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- Dougherty & Company LLC
So just quickly can you help me get to a free cash flow figure, looks like you can do $1.5 billion in CapEx, but what’s going to be the operating cash flow to offset that?
Deepak Ahuja - Chief Financial Officer
Yes, we will have clearly significant - Deepak here, hi Andrea.
Andrea James - Dougherty & Company LLC
Hi.
Deepak Ahuja - Chief Financial Officer
We would have significant positive operating cash flow, obviously as our business --our volume gross and our gross margin continues to improve. We’ll also have some cash used on our direct leasing program. Our expectation is that we will establish shop via warehouse line for leasing cars and that will continue to grow and fund the big portion for leasing funding required. So overall, we feel pretty comfortable where we are in terms of our 2015 look from a cash burn perspective.
Andrea James - Dougherty & Company LLC
So maybe about $1 billion is that about inline of cash burn?
Deepak Ahuja - Chief Financial Officer
Should be less than that
Ever since the Q4 ER call I was wondering how is it possible to reconcile the following exchange with the company provided guidance:
I could not make numbers work - how is it possible that cash burn would be less than $1B while capex is projected to be $1.5B, unless 2015 profits from the automotive operations exceed $500M. The problem was that I could not get to this number given the company guidance.
As I was going through the California SGIP spreadsheet listing application for storage incentives, and my son walked in and reminded me about this exchange, it suddenly dawned on me: the additional profit/cash flow contributor which was missing in my original analysis could come from the planned stationary storage sales in 2015!
The rough spreadsheet showing my napkin math is included below for members of the Forum to throw darts at.:smile:
One thing to note is that the mismatch between what Deepak implied the positive cash flow would be and my rough calculation is in hundreds of millions, so I neglected all items that are at least an order of magnitude smaller, like drivetrain/development profit, etc. Also note that all items which negatively impact bottom line (like forex) will make the mismatch larger, providing even stronger evidence that in order to make numbers work one has to assume even more significant additional (stationary storage?) source of income.
As seen from the spreadsheet below, in order to make numbers work Tesla needs to sell more than 323 MWh worth of storage (or 3,805 85D worth of batteries). This is clearly a speculation on my part, but I just do not know how to make sense of the exchange between AJ and DA in any other way.
If I am onto something with this speculation, though, and the additional profit to the tune of a quarter of billion of $$ will be mentioned as part of the guidance during the ER, we might witness real fireworks.![]()
So I did a stocktwit based on Vgrin's post:
"Even a bull like me couldn't see how to spend >$1.5B and burn <$1B on 55k cars and high OPEX. Hmm, missing piece?"
Maybe this is part of the "crazy positive cash flows" that has also been hinted at on more than one occasion? It seems like short term is too short to be talking about this Q3/Q4 positive cash flow that was referenced, and long term everyone already thinks big crazy numbers out to 2019, but I have been wondering how they would hit the cash flow positive that has been referenced with just the MS and MX.
Granted end of year they are talking about 2k a week production and all the R&D will be finished on the Model X and what we now see as finished R&D on the P85D/85D/70D and the autopilot stuff. But at the same time they are going to start sinking R&D into the Model 3 and will be continuing to improve on the Model S and soon X, so I don't know that those numbers are ever really going to go down. So just 2k a week production surely won't be enough to be cash flow positive like Elon has hinted at and this Stationary storage might just truly be the "missing piece" in more than one way, haha!
Valid points, but don`t forget the S and the X share a lot of components which simplifies everything from design, testing sourcing to manufacturing. For Model 3 they`ll have to develop a brand new (smaller) platform which they can then use for a series of next vehicles (3, 3 SUV, new roadster... who knows what else). They need to develop and source new parts in much higher volumes than ever before and build a new manufacturing line too.Won't R&D on Model 3 be substantially lower than for either S (inexperienced team, steep learning curve, lots of new tech) or X (new, complex features, drive to improve significantly on S)? I'm not sure about the specific numbers, but I don't think that R&D expenses in Q3,Q4 of 2015 will be anything like those in 2014. The development of the StSt product surely also burned some cash that we weren't aware of until now, and this will also no longer be the case in 2015. At the same time, as you said, weekly revenues from automotive sales will have increased quite dramatically as A: volume will be double that of 2014H2 and B: ASP will be much higher due to presence of P85Ds in the mix and of course the early, fully-spec'd, top of the range Model X's.
Recieved notice from DWP that my power is going to be shut off on Weds most likely when earnings are released & during the confernce call, they will be replacing an underground transformer that causes blackouts in our area finally..talk about my worlds colliding.
Somebody needs a PowerWall!![]()
Reserved one Thursday night, I have solar so if PowerWall pays for itself in ~7 years then I am happy while supporting the cause, plus they look cool.
View attachment 80020
Recieved notice from DWP that my power is going to be shut off on Weds most likely when earnings are released & during the confernce call, they will be replacing an underground transformer that causes blackouts in our area finally..talk about my worlds colliding.
Watch it from the car?![]()
I think it's a clever way to disguise a range extender pack. Everyone buys one, then finds out its really a solar charged range extender battery, pop it off your wall and drop it in your trunk and TA-da an extra 23 or 30 miles of range. There's your 300 mile EV. Elon is going to reveal this on the cc tonight.
Just kidding of course.![]()
I think it's a clever way to disguise a range extender pack. Everyone buys one, then finds out its really a solar charged range extender battery, pop it off your wall and drop it in your trunk and TA-da an extra 23 or 30 miles of range. There's your 300 mile EV. Elon is going to reveal this on the cc tonight.
Just kidding of course.![]()