SecProbe.io

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-3561

Mail Stop 3561           February 25, 2010   Elon Musk Chief Executive Officer Tesla Motors, Inc. 3500 Deer Creek Road  Palo Alto, California 94304
Re: Tesla Motors, Inc.
 Registration Statement on Form S-1
Filed January 29, 2010 File No. 333-164593

Dear Mr. Musk:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure.  Af ter reviewing this information, we may or
may not raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at  the telephone numbers listed at the end of this letter.
 General

1. Please tell us whether you sell the eq uipment in the photo captioned “Charging
the Roadster.”  If you do not, please rem ove this photograph.  Clarify whether the
Tesla Model S shown on page 93 is a prototype.
2. Your financial statements should be update d, as necessary, to comply with Rule
3-12 of Regulation S-X at the effective date of your registration statement.

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 2  3. Please provide a currently dated consent from your independent public accountant
upon filing your amended registration statement.

Prospectus Summary, page 1

4. Please revise the fourth paragraph to di sclose approximately how long it takes to
charge the Roadster at home.
5. Please refer to the first bullet on page 4.  Please provide us the basis for this belief
or omit it.  We are under the impression that both General Motors with its Volt
and Ford with its various hybrid automobiles, not to mention Toyota and others,
are aggressively pursing alternative fuel vehicle programs.
 The Offering, page 8

6. Per your disclosure, it appears that your co mpany plans to effect a stock split prior
to the commencement of this offering.  In this regard, please confirm that you
intend to adjust your disclosure of out standing shares and earnings per share
throughout your filing to give retroactive effect to the planned stock split.  In
addition, please provide a cr oss-referenced note, as appropriate, which discloses
your retroactive treatment, explains the ch anges made, and states the date that the
change became effective.  Refer to  FASB ASC Topic 260-10-55-12 and SAB
Topic 4:C for further guidance.

Risk Factors, page 13
7. Please remove the statement that “The ri sks and uncertainties described below are
not the only ones we face.  Additional risk s and uncertainties that we are unaware
of, or that we currently believe are no t material, also may become important
factors that may adversely a ffect us and our prospects ma terially.”  All material
risks should be discussed in  this section.  If risks ar e not deemed material then
they should not be mentioned.
8. Please add risk factors for the followi ng risks or tell us why they are not
necessary: the risk that eith er the reality or the perception that something to with
electronic matters is responsible for th e sudden acceleration problems experienced
by Toyota will substantially reduce the potential market for all-electric
automobiles; the risk that other kinds of energy, e.g., natural gas which reports
have suggested is very abundant and ine xpensive in North America, might replace
batteries as the preferred a lternative to gasoline; and th e risk that the continuing
depressed economic climate will signifi cantly reduce the market for cars in your
price range.

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 3  9. We note that in the first risk factor you say that you have no operating history
with respect to the Model S, have only recently begun the component procurement process, not completed the site selection process, finalized the design
or completed the engineering, manufacturi ng or component supply plans for it.
Yet you present an estimated  price in the Summary.  Please tell us how you are
able to do this.
10. In the third paragraph of the first risk factor, please revi se to name the automobile
manufacturer in the second sentence.
11. We note your statement on page 15 that “recent reports have suggested that
electric vehicles operated in colder temperatures may experience a reduced
overall range as batteries may lose the ab ility to hold a charge more rapidly in
cold weather.”  Please disclo se any reasons you may have to believe that this is or
will be true for your vehicles.
12. Please revise the heading of the second ri sk factor on page 16 to include the
information that customers may have difficulty shifting between different
methods of braking. We suggest discussi ng the risk that b ecause of the recent
news concerning Toyota crashes purchasers  may be less willing to purchase cars
with such issues.
13. Refer to the first risk factor on page 20. If possible, please qu antify the sales made
to persons with pre-existing relationships with the management team.
14. Refer to the first full risk factor on pa ge 31.  For your sole suppliers, either
affirmatively state that there are other alternative providers  and that you can
switch if necessary or name the sole supplier and the component.  This disclosure may be in the Business section provided a cros s-reference to it appears in this risk
factor.
 Use of Proceeds, page 53

15. We note on page six and elsewhere that you have “a goal of establishing
approximately 50 stores globally within th e next several years.”  If applicable
please discuss how the proceeds are to be a llocated to this store expansion.  If
other funds are to be used for this pur pose along with the proceeds of the offering,
please indicate.
 Selected Consolidated Financial Data, page 59

16. Please revise your selected consolidated  balance sheet data to include the
disclosure of your pro forma balance sheet  data as of September 30, 2009, or later

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 4
date as applicable.
 Management’s Discussion and Analysis of Financial Condition and Results of
Operations, page 61
17. We would encourage you to expand your “O verview” section to provide further
insight into known material opportunities, ch allenges, risks, a nd material trends
and uncertainties and discuss any actions being taken to address the same.  For example, here or in “Liquidity a nd Capital Resources,” you might discuss
Daimler’s stated intent to produce all of its lithium-ion batteri es by 2012 as part of
a joint venture with Evonik Industries AG and the challenge this poses to powertrain sales.

Basis of Presentation

Automotive Sales, page 61
18. Per your disclosure on page 87 of MD&A , you consider your company’s vehicle
reservation list to be an indicator of potential demand.  Per your disclosure on
page 34 of the “Risk Factors” sec tion of your filing, $15.2 million of your
“refundable reservation payments” balan ce at September 30, 2009 appears to have
related to undelivered Model S sedans , while only $9.3 million of the balance
appears to have related to undelivered Tesl a Roadsters.  Given that (i) reservation
payments related to Model S sedans cannot be  expected to be realized in the near
term, (ii) the Tesla Roadster currently is your company’s only commercialized
electric vehicle, (iii) sales of the Tesla Roadster through September 30, 2009
appear to have reflected a disproportiona te amount of reserva tions placed prior to
2009, which is not the expected trend for future periods, and (iv) your company
typically requires the receipt of reserv ation payments for a vehicle prior to
beginning a vehicle’s production, we be lieve that expanding your MD&A to
specifically disclose and analyze bo th (a) the portion of your refundable
reservation payment balance that relate s to Tesla Roadster  units and (b) the
number of Tesla Roadster units that have been reserved, as of each balance sheet date, may provide meaningful insight regarding your comp any’s near term
revenue prospects, changes in the number of unfulfilled reservations for the Tesla Roadster, and the current demand for the Tesla Roadster.  Please revise your MD&A disclosure acco rdingly, or advise.

Results of Operations

Costs of Sales and Gross Profit, page 76
19. We note that you recognize various expenses in  costs of sales in addition to direct
costs of vehicles sold, such as acc ruals for warranty expense, inventory
obsolescence charges, charges related to adverse purchase commitments, and
delivery costs.  Please consider expandi ng your MD&A disclosu re to quantify and

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 5
analyze the amounts of such costs to the extent material to your results of
operations.

Liquidity and Capital Resources, page 80

20. Per your disclosure on page 33 of the “R isk Factors” section of your filing, you
have historically collected full payment for the purchase of a Tesla Roadster
approximately three months prior to pr oduction.  However, per an Associated
Press news article dated February 25, 2010, it appears that you plan to begin
leasing your Tesla Roadsters to customers.  In this regard, please tell us and
disclose whether your plan to offer vehi cle leases is expected to impact your
liquidity and capital resources .  In addition, tell us and disclose in your significant
accounting policies how you plan to acc ount for the leasing of your Tesla
Roadsters.
 Cash Flows from Operating Activities, page 82

21. We note that your disclosure regarding your company’s cash flows used in
operating activities focuses primarily upon th e discussion of the reconciling items
presented in your statement of cash flows.  In this regard, we note that references
to the line items presented in your statem ents of cash flows prepared using the
indirect method may not provi de a sufficient basis for a reader to analyze the
changes in the actual sources and uses of  your operating cash flows.  As such, we
believe that you should expand or revise your disclosure to analyze your reported
cash flows used I operations, and changes th ereto, in terms of  actual cash receipts
and cash payments.  For example, we believe that your disclosure could be
enhanced by disclosing and analyzing (i) the actual recei pts of refundable
reservation payments and (ii) actual expenditures for inventory for your comparative reporting periods, rather than  referencing to the changes in the
respective account bala nces between balance sheet da tes.  Please revise your
disclosure accordingly, or advise.  For further guidance, refer to Section IV.B of our interpretive release “Commission Guidance Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations,”
which is available on our website at http://www.sec.gov/rules/interp/33-8350.htm
.

Business, page 89
22. Please reconcile your disclosures throughout  the section “Incumbent Automobile
Manufacturers Face Significant Challenges as They Pursue the Electric Vehicle
Opportunity” on pages 89 and 90 with your disclosures throughout the section “Competition” on pages 119 and 120.  For example, on page 89 you state that “incumbent automobile manufacturers face significant challenges that will
continue to inhibit their ability to capi talize on the electric vehicle opportunity,”
yet you state on page 120 that your competitors “may be in a stronger position to

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 6
respond quickly to new technologies and ma y be able to design, develop, market
and sell their products more effectively.”   See also the disclosure found on page
four.
23. Additionally, please provide bases for the statements you make on page 89 and 90
regarding challenges faced by incu mbent automobile manufacturers.
24. We note your statement on page 117 that your battery packagi ng contains “trace
amounts of various hazardous chemicals whose use, storage and disposal is
regulated under federal law.”  If applicable, please disclose any costs or restrictions automobile owners may be subject to when disposing of battery
packaging.
 Management, page 122

25. Please remove the qualitative statement regarding the “prestigious” Lexus RX350
found in the discussion of Gilbert Passin page 123.

Executive Compensation, page 129
26. We note on page 133 that during the f ourth quarter of 2009 you granted some
stock options based upon performance reviews and some based upon overall
contribution, “especially those with longer tenures with us.”  Please clarify which
grants were made to each executive offi cer based on either performance reviews
or overall contributio n/tenure.  Additionally, disc uss how prior awards were
considered in setting the amounts of grants.
27. We note your disclosure on page 134 that  “Base salaries for certain of our
executive officers were increased during 2009 to award them for individual past
performance.”  Please discuss how base sa laries were structured and implemented
to reflect each executive officers’ individual performance, describing the elements of individual performan ce taken into account.

Certain Relationships and Relate d Party Transactions, page 150

28. In the interest of clarity please revise the disc losures on pages 151 and 152.  For
each transaction involving a related pe rson, please identify the related person,
consideration paid, and secu rities received.  For example the conversion price for
each related person transaction is not clear from the Series E Preferred Stock table
on page 151, and the related persons owning “certain notes and warrants” from
the February 2008 Bridge Debt Financing are not immediately identifiable.
29. Please name the “certain holders” with wh om you have entered into investors’

Elon Musk
Tesla Motors, Inc.
February 25, 2010 Page 7
rights agreements, as disclosed on page 154.
30. Please tell us which exhibit is the first of the two strategic agreements discussed
under that heading on page 153.
 Description of Capital Stock, page 159

31. We note the disclosure on page 159 that  “All outstanding shar es of common stock
are, and all shares of common stock to  be outstanding upon completion of this
offering will be, fully paid and nonassessabl e.”  This is a legal conclusion that the
company is not qualified to make.  Pleas e attribute this to counsel and file
counsel’s consent to be named in this section.
 Financial Statements

Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-7
32. Please refer to your disclosure on page 106 of the “Business” section of your
filing.  We note that your company provides customers with the opportunity to purchase an “Extended Service Plan,” wh ich provides customers with additional
warranty coverage after the expiration of their New Vehicle Limited Warranty.  In
this regard, please expand your revenue r ecognition policy to discuss the manner
in which you account for (i) the revenue generated from the sale of your Extended
Service Plan and (ii) the co sts incurred in connection w ith the services provided
under your Extended Service Plan.  Your re vised disclosure should specifically
address the timing of revenue recogniti on, including when revenue is first
recognized.  Similarly, tell us and disc lose your revenue recognition policy for
sales of the “battery replacement option,” which is also described on page 106 of
the “Business” section of your filing.  F