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Report on Tesla Motors

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Investment Highlights

GreenTech: Tesla Motors
Poster Child for Green Mobility
NeXt Up! www.nextupresearch.com With over 1063 Roadsters sold, Tesla, in our view, is the first to achieve commercial scale in sale of high performance electric cars. Our model assumes only sales of 4200 Model S (to be launched in 2012) cars even in 2015, which could prove conservative given Tesla‟s expectations for 20k cars a year. We note that Tesla has booked over 2200 orders for Model S.

We expect the NUMMI plant (with a theoretical capacity of 400k cars) in Fremont to give the company ability to expand production at low capital cost. We expect Daimler and Toyota to provide for high recurring revenues in terms of powertrain sales. Unlike many of its competitors, Tesla has developed its own battery pack. We note that battery packs account for 30 – 40% of a car‟s cost, offering Tesla significant advantages as it scales. The company should be able to offer multiple models (such as SUV, minivans, sedans) based off the same platform without having to make significant R&D investment.

June 29, 2010

Our valuation of $1.74 - $1.88B reflects stronger OEM sales offset by weaker Roadster revenues. Our revised per share price of $17.01 to $18.37 reflects the recent 3 to 1 reverse stock split and additional shares from the public offering. We note that the IPO (on 6/29/10) is priced at $17 per share. Investment Concerns The cost of ownership for Tesla Roadster is significantly higher than for comparable alternatives such as Porsche 911. We are concerned that this factor may limit the appeal of the car to the so called green crowd. The more attractively priced $50k Model S could take another two years before achieving any traction. The Model S is still in concept stages. Any significant delays in the ramp could have an adverse impact on the quarterly numbers of the company and on the...

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