paragraph (d).-89-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(e)As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuantto this Section 11.02, the Borrower shall deliver to the Administrative Agent or the Paying Agent, as applicable, the originalor a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the returnreporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or the PayingAgent.(f) (i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to paymentsmade hereunder shall deliver to the Servicer, the Borrower, the Paying Agent and the Administrative Agent, at the time ortimes reasonably requested by the Servicer, the Borrower, the Paying Agent or the Administrative Agent, such properlycompleted and executed documentation reasonably requested by the Servicer, the Borrower, the Paying Agent or theAdministrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. Inaddition, any Lender, if reasonably requested by the Servicer, the Borrower, the Paying Agent or the Administrative Agent,shall deliver such documentation prescribed by applicable law or reasonably requested by the Borrower, the Paying Agent orthe Administrative Agent as will enable the Servicer, the Borrower, the Paying Agent or the Administrative Agent todetermine whether or not such Lender is subject to backup withholding or information reportingrequirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution andsubmission of such documentation (other than such documentation set forth in Section 11.02(f)(ii)(A), (ii)(B), and (ii)(D)below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subjectsuch Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position ofsuch Lender.(ii)Without limiting the generality of the foregoing:(A)any Lender that is a U.S. Person shall deliver to the Servicer, the Borrower, the Paying Agentand the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement(and from time to time thereafter upon the reasonable request of the Servicer, the Borrower, the Paying Agent or theAdministrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federalbackup withholding tax. (B)Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower, thePaying Agent and the Administrative Agent (in such number of copies as shall be requested by the recipient) on orprior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to timethereafter upon the reasonable request of the Servicer, the Borrower, the Paying Agent or the Administrative Agent),whichever of the following is applicable:(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty towhich the United States is a party (x) with respect to payments of interest hereunder, executed originals ofIRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Taxpursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable paymentshereunder, IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholdingTax pursuant to the “business profits” or “other income” article of such tax treaty;-90-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(2)executed originals of IRS Form W-8ECI; or(3)in the case of a Foreign Lender claiming the benefits of the exemption forportfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially to theeffect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the InternalRevenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) ofthe Internal Revenue Code, or a controlled foreign corporation” described in Section 881(c)(3)(C) of theInternal Revenue Code and (y) executed originals of IRS Form W-8BEN-E.(C)Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower, thePaying Agent and the Administrative Agent (in such number of copies as shall be requested by the recipient) on orprior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to timethereafter upon the reasonable request of the Borrower, the Paying Agent or the Administrative Agent), executedoriginals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction inU.S. federal withholding tax, duly completed, together with such supplementary documentation as may be prescribedby applicable law to permit the Borrower, the Paying Agent or the Administrative Agent to determine thewithholding or deduction required to be made.(D)If a payment made to a Recipient under any Loan Document would be subject to U.S. federalwithholding tax imposed by FATCA if such Recipient were to fail to comply with the applicable reportingrequirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, asapplicable), such Recipient shall deliver to the Borrower, the Paying Agent and the Administrative Agent at the timeor times prescribed by law and at such time or times reasonably requested by the Borrower, the Paying Agent or theAdministrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower,the Paying Agent or the Administrative Agent as may be necessary for the Borrower, the Paying Agent and theAdministrative Agent to comply with their obligations under FATCA and to determine that such Recipient hascomplied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold fromsuch payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCAafter the date of this Agreement. Any Administrative Agent or Group Agent that is a U.S. Person shall deliver to the Borrower and the Servicer executedoriginals of IRS Form W-9 certifying that such Person is exempt from U.S. federal backup withholding tax (in each case, if such formwas not provided pursuant to Section 11.02(f)(ii)(A) above). Any Administrative Agent or Group Agent that is not a U.S. Person shalldeliver to the Borrower and the Servicer (and in the case of a Group Agent, to the Administrative Agent) two duly completed executedoriginals of Form W-8IMY certifying that it is a “U.S. branch” and that the payments it receives for the account of others hereunder arenot effectively connected with the conduct of its trade or business in the United States and that such Form W-8IMY evidences itsagreement with the Borrower to be treated as a “United States person” with respect to such payments (in each case, pursuant toTreasury Regulation section 1.1441-1T(b)(2)(iv)).-91-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in anyrespect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legalinability to do so. SECTION 11.03 Additional Costs. (a)The Borrower shall pay to each Indemnified Party from time to time as specified in Section 11.04, suchamounts reasonably necessary to compensate it for any increase in costs which are attributable to its funding a Loan or beingcommitted to fund the same under this Agreement, or any reduction in any amount receivable by such Indemnified Party hereunder,under a Loan in respect of any such purchase or funding obligation (such increases in costs, payments and reductions in amountsreceivable being herein called “Additional Costs”) resulting from any Regulatory Requirement and which (i) imposes any tax on, orchanges the method or basis of taxation of, any amounts payable to such Lender under this Agreement in respect of any such purchaseor funding (in each case) excluding (x) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, (y) ConnectionIncome Taxes, and (z) Indemnified Taxes, (ii) imposes or modifies any reserve, special deposit, deposit insurance or assessment,capital or similar requirements relating to any extensions of credit or other assets of, or any deposits with or credit extended by suchIndemnified Party or (iii) imposes any other condition affecting this Agreement (or any of such extensions of credit or liabilities);provided that the Borrower shall not be required to compensate an Indemnified Party pursuant to this Section 11.03 for any increasedcosts incurred or reductions suffered more than twelve (12) months prior to the date that such Indemnified Party notifies the Borrowerof the Regulatory Requirement giving rise to such increased costs or reductions, and of such Indemnified Party’s intention to claimcompensation therefor (except that, if the Regulatory Requirement giving rise to such increased costs or reductions is retroactive, thenthe twelve-month period referred to above shall be extended to include the period of retroactive effect thereof). Each of the Borrowerand the Servicer acknowledges that any Indemnified Party may implement, as an internal institutional matter, measures in anticipationof a final or proposed Regulatory Requirement (including, without limitation, the imposition of internal charges on such IndemnifiedParty’s interest or obligations under this Agreement) and may commence recognizing the incurrence of charges by and seekingcompensation under this Section 11.03(a) in connection with such measures, in advance of the effective date of such final or proposedRegulatory Requirement, and each of the Borrower and the Servicer agrees that such charges or compensation shall be payable, butonly to the extent funds are then or thereafter become available therefor pursuant to Section 2.04(c) of this Agreement followingdemand therefor without regard to whether such proposed Regulatory Requirement has been adopted or whether such effective datehas occurred.(b)If any Indemnified Party has or anticipates having any claim for Additional Costs from the Borrowerpursuant to Section 11.03(a), and such Indemnified Party believes that having the facility evidenced by this Agreement publicly ratedby a credit rating agency would reduce the amount of such Additional Costs (such amount “Reduction Amount”) by an amountdeemed by such Indemnified Party to be material, such Indemnified Party shall provide written notice to the Borrower and the Servicer(a “Ratings Request”) that such Indemnified Party intends to request public ratings of the facility from a credit rating agency selectedby such Indemnified Party and reasonably acceptable to the Servicer (the “Facility Rating”). The Borrower and TFL agree that theyshall cooperate with such Indemnified Party’s efforts to obtain a Facility Rating within 60 days of such request, and shall provide theapplicable credit rating agency (either directly or through distribution to the Administrative Agent or such Indemnified Party), anyinformation requested by such credit rating agency for purposes of providing and monitoring the Facility Rating. The IndemnifiedParty requesting the ratings shall pay the initial fees payable to the credit rating agency for providing the rating and all ongoing feespayable to the credit rating-92-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.agency to the extent not paid by the Borrower. The Borrower shall pay such ongoing fees payable to the credit rating agency for itscontinued monitoring of the rating up to the Reduction Amount. Nothing in this Section 11.03(b) shall preclude any Indemnified Partyfrom demanding compensation from the Borrower pursuant to Section 11.03(a) at any time and without regard to whether a FacilityRating shall have been obtained, or shall require any Indemnified Party to obtain any ratings on the facility prior to demanding anysuch compensation from the Borrower. Any Facility Rating obtained pursuant to this Section 11.03(b) is exclusively for purposes ofSection 11.03 and shall not amend or modify any other term or provision of this Agreement or any other Transaction Document.SECTION 11.04 Procedures for Indemnification; Etc.(a)Each Indemnified Party agrees to promptly notify the Borrower of (i) any event of which it has knowledgewhich will entitle such Person to compensation or indemnification from the Borrower, and (ii) any potential tax assessment of which ithas knowledge by any tax authority for which the Borrower may be liable pursuant to Section 11.02(c) or 11.03. Such IndemnifiedParty’s failure or delay to so promptly notify the Borrower shall not limit the obligations of the Borrower to such Indemnified Party inrespect of such claim except to the extent the Borrower is actually materially prejudiced in its defense of such claim by such failure ordelay. Any such notice claiming compensation or indemnification hereunder shall, if applicable, set forth in reasonable detail and ingood faith the amount or amounts to be paid to such Indemnified Party hereunder and shall be conclusive in the absence of manifesterror. In determining such amount, such Indemnified Party may use any reasonable averaging and attribution methods. The Borrowershall pay each claim for compensation for which it is liable under Section 11.02(c) or 11.03 on the first Payment Date which is at leastten (10) days after notice of such claim is given to the Borrower.(b)Each Indemnified Party agrees that it will use reasonable efforts to mitigate, reduce or eliminate any claimfor indemnity pursuant to Section 11.02 or 11.03 including, subject to applicable law, a change in the funding office of suchIndemnified Party; provided, however, that nothing contained herein shall obligate such Indemnified Party to take any action thatimposes on such Indemnified Party any material additional costs or any legal or regulatory burdens, nor which, in such IndemnifiedParty’s sole discretion, would have an adverse effect on its business, operations or financial condition.(c)If any Indemnified Party determines, in its sole discretion exercised in good faith, that it has received arefund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additionalamounts pursuant to Section 11.02 or Section 11.03, it shall pay to the Borrower an amount equal to such refund (but only to the extentof indemnity payments made, or additional amounts paid, by the Borrower under Section 11.02 or Section 11.03 with respect to theTaxes giving rise to such refund), net of all reasonable out-of-pocket expenses of such Indemnified Party, as the case may be, andwithout interest (other than any interest paid by the relevant Official Body with respect to such refund), provided that the Borrower,upon the request of such Indemnified Party, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or othercharges imposed by the relevant Official Body) to such Indemnified Party in the event such Indemnified Party is required to repay suchrefund to such Official Body. Notwithstanding anything to the contrary in this paragraph, in no event will any Indemnified Party berequired to pay any amount to the Borrower pursuant to this paragraph the payment of which would place such Indemnified Party in aless favorable net after-Tax position than such Indemnified Party would have been in if the Tax subject to indemnification and givingrise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amountswith respect to such Tax had never been paid. This paragraph shall not be construed to require any Indemnified Party to makeavailable its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.-93-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 11.05 Other Costs and Expenses. The Borrower shall pay on the first Payment Date which is at least ten(10) Business Days after demand therefor, all actual and reasonable documented costs and expenses of (i) the Lender Parties and thePaying Agent in connection with the administration or amendment of this Agreement, the other Transaction Documents and the otherdocuments to be delivered hereunder, including reasonable and documented fees and out-of-pocket expenses of legal counsel for theAdministrative Agent and the Paying Agent, and the actual and reasonable documented fees and expenses incurred by any ConduitLender in connection with the transactions contemplated by this Agreement in obtaining reaffirmation by any Rating Agency of itsrating of the commercial paper notes issued by such Conduit Lender and (ii) the Lender Parties and the Paying Agent in connectionwith obtaining advice as to its rights and remedies under this Agreement or any other Transaction Document or in connection with theenforcement hereof or thereof, including reasonable and documented counsel fees and expenses of each such Person in connectiontherewith.ARTICLE XIIMISCELLANEOUSSECTION 12.01 Term of Agreement. This Agreement shall terminate following the Termination Date upon theearlier to occur of (i) the Payoff Date or (ii) the date on which all Leases have been collected and distributed to the AdministrativeAgent or written off by the Servicer as being uncollectible in accordance with its Credit and Collection Policy; provided, however, that(i) the indemnification and payment provisions of Article XI and (ii) the agreements set forth in Article XII shall be continuing andshall survive any termination of this Agreement. For the avoidance of doubt, after termination of this Agreement, the AdministrativeAgent shall cease to have any read only access rights under the eVault Letter Agreement. The provisions of Article IX shall survivethe termination of this Agreement and the resignation or removal of the Administrative Agent or the Paying Agent.SECTION 12.02 Waivers; Amendments. (a)No failure on the part of the Group Agents, the Conduit Lenders, the Committed Lenders, the PayingAgent or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; norshall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any otherright. No amendment or waiver of any provision of this Agreement or consent to any departure by the Borrower or TFL therefromshall be effective unless in a writing signed by the Administrative Agent and the Required Group Agents (and, in the case of anyamendment, also signed by the Borrower and, if applicable, TFL), and then such amendment, waiver or consent shall be effective onlyin the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent thatmodifies any of the Supermajority Terms shall be effective unless in writing and signed by the Required Supermajority Group Agents;provided, further, however, that no such waiver, amendment, or consent shall, unless in writing and signed by the Group Agents for allthe Lenders directly affected thereby (or by the Administrative Agent with the consent of the Group Agents for all the Lenders directlyaffected thereby), in addition to the Required Group Agents or Required Supermajority Group Agents, as the case may be, (or by theAdministrative Agent with the consent of the Required Group Agents or Required Supermajority Group Agents, as the case may be)and Borrower and acknowledged by the Administrative Agent, do any of the following:-94-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(i)increase or extend the Commitment of any Lender (or reinstate any Commitment terminated pursuant toSection 8.02(a));(ii)postpone or delay any date fixed for, or waive, any scheduled installment of principal or any payment ofinterest (other than a waiver of the imposition of the default interest margin pursuant to the terms of the Transaction Documents), feesor other amounts due to the Lenders (or any of them) under any other Transaction Document;(iii)reduce the principal of, or the rate of interest specified herein (other than a waiver of the imposition of thedefault interest margin pursuant to the terms of the Transaction Documents), or of any fees or other amounts payable hereunder orunder any other Transaction Document;(iv)change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loanswhich shall be required for the Lenders or any of them to take any action hereunder;(v)amend this Section 12.02 or the definition of “Required Group Agents” or the definition of “SupermajorityTerms” or the definition of “Required Supermajority Group Agents” or any provision providing for consent or other action by allLenders or amend the definition of “Commitment Percentage” or “Percentage;” or(vi)discharge TFL or any Tesla Party from its respective payment Secured Obligations under the TransactionDocuments, or release all or substantially all of the Collateral, except as otherwise may be provided in this Agreement or the otherTransaction Documents;it being agreed that all Lenders shall be deemed to be directly affected by an amendment or waiver of the type described in thepreceding clauses (iv), (v) and (vi).(b)No amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, inaddition to the Required Group Agents or the Group Agents for all Lenders directly affected thereby, as the case may be (or by theAdministrative Agent with the consent of the Required Group Agents or the Group Agents for all the Lenders directly affectedthereby, as the case may be), affect the rights or duties of the Administrative Agent, under this Agreement or any other TransactionDocument. No amendment, waiver or consent shall, unless in writing and signed by the Paying Agent, affect the rights or duties of thePaying Agent, under this Agreement or any other Transaction Documents. No amendment, modification or waiver of this Agreementor any Transaction Document altering the ratable treatment of Secured Obligations arising under Eligible Interest Rate Hedgesresulting in such Secured Obligations being junior in right of payment to principal of the Loans or resulting in Secured Obligationsowing to any Eligible Interest Rate Hedge Provider becoming unsecured (other than releases of Liens permitted in accordance with theterms hereof), in each case in a manner adverse to any Eligible Interest Rate Hedge Provider, shall be effective without the writtenconsent of such Eligible Interest Rate Hedge Provider.(c)No amendment or waiver which affects the rights of the Trustee Bank with respect to Section 2.04 shall beeffective without, in each specific instance, the written approval of the Trustee Bank.SECTION 12.03 No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of anyLender Party in exercising any right, power or privilege under the Transaction Documents shall affect any other or future exercisethereof or the exercise of any other right, power or privilege; nor shall any-95-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right,power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of theLender Parties under the Transaction Documents are cumulative and not exclusive of any rights or remedies that the Lender Partiesmay otherwise have.SECTION 12.04 No Discharge. The respective obligations of the Borrower and TFL under the TransactionDocuments shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall be absolute andunconditional and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affectedby (a) any exercise or nonexercise of any right, remedy, power or privilege under or in respect of the Transaction Documents orapplicable law, including any failure to set-off or release in whole or in part by any Lender Party of any balance of any deposit accountor credit on its books in favor of the Borrower or TFL, as the case may be, or any waiver, consent, extension, indulgence or otheraction or inaction in respect of any thereof, or (b) any other act or thing or omission or delay to do any other act or thing that couldoperate as a discharge of the Borrower or TFL as a matter of law.SECTION 12.05 Notices. All notices, requests, demands, directions and other communications (collectively“notices”) under the provisions of this Agreement shall be in writing (including facsimile or electronic communication, if the recipientprovides an e-mail address) unless otherwise expressly permitted hereunder and shall be sent by first-class mail, postage prepaid,electronic mail, prepaid courier, or by facsimile. Any such properly given notice shall be effective when received. All notices shall besent to the applicable party at the addresses specified below or on Schedule 6 hereto, as applicable, or in accordance with the lastunrevoked written direction from such party to the other parties hereto.If to Borrower:c/o Tesla, Inc.3500 Deer Creek RoadPalo Alto, CA 94304Attention: General Counsel With a copy toc/o Tesla, Inc.6800 Dumbarton CircleFremont, CA 94555Attention: Legal, Finance If to TFL:c/o Tesla, Inc.3500 Deer Creek RoadPalo Alto, CA 94304Attention: General Counsel With a copy toc/o Tesla, Inc.6800 Dumbarton CircleFremont, CA 94555Attention: Legal, Finance -96-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.If to the Paying Agent:Deutsche Bank Trust Company AmericasGlobal Securities Services (GSS)100 Plaza One, 8th FloorMail stop: JCY03-0801Jersey City, New Jersey 07311-3901Tel: +1 (201) 593-8420Fax: + (212) 553-2458Email: Michele.hy.voon@db.com If to the AdministrativeAgent:Deutsche Bank AG, New York Branch60 Wall Street, 5th FloorNew York, New York 10005Tel: (212) 250-3001Fax: (212) 797-5300Attention: Katherine BolognaEmail: abs.conduits@db.com and katherine.bologna@db.comSECTION 12.06 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNEDBY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUTREFERENCE TO ITS CONFLICT OF LAWS PROVISIONS (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEWYORK GENERAL OBLIGATIONS LAW). Each party hereto hereby submits to the nonexclusive jurisdiction of the United StatesDistrict Court for the Southern District of New York and of any New York State Court sitting in New York, New York for purposesof all legal proceedings arising out of or relating to this Agreement, any other Transaction Document or the transactions contemplatedhereby or thereby. Each party hereto hereby irrevocably waives, to the fullest extent it may effectively do so, any objection which itmay now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that any suchproceeding brought in such a court has been brought in an inconvenient forum. Nothing in this Section 12.06 shall affect the right ofany party hereto to bring any action or proceeding against any other party or their respective properties in the courts of otherjurisdictions.SECTION 12.07 Integration. This Agreement and the other Transaction Documents contain the final and completeintegration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entireunderstanding among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.SECTION 12.08 Counterparts; Severability.(a)This Agreement may be executed in any number of counterparts and by different parties hereto in separatecounterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constituteone and the same Agreement.(b)Any provisions of this Agreement that are prohibited or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof,and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any otherjurisdiction.-97-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 12.09 Set-Off.(a)The Borrower hereby waives any right of setoff which it may have or to which it may be entitled againstany Lender Party and their respective assets.(b)In case an Event of Default shall occur and be continuing, each Lender Party, to the fullest extentpermitted by law, shall have the right, in addition to all other rights and remedies available to it, without notice to the Borrower, as thecase may be, to set-off against and to appropriate and apply to any amount owing by the Borrower hereunder which has become dueand payable, any debt owing to, and any other funds held in any manner for the account of, the Borrower by such Lender Party,including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, orotherwise), now or hereafter maintained by the Borrower with such Lender Party (it being understood that no such set-off with respectto either the Borrower shall be applied to any amounts owing by the other such Person hereunder). Such right shall exist whether ornot such debt owing to, or funds held for the account of, the Borrower is or are matured other than by operation of this Section 12.09and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to the LenderParties. Nothing in this Agreement shall be deemed a waiver or prohibition or restriction of any Lender Party’s rights of set-off orother rights under applicable law.SECTION 12.10 Successors and Assigns. (a) Binding. This Agreement shall be binding on the parties hereto andtheir respective successors and assigns; provided, however, that neither the Borrower nor TFL may assign any of its rights or delegateany of its duties hereunder without the prior written consent of the Administrative Agent and each Group Agent. (b)Assignment by Conduit Lender. This Agreement and the rights of each Conduit Lender hereunder(including each Loan made by it hereunder) shall be assignable by such Conduit Lender and its successors and permitted assigns (A) toany Program Support Provider or Affiliate of a Program Support Provider of such Conduit Lender, any commercial paper issuersupported by a Program Support Provider or any collateral agent or collateral trustee under its related commercial paper programdocuments without prior notice to or consent from any Tesla Party, TBM, TFL or Tesla, Inc. or any other party, or any other conditionor restriction of any kind or (B) with the prior written consent of the Borrower (such consent not to be unreasonably withheld ordelayed, to any other Eligible Assignee; provided, however, that such consent shall not be required if an Event of Default, Default orServicer Default has occurred and is continuing). (c)Information. Each assignor of a Loan or any interest therein may, in connection with the assignment orparticipation, disclose to the assignee (if such assignee would be permitted under the Transaction Documents) or participant anyinformation relating to the Tesla Parties TFL, TBM or Tesla, Inc., including the Warehouse SUBI Assets, furnished to such assignorby or on behalf of any Tesla Party, TFL, TBM or Tesla, Inc. or by the Administrative Agent; provided that, prior to any suchdisclosure, such assignee or participant agrees to preserve the confidentiality of any confidential information relating to the TeslaParties, TFL, TBM and Tesla, Inc. received by it from any of the foregoing entities in a manner consistent with Section 12.11.(d)Assignment by Committed Lender. Each Committed Lender may assign to any Eligible Assignee or toany other Committed Lender all or a portion of its rights and obligations under this Agreement (including all or a portion of itsCommitment and any Loan or interests therein owned by it); provided, however that-98-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.(A)except for an assignment by a Committed Lender to any Lender or any Affiliate of any CommittedLender, each such assignment shall require the prior written consent of the Borrower (such consent not to be unreasonablywithheld or delayed; provided, however, that such consent of the Borrower shall not be required if an Event of Default,Default or Servicer Default has occurred and is continuing);(B)each such assignment shall be of a constant, and not a varying, percentage of all rights and obligationsunder this Agreement;(C)the amount being assigned pursuant to each such assignment (determined as of the date of the Assignmentand Acceptance Agreement with respect to such assignment) shall in no event be less than the lesser of (x) $5,000,000 and (y)all of the assigning Committed Lender’s Commitment; and,(D)the parties to each such assignment shall execute and deliver to the Administrative Agent, for itsacceptance and recording in the Register (as defined below), an Assignment and Acceptance Agreement.Upon such execution, delivery, acceptance and recording from and after the effective date specified in such Assignment andAcceptance Agreement, (x) the assignee thereunder shall be a party to this Agreement and, to the extent that rights and obligationsunder this Agreement have been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights andobligations of a Committed Lender hereunder and (y) the assigning Committed Lender shall, to the extent that rights and obligationshave been assigned by it pursuant to such Assignment and Acceptance Agreement, relinquish such rights and be released from suchobligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the remaining portionof an assigning Committed Lender’s rights and obligations under this Agreement, such Committed Lender shall cease to be a partyhereto). In addition, any Committed Lender or any of its Affiliates may assign any of its rights (including rights to payment ofprincipal and Interest) under this Agreement to any Federal Reserve Bank without notice to or consent of any Tesla Party, any otherCommitted Lender or Conduit Lender, any Group Agent or the Administrative Agent, provided that no such assignment shall relievesuch assignor of its obligations under this Agreement.(e)[Reserved].(f)Procedure. Upon its receipt of an Assignment and Acceptance Agreement executed and delivered by anassigning Committed Lender and an Eligible Assignee or assignee Committed Lender, the Administrative Agent shall, if suchAssignment and Acceptance Agreement has been duly completed, (i) accept such Assignment and Acceptance Agreement, (ii) recordthe information contained therein in the Register, and (iii) give prompt notice thereof to the Borrower and the Servicer.(g)Participations. Each Lender may, in the ordinary course of its business and in accordance with applicablelaw, at any time sell to one or more Eligible Assignees (each, a “Participant”) participating interests in all or a portion of its rights andobligations under the Loans. Notwithstanding any such sale by such Lender of participating interests to a Participant, (i) such Lender’srights and obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible for theperformance hereof and thereof, and (iii) the Borrower and the Servicer shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement and the Loans. Each Lender agrees that any agreementbetween such Lender and any such Participant in respect of such participating interest shall not restrict-99-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.or condition such Lender’s right to agree to any amendment, supplement, waiver or modification of this Agreement. The Borroweragrees that each Participant shall be entitled to the benefits of Article XI (subject to the requirements and limitations therein, includingthe requirements under Section 11.02(f) to the same extent as if such Participant were a Lender and had acquired such participationpursuant to an assignment), it being understood that the documentation required under Section 11.02(f) shall be delivered to theparticipating Lender to the same extent as if such Participant was a Lender and had acquired such Participation pursuant to anassignment; provided that all such amounts payable by the Borrower to any such Participant shall be limited to the amounts whichwould have been payable to such Lender selling such participating interest had such interest not been sold; provided further that suchParticipant agrees to be subject to the provisions of Section 11.04 as if it were a Lender.(h)Participant Register. Each Lender that sells a participation shall, acting solely for this purpose as an agentof the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and statedinterest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided thatno Committed Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of anyParticipant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligationsunder any this Agreement) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan,letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. Theentries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name isrecorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice tothe contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have noresponsibility for maintaining a Participant Register.(i)Assignments by Agents. This Agreement and the rights and obligations of the Administrative Agent andeach Group Agent herein shall be assignable by the Administrative Agent or such Group Agent, as the case may be, and its successorsand assigns; provided that in the case of an assignment to a Person that is not an Affiliate of the Administrative Agent or such GroupAgent, so long as no Event of Default, Default or Servicer Default has occurred and is continuing, such assignment shall require theBorrower’s consent (not to be unreasonably withheld or delayed).(j)Limitation on Assignments and Participations. Notwithstanding anything to the contrary containedin the Transaction Documents, none of the Administration Agent, any Group Agent or any Lender may assign or participateall or any portion of its rights and obligations hereunder unless, contemporaneous with such assignment or participation, suchPerson makes a pro rata assignment or participation to the same assignee or participant, as the case may be, of the samerights and obligations under the TFL Warehouse Agreement.(k)Addition of Lenders or Groups. The Borrower may, from time to time, with the written consent of theAdministrative Agent and each Group Agent, add additional Persons as Lenders (either to an existing Group or by creating newGroups). Each new Lender (or Group) shall become a party hereto, by executing and delivering to the Administrative Agent and theBorrower, an assumption agreement (each, an “Assumption Agreement”) in the form of Exhibit N hereto (which AssumptionAgreement shall, in the case of any new Lender or Lenders, be executed by each Person in such new Lender’s Group). -100-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 12.11 Confidentiality. The Administrative Agent, each Group Agent, each Lender, the Paying Agent,the Borrower and TFL shall keep all non-public information obtained pursuant to this Agreement and the transactions contemplatedhereby or effected in connection herewith confidential in accordance with customary procedures for handling confidential informationof this nature and will not disclose such information to outside parties but may make disclosure (a) reasonably required by (i) a bonafide transferee (including an assignee or a Participant) or prospective transferee (including a prospective assignee or Participant) that isan Eligible Assignee, including any successor Lender in connection with the participation in this Agreement by such successor Lender,and its counsel and auditors, (ii) a commercial paper issuer or any provider of liquidity or credit support facilities to, or for the accountof, a commercial paper issuer, any person acting or proposed to act as a placement agent, dealer or investor with respect to anycommercial paper notes issued by or on behalf of a Conduit Lender (provided that any confidential information provided to any suchplacement agent, dealer or investor does not reveal the identity of the Borrower, TFL or any Affiliate thereto and is limited toinformation of the type that is typically provided to such entities by asset backed commercial paper conduits) and its or their counseland auditors, provided that any such bona fide transferee or prospective transferee, including without limitation, any successor Lender,any commercial paper issuer or provider of liquidity or credit support facilities to a commercial paper issuer, and its counsel andauditors to whom such disclosure is made shall abide by the confidentiality provisions of this Section 12.11 or (iii) any member orother Person holding equity interests in a commercial paper conduit purchaser; provided that any such member or other Person hasagreed to hold such information in confidence, (b) necessary in order to obtain any consents, approvals, waivers or other arrangementsrequired to permit the execution, delivery and performance by the Borrower and TFL of this Agreement, (c) in connection with theenforcement of this Agreement or any other Transaction Document, (d) as required or requested by any Official Body, regulatory, self-regulatory or supervisory authority having proper jurisdiction or pursuant to legal process or as required by applicable law (includingsecurities laws), (e) to any Rating Agency, provided that such Rating Agency has agreed to hold such information in accordance withsuch Rating Agency’s customary procedures, (f) to its attorneys, accountants, agents and Affiliates on a need to know basis providedthat each such person to whom disclosure is made shall abide by the confidentiality provisions of this Section 12.11 and (g) withoutlimiting preceding clause (e), to any “nationally recognized statistical rating organization” (as defined in, or by reference to, Rule 17g-5under the Securities Exchange Act of 1934, as amended (“Rule 17g-5”)) (each an “NRSRO”) by posting such confidential informationto a password protected internet website accessible to each NRSRO in connection with, and subject to the terms of, Rule 17g-5. EachLender Party agrees that any confidential information (which includes all information (i) that is not and does not hereafter becomepublicly available through no fault of such Lender Party or any of its agents or representatives and (ii) that is provided by the Borroweror TFL or any of their respective agents or representatives, in any format whatsoever, including any and all analyses, compilations,reports or other material based upon such information and prepared by such Lender Party or any of its agents or representatives) shallbe used only in connection with this Agreement and the transactions contemplated hereby and not for any other purpose; provided,however, that such Lender Party may disclose on a confidential basis any such confidential information to any RatingAgency. Without limiting the generality of the foregoing, each Lender Party shall observe any applicable law prohibiting thedisclosure of information regarding Lessees and shall request of each Person to whom disclosure is made pursuant to this Section 12.11to observe any such applicable laws.Notwithstanding any other provision herein, each Lender Party, the Borrower and TFL (and each of their respectiveemployees, representatives or other agents) may disclose to any and all Persons, without limitation of any kind, the U.S. tax treatmentand U.S. tax structure of the transaction contemplated by this Agreement and the other agreements related hereto and all materials ofany kind (including opinions or other tax analysis) that are provided to any of them relating to such U.S. tax treatment and U.S. taxstructure, other than any information for which nondisclosure is reasonably necessary in order to comply with applicable securitieslaws.-101-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 12.12 Payments Set Aside. To the extent that the Borrower, TFL or any Lessee makes a payment to aLender Party or a Lender Party exercises its rights of set-off and such payment or set-off or any part thereof is subsequentlyinvalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by, or is required to be refunded, rescinded,returned, repaid or otherwise restored to the Borrower, TFL, such Lessee, a trustee, a receiver or any other Person under any law,including any bankruptcy law, any state or federal law, common law or equitable cause, the obligation or part thereof originallyintended to be satisfied shall, to the extent of any such restoration, be reinstated, revived and continued in full force and effect as if suchpayment had not been made or such set-off had not occurred. The provisions of this Section 12.12 shall survive the termination of thisAgreement.SECTION 12.13 No Petition. (a)Each party hereto agrees, prior to the date which is one (1) year and one (1) day after the payment in fullof all indebtedness for borrowed money of the Borrower, not to acquiesce, petition or otherwise, directly or indirectly, invoke, or causethe Borrower to invoke, the process of any Official Body for the purpose of (i) commencing or sustaining a case against Borrower,under any federal or state bankruptcy, insolvency or similar law (including the Bankruptcy Code), (ii) appointing a receiver, liquidator,assignee, trustee, custodian, sequestrator or other similar official for the Borrower, or any substantial part of the property of theBorrower, or (iii) ordering the winding up or liquidation of the affairs of the Borrower.(b)Each party hereto agrees, prior to the date which is one (1) year and one (1) day after the payment in fullof all indebtedness for borrowed money of any Conduit Lender, not to acquiesce, petition or otherwise, directly or indirectly, invoke,or cause such Conduit Lender to invoke, the process of any Official Body for the purpose of (i) commencing or sustaining a caseagainst such Conduit Lender, under any federal or state bankruptcy, insolvency or similar law (including the Bankruptcy Code orsimilar law in another jurisdiction), (ii) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similarofficial for such Conduit Lender, or any substantial part of the property of such Conduit Lender, or (iii) ordering the winding up orliquidation of the affairs of such Conduit Lender.SECTION 12.14 Characterization of the Transactions Contemplated by this Agreement. The parties to thisAgreement agree to treat the transactions contemplated by this Agreement as a debt financing for tax and accounting purposes andfurther agree to file on a timely basis all federal and other tax returns consistent with such treatment.SECTION 12.15 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBYIRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALLRIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT, THE OTHER TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATEDHEREBY AND THEREBY.SECTION 12.16 Loans. Any references to the Agreement herein shall, wherever applicable, be read to includeeach Loan Request and each Notice of Warehouse SUBI Lease Allocation.SECTION 12.17 TBM, TFL or Tesla, Inc. Liability. Except as provided in the Transaction Documents, none ofTBM, TFL or Tesla, Inc. shall be liable for the payment obligations of the Borrower hereunder or under any Loan.-102-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 12.18 Limitation on Consequential, Indirect and Certain Other Damages. No claim may be made bythe Borrower, TFL, or any of their Affiliates against any Lender Party, the Paying Agent, the Administrative Agent or any of theirrespective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damagesarising out of or related to the transactions contemplated by this Agreement and the other Transaction Documents, or any act, omissionor event occurring in connection therewith and each of the Borrower and TFL, to the extent permitted by law, hereby waives, releases,and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist inits favor.No claim may be made by any Lender Party, the Paying Agent, the Administrative Agent or any of their respectiveAffiliates against the Borrower, TFL, or any of their Affiliates, directors, officers, employees, attorneys or agents for any special,indirect, consequential or punitive damages arising out of or related to the transactions contemplated by this Agreement and the otherTransaction Documents, or any act, omission or event occurring in connection therewith and each Lender Party, the Paying Agent, theAdministrative Agent, to the extent permitted by law, hereby waives, releases, and agrees not to sue upon any claim for any suchdamages, whether or not accrued and whether or not known or suspected to exist in its favor; provided that a claim for damages arisingfrom a breach of Section 12.11 shall not be deemed to be a claim for special, indirect or consequential damages.In no event shall the Paying Agents be responsible or liable for special, indirect, punitive or consequential loss ordamage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Paying Agent has been advisedof the likelihood of such loss or damage and regardless of the form of action.SECTION 12.19 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it withrespect to any Secured Obligations in a greater proportion than that received by any other Lender entitled to receive a ratable share ofsuch Secured Obligations, such Lender agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion ofsuch Secured Obligations held by the other Lenders so that after such purchase each Lender will hold its ratable portion of suchSecured Obligations; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchaseshall be rescinded and the purchase price restored to the extent of such recovery, but without interest.SECTION 12.20 No Third Party Beneficiaries; Hedge Counterparties. Except as provided in the next sentence,this Agreement is not intended to confer any benefit upon, to give any rights or remedies whatsoever to, or to be enforceable by, anyPerson other than the parties hereto, the other Indemnified Parties and, with respect to Sections 2.04 and 12.02, the Trustee Bank. Theparties hereto expressly intend the provisions of this Agreement to be enforceable by each Interest Rate Hedge provider as a third partybeneficiary of this Agreement.SECTION 12.21 Back-Up Servicing. The Administrative Agent, the Group Agents and TFL agree to discuss ingood faith on an ongoing basis TFL’s ability to perform its obligations under the Transaction Documents without the need for a Back-Up Servicer and, if the Administrative Agent and TFL agree in writing that TFL has such ability, then TFL may, with prior writtenconsent from each Group Agent (such consent not to be unreasonably withheld), and shall, at the written direction of each GroupAgent, upon 30 days’ prior written notice, terminate the Back-Up Servicer, and, for the avoidance of doubt, no Back-Up Servicer shallthereafter be required and no Back-Up Servicing Fees shall thereafter be payable.-103-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc.SECTION 12.22 Limited Recourse Against Conduit Lenders. Notwithstanding anything in this Agreement or anyother Transaction Document to the contrary, no Conduit Lender shall have any obligation to pay any amount required to be paid by ithereunder or thereunder in excess of any amount received pursuant to this Agreement and available to such Conduit Lender afterpaying or making provision for the payment of its Short-Term Notes. All payment obligations of any Conduit Lender hereunder arecontingent upon the availability of funds received pursuant to this Agreement in excess of the amounts necessary to pay Short-TermNotes; and each of the Borrower, TFL and the Secured Parties agrees that they shall not have a claim under Section 101(5) of theBankruptcy Code (or similar law in another jurisdiction) if and to the extent that any such payment obligation exceeds the amountreceived pursuant to this Agreement and available to any Conduit Lender to pay such amounts after paying or making provision for thepayment of its Short-Term Notes. Notwithstanding the foregoing, the obligations of a Conduit Lender to the Borrower or TFLresulting from the gross negligence or willful misconduct of such Conduit Lender (as finally determined by a court of competentjurisdiction) or for any expenses incurred by the Borrower or TFL as a result of a breach of this Agreement made by a Conduit Lendershall not be limited to any amounts or funds received pursuant to this Agreement (but shall only be limited to the amounts available tosuch Conduit Lender after paying or making provision for the payment of its Short Term Notes).SECTION 12.23 U.S. Patriot Act. In order to comply with the laws, rules, regulations and executive orders in effectfrom time to time applicable to banking institutions, including, without limitation, those relating to the funding of terrorist activities andmoney laundering, including Section 326 of the USA PATRIOT Act of the United States (“Applicable Law”), the Paying Agent isrequired to obtain, verify, record and update certain information relating to individuals and entities which maintain a businessrelationship with the Paying Agent. Accordingly, each of the parties agree to provide to the Paying Agent, upon its request from timeto time such identifying information and documentation as may be available for such party in order to enable the Paying Agent tocomply with Applicable Law. The Paying Agent will follow its typical Know Your Customer (KYC) process on any other entitywhich becomes a party to this Agreement (through assignment or otherwise) prior to processing any instructions from such entity.[Signature Pages Follow] -104-[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officersthereunto duly authorized, as of the date first above written. LML 2018 WAREHOUSE SPV, LLC, as Borrower By:/s/ Yaron Klein Name: Yaron Klein Title: Chief Financial Officer/Treasurer TESLA FINANCE LLC By:/s/ Yaron Klein Name: Yaron Klein Title: Chief Financial Officer/Treasurer [Signature Page to Loan and Security Agreement 1 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK TRUST COMPANY AMERICAS,as Paying Agent By:/s/ Rosemary CabreraName:Rosemary CabreraTitle:Associate By:/s/ William SchwerdtmanName:William SchwerdtmanTitle:Associate [Signature Page to Loan and Security Agreement 2 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions. Confidential Treatment Requested by Tesla, Inc. DEUTSCHE BANK AG, NEW YORK BRANCH, asAdministrative Agent, as a Group Agent and as a CommittedLender By:/s/ Kevin Fagan Name: Kevin Fagan Title: Vice President By:/s/ Daniel Gerber Name: Daniel Gerber Title: Director [Signature Page to Loan and Security Agreement 3 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CITIBANK, N.A., as a Group Agent and as a Committed Lender By:/s/ Amy Jo Pitts Name: Amy Jo Pitts Title: Vice President CAFCO LLC, as a Conduit LenderBy:Citibank, N.A., as Attorney-in-Fact By:/s/ Amy Jo Pitts Name: Amy Jo Pitts Title: Vice President CHARTA LLC, as a Conduit Lender By:Citibank, N.A., as Attorney-in-Fact By:/s/ Amy Jo Pitts Name: Amy Jo Pitts Title: Vice President CIESCO LLC, as a Conduit Lender By:Citibank, N.A., as Attorney-in-Fact By:/s/ Amy Jo Pitts Name: Amy Jo Pitts Title: Vice President [Signature Page to Loan and Security Agreement 4 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CRC FUNDING LLC, as a Conduit Lender By:Citibank, N.A., as Attorney-in-Fact By:/s/ Amy Jo Pitts Name: Amy Jo Pitts Title: Vice President [Signature Page to Loan and Security Agreement 5 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. ROYAL BANK OF CANADA,as a Group Agent and as a Committed Lender By:/s/ Karen E. StoneName:Karen E. StoneTitle:Authorized Signatory By:/s/ Eric WiseName:Eric WiseTitle:Authorized Signatory [Signature Page to Loan and Security Agreement 6 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CREDIT SUISSE AG, NEW YORK BRANCH,as a Group Agent By:/s/ Patrick DugganName:Patrick DugganTitle:Vice President By:/s/ Erin McCutcheonName:Erin McCutcheonTitle:Director CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,as a Committed Lender By:/s/ Patrick DugganName:Patrick DugganTitle:Authorized Signatory By:/s/ Erin McCutcheonName:Erin McCutcheonTitle:Authorized Signatory GIFS CAPITAL COMPANY LLC,as a Conduit Lender By:/s/ Carey D. FearName:Carey D. FearTitle:Authorized Signer [Signature Page to Loan and Security Agreement 7 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. BARCLAYS BANK PLC,as a Group Agent By:/s/ Chin-Yong Choe Name: Chin-Yong Choe Title: Director SALISBURY RECEIVABLES COMPANY LLC,as a Conduit Lender By:Barclays Bank PLC, as attorney-in-fact By:/s/ Chin-Yong ChoeName:Chin-Yong ChoeTitle:Director [Signature Page to Loan and Security Agreement 8 of 8][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 1to Loan and Security Agreement Schedule of LitigationNone. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 2to Loan and Security AgreementSchedule of Corporate and Limited Liability CompanyNames, Trade Names or Assumed NamesWith respect to the Borrower: LML 2018 Warehouse SPV, LLC Schedule 2-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 3to Loan and Security Agreement Description of Electronic Lease Vault See attached. Schedule 3-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.eOriginal, Inc. Authoritative Copy System DescriptionAs Integrated with DocuSign, Inc. Electronic Signature Solution The eContract Processes BackgroundThe eOriginal, Inc. Authoritative Copy System (the “System”) enables the creation and management of Authoritative Copies and usesa combination of technological and administrative features in order to: (i) designate a single copy of the Record or Records comprisingan eContract as being the Authoritative Copy of such eContract; (ii) manage access to and the rendering of the Authoritative Copy;(iii) identify each entity who has authorized access to the System, (each such entity, a “System User”); (iv) identify which SystemUser or third party that is not a System User (each such third party, a “Non-System User”) is the Owner of Record of theAuthoritative Copy; and (v) provide a means for transferring record ownership of, and the exclusive right of access to, theAuthoritative Copy from the current Owner of Record to a successor Owner of Record (the processes performed by the System toexecute the functions described in the foregoing clauses (i) through (v) are collectively referred to as the “eContract Processes”). TheSystem comprises a Production System and a Back-up System. The Production System is accessible to System Users as describedherein and represents that portion of the System of which the Vault is a part. The Production System is backed-up onto the Back-upSystem as described in Section J.1. below. The System gives each System User and each Authoritative Copy a unique identificationnumber and maintains such unique identification numbers in the System’s administrative database.The System enables the creation and management of Authoritative Copies, including ancillary electronic Records which amend,modify, support and/or supplement Authoritative Copies (collectively, “eDocuments”), and the logical association of each of theeDocuments with the applicable Authoritative Copy. The System also enables the conversion of Authoritative Copies and relatedeDocuments from electronic media to paper media, and the conversion of Chattel Paper and ancillary documents from paper media toelectronic media for management within the System as Authoritative Copies and eDocuments.The System is integrated with the [***] ([***]) to allow eContracts and eDocuments created and, as applicable, electronically executedusing [***] to be deposited into the System to be managed as Authoritative Copies and eDocuments, respectively.Glossary of Defined Terms:[***] A.Agreements:[***]B.Integration with [***] – Creation and Deposit:[***]C.eContract Deposit and Verification:[***][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.D.Creation of the Legend[***]E.Vault Storage and Management:[***]F.System Access:[***]G.Rendering of Records:[***]H.Authority of Owner of Record:[***]I.Transfer or Export:[***]J.Back-Up:[***]Summary of System Operations:Below is a summary of the eContract Processes performed by the System with respect to a specific eContract:[***]Integration-Specific Exceptions:[***] [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 4to Loan and Security Agreement Ineligible Assignees 1.Toyota Motor Corporation2.General Motors Company3.Volkswagen AG4.Hyundai Motor Company5.Ford Motor Company6.Nissan Motor Corporation7.Honda Motor Co., Ltd.8.Peugeot S.A.9.Suzuki Motor Corporation10.Renault S.A.11.Fiat Chrysler Automobiles NV12.Daimler AG13.Bayerische Motoren Werke AG14.SAIC Motor Corporation Limited15.Tata Motors Limited16.Mazda Motor Corporation17.Dongfeng Motor Corporation18.Mitsubishi Motors Corporation19.Chang'an Automobile (Group) Co Ltd.20.Zhejiang Geely Holding Group Co., Ltd.21.Faraday & Future Inc.22.Atieva Inc.23.Nio Inc.24.Lucid Motors, Inc.25.Rivian Automotive LLC Schedule 4-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Schedule 5to Loan and Security Agreement Insurance Requirements See the attached insurance certificates. Schedule 5-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CERTIFICATE OF LIABILITY INSURANCEDATE (MM/DD/YYYY)12/27/2018THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THISCERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THISCERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE ORPRODUCER, AND THE CERTIFICATE HOLDER.IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. IfSUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does notconfer rights to the certificate holder in lieu of such endorsement(s).PRODUCERMARSH RISK & INSURANCE SERVICES345 CALIFORNIA STREET, SUITE 1300CALIFORNIA LICENSE NO. 0437153SAN FRANCISCO, CA 94104 [***]CONTACTNAME:PHONE(A/C, No, Ext):FAX(A/C, No):E-MAIL ADDRESS:INSURER(S) AFFORDING COVERAGENAIC #INSURER A : N/AN/AINSUREDTesla Motors, Inc 6800 Dumbarton CircleFremont, CA 94555INSURER B : Zurich American Insurance Company16535INSURER C : Axis Specialty Europe INSURER D : INSURER E : INSURER F : [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. COVERAGESCERTIFICATE NUMBER: SEA-003592721-12REVISION NUMBER: 7 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAYPERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAYHAVE BEEN REDUCED BY PAID CLAIMS.INSR LTRTYPE OFINSURANCEADDLINSDSUBRWVDPOLICY NUMBERPOLICY EFF(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)LIMITSB[***] [***]10/31/201810/31/2019[***][***]$B[***] [***]10/31/201810/31/2019[***][***]C[***] [***]10/31/201810/31/2019[***][***] [***] N / A [***] $$$ DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required)Tesla Lease Trust is a wholly owned subsidiary of Tesla Motors IncCERTIFICATE HOLDERCANCELLATION Tesla Lease Trust6800 Dumbarton CircleFremont, CA 94555SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BEDELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.AUTHORIZED REPRESENTATIVEof Marsh Risk & Insurance Services/s/ Stephanie Guaiumi © 1988-2016 ACORD CORPORATION. All rights reserved.ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CERTIFICATE OF LIABILITY INSURANCEDATE (MM/DD/YYYY)12/27/2018THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THISCERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THISCERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE ORPRODUCER, AND THE CERTIFICATE HOLDER.IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. IfSUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does notconfer rights to the certificate holder in lieu of such endorsement(s).PRODUCERMARSH RISK & INSURANCE SERVICES345 CALIFORNIA STREET, SUITE 1300CALIFORNIA LICENSE NO. 0437153SAN FRANCISCO, CA 94104 [***]CONTACTNAME:PHONE (A/C, No, Ext):FAX (A/C, No):E-MAIL ADDRESS:INSURER(S) AFFORDING COVERAGENAIC #INSURER A :Zurich American Insurance Company16535INSUREDTesla Motors, Inc.6800 Dumbarton CircleFremont, CA 94555INSURER B :N/A INSURER C : N/A INSURER D : National Union Fire Ins Co Pittsburgh PA19445INSURER E : INSURER F : [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. COVERAGESCERTIFICATE NUMBER: SEA-003592716-01REVISION NUMBER: 9 THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAYPERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAYHAVE BEEN REDUCED BY PAID CLAIMS.INSR LTRTYPE OF INSURANCEADDLINSDSUBRWVDPOLICY NUMBERPOLICY EFF(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)LIMITSA[***] [***]10/31/201810/31/2019[***][***]A[***] [***]10/31/201810/31/2019[***][***]B[***] [***]10/31/201810/31/2019[***][***] [***] N / A [***] $$$ DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required)Issued as Evidence of Insurance. CERTIFICATE HOLDERCANCELLATION Tesla Motors, Inc.6800 Dumbarton CircleFremont, CA 94555SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVEREDIN ACCORDANCE WITH THE POLICY PROVISIONS.AUTHORIZED REPRESENTATIVEof Marsh Risk & Insurance Services/s/ Stephanie Guaiumi © 1988-2016 ACORD CORPORATION. All rights reserved.ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. EVIDENCE OF [***] INSURANCEDATE (MM/DD/YYYY)12/27/2018THIS EVIDENCE OF [***] INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE ADDITIONALINTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BYTHE POLICIES BELOW. THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZEDREPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST.AGENCYPHONE415-743-8000(A/C, No, Ext):COMPANYZurich American Insurance CompanyMARSH RISK & INSURANCE SERVICES345 CALIFORNIA STREET, SUITE 1300CALIFORNIA LICENSE NO. 0437153SAN FRANCISCO, CA 94104[***]FAX(A/C, No):E-MAIL ADDRESS:CODE:SUB CODE:AGENCYCUSTOMER ID #:INSUREDTesla Motors, Inc.6800 Dumbarton Circle Fremont, CA 94555LOAN NUMBERPOLICY NUMBER[***]EFFECTIVE DATE10/31/2018EXPIRATION DATE10/31/2019 CONTINUED UNTIL TERMINATED IF CHECKEDTHIS REPLACES PRIOR EVIDENCE DATED:[***] INFORMATIONLOCATION/DESCRIPTIONTHE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANYREQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF [***] INSURANCE MAY BE ISSUED OR MAYPERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITSSHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. COVERAGE INFORMATION PERILS INSURED2610 ☐☐ BASIC ☐☐ BROAD ☒☒ SPECIAL ☐☐ COVERAGE / PERILS / FORMSAMOUNT OF INSURANCEDEDUCTIBLE[***][***][***]REMARKS (Including Special Conditions) Issued as Evidence of Insurance. CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED INACCORDANCE WITH THE POLICY PROVISIONS. ADDITIONAL INTERESTSEA-003592722-01 NAME AND ADDRESSTesla Motors, Inc.6800 Dumbarton CircleFremont, CA 94555 ADDITIONAL INSUREDMORTGAGEE LENDER’S LOSS PAYABLE LOSS PAYEE LOAN #AUTHORIZED REPRESENTATIVEof Marsh Risk & Insurance Services/s/ David N. Heath ACORD 27 (2016/03) © 1993-2016 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. EVIDENCE OF [***] INSURANCEDATE (MM/DD/YYYY)12/27/2018THIS EVIDENCE OF [***] INSURANCE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE ADDITIONALINTEREST NAMED BELOW. THIS EVIDENCE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BYTHE POLICIES BELOW. THIS EVIDENCE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZEDREPRESENTATIVE OR PRODUCER, AND THE ADDITIONAL INTEREST.AGENCYPHONE 415-743-8000(A/C, No, Ext):COMPANYZurich American Insurance CompanyMARSH RISK & INSURANCE SERVICES345 CALIFORNIA STREET, SUITE 1300CALIFORNIA LICENSE NO. 0437153SAN FRANCISCO, CA 94104[***]FAX(A/C, No):E-MAIL ADDRESS:CODE:SUB CODE:AGENCYCUSTOMER ID #:INSUREDTesla Motors, Inc,6800 Dumbarton CircleFremont, CA 94555LOAN NUMBERPOLICY NUMBER[***]EFFECTIVE DATE10/31/2018EXPIRATION DATE10/31/2019 CONTINUED UNTIL TERMINATED IF CHECKEDTHIS REPLACES PRIOR EVIDENCE DATED:[***] INFORMATION LOCATION/DESCRIPTIONTHE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANYREQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS EVIDENCE OF [***] INSURANCE MAY BE ISSUED OR MAYPERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITSSHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. COVERAGE INFORMATION PERILS INSURED ☐☐ BASI �� BROAD ☒☒ SPECIAL ☐☐COVERAGE / PERILS / FORM SAMOUNT OF INSURANCEDEDUCTIBLE[***][***][***]REMARKS (Including Special Conditions) Deutsche Bank AG New York Branch, as collateral agent is lenders loss payable as required by written contract. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED INACCORDANCE WITH THE POLICY PROVISIONS. ADDITIONAL INTEREST SEA-003592725-02NAME AND ADDRESSDeutsche Bank AG New York Branch, as collateral agentAttention: Phelecia Parker60 Wall StreetNew York NY 10005 ADDITIONAL INSUREDMORTGAGEExLENDER’S LOSS PAYABLE LOSS PAYEE LOAN #AUTHORIZED REPRESENTATIVEof Marsh Risk & Insurance Services/s/ David N. HeathACORD 27 (2016/03) © 1993-2016 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 6to Loan and Security Agreement Notice Addresses Borrower: c/o Tesla, Inc.3500 Deer Creek RoadPalo Alto, CA 94304Attention: General Counsel With a copy toTesla, Inc.6800 Dumbarton CircleFremont, CA 94555Attention: Legal, Finance TFL: c/o Tesla, Inc.3500 Deer Creek RoadPalo Alto, CA 94304Attention: General Counsel With a copy toTesla, Inc.6800 Dumbarton CircleFremont, CA 94555Attention: Legal, Finance Administrative Agent: Deutsche Bank AG, New York Branch60 Wall Street, 5th FloorNew York, New York 10005Tel: (212) 250-3001Fax: (212) 797-5300Attention: Katherine BolognaEmail: abs.conduits@db.com and katherine.bologna@db.com Deutsche Bank AG, New York Branch, as Lender: Deutsche Bank AG, New York BranchSchedule 6-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.60 Wall Street, 5th FloorNew York, New York 10005Tel: (212) 250-3001Fax: (212) 797-5300Attention: Katherine BolognaEmail: abs.conduits@db.com and katherine.bologna@db.com Paying Agent: Deutsche Bank Trust Company AmericasDeutsche Bank National Trust CompanyGlobal Securities Services (GSS)100 Plaza One, 8th FloorMail stop: JCY03-0801Jersey City, New Jersey 07311-3901Tel: +1 (201) 593-8420Fax: +1 (212) 553-2458Email: michele.hy.voon@db.com Citibank, N.A., CAFCO, LLC, CHARTA, LLC, CIESCO, LLC, CRC Funding, LLC, as Lenders: c/o Citibank, N.A.Global Securitized Products750 Washington Blvd., 8th FloorStamford, CT 06901Attention: Robert KohlTelephone: 203-975-6383Email: Robert.kohl@citi.com c/o Citibank, N.A.Global Loans – Conduit Operations1615 Brett Road Ops Building 3New Castle, DE 19720Telephone: 302-323-3125Email: conditoperations@citi.com Schedule 6-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Credit Suisse AG, New York Branch / Credit Suisse AG, Cayman Islands Branch: c/o Credit Suisse AG, New York Branch11 Madison Avenue, 4th FloorNew York, New York 10010Telephone: 212-325-0432Attention: Kenneth AianiEmail: kenneth.aiani@credit-suisse.com; patrick.duggan@credit-suisse.com; list.afconduitreports@credit-suisse.com;abcp.monitoring@credit-suisse.com GIFS Capital Company:227 West Monroe Street, Suite 4900Chicago, IL 60696Telephone: 312-977-4588Attention: Mark MatthewsEmail: mark.matthews@guggenheimpartners.com Royal Bank of Canada: c/o RBC Capital Markets200 Vesey StreetNew York, New York 10281Attention: Angela NimohTelephone: 212-428-6296Fax: 212-428-6308Email: conduit.management@rbccm.com; rgeoghegan@rbccm.com; angela.nimoh@rbccm.com; sofia.shields@rbccm.com Barclays Bank PLC / Salisbury Receivables Company LLC: c/o Barclays Bank PLC745 Seventh Avenue, 5th FloorNew York, New York 10019Telephone: 212-526-7161Email: asgreports@barclays.com; barcapconduitops@barclays.com; john.j.mccarty@barclays.com; martin.attea@barclays.com;jonathan.wu@barclays.com; david.hisrchy@barclays.com; eric.k.chang@barclays.com; eugene.golant@barclays.com. Schedule 6-3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 7to Loan and Security Agreement Credit and Collection Policy See attached. Schedule 7-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Tesla Finance LLC Credit and Collections Policy Effective December 2018 [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Table of Contents Page1.Mission and Philosophy42.Credit Policy4ACovered Products4BGeneral Policy Statement5CRisk Framework and Appetite5DCredit Department Roles and Responsibilities6ECredit Decisioning6i.Complete Credit Application6ii.Credit Bureau History7iii.Lease [***] System8iv.Unscored Applications8v.Credit Analysis8vi.Adverse Actions Reasons9FLending [***], Authority, and Exceptions10i.Lease Credit Approval Authority10ii.Unscored11iii.Commercial Leasing11iv.Auto Decisioning12v.High Risk Credit Applications13vi.Potential Skip/Fraud Applications13vii.Down Payment and Trade-Ins13viii.Exception Authority and Process14GFair Lending and Regulatory Compliance14i.General Policy Statement14ii.Applicant Notification Letters14iii.Audit Policy15iv.Records Retention16HOrigination Metrics163.Collections and Servicing Policy16AGeneral Policy Statement17BLoss Mitigation Department Roles and Responsibilities17CCollections Treatment Strategy and Plan17i.Initial Delinquency/Customer Service Call18ii.Formal Daily Collection Activity18iii.Collections Risk Strategy18iv.Delinquency Lifecycle Activity18v.End of Term Payment Collections19vi.End of Term Fees Collections21vii.Customer Contact and Documentation Policy21viii.Telephone Collection Policy22DBankruptcy Handling22ERepossession and Reinstatement23FFair Debt Collection and Regulatory Compliance24i.Training25ii.Customer Letters25iii.Audit Policy25[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.iv.Records Retention25GCharge-off Policy26HLease Extension Policy26ILease Repurchase Policy26JInsurance Tracking Policy26KCollections and Portfolio Management Metrics27 [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.TESLA FINANCE CREDIT AND COLLECTIONS POLICY 1. MISSION AND PHILOSOPHY The purpose of the Credit and Collections Policy is to provide Tesla Finance LLC (also referred to as Tesla Finance or TFL) with anorganized and repeatable practice of credit adjudication and portfolio management practices in support of Tesla vehicle sales andprofitability, brand experience and loyalty. TFL underwrites credit decisions on behalf of, and acts as the servicer for, Tesla Lease Trust(TLT). This policy helps establish authority, rules, process and the framework to originate, manage, and liquidate the lease portfolioeffectively. It is based on sound and established lending and collection practices while operating within the limitations of regulatoryrequirements. It is, however, not a comprehensive interpretation of specific laws and regulations governing the business but is, rather, ahigh- to medium- level discussion of intent, practice, and compliance. While certain roles have specific functional responsibilities, risk management generally is a shared responsibility across theorganization. Although credit and collections are distinctly separate functions in the product lifecycle, it is imperative that there be fullalignment, communication, and transparency on overall goals, actions, and performance of the portfolio. This is accomplished througha regular and frequent feedback loop between the two functions at the appropriate levels. This policy is intended to serve as a basic and practical manual. However, no document can fully replace: prudent business judgment;sound assessment of a borrower’s ability, capacity, and willingness to pay; or effective decision making about a specific credit requestor delinquency resolution activity that is appropriate to the situation and the needs of both the borrower and TFL. The roles andincentives of the various functions are designed to provide the appropriate alignment, unity of purpose, and check and balance tomaximize the benefit to the company. 2. CREDIT POLICY A. Covered Products The Tesla Lease product covers individual and joint consumer leasing, small business leasing and commercial leasing. Consumerleasing is intended for consumers – individually and jointly – who wish to lease their Tesla vehicle. Small business leasing is intendedfor owners and principals of small and medium sized enterprises who wish to lease a vehicle jointly with their business. This may allowthe flexibility to deduct some or all of lease payments from business income taxes (customers are always encouraged to consult with atax professional to understand their own particular situation and eligibility). The lessee will be the business and the co-less will be thebusiness owners or principal. Credit worthiness will be solely evaluated based on the co-lessee, who is the business owner or principal.Commercial leasing is a product offered to well- established and significant sized businesses who wish to lease in the company’s nameonly and with no co-buyer. This allows for the use of C-suite executives. This product is offered on a limited basis upon request. B. General Policy Statement TFL’s policy is to review and consider all applications for Leases submitted on the Tesla portal and processed through the Loan/LeaseOrigination System (LOS) using an appropriate risk/reward balance. The goal of credit decisioning is to approve credit applicationswith an acceptable probability of payment by considering the following: •A complete credit application,•A thorough credit review and analysis in support of the four facets of good credit approval(Ability, Stability, Credit History, and Deal Structure), and•Proper communication, follow up, and documentation.[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. C. Risk Framework and Appetite TFL accepts risks generally in line with those of other U.S. captive auto finance companies. Our approach to risk management is basedon these guiding principles: •Innovative support of Tesla’s sales, profitability, and brand experience•Strike appropriate risk/reward balance•Forward looking analytics with timely feedback loop•Robust governance and compliance•Overall – sound business judgment rules Credit Risk Appetite: Credit risk is the possibility of losses stemming from the failure of lessees to meet their financial obligationsunder the lease agreement. Overall, TFL’s credit risk appetite for the lease portfolio is defined by a [***] of [***]% and a [***] of[***]%. The credit policy parameters (discussed in section 2F) with [***] on [***]% and [***]% of [***] along with the [***]% aresetup to ensure that risk exposure and portfolio performance are at acceptable levels. Concentration Risk: Our leasing portfolio concentration follows that of our general business model distribution with new Teslavehicles including Model S and Model X. Our model mix is expected to shift and grow with the introduction of new products, such asModel 3. Sales are [***] in [***] and this distribution will be monitored and managed dependent on business and market conditions. Qualitative Risk Factors: The qualitative elements of the risk appetite framework define, in general, the positioning that TFL’smanagement wishes to adopt or maintain in the course of its business model. Generally speaking, the framework is based onmaintaining the following qualitative objectives: •A [***] and predictable risk profile based on a simple and transparent business model, focused primarily on retail customers,•A stable and consistent credit policy and practice to generate growth, earnings, and manage volatility,•An independent risk function with active involvement of senior management that guarantees a strong risk culture focused onprotecting and ensuring an adequate return on capital, and•Focus on the business model and products that TFL knows sufficiently well and has the management capacity (people,systems, processes) to execute successfully. D. Credit Department Roles and Responsibilities The credit function is headed by the President of Tesla Finance. Credit Analysis is performed by the Underwriting Department and isauthorized to make credit decisions per the credit criteria specified in this policy. The Underwriting Department evaluates and identifies the risk and merits of each application on a case by case basis. The Underwritingteam are experienced and trained professionals whose primary role is to make a credit decision after conducting a full analysis of theapplicant’s credit worthiness within established underwriting guidelines in compliance with fair lending and other applicableregulations. Regional Credit Analysts are a part of the broader Financial Services team and function as the primary interface with thecustomer, Sales Team and Delivery Specialists in the field, and internal teams on matters related to contracts, documents,communication and follow-up. The department is required to consult with, and escalate, deals to more senior members of theUnderwriting team on approvals above the specified limits. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.E. Credit Decisioning i.Complete Credit Application To enable a well-rounded credit decision, a complete credit application refers to thorough and accurate information as it pertains to theapplicant’s income, financial resources and assets, employment and residence history, credit obligations and payment history, and theamount of credit desired as it relates to the vehicle configuration and options. The application specifically needs to contain: •Information regarding the applicant(s)•Valid SSN (US), SIN (Optional in Canada) or Tax ID number•Asset and debt (liability) information•Vehicle price details•Any trade-in, capitalized tax or additional down payments that impact capitalized cost The credit application information is supplemented with the consumer credit bureau record of the applicant’s credit borrowing andpayment history.For the purposes of this policy, a credit application is considered incomplete when there is insufficient information to make a fullyinformed credit decision. Common reasons contributing to an incomplete credit application are: •SSN is not accurate or does not match true applicant•Applicant/co-applicant did not have sufficient time, desire, or available information to complete all sections at creditapplication or upon follow up An incomplete credit application can be decisioned as pending (Manual Review) or declined due to an incomplete credit application. Ifthe applicant provides the requested information, the credit department can continue to process the application through the normalprocess. If the applicant does not provide the requested information after reasonable attempts to obtain this information are exhausted,the adverse action notice should be sent and no further action is needed. Requesting information from the applicant/co-applicant: When insufficient information is received, or additional information isneeded to support the credit decision process, the credit department may follow up with the applicant(s), their legally authorizedrepresentatives, or Tesla sales /delivery personnel as appropriate. The credit department associates may not ask, discuss, infer, orconsider prohibited bases such as an applicant’s Race, Color, Religion, Ethnic Origin, Age (if legally eligible to contract), Sex andmarital status, public assistance usage with the applicant or any other individual involved in the credit transaction. Inquiries regardingthe applicant’s immigration status are permissible only to ascertain TFL’s rights and remedies regarding contractual repayments andend of lease termination activities. This policy applies to all verbal, written, in person, and electronic communication methods usedduring the process. ii.Credit Bureau History Credit history is a measure of the borrower’s creditworthiness evidenced through their current and past borrowing and paymentperformance. An accurate and valid SSN is crucial for pulling the right credit record. For Canadian customers, while having an accurateSIN is helpful for locating a credit file, consumers are not required to provide one. The major components of the consumer bureaureport are: •FICO Score•Length and performance of trade-lines[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.•Inquiries•Bankruptcy and public record information TFL uses the [***], a score [***]. TFL’s primary source for [***] is [***] in the United States. iii.Lease [***] System The advantages of using [***] and grades in lending include consistency, a quick turnaround, and uniform risk assessment andmonitoring. [***] are [***] into [***] based on [***] and [***] the [***] into [***] as shown below. [***] iv.Unscored Applications An unscored credit file signifies that there is not enough information available to compute a statistically-valid credit score or that therewas no credit bureau record found. Applicants without a FICO score will be considered but supplemental documentation will likely berequired including but not limited to: proof of income, proof of assets, and/or proof of home ownership and/or a higher down paymentto mitigate a lack of established credit history. Unscored applications may occur when a customer is new to the country, when theyhave not used credit actively in for many years, or when the applicant is a business. v.Credit Analysis A thorough credit analysis covers all the information provided on the credit application, vehicle pricing, and the credit bureau report. Inaddition, there may be discussions with the applicant regarding, but not limited to, verification of income and residence, contactnumbers and references where appropriate. The following attributes should be considered [***] during the decisioning process. Ability[***] Stability[***] Credit History[***] Deal Structure[***] vi.Adverse Action Reasons The LOS displays the designated adverse action reasons or stipulations selected at the time the application is decisioned. Forconsistency and accuracy the credit department will check only the [***] reasons for the credit request denial or counter from the listbelow:[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. [***] The [***] is a critical, but not the only, component of sound, judgmental credit decisioning. F. Lending [***], Authority and Exceptions Lease Credit Approval Authority: [***] •Authority levels will be assigned based on experience and performance and represent the maximum an Underwriter ispermitted to approve•If multiple applicants, [***] is based on [***] of the [***]•Exceptions above these guidelines must be approved by [***] of [***]•In the absence of an entire Authority Level with nobody higher available (i.e. outside of normal working hours), the [***] inthe [***] may [***] the [***] Tesla customers often have unique and complex financial situations. Many are self- employed or have multiple sources of income andbank accounts. Some have relatively low true income but are still very high net-worth individuals (as is the case for some retirees). We[***] and [***]. Due to the fact that [***] is self-reported and is, therefore, inherently of varying quality (due to accidental or deliberate misstatement –both high and low), we [***] on [***] when possible to make a credit decision. [***] such as [***] are generally [***] than [***] and[***], both of which are calculated [***]. [***] capacity guidelines are as follows: [***] [***]% and [***]% will generally require additional support, but will be considered for approval if [***] indicate [***]. In manycases [***] may be required, but in order to provide [***] experience consistent with the Tesla brand, Underwriters operate with thegoal of identifying and documenting [***] while [***]. As part of this process, applications are reviewed for [***] supporting [***].This includes: [***] – [***]. It is the responsibility of the Underwriter to determine what is [***] in the context of a credit request. Allfindings will be well documented within the LOS. i.Unscored See above. ii.Commercial Leasing [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Commercial leases will be underwritten based on the strength of the commercial entity since there is no consumer co-buyer as there isin small business leases. General characteristics of companies that will be considered for a commercial lease include:[***] Commercial Applications will be evaluated on the following criteria and compared to the industry average as reported by [***]:[***] Supplemental information may be requested and will be considered if provided such as trade references and bank ratings. iii.Auto Decisioning Automated decisioning serves to improve efficiency and maintain uniformity of decisions across applications. Automated decisioninghas been set up within TFL’s LOS. The logic generally checks the same variables evaluated in judgmental credit decisions made by alive underwriter. It is important to note that auto approvals eliminate the need for manual review of the strongest segment of applications. This allowsUnderwriters to spend more time working on and investigating the remaining deals requiring a judgmental credit decision. Auto decisioning is maintained by TFL’s LOS System Administrator and will be reviewed periodically to ensure decisions areconsistent with the Credit Policy. Accordingly, the System Administrator may update and adjust the logic, with authorization fromTFL’s President, to remain in line with business needs while remaining compliant with the Credit Policy and lending regulations. Auto Approval Logic: [***] Auto Decline Logic: [***] In case of a joint consumer application, [***] must be [***] or [***] to result in an automated decision.iv.High Credit Risk Applications All credit applications with [***] are generally considered high risk and may require the following investigations:•Proof of Employment•Proof of Income/Assets•Proof of Residence•Personal Cell Number•References [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. v.Potential Skip/Fraud Applications Fraud detection is a challenging and rapidly changing phenomenon in lending businesses that requires an agile and measured response.To minimize the approval of potential fraudulent and skip hazards, the Underwriter must perform a careful examination of any creditapplication that often indicate one or more of the following characteristics:•Unverifiable, unsubstantiated, and questionable information•Aliases commonly used and reversed•References with incomplete information•Short time in residence and employment•Inconsistencies or facts not adding up to the overall application profile Proper diligence should be used in analyzing the above factors in compliance with all applicable laws. vi.Down Payment and Trade-ins A down payment serves to improve TFL’s equity position in the vehicle, lower the applicant debt and payment to income ratios andincreases the applicant’s vested interest in the transaction. There are no mandatory down payment requirements other than the depositsfor ordering the vehicle and for the leasing program. Security deposits are not currently required in the leasing program. However, thecredit decision may include a stipulation of additional down payment to qualify the customer for the lease. A net negative down payment exists when the value of the trade-in or upfront tax liability adds to the capitalized cost of the leasedvehicle and there is not an adequate cash down payment to offset the amount. When this condition exists, the Underwriter mustevaluate the potential impact to TFL’s equity position.vii.Exception Authority and Process TFL may consider applications from borrowers whose credit profile does not fit within the provisions of this lending policy on a caseby case basis. Any exception to this policy must be for the clear benefit of TFL, meet the standards for review and approval ofexception leases established by this policy, and be approved by [***] and documented in the LOS. A written justification that clearlysets forth all the relevant credit factors that support the underwriting decision is needed to support the application approval. Additionally, it is the responsibility of the risk department to:•Monitor compliance with this policy,•Track the aggregate level of exceptions to help detect shifts in the risk characteristics of that element(s) within the lendingportfolio, and•Regularly analyze aggregate exception levels and report them to Senior Management. An excessive volume or a pattern ofexceptions may signal an unintended or unwarranted relaxation of TFL’s underwriting standards. When viewed individually, underwriting exceptions may not appear to increase risk significantly. However, when aggregated, evenwell mitigated exceptions increase portfolio risk to TFL, especially under adverse business and economic conditions. When higher riskapprovals are made on an exception basis from sound and normal underwriting policies, it is policy to make them only in limitedamounts and only when robust risk management practices are in place to manage and control the higher risk. Exceptions are [***] andwill [***] based on [***]. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Applicants with [***] present a significant default risk. TFL will consider applicants with [***] with [***], and strong supportingevidence that [***]. Exceptions may be made if the applicant [***]. Adequate documentation to support such an approval is requiredwhich should include a direct in depth conversation with the applicant to gather all the material facts. G. Fair Lending and Regulatory Compliancei.General Policy StatementIt is TFL’s policy to follow sound lending practices in letter and spirit to comply with applicable federal, state, and local laws. TheCredit department will be trained and required to comply with all applicable regulations at the federal, state, and local level. In regardsto Fair Lending, we will not discriminate in our treatment of any credit applications with respect to the following prohibited basis: •Race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract);•Because all or part of the applicant’s income derives from any public assistance program; or•Because the applicant has in good faith exercised any right under the ConsumerProtection Act. In addition to Fair Lending, the following regulations generally apply to TFL’s leasing activities: •Consumer Leasing Act (Reg. M)•FCRA and Adverse Action Notice•OFAC•Red Flag / ID Theft•California Credit Score Disclosure•Information Security (Saleguards Rule)•Service Providers / Vendor Management In accordance with the Fair Lending program and other regulatory compliance, it is the company’s policy to: •Maintain up to date regulatory policy statements,•Perform and document periodic training for all employees involved with any aspect of the lending transactions,•Perform ongoing monitoring for compliance with regulatory policies, procedures and practices,•Conduct a regular assessment of the marketing of leasing products, and•Perform meaningful oversight of compliance by Senior Management. ii.Applicant Notification Letters The credit department will issue an adverse action notice within 30 days of the decision on each application that is declined orconditionally approved. The LOS generates the adverse action letter which informs the applicant’s rights under law including the rightto obtain specific adverse action reasons by writing to us within 30 days. In addition, all California applicants will receive the California Credit Score Disclosure Notice indicating the credit score, the source ofthat score, and information about where their score falls with respect to other consumers.[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.iii.Audit Policy The business activities of Tesla Finance are subject to periodic audits in accordance with Tesla Inc. Audit Committee rules and riskassessment results. This review may cover all leases or include a sample over a predetermined period, current, past due and liquidatedleases. In addition, a sample of smaller leases may also be examined to ensure compliance and flag major departures from establishedpolicy and procedure. iv.Records Retention The following documents will be held for a period not less than required by relevant statutes in electronic format, where possible:•Original credit application,•Credit report obtained from a credit reporting agency,•Copies of all legal notices sent to the applicant,•Any written complaint filed by the applicant alleging a violation of the law by TFL,•Original copy of manufacturer’s invoice, and•Copy of the lease sales contract enforceable in the jurisdiction where the collateral is located, whereby TFL can acquire titleand repossess the collateral property in the event of a default. H. Origination Risk Metrics Timely tracking and reporting of appropriate metrics are key to effective risk and performance management. The following metrics willbe tracked for appropriate actions [***]: [***] 3. COLLECTIONS AND SERVICING POLICY A. General Policy StatementThe performance of a lending portfolio is subject to individual, maturation, seasonal, economic,and collateral factors. The role of the collections function is to satisfactorily resolve the delinquency situation taking into account thecustomer’s situation, TFL’s risk exposure, and overall portfolio performance goals. At a high level the primary collections goals are to: •Provide outstanding customer service in line with Tesla brand values and expectations,•Minimize collection costs by identifying the most effective ways to allocate resources,•Increase collections effectiveness by assessing the cost versus benefit at the lease level,•Increase total recovered dollars by optimizing early to late stage collection activities while determining the ideal contactmethod and collection strategy, all at the lease level, and•Determine the ideal repossession and recovery strategy B. Loss Mitigation Department Roles and Responsibilities To successfully achieve each of the above goals, the Loss Mitigation department at TFL’s servicer and TFL’s internal customer serviceteam maintain timely, professional, compliant, and effective collection practices. The importance of immediate collection follow-up ona delinquent account cannot be over-emphasized. Account profitability is affected by[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.more than the potential loss due to repossession. The use of a servicing partner is an important complement to the lease originationfunction. Employing the expertise of a well-established servicer relieves the company of the many details of this function and caneffectively minimize losses, provide outstanding customer service, and reduce the costs of collection. Daily collections efforts are performed by the servicer’s Loss Mitigation Team and managed by the Customer Service and OperationsManager at Tesla. The Loss Mitigation Team is currently comprised of trained collection representatives, each of whom is trained incustomer service, client interaction anDd collections. Leads or Supervisors oversee the daily actions of up to five representatives, with amanager for every two or three leads/supervisors. Each of these functional managers has been at the servicer for more than 10 years,and has worked with the Tesla Roadster lease program from inception. Tesla’s Customer Service and Operations Manager maintains frequent (often daily) interaction with the servicer’s Loss MitigationManager and is kept abreast of lease level collection efforts through shared reporting and bi-monthly review. The CSO Managerremains the servicer’s primary point of contact for escalations that require expedient treatment. While the CSO Manager acts as theservicer’s primary escalation point, it is the CSO Manager’s responsibility to report abnormal risk exposure to the President of TFL.C. Collections Treatment Strategy and Plan The timing and intensity of collections activity is determined by the delinquency stage, risk exposure, and the customers’ ability andwillingness to fulfill the agreed upon course of action. A combination of relationship building, customer service, and assertivecollection skills are critical in an effective collector. The collections process will generally escalate from customer service (how can wehelp?) towards a front-line collections (when can we expect payment?) approach as the customer’s delinquency and risk of defaultincreases. All past due lease accounts are evaluated on their payment due date and assigned a specific collection strategy which includes paymentnotices, emails and telephone follow- up calls as part of the delinquency lifecycle activity stream. i.Initial Delinquency/Customer Service Call Unless the situation requires it, the [***] an account would be worked is [***]. At this point, Tesla’s customer service team willperform courtesy calls and emails to ensure billing related questions (the most common reason for early stage delinquency) areresolved. ii.Formal Daily Collection Activity Once account becomes [***], Tesla will turn over formal collections activity to our servicer’s Loss Mitigation Team. The team iscomposed of representatives assigned the responsibility of handling outbound and inbound calls. Representatives handling outboundcalls review collection lists and place calls to delinquent accounts. Representatives should attempt to address customer delinquency ona one-call resolution basis. The Work List sequences accounts for follow-up by the associate based upon the review date and payment due date. This list displaysthe first ‘available’ account on the collection list and requires the associate to work the account before moving on to the next accountrequiring collection activity. [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.An ’available’ account is one that:•Is scheduled to be worked that day•Is not being worked by another associate•Has not been worked that day Once an account has been worked, the representative must assign a specific activity code describing the collection effort, and leavedetailed notes of the collection activity in the customer’s account. Tesla’s customer service team has viewing access to account notesand is prepared to pick up where the servicer’s team left off should the customer contact a Tesla representative regarding payment. iii.Collections Risk Strategy Given the size, quality and expected performance of our portfolio, all delinquent accounts are [***] on [***]. [***] customers will behandled differently than those [***] of the [***]. Customized data driven optimization strategies at the account level incorporating[***] will be deployed over time. Overall, the risk approach to collections is based on a matrix of risk/exposure levels and delinquencystage. [***] [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.[***] Delinquency The low end of the risk spectrum is handled through a [***] or [***] progressing to and culminating in [***] approach. iv.Delinquency Lifecycle Activity The following sequence of activities will drive the collection efforts throughout the delinquency lifecycle. [***] A late fee of 5% of the contractual base monthly payment (or as limited by state laws) of any amount not receive 10 days after the duedate will be collected. [***] v.End of Term Payment Collections vi.End of Term Fees Collections [***] Collections Authority and Exceptions [***] Contact will be performed by Tesla’s customer service and operations team. Once [***], the servicer’s Loss Mitigation Team willbegin collections activity unless an account has been flagged as “DNC – Do Not Contact” by the Tesla team. An account is flaggedDNC if an ACH or other payment issue is the process of being resolved. Delinquency collections activities are performed by the servicer. The CSO Manager stays in frequent communication with the LossMitigation Manager to ensure the Collections Policy is adhered to, and that customers are receiving TFL’s desired brand and customerexperience. In unique situations where collections activity may deviate from the standard collections timeline, the CSO Manager may authorizecollection notices to be mailed in advance or after normal policy guidelines. The CSO Manager may [***] after presenting the paymentplans to [***]. In any event where credit loss may occur, the CSO Manager will provide full account details to the President of TFL. Together, thePresident of TFL and CSO Manager will plan the optimal recovery strategy. The recovery strategy will aim to minimize loss, protect theasset/equipment, and maintain positive customer experience.vii.Customer Contact and Documentation Policy All forms of communication (telephone, general correspondence, email) between TFL, the servicer and customers should be performedin an appropriate professional manner. Representatives are not to demonstrate conduct that is annoying, illegal, or harassing. Representatives must utilize effective and professional telephone skills when contacting customers. When speaking with the customer,representatives must identify themselves and state they are calling on behalf of Tesla Finance. Representatives must not indicate they are calling on behalf of Tesla Finance when speaking to a party other than the debtor or whenleaving voice messages. Representatives should communicate in a clear, confident and polite manner and treat all customers fairly, courteously and equitably.Upon assuming control of the conversation, representatives should employ the following guidelines:[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. •Determine the customer's financial situation.•Demonstrate understanding by allowing the customer the opportunity to propose solutions to the delinquency. Customers aremore likely to follow through on their own proposals or promises rather than those suggested by the representative.•Explore viable short-term and long-term solutions to the delinquency.•Offer the customer satisfactory payment arrangements to remit the full amount due, including late charges.*•Obtain a specific and detailed payment commitment from the customer for bringing the account current.•Emphasize to the customer the importance of keeping the payment arrangements.•Follow-up on promises or commitments to pay on agreed upon dates.•Promote positive customer relations. *Once payment arrangements are obtained, the loss mitigation representative should ensure the appropriate system entry notes andupdate tasks are accomplished. viii. Telephone Collection Policy TFL collection procedures emphasize the use of the telephone as the primary means for contacting delinquent customers. Telephonecontact is timely and often provides for immediate results. When conducting telephone collections, it is policy to treat all delinquentcustomers in a fair manner and comply with all regulations. A delinquent customer is entitled to receive helpful assistance in acourteous manner. Objectives: The representative's main objectives in contacting the customer should be: •Verify pertinent customer information such as current home address, home and/or business telephone number, andemployment status.•Obtain the reason(s) for delinquency.•Obtain a firm commitment from the customer on payment arrangements for bringing the account current and keeping theaccount current until account liquidation. It is essential that the reason for delinquency is determined, notated on the system, and the account delinquency is resolved on theinitial customer contact (once and done). Basic Guidelines for Effective Customer Interaction Each customer has a reason(s) for delinquency; therefore, the representative must evaluate and work each account on an individualbasis. The representative must maintain a positive and professional approach in resolving the delinquency situation of each account.The basic guidelines are as follows: •Focus on Specifics - The representative must focus on the specifics of the delinquency situation. A customer may overreact tothe most business like collection contact by raising his/her voice or by using profanity. Representatives should not take these actionspersonally and never reply in kind.•Build and Maintain Self-Confidence and Self-Esteem – Representatives must emphasize the benefits of keeping the account ingood standing, without engaging in any threats, implied or otherwise.•Build and Maintain a Positive, Constructive Relationship – Representatives must advise the customer of their intention to helpresolve the situation. D. Bankruptcy Handling Filing of the bankruptcy petition requires (with limited exceptions) TFL to cease or "stay" further action to collect their[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.claims. Once filed, the petition prohibits actions to accelerate, set-off, enforce a statutory, or otherwise collect the debt. The petitionalso prohibits post- bankruptcy contacts with the lessee (i.e., "dunning" letters.) The stay remains in effect until the bankruptcy courtreleases the lessee’s property from the estate, dismisses the bankruptcy case, and approves a creditor's request for termination of thestay or the lessee obtains or is denied a discharge. E. Repossession and Reinstatement Unless [***], the repossession of a leased vehicle [***] action considered to resolve the situation. However, repo assignment shouldhappen [***]. All repo assignments must be approved by the President of TFL. TFL will comply with all applicable state level lawsregarding cure notices, reporting delinquency to bureaus, and right to reinstate. Repossessed vehicles may be sold at public auction toreduce TFL’s exposure to loss. The President of TFL will decide how repossessed equipment is sold.F.Fair Debt Collection and Regulatory Compliance General Policy Statement It is TFL’s policy to follow sound collections practices in letter and spirit to comply with applicable federal and state laws. Thecollections department will be trained and required to comply with all applicable regulations at the federal, state, and local level. Wewill follow the provisions and intent of the Fair Debt Collection Practices Act (FDCPA) to: •Eliminate the use of abusive, deceptive, and unfair debt collection practices by debt collectors,•To ensure that those reputable debt collectors who refrain from using abusive debt collection practices are not competitivelydis-advantaged, and•Promote consistent state action to protect consumers against debt collection abuses. The FDCPA defines activities that are harassing, deceptive, or otherwise unacceptable. The representatives are not permitted to engagein any conduct that would mislead, harass, or abuse any person. Some examples of such conduct include: •The use or threat of violence, or other criminal means to harm the customer, the customer's reputation, or the customer'sproperty.•Collecting any amount unless authorized by the contract or applicable law.•The use of obscene or profane language, or language which the receiving party could consider abusive.•Calling outside the hours or frequency prescribed by law. Engaging the customer or any third person (to the extent otherwisepermitted) in telephone conversation repeatedly or continuously.•Continuous attempts to contact a customer through the customer's employer.•Failing to reveal to the customer that the purpose of the call is to collect a debt.•Threatening to initiate a specific type of collection action against the customer that cannot be taken legally or for which there isno intent to take the action.•Implying that non-payment will result in arrest, imprisonment, or garnishment of wages or otherwise falsely representing theamount that may be collected or the manner in which collection may be enforced.•Falsely representing the outstanding balance amount or nature or status of an account, or the penalties or late charges that maybe assessed because of non- payment.•Utilizing deceptive means or false representations in an attempt to collect an account or to obtain information concerning thecustomer.•Placing collect telephone calls to the customer.•Attempting to shame or disgrace a customer by falsely representing or implying that the customer has committed a crime oracted disgracefully.•Use of any business, company, or organization names other than that of Tesla Finance LLCand Tesla Lease Trust.[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.•Discussing the delinquency status of an account with any person other than the customer, unless specifically authorized by thecustomer in writing.•Deceptive claims regarding debt payments and impact on credit reports, scores, and credit worthiness. In addition, we will fully comply with the following regulations that generally apply to TFL’s servicing and collection activities: •EFTA•GLBA (Privacy Rule and Notice, Reg. P)•SCRA•Bankruptcy Laws•Information Security (Safeguards Rule)•Service Providers / Vendor Management•Customer Complaint Management i.Training All representatives involved in servicing and collections are trained and certified on the Fair Debt Collection Practices Act andadditional compliance training is done by the servicer’s Loss Mitigation Manager. ii.Customer Letters The Privacy Notice is mailed with the first statement to the lease customer and annually thereafter. Additional letters sent out during theservicing and collections process may include collection letters, repossession notices, and end of lease notices. iii.Audit Policy TFL’s business activities are subject to periodic audits in accordance with Tesla Inc. Audit Committee rules and risk assessment results.This review may cover all leases or include a sample over a predetermined period, current and past due and liquidated leases. Inaddition, a sample of smaller leases may also be examined to ensure compliance and flag major departure from established policy andprocedures. iv.Records Retention The following documents and information will be held for a period not less than required by statutes in electronic format, wherepossible:•Refresh credit report obtained from a credit reporting agency,•Other supporting information obtained during the collections process,•Copies of all legal and collection notices sent to the customer,•Any written complaint filed by the applicant alleging a violation of the law by TFL,•Copy of the lease sales contract, incl. the security agreement enforceable in the jurisdiction where the collateral is located,whereby TFL can acquire title and repossess the collateral property in the event of a default. G. Charge-off Policy The general policy is to charge-off [***]. The following conditions should generally result in a charge-off: [***][***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. H. Lease Extension Policy Customers interested in extending their lease may extend for a maximum of [***] beyond original contract maturity date and maycomplete the extension form within [***] of original maturity date. To qualify for extension, the lease account must be eligible,including that it must be current on payments. Once an account is determined to be eligible for extension, an extension form is signedby the lessee(s) and TFL. An account is not formally extended unless a completed extension form is accepted at TFL’s discretion. I.Lease Repurchase Policy Lease repurchases by Tesla, Inc. may occur if the lease customer experiences reliability issues with the vehicle. The lease repurchasewill be processed differently based on vehicle title status. In all lease repurchase situations, the lessee(s) will sign a release of liabilityand odometer disclosure form. J.Insurance Tracking •Proof of insurance is a funding requirement, meaning leases are not booked until insurance is provided (either current vehicleinsurance, or insurance listing the new Tesla vehicle).•If the servicer’s insurance tracking team does not receive complete insurance information [***], Tesla’s CSO lead will sendeach customer an email requesting a copy of their insurance card, listing the Tesla leased vehicle.•If Tesla or the servicer receives notification that the insurance policy has been changed, cancelled, or altered, the servicerreaches out to the insurance company for updated policy details.•If the servicer is unable to reach the insurance company, the CSO Lead emails the lessees directly for policy information.•If the CSO Lead is unable to reach the lessee over email, the servicer contacts the lessee by phone to resolve. K. Collections and Portfolio Management Metrics Timely tracking and reporting of appropriate metrics are key to effective risk and performance management. The following metrics willbe tracked for appropriate actions [***] as the portfolio grows and performance evolves:[***] [***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 8to Loan and Security Agreement Commitments of Lenders Committed LenderCommitmentDeutsche Bank AG, New York Branch$350,000,000.00Citibank, N.A.$325,000,000.00Royal Bank of Canada$157,500,000.00Credit Suisse AG, Cayman Islands Branch$135,000,000.00Barclays Bank PLC$132,500,000.00Total:$1,100,000,000.00 Schedule 8-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule 9to Loan and Security Agreement Short-Term Note Rate The Short-Term Note Rate applicable to each of CAFCO, LLC, CHARTA, LLC, CIESCO, LLC, CRC Funding, LLC for anyInterest Period (or portion thereof), shall be determined as follows: (a) to the extent that such Conduit Lender funds its Percentage ofthe Loan Balance during such Interest Period with Short-Term Notes, the per annum rate equal to the weighted average of the rates atwhich all Short-Term Notes issued by such Conduit Lender to fund its Percentage of the Loan Balance during such Interest Periodwere sold, which rates include all dealer commissions and other costs of issuing such Short-Term Notes, whether any such Short-TermNotes were specifically issued to fund its Percentage of the Loan Balance or are allocated, in whole or in part, to such funding, and (b)otherwise, the Bank Interest Rate. The Short-Term Note Rate applicable to GIFS Capital Company LLC means, for any day during any Interest Period, the per annumrate equivalent to (a) the rate (expressed as a percentage and an interest yield equivalent and calculated on the basis of a 360-day year)or, if more than one rate, the weighted average thereof, paid or payable by such Conduit Lender from time to time as interest on orotherwise in respect of the Short-Term Notes issued by such Conduit Lender that are allocated, in whole or in part, by such Conduit’sLender’s agent to fund the purchase or maintenance of the Loans outstanding made by such Conduit Lender (and which may also, inthe case of a pool-funded conduit Conduit Lender, be allocated in part to the funding of other assets of such Conduit Lender and whichShort-Term Notes need not mature on the last day of any Interest Period) during such Interest Period as determined by such ConduitLender’s agent, which rates shall reflect and give effect to (i) certain documentation and transaction costs (including, without limitation,dealer and placement agent commissions, and incremental carrying costs incurred with respect to Short-Term Notes maturing on datesother than those on which corresponding funds are received by such Conduit Lender) associated with the issuance of the ConduitLender’s Short-Term Notes, and (ii) other borrowings by such Conduit Lender, including borrowings to fund small or odd dollaramounts that are not easily accommodated in the commercial paper market, solely to the extent such amounts are allocated, in whole orin part, by the Conduit Lender’s agent to fund such Conduit Lender’s purchase or maintenance of the Loans outstanding made by suchConduit Lender during such Interest Period; provided, that, if any component of such rate is a discount rate, in calculating theapplicable “Short-Term Note Rate” for such day, such Conduit Lender’s agent shall for such component use the rate resulting fromconverting such discount rate to an interest bearing equivalent rate per annum. The Short-Term Note Rate applicable to Salisbury Receivables Company LLC shall mean, for each day during an Interest Period,the greater of (x) zero and (y) the weighted average rate at which interest or discount is accruing on or in respect of the Short-TermNotes with respect to such Conduit Lender allocated, in whole or in part, by the related Agent, to fund the purchase or maintenance ofsuch portion of such Loan Balance (including, without limitation, any interest attributable to the commissions of placement agents anddealers in respect of such Short-Term Notes and any costs associated with funding small or odd-lot amounts, to the extent that suchcommissions or costs are allocated, in whole or in part, to such Short-Term Notes by such Agent); provided, that, notwithstandinganything herein to the contrary, the Short-Term Note Rate with respect to Salisbury Receivables Company LLC shall, at the election ofthe related Agent, be determined by such Agent by application of this definition of Short-Term Note Rate with the words “short-termpromissory notes of Sheffield Receivables Company LLC” replacing the words “Short-Term Notes with respect to such ConduitLender” or “such Short-Term Notes” wherever they appear herein. Schedule 8-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Ato Loan and Security Agreement Form of Loan RequestLoan Request[DATE]To: Deutsche Bank AG, New York Branch,as Administrative Agent60 Wall Street, 5th FloorNew York, New York 10005Attention: Katherine Bologna VIA EMAIL, FACSIMILE AND OVERNIGHT COURIER Re:Loan and Security Agreement (Warehouse SUBI Certificate) dated as of December 27, 2018 (as amended,supplemented or otherwise modified and in effect from time to time, the “Agreement”), among LML 2018Warehouse SPV, LLC, as Borrower (the “Borrower”), Tesla Finance LLC (“TFL”), the Lenders and Group Agentsparty thereto and Deutsche Bank AG, New York Branch, as Administrative Agent (“Administrative Agent”)Ladies and Gentlemen:This is a Loan Request delivered pursuant to the Agreement. Capitalized terms used in this Loan Request but not otherwisedefined herein shall have the respective meanings assigned to such terms in the Agreement.The Borrower hereby requests that the Lenders make Loans on [__________] in the aggregate principal amount of$[_________] [if the Loan Increase Date is a Warehouse SUBI Lease Allocation Date, insert: and that a proposed allocation be madeto the Warehouse SUBI of Leases and related Leased Vehicles with an aggregate Securitization Value of $[__________] as of theapplicable Cut-Off Date].The Borrower hereby requests that the proceeds of the loan be wire transferred to the following account[________________].Attached hereto are (i) a completed worksheet which calculates the amount of the Loans, its impact on the Loan Balance, theAvailable Facility Limit (on a pro forma basis as of the date hereof, after giving effect to such Loans) and the relationship of theincreased Loan Balance to the Maximum Loan Balance, after giving effect to the allocation of the Lease Pool, if any, to the WarehouseSUBI on the Loan Increase Date (Attachment A), (ii) [if the Loan Increase Date is a Warehouse SUBI Lease Allocation Date,insert: an Allocation Notice with respect to the proposed allocation to the Warehouse SUBI of Leases and related Leased Vehicles onthe Loan Increase Date] and [(iii)] in the copy of this Notice delivered to the Lender, a Pool Cut Report as to all Leases included in theWarehouse SUBI (including, without limitation, the Lease Pool (if any) proposed to be allocated to the Warehouse SUBI on the LoanIncrease Date) (Attachment B).A-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.The Borrower hereby certifies that each of the conditions precedent to the Loan Increase herein contemplated set forth inSections 2.01(b) and 5.02 of the Agreement shall be satisfied as of the Loan Increase Date.IN WITNESS WHEREOF, the Borrower has caused this Loan Request to be executed and delivered by its duly authorizedofficer as of the date first above written.Very truly yours,LML 2018 WAREHOUSE SPV, LLC By: Name: Title: A-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Bto Loan and Security Agreement Form of Control AgreementThis Control Agreement (as amended, supplemented or otherwise modified and in effect from time to time, the“Agreement”), dated as of [_________], is among LML 2018 Warehouse SPV, LLC (the “Borrower”), Tesla Finance LLC (the“Servicer”), Deutsche Bank AG, New York Branch, as administrative agent (the “Secured Party”), and [___________], as securitiesintermediary (the “Securities Intermediary”). Except as otherwise defined herein, capitalized terms used herein shall have therespective meanings assigned to such terms in the Loan and Security Agreement (defined below) and the interpretive rules thereof shallapply to this Agreement.RECITALSWHEREAS, pursuant to the Loan and Security Agreement, the Borrower has granted to the Secured Party a securityinterest in investment property consisting of the Securities Accounts, related Security Entitlements and the Financial Assets and otherinvestment property from time to time included therein; andWHEREAS, the parties hereto desire that the security interests of the Secured Party in the Securities Accounts be afirst priority security interest perfected by “control” pursuant to Articles 8 and 9 of the UCC.NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto agree as follows:ARTICLE IDEFINITIONSSection 1.01.General Definitions. Except as otherwise specified herein or as the context may otherwise require, thefollowing terms have the respective meanings set forth below for all purposes of this Agreement.“Agreement” has the meaning set forth in the Preamble.“Bankruptcy Code” means the United States Bankruptcy Code, Title 11 United States Code.“Borrower” has the meaning set forth in the Preamble.“Entitlement Holder” means, with respect to any Financial Asset, a Person identified in the records of the SecuritiesIntermediary as the Person having a Security Entitlement against the Securities Intermediary with respect to such Financial Asset.“Entitlement Order” means a notification directing the Securities Intermediary to transfer or redeem a FinancialAsset.“Financial Asset” has the meaning specified in Section 8-102(a)(9) of the UCC.B-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.“Loan and Security Agreement” means the Loan and Security Agreement (Warehouse SUBI Certificate) dated as ofDecember 27, 2018 (as amended, supplemented or otherwise modified and in effect from time to time), among the Borrower, TeslaFinance LLC, the Lenders and the Group Agents parties thereto from time to time, and the Administrative Agent described therein.“Person” means any legal person, including any individual, corporation, partnership, joint venture, association,limited liability company, joint stock company, trust, business trust, bank, trust company, estate (including any beneficiaries thereof),unincorporated organization or government or any agency or political subdivision thereof.“Secured Party” has the meaning set forth in the Preamble.“Securities Accounts” means the Warehouse SUBI Collection Account and the Warehouse SUBI Reserve Account,individually or collectively, as the context requires or permits.“Securities Intermediary” has the meaning set forth in the Preamble.“Security Entitlement” means the rights and property interest of an Entitlement Holder with respect to a FinancialAsset, as specified in Part 5 of Article 8 of the UCC.“Servicer” has the meaning set forth in the Preamble.“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York.“Warehouse SUBI Collection Account” means account number [***] in the name “Warehouse SUBI CollectionAccount of LML 2018 Warehouse SPV, LLC for the benefit of Deutsche Bank AG, New York Branch, as Administrative Agent”established with the Securities Intermediary pursuant to the Loan and Security Agreement, together with any successor accountsestablished pursuant to the Loan and Security Agreement.“Warehouse SUBI Reserve Account” means account number [***] in the name “Reserve Account of LML 2018Warehouse SPV, LLC for the benefit of Deutsche Bank AG, New York Branch, as Administrative Agent” established with theSecurities Intermediary pursuant to the Loan and Security Agreement, together with any successor accounts established pursuant to theLoan and Security Agreement.Section 1.02.Incorporation of UCC by Reference. Except as otherwise specified herein or as the context mayotherwise require, all terms used in this Agreement not otherwise defined herein which are defined in Article 1, 8 or 9 of the UCC shallhave the respective meanings assigned to such terms in such Article the UCC.ARTICLE IIESTABLISHMENT OF CONTROL OVER SECURITIES ACCOUNTSection 2.01.Establishment of Securities Account. The Securities Intermediary hereby confirms that (i) the SecuritiesIntermediary has established the Securities Accounts specifically referenced in the definition thereof, (ii) each of the SecuritiesAccounts is an account to which Financial Assets are or may be credited, (iii) the Securities Intermediary shall, subject to the terms ofthis Agreement, treat the Secured Party as entitled to exercise the rights that comprise any Financial Asset credited to any SecuritiesAccount, (iv) all property delivered to the Securities Intermediary by or on behalf of the Borrower, the Servicer or the Secured Partyfor deposit to any Securities Account will promptly be credited to such Securities Account and (v) all securities or other propertyB-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.underlying any Financial Assets credited to any Securities Account shall be registered in the name of the Securities Intermediary,endorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the SecuritiesIntermediary and in no case will any Financial Asset credited to any Securities Account be registered in the name of the Borrower orthe Servicer, payable to the order of the Borrower or the Servicer or specially endorsed to the Borrower or the Servicer, except to theextent the foregoing have been specially endorsed to the Securities Intermediary or in blank.Section 2.02.“Financial Assets” Election. The Securities Intermediary hereby agrees that each item of property(whether investment property, financial asset, security, instrument or cash) credited to a Securities Account shall be treated as a“financial asset” within the meaning of Section 8-102(a)(9) of the UCC.Section 2.03.Entitlement Orders. If at any time the Securities Intermediary shall receive an Entitlement Order from theSecured Party with respect to any Securities Account (or the Financial Assets credited thereto), the Securities Intermediary shallcomply with such Entitlement Order without further consent by the Borrower, the Servicer or any other Person. Without limiting thegenerality of the foregoing, if the Secured Party notifies the Securities Intermediary in writing that the Secured Party shall exerciseexclusive control over any Securities Account (and any Financial Assets credited thereto) (such notice, which shall be substantially inthe form of Attachment A attached hereto, “Notice of Exclusive Control”), the Securities Intermediary shall cease (i) complying withEntitlement Orders or other directions relating to such Securities Account (or the Financial Assets credited thereto) originated by theBorrower, the Servicer or any other Person other than the Secured Party and (ii) distributing to the Borrower, the Servicer or anyPerson other than the Secured Party interest, dividends or other amounts received by the Securities Intermediary in respect of anyFinancial Asset or other property credited to such Securities Account (and, instead, shall (at the direction of the Secured Party fromtime to time) retain such interest, dividends and other amounts in such Securities Account or distribute same to, or at the direction of,the Secured Party). The Securities Intermediary shall provide to the Borrower copies of Entitlement Orders received from the SecuredParty. Except as otherwise provided in this Section 2.03, the Servicer may give Entitlement Orders to the Securities Intermediaryrelating to the redemption or transfer of Financial Assets in the Securities Accounts. Such Entitlement Orders shall be in accordancewith the information contained in the related Settlement Statement.Section 2.04.Waiver of Lien; Waiver of Set-Off. In the event that the Securities Intermediary has or subsequentlyobtains by agreement, operation of law or otherwise a security interest in any Securities Account or any Security Entitlement orFinancial Asset credited thereto, the Securities Intermediary hereby waives such security interest (except as provided in the nextsentence). The Financial Assets and other items deposited to any Securities Account will not be subject to deduction, set-off, banker’slien or any other right in favor of any Person or entity other than the Secured Party (except that the Securities Intermediary may set offagainst amounts on deposit in the Securities Accounts (i) all amounts due to it in respect of its customary fees and expenses for theroutine maintenance and operation of the Securities Accounts, and (ii) the face amount of any checks that have been credited to anysuch Securities Account, but are subsequently returned unpaid because of uncollected or insufficient funds).Section 2.05.Notice of Adverse Claims. Except for the claims and interests of the Secured Party and the Borrower inthe Securities Accounts, the Securities Intermediary does not know of any claim to, or interest in, any Securities Account or in anyFinancial Asset credited thereto. If any Person asserts any lien, encumbrance or adverse claim (including any writ, garnishment,judgment, warrant of attachment, execution or similar process) against any Securities Account or in any Financial Asset carried therein,the Securities Intermediary will promptly notify the Secured Party and the Borrower thereof.B-3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.ARTICLE IIIREPRESENTATIONS, WARRANTIES ANDCOVENANTS OF THE SECURITIES INTERMEDIARYSection 3.01.Representations, Warranties and Covenants of the Securities Intermediary. The Securities Intermediaryhereby represents and warrants to the Secured Party, the Borrower and the Servicer, and covenants that: (a)The Securities Intermediary is a banking corporation duly organized, validly existing and in good standingunder the laws of [_________] and each other state where the nature of its business requires it to qualify,except to the extent that the failure to so qualify would not have a material adverse effect on the ability ofthe Securities Intermediary to perform its obligations under this Agreement. (b)Each Securities Account has been established as set forth in Section 2.01 and will be maintained in themanner set forth herein until termination of this Agreement. The Securities Intermediary shall not changethe name or account number of any Securities Account without the prior written consent of the SecuredParty. (c)No Financial Asset carried in any Securities Account is or will be registered in the name of the Borrower,payable to the order of the Borrower, or specially endorsed to the Borrower, except to the extent suchFinancial Asset has been endorsed to the Securities Intermediary or in blank. (d)This Agreement is the valid and legally binding obligation of the Securities Intermediary. (e)The Securities Intermediary has not entered into, and until the termination of this Agreement will not,without the prior written consent of the Borrower, the Servicer and the Secured Party, enter into, anyagreement pursuant to which it agrees to comply with Entitlement Orders of any Person other than theSecured Party with respect to each Securities Account. (f)The Securities Intermediary has not entered into, and until the termination of this Agreement will not,without the prior written consent of the Borrower, the Servicer and the Secured Party, enter into, any otheragreement with the Borrower the Servicer, the Secured Party or any other Person purporting to limit orcondition the obligation of the Securities Intermediary to comply with Entitlement Orders as set forth inSection 2.03. (g)If requested by the Secured Party, the Securities Intermediary will deliver to the Secured Party copies of allstatements and confirmations relating to the Securities Accounts (and the Financial Assets credited thereto),such delivery to be made at the same time as delivery to the Borrower or the Servicer.ARTICLE IVMISCELLANEOUSB-4[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Section 4.01.Choice of Law. This Agreement and the Securities Accounts shall be governed by the laws of the Stateof New York (without regard to its conflicts of law principles). Regardless of any provision in any other agreement, for purposes ofthe UCC, New York shall be deemed to be the Securities Intermediary’s location and the Securities Accounts (as well as the SecurityEntitlements related thereto) shall be governed by the laws of the State of New York.Section 4.02.Conflict with other Agreements. As of the date hereof, there are no other agreements entered intobetween the Securities Intermediary in such capacity and the Borrower with respect to any Securities Account. In the event of anyconflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms ofthis Agreement shall prevail.Section 4.03.Amendments. No amendment or modification of this Agreement or waiver of any right hereunder shallbe binding on any party hereto unless it is in writing and is signed by all of the parties hereto.Section 4.04.Successors. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, theparties hereto and their respective successors.Section 4.05.Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed tohave been duly given if personally delivered at or mailed by registered mail, return receipt requested, to, in the case of (i) the Borrower,at c/o Tesla, Inc., 3500 Deer Creek Road, Palo Alto, California 94304, Attention: General Counsel, facsimile no. (650) 523-4770,(ii) the Servicer, at c/o Tesla, Inc., 3500 Deer Creek Road, Palo Alto, California 94304, Attention: General Counsel, facsimile no.(650) 523-4770, (iii) the Secured Party, [__________], Attention: Asset Finance Group, telecopy no. [_________], and (iv) theSecurities Intermediary, [__________________, telecopy no. (___)__________] or as to any of such parties, at such other address asshall be designated by such party in a written notice to the other parties.Section 4.06.Termination. The rights and powers granted herein to the Secured Party have been granted in order toperfect its security interest in each Securities Account, are powers coupled with an interest and will neither be affected by thebankruptcy of the Borrower nor by the lapse of time. The obligations of the Securities Intermediary hereunder shall continue in effectwith respect to each Securities Account until the Secured Party has notified the Securities Intermediary in writing that its securityinterest under the Loan and Security Agreement has been terminated. Upon the joint written instruction of the Secured Party and theBorrower, the Securities Intermediary shall close a Securities Account and disburse as directed the balance of any assets therein.Section 4.07.Counterparts. This Agreement may be executed in any number of counterparts, all of which shallconstitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or morecounterparts.Section 4.08.No Petition. Each party hereto agrees, prior to the date which is one (1) year and one (1) day after thepayment in full of all indebtedness for borrowed money of the Borrower, not to acquiesce, petition or otherwise, directly or indirectly,invoke, or cause the Borrower to invoke, the process of any Official Body for the purpose of (a) commencing or sustaining a caseagainst Borrower, under any federal or state bankruptcy, insolvency or similar law (including the Bankruptcy Code), (b) appointing areceiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for the Borrower, or any substantial part of theproperty of the Borrower, or (c) ordering the winding up or liquidation of the affairs of the Borrower.B-5[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respectiveofficers as of the day and year first above written. TESLA FINANCE LLC,as Servicer By: Name: Title: LML 2018 WAREHOUSE SPV, LLC,as Borrower By: Name: Title: DEUTSCHE BANK AG, NEW YORK BRANCH, asAdministrative Agent, as Secured Party, By: Name: Title: [________________________],as Securities Intermediary By: Name: Title: B-6[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.ATTACHMENT AtoControl AgreementFORM OF NOTICE OF EXCLUSIVE CONTROL[ , ][BANK][ADDRESS]Re:Control AgreementLadies and Gentlemen:We hereby notify you that, in accordance with the provisions of the Loan and Security Agreement, dated as ofDecember 27, 2018 (as amended, supplemented or otherwise modified and in effect from time to time, the “Agreement”), among theBorrower, Tesla Finance LLC, the Lenders and the Group Agents parties thereto from time to time and the undersigned, asAdministrative Agent (“Administrative Agent”), we intend to exercise in the place and stead of the Borrower and the Servicer any andall rights in respect of or in connection with the Control Agreement dated [•], 20[•], among the Administrative Agent, the Borrower,the Servicer and you (the “Control Agreement”) and the [__________] Account.Capitalized terms used herein without definition shall have the respective meanings assigned to such terms in theControl Agreement. Very truly yours,DEUTSCHE BANK AG, NEW YORK BRANCH,as Administrative Agent By: Title: B-7[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Cto Loan and Security AgreementForm of Compliance CertificateCertificate of TreasurerI, the undersigned, Treasurer of LML 2018 Warehouse SPV, LLC (the “Borrower”) do hereby CERTIFY, pursuant toSection 6.01(a)(i) of the Loan and Security Agreement (Warehouse SUBI Certificate) dated as of December 27, 2018 (as amended,supplemented or otherwise modified and in effect from time to time, the “Loan and Security Agreement”) among the Borrower, TFL,the Lenders and Group Agents party thereto, and Deutsche Bank AG, New York Branch, as Administrative Agent, that on and as ofthe date hereof, there exists no Default, Event of Default or, to my knowledge, Servicer Default.Capitalized terms not otherwise defined herein have the respective meanings assigned to such terms in the Loan and SecurityAgreement.IN WITNESS WHEREOF, the undersigned has executed this Certificate this day of , 20 . LML 2018 WAREHOUSE SPV, LLC By: Name: Title: Treasurer C-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Dto Loan and Security AgreementForm of Notice of Warehouse SUBI Lease AllocationNotice of Warehouse SUBI Lease Allocation[DATE] Deutsche Bank AG, New York Branch,as Administrative Agent60 Wall Street, 5th FloorNew York, New York 10005Attention: Katherine Bologna VIA EMAIL, FACSIMILE AND OVERNIGHT COURIER Re:Loan and Security Agreement (Warehouse SUBI Certificate) dated as of December 27, 2018 (as amended,supplemented or otherwise modified and in effect from time to time, the “Agreement”), among Tesla 2014Warehouse Borrower SPV LLC, as Borrower (the “Borrower”), Tesla Finance LLC (“TFL”), the Lenders andGroup Agents party thereto and Deutsche Bank AG, New York Branch, as Administrative Agent (“AdministrativeAgent”)Ladies and Gentlemen:This is a Notice of Warehouse SUBI Lease Allocation delivered pursuant to the Agreement and Section 11.2 of theWarehouse SUBI Supplement. Capitalized terms used in this Notice of Warehouse SUBI Lease Allocation but not otherwise definedherein shall have the respective meanings assigned to such terms in the Agreement.TFL hereby notifies the Administrative Agent of a proposed allocation to the Warehouse SUBI of Leases and related LeasedVehicles to occur on [_____] (the “Warehouse SUBI Lease Allocation Date”) pursuant to the Agreement and the Warehouse SUBISupplement. The aggregate Securitization Value of such Leases is $[__________] as of the applicable Cut-Off Date.Attached hereto are (i) a Pool Cut Report as to the Leases proposed to be allocated to the Warehouse SUBI on the WarehouseSUBI Lease Allocation Date (Attachment A) and (ii) a schedule of Leases proposed to be allocated to the Warehouse SUBI on theWarehouse SUBI Lease Allocation Date (Attachment B).Pursuant to Section 2.3 of the Warehouse SUBI Servicing Agreement, TFL, as Servicer, hereby certifies to the AdministrativeAgent, it has received all of the Lease Documents (other than (x) the original Certificates of Title, which shall be delivered to theServicer promptly following receipt from the applicable Registrar of Titles and (y) any Lease Documents (including each Lease thatconstitutes Electronic Chattel Paper) related to the Leases identified in Attachment B hereto.IN WITNESS WHEREOF, the Borrower and TFL have caused this Notice of Warehouse SUBI Lease Allocation to beexecuted and delivered by its duly authorized officer as of the date first above written.D-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Very truly yours,LML 2018 WAREHOUSE SPV, LLC By: Name: Title: TESLA FINANCE LLC By: Name: Title: D-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Eto Loan and Security AgreementForm of Pool Cut Report E-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Account NumberVINCustomerStateFICO ScoreOriginal TermContractual TotalMonthly PaymentAmountBuy Rate (APR)ContractualResidual AmountALG Estimate ofResidualCurrentMaturity DateNumber ofPaymentsRemainingCurrentDaysPastDueMark-to-MarketALGValue1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 E-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.MTM DateSUBIDateBase RVBase RVTypeReq.Disc.RateOriginal SVLease SVBRV SVFacility SVCountryIneligible?OriginalTermIneligible?Initial SVIneligible?Excess MilesIneligible?ScheduledPaymentsMadePast due Ineligible? E-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.FICOIneligible?Early PaidRepo?Charged-off?BankruptcyExtensionRepurchaseMaturityIneligible?FacilityEligibilityMaturityMonthTapeCurrent Lease ReceivableVehicle Make andModel E-3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Exhibit Fto Loan and Security Agreement Form of Notice of Securitization Take-Out[Date]Deutsche Bank AG, New York Branchas Administrative Agent60 Wall Street, 5th FloorNew York, New York 10005Attention: Katherine Bologna Attention: Re:Loan and Security Agreement (Warehouse SUBI Certificate) dated as of December 27, 2018 (as amended, supplementedor otherwise modified and in effect from time to time, the “Agreement”), among LML 2018 Warehouse SPV, LLC, asBorrower (the “Borrower”), Tesla Finance LLC, the Lenders and the Group Agents party thereto from time to time, andDeutsche Bank AG, New York Branch, as Administrative Agent (“Administrative Agent”)Ladies and Gentlemen:This is a Notice of Securitization Take-Out delivered pursuant to the Agreement. Capitalized terms used in this Notice ofSecuritization Take-Out but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.The Borrower hereby notifies the Administrative Agent that it intends to effect a Securitization Take-Out on the SecuritizationTake-Out Date of _______, 20__ [Insert date which may be no fewer than 5 Business Days after the date of this Notice].The Securitization Take-Out Price for the Securitization Take-Out is estimated to be $ .F-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. IN WITNESS WHEREOF, Borrower has caused this Notice of Securitization Take-Out to be executed and delivered by itsduly authorized officer as of the date first above written.Very truly yours,LML 2018 WAREHOUSE SPV, LLC By: Name: Title: F-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Gto Loan and Security AgreementForm of Securitization Take-Out Certificate LML 2018 WAREHOUSE SPV, LLCSecuritization Take-Out CertificateThis Securitization Take-Out Certificate is delivered pursuant to Section 2.09(b)(i) of the Loan and Security Agreement (WarehouseSUBI Certificate), dated as of December 27, 2018, among LML 2018 Warehouse SPV, LLC, as Borrower, Tesla Finance LLC,certain Lenders party thereto, certain Group Agents party thereto and Deutsche Bank AG, New York Branch, as Administrative Agent(as in effect from time to time, the “Loan and Security Agreement”). Unless otherwise defined herein, capitalized terms used in thisSecuritization Take-Out Certificate shall have the respective meanings assigned to such terms in the Loan and Security Agreement.Today’s Date:___________Securitization Take-Out Date:___________I.CALCULATION OF LOAN BALANCE A.Securitization Value of Warehouse SUBI Leases (prior to Securitization Take-Out)$ - B.Less: Securitization Value of Warehouse SUBI Leases to be reallocated to UTI inconnection with Securitization Take-Out$ C.Remaining aggregate Securitization Value of Warehouse SUBI Leases other thanDefaulted Leases, Terminated Leases, Delinquent Lease and Leases which exceed theExcess Concentration Amount and after giving effect to any other reductions thereto inaccordance with the term “Maximum Loan Balance” determined as if the remainingLeases are now being allocated to the Warehouse SUBI$ - D.Advance Rate% E.Maximum Loan Balance which can be outstanding following Securitization Take-Out(= (D. x C.)$ -II.LOAN BALANCE RECONCILIATION A.Loan Balance prior to Securitization Take-Out$ - B.Maximum Loan Balance which can be outstanding following Securitization Take-Out(I.E)$ - C.Portion of Loan Balance to be repaid on Securitization Take-Out Date (A. minus B.)$ - D.Actual Loan Balance following Securitization Take-Out (A. minus C.)$III.AVAILABLE MAXIMUM LOAN BALANCE A.Maximum Loan Balance$[________] B.Loan Balance (following Securitization Take-Out) (II.D)$ - C.Available Maximum Loan Balance (A. minus B.)$ G-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.The Borrower hereby represents and warrants, in connection with the Securitization Take-Out to which this SecuritizationTake-Out relates, that each of the conditions and other requirements set forth in Section 2.09(b) of the Loan and Security Agreementhas been satisfied.G-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.IN WITNESS WHEREOF, I _________, a Responsible Officer of the Borrower, has executed this SecuritizationTake-Out Certificate as of the date set forth above.LML 2018 WAREHOUSE SPV, LLC By: Name: Title: G-3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Hto Loan and Security Agreement [RESERVED] H-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Ito Loan and Security Agreement[Reserved] I-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Jto Loan and Security Agreement[Reserved] J-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Kto Loan and Security Agreement[Reserved] K-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc. Exhibit L[Reserved] L-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Mto Loan and Security Agreement Form of Assignment and Acceptance Agreement This Assignment and Assumption Agreement (this “Assignment”) dated as of [___________], 20___ is made by[_____________] [(together with the Group Agent (as defined below),] the “Assignor”) to [____________] (the “Assignee”) [with theconsent of LML 2018 Warehouse SPV, LLC, as Borrower under the Loan and Security Agreement (defined below)], pursuant toSection 12.10 of the Loan and Security Agreement (Warehouse SUBI Certificate) dated as of December 27, 2018 (as amended,supplemented, or otherwise modified and in effect from time to time, the “Loan and Security Agreement”), among LML 2018Warehouse SPV, LLC, as Borrower, Tesla Finance LLC, the Lenders and Group Agents party thereto from time to time, andDeutsche Bank AG, New York Branch, as Administrative Agent. Capitalized terms used (but not defined) in this Assignment shallhave the respective meanings assigned to such terms in the Loan and Security Agreement.SECTION 1.Assignment and Assumption. In consideration of the payment of $___________ by the Assignee to theAssignor, the receipt and sufficiency of which payment is hereby acknowledged, effective on _________, 20__ (the “Effective Date”),the Assignor hereby assigns to the Assignee [(or to _________ (the “Assignee Group Agent”), for the benefit of the Assignee)]without recourse and (except as provided below) without representation or warranty, and the Assignee hereby purchases and assumes,an undivided ___% interest in the Assignor’s Loans (and the Assignor’s rights and obligations under its Loans), together with theAssignor’s related interest in the Collateral and the Assignor’s Commitment Amount. The Assignor represents and warrants to theAssignee that (i) it is the owner of the portion of the Loans assigned hereby and (ii) it has not created any lien upon or with respect tothe portion of the Loans assigned hereby.SECTION 2.Effect of Assignment. (a) From and after the Effective Date, (i) the Assignee shall be a party to and bebound by all of the terms of the Loan and Security Agreement and shall have the rights and obligations of a Lender thereunder and(ii) the Assignor shall, to the extent of the assignment effected hereby, relinquish its rights and be released from its obligations underthe Loan and Security Agreement. Without limiting the generality of this Section 2(a), the Assignee acknowledges receipt of a copy ofSection 12.11 of the Loan and Security Agreement and agrees to be bound thereby.(b)After giving effect to the assignment effected by this Assignment, (i) the Assignor’s Commitment Amount shall be$___________, and its portion of the Loan Balance shall be $_____________, and (ii) the Assignee’s Commitment Amount shall be$__________, and its portion of the Loan Balance shall be $___________.SECTION 3.Administrative Agent. The Assignee [and the Assignee’s Group Agent] hereby accept(s) theappointment of, and authorizes, the Administrative Agent to take such action on its behalf and to exercise such powers as are delegatedto the Administrative Agent by the terms of the Loan and Security Agreement, together with such powers as are reasonably incidentalthereto.SECTION 4.Miscellaneous.(a)The Assignor shall deliver a copy of this Assignment to the Servicer, the Borrower and the Administrative Agent.M-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.(b)THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES).(c)Schedule I attached hereto sets forth information (as such information may be changed from time to time inaccordance with Section 12.05 of the Loan and Security Agreement) relating to the Assignee [and its Group Agent]. Such Schedule Ishall be deemed to amend Schedule I to the Loan and Security Agreement without any further action of any party to the Loan andSecurity Agreement.(d)This Assignment may be executed in any number of counterparts and by the different parties hereto on separatecounterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.IN WITNESS WHEREOF, the parties hereto, by their duly authorized signatories, have executed and delivered thisAssignment as of the date first above written.[ASSIGNOR] By: Authorized SignatoryTitle: [ASSIGNOR’S FACILITY AGENT] By: Authorized SignatoryTitle: [ASSIGNEE] By: Authorized SignatoryTitle:[ASSIGNEE’S FACILITY AGENT] By: Authorized SignatoryTitle: [CONSENTED TO: LML 2018 WAREHOUSE SPV, LLC, as Borrower By: ]Authorized SignatoryTitle: M-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule I to Assignment and AssumptionAgreementN-1[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Exhibit Nto Loan and Security Agreement Form of Assumption Agreement THIS ASSUMPTION AGREEMENT (this “Agreement”), dated as of [_________ ___, ____], is among LML 2018Warehouse SPV, LLC (the “Borrower”), [_____________], as a Conduit Lender (the “New Conduit Lender[s]”), [_____________],as a Related Committed Lender (the “New Committed Lender[s]” and together with the New Conduit Lender[s], the “New Lenders”),[_____________], as group agent for the New Lenders (the “New Group Agent” and together with the New Lenders, the “NewGroup”) and Deutsche Bank AG, New York Branch (“Deutsche Bank”), as Administrative Agent (in such capacity, the“Administrative Agent”), as a Lender and as a Group Agent.1BACKGROUNDThe Borrower and various others are parties to a certain Loan and Security Agreement (Warehouse SUBI Certificate), datedas of December 27, 2018 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “LoanAgreement”). Capitalized terms used and not otherwise defined herein have the respective meaning assigned to such terms in the LoanAgreement.NOW, THEREFORE, the parties hereto hereby agree as follows:SECTION 1.This letter constitutes an Assumption Agreement pursuant to Section 12.10(j) of the Loan Agreement. TheBorrower desires the New Lenders and the New Group Agent to become a Group under the Loan Agreement, andupon the terms and subject to the conditions set forth in the Loan Agreement, the New Lenders and the New GroupAgent agree to become a Group thereunder, each in the respective capacities set forth on the signature pages hereto.SECTION 2.Upon execution and delivery of this Agreement by the Borrower and each member of the New Group,satisfaction of the other conditions with respect to the addition of a Group specified in Section 12.10(j) of the LoanAgreement (including the written consent of the Administrative Agent) and receipt by the Administrative Agent ofcounterparts of this Agreement (whether by facsimile or otherwise) executed by each of the parties hereto:(a)[each of] the New Conduit Lender[s] shall become a party to, and have all of the rights andobligations of, a Conduit Lender under the Loan Agreement;(b)[each of] the New Committed Lender[s] shall become a party to, and have the rights and obligationsof, a Committed Lender under the Loan Agreement and the Commitment shall be as set forth on its signature pagehereto;(c)the New Group Agent shall become a party to, and have all the rights and obligations of, a GroupAgent under the Loan Agreement;(d) the New Committed Lender shall make a Loan to the Borrower by transferring to the AdministrativeAgent an amount equal to the product of (x) the Loan Balance with respect to all outstanding Loans made by eachexisting Committed Lender prior to giving effect to the Loan to be made by the New 1 Note: Each existing Committed Lender and Group Agent should be included as parties to the Assumption Agreement.N-2[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Committed Lender described in this clause (d) (such amount, the “Existing Loan Balance”)multiplied by (y) a fraction the numerator of which is the Commitment Amount of the New Committed Lender andthe denominator of which is the aggregate Commitments of all Committed Lenders (including the New CommittedLender) (such amount, the “Committed Balancing Amount”);(e)the Administrative Agent shall distribute to existing Committed Lenders (as principal repayment oftheir Loans) the applicable portion of the Commitment Balancing Amount, if any, such that (i) the Loan to be madeby the New Committed Lender described in Section 2(d) will not increase the Existing Loan Balance and (ii) theNew Committed Lender’s Loan to the Borrower will be proportionate to the Loans of each other Committed Lenderbased on their relative Commitment;(f)the Administrative Agent shall record in the Register (i) the relevant information with respect to theNew Group, (ii) the Loan made by the New Committed Lender described in clause (d) of this Section 2 and (iii) theapplication of the Commitment Balancing Amount as described in clause (e) of this Section 2;(g)each existing Committed Lender shall, to the extent such rights have been assigned by it under thisAgreement, relinquish its assigned rights and be released from its assigned obligations under the Loan Agreement,except for those rights that expressly survive the termination of the Loan Agreement by its terms;(h)the Administrative Agent shall make, or cause to be made, all payments under the Loan Agreementin respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and feeswith respect thereto) to the New Group; and(i)each existing Committed Lender and the New Group shall make all appropriate adjustments inpayments under the Loan Agreement for periods prior to the date hereof directly among themselves.SECTION 3.The parties hereto agree that immediately after giving effect to (a) this Agreement, (b) the Loan made by theNew Committed Lender described in Section 2(d) and (c) the application of the Commitment Balancing Amount asdescribed in Section 2(e), the Commitment, Loan and Percentage of each Lender are as set forth in Schedule I attachedhereto.SECTION 4.The Administrative Agent and each Group Agent as of the date hereof hereby consent to the addition of theNew Conduit Lender[s] and the New Committed Lender[s] as Lenders under the Loan Agreement.SECTION 5.Each party hereto hereby covenants and agrees that it will not institute against, or join any other Person ininstituting against, the Borrower or any Conduit Lender, any bankruptcy, reorganization, arrangement, insolvency orliquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and oneday after the latest maturing commercial paper notes issued by the Borrower is paid in full. The covenant contained inthis paragraph shall survive any termination of the Loan Agreement.SECTION 6. Deutsche Bank and the New Group confirm and agree with each other and the other parties to the LoanAgreement that: (i) other than as provided herein, Deutsche Bank makes no representation or warranty and assumes no responsibilitywith respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution,legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or documentfurnished pursuant thereto; (ii) the New Group confirms that it has received a copy of the Loan Agreement, together with copies ofsuch financialN-3[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.statements and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter intothis Agreement; (iii) the New Group will, independently and without reliance upon Deutsche Bank or any other Lender party to theLoan Agreement and based on such documents and information as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under the Loan Agreement; (iv) the New Lenders appoints and authorizes the NewGroup Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to suchagent by the terms hereof, together with such powers as are reasonably incidental thereto; (v) the New Lenders agree that it willperform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performedby it as a Lender and (vi) the New Group Agent agrees that it will perform in accordance with their terms all of the obligations whichby the terms of the Loan Agreement are required to be performed by it as a Group Agent.SECTION 7. The Short-Term Note Rate applicable to the New Conduit Lender[s] for any Interest Period (or portionthereof), shall be determined as follows: [________________].SECTION 8.THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEWYORK. This Agreement may be executed in counterparts, and by the different parties on different counterparts, each ofwhich shall constitute an original, but all together shall constitute one and the same agreement.N-4[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.(Signature Page Follows)IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first abovewritten. [ ], as a Conduit Lender By: Name Printed: Title: [Address] [ ], as a Committed Lenderfor the New Group By: Name Printed: Title: [Address] [Commitment] [Scheduled Termination Date] [ ], as Group Agentfor the New Group By: Name Printed: Title: [Address] LML 2018 WAREHOUSE SPV, LLC, as Borrower By: Name Printed: Title: N-5[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Confidential Treatment Requested by Tesla, Inc.Schedule ILenderLender TypeCommitmentLoanPercentageDeutsche Bank AG, NewYork BranchCommitted Lender$[_________]$[_________][__]%$[_________]$[_________]$[_________]$[_________][__]% N-5[***] Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential Treatment has been requested withrespect to the omitted portions.Exhibit 21.1SUBSIDIARIES OF TESLA, INC. Name of Subsidiary Jurisdiction ofIncorporation or OrganizationAllegheny Solar 1, LLC DelawareAllegheny Solar Manager 1, LLC DelawareAncon Holdings II, LLC DelawareAncon Holdings III, LLC DelawareAncon Holdings, LLC DelawareAncon Solar Corporation DelawareAncon Solar I, LLC DelawareAncon Solar II Lessee Manager, LLC DelawareAncon Solar II Lessee, LLC DelawareAncon Solar II Lessor, LLC DelawareAncon Solar III Lessee Manager, LLC DelawareAncon Solar III Lessee, LLC DelawareAncon Solar III Lessor, LLC DelawareAncon Solar Managing Member I, LLC DelawareArpad Solar Borrower, LLC DelawareArpad Solar I, LLC DelawareArpad Solar Manager I, LLC DelawareAU Solar 1, LLC DelawareAU Solar 2, LLC DelawareBanyan SolarCity Manager 2010, LLC DelawareBanyan SolarCity Owner 2010, LLC DelawareBasking Solar I, LLC DelawareBasking Solar II, LLC DelawareBasking Solar Manager II, LLC DelawareBeatrix Solar I, LLC DelawareBernese Solar Manager I, LLC DelawareBlue Skies Solar I, LLC DelawareBlue Skies Solar II, LLC DelawareBuilding Solutions Acquisition Corporation DelawareCaballero Solar Managing Member I, LLC DelawareCaballero Solar Managing Member II, LLC DelawareCaballero Solar Managing Member III, LLC DelawareCardinal Blue Solar, LLC DelawareCastello Solar I, LLC DelawareCastello Solar II, LLC DelawareCastello Solar III, LLC DelawareChaparral SREC Borrower, LLC DelawareChaparral SREC Holdings, LLC DelawareChompie Solar I, LLC DelawareChompie Solar II, LLC DelawareChompie Solar Manager I, LLC DelawareChompie Solar Manager II, LLC DelawareCity UB Solar, LLC DelawareClydesdale SC Solar I, LLC DelawareCommon Assets Capital, LLC DelawareCommon Assets Financial, LLC DelawareCommon Assets Securities, LLC DelawareCommon Assets Technologies, LLC DelawareCommon Assets, LLC DelawareDahlia Holdings I, LLC DelawareDahlia Holdings II, LLC DelawareDom Solar General Partner I, LLC DelawareDom Solar Limited Partner I, LLC DelawareEiger Lease Co, LLC DelawareEnergy Freedom Coalition of America, LLC DelawareFalconer Solar Manager I, LLC DelawareFirehorn Solar Manager I, LLC DelawareFocalPoint Solar Borrower, LLC DelawareFocalPoint Solar I, LLC DelawareFocalPoint Solar Manager I, LLC DelawareFontane Solar I, LLC DelawareFotovoltaica GI 4, S. de R.L. de C.V. MexicoFotovoltaica GI 5, S. de R.L. de C.V. MexicoFTE Solar I, LLC DelawareGrohmann Engineering Trading (Shanghai) Co. Ltd. ChinaGrohmann USA, Inc. DelawareHammerhead Solar, LLC DelawareHangzhou Silevo Electric Power Co., Ltd. ChinaHarpoon Solar I, LLC DelawareHarpoon Solar Manager I, LLC DelawareHaymarket Holdings, LLC DelawareHaymarket Manager 1, LLC DelawareHaymarket Solar 1, LLC DelawareIkehu Manager I, LLC DelawareIL Buono Solar I, LLC DelawareIliosson, S.A. de C.V. MexicoKnight Solar Managing Member I, LLC DelawareKnight Solar Managing Member II, LLC DelawareKnight Solar Managing Member III, LLC DelawareLandlord 2008-A, LLC DelawareLML Partnership, LLC DelawareLML 2018 Warehouse SPV, LLC DelawareLML Warehouse SPV, LLC DelawareLouis Solar II, LLC DelawareLouis Solar III, LLC DelawareLouis Solar Manager II, LLC DelawareLouis Solar Manager III, LLC DelawareLouis Solar Master Tenant I, LLC DelawareLouis Solar MT Manager I, LLC DelawareLouis Solar Owner I, LLC DelawareLouis Solar Owner Manager I, LLC DelawareMako GB SPV Holdings, LLC DelawareMako GB SPV, LLC DelawareMako Solar Holdings, LLC DelawareMako Solar, LLC DelawareMaster Tenant 2008-A, LLC DelawareMatterhorn Solar I, LLC DelawareMegalodon Solar, LLC DelawareMonte Rosa Solar I, LLC DelawareMound Solar Manager V, LLC DelawareMound Solar Manager VI, LLC DelawareMound Solar Manager X, LLC DelawareMound Solar Manager XI, LLC DelawareMound Solar Manager XII, LLC DelawareMound Solar Master Tenant IX, LLC DelawareMound Solar Master Tenant V, LLC CaliforniaMound Solar Master Tenant VI, LLC DelawareMound Solar Master Tenant VII, LLC DelawareMound Solar Master Tenant VIII, LLC DelawareMound Solar MT Manager IX, LLC DelawareMound Solar MT Manager VII, LLC DelawareMound Solar MT Manager VIII, LLC DelawareMound Solar Owner IX, LLC DelawareMound Solar Owner Manager IX, LLC DelawareMound Solar Owner Manager VII, LLC DelawareMound Solar Owner Manager VIII, LLC DelawareMound Solar Owner V, LLC CaliforniaMound Solar Owner VI, LLC DelawareMound Solar Owner VII, LLC DelawareMound Solar Owner VIII, LLC DelawareMound Solar Partnership X, LLC DelawareMound Solar Partnership XI, LLC DelawareMound Solar Partnership XII, LLC DelawareMS SolarCity 2008, LLC DelawareMS SolarCity Commercial 2008, LLC DelawareMS SolarCity Residential 2008, LLC DelawareMT Solar Corporation DelawareNBA SolarCity AFB, LLC CaliforniaNBA SolarCity Commercial I, LLC CaliforniaNBA SolarCity Solar Phoenix, LLC CaliforniaNorthern Nevada Research Co., LLC NevadaOranje Solar I, LLC DelawareOranje Solar Manager I, LLC DelawareParamount Energy Fund I Lessee, LLC DelawareParamount Energy Fund I Lessor, LLC DelawarePEF I MM, LLC DelawarePerbix Machine Company, Inc. MinnesotaPoppy Acquisition LLC DelawarePresidio Solar I, LLC DelawarePresidio Solar II, LLC DelawarePresidio Solar III, LLC DelawarePukana La Solar I, LLC DelawareRoadster Automobile Sales and Service (Beijing) Co., Ltd. ChinaRoadster Finland Oy FinlandSequoia Pacific Holdings, LLC DelawareSequoia Pacific Manager I, LLC DelawareSequoia Pacific Solar I, LLC DelawareSequoia SolarCity Owner I, LLC DelawareServicios de Technología Y Admninstración Ilioss, S.A. de C.V. MexicoSierra Solar Power (Hong Kong) Limited Hong KongSilevo, LLC DelawareSolar Aquarium Holdings, LLC DelawareSolar Energy of America 1, LLC DelawareSolar Energy of America Manager 1, LLC DelawareSolar Explorer, LLC DelawareSolar House I, LLC DelawareSolar House II, LLC DelawareSolar House III, LLC DelawareSolar House IV, LLC DelawareSolar Integrated Fund I, LLC DelawareSolar Integrated Fund II, LLC DelawareSolar Integrated Fund III, LLC DelawareSolar Integrated Fund IV-A, LLC DelawareSolar Integrated Fund V, LLC DelawareSolar Integrated Fund VI, LLC DelawareSolar Integrated Manager I, LiLC DelawareSolar Integrated Manager II, LLC DelawareSolar Integrated Manager III, LLC DelawareSolar Integrated Manager IV-A, LLC DelawareSolar Integrated Manager V, LLC DelawareSolar Integrated Manager VI, LLC DelawareSolar Services Company, LLC DelawareSolar Ulysses Manager I, LLC DelawareSolar Ulysses Manager II, LLC DelawareSolar Voyager, LLC DelawareSolar Warehouse Manager I, LLC DelawareSolar Warehouse Manager II, LLC DelawareSolar Warehouse Manager III, LLC DelawareSolar Warehouse Manager IV, LLC DelawareSolarCity Alpine Holdings, LLC DelawareSolarCity Amphitheatre Holdings, LLC DelawareSolarCity Arbor Holdings, LLC DelawareSolarCity Arches Holdings, LLC DelawareSolarCity AU Holdings, LLC DelawareSolarCity Cruyff Holdings, LLC DelawareSolarCity Electrical New York Corporation DelawareSolarCity Electrical, LLC DelawareSolarCity Engineering, Inc. CaliforniaSolarCity Finance Company, LLC DelawareSolarCity Finance Holdings, LLC DelawareSolarCity Foxborough Holdings, LLC DelawareSolarCity FTE Series 1, LLC DelawareSolarCity FTE Series 2, LLC DelawareSolarCity Fund Holdings, LLC DelawareSolarCity Grand Canyon Holdings, LLC DelawareSolarCity Holdings 2008, LLC DelawareSolarCity International, Inc. DelawareSolarCity Leviathan Holdings, LLC DelawareSolarCity LMC Series I, LLC DelawareSolarCity LMC Series II, LLC DelawareSolarCity LMC Series III, LLC DelawareSolarCity LMC Series IV, LLC DelawareSolarCity LMC Series V, LLC DelawareSolarCity Mid-Atlantic Holdings, LLC DelawareSolarCity Nitro Holdings, LLC DelawareSolarCity Orange Holdings, LLC DelawareSolarCity Series Holdings I, LLC DelawareSolarCity Series Holdings II, LLC DelawareSolarCity Series Holdings IV, LLC DelawareSolarCity Steep Holdings, LLC DelawareSolarCity Ulu Holdings, LLC DelawareSolarCity Village Holdings, LLC DelawareSolarRock, LLC DelawareSolarStrong, LLC DelawareSparrowhawk Solar I, LLC DelawareSREC Holdings, LLC DelawareTALT Holdings, LLC DelawareTBM Partnership II, LLC DelawareTES 2017-1, LLC DelawareTES 2017-2, LLC DelawareTES 2018-K2, LLC DelawareTES Holdings 2017-1, LLC DelawareTES Holdings 2018-K2, LLC DelawareTesla (Beijing) New Energy R&D Co., Ltd. ChinaTesla 2014 Warehouse SPV LLC DelawareTesla Auto Lease Trust 2018-A DelawareTesla Auto Lease Trust 2018-B DelawareTesla Motors (Beijing) Co., Ltd. ChinaTesla Automobile Sales and Service (Beijing) Co., Ltd. ChinaTesla Automobile Sales and Service (Changsha) Co., Ltd. ChinaTesla Automobile Sales and Service (Chengdu) Co., Ltd. ChinaTesla Automobile Sales and Service (Chongqing) Co., Ltd. ChinaTesla Automobile Sales and Service (Guangzhou) Co., Ltd. ChinaTesla Automobile Sales and Service (Hangzhou) Co., Ltd. ChinaTesla Automobile Sales and Service (Nanjing) Co., Ltd. ChinaTesla Automobile Sales and Service (Ningbo) Co., Ltd. ChinaTesla Automobile Sales and Service (Qingdao) Co., Ltd. ChinaTesla Automobile Sales and Service (Shanghai) Co., Ltd. ChinaTesla Automobile Sales and Service (Shenzhen) Co., Ltd. ChinaTesla Automobile Sales and Service (Shenyang) Co., Ltd. ChinaTesla Automobile Sales and Service (Suzhou) Co. Ltd. ChinaTesla Automobile Sales and Service (Tianjin) Co. Ltd. ChinaTesla Automobile Sales and Service (Wenzhou) Co., Ltd. ChinaTesla Automobile Sales and Service (Wuhan) Co., Ltd. ChinaTesla Automobile Sales and Service (Xi'an) Co., Ltd. ChinaTesla Automobile Sales and Service (Xiamen) Co., Ltd. ChinaTesla Automobile Sales and Service (Zhengzhou) Co. Ltd. ChinaTesla Automobiles Sales and Service Mexico, S. de R.L. de C.V. MexicoTesla Belgium BVBA BelgiumTesla Canada GP Inc. CanadaTesla Canada LP CanadaTesla Czech Republic s.r.o. Czech RepublicTesla Energia Macau Limitada MacauTesla Energy Electrical LLC DelawareTesla Energy Operations, Inc. DelawareTesla Energy Sales LLC DelawareTesla Finance LLC DelawareTesla Financial Leasing (China) Co., Ltd. ChinaTesla Financial Services GmbH GermanyTesla Financial Services Holdings B.V. NetherlandsTesla Financial Services Limited United KingdomTesla France S.à r.l. FranceTesla Germany GmbH GermanyTesla Greece Single Member P.C. GreeceTesla Grohmann Automation GmbH GermanyTesla Insurance Services, Inc. CaliforniaTesla International B.V. NetherlandsTesla Italy S.r.l. ItalyTesla Jordan Car Trading LLC JordanTesla Korea Limited Republic of KoreaTesla Lease Trust DelawareTesla Motors Australia, Pty Ltd AustraliaTesla Motors Austria GmbH AustriaTesla Motors Canada ULC CanadaTesla Motors Coöperatief U.A. NetherlandsTesla Motors Denmark ApS DenmarkTesla Motors Exports LLC DelawareTesla Motors FL, Inc. FloridaTesla Motors HK Limited Hong KongTesla Motors Ireland Limited IrelandTesla Motors Japan GK JapanTesla Motors Limited United KingdomTesla Motors Luxembourg S.à r.l. LuxembourgTesla Motors MA, Inc. MassachusettsTesla Motors Netherlands B.V. NetherlandsTesla Motors New York LLC New YorkTesla Motors NL LLC DelawareTesla Motors Norway AS NorwayTesla Motors NV, Inc. NevadaTesla Motors PA, Inc. PennsylvaniaTesla Motors Sales and Service LLC TurkeyTesla Motors Singapore Holdings Pte. Ltd. SingaporeTesla Motors Singapore Private Limited SingaporeTesla Motors Stichting NetherlandsTesla Motors Switzerland GmbH SwitzerlandTesla Motors Taiwan Limited TaiwanTesla Motors TN, Inc. TennesseeTesla Motors TX, Inc. TexasTesla Motors UT, Inc. UtahTesla New Zealand ULC New ZealandTesla Portugal, Sociedade Unipessoal LDA PortugalTesla Poland sp. z o.o. PolandTesla Puerto Rico LLC Puerto RicoTesla Sales, Inc. DelawareTesla Services Sdn. Bhd. MalaysiaTesla Shanghai Co., Ltd ChinaTesla Spain, S.L. Unipersonal SpainTesla, Inc. DelawareThe Big Green Solar Holdings, LLC DelawareThe Big Green Solar I, LLC DelawareThe Big Green Solar Manager I, LLC DelawareThree Rivers Solar 1, LLC DelawareThree Rivers Solar 2, LLC DelawareThree Rivers Solar 3, LLC DelawareThree Rivers Solar Manager 1, LLC DelawareThree Rivers Solar Manager 2, LLC DelawareThree Rivers Solar Manager 3, LLC DelawareTM International C.V. NetherlandsTM Sweden AB SwedenUSB SolarCity Manager 2009, LLC DelawareUSB SolarCity Manager 2009-2010, LLC DelawareUSB SolarCity Manager III, LLC DelawareUSB SolarCity Manager IV, LLC DelawareUSB SolarCity Master Tenant 2009, LLC CaliforniaUSB SolarCity Master Tenant 2009-2010, LLC CaliforniaUSB SolarCity Master Tenant IV, LLC CaliforniaUSB SolarCity Owner 2009, LLC CaliforniaUSB SolarCity Owner 2009-2010, LLC CaliforniaUSB SolarCity Owner IV, LLC CaliforniaVisigoth Solar 1, LLC DelawareVisigoth Solar Holdings, LLC DelawareVisigoth Solar Managing Member 1, LLC DelawareWeisshorn Solar I, LLC DelawareWeisshorn Solar Manager I, LLC DelawareZep Solar Hong Kong Limited Hong KongZep Solar LLC CaliforniaZep Solar Trading Ltd China  Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S 3 (Nos. 333-221378 and 333-211437) and S-8 (Nos. 333-223169, 333-216376, 333-209696, 333-198002, 333-187113, 333-183033, and 333-167874) of Tesla, Inc. of our report dated February 19, 2019 relating tothe financial statements and the effectiveness of internal control over financial reporting, which appear in this Form 10 K./s/ PricewaterhouseCoopers LLPSan Jose, CaliforniaFebruary 19, 2019  Exhibit 31.1CERTIFICATIONSI, Elon Musk, certify that:1.I have reviewed this Annual Report on Form 10-K of Tesla, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 19, 2019 /s/ Elon Musk Elon Musk Chief Executive Officer (Principal Executive Officer)  Exhibit 31.2CERTIFICATIONSI, Deepak Ahuja, certify that:1.I have reviewed this Annual Report on Form 10-K of Tesla, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 19, 2019 /s/ Deepak Ahuja Deepak Ahuja Chief Financial Officer (Principal Financial Officer) Exhibit 32.1SECTION 1350 CERTIFICATIONSI, Elon Musk, certify, pursuant to 18 U.S.C. Section 1350, that, to my knowledge, the Annual Report of Tesla, Inc. on Form 10-K for the annual period endedDecember 31, 2018, (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that the informationcontained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Tesla, Inc. Date: February 19, 2019 /s/ Elon Musk Elon Musk Chief Executive Officer (Principal Executive Officer)I, Deepak Ahuja, certify, pursuant to 18 U.S.C. Section 1350, that, to my knowledge, the Annual Report of Tesla, Inc. on Form 10-K for the annual periodended December 31, 2018, (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) that theinformation contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Tesla, Inc. Date: February 19, 2019 /s/ Deepak Ahuja Deepak Ahuja Chief Financial Officer (Principal Financial Officer) 

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