I've separated Energy Leases from Sales and Costs from Revenues for 2020

[TSleuths]

On the financial statements for Qs 1 thru 3 and full year 2020, Tesla reports a blended Gross Margin for its Energy business which includes revenues from both Sales and Leases. This gives a false GM so I decided to calculate the actual margins. To do so requires us to make one assumption under 3 sample cases.

Note that leases are a large asset base of about $6 billion on Tesla's balance sheet. Tesla's expenses for leases are 1) Depreciation, 2) Maintenance, 3) Amortization of initial costs, and 4) Other. From the 8-Ks and 10-K annual we can calculate actual values for 1) Depreciation and 3) Amortization. This leaves 2) Maintenance and 4) Other as unknowns.

So if we estimate Maintenance plus Other lease expenses we can separate Lease expenses from Sales expenses. Tesla reports Sales and Lease revenues on the financials except for Q4, which can be calculated. They also report total Energy expenses but do not report which are from Leases or Sales.

We know that total expenses for Energy consists of Sales + Lease expenses and we know the total values from the statements. Therefore by doing 3 sample cases where we assume Maintenance plus Other Lease expenses per quarter to be at $6 million, $24 million, and $48 million we can calculate actual margins for Sales under those assumptions. For leases, this allows us to calculated payback time.

Perhaps I've made a mistake of accounting logic or in the #s so please tell me what you think and I'll get on to the numbers for Q1 of 2020.

 

[TheTalkingMule]

I don't think we'll find much of immediate interest over the next 2-4 quarters, but it'll be great to set cost benchmarks for 2022 onward. The residential side for Tesla is all red ink I'm sure, they lowered pricing for standard panel installs to $2.01/W and haven't budged. No economies of scale outside California and all sorts of growing pains in the new sales-free model, but there's gonna be one huge differentiator for Tesla from here on out. As Tesla scales, avg costs will rationally drop. That statement seems unimportant, but everyone else still purely sales-based and their costs haven't(and won't) budge as business ramps up.

Not long from now, charting 8-12 historical quarters of total cost per Watt and sales cost per Watt vs everyone else is gonna be laughable. Form an investment standpoint, I'm fairly confident you can take a few quarters trending in the right direction as confirmation the cost declines will continue and it's not a fluke. That is NOT the case with literally anyone else, regional or nationwide. Tesla's plans are that much better. If service complaints are down a bit and breakeven is on the horizon by 3Q21 earnings, I'll be overjoyed.

Much like the automotive side, the competition is stuck in a Catch-22 where they can't eliminate costs until the capitulate and head in an entirely new direction.

This is the beginning of the next phase for Tesla, thanks for getting a jump on the data breakout.

 

[TSleuths]

Yes, agreed their price is the best along with great quality. They are advertising some markets at $1.49 per watt after tax breaks. Their margins improve as they sell more storage products and fewer leases. Anyhow here are the numbers for Q1. Let me know if you agree or not?

Tesla reported Energy Gross Margins blended at 4%. Note that Lease Depreciation plus Amortization expenses are calculated to be $58 million for all quarters of 2020.

Case A where we assume Maintenance plus Other Lease expenses are $6 million. This provides an actual Sales GM of -26% or 45 $MM gross loss. The payback time for the lease base is 26.9 years with a 0.93% ROI for the period.

Case B where we assume Maintenance plus Other Lease expenses are $24 million. Actual Sales GM is then -15.6%. The payback time is 39.6 years with a 0.63% ROI for the leases.

Case C where we assume Maintenance plus Other Lease expenses are $48 million. Actual Sales GM is then -1.7%. Lease payback time is then 107.6 years.

I could go over the calculations for Case A to make it more clear? Also, I think most will agree on the actual values for Lease Maintenance plus Other expenses are somewhere between Case A and B? Maybe about 10 to 15 million on average.