2017 Investor Roundtable:General Discussion

[ValueAnalyst]

From the last earnings call:

Elon Reeve Musk - Tesla Motors, Inc.

Sure. With respect to the battery stuff, it's a little lumpy right now because we had a big inflation in fourth quarter with Southern California Edison. And then we had a bit of a gap between the Powerwall 1 and Powerwall 2. So we should start to see that correcting in, Q2, Q3, and particularly, towards the end of this year I would expect quite a dramatic ramp in storage deployment, like really dramatic.

My projection for Powerpack installations for the next four quarters. Feedback welcome.

 

[ValueAnalyst]

If we could step back a moment from the, I am sure entertaining, discussion on who is a paid shill and who should be on whoms ignore list, may I venture a relevant topic instead?

I did a very rough estimate for the upcoming quarterly report. Welcoming some discussion should I find time to refine this a little more like last quarter.

Assuming improvement in vehicle average sale price of 75 base points and excluding recognition of any delayed EAP/FSD revenue I get a revenue of $1,732M. Assuming an improvement of the same 75BP in production efficiency, costs are $1,303M. For leasing I am estimating flat cost and revenue. Obviously the increased fleet should make them grow but last quarter saw exceptionally few leasing starts because of large Hong Kong deliveries which were straight sales. So making those cancel out against each other I get revenue of $254M and cost of $166M.

Service cost and revenue I don't see that changing a lot compared to last quarter, so let's take identical numbers ($193M revenue, $214 costs)

Energy storage and generation : are there any big projects that hit the bottom line this quarter? There are the first deliveries for Powerwall 2.0 to account for. 5k delivered @ $6200 adds $31M to the revenue side. Assuming gross margin of 10% (Gigafactory not yet at volumes) adds $28M to the cost side to reach $245M and $180M respectively.

Adding it all together I get revenue of $2,392M and costs of $1,835M for a gross profit of $557M.

R&D growing by 10%, SG&A dropping by 10% with the winding down down of SolarCity and adding $5M to the interest expense due to the new convertibles written this quarter I get to respectively $354M, $543M and $104M. On the plus side losses attributable to non-controlling interest of $66M

Final tally a loss of $375M. Possible upsides : ZEV credits (didn't sell any last quarter) maybe up to $100M and recognition of previous EAP revenue maybe as high as another $100M.

My estimates are very close to yours. I'm slightly on the pessimistic side due to lower revenue estimate due to lower TE estimates.

 

[erthquake]

Insurance... Liability claims should be reduced for Tesla drivers, including injury claims on the opposing side. Injury for occupants inside the Tesla should also be lower. However property damage claims for comprehensive/collision are much higher from what I've read. Un-insured and under-insured drivers will bump up claim amounts, since they are ungodly expensive to fix. Minimums in most places are $25k, and most people don't carry more than $50k on property liability. (Why should they since most people with expensive cars have underinsured motorists coverage?)

Exactly. As long as car insurance is required in every state, insurance companies will find a way to price their offerings to ensure profitability. Car insurance is a gravy train. They really only seem to take a hit with major disasters, but they've gotten a lot better in the last 20 years with assessing and appropriately pricing those risks and avoiding the kinds of hits they took with Hurricane Andrew.

 

[SwTslaGrl]

The U.S. Dollar Index (DXY) is down -6.37% YTD. This could increase Tesla ex-US sales profit.

 

[RobStark]

One of a dozen so-called independent agencies!?!? Please name the other 11. Don't get me wrong the CNBC article had a pretty obvious negative spin but the IIHS itself is basically the only other agency that anyone pays attention to in the US. So Tesla is only acceptable with the relatively new small overlap test. 2 out of the 3 cars that got the highest mark in this test were completely redesigned for 2017. Maybe Tesla figured it out for the Model 3 but either way it is the same test that all automakers are getting and a large number of them are having a hard time getting the 'good' rating. Only a complete redesign will be able to pass and I have high confidence Tesla will get it right when they release a full redesign in a couple years.

How then did a 2017 Toyota Avalon in its 5th year of production before a complete redesign in 2019 pass?

The 2012 Camry built on the same platform as the 2017 Toyota Avalon failed the IIHS front overlap test.

There are tradeoffs. IIHS standard requires a much tighter seat belt that reduces the chances of a head injury but increases the chance of broken ribs in an accident. Tesla engineers, obviously, felt reducing the chances of head injury from very low to lower while at the same time increasing the chances of broken ribs substantially was not worth it.

 

[RobStark]

Initially I bugged out about it to, but it's pretty damning to not question if there is an agenda if there are no 7 series or S Class on the list. IIHS also has an incredibly small list of vehicles it has tested.

There are two ways IIHS gets cars to test. 1) They buy some of the most popular cars in the US to test. 2) Automakers donate their cars to IIHS to test. MB and BMW did not donate S Class or 7 Series and IIHS did not buy them because their sales are not substantial enough in the US.

 

[Ichabod]

My projection for Powerpack installations for the next four quarters. Feedback welcome.

View attachment 234365

My feedback would be: Interesting, but nothing to base a decision on, because it is conjecture. You have no company guidance, no historical statistics to extrapolate, nothing to base this on. It's as good a guess as any, but it is hard to call it anything more than a guess. Not a bad guess, but a guess nonetheless.

 

[ValueAnalyst]

My feedback would be: Interesting, but nothing to base a decision on, because it is conjecture. You have no company guidance, no historical statistics to extrapolate, nothing to base this on. It's as good a guess as any, but it is hard to call it anything more than a guess. Not a bad guess, but a guess nonetheless.

I agree, except that Elon guided a "dramatic ramp-up" in storage later this year and I'm using slightly conservative than last quarter's gross margin.

I agree that there is not much to base TE projections on, so readers should be aware of that caveat. Thanks for pointing it out.

 

[Reciprocity]

Another way to look at this IIHS mess .. My understanding is that Tesla came in 3rd in the one test (offset test) and first in the rest. This one test is responsible for 25% of injuries to drivers per IIHS. So worst case, Tesla is the safest car 75% of the time and only the 3rd safest car the other 25% of the time, making it almost impossible for another car to be more safe in the real world. Its not like you are 100% guaranteed to die because you came in 3rd out of hundreds of brands/models? I am also sure that your likely hood of being injured in the other situation isn't just marginally better then the competition, but dramatically. Like the guy who went off the road down a 300ft embankment.

So the Model S is still the safest car in the world.

 

[elasalle]

BTW, hope EM doesn't tweet he will give update on SN1 by tomorrow - else might not get into bed on time

 

[aznt1217]

There are two ways IIHS gets cars to test. 1) They buy some of the most popular cars in the US to test. 2) Automakers donate their cars to IIHS to test. MB and BMW did not donate S Class or 7 Series and IIHS did not buy them because their sales are not substantial enough in the US.

But didn't you hear? Model S is having demand issues and Tesla doesn't make enough money to donate cars eye rolls*

 

[Waiting4M3]

New GF#1 picture:

There are about 250 cars per section and with 12 sections, it brings the total to about 3,000 vehicles at the plant.

and I particularly like this picture showing the current as a portion of the final version:

 

[Matias]

It could be argued that the overlap test is setup to bypass most of Tesla's superior crumple zone. That insurance companies have a vested interest in slamming slowing down Tesla keep their autonomous technology from obviating the insurance industry..

Ok. This is in the top three of the most stupid conspiracy theories i've read on the TMC and that is quite an achievement.

 

[Ichabod]

So crazy question, but where is the parking in the final version?

New GF#1 picture:

and I particularly like this picture showing the current as a portion of the final version:

i

 

[mongo]

So crazy question, but where is the parking in the final version?


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At the other end of the tunnel/ rail line?
If employees scale with area, I sure wouldn't want to drive to work....

 

[Waiting4M3]

So crazy question, but where is the parking in the final version?

Maybe robots don't need parking, or maybe Tesla network will move all the people...

 

[adiggs]

That looks like a building that is badly in need of parking garageS.

Besides the benefit of parking somewhere other than the top deck (parking in the shade!)

 

[Ichabod]

At least most of the employees are from the area, so they aren't accustomed to parking under a nice broad oak tree all summer.

 

[AlMc]

Has anyone seen a post from @TrendTrader007 recently?

I am curious about his charting as to where he sees TSLA going, and frankly, to make sure he is OK.

 

[AlMc]

I see one more attempt to break down the SP before close. Hopefully it fails. Would like to go into AH/tomorrow on an uptick.