Required Discuss the relations among net income, cash flows from operations, cash flows from investing activities, and cash flows from financing activities for the firm over the three-year period. Speculate on the reasons for significant adjustments on the statement of cash flows. Describe what stage of life cycle these relations suggest for Tesla Motors. Why are negative operating cash flows less than the net losses? Where is Tesla obtaining cash, and what is it doing with it? What do you think will happen with cash flows in 2013?

2011 + Exhibit 3.18 Tesla Motors Statement of Cash Flows (amounts in thousands) (Problem 3.20) 2012 2010 Cash Flows from Operating Activities Net loss $(396,213) $(254,411) $(154,328) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 28,825 16,919 10,623 Change in fair value of warrant liabilities 1,854 2,750 5,022 Discounts and premiums on short-term marketable securities 56 (112) Stock-based compensation 50,145 29,419 21,156 Excess tax benefits from stock-based compensation (74) Loss on abandonment of fixed assets 1,504 345 Inventory write downs 4,929 1,828 951 Changes in operating assets and liabilities Accounts receivable (17,303) (2,829) (3,222) Inventories and operating lease vehicles (194,726) (13,638) (28,513) Prepaid expenses and other current assets 1,121 (248) (4,977) Other assets (482) (288) (463) Accounts payable 187,821 19,891 (212) Accrued liabilities 9,603 10,620 13,345 Deferred development compensation (156) Deferred revenue (526) (1,927) 4,801 Reservation payments 47,056 61,006 4,707 Other long-term liabilities 10,255 2,641 3,515 8 reservacoa 17,00 10,255 (266,081) U1,000 2,641 (128,034) 3,515 (127,817) (14,992) 40,000 (64,952) 40,000 (239,228) (184,226) (65,210) (40,203) 8,620 (1,330) (206,930) 50,121 (3,201) (162,258) (73,597) (1,287) (180,297) Other long-term liabilities Net cash used in operating activities Cash Flows from Investing Activities Purchases of marketable securities Maturities of short-term marketable securities Payments related to acquisition of Fremont manufacturing facility and related assets Purchases of property and equipment excluding capital leases Withdrawals out of (transfers into) our dedicated Department of Energy account, net Increase in other restricted cash Net cash used in investing activities Cash Flows from Financing Activities Proceeds from issuance of common stock in public offerings, net Proceeds from issuance of common stock in private placements Principal payments on capital leases and other debt Proceeds from long-term debt and other long-term liabilities Principal payments on long-term debt Proceeds from exercise of stock options and other stock issuances Excess tax benefits from stock-based compensation Deferred common stock and loan facility issuance costs Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 221,496 172,410 59,058 (416) 204,423 188,842 80,000 (315) 71,828 (2,832) 188,796 (12,710) 24,885 10,525 419,635 (53,376) 255,266 $ 201,890 446,000 155,708 99,558 $ 255,266 1,350 74 (3,734) 338,045 29,931 69,627 $ 99,558 2011 + Exhibit 3.18 Tesla Motors Statement of Cash Flows (amounts in thousands) (Problem 3.20) 2012 2010 Cash Flows from Operating Activities Net loss $(396,213) $(254,411) $(154,328) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 28,825 16,919 10,623 Change in fair value of warrant liabilities 1,854 2,750 5,022 Discounts and premiums on short-term marketable securities 56 (112) Stock-based compensation 50,145 29,419 21,156 Excess tax benefits from stock-based compensation (74) Loss on abandonment of fixed assets 1,504 345 Inventory write downs 4,929 1,828 951 Changes in operating assets and liabilities Accounts receivable (17,303) (2,829) (3,222) Inventories and operating lease vehicles (194,726) (13,638) (28,513) Prepaid expenses and other current assets 1,121 (248) (4,977) Other assets (482) (288) (463) Accounts payable 187,821 19,891 (212) Accrued liabilities 9,603 10,620 13,345 Deferred development compensation (156) Deferred revenue (526) (1,927) 4,801 Reservation payments 47,056 61,006 4,707 Other long-term liabilities 10,255 2,641 3,515 8 reservacoa 17,00 10,255 (266,081) U1,000 2,641 (128,034) 3,515 (127,817) (14,992) 40,000 (64,952) 40,000 (239,228) (184,226) (65,210) (40,203) 8,620 (1,330) (206,930) 50,121 (3,201) (162,258) (73,597) (1,287) (180,297) Other long-term liabilities Net cash used in operating activities Cash Flows from Investing Activities Purchases of marketable securities Maturities of short-term marketable securities Payments related to acquisition of Fremont manufacturing facility and related assets Purchases of property and equipment excluding capital leases Withdrawals out of (transfers into) our dedicated Department of Energy account, net Increase in other restricted cash Net cash used in investing activities Cash Flows from Financing Activities Proceeds from issuance of common stock in public offerings, net Proceeds from issuance of common stock in private placements Principal payments on capital leases and other debt Proceeds from long-term debt and other long-term liabilities Principal payments on long-term debt Proceeds from exercise of stock options and other stock issuances Excess tax benefits from stock-based compensation Deferred common stock and loan facility issuance costs Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 221,496 172,410 59,058 (416) 204,423 188,842 80,000 (315) 71,828 (2,832) 188,796 (12,710) 24,885 10,525 419,635 (53,376) 255,266 $ 201,890 446,000 155,708 99,558 $ 255,266 1,350 74 (3,734) 338,045 29,931 69,627 $ 99,558