I would expect that this 159250 will be rebadged to a 75 but the price kept the same. It was 67200, now 69250. I bet if you call and ask about it, it will come up as a 75.
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I would expect that this 159250 will be rebadged to a 75 but the price kept the same. It was 67200, now 69250. I bet if you call and ask about it, it will come up as a 75.
dennis
Model S Plaid
No I think you are wrong on this one. All of the direct cost for cars produced in Q2 but not delivered, including parts and direct labor, goes into Finished Good Inventory. When those cars are delivered in Q3 and the revenue is recognized the costs come out of FGI and go into Cost of Sales. Same is true for inventory cars, unless they have been used for demo purposes, in which case the depreciation discount (based on the formula) goes into SG&A and is added back to the actual purchase price on the revenue line.
Well, here is summary of situation for members of Skeptics team: the company is in enviable position of being able, due to improved efficiency of production and cost downs, to increase both the top and the bottom line in spite of the expected lower ASP, while outselling competitors in similar price range.
dennis
Model S Plaid
The corollary is that even if GM remains the same with increasing volume comes an increased bottom line (less losses or even profitability). This is because the indirect manufacturing costs and the R&D and SG&A costs are spread over an increased number of vehicles. Thus the profitability hit to the GM of each car is smaller because there are more of them.
The one case where this would not be true would be if the ASP decreased more on a % basis than the volume increased. Clearly that is not happening here.
I already made a megapost on my predictions for this quarter. See this thread. 23% is my guess.
Good to know. My non-native English made me read this as gross margin steadily rising throug Q3 and Q4 end ending up at the end of the year around 2-3%, which is why I took it as +1% for this quarter and +2% for Q4. But the meaning of that sentence is really between +2-3% for the full period of Q3 and Q4? That'd certainly be good news since that means my total earnings re-adjustment since that post tallies up to an additional $43M more.
Come on now. For every single new car listed without a discount, there are at least 20 cars with one. I recognize a duck when I see one.
OK I'll bite. Wanna do this for a few weeks anyway and you just gave me the extra motivation.
So I've spent about 2 hours working on a previous spreadsheet I made to calculate the costs of base models. This time I added various options and uptake rate for each and the % of each model (75, 90, 75D, 90D, etc.) in total sales. Overall I'm pretty happy with the results as I got 27% GM and $98k for Model S and 16% GM and $112k for Model X, which have a combined of 21.8% GM in Q2. So, I think my model is reasonably validated with Q2 results up till this point.
Assumptions I made for Q3. All costs discussed on per car basis. I consider variable costs including sourced parts (glider), labor cost, tooling cost, delivery logistics, and warranty. Fixed cost is the depreciation of the factory. Sourced parts (the glider) cost decreased 10%, thanks to increased production and Model 3 reservation number. Labor assumed not decreased because of Tesla hiring more people to accommodate the increased production, which we know. Tooling cost unchanged as Tesla specially stated their tooling cost is on a per car basis, so no matter how much cars they produce, it's the same for each car (I think quite a few people on TMC put tooling into fixed cost and assume this will go down as production increases, no). Delivery logistics and warranty assumed unchanged. Fixed cost assumed reduced by 40%, but this doesn't affect much as it's not an important part of COGS in my model.
On the revenue side, I assumed the all 75 and 75D have an overall 5% discount off the base price MSRP, i.e., options not affected. 90D and up have 15% discount overall. This is based on the observation of a lot of 10% and 30% discount off the cars. But I don't assume all buyers took advantage of them, and assumed only half buyers did.
Because of observations we've seen on the high uptake rate of the 60, I assumed the sales of 60 and 60D are the same as 75 and 75D in Q3. Total sales predicted are 14700 for Model S and 10100 for Model X. These numbers also include a few hundred of the new P100D. I also assigned higher percentage of the Model X sales to the higher end versions, because basically European just got their Model X this quarter and most of them should be Signature versions.
Those are my major assumptions. The results are, for Model S, $91k ASP with 27% GM. For Model X, $107k ASP with 18% GM. Overall ASP $98k with 23% GM. Better than I previously thought, I admit.
I find assumption of how widely spread discounts are too conservative. These discounts are mostly available through the inventory sales. It is unlikely that inventory sales were more than few percentage points of the total.
But I also think that your assumptions on cost downs were a little too aggressive.
Overall, though, $98K ASP with 23% GM seems to be about right.
Thank you for taking your time to do the modeling and share results.
But I also think that your assumptions on cost downs were a little too aggressive.
Overall, though, $98K ASP with 23% GM seems to be about right.
Thank you for taking your time to do the modeling and share results.
It's not really that complicated.
1) beginning of the year, they forecast 100k sales of their 25% margin, custom built, pre sold cars
2) 1st and 2nd quarter they completely missed delivery target, but confused (you) with production numbers...and confirmed gullwing doors are a DFI.
3) now it looks like they are doing EVERYTHING they can to sell enough vehicles in the 3rd quarter to prevent the money tap from being welded shut when they try another raise. New lower margin 60, with same internal cost as 75, blowout leases, inventory production out the wazoo...exceeding demand (the theme of the thread for some that have trouble remembering in the mist of their fanboism), etc. My post simply directed you to another thread where prospective owners are shopping the lot for end of quarter deals. Some people still think there is no demand problem...I guess Tesla is just discounting cars they were already selling at a loss because they are so clever.
Short version is clear, the old business model didn't generate 100k units/yr...amazing how despite all the condescending talk about the old inept auto industry, Tesla has started looking more like them with each passing quarter. (Except the making a profit part)
1) beginning of the year, they forecast 100k sales of their 25% margin, custom built, pre sold cars
2) 1st and 2nd quarter they completely missed delivery target, but confused (you) with production numbers...and confirmed gullwing doors are a DFI.
3) now it looks like they are doing EVERYTHING they can to sell enough vehicles in the 3rd quarter to prevent the money tap from being welded shut when they try another raise. New lower margin 60, with same internal cost as 75, blowout leases, inventory production out the wazoo...exceeding demand (the theme of the thread for some that have trouble remembering in the mist of their fanboism), etc. My post simply directed you to another thread where prospective owners are shopping the lot for end of quarter deals. Some people still think there is no demand problem...I guess Tesla is just discounting cars they were already selling at a loss because they are so clever.
Short version is clear, the old business model didn't generate 100k units/yr...amazing how despite all the condescending talk about the old inept auto industry, Tesla has started looking more like them with each passing quarter. (Except the making a profit part)
dennis
Model S Plaid
Well, I guess that it one really negative way of looking at it. The other way is to realize that Tesla has overcome the issues with the Model X and has it in full production, that contrary to every other 4 year old car design demand for the Model S is not declining, but continues to expand now that there is a lower entry price, that Tesla is going to grow deliveries by 60% this year, and that Tesla can be GAAP profitable at around 25K-27K deliveries per quarter, even with selective EOQ discounts and continuing to ramp expenses in advance of the Model 3's arrival. And by the way, Tesla continues to disrupt "the old inept auto industry" - just look how hard the Germans are trying to play catchup as Tesla eats into their most profitable markets.
dennis
Model S Plaid
I'm aware that there will be perturbations in non-GAAP vs. GAAP due to RVG's expiring over the next 3 years, and impacts on profitability based on what % of cars are direct leased. But the overall takeaway is that Tesla can ramp production significantly and has operating leverage with increased volumes. That should raise confidence for investors that are looking toward where Tesla will be once the Model 3 starts shipping in volume.
Couple interesting data points.
With under two weeks to go in Sept, the # of Vins given out for MS in Q3 is less than Q2 by appx 2000.
We saw a bunch of recent Vin # inventory layout for the recent 75 series which are being discounted. (156,157,158 ranges)
Model X Vins are 2500 below Q2 at this point, with 2 weeks left. Most MX vin 1000s happen 9 days or longer. Last couple have been right about 7 days. Could include delayed deliveries, inventory etc. July 3-4 had an interesting jump in Vin #s that doesn't make sense so it could have been a clean vin reset up.
So, given this, they are still not consistently giving > 2000 Vin #s per week. I suspect a slowing of MX production soon, due to the recent push of delivery estimates for US to November. 5-seat and coil may be the issue holding back full production rates.
None of this means they cannot hit 79,000 if they continue with active sales cycles through end of year or special deals, incentives, repricing, etc. If the market turns up and the wealth factor, well, factors in - then that can help too. The market share is so few and the # of millionaires in the USA is so great that there is no reason not to think that something could trigger a 26,000 unit sale Q4 but would really come down to how well the USA can be blanketed with interest and excitement. Perhaps just sell the 75s at the price of 60s and drop price of 60 by $5k maybe. But one thing to factor in. The low-digit millionaires are that way because of frugal spending. They have drawers full of 10 year old socks and don't eat in restaurants much. They save. They would not be in the target market. The younger folks who "spend like millionaires" would jump on the lease agreements to get their excitement going while young. We all know the saying "poor people spend like they are rich .... while the rich spend like they are poor".
With under two weeks to go in Sept, the # of Vins given out for MS in Q3 is less than Q2 by appx 2000.
We saw a bunch of recent Vin # inventory layout for the recent 75 series which are being discounted. (156,157,158 ranges)
Model X Vins are 2500 below Q2 at this point, with 2 weeks left. Most MX vin 1000s happen 9 days or longer. Last couple have been right about 7 days. Could include delayed deliveries, inventory etc. July 3-4 had an interesting jump in Vin #s that doesn't make sense so it could have been a clean vin reset up.
So, given this, they are still not consistently giving > 2000 Vin #s per week. I suspect a slowing of MX production soon, due to the recent push of delivery estimates for US to November. 5-seat and coil may be the issue holding back full production rates.
None of this means they cannot hit 79,000 if they continue with active sales cycles through end of year or special deals, incentives, repricing, etc. If the market turns up and the wealth factor, well, factors in - then that can help too. The market share is so few and the # of millionaires in the USA is so great that there is no reason not to think that something could trigger a 26,000 unit sale Q4 but would really come down to how well the USA can be blanketed with interest and excitement. Perhaps just sell the 75s at the price of 60s and drop price of 60 by $5k maybe. But one thing to factor in. The low-digit millionaires are that way because of frugal spending. They have drawers full of 10 year old socks and don't eat in restaurants much. They save. They would not be in the target market. The younger folks who "spend like millionaires" would jump on the lease agreements to get their excitement going while young. We all know the saying "poor people spend like they are rich .... while the rich spend like they are poor".
A point that has been made several times in the forums, based on guidance from Q2, is that the Fremont plant will be closed for two weeks in Q4. For Tesla to deliver 80,000 cars in 2016, they will have to deliver 51,000 in Q3 and Q4. Given that Q4 has only 11 weeks of production and assuming a best case production rate of 2,300 cars/week, one can expect 25,300 cars made in Q4. Then there is the problem of delivering all of these cars by the end of Q4. The upshot of this is that at least 25,700 cars will have to be delivered in Q3 to meet guidance. I suspect that the number for Q3 will have to be greater than 26,000 in Q3 to have any chance of meeting the full year guidance. So, perhaps the expected outcome for Q3 would be deliveries that produce a small profit (YEA!) along with a lowering of guidance for the full year.
The real question is - will the guidance be the carrot that they aspire to but miss? It would be "as usual" since early year guidance for 2013, 14 and 15 were all missed as well. There is no reason to publish "high guidance" unless it is really known that order rates support it. Did they?
At start of 2016, they had only delivered a few Model X and thought the "car would do well". So, perhaps they just didn't know the future order rate after the first 15-20k were delivered. But holding back on any guidance and if they do miss by a material margin, then you can definitely believe the high guidance published was in order to help withstand (or "bolster") the stock price. They could have easily said 75,000 total was reasonable guidance. However, Elon said "we will grow by 50% for years to come" and so I guess they are just going with that and the 80-90k initial guidance. Q3 will be a fantastic quarter. But will there be follow-through? And will it require strong active selling in the USA?
dennis
Model S Plaid
It is virtually impossible for any company to create a 50% increase in YoY demand (17K->26K) without "strong active selling". And that is not a negative.
anticitizen13.7
Not posting at TMC after 9/17/2018
I'm sort of only half-joking when I say that Tesla is as masterful as Donald Trump at getting free publicity. Tesla doesn't need to advertise because it is so controversial that anything the company does is subjected to intense media scrutiny and bombardment.
Model 3 in of itself seems to have been a very successful "ad campaign" for Model S and X: [Poll] - Who bought or will buy Model S/X 60 kwh instead of waiting?, with a significant % of Model 3 reservation holders getting a Model S because they didn't want to wait to get into a great EV.
I'd be interested to see how sales of the 60 kWh model fared this quarter. I wrote about this in another thread, but even if 60 kWh cars are sold at the expense of some margin, many people are going to pay later for OTA upgrades. Unlocking 75 kWh of battery, unlocking Autopilot, and unlocking the 72 amp charger will in many cases be differed revenue. If I were to order a Model S today, I could differ some of my cost to the future with the features that I'd like, but don't need to have today.
Finally a new VIN for the S! 164xxx on Sept 26th. Would suggest a quickening of the VIN pace, because 160xxx ended somewhere Sept 12th. However, I suspect many of those cars are actually build-for-inventory and currently on transport to be released later in the fourth quarter.
Any thoughts on why so few people are reporting vin #s versus a month ago? I think what you may be implying is that order rate is down and inventory car pre-assignment of vin # s is up. What I mean by order - is a named, custom order someone makes on the internet and not a sales site ordering up inventory. Both are "net new orders", correct?
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