Table of ContentsITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency RiskWe transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costsof revenue and operating expenses denominated in currencies other than the U.S. dollar (primarily the Chinese yuan and euro inrelation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreignsubsidiaries. Accordingly, changes in exchange rates affect our operating results as expressed in U.S. dollars as we do nottypically hedge foreign currency risk.We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) onthe settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the localcurrency (primarily consisting of our intercompany and cash and cash equivalents balances).We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible thatadverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. Thesechanges were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at thebalance sheet date to compute the impact these changes would have had on our net income before income taxes. These changeswould have resulted in a gain or loss of $1.05 billion at September 30, 2024 and $1.01 billion at December 31, 2023, assumingno foreign currency hedging.ITEM 4. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated theeffectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, asamended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, our managementrecognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assuranceof achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the factthat there are resource constraints and that our management is required to apply its judgment in evaluating the benefits ofpossible controls and procedures relative to their costs.Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as ofSeptember 30, 2024, our disclosure controls and procedures were designed at a reasonable assurance level and were effective toprovide reasonable assurance that the information we are required to disclose in reports that we file or submit under theExchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms,and that such information is accumulated and communicated to our management, including our Chief Executive Officer andour Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.Changes in Internal Control over Financial ReportingThere was no change in our internal control over financial reporting that occurred during the quarter endedSeptember 30, 2024, which has materially affected, or is reasonably likely to materially affect, our internal control overfinancial reporting.35
tsla-20240930https://www.sec.gov/Archives/edgar/data/1318605/00016282802404...
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