2012 Q4 Earnings Report thread

[K Hall]

They are confirming quickly and "weeding out" reservation holders who are not serious about buying the car. I took that they have over 10,000 confirmed reservations from the US today.

 

[Zzzz...]

All I could say is WOW!!!

But I betted that share price would go down... Now I feel pain cuz:::

1) Elon expect Q1 to be profitable! What da f!!! All analysts expected no early then Q3 '13 to get that... Problem is, I do believe Elon and expect market to believe...They half way plus over Q1!
2) He(Elon) expect more then 25% profit margins before Q4 '13? And not only before Q4, but as early as Q2???????? Correct me if I got wrong impression.
3) They got no problem to increase production rate beyond 5k units a quarter but now they are (TM) concentrates about efficiency! Only that explain below 500 units a week plus the fuct they are about to get rid of most part time workers...

 

[drinkerofkoolaid]

Same here. I took this as meaning they have a backlog of 12k finalized orders that have not been delivered yet.

They are confirming quickly and "weeding out" reservation holders who are not seious about buying the car. I took that they have over 10,000 confirmed reservations from the US today.

 

[Norbert]

3) Faster (30minute?) Supercharger coming soon.

I didn't quite get the bit about improved SuperCharger technology.

Did Elon say faster? Through software, or changes in the Superchargers?

 

[CapitalistOppressor]

All I could say is WOW!!!

But I betted that share price would go down... Now I feel pain cuz:::

1) Elon expect Q1 to be profitable! What da f!!! All analysts expected no early then Q3 '13 to get that... Problem is, I do believe Elon and expect market to believe...They half way plus over Q1!
2) He(Elon) expect more then 25% profit margins before Q4 '13? And not only before Q4, but as early as Q2???????? Correct me if I got wrong impression.
3) They got no problem to increase production rate beyond 5k units a quarter but now they are (TM) concentrates about efficiency! Only that explain below 500 units a week plus the fuct they are about to get rid of most part time workers...

If I am a temp at Tesla, this call was pretty grim.

A profit in Q1 looks very doable to me because of the increased efficiencies they have already obtained, and because of the heavy weighting of high dollar purchases compared to the future. Plus the ZEV credits are absolute gravy.

The key takeaway from this call I think is that Tesla is extremely reliant on sales growth in the global market. They clearly do not expect the U.S. to sustain them, with their estimate of ~10k U.S. sales. The current reservation rate is just short of that, so instead of being a pullback that is what they expect to be the norm moving forward.

 

[slyastro]

Ok, 2400 MS sold during Q4. Anyone knows how much from that are Canadian sales? Should be about 100 right?

 

[wstuff]

I heard that over the next few months, perhaps two or three, the network would allow travel just about anywhere with no worry. he mentioned that now in Cal and Nev the rest of the system will be available and they are targeting 120 to 150 miles apart, if I understand that correctly they are way ahead on SC than I thought. I'm listening to the replay right now to clarify a few points.

 

[CapitalistOppressor]

I'm not positive, but I think the most important fact that Elon mentioned was that ZEV credits are not included in the 25% Margins. I've seen it mentioned that the Model S gets Tesla 4 ZEV credits . If we assume Tesla receives 5K per EV credit, that would mean 20k in profit per Model S. (Regardless of Price). Tesla wouldn't rely on the profit, as they have affirmed on many occasions, but it would certainly make them very profitable. I don't think analysts are accounting for this.

Oh, jeeze, I forgot they were that many, and that the price was per credit. I remember researching the issue after the last conference call and thinking it was a large source of free cash. The price is actually set in a market, so the individual price for each credit will decrease as supply increases. At one point they were going for ~$7,500 each, but I would expect the price to fall because Tesla will have so many credits. They will have even more than Nissan because I believe the Leaf gets just 1 credit per car, while it scales up from there for Tesla based on battery size.

Edit: Actually, the price shouldn't fall endlessly. There is an actual quota, which means Tesla has no ability to sell all of its credits unless California is nice and increases the quota.

 

[Norbert]

That puzzled me too. But it was clarified later on: if they close all stores and fire all sales people they would still be selling enough cars this year to build 20,000 on - and here it comes - momentum alone. So they still need to receive orders to get the 23,000 total they need (3,000 in 2012 and 20,000 in 2013), but they are convinced those orders would simply come in through the internet.

But with the expanding store network, the sales people and marketing they expect to get many more orders than that, also in Europe and Asia. Elon said that 70% of the market for cars in this price class is outside of the United States.

I think at one point he indicated even without the stores they could get 20,000/year (in 2013), then with the stores they could get in excess of 20,000/year (2014 and beyond).

Between the lines it sounded to me like they now have bigger plans than before, but are not yet ready to officially commit to them.

 

[drinkerofkoolaid]

I didn't quite get the bit about improved SuperCharger technology.

Did Elon say faster? Through software, or changes in the Superchargers?

To quote from the conference call.

"We're continuing to improve the rate at which the supercharger can put energy into the car. We've deployed some of the solar panels that cuts costs of electricity. We've got a fairly meaningful announcement about a step change in supercharge technology for later this year. I think people are going to be pretty interested in that announcement when it comes out"

I also found it meaningful that he stated "less than 10% of people are ordering the 40KWH battery pack. The majority of people are ordering the big battery pack (I think he said more than 50%?)."

 

[CapitalistOppressor]

To quote from the conference call.

"We're continuing to improve the rate at which the supercharger can put energy into the car. We've deployed some of the solar panels that cuts costs of electricity. We've got a fairly meaningful announcement about a step change in supercharge technology for later this year. I think people are going to be pretty interested in that announcement when it comes out"

I also found it meaningful that he stated "less than 10% of people are ordering the 40KWH battery pack. The majority of people are ordering the big battery pack (I think he said more than 50%?)."

I assume he is going to announce it is going to 120kWh which was discussed previously in the last conference call. The existing chargers use a 120kWh head so it shouldn't be hard to switch over.

 

[Norbert]

To quote from the conference call.

"We're continuing to improve the rate at which the supercharger can put energy into the car. We've deployed some of the solar panels that cuts costs of electricity. We've got a fairly meaningful announcement about a step change in supercharge technology for later this year. I think people are going to be pretty interested in that announcement when it comes out"

Thanks!

I also found it meaningful that he stated "less than 10% of people are ordering the 40KWH battery pack. The majority of people are ordering the big battery pack (I think he said more than 50%?)."

Yes, more than 50% for the 85 kWh pack.

 

[drinkerofkoolaid]

Isn't Tesla is exempt from the Quota due to the volume of cars being sold? I thought it only applied to automakers that were selling 60k cars annually?

Oh, jeeze, I forgot they were that many, and that the price was per credit. I remember researching the issue after the last conference call and thinking it was a large source of free cash. The price is actually set in a market, so the individual price for each credit will decrease as supply increases. At one point they were going for ~$7,500 each, but I would expect the price to fall because Tesla will have so many credits. They will have even more than Nissan because I believe the Leaf gets just 1 credit per car, while it scales up from there for Tesla based on battery size.

Edit: Actually, the price shouldn't fall endlessly. There is an actual quota, which means Tesla has no ability to sell all of its credits unless California is nice and increases the quota.

 

[K Hall]

I think at one point he indicated even without the stores they could get 20,000/year (in 2013), then with the stores they could get in excess of 20,000/year (2014 and beyond).

Between the lines it sounded to me like they now have bigger plans than before, but are not yet ready to officially commit to them.

His main emphasis was that for 2013 filling demand by delivering 20,000 units is done!

The marketing efforts from this point on are to build sales for 2014, 2015 and beyond at the same rate or better. With 14,000 Model X's projected to sell in 2014 you could estimate sales to double over 2013.

 

[CapitalistOppressor]

Isn't Tesla is exempt from the Quota due to the volume of cars being sold? I thought it only applied to automakers that were selling 60k cars annually?

They don't have a quota at all because they don't sell gasoline powered vehicles. The quota is that you have to sell a certain percentage of ZEV's for each ICE you sell. Any manufacturer who builds ZEV's gets a number of credits based on how many kWh they build, and they can use those credits to offset their quota. Nissan has a positive number of credits because they sell more ZEV's than is required based on how many ICE they sell. They then can sell their extra credits to other manufacturers.

Tesla has a huge number of credits though, because of their sales volume in California (and participating states), and the relative hugeness of their batteries, and the fact they don't sell any ICE, so they don't have a quota to fill. So they can sell credits to GM, Honda, etc who don't have sell enough EV compliance cars to make their quota. Tesla alone probably is selling enough kWh to satisfy the current quota, but some manufacturers are selling compliance cars, which would reduce the number of credits they need to buy from Tesla.

- - - Updated - - -

What California needs to do is increase the ZEV quota to make sure it is higher than the number of credits that Tesla (and Nissan) is generating to keep the pressure on the other automakers to produce ZEV's and to reward Tesla, Nissan and other ZEV manufacturers.

 

[drinkerofkoolaid]

You are indeed correct. It will be interesting when the Gen 3 comes out. I suspect a 30k Tesla will capture a lot of EV sales that would have otherwise gone to major manufacturers for a variety of reasons. The supercharge network standard could affirm this. Nissan could be a different story for a variety of reasons.

When this happens, it might be easier and cheaper for major companies to buy ZEV credits/ power powertrains from Tesla, rather than compete with their own technology.

On an aside, World Green Car of the Year goes to The Model S in 2 weeks

 

[anticitizen13.7]

I was happy overall with this report. The factory is meeting its production goals. With all the good press in the past 2 weeks, I'm betting that there will be a steady flow of sales:smile:

I get the sense that some of us were expecting more, but I think it is worth remembering that company growth is often an uneven process. Volatility ahead!

 

[SteveG3]

I agree with the comments that the selloff has been an initial reaction to higher eps loss last quarter, as well as reservation cancel rate issue still something of a question (this last one Elon somewhat addressed, but not a head on confident statement that cancel rate is as previously guided).

that being said I think it was a positive earnings release due to positive eps coming in this Q1 we're in middle of and reasonably confident will continue subsequent quarters.

I would expect analyst reports out tomorrow to highlight that while eps Q4 might have missed by $.10-15, what's far more important is Q1 '13 will be better than analyst expectations by about the same margin (which Elon gave good detail on supporting these numbers... both the past miss, and the big improvement in Q1).

outside of some overall market selloff, I think such analyst comments will get stock about halfway back up to 39, though it may well slip back down near these lows. Elon on CNBC won't hurt either.

 

[drinkerofkoolaid]

Any dip tomorrow is likely buyable. Nothing was revealed today that signifies any trouble ahead, and ultimately, the 20k number and 25% margins are what matters. Analysts do not "take Elon's gross margin or unit sales claims seriously", and are only pricing in 15-18% Gross Margins and 13K cars into their bullish targets.

I don't think Analysts are accounting for the profit from the sale of EV credits. Maybe this was the reason Elon repeated multiple times, the part about "profit from EV credits not being part of the 25% Margins." Tomorrow should be interesting.

It's possible they will come to Tesla's defense and upgrade the stock. Likewise it's also possible they will interpret the cancelation rate to be a problem, and will ignore the profit from EV credits or statements until they can see it, resulting in downgrades. Thoughts?

 

[NigelM]

What California needs to do is increase the ZEV quota to make sure it is higher than the number of credits that Tesla (and Nissan) is generating to keep the pressure on the other automakers to produce ZEV's and to reward Tesla, Nissan and other ZEV manufacturers.

And in the process effectively milking Detroit to support a California company. Nice politics.