$561.8 million in revenue.. WTF???

[vgrinshpun]

Quick model to illustrate the problem -

1,470 60kWh sales @ $80,000 = $117.6m
1,715 85kWh sales @ $90,000 = $154.4m
1,715 P85 sales @ $100,000 = $171.5m

total
4,900 = $443.5m

ZEV Credits = $68m
Development Cash = $7m

Total = $518.5m

Actual = $562m

Missing = $43.5m??? From web merchandise and retail sales? We are talking like $8,900/car worth of revenue.

If CAFE prices equal GHG prices, then going off the model in the OP that would be worth ~$7,200/car. Totally speculative though, and is based only on EPA guidance of $23/Mg of CO2 with a multiplier of 2. Current CO2 price in Europe is ~$4/Mg, but thats because of a collapse. It's been as high as $40/Mg before the financial crisis, with many predicting $100+/Mg.

Regardless, its the only (potentially) missing line item which is at the correct scale (that I see anyways).

The "$7.0M Development Cash" is not part of the "Automotive Sales", it is listed as a separate item in the Shareholders Letter. The powertrain sales, however, are not listed as a separate item anywhere else, and are included in "Automotive sales".

So assuming that Model S ASP is $95,000 (including service plans, accessories, etc.), the total Models S automotive sales come at 4,900 x 95,000 = $465.5M. The remaining 555.203 - 465.5 = $89.7M is the total for Regulatory credits and powertrain sales. The most frustrating thing is lack of clarity on what ZEV credits entail, just ZEV (state) or ZEV combined with GHG (federal) credits. So the conclusion is that 89.7 - 68 = $21.7M is either powertrain sales or combination of powertrain sales and federal regulatory credits.

We will have to wait for 10-K filing to sort this out.

 

[blakegallagher]

I noticed they always made sure to mention the credits as ZEV and made no mention of any other credits ... I believe this was intentional .... regarding merchandise .... I bought one of their 25ish dollar water bottle and I asked about a red hat and they said they were sold out at nearly every store nationwide ... The store in the parks mall near Denver said they were selling a lot of merchandise, I am sure this is most likely the case all over. I kinda doubt it is enough to cover all the store cost but who knows

 

[CapitalistOppressor]

your still low on dev money. I am sure it said $7mill for Merc. It didnt disclose how much they got off of Toyota.

Yes, you are right. Development "Services" probably only covers engineering only. The Toyota drive trains might have been worth $4-$8m in Q1. Depending mostly how how many units Toyota ordered.

Actual manufacturing levels by Toyota were low, probably around 200 in Q1 based on RAV4 sales, which is worth maybe only $4 million, which is why I was thinking it was in Development Services.

Regardless, it can't possibly fill the hole by itself.

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Where is the income from the RAV4EV drive trains and packs they are selling to Toyota? I don't see it above.
Where is the income from the tesla online store for accessories?
Where is 1/16 income from selling 4 year service plans? They pushed pretty hard to get us to buy those..

I think your missing a bunch of income.

It's not a "bunch." Toyota only sold around 200-300 RAV4's total in Q1. If Tesla managed to capture $20,000/revenue/unit that is $4-6m.

$1,600 * 4,900 is $7.8m, and most likely you have to amortize that anyways (which I assume you mean by 1/16).

I don't have a clue about the online store revenue or the merchandise sold at the retail locations.

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The "$7.0M Development Cash" is not part of the "Automotive Sales", it is listed as a separate item in the Shareholders Letter. The powertrain sales, however, are not listed as a separate item anywhere else, and are included in "Automotive sales".

So assuming that Model S ASP is $95,000 (including service plans, accessories, etc.), the total Models S automotive sales come at 4,900 x 95,000 = $465.5M. The remaining 555.203 - 465.5 = $89.7M is the total for Regulatory credits and powertrain sales. The most frustrating thing is lack of clarity on what ZEV credits entail, just ZEV (state) or ZEV combined with GHG (federal) credits. So the conclusion is that 89.7 - 68 = $21.7M is either powertrain sales or combination of powertrain sales and federal regulatory credits.

We will have to wait for 10-K filing to sort this out.

Yes, assuming a really huge ASP is the only way I see to get there without there being a big hole to fill.

I just don't see $95,000 ASP as credible though.

Our VIN data shows ~30% of all Q1 deliveries being 60kWh. Unlike the VIN itself there are self selection issues with the specific model. But Elon mentioned 35% sales for 60kWh so far.

The quickie model I posted likely is under counting P85's because we have reason to believe they represent 40% of underlying sales. But not enough to shift overall ASP up to $95,000 when you have substantial numbers of 60kWh cars being delivered in Q1. The quickie model isn't exactly conservative in terms of option uptake either.

 

[vgrinshpun]

Yes, you are right. Development "Services" probably only covers engineering only. The Toyota drive trains might have been worth $4-$8m in Q1. Depending mostly how how many units Toyota ordered.

Actual manufacturing levels by Toyota were low, probably around 200 in Q1 based on RAV4 sales, which is worth maybe only $4 million, which is why I was thinking it was in Development Services.

Regardless, it can't possibly fill the hole by itself.

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Yes, assuming a really huge ASP is the only way I see to get there without there being a big hole to fill.

I just don't see $95,000 ASP as credible though.

Our VIN data shows ~30% of all Q1 deliveries being 60kWh. Unlike the VIN itself there are self selection issues with the specific model. But Elon mentioned 35% sales for 60kWh so far.

The quickie model I posted likely is under counting P85's because we have reason to believe they represent 40% of underlying sales. But not enough to shift overall ASP up to $95,000 when you have substantial numbers of 60kWh cars being delivered in Q1. The quickie model isn't exactly conservative in terms of option uptake either.

I do not think that Q1 deliveries included 60kWhs, see snapshot from my Q1 modeling which I've done a while ago - it shows $95,000 as a very credible number, even without the service agreements and accessories.

 

[CyberDutchie]

I do not think that Q1 deliveries included 60kWhs, see snapshot from my Q1 modeling which I've done a while ago - it shows $95,000 as a very credible number, even without the service agreements and accessories.

I got my 60kWh delivered in Q1 and there are many, many reports by others as well.

 

[yobigd20]

I do not think that Q1 deliveries included 60kWhs, see snapshot from my Q1 modeling which I've done a while ago - it shows $95,000 as a very credible number, even without the service agreements and accessories.

View attachment 21743

fyi leather and air suspension are included with the P85's base price. those are not additional upgrades.

But I also agree that CapitalistOppressor's numbers are probably about 4-5k too low for each model. I don't know many (or any) people that pretty much didn't get it fully loaded. I think if most people can buy an $80k car they can afford to purchase all the options. That could easily account for another $22m, and with the addition of Tesla Store purchases (lots of ppl getting winter tires and floor mats), and Developmental Services that should make up the rest of the "missing" amount.

 

[PeterK]

This could easily generate $30 million in sales.

Service plans and warranties usually aren't counted as immediate sales - they generate revenue over the plan's time period.

 

[CapitalistOppressor]

fyi leather and air suspension are included with the P85's base price. those are not additional upgrades.

But I also agree that CapitalistOppressor's numbers are probably about 4-5k too low for each model. I don't know many (or any) people that pretty much didn't get it fully loaded. I think if most people can buy an $80k car they can afford to purchase all the options. That could easily account for another $22m, and with the addition of Tesla Store purchases (lots of ppl getting winter tires and floor mats), and Developmental Services that should make up the rest of the "missing" amount.

That's the most credible explanation. I am often wrong about many things.

That said, I tried to keep the model at least slightly conservative by including only ~$8,000 in options per model. But do we really want to say that 4,900 customers purchased every possible option?

As to Development Services, that is included already. The only thing not included is drive train sales to Toyota, but those are only worth maybe $4-6m.

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Are you sure about your average pricing per model? I think they're low, but not by much, especially when you think about 2013 pricing. If you bump your avg up about $2500 or so (more on the higher end models, less on the 60's), I think you'll easily arrive where you need to be.

Most deliveries in Q1 were made under 2012 pricing. By far most.

But even so I am giving $80k for a $72k 60kWh, which provides $8k in options. Same with all models. The biggest area where I think the model is clearly wrong is the P85 sales. I suspect those actually were basically maxed on options (except the xtra seats), and the percentage in the model is lower than our guidance on sales (Elon has said ~40% are P85). At the same time, I am extremely uncomfortable with saying that there were as many 85kWh cars delivered in Q1 as 60kWh cars.

By itself I don't see those potential adjustments getting us to where we need to be. Upping P85 to 40% (from 35%) gives us $2.5m in additional revenue. Adding $4,000 to the ASP for that higher number of P85's gives us an additional $7.8m. So together we are looking at $10m, which is nice, but even stacked up with a few other little chunks is leaving us well short of the $40m we need. The only way I see getting close is by assuming that literally every car had almost every option.

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Just a quick point. Consumer Reports paid $89,650 for their fully loaded 85kWh. They also added the $1,200 for the HPWC, but I don't think my model is crazy low by assuming $90,000 for every 85kWh car sold. I think $80,000 for the 60kWh is equally generous. There is a lot of perfection already built into the model.

 

[akula]

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Just a quick point. Consumer Reports paid $89,650 for their fully loaded 85kWh. They also added the $1,200 for the HPWC, but I don't think my model is crazy low by assuming $90,000 for every 85kWh car sold. I think $80,000 for the 60kWh is equally generous. There is a lot of perfection already built into the model.

Here is what I think happened: Tesla was pushing EVERY reservation for a loaded P85 ahead of everything else. Mine arrived on the same truck to chicago as my buddy's car and I was over 1k reservations ahead of him. I finalized a month before he did and we got our cars at the same time. He did have a bigger due bill but the cars arrived on the same truck, we know this for a fact. I am assuming I am not alone in this case and many many 60kwh and 85kwh standards were pushed so the p85s get delivered. We can also safely assume that 99% of all p85s were ordered with every option available sans the rear facing seats and paint armor (maybe). I got an average price of 95k when doing the calculations as I assumed a much heavier weight to the p85s. I think there are even some deliveries that took place in the 1st qtr at the new price.

 

[fjm9898]

if that is teh case. Q2 is not going to be as pretty as i was hoping for, if all the cheap cars get delivered.

 

[akula]

if that is teh case. Q2 is not going to be as pretty as i was hoping for, if all the cheap cars get delivered.

yes, this was my thought initially as well, but I am not sure it will have a huge bearing on the earnings considering they will deliver slightly more cars and get incrementally better at the margin as the production line works itself out. Based on the guidance we received yesterday, I am not sure I'd make a bet against Elon based solely on the fact that q2 car mix is different. More info and time is needed to get an idea of what the 2nd quarter will look like (and of course it has to finish out as well ) We still have a month left.

 

[gregincal]

yes, this was my thought initially as well, but I am not sure it will have a huge bearing on the earnings considering they will deliver slightly more cars and get incrementally better at the margin as the production line works itself out. Based on the guidance we received yesterday, I am not sure I'd make a bet against Elon based solely on the fact that q2 car mix is different. More info and time is needed to get an idea of what the 2nd quarter will look like (and of course it has to finish out as well ) We still have a month left.

They did say in the guidance they expected a greater percentage of 60kWh going forward.

 

[akula]

They did say in the guidance they expected a greater percentage of 60kWh going forward.

Exactly, and I think that will be driven by the availability of financing.

 

[fjm9898]

speaking of 60 vs 85, i am going to say that is why they predict low revenue but yet high margin. the 60 sells for less sure but is there more margin built into a 60 vs a 85?
I know there are many other reasons for margin growth and revenue decline but i have to ask if this is some of it.

I have said it before and i will say it again, I am still betting that Elon hedged his Q2 guidance to remain inline instead of ramping it up. Gotta leave head room for a better then expected Q2 as well.

 

[akula]

speaking of 60 vs 85, i am going to say that is why they predict low revenue but yet high margin. the 60 sells for less sure but is there more margin built into a 60 vs a 85?
I know there are many other reasons for margin growth and revenue decline but i have to ask if this is some of it.

I have said it before and i will say it again, I am still betting that Elon hedged his Q2 guidance to remain inline instead of ramping it up. Gotta leave head room for a better then expected Q2 as well.

I don't know if the costs are that different to be honest, the only real difference is the battery capacity and the power inverter. I have no idea what the material costs on the battery is since their assembly of the pack would cost the same. The power inverter should be a relatively inexpensive part as far as I know.

 

[mitch672]

I don't know if the costs are that different to be honest, the only real difference is the battery capacity and the power inverter. I have no idea what the material costs on the battery is since their assembly of the pack would cost the same. The power inverter should be a relatively inexpensive part as far as I know.

The smaller pack has fewer cells, which equals lower cost, also lower labor to assemble the pack as well...
The inverter is likely the same

 

[akula]

The smaller pack has fewer cells, which equals lower cost, also lower labor to assemble the pack as well...
The inverter is likely the same

correct, the real question is how the cost of the extra cells relates to the sales price of the more expensive model s p85 and a regular 85

 

[vfx]

Re the store and merch.

These shops are expensive to build at 1 to 2 mil each.
They are in expensive locations. My guess is that T shirts and stuff cover the rent and they are pleasantly surprised by that. Watch to see if they expand on the merch portion of the stores.

 

[hershey101]

I don't know if the costs are that different to be honest, the only real difference is the battery capacity and the power inverter. I have no idea what the material costs on the battery is since their assembly of the pack would cost the same. The power inverter should be a relatively inexpensive part as far as I know.

I think the key point to lower production costs will be improved efficiency which will help lead us to better margins. Based on Elon's guidance, I think we are looking at gross margins somewhere in the low-mid teens (not including ZEV credits) for Q2, and then closer to the 20s in Q3, and an avg. of 25% for Q4.

 

[DonPedro]

CapOp: I think you might find today's SEC filing interesting. There is an interesting discrepancy between the "management's discussion" and the "risks" part. Here is from the former, mentioning only ZEV (p. 22):

[W]e expect to achieve gross margin in the high teens in the second quarter of 2013. This expectation includes the impact from lower zero emission vehicle (ZEV) credit sales, a lower average selling price due to a higher mix of 60 kWh Model S vehicles, as well as limited sales of the now discontinued 40 kWh vehicles, which will have a range-limited 60 kWh battery pack. We expect our gross margin to continue to rise to our target of 25% in the fourth quarter of 2013, which assumes no ZEV credit revenue. We may not be able to achieve the planned cost reductions from our various cost savings and process improvement initiatives, which would negatively affect our ability to reach our gross margin goals.

During the first quarter of 2013, we recognized $67.9 million in ZEV sales, which contributed to our gross margin. ZEV credit revenue should decline in future quarters relative to our automotive sales as we grow our sales outside the United States and earn fewer credits on the 60 kWh Model S battery variant for those sales that occur in the United States. Other regulatory credit sales recognized during the first quarter of 2013 were $17.1 million. While we will pursue opportunities to monetize ZEV credits we earn from the sales of our vehicles, we do not plan to rely on these sales to be a significant contributor to gross margin, and our business model is not predicated on such ZEV credits.

Here is from the latter, which acknowledges Q1 sales of other credits (p. 40):

Our revenues to date have included amounts we receive from selling certain regulatory credits such as ZEV, GHG and CAFE credits to other automobile manufacturers. For example, in the first quarter of 2013 we earned significant revenues from selling ZEV and other regulatory credits, and we have sold substantially all of the ZEV credits saleable under our existing ZEV credit sale agreements. While we continue our efforts to sign agreements with a limited pool of automakers to sell them ZEV, GHG and other regulatory credits, we may not be able to enter into new agreements to sell any or all our available regulatory credits related to Model S, Model X or our other future vehicles, which would negatively impact our revenues and margins. Additionally, any inability to sell additional regulatory credits may negatively impact our ability to maintain profitability in the short term.