diff --git a/homeassistant/components/tesla.py b/homeassistant/components/tesla.py
index e48d805abab..08006310dc7 100644
--- a/homeassistant/components/tesla.py
+++ b/homeassistant/components/tesla.py
@@ -5,7 +5,9 @@ For more details about this component, please refer to the documentation at
 https://home-assistant.io/components/tesla/
 """
 from collections import defaultdict
+import logging
 
+from urllib.error import HTTPError
 import voluptuous as vol
 
 from homeassistant.const import (
@@ -19,6 +21,8 @@ REQUIREMENTS = ['teslajsonpy==0.0.11']
 
 DOMAIN = 'tesla'
 
+_LOGGER = logging.getLogger(__name__)
+
 TESLA_ID_FORMAT = '{}_{}'
 TESLA_ID_LIST_SCHEMA = vol.Schema([int])
 
@@ -31,6 +35,9 @@ CONFIG_SCHEMA = vol.Schema({
     }),
 }, extra=vol.ALLOW_EXTRA)
 
+NOTIFICATION_ID = 'tesla_integration_notification'
+NOTIFICATION_TITLE = 'Tesla integration setup'
+
 TESLA_COMPONENTS = [
     'sensor', 'lock', 'climate', 'binary_sensor', 'device_tracker'
 ]
@@ -46,10 +53,31 @@ def setup(hass, base_config):
     password = config.get(CONF_PASSWORD)
     update_interval = config.get(CONF_SCAN_INTERVAL)
     if hass.data.get(DOMAIN) is None:
-        hass.data[DOMAIN] = {
-            'controller': teslaApi(email, password, update_interval),
-            'devices': defaultdict(list)
-        }
+        try:
+            hass.data[DOMAIN] = {
+                'controller': teslaApi(email, password, update_interval),
+                'devices': defaultdict(list)
+            }
+            _LOGGER.debug("Connected to the Tesla API.")
+        except HTTPError as ex:
+            if ex.code == 401:
+                hass.components.persistent_notification.create(
+                    "Error:<br />Please check username and password."
+                    "You will need to restart Home Assistant after fixing.",
+                    title=NOTIFICATION_TITLE,
+                    notification_id=NOTIFICATION_ID)
+            else:
+                hass.components.persistent_notification.create(
+                    "Error:<br />Can't communicate with Tesla API.<br />"
+                    "Error code: {} Reason: {}"
+                    "You will need to restart Home Assistant after fixing."
+                    "".format(ex.code, ex.reason),
+                    title=NOTIFICATION_TITLE,
+                    notification_id=NOTIFICATION_ID)
+            _LOGGER.error("Unable to communicate with Tesla API: %s",
+                          ex.reason)
+
+            return False
 
     all_devices = hass.data[DOMAIN]['controller'].list_vehicles()