PROXY STATEMENT

FOR SPECIAL MEETING OF STOCKHOLDERS

March 21, 2018

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TESLA, INC.

3500 Deer Creek Road

Palo Alto, California 94304

PROXY STATEMENT

FOR SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON MARCH 21, 2018

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this proxy statement that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act, and Section 27A of the Securities Act. These forward-looking statements, including, without limitation, those relating to possible future market prices, market capitalization levels for Tesla common stock and Tesla’s results of operations, wherever they occur in this proxy statement, are necessarily estimates reflecting the best judgment of the management of Tesla and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this proxy statement.

Words such as “estimate,” “project,” “plan,” “intend,” “expect,” “anticipate,” “believe,” “would,” “should,” “could” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are found at various places throughout this proxy statement. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include those set forth in Tesla’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017.

Tesla undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. In the event that Tesla does update any forward-looking statement, no inference should be made that Tesla will make additional updates with respect to that statement, related matters or any other forward-looking statements.

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CEO PERFORMANCE AWARD PROPOSAL

Executive Summary

Since its IPO in 2010, Tesla has gone from having just a tiny number of cars on the road to about 300,000, it has grown revenue about 100x, and it has created significant value for its stockholders, with its market capitalization having increased almost 35x. Most importantly, Tesla is a mission-driven company, devoted to accelerating the world’s transition to sustainable energy, and it has made important strides towards this goal. However, Tesla’s Board of Directors (the “ Board ”) believes that there is much more to be done.

As Tesla embarks on the next phase of its development, it is no longer just a small automobile manufacturer. It is now the world’s only vertically integrated sustainable energy company, with products ranging from generation to storage to consumption, and the Board believes that it is on a path that, with proper execution, could result in Tesla becoming one of the most valuable companies in the world.

With that goal in mind, the Board is asking Tesla’s stockholders to approve a 10-year performance award for Mr. Musk that will incentivize his continued leadership of Tesla over the long-term. This award is fully aligned with Tesla’s long-term ambitions and the interests of its stockholders.

In 2012, Tesla’s Board approved a performance stock option award for Mr. Musk that required Tesla to grow its market capitalization in $4 billion increments from what was then less than a $4 billion company to a company that is now worth more than $55 billion, and to concurrently execute 10 key operational goals. Although these milestones were viewed at the time as very difficult to achieve, by last year, all of the market capitalization milestones had been achieved, and all but one of the operational milestones have now been achieved as well.

Early in 2017, with the 2012 Performance Award heading to substantial completion, the independent members of the Board began preliminary discussions about how to continue to incentivize Mr. Musk to lead Tesla through the next phase of its development. Through more than six months of work and with the help of a third-party compensation consultant, the CEO Performance Award was developed.

Under the CEO Performance Award, which is attached as Appendix A , Mr. Musk will receive no salary, no cash bonuses, and no equity that vests simply by the passage of time. Instead, his only compensation will be a 100% at-risk performance award, consisting exclusively of stock options with tranches that vest only if one market capitalization milestone and one operational milestone are both achieved. For the first tranche, Tesla’s current market capitalization has to increase to $100 billion and the Company must meet an additional operational milestone. For each subsequent tranche, Tesla must increase its market capitalization in additional $50 billion increments—up to a total of $650 billion—and achieve another previously unmet operational milestone at each level. The award consists of a 10-year grant of stock options with 12 potential vesting tranches, and is designed to help ensure that Tesla is executing well on both a top-line and bottom-line basis. For each tranche that is achieved, Mr. Musk will vest in a number of stock options that corresponds to approximately 1% of Tesla’s current total outstanding shares.

Mr. Musk must also remain as Tesla’s CEO or serve as both Executive Chairman and Chief Product Officer, in each case with all leadership ultimately reporting to him, at the time each milestone is met in order for the corresponding tranche to vest. This ensures Mr. Musk’s active leadership of Tesla over the long-term while also providing the flexibility to bring in another CEO who would report to Mr. Musk at some point in the future. Although there is no current intention for this to happen, it provides flexibility as Tesla continues to grow to potentially allow Mr. Musk to focus more of his attention on the kinds of key product and strategic matters that most impact Tesla’s long-term growth and profitability.

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The Board’s primary objective in designing the CEO Performance Award is to help Tesla grow and achieve its mission, which would facilitate the creation of significant stockholder value. There are three main reasons why the Board recommends that stockholders approve the award. The CEO Performance Award:

Background of the CEO Performance Award

The Board created a new 10-year performance award for Mr. Musk, who is Tesla’s Chief Executive Officer and Chairman. He is also a substantial stockholder of Tesla, and beneficially owned as of December 31, 2017, an aggregate of 37,853,041 shares of Tesla common stock. See the section entitled “ CEO Performance Award Proposal — Potential Ownership of Securities As a Result of the CEO Performance Award ” on page  18 for more information.

In 2012, the Board approved a compensation program for Mr. Musk that consisted entirely of performance stock options that would vest only upon the achievement of certain market capitalization and operational milestones (the “ 2012 Performance Award ”). At the time, Tesla had begun to execute on the original Master Plan that laid out the objectives for Tesla during the first phase of its development. It had yet to begin volume production of Model S and had a market capitalization of under $4 billion. The vesting milestones for the 2012 Performance Award included 10 tranches, with each tranche requiring Tesla both to (i) grow market capitalization by an additional $4 billion, and (ii) achieve an additional specified operational milestone. Following the grant of the 2012 Performance Award, Tesla received strong stockholder support in its triennial “Say on Pay” votes in 2014 and 2017 (94.4% and 98.9%, respectively, of the shares present or represented by proxy and entitled to vote).

Since 2012, Tesla has, among other things, (a) launched and ramped up production of Model S, which is the top-selling car in its segment in many key markets around the world, (b) designed, launched and ramped up production of Model X, which continues to gain substantial market share, (c) designed, launched and started to ramp up production of Model 3, a mass-market vehicle that the success of Model S and Model X enabled and which has already been reserved by hundreds of thousands of customers, and (d) added important new business lines, including solar energy generation and energy storage.

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In the five years since the 2012 Performance Award was put in place, Tesla’s market capitalization has increased 17x. The Board believes that the 2012 Performance Award played a significant role in Tesla’s operational and financial success by properly aligning Mr. Musk’s incentives with the best interests of Tesla and its stockholders.

With the 2012 Performance Award nearing completion, the Board engaged in more than six months of active and ongoing discussions regarding a new compensation program for Mr. Musk, ultimately concluding in its decision to grant the CEO Performance Award. These discussions first took place among the members of the Compensation Committee of the Board (the “ Compensation Committee ”), all of whom are independent directors, and then with the Board’s other independent directors, including its two newest independent directors, Linda Johnson Rice and James Murdoch.

These discussions extensively covered each of the various considerations that were involved in deciding to grant the CEO Performance Award, including, among other things:

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For each of the relevant Compensation Committee and Board meetings, both Elon Musk and Kimbal Musk recused themselves.

Throughout this process, the Board used the services of Compensia, which served as its independent compensation consultant, and Wilson Sonsini Goodrich & Rosati, P.C. (“ WSGR ”), which served as its special outside counsel.

At various points during this process, the independent members of the Board met with Mr. Musk to share their thinking on the award and get his perspective, including as to each of the issues identified above and ultimately to negotiate the terms of the award with him.

Additionally, early in the Board’s process, at the request of the Compensation Committee, Ira Ehrenpreis and Tesla’s General Counsel, Todd Maron, had calls with 15 of Tesla’s largest institutional stockholders to discuss and solicit their views regarding the 2012 Performance Award and considerations for a new compensation award for Mr. Musk, in light of the fact that nearly all of the milestones in the 2012 Performance Award had been or would be achieved in the near future. Many of these stockholders indicated that they favored the approach used in the 2012 Performance Award, especially when coupled with Mr. Musk’s lack of traditional non-performance based types of compensation (i.e., no salary, no cash bonuses, no time-based equity awards), and indicated that they favored a new equity award to Mr. Musk broadly based on the model of the 2012 Performance Award that would motivate and incentivize his continued service and dedication to Tesla. Stockholders suggested various operational milestones to pair with market capitalization milestones, but in general expressed preferences for financial-based operational milestones that would ensure both top-line and bottom-line Tesla growth as a condition for awards of compensation to Mr. Musk. As the Board thereafter deliberated on a new performance award for Mr. Musk, it gave great weight to the feedback that its stockholders provided during these calls, and it incorporated much of that feedback into the ultimate design of the award.

After engaging in this extended process and arriving at terms for a performance award to which both the independent members of the Board and Mr. Musk agreed, and concluding that such an award would motivate and incentivize Mr. Musk to continue to lead the management of Tesla over the long-term, the Board, with Elon Musk and Kimbal Musk recusing themselves, granted the CEO Performance Award.

The Master Plan and 2012 Performance Award History

In 2006, Mr. Musk published the original Tesla Master Plan in which he laid out a vision for Tesla that started with building electric sports cars and then leveraged that into a broad product base of affordable cars and zero emission electric power generation options.

Prior to option grant awards made in December 2009, Mr. Musk did not receive any equity compensation for his services for a period of five years.

In 2010 and 2011, Mr. Musk did not receive any equity grants, because the Compensation Committee believed his existing grants made in December 2009 already provided sufficient motivation for Mr. Musk to perform his duties as Chief Executive Officer.

In 2012, to create incentives for continued long-term success from the Model S program as well as from Tesla’s planned Model X and Model 3 programs, and to further align executive compensation with increases in stockholder value, the Compensation Committee reviewed Mr. Musk’s equity compensation and retained Compensia as its outside compensation consultant to advise it in doing so. Following such review, the Compensation Committee recommended to the Board that a new stock option grant be made to Mr. Musk. On August 1, 2012, the Board approved the 2012 Performance Award, which consisted of a grant to Mr. Musk of options to purchase 5,274,901 shares of Tesla’s common stock at an exercise price of $31.17 per share, representing 5% of Tesla’s total issued and outstanding shares as of August 13, 2012, the effective date of such

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grant. The 2012 Performance Award consisted of 10 equal vesting tranches, with a vesting schedule based entirely on the attainment of both operational and market capitalization milestones, as further detailed below. The 2012 Performance Award was designed to be an incentive for future performance that would take many years to achieve, if at all, and was a 100% at-risk performance award. Mr. Musk and the Board viewed the milestones as very challenging at the time the Board granted the 2012 Performance Award.

Under the 2012 Performance Award, each of the 10 vesting tranches requires that Tesla meet a combination of (i) an operational milestone achievement and (ii) a $4 billion increase in Tesla’s market capitalization. Consequently, the 2012 Performance Award would fully vest only if Tesla achieved a sustained market capitalization increase from $3.2 billion to $43.2 billion, and all 10 operational milestones described were achieved. Market capitalization for purposes of milestone achievement was determined based on a rolling six month historic average (based on trading days only). The market capitalization for a particular trading day is equal to the closing price multiplied by the outstanding shares of common stock as of the end of such trading day.

The 10 operational milestones for the 2012 Performance Award are:

The market capitalization conditions for all of the 10 vesting tranches and 9 of the 10 operational milestones have been achieved. Therefore, as of the date of this proxy statement, only the milestone requiring gross margin of 30% or more for four consecutive quarters has not been achieved and remains outstanding.

The Board believes that the 2012 Performance Award was instrumental in helping Tesla achieve the objectives that were laid out in the original Tesla Master Plan, along with the tremendous stockholder value that was created during the process.

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Comparison of the 2012 Performance Award and the CEO Performance Award

The following table summarizes some of the key features of the CEO Performance Award compared to the 2012 Performance Award.

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Summary of the CEO Performance Award

The following table provides details regarding how options underlying the CEO Performance Award would vest over the 12 tranches and the milestone requirements that would need to be met in order for each tranche to vest.

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Material Terms of the Proposed CEO Performance Award

CEO Performance Award Value . The total number of shares of Tesla common stock underlying the CEO Performance Award will be 20,264,042, divided equally among 12 separate tranches of options to purchase approximately 1.69 million shares per tranche. The number of shares underlying the CEO Performance Award in each tranche is equivalent to 1% of the 168,867,016 shares of Tesla’s common stock outstanding as of January 19, 2018 and, therefore, the total number of shares underlying the CEO Performance Award is equivalent to 12% of the total number of shares of Tesla’s common stock outstanding as of such date.

Equity Type . The CEO Performance Award is comprised of performance-based nonqualified stock options. Mr. Musk will receive compensation from the CEO Performance Award only to the extent that Tesla achieves the applicable performance milestones. The CEO Performance Award will not be made under an equity incentive plan, such as Tesla’s 2010 Equity Incentive Plan.

Exercise Price . The exercise price of the CEO Performance Award is $350.02 per share, which was the closing market price of Tesla’s common stock on the Nasdaq Global Select Market on January 19, 2018, the last trading day prior to the date on which the Board approved the CEO Performance Award (which was not a trading day).

Award Vesting / Milestones . Each of the 12 vesting tranches of the CEO Performance Award will vest upon certification by the Board that each of (a) the Market Capitalization Milestone for such tranche and (b) an Operational Milestone has been met. Any single Operational Milestone may only satisfy the vesting requirement for one tranche of the CEO Performance Award, together with the corresponding Market Capitalization milestone.

There are 12 Market Capitalization Milestones, each one requiring an incremental increase in Tesla’s market capitalization, initially to $100 billion and by increments of $50 billion thereafter, with each incremental increase being approximately equivalent to Tesla’s approximate market capitalization of $50 billion in late 2017 (each, a “ Market Capitalization Milestone ”).

To meet all 12 Market Capitalization Milestones, Tesla will have to add approximately $600 billion to its current market capitalization. The Board considers the Market Capitalization Milestones to be challenging hurdles.

There are also 16 operational milestones, half of which are focused on top-line performance and half of which are focused on bottom-line performance (each, an “ Operational Milestone ”). Any one of the Operational Milestones, including one of the eight Revenue milestones or one of the eight Adjusted EBITDA milestones, may be paired with any of the 12 Market Capitalization Milestones to successfully achieve the vesting of one of the 12 tranches. Any single Operational Milestone may only satisfy the vesting requirement of one tranche, together with the corresponding Market Capitalization Milestone. Subject to any applicable clawback provisions, policies or other forfeiture terms, once a milestone is achieved, it is forever deemed achieved for determining the vesting of a tranche. Meeting more than 12 of the 16 Operational Milestones will not result in any additional vesting or other compensation to Mr. Musk under the CEO Performance Award.

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The Board considers the Revenue milestones to be challenging hurdles as they significantly exceed Tesla’s historic annual revenue, which was approximately $7.0 billion for 2016 and approximately $11.8 billion for 2017. To achieve the first or second of the Revenue milestones, Tesla would have to increase its revenue by 3x and 5x, respectively, from its 2016 revenue levels. To satisfy all eight Revenue milestones, Tesla would have to increase revenue by almost $168 billion.

In addition to the Revenue milestones and to promote Tesla’s continued focus on a balanced approach to both growth and profitability, the CEO Performance Award also has eight profitability milestones. The Compensation Committee and the Board selected Adjusted EBITDA, which is defined as EBITDA minus only non-cash charges for stock-based compensation, as the appropriate profitability measure because the Board believes it is a metric that is commonly used for companies at this stage of development and because many of Tesla’s stockholders use it to evaluate Tesla’s performance. It is a measure of cash generation from operations that does not disincentivize Tesla from making additional investments to grow further. Like the Revenue milestones described above, the Adjusted EBITDA milestones are designed to be challenging and to reflect Tesla’s objective to have strong bottom-line performance on a consistent basis.

In establishing the Revenue and Adjusted EBITDA milestones, the Board carefully considered a variety of factors, including Tesla’s growth trajectory and internal growth plans and the historical performance of other high-growth and high-multiples companies in the technology space that have invested in new businesses and tangible assets. These benchmarks provided revenue/EBITDA to market capitalization multiples, which were then used to inform the specific operational targets that aligned with Tesla’s plans for future growth.

Except in a change in control situation, measurement of the Market Capitalization Milestones will be based on both (i) a six calendar month trailing average of Tesla’s stock price as well as (ii) a 30 calendar day trailing average of Tesla’s stock price, in each case based on trading days only, and will thus require sustained market capitalization appreciation to be met.

Measurement of the Operational Milestones will be based on the previous four consecutive fiscal quarters for each of Revenue and Adjusted EBITDA, each to be determined on an aggregate basis, based on publicly disclosed Tesla financial statements.

Term of CEO Performance Award / Post-Termination of Employment Exercise Period . The term of the CEO Performance Award is 10 years from the date of the grant, unless Mr. Musk’s employment with Tesla is terminated prior to such date. Accordingly, Mr. Musk has until January 20, 2028 to exercise any portion of the CEO Performance Award that has vested on or prior to such date, provided that he remains employed at Tesla. Additionally, Mr. Musk has up to one year following the termination of his employment with Tesla to exercise any portion of the CEO Performance Award that vested prior to such termination, subject to any earlier expiration of the CEO Performance Award on January 20, 2028. Further, the CEO Performance Award also may terminate earlier in connection with a change in control event of Tesla, as described further below.

Post-Exercise Holding Period . Mr. Musk must hold shares that he acquires upon exercise of the CEO Performance Award for five years post-exercise (except for shares used to pay exercise price and tax withholdings, or in certain other limited circumstances described further below).

After reviewing market practices for post-exercise holding periods for executive equity awards, the Board believed such requirement to be very atypical of executive equity awards generally. Nevertheless, the Board selected a five-year holding period, which is the longest period that was considered and which is particularly unusual in its long duration, in order to further align Mr. Musk’s interests with Tesla stockholders’ interests for five years following the exercise of any options under the CEO Performance Award. Such alignment complements the requirements for sustained increases to Tesla’s market capitalization levels, Revenue and Adjusted EBITDA in order to meet the applicable vesting milestones under the CEO Performance Award, and ensures that Mr. Musk will be focused on sustaining Tesla’s success both before, and even after he achieves, vesting under the CEO Compensation Award.

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Moreover, the requirement of a five-year holding period significantly decreases the stock-based compensation expenses that Tesla will recognize for the CEO Performance Award. See Notes 3 and 4 to the table in the section entitled “ Executive Compensation—Pro Forma Summary Compensation Table ” on page 34 for more information.

Employment Requirement for Continued Vesting . Mr. Musk must continue to lead Tesla’s management at the time each milestone is met in order for the corresponding tranche to vest under the CEO Performance Award. Specifically, he must be serving as either Tesla’s Chief Executive Officer or, alternatively, as both its Executive Chairman and Chief Product Officer, in which case any other Chief Executive Officer would be reporting directly to him.

Termination of Employment . There will be no acceleration of vesting of the CEO Performance Award if the employment of Mr. Musk is terminated, or if he dies or becomes disabled. In other words, termination of Mr. Musk’s employment with Tesla will preclude his ability to earn any then-unvested portion of the CEO Performance Award following the date of his termination. Vesting of the CEO Performance Award will be suspended in the event of any leave of absence by Mr. Musk.

Change in Control of Tesla . If Tesla experiences a change in control event, such as a merger with or purchase by another company, vesting under the CEO Performance Award will not automatically accelerate. In a change in control situation, the achievement of the milestones will be based solely on the Market Capitalization Milestones, with the measurement of Tesla’s market capitalization determined by the product of the total number of outstanding shares of Tesla common stock immediately before the change in control multiplied by the greater of the last closing price of a share of Tesla common stock before the effective time of the change in control or the per share price (plus the per share value of any other consideration) received by Tesla’s stockholders in the change in control. The treatment of the CEO Performance Award upon a change in control is intended to align Mr. Musk’s interests with Tesla’s other stockholders with respect to evaluating potential takeover offers.

Exercise Methods / Requirements . Mr. Musk may exercise any vested options under the CEO Performance Award in one of two ways: (i) a cashless exercise or (ii) a cash exercise. A cashless exercise occurs when the stock option is exercised and the shares are simultaneously sold to pay for the exercise price and any required tax withholding. A cash exercise simply involves paying the Tesla option exercise price of $350.02 per share in cash.

Clawback . In the event of a restatement of Tesla’s financial statements previously filed with the SEC (“ restated financial results ”), and if a lesser portion of the CEO Performance Award would have vested based on the restated financial results, then Tesla will require forfeiture (or repayment, as applicable) of the portion of the CEO Performance Award that would not have vested based on the restated financial results (less any amounts Mr. Musk may have paid to Tesla in exercising any forfeited awards). The CEO Performance Award also will be subject, if more stringent than the foregoing, to any current or future Tesla clawback policy applicable to equity awards, provided that the policy does not discriminate solely against Mr. Musk except as required by applicable law.

Market Capitalization and Operational Milestone Adjustments . In the event that Tesla acquires a business with a purchase price of more than $1 billion, any then-unachieved Market Capitalization Milestones will be increased by the purchase price of such acquisition. Similarly, if the target of an acquisition transaction has revenue or adjusted EBITDA (based on cumulative four consecutive quarters prior to the transaction) of more than $500 million and $100 million, respectively, the then-unachieved Revenue or Adjusted EBITDA Milestones (as applicable) will be increased by such Target’s revenue or adjusted EBITDA (as applicable). This feature of the CEO Performance Award is intended to prevent achievement of milestones based on acquisition activity that could be considered material to the achievement of those milestones.

Likewise, in the event that Tesla enters into a transaction constituting a split-up, spin-off or divestiture that has a value over $1 billion, any then-unachieved Market Capitalization Milestones will be decreased by the value of such transaction. Also, if an entity with more than $500 million or $100 million of revenue or adjusted

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EBITDA, respectively, is divested by Tesla, the then-unachieved Revenue or Adjusted EBITDA Milestones (as applicable) will be decreased by the amount of revenue or adjusted EBITDA (as applicable) divested in such a transaction.

Other Details Regarding CEO Performance Award

Administration . The CEO Performance Award will be administered by the Board, its Compensation Committee, or any committee of Board members or other individuals (excluding Mr. Musk) appointed by the Board and satisfying applicable laws (the “ Administrator ”), provided that Mr. Musk will recuse himself from any approvals relating to the administration of the CEO Performance Award. References to the Board in the executive summary of the material terms of the CEO Performance Award under the section titled “Material Terms of the Proposed CEO Performance Award” above generally are references to the Administrator, as applicable. The Administrator has the power and authority, in good faith, to interpret the CEO Performance Award and adopt rules for its administration, interpretation and application of the terms of the CEO Performance Award. All actions taken, and interpretations and determinations made, by the Administrator in good faith with respect to the CEO Performance Award will be final and binding on Mr. Musk and any other interested persons.

Certain Other Market Capitalization Provisions . For purposes of achieving the Market Capitalization Milestones, the Company’s market capitalization is based on an average of the Company’s market capitalization for all trading days in the applicable trailing six calendar month period or 30 calendar day period. As of any date of determination, the applicable six month or 30 day period ends with (and is inclusive of) such determination date. The Company’s market capitalization on any particular trading day is equal to the product of the closing price of a share of Tesla’s common stock on the trading day, multiplied by the outstanding shares of Tesla common stock at the closing of the trading day.

Certain Other Termination Provisions . In all cases, in the event that Tesla stockholders do not approve the CEO Performance Award within 12 months after its grant date or, at any meeting of Tesla’s stockholders, do not approve the CEO Performance Award by the requisite vote, the CEO Performance Award automatically will be forfeited and Mr. Musk will have no rights to the CEO Performance Award or the shares underlying it. Upon a change in control of Tesla, any vested portion of the CEO Performance Award will be assumed or substituted by the successor and any unvested portion of the CEO Performance Award automatically will terminate at the effective time of the change in control event. The Administrator may not accelerate the vesting of any portion of the CEO Performance Award in connection with a change in control. The vested and unexercised portion of the CEO Performance Award will remain exercisable through its expiration date. If Mr. Musk’s role either as Chief Executive Officer or as Executive Chairman and Chief Product Officer terminates while the CEO Performance Award is outstanding, the Administrator will promptly make a final determination as to whether any additional tranches have vested through the date of such termination, and any portion of the CEO Performance Award that has failed to vest based on performance through such date of termination will be forfeited.

Certain Other Adjustments Upon Certain Transactions . In the event of any dividend or other distribution (whether in the form of cash, shares of Tesla common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Tesla’s securities, or other change in the corporate structure of Tesla affecting Tesla’s common stock, then the Administrator, in order to prevent the diminution or enlargement of the benefits or potential benefits intended to be made available under the CEO Performance Award (and in a manner that will not provide any greater benefit or potential benefits than intended to be made available, other than solely to reflect changes resulting from any such triggering event), will adjust the number, class and price of the shares underlying the CEO Performance Award. In the event of a proposed dissolution or liquidation of Tesla, the Administrator will notify Mr. Musk as soon as practicable before the effective date of the proposed transaction. To the extent the CEO Performance Award has not been previously exercised, it will terminate immediately before the completion of such proposed transaction.

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Mr. Musk will have no rights or privileges of a stockholder of Tesla with respect to the shares underlying the CEO Performance Award unless and until the shares actually are issued, recorded on the records of Tesla or its transfer agents or registrars, and delivered to Mr. Musk (which may occur through electronic delivery to a brokerage account). In addition, unless and until Tesla’s stockholders approve the CEO Performance Award, no portion of the CEO Performance Award may be exercised, regardless of whether any portion of the CEO Performance Award may have vested before such stockholder approval.

Certain Other Securities Information . Shares issuable under the CEO Performance Award may be authorized, but unissued, or reacquired Tesla common stock. As of February 7, 2018, the closing price of a share of Tesla’s common stock was $345.00.

Tax Withholdings . The Administrator will determine the methods by which tax withholding obligations with respect to the CEO Performance Award will be satisfied by Mr. Musk. For example, to the extent permissible by applicable law, the Administrator may permit Mr. Musk to satisfy tax withholding obligations relating to the CEO Performance Award by (a) paying cash, or (b) having a sufficient number of shares otherwise deliverable under the CEO Performance Award sold through means determined by Tesla (whether through a broker or otherwise) equal to the minimum required amount to be withheld (or such greater amount that Mr. Musk elects, if permitted by the Administrator and if withholding a greater amount would not result in adverse financial accounting consequences for Tesla).

Non-transferability . The CEO Performance Award may not be transferred in any manner other than by will or the laws of descent or distribution and may be exercised during Mr. Musk’s lifetime only by him. Shares issued to Mr. Musk upon exercise of the CEO Performance Award are subject to the holding period described further above, except that Mr. Musk may transfer shares to change the form in which he holds the shares, such as through certain family or estate planning trusts, or as permitted by the Administrator consistent with the Company’s internal policies.

Supporting Statement of the Board

We are asking stockholders to vote their shares “FOR” the proposed CEO Performance Award.

The independent members of the Board, led by the members of the Compensation Committee, spent more than six months designing a compensation award that would incentivize Mr. Musk while maximizing value for Tesla stockholders. As part of this process, the Compensation Committee and the Board sought to balance a variety of important objectives, including:

The Board sought and obtained feedback from a broad set of institutional stockholders and incorporated that feedback into its decision-making process. As part of its consideration, the Board drew from the success of the 2012 Performance Award. That award helped Tesla grow its market capitalization from less than $4 billion to over $55 billion in just over five years, and formed the biggest part of the executive compensation program that Tesla stockholders strongly supported in “Say on Pay” votes in 2014 and 2017.

Additionally, with the 2012 Performance Award milestones largely achieved, and with Tesla entering the next phase of its development, the Board sought to develop a compensation award for Mr. Musk that reflects

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Tesla’s current long-term goals and helps incentivize their achievement. During the initial phase of its development, Tesla executed on its original Master Plan, which primarily called for Tesla to develop electric vehicles in increasingly affordable and higher volume segments. Even though most believed that Tesla would not be able to accomplish this, Tesla managed to do so, and it created significant stockholder value in the process.

With Tesla now the world’s first vertically integrated sustainable energy company, from generation to storage to consumption, its ambitions are even greater. As laid out in Master Plan, Part Deux, it intends to:

With these goals, the Board believes that Tesla has the potential to become one of the most valuable companies in the world. The CEO Performance Award is based on a vision of making Tesla a $650 billion company — more than ten times more valuable than it is today — and accomplishing Tesla’s mission of accelerating the world’s transition to sustainable energy.

The Board recommends that stockholders approve the CEO Performance Award for the following reasons:

The Board believes in rewarding Mr. Musk in a fair way that provides compensation to him if, and only if, all other stockholders realize significant value.

Under the CEO Performance Award, Mr. Musk will not receive any of the kinds of guaranteed forms of compensation that are common for CEOs at other companies. He will receive no salary, no cash bonuses and no time-based equity awards that vest solely through the passage of time (that is, simply by continuing to show up for work). To the contrary, Mr. Musk’s only opportunity to earn compensation from Tesla will be dependent on him leading Tesla’s achievement of challenging milestones, which, among other things, require Tesla’s current market capitalization to increase to $100 billion, and to then continue increasing in additional $50 billion increments thereafter, up to $650 billion. Additionally, Mr. Musk’s compensation will also be dependent on him leading Tesla’s achievement of challenging operational milestones, which are designed to ensure that it is executing well on both a top-line and bottom-line basis. Under this award, if these ambitious milestones are met, all Tesla stockholders will benefit, with the value of Tesla’s equity growing by tens of billions of dollars per milestone. Moreover, in contrast to Mr. Musk’s rights under the CEO Performance Award, which requires a pair of milestone targets to be fully met in order for him to receive any vesting of the corresponding tranche, Tesla’s stockholders will realize the real-time benefit of any increases to its stock price that result from execution that falls short of the specific milestone targets required by the CEO Performance Award. Finally, the CEO Performance Award creates even more stockholder alignment by incorporating features such as a five-year holding period that ensures Mr. Musk’s continuing alignment with company interests for many years even after he exercises his options.

As such, this award is a true “pay-for-performance” compensation program that tightly aligns Mr. Musk’s interests with the interests of stockholders and Tesla.

The Board believes that having the active and engaged services of Mr. Musk is important to the continued growth and long-term interests of Tesla. While the Board recognizes that Tesla has many valuable employees who have been a critical part of Tesla’s success, the Board believes that many of Tesla’s past successes were driven significantly by Mr. Musk’s leadership. Those successes include

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making Model S the top-selling car in its segment in many key markets around the world and ramping up the production of it, designing and ramping up the production of Model X, which continues to gain substantial market share around the world, and designing and beginning to ramp up the production of Model 3, the mass-market vehicle that the success of Model S and Model X enabled. These accomplishments led to significant value creation for Tesla’s stockholders. Since going public, Tesla’s market cap has grown almost 35x.

The Board designed the CEO Performance Award to incentivize and motivate Mr. Musk to continue to not only lead Tesla over the long-term, but particularly in light of his other business interests, to devote his time and energy in doing so. In the Board’s discussions with Mr. Musk, he indicated that the CEO Performance Award will accomplish that.

Mr. Musk must remain as Tesla’s CEO or serve as both Executive Chairman and Chief Product Officer, in each case with all leadership ultimately reporting to him, at the time each milestone is met in order for the corresponding tranche to vest. This ensures that he will continue to lead the management of Tesla over the long-term while also providing the flexibility to bring in another CEO who would report to Mr. Musk at some point in the future. Although there is no current intention for this to happen, the Board believes that having flexibility as Tesla continues to grow to potentially allow Mr. Musk to focus more of his attention on the kinds of key product and strategic matters that most impact Tesla’s long-term growth and profitability would benefit stockholders.

The Board believes that the 2012 Performance Award was instrumental in motivating Mr. Musk to lead Tesla’s achievement of the objectives set out in the original Tesla Master Plan, thereby generating the significant stockholder value that was created during the process. With the first Master Plan having been achieved and with Master Plan, Part Deux having been announced, the CEO Performance Award will help align Tesla and its employees as they design, engineer and make the products that execute on this plan, and it will help focus everyone on achieving the market capitalization and operational milestones that, while challenging, the Board believes are attainable for Tesla. If all of these milestones were to be achieved, Tesla will have meaningfully achieved its mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. This is our ambition.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE CEO PERFORMANCE AWARD.

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Potential Value that Could be Realized under the CEO Performance Award

It is not possible to reliably estimate the value that could be realized under the CEO Performance Award because that value depends on the amount of dilution that Tesla experiences over the course of the 10-year term of the award. The more dilution, the less value that Mr. Musk will realize. While Tesla has no way of predicting how much dilution there will be, some amount of future dilution is a certainty, whether due to additional issuances of equity as part of (i) regular compensation awards to Tesla employees, (ii) capital-raising activities, or (iii) mergers or acquisitions. Thus, it is not possible to know the actual value that Mr. Musk will realize from the CEO Performance Award even if one were to assume that he were to fully vest in it.

Nevertheless, the table below depicts the maximum theoretical value, both in dollar value and as a percentage of total value created, that could be realized by Mr. Musk and Tesla stockholders over various vesting scenarios. This table only takes into account estimated dilution as a result of potential exercises or conversions from the existing employee equity pool and the outstanding convertible notes and warrants. It also assumes that Mr. Musk does not exercise any of the stock options in the CEO Performance Award until the very end of the 10-year term, which results in a significantly larger value being attributed to Mr. Musk than would be the case if he were to exercise as soon as the stock options vest. Importantly, this table does not take into account any other future dilutive events over the next ten years even though such events will occur. Accordingly, this table should only be used for illustration purposes, recognizing that future dilutive events or earlier exercises would significantly decrease the maximum value that Mr. Musk would realize from the award over the various vesting scenarios, both in dollar value and as a percentage of total value created.

Potential Ownership of Securities As a Result of the CEO Performance Award

As of December 31, 2017, Mr. Musk beneficially owned 37,853,041 shares of Tesla’s common stock, including 33,632,421 shares held of record by the Elon Musk Revocable Trust dated July 22, 2003 and 4,220,620 shares issuable to Mr. Musk upon exercise of options exercisable within 60 days after December 31, 2017. Based on 168,796,945 shares of Tesla’s common stock outstanding at December 31, 2017, and assuming that all shares of common stock subject to options held by Mr. Musk that were exercisable within 60 days of December 31, 2017 were outstanding as of such date, Mr. Musk beneficially owned 21.9% of the outstanding shares of Tesla common stock as of December 31, 2017.

For illustration purposes only, if (i) all 20,264,042 shares of common stock subject to the CEO Performance Award were to become fully vested, outstanding and held by Mr. Musk; (ii) all shares of common stock subject to the other options held by Mr. Musk that are currently vested and exercisable were outstanding, (iii) the 527,491 shares of common stock subject to the tenth and final tranche of the 2012 Performance Award were to become fully vested, outstanding and held by Mr. Musk, (iv) estimated dilution as a result of potential exercises or conversions from the existing employee equity pool and the outstanding convertible notes and warrants were to be considered; and (v) there were no other dilutive events of any kind, Mr. Musk would beneficially own 28.3% of the outstanding shares of Tesla common stock.

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However, except as indicated above, this calculation does not account for any future dilutive events over the next ten years, such as the issuance of additional equity as compensation to employees, as consideration for mergers and acquisitions, or for capital-raising activities, which would have the effect of diluting Mr. Musk’s ownership of Tesla common stock, nor does it account for any sales of Tesla stock that Mr. Musk will likely have to make in order to pay required taxes upon the exercise of expiring stock options. Therefore, it is impossible to provide the exact or true percentage of Mr. Musk’s future total ownership of Tesla common stock upon the vesting of one or more tranches of the CEO Performance Award. Given that some amount of dilution and/or stock sales to cover required tax payments will occur, we believe that Mr. Musk’s future potential ownership of Tesla common stock will be significantly less than 28.3% if 100% of the CEO Performance Award, as well as the tenth and final tranche of the 2012 Performance Award, were to vest.

Accounting and Tax Considerations

Accounting Consequences. We follow FASB Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ ASC Topic 718 ) for our stock-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all stock-based compensation awards made to employees and directors based on the grant date “fair value” of these awards. Pursuant to ASC Topic 718, this calculation cannot be made for the CEO Performance Award prior to the date on which it is approved by our stockholders, which will be the “grant date” for accounting purposes. However, we have calculated for illustrative purposes a preliminary aggregate fair value estimate for this value in the section below entitled “ Executive Compensation — Pro Forma Summary Compensation Table ” on page 34 of this proxy statement. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award. Accordingly, the CEO Performance Award would result in the recognition of additional stock-based compensation expense over the term of the award as the tranches thereof become probable of vesting as determined by the Administrator pursuant to ASC Topic 718.

Federal Income Tax Consequences . The following discussion is a brief summary of the principal United States federal income tax consequences of the CEO Performance Award under the U.S. Internal Revenue Code (the “ Code ”) as in effect on the date of this proxy statement. The following summary assumes that Mr. Musk remains a U.S. taxpayer. The Code and its regulations are subject to change. This summary is not intended to be exhaustive and does not describe, among other things, state, local or non-U.S. income and other tax consequences. The specific tax consequences to Mr. Musk will depend upon his future individual circumstances.

Tax Effect for Mr. Musk . Mr. Musk did not have taxable income from the grant of the CEO Performance Award nor will he have taxable income from stockholder approval of the Award, if such approval occurs. If and when Mr. Musk exercises any portion of the CEO Performance Award, he will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the Tesla shares purchased over the exercise price of the option. Any taxable income recognized in connection with the exercise of the CEO Performance Award by Mr. Musk will be subject to tax withholding by us. Any additional gain or loss recognized upon any later disposition of the shares will be capital gain or loss.

Tax Effect for Tesla . We will not be entitled to a material tax deduction in connection with the CEO Performance Award. In most cases, companies are entitled to a tax deduction in an amount equal to the ordinary income realized by a participant when the participant exercises a nonstatutory stock option and recognizes such income. However, Section 162(m) of the Code limits the deductibility of compensation paid to our Chief Executive Officer and other “covered employees” as defined in Section 162(m) of the Code. No tax deduction is allowed for compensation paid to any covered employee to the extent that the total compensation for that executive exceeds $1,000,000 in any taxable year. Under Section 162(m) of the Code, as most recently amended in December 2017, we expect that Mr. Musk always will be a covered employee for purposes of Section 162(m) of the Code. Therefore, in any given year in which Mr. Musk exercises all or part of the CEO Performance Award, we will be able to take a tax deduction of only $1,000,000 or less, regardless of the amount of compensation recognized by Mr. Musk from the exercise of the CEO Performance Award.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND PROCEDURAL MATTERS

Please refer to the question entitled “What is the difference between holding shares as a stockholder of record or as a beneficial owner?” below for important details regarding different forms of stock ownership.

On January 21, 2018, the Board, with Elon Musk and Kimbal Musk recusing themselves, approved, subject to the approval of Tesla’s stockholders (excluding any shares owned, directly or indirectly, by Elon Musk or Kimbal Musk) the grant of a stock option award (the “ CEO Performance Award ”) to Elon Musk, Tesla’s Chief Executive Officer and Chairman. The CEO Performance Award will be forfeited if not approved by Tesla’s stockholders (excluding any shares owned, directly or indirectly, by Elon Musk or Kimbal Musk).

This proxy statement contains important information about the CEO Performance Award and the Special Meeting, and you should read it carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending the Special Meeting. Your vote is important. We encourage you to vote as soon as possible.

These proxy materials are being distributed to you on or about February 12, 2018.

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We will not be able to accommodate guests without proper evidence of stock ownership as of the Record Date at the Special Meeting, including guests of our stockholders.

The meeting will begin promptly at 9:00 a.m., Pacific Time and you should leave ample time for the check-in procedures.

Please note that Mr. Musk will recuse himself from attending any forum at which decisions regarding the CEO Performance Award are made, at both the Board and stockholder levels. Accordingly, Mr. Musk will not be present at the Special Meeting, nor will there be a Tesla presentation or questions and answers session as in past meetings of stockholders.

As of the Record Date, holders of common stock were eligible to cast an aggregate of 168,878,154 votes at the Special Meeting.

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You are the “beneficial owner” of any shares (which are considered to be held in “street name”) that are held on your behalf by a brokerage account or by a bank or another intermediary that is the stockholder of record for those shares. If you are a beneficial owner, you did not receive proxy materials directly from Tesla, but your broker, bank or other intermediary forwarded you a proxy statement and voting instruction card for directing that organization how to vote your shares. You may also attend the Special Meeting, but because a beneficial owner is not a stockholder of record, you may not vote in person at the Special Meeting unless you obtain a “legal proxy” from the organization that holds your shares, giving you the right to vote the shares at the Special Meeting.

By Internet — Stockholders of record with Internet access may submit proxies by following the “Vote by Internet” instructions on the proxy card until 1:00 a.m., Central time on March 21, 2018. If you are a beneficial owner of shares held in street name, please check the voting instructions in the voting instruction card provided by your broker, bank or other intermediary for Internet voting availability.

By telephone — Stockholders of record who live in the United States or Canada may submit proxies by telephone by following the “Vote by Telephone” instructions on the proxy card until 1:00 a.m., Central time on March 21, 2018. If you are a beneficial owner of shares held in street name, please check the voting instructions in the voting instruction card provided by your broker, bank or other intermediary for telephone voting availability.

By mail — If you elect to vote by mail, please complete, sign and date the proxy card where indicated and return it in the prepaid envelope included with the proxy card. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to be voted. If you are a beneficial owner of shares held in street name, you may vote by mail by following the instructions for voting by mail in the voting instruction card provided by your broker, bank or other intermediary.

Under the General Corporation Law of the State of Delaware, abstentions and broker “non-votes” are counted as present and therefore will be included for the purposes of determining whether a quorum is present at the Special Meeting. A broker “non-vote” occurs when an organization that is the stockholder of record that holds shares for a beneficial owner and that is otherwise counted as present or represented by proxy does not vote on a particular proposal because that organization does not have discretionary voting power under applicable regulations to vote on that item and has not received specific voting instructions from the beneficial owner.

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(1) Majority of the total votes of shares of Tesla common stock cast in person or by proxy at the Special Meeting, pursuant to the NASDAQ Stock Market Rules (the “ NASDAQ Standard ”),

and

(2) Majority of the voting power of the shares present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal, pursuant to Tesla’s amended and restated bylaws (the “ Bylaws Standard ”),

and

(3) Majority of the total votes of shares of Tesla common stock not owned, directly or indirectly, by Elon Musk or Kimbal Musk cast in person or by proxy at the Special Meeting, pursuant to the resolutions of the Board approving the CEO Performance Award (the “ Disinterested Standard ”).

If you are a beneficial owner and you fail to provide the organization that is the stockholder of record for your shares with voting instructions, the organization will not have discretion to vote on the non-routine matters that will be proposed at the Special Meeting. If you fail to provide voting instructions to the organization, it will have no effect on the CEO Performance Award, assuming a quorum is present, under the NASDAQ Standard, the Bylaws Standard or the Disinterested Standard. If you instruct the organization to vote your shares to abstain from voting, it will have the same effect as a vote against the CEO Performance Award under the Bylaws Standard, but will have no effect on the NASDAQ Standard or the Disinterested Standard.

If you are a beneficial owner and you do not provide the organization that is the stockholder of record for your shares with voting instructions, the organization will not have discretion to vote on the non-routine matters that will be proposed at the Special Meeting.

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The Board recommends that Tesla stockholders vote “FOR” the CEO Performance Award.

If you are a beneficial owner of shares held in street name, you may generally change your vote by (1) submitting new voting instructions to your broker, bank or other intermediary or (2) if you have obtained a legal proxy from the organization that holds your shares giving you the right to vote your shares, by attending the Special Meeting and voting in person. However, please consult that organization for any specific rules it may have regarding your ability to change your voting instructions.

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Innisfree M&A Incorporated

501 Madison Avenue

New York, New York 10022

Stockholders Call Toll Free: (877) 456-3463

International Callers: +1 (412) 232-3651

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