Devonshire Research Group releases report outlining a 3 part thesis for what it thinks about Tesla's R&D and IP

1. Tesla Motors, Inc.
Devonshire Research Group, LLCDevonshire Research Group, LLCDevonshire Research Group, LLCDevonshire Research Group, LLC
March 2016March 2016March 2016March 2016

2. -Attorney Confidential-
Disclaimer
As of the publication date of this report, the Principals and Clients of Devonshire Research Group LLC ("Devonshire") have a short position in the stock of the company covered
herein (“Company”) and stand to realize gains in the event that the price of the stock declines. Following publication of the report, Devonshire’s Principals and Clients may
transact in the securities of the company covered herein, including but not limited to the use of derivatives to hedge, synthetically replicate, or profit from near term volatility in its
position. All content in this report represent the opinions of Devonshire and is based on information that Devonshire believes to be reliable and the vast majority of which comes
from publicly available sources. However, such information is presented “as is”, without warranty of any kind – whether express or implied. Devonshire makes no representations,
and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material contained. All expressions of opinion are
subject to change without notice, and Devonshire undertakes no obligation to correct, update or revise those statements or to otherwise provide any additional materials.
This document is for informational purposes only and it is not intended as an official confirmation of any transaction. All market prices, data and other information are not
warranted as to completeness or accuracy and are subject to change without notice. The information included in this document is based upon selected public market data and
reflects prevailing conditions and Devonshire’s opinions as of this date, all of which are accordingly subject to change. Devonshire’s opinions and estimates constitute a best efforts
judgment and should be regarded as indicative, preliminary and for illustrative purposes only. Any investment involves substantial risks, including, but not limited to, pricing
volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential
fundamental valuation of a specific security, and is not expressed as, or implied as, assessments of the quality of a security, a summary of past performance, or an actionable
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develop a stand-alone judgment of the relevant markets prior to making any investment decision.
2

3. -Attorney Confidential-
Notice of investment interests
As of the publication date of this report, the Principals and Clients of Devonshire
Research Group LLC have a net short position in the stock, put options, bonds, and
credit swaps of Tesla Motors, Inc. and stand to realize gains in the event that the price of
the stock “TSLA” declines over the long run, or if investment sentiment improves the
appeal of an expected decline in any of its securities.
However, Devonshire recognizes that while the technology strategy of the Company
reflects a long term bearish outlook for Tesla Motors, Inc.’s security instruments, the
short term implication of powerful marketing, including the power of social media
tweeting by the CEO and his PR firm, well orchestrated and heavily blogged product
launches, and a deep and powerful short term media control and attention span, suggests
unpredictable short term volatility.
Principals and Clients of Devonshire Research Group LLC are short term volatility
oriented with a long term net short position across multiple security instruments.
3

4. -Attorney Confidential-
On humility:
4
It is unwise to be too sure of one’s own wisdom. It
is healthy to be reminded that the strongest might
weaken and the wisest might err.
-Ghandi

5. -Attorney Confidential-
Executive Summary
5
What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its
valuation multiples (when they can be calculated) lie well above its direct business model comparables
− TSLA is attempting more vertical integration than any auto company has recently tried
− TSLA trades at a higher revenue multiple than any related technology business
− TSLA’s only comparables in terms of multiple are business models that TSLA is not:
− Software companies: TSLA has low / negative margins and heavy fixed asset commitment
− Social media companies: TSLA has no network effects, no platform economics and high scaling costs
− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces
TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some
valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology
− TSLA’s patents cover battery-related technology and selected components but not battery cells
− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market
where its technology position is modest
− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left
− TSLA’s valuable inventions can be readily copied by its EV competitors
− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to
price aggressively for their advanced technologies
TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle
− TSLA battery production requires the mining and use of numerous toxic chemicals
− TSLA EV production has a heavier carbon footprint than traditional vehicles
− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants
− Disposal of TSLA batteries at large scale will create a heavy toxic burden

6. -Attorney Confidential-
Executive Summary
6
What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its
valuation multiples (when they can be calculated) lie well above its direct business model comparables
− TSLA is attempting more vertical integration than any auto company has recently tried
− TSLA trades at a higher revenue multiple than any related technology business
− TSLA’s only comparables in terms of multiple are business models that TSLA is not:
− Software companies: TSLA has low / negative margins and heavy fixed asset commitment
− Social media companies: TSLA has no network effects, no platform economics and high scaling costs
− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces
TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some
valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology
− TSLA’s patents cover battery-related technology and selected components but not battery cells
− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market
where its technology position is modest
− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left
− TSLA’s valuable inventions can be readily copied by its EV competitors
− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to
price aggressively for their advanced technologies
TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle
− TSLA battery production requires the mining and use of numerous toxic chemicals
− TSLA EV production has a heavier carbon footprint than traditional vehicles
− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants
− Disposal of TSLA batteries at large scale will create a heavy toxic burden

7. -Attorney Confidential-
Tesla wears many hats—does this large scope of functions justify its
“disruptive” reputation and corresponding market cap?
7
Automotive
Design /
Manufacture
Automotive
Components
Sales &
Service
Software
Business Function
Electric Utility88888888
Battery / Energy
Storage Provider
77777777
Automotive Dealer66666666
Electric Motor /
Powertrain Provider
55555555
Software Company33333333
Consumer Electronic
Device Maker
44444444
Systems Integrator22222222
Automotive
Manufacturer / Designer
11111111
SIC / NAIC Code
4931 / 2211
3691 / 335911
5511 / 441110
3714 / 336390
7372 / 511210
3571 / 334111
7373 / 541512
3711 / 336111
Nature of TSLA Involvement
Charging stations, battery swapping
Powerwall home battery, Gigafactory
Direct-to-consumer vehicle sales
EV powertrain design & manufacture
Autopilot, over-the-air updates, GUI
Control & sensor electronics
Assembly plant in Fremont, CA; network
of suppliers, retail stores, charging stations
Models S and X in production
Example Comps
Entergy, Edison, Ameren
A123, Panasonic, LG Chem
Sonic, Penske, CarMax
Magna, Denso, Delphi
Symantec, Microsoft, Oracle
LG, Toshiba, Sony, HP
Apple, IBM, Fujitsu
GM, Ford, Honda, VW

8. -Attorney Confidential-
Tesla is currently trading at a 7.0x revenue multiple—far above any
comparable except, at the extreme, a high-flying software company
8
Key financials across TSLA comps (EV in billion USD)
Tesla is not, and will not grow like, a software company—it is an automotive
company, and the automotive industry is mature and famously difficult to disrupt
Systems Integrator
22222222
Electric Motor /
Powertrain Provider
55555555
Software Company
33333333
Automotive Dealer
66666666
Battery / Energy Storage
77777777
Electric Utility
88888888
Consumer
Electronic Device Maker
44444444
Automotive
Manufacturer / Designer
11111111
Name EV/Rev EV P/E
GM 0.6 91 6
Honda 0.7 99 9
VW 0.7 159 7
Nissan 1.0 106 8
Daimler 1.0 173 8
Continental 1.1 47 13
Ford 1.1 162 7
AverageAverageAverageAverage 0.9 119 8
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Fujitsu 0.4 15 8
Hitachi 0.7 63 10
Cisco 2.0 100 12
IBM 2.0 165 10
Rockwell 2.2 13 18
Apple 2.5 585 11
Citrix 3.6 12 16
AverageAverageAverageAverage 1.9 136 12
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
HP 0.2 22 7
Sharp 0.3 7 NM
LG 0.3 15 16
Toshiba 0.4 22 NM
Sony 0.5 37 18
Samsung 0.7 118 9
Canon 0.8 28 16
AverageAverageAverageAverage 0.5 36 13
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Symantec 1.7 11 16
Microsoft 4.0 351 18
Oracle 4.0 150 14
SAP 4.3 98 17
Intuit 5.9 26 27
Salesforce 7.1 48 69
Adobe 8.4 40 31
AverageAverageAverageAverage 5.1 103 27
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Magna 0.5 16 8
Valeo 0.7 12 13
Denso 0.8 33 13
Cummins 0.9 18 13
MAN 1.1 17 39
Delphi 1.5 23 11
Eaton 1.7 35 14
AverageAverageAverageAverage 1.0 22 16
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Sonic 0.3 3 9
Penske 0.4 8 10
Group 1 0.4 4 8
AutoNation 0.5 11 12
Asbury 0.5 3 10
Lithia 0.6 5 12
CarMax 1.4 20 16
AverageAverageAverageAverage 0.6 8 11
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Panasonic 0.3 20 14
Elentec 0.5 0 NM
Saft 1.0 1 13
LG Chem 1.0 17 14
EnerSys 1.1 3 14
Electrovaya 2.3 0 9
A123 - - NM
AverageAverageAverageAverage 1.0 7 13
TeslaTeslaTeslaTesla 7.0 29 NM
Name EV/Rev EV P/E
Entergy 2.3 26 14
FirstEnergy 2.5 37 12
Xcel Energy 3.1 35 18
Edison 3.2 36 18
Ameren 3.2 19 19
Natl. Grid 3.9 88 16
NextEra 4.7 83 19
AverageAverageAverageAverage 3.3 46 17
TeslaTeslaTeslaTesla 7.0 29 NM

9. -Attorney Confidential-
By valuation multiples, Tesla is comparable to a social media
giant—except that it lacks network effects or serious user traction
9
Name EV/Rev EV P/E
Yelp 2.2 1 40
SINA 2.7 4 36
LinkedIn 4.4 13 35
Twitter 4.9 11 34
Alphabet 5.6 420 21
Renren 16.2 1 NM
Facebook 16.3 293 34
AverageAverageAverageAverage 7.5 106 33
TeslaTeslaTeslaTesla 7.0 29 NM
Social Media
Comps derived from business model fail to support valuation Valuation-appropriate comp set?
Social media companies have… Tesla has…
VS
Network effects / tipping point economics Word-of-mouth marketing
A dominant platform used by an active user base A subreddit with 30k subscribers
A clear path to user base monetization No ability to sell product at a profit

10. -Attorney Confidential-
11
12
14
0
6
8
2
10
4
1
9
13
5
3
7 TSLA
Broadly speaking, Tesla’s multiple places it among industries that
rely on speculative future windfalls; true comparables lie far below
10*Source: Cognient Industry Valuation Multiples, Q3 2015
Distribution of median revenue multiples across non-financial industries
EV / LTM
Revenue
Percentile Rank
Real EstateReal EstateReal EstateReal Estate
BiotechBiotechBiotechBiotech
PharmaPharmaPharmaPharma
Software
AutomotiveAutomotiveAutomotiveAutomotive
Retail
Transportation Electric Utilities
Electrical
Equipment
Chemicals
Upstream OilUpstream OilUpstream OilUpstream Oil
Electronics
Where Tesla
Currently Is
Where Tesla
Should Be
Square
Twitter

11. -Attorney Confidential-
Executive Summary
11
What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its
valuation multiples (when they can be calculated) lie well above its direct business model comparables
− TSLA is attempting more vertical integration than any auto company has recently tried
− TSLA trades at a higher revenue multiple than any related technology business
− TSLA’s only comparables in terms of multiple are business models that TSLA is not:
− Software companies: TSLA has low / negative margins and heavy fixed asset commitment
− Social media companies: TSLA has no network effects, no platform economics and high scaling costs
− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces
TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some
valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology
− TSLA’s patents cover battery-related technology and selected components but not battery cells
− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market
where its technology position is modest
− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left
− TSLA’s valuable inventions can be readily copied by its EV competitors
− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to
price aggressively for their advanced technologies
TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle
− TSLA battery production requires the mining and use of numerous toxic chemicals
− TSLA EV production has a heavier carbon footprint than traditional vehicles
− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants
− Disposal of TSLA batteries at large scale will create a heavy toxic burden

12. -Attorney Confidential-
Tesla’s patents focus on battery peripherals but do not address
battery cells, the key performance driver of their products
12
TSLA patent portfolio*: semantic map of 357357357357 patent documents
* Worldwide search of grants and applications,
collapsed to one document per distinct invention

13. -Attorney Confidential-
Tesla’s limited IP footprint is clearly evident in the broader scope
of automotive technologies—they are exposed in many key areas
13
Broad automotive space*: semantic map of 24,30224,30224,30224,302 patent families (past 10 years only)
TSLA patents
Non-TSLA patents
Key
* US grants in past 10 years on the topic of
motor vehicle or electric vehicle technology

14. -Attorney Confidential-
Key players in the broad landscape have a long history of
patenting, meaning larger stockpiles of enforceable IP
14
Rank Company 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 TOTAL
1 GEN MOTORS CORP 43 39 52 47 36 28 34 22 37 32 39 48 94 254 281 273 398 504 280 300 2841
2 TOYOTA MOTOR CO LTD 19 35 51 59 42 31 42 38 51 42 31 36 76 161 324 201 322 399 349 407 2716
3 BOSCH GMBH ROBERT 23 30 52 67 92 92 91 88 101 95 88 85 104 99 137 147 192 248 321 276 2428
4 FORD MOTOR CO 54 58 77 53 45 41 48 66 59 58 57 76 73 103 187 129 175 281 258 443 2341
5 HONDA MOTOR CO LTD 41 66 59 62 75 71 63 58 80 102 53 59 59 107 187 139 170 268 182 216 2117
6 DAIMLER AG 25 27 49 47 106 116 87 60 51 55 65 60 73 65 36 48 59 63 61 61 1214
7 DENSO CORP 0 1 14 32 40 47 29 31 49 57 38 40 56 91 81 69 99 101 88 127 1090
8 YAZAKI CORP 28 56 75 56 51 36 44 40 34 39 16 22 35 39 43 33 61 96 86 153 1043
9 CONTINENTAL 0 0 0 0 3 12 11 8 8 7 10 19 31 58 145 107 136 170 118 173 1016
10 NISSAN MOTOR 15 21 39 41 51 31 28 40 38 64 30 35 39 39 31 23 47 94 109 159 974
11 VALEO 13 23 50 37 25 41 29 29 33 16 21 46 51 61 70 66 65 143 81 85 985
12 ZF GROUP 5 1 3 4 4 10 7 5 11 10 32 34 57 72 136 82 96 94 80 79 822
13 HYUNDAI MOTOR CO LTD 6 18 12 10 10 14 16 8 9 7 7 11 13 71 69 48 90 96 91 158 764
14 PORSCHE AG 4 6 4 9 7 11 8 15 12 21 19 25 43 84 86 72 79 70 72 92 739
15 PANASONIC CORP 2 5 12 15 15 15 14 19 29 18 16 14 29 55 60 32 81 92 69 122 714
16 BMW AG 2 4 12 2 10 11 14 9 15 17 9 29 44 89 71 52 70 83 77 85 705
17 MITSUBISHI ELECTRIC CORP 15 37 21 23 10 26 22 17 14 23 10 14 26 23 47 22 41 79 45 103 618
18 DELPHI TECH INC 0 0 0 1 16 34 64 96 63 47 43 31 31 39 30 18 20 20 21 20 594
19 SUMITOMO WIRING 24 19 22 17 9 13 16 15 23 12 3 4 9 27 59 41 54 60 48 78 553
20 SIEMENS AG 3 6 5 19 36 48 23 38 35 54 47 45 45 20 15 14 3 8 9 14 487
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
85 TESLA MOTORS INC 0 0 0 0 0 0 0 0 0 0 0 0 2 2 13 8 14 29 20 22 110
11111111
33333333
44444444
22222222
55555555
66666666
11111111 22222222 Secondary cohort contributing significant R&D spendSustained leadership with recent ramp-up
33333333 44444444 Re-investment following R&D down-cycleRecent ramp-up / expansion in scope
55555555 66666666Transient R&D productivity Niche player with short history of innovative activity
Broad automotive space*: top assignee filing trends
* US grants and applications in the past 20 years on the topic of
motor vehicle or electric vehicle technology, collapsed by family

15. -Attorney Confidential-
As a technology owner, Tesla’s patent holdings in key topic areas
are dwarfed by its direct competitors in the automotive space
15
Patent counts* in core automotive topic areas
* INPADOC families filed in past
20 years, worldwide patent search

16. -Attorney Confidential-
Within even the more narrowly specified electric vehicles space,
Tesla’s portfolio accounts for a small share of total R&D activity
16
Key
More EV patents
than TSLA
Fewer EV patents
than TSLA
TSLA
Electric vehicle* patent citation network
*Source: Search on electric vehicle keywords returning ~13k INPADOC families
filed in past 20 years. Chart shows assignees with 50+ patent families in set

17. -Attorney Confidential-
Tesla’s Model S battery technology builds on pioneering
innovation by EV competitors — these patents are still enforceable
17
Patent No. Title Inventors
Publication
Year CitationsAssignee
Method for adjusting battery
power limits in a hybrid EV to
provide consistent launch
William Cawthorne
Gregory Hubbard
US6868318B1US6868318B1US6868318B1US6868318B1 2005GM 257257257257
Interactive battery charger for
electric vehicle
Allan Gale
Michael Degner
US7679336B2US7679336B2US7679336B2US7679336B2 2010Ford 50505050
System and method for
minimizing energy
consumption in hybrid vehicles
James Hafner
Anthony Tomlin
US7013205B1US7013205B1US7013205B1US7013205B1 2006IBM 226226226226
Battery assembly system used
for electric vehicle
Minamiura Keiichi
Nakanishi Toshiaki
US6541151B2US6541151B2US6541151B2US6541151B2 2003Toyota 52525252
Method for resetting a state of
charge of a battery of a hybrid
electric vehicle
Jae Seung KooUS6841972B2US6841972B2US6841972B2US6841972B2 2005Hyundai 26262626
Battery unit mounting structure
for electric vehicle
Takasaki Seiichi
Shimura Nobuyuki
US7610978B2US7610978B2US7610978B2US7610978B2 2009Mitsubishi 55555555
Tesla has proudly Open Sourced and abandoned it’s Intellectual Property, but other
companies have not, and are under no obligation to abandon their rights

18. -Attorney Confidential-
Tesla has orders of magnitude less patent protection than
competitors in any of the related industries in which it participates
18
Automotive Manufacturer / Designer
Consumer Electronic Device Maker
Electric Motor / Powertrain Provider
Battery / Energy Storage
Tesla Motors
Software Company
Systems Integrator
* INPADOC families filed in past
20 years, worldwide patent search
10
100
1,000
10,000
100,000
100 1,000 10,000 100,000 1,000,000
CanonPanasonic
EnerSys
AdobeRockwell Automation
VW
Nissan
Honda
GM
Ford
IBM
TeslaTeslaTeslaTesla
Microsoft
Oracle
Symantec
SAP
Patent Count*
Sony
Samsung
Sharp
Salesforce
Magna
Toshiba
Cummins
Delphi
Daimler
Continental
Hitachi
Cisco
Apple
Citrix
Fujitsu
Intuit
Eaton
Denso
LG
HP
Saft Groupe
LG Chem
Valeo
MAN
TEV
(MM USD)

19. -Attorney Confidential-
Tesla’s small inventor group highlights their lack of R&D depth in
an industry with vast inventive resources
19
Tesla: 114 iTesla: 114 iTesla: 114 iTesla: 114 inventors with >2 patents Ford: 3245Ford: 3245Ford: 3245Ford: 3245 inventors with >2 patents
Inventor Co-Occurrence Networks
Beyond the overwhelming difference in scale, Tesla’s small core inventor team is a
source of fragility—R&D quality relies on the consistent output of a small talent base

20. -Attorney Confidential-
The core inventor team is fragile: of the 16 inventors with 5+ co-
authored patents, 10 have since left Tesla for other opportunities
20
Currently employed by TSLA
No longer employed by TSLA
Key
IP Counsel

21. -Attorney Confidential-
Why patents matter: battery and automotive technology is
complicated, and keeping up requires every advantage possible
21
TSLA battery patents: 9-grams in claim language

22. -Attorney Confidential-
Tesla’s technology would risk being copied even if it owned all the
patents assigned to it…but it has actually given its IP away
22
Patents have no value beyond the ability to enforce them; unless this is a PR platitude with no real-
world meaning, then TSLA has discarded a key source of competitive advantage
Translation: “please do not sue us, established auto manufacturers of the world!” Engineers do build
technology leadership, but IP (and the threat of mutually assured destruction) maintains it

23. -Attorney Confidential-
Tesla imports large volumes of strategic components in a supply
network that is volatile and poorly understood
23
Two 10x swings in
less than a year

24. -Attorney Confidential-
Tesla’s need to reduce cost requires tough negotiations with
numerous strategic suppliers, possibly leading to drastic recent shifts
24
J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13 J-14 F-14 M-14 A-14 M-14 J-14 J-14 A-14 S-14 O-14 N-14 D-14 J-15 F-15 M-15 A-15 M-15 J-15 J-15 A-15 S-15 O-15 N-15 D-15 J-16 F-16
Sanyo Electric Co. Ltd. 43416 34532 48600 51605 50760 62650 41040 80460 73374 75384 99360 81297 74376 95040 1E+05 84240 1E+05 1E+05 68178 69120 2E+05 2E+05 2E+05 28080 1E+05 2E+05 3E+05 1E+05 30247 2E+05 1E+05 1E+05 2E+05 2E+05 2E+05 2E+05 2E+05 2E+05
Luvata Pori Oy 48 47 58 58 33 33 34 35 33 29 60 70 69 102 41 0 121 120 62 35 12 4 118 0 15 107 251 127 124 178 129 90 78 79231 4E+05 1E+05 9E+05 3E+05
Fukuta Electric& MachineryCo.,Ltd 28 21 97 159 100 176 145 240 195 177 116 183 126 155 210 214 298 230 283 208 136 7890 15241 4080 7620 12208 12533 28856 27310 30468 26324 22950 24616 10460 31226 27780 37734 6250
Ceramtec Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12483 4 1 0 1 2 4 31201 62400 46800 78000 54600
Ningbo Jinyi AutomotiveParts 5509 5244 5227 5079 7410 4692 5302 5388 6958 5797 4254 7704 4988 7070 1718 5714 9170 11822 6013 18389 15167 14220 12304 1457 6857 7055 13743 7195 3304 1245 2561 4900 6139 7646 0 0 0 1155
Hota Industrial Mfg. Co., Ltd. 836 668 2428 2073 4100 248 1708 2791 2366 2244 1718 3660 2841 3808 1647 4147 5722 4872 3379 993 7441 5171 4171 1306 3143 5308 10115 8802 3950 7662 8846 10151 5706 7068 12371 9541 8309 2961
Srems Zhongshan Cenity Electronic 7200 2599 3006 9776 7930 4288 23695 9196 9752 6429 6729 6337 3045 5968 2538 4364 3634 6499 3883 3430 1840 1450 500 0 1080 540 1200 1470 1000 300 1080 360 0 0 0 0 0 0
Pektron Plc 1 7584 0 63 28 7 41 31 0 0 0 0 0 0 0 0 0 0 0 0 55 73 39 19 35 62 41 82 98 124 37 39 4549 20098 19120 24388 24406 22608
Barum Continental Spol Sro 2000 2300 5000 5000 3948 2787 6 2000 1800 2216 0 0 1600 600 1432 1728 4682 3864 1296 5616 4320 3888 4321 864 1296 1296 11231 6406 6912 8208 1728 1728 2160 432 1296 1728 4752 4035
Nishikawa Rubber Co., Ltd. 1399 1765 1428 1565 1310 1146 1422 2146 1633 2824 2086 1226 2559 2076 2433 3015 2950 1693 2167 3147 3378 2346 2858 1266 3804 1942 4110 4202 3888 3456 3930 4886 2240 3702 3956 3968 3622 2508
Premo Mediterranee Sarl 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 61 4 1 3 0 13 9 2 10 5 6 10 36 26136 27 39921 33780
Amtek(Suzhou)Precision Engineering 240 1558 2904 729 762 3283 1948 0 0 0 0 0 34 0 0 0 0 48 408 0 4690 5790 3256 0 2753 678 3613 6623 4663 4343 6807 3547 4083 6379 5333 5733 5917 2105
Amtek Plastic (Shenzhen) Ltd 0 0 115 170 214 196 121 88 319 121 1003 62 731 1324 1158 1945 2452 2453 1359 2767 1211 4735 1596 879 1706 415 5745 2982 2428 3491 3746 2896 3977 5438 3959 4892 3573 3238
Wabco Fahrzeugsysteme Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 37 700 22500 20272 17900 11000
Dura AutomotiveSystems Gmbh 0 3 2 3 2 1 6 1 0 0 0 0 0 0 0 0 0 0 0 0 6 10 9 4 3 6 7 4 4 8 8 10 23 3971 18793 13146 14073 22270
Sixxon Precision Machinery Co., Ltd 705 1024 1242 983 387 722 1132 1083 954 1037 1084 1223 301 2487 843 1771 2287 1898 1277 565 3551 2252 1823 350 1298 2331 1098 3948 1673 1604 1378 2203 1679 1697 1940 1705 2595 405
Fuji Polymer Industries Co., Ltd. 1350 1305 1260 945 765 900 900 900 1485 1825 1848 3150 900 1848 2700 1944 1944 1944 3036 1044 1992 1140 1944 0 1044 2088 2256 1044 900 2088 1992 2161 192 1164 1080 1080 1164 1068
Tesla Motors Netherlands 0 0 0 21 0 0 0 2 48 0 0 0 6 74 66 260 1200 1194 1786 519 1409 1882 964 234 2806 571 1646 2859 1204 1417 2163 1475 2749 2637 1981 3635 2653 18335
Leopold Kostal Gmbh & Co Kg 0 58 43 0 9 0 32 26 0 0 0 0 0 0 0 0 0 0 0 0 3 15 4 0 7 3 4 3 4 1 2 7 2 6386 17626 15491 5480 7305
Panasonic Corporation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 600 1080 1872 3852 3840 1596 0 2220 2400 1140 3840 3480 2112 1536 3636 1320 2652 5160 1716 3732 2928
Rogers Technologies (Suzhou)Co.,Ltd 1760 326 988 356 712 906 916 2113 1240 1195 1740 1395 1546 1382 1465 920 686 631 447 206 2594 2350 1245 0 846 1074 1230 3074 1479 1698 979 1292 1198 2090 1690 2768 2106 1632
Transtek Magnetics Ltd. 0 0 0 0 0 0 0 0 302 389 884 882 1616 812 51 767 964 1287 683 549 1688 1637 4207 0 1195 3346 2606 2506 2106 2390 843 1706 1442 2862 2534 2231 2968 1350
Flextronics International Kft 19 127 85 53 90 85 156 138 55 93 121 33 224 43 88 99 187 66 0 176 222 160 184 61 49 119 376 165 303 233 254 110 1027 8986 8000 7468 13002 4044
Huf Huelsbeck & Fuerst Gmbh & Co Kg 0 0 0 12 10 9 33 11 0 0 0 0 0 0 0 0 0 0 0 0 34 30 26 5 20 18 30 21 27 30 27 22 28 4359 14428 10 15204 10936
IsabellenhuetteHeusler Gmbh & Co K 0 0 0 0 10 10 15 15 0 0 0 0 0 0 0 0 0 0 0 0 28 32 27 28 22 12 38 7 7 10 22 26 17 6000 3950 10300 12000 11200
Bizlink Technology Inc 256 619 143 667 311 371 873 324 833 491 392 279 685 1068 315 430 815 918 861 1331 1738 1382 2365 0 569 1790 971 1826 1443 1850 793 1144 2031 2332 2479 2248 3081 1887
Csf Poland Sp Zoo 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 4762 12897 89 14200 8179
Magnetec-Ungarn Kft. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 15 18 5962 7560 6440 10360 8400
Metalsa AutomotiveHainichen 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 10 20 20 0 12 18 20 18 20 8 26 22 16 6726 5760 9120 11520 4806
Halla Visteon Climate Control Corp. 598 605 428 706 760 338 1130 1145 928 1229 920 690 1130 848 1227 943 1649 1735 1385 1321 1386 1308 1458 244 1208 1832 1638 2171 1587 1447 1385 784 0 0 0 0 0 0
U-Shin Slovakia Sro 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8594 2232 15688 4920
Khl Interior Gmbh 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 8 10 4 8 10 2921 4554 6716 6456 3648
Viasystems Asia Pacific Co Ltd 0 789 416 518 366 106 251 181 493 1175 158 339 246 1084 333 337 1021 818 616 501 952 1185 1266 0 346 218 1136 943 756 483 391 651 769 1676 419 1158 776 753
Tpk Touch Solution(Xiamen)Inc. 7 2 16 15 11 13 312 432 384 500 341 360 413 636 516 874 392 445 609 345 722 720 848 0 449 865 656 1176 624 880 624 768 832 900 1256 1077 1353 89
Hongfujin Precision 138 420 186 120 124 310 260 391 324 373 403 484 416 421 226 376 485 366 307 0 706 594 378 190 743 849 691 247 1178 1095 1685 494 1492 557 548 959 1003 296
Ningbo Yexing AutomotivePart Co., 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5579 6821 6357 843
Tesla Motors Hk Ltd 10 0 1 0 0 0 3 0 0 0 0 0 0 0 5 0 0 0 0 0 23 0 0 0 3712 0 0 0 5016 0 0 12 0 5184 0 0 5136 0
Gaoyao Hongxing Precision Casting 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 480 1976 4621 10048 1860
Connor Manufacturing(Suzhou)Co.Ltd. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 63 0 315 630 918 1328 1717 1860 5 21 6 989 2410 2518 2245 1692
Hanon Systems. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 679 1209 3510 3002 3351 2629 1801
Brembo Spa 139 164 88 18 115 142 117 109 81 177 146 2488 106 124 256 134 273 397 322 47 166 301 273 16 101 56 146 136 162 233 142 106 119 2806 154 230 167 5144
“December effect”
Drastic supply shifts October ‘15
Abrupt supply
ramp-ups
Abrupt supply
discontinuations
Top Tesla suppliers, containers per yearTop Tesla suppliers, containers per yearTop Tesla suppliers, containers per yearTop Tesla suppliers, containers per year

25. -Attorney Confidential-
Tesla is increasingly dependent on battery and motor imports
25
The “smoking gun”: as
deployment of diverse
motor parts increases, the
probability of patent
infringement increases
The “smoking gun”: as
deployment of diverse
motor parts increases, the
probability of patent
infringement increases

26. -Attorney Confidential-
Tesla’s cost position is driven by negotiations with suppliers (e.g. Panasonic and
Fukuta) with incentives to charge high prices for advanced technologies
26
Supplier # bills Supplier # bills Supplier # bills
Constellium France Sas 67 Sanyo Electric Co. Ltd. (Panasonic) 521 Fukuta Electric & Machinery Co.,Ltd 251
Constellium Neuf Brisach 40 Lg Electronics Inc 54 Da Horn Refining Co., Ltd. 79
Constellium Singen Gmbh 23 Tesla Motors Netherlands 52 Faurecia (Wuxi) Seating Components 75
Toyota Tsusho Corporation 12 Amtek Plastic (Shenzhen) Ltd 49 Kuen Tong Industrial Co., Ltd. 62
Sanmina-Sci Enclosure System 11 Samsung Sdi Co.,Ltd 19 Ningbo Xusheng Auto Technology 60
Premo Mediterranee Sarl 7 Ningbo Jinyi Automotive Parts 10 Hongfujin Precision 41
King Lai International Co., Ltd. 2 Tesla Motors Ltd 7 Igarashi Electric Works Hk Ltd 38
Aleris Aluminium Duffel Bvba 1 Samsung Sdi Co.,Ltd. 5 Mabuchi Taiwan Co., Ltd. 35
Constellium 1 Tesla Motors Japan Kk 5 Amtek Plastic (Shenzhen) Ltd 34
Hunan Xiangtou Goldsky Titanium 1 Shenzhen Tat Fook Tech Co Ltd 4 Tesla Motors Taiwan Limited 28
Kobe Steel, Ltd. 1 Tesla Automobile Distribution 4 Semyung Industrial, Co., Ltd. 18
Kobe Steel,Ltd. 1 Atlasbx Co., Ltd. 3 Sixxon Precision Machinery Co., Ltd 16
Mga International 1 Tesla Motors Hk Ltd 3 Brembo Spa 15
Odawara Engineerinbg Co.,Ltd. 1 LG Electronics Inc 2 Faurecia (Yancheng) Automotive Syst 12
Sanmina-Sci Enclosure Systems 1 Aig Verpackungs Gmbh 1 Central Corporation 10
Shenzhen Meinie Tool & Die Co Ltd 1 Brabus Gmbh 1 Eaton Automotive Controls Ltd. 10
Srems Zhongshan Cenity Electronic 1 Galliker Transport Ag 1 Jiu-Bor Industrial Co.,Ltd. 9
Aluminum (for doors, hood, etc.) Batteries Motors & motor parts
Tesla does not own its IP, and worse, it doesn’t own the technology within its motors.
As soon as Tesla becomes profitable its margins will be drained by its vendor network
Basic industrial commodity Valuable semi-commodity Critical technology chokepoint

27. -Attorney Confidential-
Executive Summary
27
What kind of company is TSLA really? Few companies have ever managed such a broad scope of business models. Its
valuation multiples (when they can be calculated) lie well above its direct business model comparables
− TSLA is attempting more vertical integration than any auto company has recently tried
− TSLA trades at a higher revenue multiple than any related technology business
− TSLA’s only comparables in terms of multiple are business models that TSLA is not:
− Software companies: TSLA has low / negative margins and heavy fixed asset commitment
− Social media companies: TSLA has no network effects, no platform economics and high scaling costs
− Biotech or oil explorations companies: TSLA has high marginal costs for every unit it produces
TSLA has relied heavily on existing technology in designing a successful EV model, and while it may have generated some
valuable IP it now controls little of it and has questionable sustainable competitive advantage in technology
− TSLA’s patents cover battery-related technology and selected components but not battery cells
− TSLA’s patent holdings are dwarfed by its technology competitors, limiting its freedom to operate in the EV market
where its technology position is modest
− TSLA’s engineering talent is thin relative to competitors and many productive inventors have left
− TSLA’s valuable inventions can be readily copied by its EV competitors
− TSLA’s cost position is heavily dependent on its bargaining positions with strategic suppliers who have an incentive to
price aggressively for their advanced technologies
TSLA is not the green company it claims to be, with environmental risks at all stages of the vehicle lifecycle
− TSLA battery production requires the mining and use of numerous toxic chemicals
− TSLA EV production has a heavier carbon footprint than traditional vehicles
− TSLA vehicles consume lots of energy; battery charging shifts CO2 emissions from car engines to power plants
− Disposal of TSLA batteries at large scale will create a heavy toxic burden

28. -Attorney Confidential-
Finally, all-electric vehicles are not as sustainable as they may
seem; this is a serious brand risk and an unknown legal exposure
28
“ ”
Battery Sourcing Battery Charging Battery Disposal
“When a wire is connected to an
electric vehicle at one end and a
coal-fired power plant at the other
end, the environmental
consequences are worse thanworse thanworse thanworse than
driving a normal gasolinedriving a normal gasolinedriving a normal gasolinedriving a normal gasoline----poweredpoweredpoweredpowered
car…allcar…allcar…allcar…all----electric vehicles cause 86%electric vehicles cause 86%electric vehicles cause 86%electric vehicles cause 86%
more deaths from air pollutionmore deaths from air pollutionmore deaths from air pollutionmore deaths from air pollution
than do cars powered by regular
gasoline.“ -- Carnegie Inst. for Sci.
“Graphite…is mined and processed
in China where graphite pollution
has fouled air and water, damagedfouled air and water, damagedfouled air and water, damagedfouled air and water, damaged
crops and raised healthcrops and raised healthcrops and raised healthcrops and raised health
concerns…concerns…concerns…concerns…TeslaTeslaTeslaTesla’’’’s factory alones factory alones factory alones factory alone
could double demandcould double demandcould double demandcould double demand for graphite
in batteries.” -- Bloomberg
“Initial production of the vehicle
and the batteries together make up
something like 40 percent of the40 percent of the40 percent of the40 percent of the
total carbon footprint of antotal carbon footprint of antotal carbon footprint of antotal carbon footprint of an EVEVEVEV—
nearly double that of an equivalent
gasoline-powered vehicle.” -- EC
“The recovery rate of lithium ion
batteries, even in first world
countries, is in the single digit
percent range. Most batteries endMost batteries endMost batteries endMost batteries end
up in landfillup in landfillup in landfillup in landfill.” -- Tech Metals
Insider
“The extraction of lithium has
significant environmental and socialsignificant environmental and socialsignificant environmental and socialsignificant environmental and social
impactsimpactsimpactsimpacts, especially due to water
pollution and depletion.” -- EC
“The environmental impacts
include resource depletion, global
warming, and ecological toxicity —
primarily resulting from the
production, processing, and use ofuse ofuse ofuse of
cobalt and nickel metalcobalt and nickel metalcobalt and nickel metalcobalt and nickel metal
compoundscompoundscompoundscompounds, which can cause
adverse respiratory, pulmonary,respiratory, pulmonary,respiratory, pulmonary,respiratory, pulmonary,
and neurological effectsand neurological effectsand neurological effectsand neurological effects in those
exposed.” -- ABT Associates
“A carbon emissions surchargecarbon emissions surchargecarbon emissions surchargecarbon emissions surcharge [was]
slapped on…the Model S [in
Singopore for]…an equivalent CO2
emission of 222g/km. The
emissions were calculated using a
"grid emissions factor" [for]
emissions created by energy useemissions created by energy useemissions created by energy useemissions created by energy use …
when its battery converts electricity
into power” -- CNBC

29. -Attorney Confidential-
Pounds of toxic cobalt and unstable lithium are present in each
Tesla EV, and present a serious safety (as well as moral) hazard
29
From US20150111082A1: Cell Module Assemblies
Tesla Battery Pack
LithiumLithiumLithiumLithium
CobaltCobaltCobaltCobalt
Immediately dangerous to life and health at 20
mg / m3 (microgram / L)
A Tesla EV contains 18 pounds of cobalt
distributed throughout the battery cells
This toxic concentration of a dangerous heavyThis toxic concentration of a dangerous heavyThis toxic concentration of a dangerous heavyThis toxic concentration of a dangerous heavy
metal is core to Tesla vehicle performancemetal is core to Tesla vehicle performancemetal is core to Tesla vehicle performancemetal is core to Tesla vehicle performance
Lithium in damaged battery cells is known to
lead to spontaneous and violent explosions
The Model S stores 30 pounds of lithium in
cells with reduced individual safety features
What happens when aging Tesla batteries getWhat happens when aging Tesla batteries getWhat happens when aging Tesla batteries getWhat happens when aging Tesla batteries get
compacted and punctured in landfills?compacted and punctured in landfills?compacted and punctured in landfills?compacted and punctured in landfills?
Just as switching from tobacco cigarettes to e-cigarettes is still bad for your health,
switching from gas automobiles to electric vehicles is still bad for the environment

30. -Attorney Confidential-
On market price adjustments:
30
There’s a man goin’ round takin’ names.
An’ he decides who to free and who to blame.
Everybody won’t be treated all the same.
There’ll be a golden ladder reaching down.
When the man comes around.
-Johnny Cash

31. -Attorney Confidential-
Thank you
For more information, please contact Devonshire Research Group, LLC on Bloomberg: SURFHACKER