Tesla, Inc. TSLA: Evaluating Competitive Positioning on ADAS

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1 EQUITY RESEARCH COMPANY UPDATE May 24, 2017 Stock Rating: PERFORM mo. Price Target NA TSLA - NASDAQ $ Yr. EPS Gr. Rate 35% 52-Wk Range $ $ Shares Outstanding 180.7M Float 116.5M Market Capitalization $50,978.0M Avg. Daily Trading Volume 6,077,136 Dividend/Div Yield NA/NM Book Value $34.00 Fiscal Year Ends Dec 2017E ROE NA LT Debt $7,159.0M Preferred NA Common Equity $6,168M Convertible Available Yes Revenue ($/mil) Q1 Q2 Q3 Q4 Year Mult. 2015A B 4.0B NM 2016A 1.1B 1.3B 2.3B 2.3B 7.0B NM 2017E 2.7BA 2.5B 2.6B 2.7B 10.2B NM 2018E B NM EPS Non- GAAP Q1 Q2 Q3 Q4 Year Mult. 2015A (0.88) (1.11) (1.35) (2.02) (5.39) NM 2016A (1.45) (1.61) 0.71 (0.69) (2.87) NM 2017E (1.33)A (1.03) (1.48) (1.26) (5.00) NM 2018E NM Colin Rusch Colin.Rusch@opco.com Kristen Owen, CFA Kristen.Owen@opco.com Noah Kaye Noah.Kaye@opco.com Luis Amadeo Luis.Amadeo@opco.com Disseminated: May 24, :00 EDT; Produced: May 23, :36 EDT SUSTAINABLE GROWTH AND RESOURCE OPTIMIZATION Tesla, Inc. TSLA: Evaluating Competitive Positioning on ADAS SUMMARY With Model 3 rollout nearing, we assess how it will impact the company s Advanced Driver Assist System (ADAS) and ambitions around machine learning. We believe Model 3 is critical to TSLA s ADAS position for two reasons. First, TSLA s ability to accelerate learning cycles related to characterizing driving behavior is facilitated by high volume rollout of Model 3, but the ability to process that data and create driving applications appears nascent and the challenge is extensive. Second, we believe leveraging consumer balance sheets for its technology development is an underappreciated aspect of the business. Should the Model 3 ramp on schedule, or even late as most investors expect, we believe the cost effectiveness and time to learning are critical advantages for TSLA. KEY POINTS Limited number of competitor vehicles available. Our checks indicate just fifteen models with semi-autonomous driving technology are currently available for model years 16/17, offered by BMW, Mercedes-Benz, Volvo, and Tesla. Often combined with ADAS technologies, such as forward collision warning and lane departure prevention systems, we use the presence of self-steering capability as our determinant for defining semi-autonomous. Model 3 enables high mileage data collection. A RAND Corporation study estimates over 11 billion test miles would be necessary in order to show statistically significant evidence of the autonomous vehicle s superiority over human drivers. We note TSLA collects data regardless of whether Autopilot is engaged and estimate the company can accumulate the necessary mileage within just 27 months, or by mid Can TSLA effectively process information? While collecting data is an important step for TSLA, its ability to efficiently and insightfully process it will prove vital to the success of the program. TSLA has been careful to protect its capabilities in this regard for competitive reasons. We assume it will field a capable team, with the next-gen ADAS release providing potential proof point. Leveraging customer balance sheets. We estimate TSLA will generate ~$10B sales in 2017 with gross profit of $2.5B. We believe that capital which comes from TSLA s customers is a key contributor to facilitating large volumes of vehicles on the road. We note software, fleet, and auto competitors largely remain at a stage where they are funding testing from their own balance sheets. Valuation implications. Our SOTP analysis (note) only considered TSLA's ADAS value equivalent to Mobileye s acquisition price. We see potential for TSLA to have significantly higher value if it controls the machine learning aspect of the product development. We view the successful ramp of the Model 3 as a precursor to considering additional value from TSLA s ADAS offering. Stock Price Performance Company Description Tesla, Inc. designs, develops, manufactures, and sells electric vehicles, electric powertrain components. It also offers design, installation, and sale or lease of solar energy systems and ongoing monitor/ repair services. Its products include electric vehicles such as the Model S and Model X. For analyst certification and important disclosures, see the Disclosure Appendix. Oppenheimer & Co Inc. 85 Broad Street, New York, NY Tel: Fax:

2 Tesla, Inc. 5-YEAR PRICE PERFORMANCE Source: Bloomberg BASE CASE ASSUMPTION 2016 US residential solar market continues to show modest growth throughout 2017 with a moderate degree of sales synergies for SolarCity A relatively slow ramp for Model 3, with deliveries beginning in late 2H17 TSLA 2017 INVESTMENT THESIS While we believe TSLA has the potential to become a transformative technology company and deliver outsized returns for investors, the company's pace of growth, recent questionable decisions around capital allocation, and lack of disclosure keep us on the sidelines. CATALYSTS TSLA reaches profitability on GAAP basis post-solarcity acquisition Continued execution on its vehicle production and Gigafactory ramps UPSIDE SCENARIO Gigafactory continues to ramp ahead of expectations TSLA begins to reveal ways to monetize its network beyond hardware sales Model 3 production ramps on schedule DOWNSIDE SCENARIO Model 3 production is delayed into 2H18 Gigafactory ramp is delayed Capex exceeds investor expectations 2 Colin Rusch:

3 Tesla, Inc. State of Autonomy Although autonomous driving has gained increasing interest from investors and potential corporate partners, we believe we are still in very early stages of the development of technologies to support fully driverless vehicles. We note a number of advanced driver assistance systems (ADAS) currently available address a specific task or a small number of tasks related to semi-autonomous driving, and very few full-suite solutions supporting anything beyond Level Two automation as defined by the Society of Automotive Engineers (SAE) and NHTSA (see Exhibit 1). That said, we believe the pace of innovation is reaching a critical tipping point; recent checks at the Detroit Auto Show suggest that there is significant activity on the hardware side, while the development and timing of software and fully integrated solutions remain a more complex undertaking. Exhibit 1: Overview of Levels of Automation Source: 2025AD Our checks indicate just fifteen models with semi-autonomous driving technology are currently available for model years 16/17, offered by BMW, Mercedes-Benz, Volvo, and Tesla. Often combined with ADAS technologies, such as forward collision warning and lane departure prevention systems, we use the presence of self-steering capability as our determinant for defining semi-autonomous. While most of the models offered come with a set of standard ADAS features (rear-view back up camera, automatic braking systems, parking assist), we note that the higher levels of autonomy where the vehicle responds to incidents (vs. warning against), such as collision avoidance, are often combined into premium add-on packages. 3

4 Tesla, Inc. We believe that requiring buyers to opt in may help inform OEMs regarding which autonomous features customers are willing to pay for; however, we note that an integrated approach may be more conducive to widespread adoption. Consistent with our view that autonomous technologies will penetrate luxury brands before we see widespread adoption among volume vehicles, we note that the median MSRP for vehicles with these enhanced systems was $80,850. As the cost of hardware declines, economies of scale are achieved in software development, and the incremental safety benefits of the technology prove out, we believe we will see an increasing number of volume vehicles provide standard semiautonomous features. Increasing Attention on Partnerships, But Is Piecemeal an Effective Strategy? With few companies tackling autonomous driving from all angles, we note an increase in the number of partnerships being developed among systems and technology providers, such as the recent agreement between Lyft and Waymo (Alphabet s self-driving car unit). In this case, the partnership provides Waymo access to a sizable testing fleet which can potentially be retrofitted while enabling Lyft access to self-driving technology development for potential future use in ride-hailing services. We believe Lyft s separate agreement with and investment from GM complements the partnership by offering an OEM perspective on designing and manufacturing a vehicle for mass production. We note similar partnership arrangements between Uber and Daimler, as well as a separate deal struck between Waymo and Fiat Chrysler. We see potential for significant complication in investment and ownership of hardware, especially considering the fact that many drivers engaged are employed by both Lyft and Uber and the transient nature of drivers may limit commitments to any platform for testing purposes. Tesla Miles Ahead of Competition While we see rapid development occurring on the hardware side, we note software remains the greatest impediment to enabling autonomous technology. To that end an immense amount of data will be required in order to develop the codes necessary for robust artificial intelligence (AI) networks capable of making safety decisions on par with or better than human drivers. We believe that, as far data collection is concerned, Tesla has a material advantage to date. At the most stringent levels, the RAND Corporation study estimates that over 11 billion test miles would need to be driven by autonomous vehicles in order to show statistically significant evidence of the technology s superiority over human drivers. Elon Musk postulated regulatory approval would require something on the order of 6 billion miles. Based on the assumptions made in this study, it would take the example fleet of 100 vehicles running 24/7/365 at an average speed of 25 mph over 500 years to complete 1. Using this as a baseline, we compare our estimates for deliveries of vehicles with Autopilot 2.0 installed through 2018 (~415K vehicles). Assuming 12,000 average annual miles per vehicle, and only 8% of miles driven in Autopilot mode, we estimate the same test would take 28 years for Tesla to accumulate sufficient mileage. However, we note that Tesla is collecting data regardless of whether or not Autopilot is engaged. Assuming the same 12,000 miles per vehicle, we estimate the company can accumulate the necessary mileage within just 27 months, or by mid-2021 based on our deliveries estimates (see Exhibit 2; for a summary of assumptions, please see Exhibit 4). 1 Kalra, Nidhi and Susan Paddock. Driving to Safety: How Many Miles of Driving Would It Take to Demonstrate 4 Autonomous Vehicle Reliability?. Santa Monica, CA: RAND Corporation,

5 Cumulative Autopilot Miles (M) Autopilot 2.0 Full-scale Model 3 Tesla, Inc. How many miles (years*) would autonomous vehicles have to be driven. Exhibit 2: Examples of Miles/Time Needed to Demonstrate Autonomous Vehicle Reliability A) 1.12 fatalities per 100 million miles (1) Sources: RAND Corporation, Oppenheimer & Co. B) 78 reported injuries per 100 million miles (2) C) 201 reported crashes per 100 million miles (3) 1) without failure to demonstrate with 95% confidence that their failure rate is at most 268 million miles 3.8 million miles 1.5 million miles RAND time to achieve 12 years 2 months 25 days Tesla time to achieve 8 months 4 days 33 hours 2) to demonstrate with 95% confidence their failure rate to within 20% of the true rate of 8.6 billion miles 123 million miles 48 million miles RAND time to achieve 392 years 6 years 26 months Tesla time to achieve 22 years 4 months 44 days 3) to demonstrate with 95% confidence and 80% power that their failure rate is 20% better than the human driver failure rate of 11 billion miles 159 million miles 62 million miles RAND time to achieve 504 years 7 years 3 years Tesla time to achieve 28 years 5 months 2 months * years based on average annual miles driven/vehicle 1) Department of Transportation fatalities per 100 million miles driven, ) Department of Transportation reported injuries per 100 million miles driven, ) Department of Transportation reported crashes per 100 million miles driven, 2015 Note: RAND Study updated for 2015 DOT data While we believe the timing of widespread adoption of autonomous driving remains difficult to predict and subject to myriad policy decisions beyond Tesla s control, we use this study to demonstrate the value of Tesla s existing install base and view it as a key differentiator from other developers of autonomous driving technology. We note that, based on our estimates for deliveries through 4Q18, we estimate Tesla will have logged just under 2.5 billion road miles driven with Autopilot engaged (see Exhibit 3). This compares to our estimates of 336 million miles to date through 1Q17 and versus Waymo s 3 million live (non-simulated) miles. Exhibit 3: Tesla Estimated Cumulative Autopilot Miles Driven by YE2018 2,500 2,000 1,500 1, M Miles Sources: Company Reports, Oppenheimer & Co. 5

6 Tesla, Inc. All that said the crux of this argument depends on two things: 1) a successful launch of the Model 3, and 2) Tesla s ability to effectively use the data it is collecting to improve Autopilot performance and demonstrate Level 3-5 functionality. And it is unclear how mature Tesla s software development is. Beyond object recognition, which we understand to be in need of additional improvements, the real challenge appears to be in the decisionmaking software creation. Integrating mapping data, real-time information and some integrated approach of neural networks and rule-based decision making appears years away at best. We certainly believe Tesla will be among leaders in the development of these applications, but are tempering expectations on when products will be on the market. Cost of Capital as a Competitive Advantage As the autonomous driving landscape becomes more complex with traditional auto manufacturers, Tier 1 suppliers, and systems integrators working with emerging technology providers, we believe cost and structure of capital for development will become increasingly important. As we previously discussed, we see the majority of players currently in this space taking a piece-meal approach to development, suggesting a fragmented flow of capital investments necessary for that development. Tesla, on the other hand, funds a material portion of its development capital through the sale of its vehicles. We estimate the company will generate ~$10B in sales in 2017 with gross profit of $2.5B. We believe that capital, which comes from Tesla s customers, is a key contributor to facilitating large volumes of vehicles on the road which will be collecting data. When we look at private companies trying to compete in this space (Uber), or technology companies, like Waymo or Mobileye, it is clear that Tesla s ability to have customers effectively pay for a dedicated fleet of test vehicles is a very efficient source of capital and a clear competitive advantage. ADAS in Context of Valuation Our sum of the parts analysis on TSLA (Tesla: Taking Stock of the Fantasy, 3/22/2017) only considered its ADAS value as an equivalent of Intel s $15B offer price for Mobileye. While we believe Tesla s technology appears to be behind Mobileye from a functionality perspective, we see the potential for TSLA to have a significantly higher value if it controls the machine learning aspect of the product development. With that said, we believe that a successful ramp of the Model 3 is precursor to considering additional value from TSLA s ADAS offering. As we see high-volume rollout of Model 3, we anticipate reviewing this component of our valuation methodology. 6

7 Tesla, Inc. Exhibit 4: Summary of Assumptions for Examples of Miles and Time Needed to Demonstrate Autonomous Vehicle Reliability Summary of Assumptions General Assumptions RAND Assumptions Tesla Assumptions Fleet Size ,000 Hours 24 N/A Days 365 N/A Ave. MPH 25 N/A Annual Autopilot Miles/vehicle 219,000 1,800 Confidence Interval 95% z-score 1.96 Degree of precision 20% Power 80% Fatalities per M miles driven 1.09 Reported Injuries 77 Reported crashes 190 Autopilot incident improvement 20% Sources: RAND Corporation, Oppenheimer & Co. estimates Non-Covered Companies Mentioned in this Report (prices as of 5/23/17): Bayerische Motoren Werke AG (BMW-DE, 86.63, Not Covered) Daimler AG (DAI-DE, 67.77, Not Covered) Fiat Chrysler Automobiles N.V. (FCA-IT, 9.73, Not Covered) General Motors Company (GM-NYSE, $32.92, Not Covered) Mobileye N.V. (MBLY-NYSE, $61.81, Not Covered) 7

8 Tesla, Inc. Oppenheimer & Co Colin Rusch, , Noah Kaye, , INCOME STATEMENT * Standalone Tesla results through 3Q16, pro forma thereafter Last Reported Quarter: 3/31/17 Last Oppenheimer & Co. Update: 5/24/ A 2017E FYE December FY MAR JUN SEP DEC FY MAR JUN SEP DEC FY FY FY FY FY FY (in $M, except per share data) 2015A 1QA 2QA 3QA 4QA 2016A 1QA 2QE 3QE 4QE 2017E 2018E 2019E 2020E 2021E 2022E TRUE TRUE TRUE TRUE Revenue 4, , , , , , , , , , , , , , , ,725.1 Total Automotive 3, , , , , , , , , , , , , , , ,121.8 Energy Generation & Storage , , , , ,189.0 Services & Other , , ,414.3 Cost of Goods 3, , , , , , , , , , , , , ,741.3 Total Automotive 2, , , , , , , , , , , , , ,153.3 Energy Generation & Storage , , , ,343.4 Services & Other , ,244.5 Gross Profit , , , , , , ,983.8 Gross Margin 22.8% 22.0% 21.6% 27.7% 19.1% 22.8% 24.8% 24.1% 21.5% 26.4% 24.8% 28.4% 28.8% 28.7% 28.7% 28.7% R&D , , , , , ,345.1 SG&A , , , , , , ,127.1 Total Operating Expenses 1, , , , , , , , ,472.2 GAAP Operating Income (716.6) (248.2) (238.0) 85.6 (266.7) (667.3) (257.5) (336.6) (420.6) (330.1) (1,344.8) , , , ,511.6 D&A , , , , , ,704.1 EBITDA (294.0) (91.8) (54.8) , , , , ,215.7 Interest Expense Other Income 41.7 (9.2) (121.2) (111.3) GAAP Pre-Tax Income (875.6) (278.4) (289.5) 30.0 (208.4) (746.3) (371.9) (467.5) (551.9) (465.2) (1,841.2) (323.3) 1, , , ,083.4 Taxes (108.8) (142.5) (130.3) (356.4) (45.0) , ,742.7 GAAP Net Income (888.7) (282.3) (293.2) 21.9 (219.5) (773.0) (397.2) (358.7) (409.3) (334.9) (1,484.9) (278.3) , , ,340.7 Non-Controlling Interest (29.3) GAAP EPS to Shareholders ($6.03) ($1.87) ($1.90) $0.14 ($0.73) ($4.29) ($2.04) ($1.50) ($1.93) ($1.73) ($6.91) ($0.68) $4.46 $9.89 $13.23 $17.21 Stock-based comp Other Non-recurring (72.9) (72.9) Non-GAAP Net Income (690.7) (192.6) (225.9) (106.5) (413.6) (215.0) (167.5) (241.9) (207.5) (816.7) , , , ,841.6 Basic Shares Diluted Shares Non-GAAP EPS ($5.39) ($1.45) ($1.61) $0.71 ($0.69) ($2.87) ($1.33) ($1.03) ($1.48) ($1.26) ($5.00) $1.65 $6.93 $12.45 $15.89 $19.97 Source: Company documents, Oppenheimer & Co. estimates PRO FORMA OPERATING METRICS Revenue Growth yr/yr 22.0% 33.0% 145.4% 88.1% 73.0% 135.1% 93.5% 11.2% 18.0% 45.6% 50.5% 41.7% 35.3% 29.7% 27.8% qtr/qtr -5.5% 10.7% 81.0% -0.6% 18.0% -8.9% 4.1% 5.5% Gross Margin 22.8% 22.0% 21.6% 27.7% 19.1% 22.8% 24.8% 24.1% 21.5% 26.4% 24.8% 28.4% 28.8% 28.7% 28.7% 28.7% R&D as % of Sales 17.7% 15.9% 15.1% 9.3% 10.8% 11.9% 11.9% 13.6% 14.3% 14.3% 13.8% 9.6% 7.7% 6.8% 6.8% 6.9% SG&A as % of Sales 22.8% 27.7% 25.3% 14.7% 20.0% 20.5% 22.4% 24.2% 23.7% 24.3% 24.1% 17.3% 13.3% 11.1% 10.8% 10.5% Operating Margin -17.7% -21.6% -18.7% 3.7% -11.7% -9.5% -9.6% -13.7% -16.5% -12.2% -13.2% 1.5% 7.8% 10.8% 11.1% 11.3% Net Margin -17.1% -16.8% -17.8% 4.8% -4.7% -5.9% -8.0% -6.8% -9.5% -7.7% -8.0% 1.9% 5.7% 7.8% 7.8% 7.9% 8

9 Tesla, Inc. Oppenheimer & Co Pro Forma Colin Rusch, , Noah Kaye, , BALANCE SHEET * Standalone Tesla results through 3Q16, pro forma thereafter Last Reported Quarter: 03/31/17 Last Oppenheimer & Co. Update: 05/24/17 FY end: Dec (in $M, except per share data) 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E Assets: Cash 1, , , , , , , ,176.8 Short Term Investments Restricted Cash Receivables , , , , ,399.3 Inventories 1, , , , , , , ,523.1 Other Current Assets Total Current Assets 2, , , , , , , ,530.7 Operating Lease Vehicles 1, , , , , , , ,115.0 Solar Energy Systems to be Leased 0.0 5, , , , , , ,196.6 PP&E 3, , , , , , , ,391.3 Goodwill & Intangibles Other Assets , , , , , ,094.0 Total Assets 8, , , , , , , ,757.2 Liabilities: Current Portion of LT Debt , , , , , , ,003.3 Payables , , , , , , ,024.3 Deferred Revenue , , , ,692.5 Resale Value Guarantees Customer Deposits Accrued & Other Liabilities , , , , , , ,851.5 Total Current Liabilities 2, , , , , , , ,606.9 Long-term Deferred Revenue , , , , ,921.0 Long-term RVG 1, , , , , , , ,974.7 Long-term Debt 2, , , , , , , ,635.2 Other Long-term Liabilities , , , , , , ,081.8 Total Liabilities 6, , , , , , , ,219.6 Shareholders Equity 1, , , , , , , ,537.6 Total Liabilities & Equity 8, , , , , , , ,757.2 check Source: Company documents, Oppenheimer & Co. estimates BALANCE SHEET METRICS Current Ratio Quick Ratio Days Inventory Days A/R Accounts Receivables as a % of Annualized Sales 4.2% 7.1% 7.3% 8.4% 7.0% 6.6% 6.7% 7.0% Days Payable Accounts Payable as a % of Annualized Sales 22.6% 26.6% 30.0% 29.8% 23.3% 21.2% 19.5% 20.6% Cash Conversion Debt Ratio 32.8% 31.4% 30.1% 27.9% 25.0% 21.6% 18.8% 16.1% Book Value/Share Cash/Share Debt/Share Tangible BV/Share

10 Tesla, Inc. Oppenheimer & Co PRO FORMA Colin Rusch, , Noah Kaye, , STATEMENT OF CASH FLOWS * Standalone Tesla results through 3Q16, pro forma thereafter Last Reported Quarter: 3/31/17 Last Oppenheimer & Co. Update: 5/24/17 FYE December FY FY FY FY FY FY FY FY (in $M, except per share data) 2015A 2016A 2017E 2018E 2019E 2020E 2021E 2022E Net Income (888.7) (773.0) (1,500.1) (278.3) , , ,340.7 Depreciation & amortization , , , , , ,704.1 Stock-based compensation Other (72.5) (924.1) Receivables 46.3 (216.6) (244.6) (542.4) (232.3) (421.0) (597.1) (862.7) Inventories (1,573.9) (2,465.7) (733.3) (1,464.0) (1,683.7) (579.1) (920.3) (2,075.3) Prepaid expenses & other current assets (77.2) (13.6) (14.3) (15.0) (15.7) (16.5) Payables , , , , ,576.6 Accrued & other liabilities (0.0) (0.0) (0.0) Cash from Operations (524.5) (123.8) 1, , , , , ,087.3 System Capex 0.0 (159.7) (1,150.3) (1,301.1) (1,288.7) (1,269.9) (1,245.9) (1,217.6) Other Capex (1,634.9) (1,280.8) (3,077.6) (2,184.0) (2,182.9) (2,415.4) (3,130.3) (3,995.0) Acquisitions, net (109.1) Marketable securities, net (38.7) (62.5) (45.2) Other 0.0 (127.0) Cash from Investing (1,673.6) (1,416.4) (4,382.4) (3,485.1) (3,471.6) (3,685.3) (4,376.2) (5,212.6) Payments on short-term debt, net Payments on long-term debt, net , , Collateralized lease borrowing Tax Equity Contributions , Proceeds from common stock , Proceeds from exercise of stock options Other (17.0) (1,715.1) Cash from Financing 1, , , , , , , Currency (34.3) (7.4) Beginning Cash Balance 1, , , , , , , ,359.3 Change in Cash (708.8) 2,196.3 (46.2) 1, , , Ending Cash Balance 1, , , , , , , ,176.8 Source: Company documents, Oppenheimer & Co. estimates 10

11 Tesla, Inc. Disclosure Appendix Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Analyst Certification - The author certifies that this research report accurately states his/her personal views about the subject securities, which are reflected in the ratings as well as in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Potential Conflicts of Interest: Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest. Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by Oppenheimer & Co. Inc: Stock Prices as of May 24, 2017 Alphabet Inc. (GOOG - NASDAQ, $941.86, OUTPERFORM) Intel Corp. (INTC - NASDAQ, $35.77, PERFORM) 11

12 Tesla, Inc. All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer & Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price histories, please write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager. Oppenheimer & Co. Inc. Rating System as of January 14th, 2008: Outperform(O) - Stock expected to outperform the S&P 500 within the next months. Perform (P) - Stock expected to perform in line with the S&P 500 within the next months. 12

13 Tesla, Inc. Underperform (U) - Stock expected to underperform the S&P 500 within the next months. Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential conflict of interest. Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008: Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments, and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector. Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy, aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere. Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group. Distribution of Ratings/IB Services Firmwide IB Serv/Past 12 Mos. Rating Count Percent Count Percent OUTPERFORM [O] PERFORM [P] UNDERPERFORM [U] Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform. Note: Stocks trading under $5 can be considered speculative and appropriate for risk tolerant investors. Company Specific Disclosures Oppenheimer & Co. Inc. makes a market in the securities of TSLA, GM, GOOG and INTC. Additional Information Available Please log on to or write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager. Other Disclosures This report is issued and approved for distribution by Oppenheimer & Co. Inc. Oppenheimer & Co. Inc. transacts business on all principal exchanges and is a member of SIPC. This report is provided, for informational purposes only, to institutional and retail investor clients of Oppenheimer & Co. Inc. and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and 13

14 Tesla, Inc. the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to Oppenheimer & Co. Inc. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by Oppenheimer & Co. Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This research is for distribution only to persons who are eligible counterparties or professional clients. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA s protection rules nor compensation scheme may be applied. Distribution in Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by Oppenheimer Investments Asia Limited (OIAL) to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent. OIAL, an affiliate of Oppenheimer & Co. Inc., is regulated by the Securities and Futures Commission for the conduct of dealing in securities, advising on securities, and advising on Corporate Finance. For professional investors in Hong Kong, please contact researchasia@opco.com for all matters and queries relating to this report. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright Oppenheimer & Co. Inc