May 2, 2019:

and Warrant Transactions:

In connection with the pricing of the Notes, the Issuer has entered into privately negotiated convertible note hedge transactions with one or more of the underwriters or their respective affiliates or other financial institutions (“hedge counterparties”). The convertible note hedge transactions will cover, subject to customary anti-dilution adjustments, the number of shares of Common Stock that will initially underlie the Notes.

The Issuer also has entered into warrant transactions with the hedge counterparties relating to the same number of shares of Common Stock, with a strike price of $607.50, subject to customary anti-dilution adjustments.

Goldman Sachs & Co. LLC

Citigroup Global Markets Inc.

Merrill Lynch, Pierce, Fenner & Smith

                     Incorporated

Deutsche Bank Securities Inc.

Morgan Stanley & Co. LLC

Credit Suisse Securities (USA) LLC

SG Americas Securities, LLC

Wells Fargo Securities, LLC

Adjustment to Conversion Rate Upon

Conversion In Connection With a

Make Whole Fundamental Change:

Effective Date

May 7, 2019

May 15, 2020

May 15, 2021

May 15, 2022

May 15, 2023

May 15, 2024

if the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates based on a 365-day year, as applicable;

if the stock price is greater than $2,500.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above as described in the Preliminary Prospectus Supplement), no additional shares will be added to the conversion rate; and

if the stock price is less than $243.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above as described in the Preliminary Prospectus Supplement), no additional shares will be added to the conversion rate.

Consolidated Balance Sheet Data:

Cash and cash equivalents

Restricted cash(1)

Working (deficit) capital

Property, plant and equipment, net

Total assets

Total current liabilities

Long-term debt and finance leases, net of current portion(2)

Resale value guarantees, net of current portion

Total stockholders’ equity(3)

The Issuer maintains certain cash balances restricted as to withdrawal or use. The Issuer’s restricted cash is comprised primarily of cash as collateral for the Issuer’s sales to lease partners with a resale value guarantee, letters of credit, real estate leases, insurance policies, credit card borrowing facilities and certain operating leases. In addition, restricted cash includes cash received from certain fund investors that have not been released for use by the Issuer and cash held to service certain payments under various secured debt facilities.

Reflects on an as-further-adjusted basis the issuance of $1.60 billion aggregate principal amount of 2.00% convertible senior notes due 2024 in this offering. In accordance with ASC 470-20, convertible debt that may be wholly or partially settled in cash is required to be separated into a liability and an equity component, such that interest expense reflects the issuer’s nonconvertible debt interest rate. Upon issuance, a debt discount is recognized as a decrease in debt and an increase in equity. The debt component accretes up to the principal amount over the expected term of the debt. ASC 470-20 does not affect the actual amount that the Issuer is required to repay, and the amount shown above for the notes offered hereby is the aggregate principal amount of the notes without reflecting the debt discount or fees and expenses that the Issuer is required to recognize or the increase in additional paid-in capital on the Issuer’s consolidated balance sheet.

As noted in footnote (2), in accordance with ASC 470-20, convertible debt that may be wholly or partially settled in cash is required to be separated into a liability and an equity component, such that interest expense reflects the issuer’s nonconvertible debt interest rate. Upon issuance, a debt discount is recognized as a decrease in debt and an increase in equity. The debt component accretes up to the principal amount over the expected term of the debt. ASC 470-20 does not affect the actual amount that the Issuer is required to repay, and the amount shown above for the notes offered hereby is the aggregate principal amount of the notes without reflecting the debt discount or fees and expenses that the Issuer is required to recognize or the increase in additional paid-in capital on the Issuer’s consolidated balance sheet.

on an actual basis;

on an as-adjusted basis to give effect to this offering of notes (assuming the underwriters do not exercise their over-allotment option to purchase additional notes) after deducting the underwriting discount and the Issuer’s estimated offering expenses, and the application of the net proceeds from this offering and the Issuer’s concurrent common stock offering to pay the cost of the convertible note hedge and warrant transactions entered into in connection with this offering (after such cost is partially offset by the proceeds to the Issuer from the warrant transactions), as described in “Use of Proceeds”; and

on an as-further-adjusted basis to give effect to the sale of the shares in the concurrent common stock offering (assuming the underwriters do not exercise their option to purchase additional shares), based on the public offering price of $243.00 per share after deducting the underwriting discount and the Issuer’s estimated offering expenses.

Cash and cash equivalents

Restricted cash(1)

Current portion of long-term debt and finance leases

Long-term debt:

1.25% convertible senior notes due 2021(2)

2.375% convertible senior notes due 2022(2)

5.30% senior notes due 2025

2.00% convertible senior notes due 2024 offered concurrently
herewith(3)

Other long-term debt and finance leases, net of current portion(2)(4)

Stockholders’ equity:

Preferred stock, par value $0.001; 100,000 shares authorized, no shares issued and outstanding, actual; no shares issued and outstanding, as adjusted and as further adjusted

Common stock, par value $0.001; 2,000,000 shares authorized; 173,682 shares issued and outstanding, actual; 176,768 shares issued and outstanding, as-adjusted and as-further-adjusted

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total capitalization

The Issuer maintains certain cash balances restricted as to withdrawal or use. The Issuer’s restricted cash is comprised primarily of cash as collateral for our sales to lease partners with a resale value guarantee, letters of credit, real estate leases, insurance policies, credit card borrowing facilities and certain operating leases. In addition, restricted cash includes cash received from certain fund investors that have not been released for use by the Issuer and cash held to service certain payments under various secured debt facilities.

In accordance with ASC 470-20, convertible debt that may be wholly or partially settled in cash is required to be separated into a liability and an equity component, such that interest expense reflects the issuer’s nonconvertible debt interest rate. Upon issuance, a debt discount is recognized as a decrease in debt and an increase in equity. The debt component accretes up to the principal amount over the expected term of the debt. The amount shown in the table above for the 1.25% Convertible Senior Notes due 2021 and the 2.375% Convertible Senior Notes due 2022 reflects the carrying value as of March 31, 2019. ASC 470-20 does not affect the actual amount that the Issuer is required to repay. The Issuer had $1.4 billion in aggregate principal amount of the Issuer’s 1.25% Convertible Senior Notes due 2021, and $977.5 million in aggregate principal amount of the Issuer’s 2.375% Convertible Senior Notes due 2022 outstanding as of March 31, 2019.

Reflects on an as-further-adjusted basis the issuance of $1.60 billion aggregate principal amount of 2.00% Convertible Senior Notes due 2024 offered hereby. In accordance with ASC 470-20, convertible debt that may be wholly or partially settled in cash is required to be separated into a liability and an equity component, such that interest expense reflects the issuer’s nonconvertible debt interest rate. Upon issuance, a debt discount is recognized as a decrease in debt and an increase in equity. The debt component accretes up to the principal amount over the expected term of the debt. ASC 470-20 does not affect the actual amount that the Issuer is required to repay, and the amount shown above for the notes offered hereby is the aggregate principal amount of the notes without reflecting the debt discount or fees and expenses that the Issuer is required to recognize or the increase in additional paid-in capital on the Issuer’s consolidated balance sheet.

As of March 31, 2019, the Issuer had borrowed $1.9 billion under the Credit Agreement.

30,894,313 shares of common stock issuable upon the exercise of options outstanding at March 31, 2019 at a weighted average exercise price of $275.44 per share;

5,192,006 shares of common stock issuable upon the vesting of restricted stock units outstanding at March 31, 2019;

15,173,325 shares of common stock reserved for future issuance under the Issuer’s stock-based compensation plans, consisting of 13,370,496 shares of common stock reserved for issuance under the Issuer’s Amended and Restated 2010 Equity Incentive Plan and 1,802,829 shares of common stock reserved for issuance under the Issuer’s 2010 Employee Stock Purchase Plan and shares that become available under the Amended and Restated 2010 Equity Incentive Plan and 2010 Employee Stock Purchase Plan pursuant to provisions thereof that automatically increase the share reserves under the plans each year;

the shares of common stock reserved for issuance upon conversion of the Issuer’s Existing Notes and the warrant transactions entered into in connection with the issuance of these notes;

the shares of common stock reserved for issuance upon conversion of the Issuer’s SolarCity Convertible Notes;

the shares of common stock to be reserved for issuance upon conversion of the notes being offered hereby and the warrant transactions being entered into in connection therewith; and

any shares issued pursuant to the Issuer’s S-4 (File No. 333-229749) in connection with the Issuer’s pending acquisition of Maxwell Technologies, Inc., which shares are expected to have a market value of approximately $219 million when issued.