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Near-future quarterly financial projections
- Thread starter luvb2b
- Start date
SageBrush
REJECT Fascism
Tesla finished Q3 with 22.5k inventory. They disclosed this directly with their inventory days disclosure.
Backing out the 15k Model 3 production vs deliveries delta means ~7.5k S&X at Q3. This is because over the years some have been written off and some assigned as permanent loaner vehicles in PP&E on the balance sheet.
At Q4 this has reduced to 8.5k Model 3 Fremont inventory, 1k MIC Model 3 inventory and 6k S&X inventory. So 14.5k real inventory (excluding MIC which are just waiting for the delivery ceremony).
I would guess most of these are short term loaner cars or in shipment across country.
EVNow
Well-Known Member
But we are talking about just Fremont capacity, which should serve NA. GF3 and GF4 should serve rest of the world.
There were likely many at delivery centers as well that were not listed on Tesla's website.
Why not? What was listed? What was not? What was the reason for that?
I am so glad, you have asked this question. Because I have no clue and I would like to know the answer myself.
My only observation is that all inventory listings were limited to 50 cars.
SageBrush
REJECT Fascism
That might be true one day but in the meantime geographic demand will have ups and downs, while GF3 and GF4 have ramps to complete and future expansions. Tesla factories will play an intricate game for a long time.
Doggydogworld
Active Member
Indexers lend shares to help keep costs down.
By my count cumulative S/X production is 459,152 S/X vs. 451,354 deliveries. This is not as precise as it looks, in the early years Tesla's disclosure was hit and miss, but it should be pretty close. The difference of 7,798 is mostly in Finished Goods Inventory, but they did move ~1500 long term loaners to PP&E about a year ago and I'm sure they scrapped some over the years.
S/X inventory was as high as 16.7k back in 2017. That's ~60 days worth, as much as a traditional carmaker. I have no idea why they let it get so high, nor do I know where they kept all those cars. Most stores and service centers only had a dozen or so and they never showed more than a small fraction of this inventory on their web site. But the numbers match Tesla's comments and the balance sheet. Jon McNiell's exit bonus was based on whittling S/X inventory down, and he got it below 10k at yearend 2017, but it grew again to almost 15k the next year. They now seem more focused on keeping S/X inventory low. Reducing the number of h/w configurations helps a lot with that.
Model 3 is 457,963 produced and 448,634 delivered. The 9,329 difference should all be in FGI. Take out the GF3 cars and that's only about a week's worth of Fremont Model 3 production, an extremely low inventory level for a carmaker.
EVNow
Well-Known Member
But why would you spend large capex for just small short term gain ?
I'm sure they will try to increase the production a little if it can be done easily. But the smart thing to do now is to increase production in GF3 and export if needed.
Regarding demand, yes BMW sells about 2.5 million. But
- Tesla sells better cars at a lower TCO
- In some places like urban centers in China, it's not possible to get an ICE car
- BMW has equivalent competition in every segment they sell, unlike Tesla who has no competition at the moment
- Governments are pushing EVs with incentives, which is only going to increase as climate change awareness increases, though this may over time shift to penalties for ICE (e.g. Europe)
- BMW doesn't make trucks
- The Tesla Stretch
Remember, the most valuable consumer product the iPhone, has only a few models. Between these products, Tesla can easily get to 6-7 million worldwide. A model 2 and a smaller Y can easily get it to double digits if priced under 30k.
Pivoting to valuation for a bit, Toyota makes 20B dollars in profit for 10 Million cars sold. Tesla will make more even at 5 million in sales. Let's say 12% at 40k ASP. Remember a lot of this value is software, where marginal cost is zero unlike traditional automaker. Also Tesla is more integrated both upstream and downstream. So 12% is really an underestimate. At 24 Billion in profit (12%*40k*5 Million), slap a 30 PE, that's a 720B in valuation. Assume 240 million shares at that point, which is 3K per share.
This assumes no energy and storage, no FSD, no Tesla insurance, no Tesla credit (which becomes a reality when the ratings and cost of funds improve), no premium service subscriptions. The biggest one I am excluding is the Tesla Semi, where the purchase decisions are solely economic in nature and a flip in economics will mean a sudden shift in buying decisions as long as infrastructure is there.
Bottom line, if Tesla is approaching 5 Million in sales, it should be trading at close to 3k, and that would be undervalued. I expect this to be met from 6 giga factories, each doing 15-20k per week. Expect to see a US Midwest GF, one near Beijing or in Japan, and another in Europe. I don't see a reason why any of this cannot happen before end of 2024.
I realize this is a tangent, but the BMW comparison forced me to respond.
Yeah, your original message did not make any sense
So then you're assuming they will also start producing LR and P models at Giga 3 and Giga 4? Last time I heard Giga 3 is going to be only SR+, but it's something I'm not sure about and would like other people's opinion on.
‘Thanks so much for your efforts.
1) I would think GF3 COGS would be higher initially because of only 30% local content and then decline rapidly with scale and as they move towards 100% local content by the end of the year.
2) Also Tesla apparently just hit a rate of 28 vehicles per hour, and didn’t sustain that for very many hours. Even with 1 single 10 hour shifts, that would have produced 1k cars in 3.5 days and we know they built fewer. So they obviously only peaked at this rate. Based on the U.S. Model 3 ramp (even after they achieved 5k / week peak rate) I would go more conservative with q1 GF3 production. As @Fact Checking posited IIRC, they still need to ramp the supply chain now that production rates have been proven. Glad to see they apparently learned that lesson after the battery pack production fiasco in the initial Model 3 ramp, where it had apparently never been tested at speed before they ramped the supply chain
1) Yeah, I sort of assumed maybe this and capital efficiencies to build Giga 3 will outweigh each other? I did not include any reduction in COGS because of those lower capex per unit of capacity, and also did not include increase in COGS due to only 30% local content. But this is a guess I admit, the 30% local content could outweigh lower capex per unit of capacity.
2) Yeah, you are right. That's why I'm not projecting 5k / week from the get go. I have Q1 @ 2k / week, Q2 @ 3k / week, Q3 @ 4k / week, and finally Q4 @ 5k / week. Which I think seems reasonable based on current information, but they could not achieve that of course.
EVNow
Well-Known Member
Have they announced this 5k/wk rate ? I thought the capacity was 3k/wk.
28/hr is the claimed designed rate - which equates to 4k/wk @ 20hrs/day, 7 days a week.
No, that's why I listed it as one of the assumptions. I feel like the demand should easily be there (biggest sedan market in the world).
In terms of it being physically possible in that factory, don't they usually operate more than 20 hrs/day? I know there's some downtime for maintenance, but 28 hours per week seems excessive. And I feel like they should be able to crank out some further small efficiencies over time too to get them to 5k / week. It's an assumption I've made, but doesn't seem like a stretch.
Where did you get the 28/hr rate for which it is designed? Is it in an SEC filing somewhere?
EVNow
Well-Known Member
I read or heard it in a story about first deliveries on GF3. 3k/wk, IIRC, is what Tesla agreed to build with Chinese government (minimum).
I've no doubt they want to expand that capacity, but I think that will be mostly for Y.
While we have heard about 10k/wk in Fremont and 10k/wk in GF4 from reports - I've not heard of a target production rate in GF3. I've been assuming it to be about the same 10k/wk at some point in the future. I think before expanding 3 production beyond 3k/wk, Tesla should start producing Y and see where the combined 3+Y demand is in China. Although China is the largest auto market, most of those are cheap cars - with the kind of prices you won't get any new cars in the US for.
I asked 1-2 pages ago if anybody knows about an exact breakdown of restructuring & other OPEX costs, but nobody seems to know.
My reasoning for the $40m is that Tesla has been reporting this number for 6 quarters now, and it's only been $0 once. I am aware that the big $100M quarters were mostly due to layoffs, but it's restructuring & other, and it seems like there are other costs that get counted here as well.
$40M is probably a bit too high, and either way this is a bit of a guess because Tesla has never given us a detailed breakdown of what these involve, but I doubt it's going to be $0 every time in the absence of layoffs.
I know we've discussed this before but I still disagree.
In terms of large capex for short term gain - If the Paint Shop is the single bottleneck to taking Fremont from 10k 3+Y per week to 15k 3+Y per week, the capex payback will be extremely quick. And it can be justified even if Fremont production is cut back down to 10k after GF4 in Europe is up to capacity. I heard that the original Fremont Paint Shop cost EUR250m. I've also heard reports that GF3 paint shop was built in-house so was likely significantly cheaper. Most likely Tesla would just expand the current Fremont Paintshop rather than building a new one. But even if they spent $300m on a new paint shop at Fremont this would be paid back by selling just 30k cars at $10k gross profit.
I think this line is key.
Elon Musk: "Yeah, the body line is separate, the paint line is -- basically we do not expect it to interfere with Model 3."
The Y body line is a new body line. Body shop is by far the most capital intensive part of a new production line. The new Y Body Shop must be at least 6-7k if you are expecting 3 production to drop to 3-4k. So this means the current 3 line will be dropped from its current 7k per week production rate roughly in half to 3-4k. This would be a massive underutilisation of assets.
The question is really if you think Elon's "the paint line is --" sentence would have finished with:
A - "The paint line is going to be expanded to allow for Model Y production -- basically we do not expect it to interfere with Model 3.."
or B - "The paint line is going to be our single bottleneck between 10k per week and 15k per week 3/Y at Fremont and will hold back annual capacity by 250k cars per year and net profit by $2,500m and we're not going to do anything to expand it and solve the bottleneck, we'll instead cut Model 3 production in half -- basically we do not expect it to interfere with Model 3."
15k per week 3/Y at Fremont also aligns with Carsonight's reports that Tesla is targeting 15k packs per week at GF1 in its current footprint and with Panasonic's recent talk that they can ramp to 54GWh.
In addition, some points i made before:
Do you have a source for this? It's pretty much exactly what I've been thinking, but it's just guesstimations from extrapolating Tesla's announced plans. If Tesla has officially stated this at some point, that would improve my confidence level in certain predictions.
Detailed internal documents leaked to Business Insider late 2018.
Leaked documents reveal Tesla had an aggressive production ramp for its Model Y — but the company says that its plans have changed
