Near-future quarterly financial projections

[Esme Es Mejor]

Big month and quarter in Italy, I think they got a new incentive. On the flip side, Model 3 was much lower in June than March in Austria. Also in Sweden, but that's a bit of a special case. Then again, they all look like special cases. It's really hard to see a consistent trend.

I wouldn’t bother comparing June to March when we can compare full quarter Q2 to full quarter Q1. Of course, if June is too far below March, the entire quarter will be below.

Officially Down
Norway -20.5%
Austria -10.8%
Spain -12.1%

Officially Up
Netherlands +26.6%
Sweden +45.1%

Unofficial
Italy reported to be up 119.3%, but I haven’t seen anything official.

Portugal reported to be up, but I haven’t seen any numbers.

Switzerland reported to have homologation issue with SR+, so down would be expected.

No reports from Germany or UK yet, but Germany almost certainly down & UK almost certainly up.

 

[EVNow]

hello friends. i haven't been spending so much time on tesla. just wanted to post a quick update with what i feel are fairly optimistic delivery numbers. i wanted to have something ready for when real numbers are out. it's not great so feel free to share your comments. thanks.

one majorly important change for those not familiar with my past work - model 3 leasing has been introduced. this means not all model 3 units will flow into the revenue line.

…

s deliveries

x deliveries

s+x deliveries

3 deliveries

3 production

est cash gm for model 3

lease 3s % veh

lease s/x % veh

avg price s+x

avg price model 3

revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time revenue

zev credits

total auto

energy storage

solarcity

maxwell/grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

total auto

energy storage

solarcity

maxwell/grohmann

services & other

total cost of rev

gross profit

auto ex 3 gm

auto gaap gm

auto lease gm

auto gaap ex 3 gm

auto-zev ex 3 gm

model 3 gm

auto-zev incl 3 gm

storage gm

scty gm

mxwl/grohmann gm

services gm

opex

tesla r&d

tesla sg&a

1 time costs

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

+ stock based comp

+ one time scty

non-gaap net income

non-gaap diluted eps

[TD2] Jun-19 [/TD2][TD2] Mar-19 [/TD2][TD2] Dec-18 [/TD2][TD2] Sep-18 [/TD2] [TD2]9,000[/TD2][TD2]6,000[/TD2][TD2]13,500[/TD2][TD2]14,495[/TD2] [TD2]9,100[/TD2][TD2]6,100[/TD2][TD2]14,107[/TD2][TD2]13,215[/TD2] [TD2] 18,100 [/TD2][TD2] 12,100 [/TD2][TD2] 27,607 [/TD2][TD2] 27,710 [/TD2] [TD2] 73,500 [/TD2][TD2] 50,900 [/TD2][TD2] 63,359 [/TD2][TD2] 56,065 [/TD2] [TD2] 75,000 [/TD2][TD2] 62,950 [/TD2][TD2] 60,000 [/TD2][TD2] 53,239 [/TD2] [TD2]31.6%[/TD2][TD2]32.2%[/TD2][TD2]33.3%[/TD2][TD2]34.5%[/TD2] [TD2] 0.10 [/TD2][TD2] - [/TD2][TD2] - [/TD2][TD2] - [/TD2] [TD2] 0.10 [/TD2][TD2] 0.10 [/TD2][TD2] 0.13 [/TD2][TD2] 0.09 [/TD2] [TD2] 98.00 [/TD2][TD2] 102.00 [/TD2][TD2] 106.00 [/TD2][TD2] 104.80 [/TD2] [TD2] 53.00 [/TD2][TD2] 56.75 [/TD2][TD2] 55.75 [/TD2][TD2] 56.78 [/TD2] [TD2]1,594,264[/TD2][TD2]1,105,680[/TD2][TD2]2,540,646[/TD2][TD2]2,642,647[/TD2] [TD2]3,505,950[/TD2][TD2]2,888,649[/TD2][TD2]3,532,057[/TD2][TD2]3,183,389[/TD2] [TD2]225,000[/TD2][TD2]215,120[/TD2][TD2]249,748[/TD2][TD2]220,461[/TD2] [TD2]0[/TD2][TD2]-501,000[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]15,000[/TD2][TD2]15,412[/TD2][TD2]768[/TD2][TD2]52,269[/TD2] [TD2] 5,340,214 [/TD2][TD2] 3,723,861 [/TD2][TD2] 6,323,219 [/TD2][TD2] 6,098,766 [/TD2] [TD2]133,950[/TD2][TD2]129,094[/TD2][TD2]131,497[/TD2][TD2]105,317[/TD2] [TD2]235,125[/TD2][TD2]195,567[/TD2][TD2]240,000[/TD2][TD2]294,000[/TD2] [TD2]12,000[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]535,000[/TD2][TD2]492,942[/TD2][TD2]531,157[/TD2][TD2]326,330[/TD2] [TD2] 6,256,289 [/TD2][TD2] 4,541,464 [/TD2][TD2] 7,225,873 [/TD2][TD2] 6,824,413 [/TD2] [TD2]1,291,354[/TD2][TD2]945,624[/TD2][TD2]1,850,532[/TD2][TD2]1,875,125[/TD2] [TD2]2,815,278[/TD2][TD2]2,319,585[/TD2][TD2]2,807,985[/TD2][TD2]2,530,794[/TD2] [TD2]130,500[/TD2][TD2]117,092[/TD2][TD2]127,731[/TD2][TD2]119,283[/TD2] [TD2] 4,237,132 [/TD2][TD2] 2,973,301 [/TD2][TD2] 4,786,248 [/TD2][TD2] 4,525,202 [/TD2] [TD2]160,740[/TD2][TD2]159,456[/TD2][TD2]160,706[/TD2][TD2]124,754[/TD2] [TD2]189,276[/TD2][TD2]157,431[/TD2][TD2]168,000[/TD2][TD2]205,800[/TD2] [TD2]27,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]695,500[/TD2][TD2]674,533[/TD2][TD2]657,019[/TD2][TD2]433,992[/TD2] [TD2] 5,309,647 [/TD2][TD2] 3,975,721 [/TD2][TD2] 5,782,973 [/TD2][TD2] 5,300,748 [/TD2] [TD2] 946,642 [/TD2][TD2] 565,743 [/TD2][TD2] 1,442,900 [/TD2][TD2] 1,523,665 [/TD2] [TD2]19.0%[/TD2][TD2]14.5%[/TD2][TD2]27.2%[/TD2][TD2]29.0%[/TD2] [TD2]20.7%[/TD2][TD2]20.2%[/TD2][TD2]24.3%[/TD2][TD2]25.8%[/TD2] [TD2]42.0%[/TD2][TD2]45.6%[/TD2][TD2]48.9%[/TD2][TD2]45.9%[/TD2] [TD2]22.5%[/TD2][TD2]21.7%[/TD2][TD2]29.1%[/TD2][TD2]31.6%[/TD2] [TD2]21.8%[/TD2][TD2]19.5%[/TD2][TD2]29.1%[/TD2][TD2]30.3%[/TD2] [TD2]19.7%[/TD2][TD2]19.7%[/TD2][TD2]20.5%[/TD2][TD2]20.5%[/TD2] [TD2]20.4%[/TD2][TD2]19.6%[/TD2][TD2]24.3%[/TD2][TD2]25.2%[/TD2] [TD2]-20.0%[/TD2][TD2]-23.5%[/TD2][TD2]-22.2%[/TD2][TD2]-18.5%[/TD2] [TD2]19.5%[/TD2][TD2]19.5%[/TD2][TD2]30.0%[/TD2][TD2]30.0%[/TD2] [TD2]-125.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-30.0%[/TD2][TD2]-36.8%[/TD2][TD2]-23.7%[/TD2][TD2]-33.0%[/TD2] [TD2]300,000[/TD2][TD2]295,174[/TD2][TD2]306,297[/TD2][TD2]315,848[/TD2] [TD2]575,000[/TD2][TD2]573,929[/TD2][TD2]522,452[/TD2][TD2]599,876[/TD2] [TD2]25,000[/TD2][TD2]43,471[/TD2][TD2]5,615[/TD2][TD2]26,184[/TD2] [TD2]45,000[/TD2][TD2]45,000[/TD2][TD2]50,000[/TD2][TD2]35,000[/TD2] [TD2]130,000[/TD2][TD2]130,000[/TD2][TD2]145,000[/TD2][TD2]130,000[/TD2] [TD2] 1,075,000 [/TD2][TD2] 1,087,574 [/TD2][TD2] 1,029,364 [/TD2][TD2] 1,106,908 [/TD2] [TD2] -128,358 [/TD2][TD2] -521,831 [/TD2][TD2] 413,536 [/TD2][TD2] 416,757 [/TD2] [TD2]17,000[/TD2][TD2]8,762[/TD2][TD2]7,348[/TD2][TD2]6,907[/TD2] [TD2]-115,000[/TD2][TD2]-104,453[/TD2][TD2]-121,723[/TD2][TD2]-122,220[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2] [TD2]25,750[/TD2][TD2]25,750[/TD2][TD2]-14,205[/TD2][TD2]22,876[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] -253,608 [/TD2][TD2] -644,772 [/TD2][TD2] 231,956 [/TD2][TD2] 271,320 [/TD2] [TD2]23,000[/TD2][TD2]22,873[/TD2][TD2]21,878[/TD2][TD2]16,647[/TD2] [TD2] -276,608 [/TD2][TD2] -667,645 [/TD2][TD2] 210,078 [/TD2][TD2] 254,673 [/TD2] [TD2]25,000[/TD2][TD2]34,490[/TD2][TD2]70,595[/TD2][TD2]-56,843[/TD2] [TD2] -301,608 [/TD2][TD2] -702,135 [/TD2][TD2] 139,483 [/TD2][TD2] 311,516 [/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]172,026[/TD2][TD2]170,893[/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]179,026[/TD2][TD2]178,196[/TD2] [TD2] -1.71 [/TD2][TD2] -4.06 [/TD2][TD2] 0.78 [/TD2][TD2] 1.75 [/TD2] [TD2]-301,608[/TD2][TD2]-702,135[/TD2][TD2]139,483[/TD2][TD2]311,516[/TD2] [TD2]210,000[/TD2][TD2]208,378[/TD2][TD2]205,313[/TD2][TD2]204,728[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]-91,608[/TD2][TD2]-493,757[/TD2][TD2]344,796[/TD2][TD2]516,244[/TD2] [TD2] -0.52 [/TD2][TD2] -2.85 [/TD2][TD2] 1.93 [/TD2][TD2] 2.90 [/TD2]

Thanks for the model.

I see the main differences between my model and yours are (once I assume same # of deliveries as you)
- 98k ASP for S&X vs 105k in mine
- 10% Model 3 lease vs 5%
- non-automotive differences

This results in
301M gaap loss vs 179M loss,
91M non-gaap loss vs 30M non-gaap profit

I assumed 105k ASP for S&X because of Raven refresh. But only a few of those seem to have been delivered - so may be you are closer to actual S&X ASP because of discounted inventory pre-Raven S&X.

I do think the leasing for 3 will be less than 10% because of closed end leasing and they had to even reduce leasing price. Also, leasing on 3 is not available everywhere. Given the difference in ASP between 3 & S+X, you expect more leasing for S+X. So, all in all, I think 3 leasing % will be less than S+X (at 10.4%).

 

[luvb2b]

all valid points. i think the most important idea to me was that in this "monster" quarter with (even more) optimistic assumptions i could not get to a gaap profit. i should also add that i don't believe my own s/x delivery estimates. my quantitative modeling would put the number around 16.5k. it's just the tax credit/raven bump is not captured so i added a booster to get to 18.2k.

we are such a far cry from 'we should be profitable every quarter going forward'!

Thanks for the model.

I see the main differences between my model and yours are (once I assume same # of deliveries as you)
- 98k ASP for S&X vs 105k in mine
- 10% Model 3 lease vs 5%
- non-automotive differences

This results in
301M gaap loss vs 179M loss,
91M non-gaap loss vs 30M non-gaap profit

I assumed 105k ASP for S&X because of Raven refresh. But only a few of those seem to have been delivered - so may be you are closer to actual S&X ASP because of discounted inventory pre-Raven S&X.

I do think the leasing for 3 will be less than 10% because of closed end leasing and they had to even reduce leasing price. Also, leasing on 3 is not available everywhere. Given the difference in ASP between 3 & S+X, you expect more leasing for S+X. So, all in all, I think 3 leasing % will be less than S+X (at 10.4%).

 

[EVNow]

all valid points. i think the most important idea to me was that in this "monster" quarter with (even more) optimistic assumptions i could not get to a gaap profit. i should also add that i don't believe my own s/x delivery estimates. my quantitative modeling would put the number around 16.5k. it's just the tax credit/raven bump is not captured so i added a booster to get to 18.2k.

we are such a far cry from 'we should be profitable every quarter going forward'!

Yes, I've been saying this for a while - no gaap profit until they get to about 120k deliveries.

The narrative has certainly changed. The target is now positive free cash flow going forward (basically fund capex with internally generated cash).

It makes sense to me - its not like people expect Tesla to be paying dividends. They can aim for profits once they have GFs on all continents and have 3, Y, Semi & Pickup in volume production. Though, I think they will get to reliable profits just with 3 & Y.

 

[bdy0627]

all valid points. i think the most important idea to me was that in this "monster" quarter with (even more) optimistic assumptions i could not get to a gaap profit. i should also add that i don't believe my own s/x delivery estimates. my quantitative modeling would put the number around 16.5k. it's just the tax credit/raven bump is not captured so i added a booster to get to 18.2k.

we are such a far cry from 'we should be profitable every quarter going forward'!

What fundamentally changed to cause Elon to be off the mark on that prediction? Isn't it primarily the lower production numbers of model 3 vs what Elon anticipated at this point plus lower sales of model S/X? He was overly optimistic in his expectations of Panasonic's ability to ramp battery cell production. I think it seems reasonable for him to have expected more out of Panasonic than what they have delivered. He was also overly optimistic in his expectations of the hit that S, and to a lesser extent, X, would take from both the model 3 effect and the tax credit cliff in Q1, as well as in his expectation of the Raven production ramp. The battery production ramp seems like it should get better over Q3 and Q4, which should allow increased production of model 3. That will help gross margins. On the other hand, the mix will shift toward SR+, which will lower ASP. Future sales of S & X seem more uncertain at this point, particularly S. Perhaps those sales numbers moving forward will end up being lower than he expected. Too early to say.

 

[Bet the House]

Thanks for the model.

I see the main differences between my model and yours are (once I assume same # of deliveries as you)
- 98k ASP for S&X vs 105k in mine
- 10% Model 3 lease vs 5%
- non-automotive differences

This results in
301M gaap loss vs 179M loss,
91M non-gaap loss vs 30M non-gaap profit

I assumed 105k ASP for S&X because of Raven refresh. But only a few of those seem to have been delivered - so may be you are closer to actual S&X ASP because of discounted inventory pre-Raven S&X.

I do think the leasing for 3 will be less than 10% because of closed end leasing and they had to even reduce leasing price. Also, leasing on 3 is not available everywhere. Given the difference in ASP between 3 & S+X, you expect more leasing for S+X. So, all in all, I think 3 leasing % will be less than S+X (at 10.4%).

Thank you for posting. These are very helpful.

One question I have is if you took into account the cost cutting initiatives? Is it possible lower expenses could be a bit of a surprise this quarter as Elon and the CFO are signing off of expense reports, headcount has been reduced previously, etc?

 

[neroden]

hello friends. i haven't been spending so much time on tesla. just wanted to post a quick update with what i feel are fairly optimistic delivery numbers. i wanted to have something ready for when real numbers are out. it's not great so feel free to share your comments. thanks.

one majorly important change for those not familiar with my past work - model 3 leasing has been introduced. this means not all model 3 units will flow into the revenue line.

…

s deliveries

x deliveries

s+x deliveries

3 deliveries

3 production

est cash gm for model 3

lease 3s % veh

lease s/x % veh

avg price s+x

avg price model 3

revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time revenue

zev credits

total auto

energy storage

solarcity

maxwell/grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

total auto

energy storage

solarcity

maxwell/grohmann

services & other

total cost of rev

gross profit

auto ex 3 gm

auto gaap gm

auto lease gm

auto gaap ex 3 gm

auto-zev ex 3 gm

model 3 gm

auto-zev incl 3 gm

storage gm

scty gm

mxwl/grohmann gm

services gm

opex

tesla r&d

tesla sg&a

1 time costs

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

+ stock based comp

+ one time scty

non-gaap net income

non-gaap diluted eps

[TD2] Jun-19 [/TD2][TD2] Mar-19 [/TD2][TD2] Dec-18 [/TD2][TD2] Sep-18 [/TD2] [TD2]9,000[/TD2][TD2]6,000[/TD2][TD2]13,500[/TD2][TD2]14,495[/TD2] [TD2]9,100[/TD2][TD2]6,100[/TD2][TD2]14,107[/TD2][TD2]13,215[/TD2] [TD2] 18,100 [/TD2][TD2] 12,100 [/TD2][TD2] 27,607 [/TD2][TD2] 27,710 [/TD2] [TD2] 73,500 [/TD2][TD2] 50,900 [/TD2][TD2] 63,359 [/TD2][TD2] 56,065 [/TD2] [TD2] 75,000 [/TD2][TD2] 62,950 [/TD2][TD2] 60,000 [/TD2][TD2] 53,239 [/TD2] [TD2]31.6%[/TD2][TD2]32.2%[/TD2][TD2]33.3%[/TD2][TD2]34.5%[/TD2] [TD2] 0.10 [/TD2][TD2] - [/TD2][TD2] - [/TD2][TD2] - [/TD2] [TD2] 0.10 [/TD2][TD2] 0.10 [/TD2][TD2] 0.13 [/TD2][TD2] 0.09 [/TD2] [TD2] 98.00 [/TD2][TD2] 102.00 [/TD2][TD2] 106.00 [/TD2][TD2] 104.80 [/TD2] [TD2] 53.00 [/TD2][TD2] 56.75 [/TD2][TD2] 55.75 [/TD2][TD2] 56.78 [/TD2] [TD2]1,594,264[/TD2][TD2]1,105,680[/TD2][TD2]2,540,646[/TD2][TD2]2,642,647[/TD2] [TD2]3,505,950[/TD2][TD2]2,888,649[/TD2][TD2]3,532,057[/TD2][TD2]3,183,389[/TD2] [TD2]225,000[/TD2][TD2]215,120[/TD2][TD2]249,748[/TD2][TD2]220,461[/TD2] [TD2]0[/TD2][TD2]-501,000[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]15,000[/TD2][TD2]15,412[/TD2][TD2]768[/TD2][TD2]52,269[/TD2] [TD2] 5,340,214 [/TD2][TD2] 3,723,861 [/TD2][TD2] 6,323,219 [/TD2][TD2] 6,098,766 [/TD2] [TD2]133,950[/TD2][TD2]129,094[/TD2][TD2]131,497[/TD2][TD2]105,317[/TD2] [TD2]235,125[/TD2][TD2]195,567[/TD2][TD2]240,000[/TD2][TD2]294,000[/TD2] [TD2]12,000[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]535,000[/TD2][TD2]492,942[/TD2][TD2]531,157[/TD2][TD2]326,330[/TD2] [TD2] 6,256,289 [/TD2][TD2] 4,541,464 [/TD2][TD2] 7,225,873 [/TD2][TD2] 6,824,413 [/TD2] [TD2]1,291,354[/TD2][TD2]945,624[/TD2][TD2]1,850,532[/TD2][TD2]1,875,125[/TD2] [TD2]2,815,278[/TD2][TD2]2,319,585[/TD2][TD2]2,807,985[/TD2][TD2]2,530,794[/TD2] [TD2]130,500[/TD2][TD2]117,092[/TD2][TD2]127,731[/TD2][TD2]119,283[/TD2] [TD2] 4,237,132 [/TD2][TD2] 2,973,301 [/TD2][TD2] 4,786,248 [/TD2][TD2] 4,525,202 [/TD2] [TD2]160,740[/TD2][TD2]159,456[/TD2][TD2]160,706[/TD2][TD2]124,754[/TD2] [TD2]189,276[/TD2][TD2]157,431[/TD2][TD2]168,000[/TD2][TD2]205,800[/TD2] [TD2]27,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]695,500[/TD2][TD2]674,533[/TD2][TD2]657,019[/TD2][TD2]433,992[/TD2] [TD2] 5,309,647 [/TD2][TD2] 3,975,721 [/TD2][TD2] 5,782,973 [/TD2][TD2] 5,300,748 [/TD2] [TD2] 946,642 [/TD2][TD2] 565,743 [/TD2][TD2] 1,442,900 [/TD2][TD2] 1,523,665 [/TD2] [TD2]19.0%[/TD2][TD2]14.5%[/TD2][TD2]27.2%[/TD2][TD2]29.0%[/TD2] [TD2]20.7%[/TD2][TD2]20.2%[/TD2][TD2]24.3%[/TD2][TD2]25.8%[/TD2] [TD2]42.0%[/TD2][TD2]45.6%[/TD2][TD2]48.9%[/TD2][TD2]45.9%[/TD2] [TD2]22.5%[/TD2][TD2]21.7%[/TD2][TD2]29.1%[/TD2][TD2]31.6%[/TD2] [TD2]21.8%[/TD2][TD2]19.5%[/TD2][TD2]29.1%[/TD2][TD2]30.3%[/TD2] [TD2]19.7%[/TD2][TD2]19.7%[/TD2][TD2]20.5%[/TD2][TD2]20.5%[/TD2] [TD2]20.4%[/TD2][TD2]19.6%[/TD2][TD2]24.3%[/TD2][TD2]25.2%[/TD2] [TD2]-20.0%[/TD2][TD2]-23.5%[/TD2][TD2]-22.2%[/TD2][TD2]-18.5%[/TD2] [TD2]19.5%[/TD2][TD2]19.5%[/TD2][TD2]30.0%[/TD2][TD2]30.0%[/TD2] [TD2]-125.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-30.0%[/TD2][TD2]-36.8%[/TD2][TD2]-23.7%[/TD2][TD2]-33.0%[/TD2] [TD2]300,000[/TD2][TD2]295,174[/TD2][TD2]306,297[/TD2][TD2]315,848[/TD2] [TD2]575,000[/TD2][TD2]573,929[/TD2][TD2]522,452[/TD2][TD2]599,876[/TD2] [TD2]25,000[/TD2][TD2]43,471[/TD2][TD2]5,615[/TD2][TD2]26,184[/TD2] [TD2]45,000[/TD2][TD2]45,000[/TD2][TD2]50,000[/TD2][TD2]35,000[/TD2] [TD2]130,000[/TD2][TD2]130,000[/TD2][TD2]145,000[/TD2][TD2]130,000[/TD2] [TD2] 1,075,000 [/TD2][TD2] 1,087,574 [/TD2][TD2] 1,029,364 [/TD2][TD2] 1,106,908 [/TD2] [TD2] -128,358 [/TD2][TD2] -521,831 [/TD2][TD2] 413,536 [/TD2][TD2] 416,757 [/TD2] [TD2]17,000[/TD2][TD2]8,762[/TD2][TD2]7,348[/TD2][TD2]6,907[/TD2] [TD2]-115,000[/TD2][TD2]-104,453[/TD2][TD2]-121,723[/TD2][TD2]-122,220[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2] [TD2]25,750[/TD2][TD2]25,750[/TD2][TD2]-14,205[/TD2][TD2]22,876[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] -253,608 [/TD2][TD2] -644,772 [/TD2][TD2] 231,956 [/TD2][TD2] 271,320 [/TD2] [TD2]23,000[/TD2][TD2]22,873[/TD2][TD2]21,878[/TD2][TD2]16,647[/TD2] [TD2] -276,608 [/TD2][TD2] -667,645 [/TD2][TD2] 210,078 [/TD2][TD2] 254,673 [/TD2] [TD2]25,000[/TD2][TD2]34,490[/TD2][TD2]70,595[/TD2][TD2]-56,843[/TD2] [TD2] -301,608 [/TD2][TD2] -702,135 [/TD2][TD2] 139,483 [/TD2][TD2] 311,516 [/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]172,026[/TD2][TD2]170,893[/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]179,026[/TD2][TD2]178,196[/TD2] [TD2] -1.71 [/TD2][TD2] -4.06 [/TD2][TD2] 0.78 [/TD2][TD2] 1.75 [/TD2] [TD2]-301,608[/TD2][TD2]-702,135[/TD2][TD2]139,483[/TD2][TD2]311,516[/TD2] [TD2]210,000[/TD2][TD2]208,378[/TD2][TD2]205,313[/TD2][TD2]204,728[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]-91,608[/TD2][TD2]-493,757[/TD2][TD2]344,796[/TD2][TD2]516,244[/TD2] [TD2] -0.52 [/TD2][TD2] -2.85 [/TD2][TD2] 1.93 [/TD2][TD2] 2.90 [/TD2]

Thanks very much Looks good to me.

(Though I worry that production may be lower than you project and might actually be lower than deliveries -- I hope not, as that would be "rewinding the wave" rather than "unwinding the wave". I'll watch for that.)

I'm more interested in cash flow right now -- it's obvious Tesla will be significantly profitable once it's making enough cars and has enough economies of scale, so the question for me is how fast it can generate cash to do that expansion (or, how much dilution will they have to do in order to do that expansion).

Given depreciation & amortization (including debt discount amortization) running at $508 million / quarter, your model is structurally operational-cash-flow positive by about $400 million. The wild card is inventory changes, but your model is guessing the inventory (in-transit) build at about $80 million, so call it operational cash flow circa $300 million. There's a bunch of other unpredictable stuff on the cash flow sheet (deferred revenue, accounts payable, accounts receivable) so I can't be very precise -- there's really only 1 significant digit. I can't really guess at Tesla's capex for the quarter, but I'd expect it to be on the low side, similar to Q1 -- operational cash flow should cover capex, though it'll be pretty close to neutral.

However, I think SG&A will go up; or at least it *ought to* go up. You're estimating it flat, and I know Tesla *had to* expand service centers, though it sounds like they've been failing to do so as much as they should. So I expect that operational cash flow will be a little lower and will not cover capex. Still, in the "cash neutral zone", IMO.

 

[neroden]

all valid points. i think the most important idea to me was that in this "monster" quarter with (even more) optimistic assumptions i could not get to a gaap profit.

FYI, that is not an important idea to me. I think you're still looking at the trees rather than the forest

So, for a very long time, my very high-level model has been that 5000 Model 3s/week should be roughly breakeven on cash flow, but 10,000/week are needed to get real profits. Well... we're in between at 7000/week, but S & X had a stutter due to a leaked refresh, tax credit effects, etc, and they have outsized influence on profits (I think they'll be back to at least 20K/quarter in Q3). And none of the "wild card" products (Solar Roof, Powerwall, Powerpack, Model Y, Semi) have really released in volume yet.

we are such a far cry from 'we should be profitable every quarter going forward'!

Nah. We're pretty close really. Swings of a couple of hundred million dollars per quarter are actually in the noise at this point.

The really big issue is the inability to get more than 7000 Model 3/week out of Fremont; the shorter-term issue was the inability to even get to 7000 Model 3/week, which seems to have only been reached near the end of the second quarter. The need to build an additional factory to get to 10000/week was definitely a bad thing. One hopes that Model Y will have larger economies of scale, of course.

 

[neroden]

Future sales of S & X seem more uncertain at this point, particularly S.

Following the trends, I'm not worried in the least about X sales. The rumored combination of S & X body lines would allow resources to be smoothly shifted from S to X.

 

[schonelucht]

What fundamentally changed to cause Elon to be off the mark on that prediction? Isn't it primarily the lower production numbers of model 3 vs what Elon anticipated at this point plus lower sales of model S/X?

In 2018Q4 we had GM on the S/X approaching 30%. Dropping 10% of margin means 10k per S/X and we had more than 25 000 of those. That alone accounts for $250M. Combine this with deliveries falling from north of 25k to 18k. That's a drop of 7000 units. At the remaining 20% of margin, that's another $140M and finally, ASP went down on average maybe 10k, that's another 2k for each delivered car or $36M. All in total around $400M gross profit drop just because of the S/X meltdown.

I do not understand at all why Elon could claim we "profitable from here on out". He must have had this visibility already by January.

 

[schonelucht]

So, for a very long time, my very high-level model has been that 5000 Model 3s/week should be roughly breakeven on cash flow, but 10,000/week are needed to get real profits.

Let's say we sold 75k Model 3 this quarter. Give or take 6k/week. Where and at what ASP do you think they will sell the additional 50k units to get to 10k/week?

For me, the S/X meltdown is the real issue.

 

[EVNow]

Given depreciation & amortization (including debt discount amortization) running at $508 million / quarter, your model is structurally operational-cash-flow positive by about $400 million. The wild card is inventory changes, but your model is guessing the inventory (in-transit) build at about $80 million, so call it operational cash flow circa $300 million. There's a bunch of other unpredictable stuff on the cash flow sheet (deferred revenue, accounts payable, accounts receivable) so I can't be very precise -- there's really only 1 significant digit. I can't really guess at Tesla's capex for the quarter, but I'd expect it to be on the low side, similar to Q1 -- operational cash flow should cover capex, though it'll be pretty close to neutral.

Once we know the production & delivery, we can estimate the effect on inventory, receivables & payables. I expect overall +ve effect on cash flow (~200M) because of increase in production causing payables to go up and almost flat receivables & inventory. Deferred income should be minimum of $100M (expect more because of all the FSD noise) - last quarter was $317M.

However, I think SG&A will go up; or at least it *ought to* go up. You're estimating it flat, and I know Tesla *had to* expand service centers, though it sounds like they've been failing to do so as much as they should. So I expect that operational cash flow will be a little lower and will not cover capex. Still, in the "cash neutral zone", IMO.

​

SG&A will probably not go up too much - I think they are balancing addition of service with reduction of sales. But we'll see more service cost, like we have in past 3 quarters.

 

[EVNow]

For me, the S/X meltdown is the real issue.

If Tesla sold 22k S+X (like in Q2 '18) but 75k Model 3 - they would still make a gaap loss. Remember when Tesla was selling 100k s+x a year, it never made a yearly gaap profit.

ps : If Tesla sells 22k S+X @ 105k ASP and 25% margin, they will breakeven. The real issue is overall ASP & Margin. Given the lower ASP & Margin, they need to sell more to gaap break-even.

IMO gaap break-even / profit is not important. If they can get to non-gaap break even and good cash flow in '19 and '20 that would be sufficient to melt away shorts.

 

[schonelucht]

If Tesla sold 22k S+X (like in Q2 '18) but 75k Model 3 - they would still make a gaap loss. Remember when Tesla was selling 100k s+x a year, it never made a yearly gaap profit.

Q2 was an all-round disaster quarter for the Model 3. Obviously an organisation that is scaling for mass-production and deliveries on a model that they don't actually deliver won't make a profit. That's also the reason why they did not turn a profit when it was just S/X (except one quarter, so it was doable) : they were continually spending for expensive growth (be it the X, be it the 3).

Rather take a look at Q3. Very low Model 3 sales, but good S/X sales and profit. That is what would have been Q1 and Q2 as well if they had been able to keep the deliveries on S/X high with high margin.

IMO gaap break-even / profit is not important. If they can get to non-gaap break even and good cash flow in '19 and '20 that would be sufficient to melt away shorts.

I agree cash flow is more important. But the question here specifically was why did Elon miss that hard on profit guidance. And it is a pertinent question : they will guide for things in the upcoming quarterly. Can we put credence to that guidance or should we keep in the back of our mind that they can be totally wrong on Q3 guidance even nearly halfway through Q3?

 

[luvb2b]

i would say no, at this point it is not just lower production numbers. 18q4 and 19q1 both had production numbers over 60k.

the surprise for me in 19q1 is how bad the gross margin actually was. you can see in my model i show 19.7% model 3 gross margin and 14.5% s/x gorss margin for 19q1. just to see these numbers clearly i had to back out one-time revenue and cogs adjustments. i see i didn't show the one-time adjustments to cogs on the model so will repost below.

what you don't see is that the 19q1 gross margin figures in my model incorporate:
1. some outsized non-zev credit sales
and no, these are not the 140m of credit sales which got booked as deferred revenue. i estimate one-time gross margin benefit of +3% to model 3 and about +2% to s/x as a result of the credit sales. i feel they did a real disservice to investors by not providing some clarity around this one-time effect. just to quantify, historically non-zev credit sales have averaged 1.2k per unit (for a long time). 19q1 jumped to 3.2k per unit which i believe is an unusual one-time jump that came with no disclosure. note that this also inflates 19q1 model 3 asp by about 2k.
2. benefit of selling discount autopilot/fsd packages to upgrade customers. this got booked as pure revenue and carries basically 100% gross margin. there was no disclosure on the amounts, but i would venture it's a positive one time impact of +0.5% (s/x) to +1% (3).
3. offsets for refunds given for those who missed the tax credits and got price adjustments. i have to guess this is a -1% (s/x) to -1.5% (3) drag as there is no disclosure.

trying to adjust some of these one-time puts and takes out of gross margin yields an adjusted gross margin of approx 17.2% (19.7 - 3 - 1 + 1.5) and model s/x margin of approx 13% (14.5 - 2 - 0.5 + 1). that's a big margin drop for model 3 given 5k weekly production continuing.

there are two other models i keep for model 3 gross margins/cogs. for 19q1, one model estimates a 42.9k cash cogs for model 3, and the other estimates fixed cost of 360m + variable costs of 38.5k per unit (at 60k units is about 44.5k per unit but this includes non-cash items). understanding that a smaller pack can shave several thousand off the production costs, you're still running costs too high. say that you can save 4k at a smaller pack size, the cash cogs would still be 38.9k and the alternate cogs estimate about 40.5k.

what this means to me is that as the mix shifts lower, the gross margins are going to compress dramatically. i believe this is why so all the pricing adjustments to pull up the low end pricing (including ap, including options, limiting online choices, etc.). i displayed a model with what i feel are overly optimistic gross margin and delivery assumptions to see that i can't see them turning a profit this quarter. but the real gross margin number on model 3 could potentially come in below 17% this quarter. especially if a meaningful proportion of high end/high options units go to leasing.

what caused the gross margin to be so much lower? i think a number of things happened they didn't expect.
1. cannibalization into s/x was greater than expected eating into a very gross margin product line.
2. model 3 demand for higher end units has not been as high as was planned.
3. take rate on options for lower end units was not as high as planned.
4. tariffs and trade problems caused some issues.
5. actual production costs for various components (batteries, etc.) were higher than expected.

the model i post below includes a look at the non-zev credit issue and i changed the gross margin numbers towards what i more likely expect (vs. optimistic assumptions).

…

s deliveries

x deliveries

s+x deliveries

3 deliveries

3 production

lease 3s % veh

lease s/x % veh

avg price s+x

avg price model 3

non-zev credits per delivery

revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time revenue

zev credits

total auto

energy storage

solarcity

maxwell/grohmann

services/other

total revenue

cost of revenue

auto sales ex 3

auto sales mod 3

auto leasing

1 time cogs

total auto

energy storage

solarcity

maxwell/grohmann

services & other

total cost of rev

gross profit

auto ex 3 gm

auto gaap gm

auto lease gm

auto gaap ex 3 gm

auto-zev ex 3 gm

model 3 gm

auto-zev incl 3 gm

storage gm

scty gm

maxwell/grohmann gm

services gm

opex

tesla r&d

tesla sg&a

1 time costs

solarcity r&d

solarcity sg&a

total opex

op income

interest inc

interest exp

scty interest

other income exp

1time scty gain

pretax income

income tax

net income

non-cont int.

net inc to common

basic shares

diluted shares

diluted gaap eps

gaap net income

+ stock based comp

+ one time scty

non-gaap net income

non-gaap diluted eps

[TD2] Jun-19 [/TD2][TD2] Mar-19 [/TD2][TD2] Dec-18 [/TD2][TD2] Sep-18 [/TD2] [TD2]9,000[/TD2][TD2]6,000[/TD2][TD2]13,500[/TD2][TD2]14,495[/TD2] [TD2]9,100[/TD2][TD2]6,100[/TD2][TD2]14,107[/TD2][TD2]13,215[/TD2] [TD2] 18,100 [/TD2][TD2] 12,100 [/TD2][TD2] 27,607 [/TD2][TD2] 27,710 [/TD2] [TD2] 73,500 [/TD2][TD2] 50,900 [/TD2][TD2] 63,359 [/TD2][TD2] 56,065 [/TD2] [TD2] 75,000 [/TD2][TD2] 62,950 [/TD2][TD2] 60,000 [/TD2][TD2] 53,239 [/TD2] [TD2] 0.10 [/TD2][TD2] - [/TD2][TD2] - [/TD2][TD2] - [/TD2] [TD2] 0.10 [/TD2][TD2] 0.10 [/TD2][TD2] 0.13 [/TD2][TD2] 0.09 [/TD2] [TD2] 98.00 [/TD2][TD2] 102.00 [/TD2][TD2] 106.00 [/TD2][TD2] 104.80 [/TD2] [TD2] 53.00 [/TD2][TD2] 56.75 [/TD2][TD2] 55.75 [/TD2][TD2] 56.78 [/TD2] [TD2] 1.30 [/TD2][TD2] 3.18 [/TD2][TD2] 1.04 [/TD2][TD2] 1.64 [/TD2] [TD2]1,594,264[/TD2][TD2]1,105,680[/TD2][TD2]2,540,646[/TD2][TD2]2,642,647[/TD2] [TD2]3,505,950[/TD2][TD2]2,888,649[/TD2][TD2]3,532,057[/TD2][TD2]3,183,389[/TD2] [TD2]225,000[/TD2][TD2]215,120[/TD2][TD2]249,748[/TD2][TD2]220,461[/TD2] [TD2]0[/TD2][TD2]-501,000[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]15,000[/TD2][TD2]15,412[/TD2][TD2]768[/TD2][TD2]52,269[/TD2] [TD2] 5,340,214 [/TD2][TD2] 3,723,861 [/TD2][TD2] 6,323,219 [/TD2][TD2] 6,098,766 [/TD2] [TD2]133,950[/TD2][TD2]129,094[/TD2][TD2]131,497[/TD2][TD2]105,317[/TD2] [TD2]235,125[/TD2][TD2]195,567[/TD2][TD2]240,000[/TD2][TD2]294,000[/TD2] [TD2]12,000[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]535,000[/TD2][TD2]492,942[/TD2][TD2]531,157[/TD2][TD2]326,330[/TD2] [TD2] 6,256,289 [/TD2][TD2] 4,541,464 [/TD2][TD2] 7,225,873 [/TD2][TD2] 6,824,413 [/TD2] [TD2]1,291,354[/TD2][TD2]945,624[/TD2][TD2]1,850,532[/TD2][TD2]1,875,125[/TD2] [TD2]2,874,879[/TD2][TD2]2,319,585[/TD2][TD2]2,807,985[/TD2][TD2]2,530,794[/TD2] [TD2]130,500[/TD2][TD2]117,092[/TD2][TD2]127,731[/TD2][TD2]119,283[/TD2] [TD2]0[/TD2][TD2]-409,000[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] 4,296,733 [/TD2][TD2] 2,973,301 [/TD2][TD2] 4,786,248 [/TD2][TD2] 4,525,202 [/TD2] [TD2]160,740[/TD2][TD2]159,456[/TD2][TD2]160,706[/TD2][TD2]124,754[/TD2] [TD2]189,276[/TD2][TD2]157,431[/TD2][TD2]168,000[/TD2][TD2]205,800[/TD2] [TD2]27,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2][TD2]11,000[/TD2] [TD2]695,500[/TD2][TD2]674,533[/TD2][TD2]657,019[/TD2][TD2]433,992[/TD2] [TD2] 5,369,248 [/TD2][TD2] 3,975,721 [/TD2][TD2] 5,782,973 [/TD2][TD2] 5,300,748 [/TD2] [TD2] 887,041 [/TD2][TD2] 565,743 [/TD2][TD2] 1,442,900 [/TD2][TD2] 1,523,665 [/TD2] [TD2]19.0%[/TD2][TD2]14.5%[/TD2][TD2]27.2%[/TD2][TD2]29.0%[/TD2] [TD2]19.5%[/TD2][TD2]20.2%[/TD2][TD2]24.3%[/TD2][TD2]25.8%[/TD2] [TD2]42.0%[/TD2][TD2]45.6%[/TD2][TD2]48.9%[/TD2][TD2]45.9%[/TD2] [TD2]22.5%[/TD2][TD2]21.7%[/TD2][TD2]29.1%[/TD2][TD2]31.6%[/TD2] [TD2]21.8%[/TD2][TD2]19.5%[/TD2][TD2]29.1%[/TD2][TD2]30.3%[/TD2] [TD2]18.0%[/TD2][TD2]19.7%[/TD2][TD2]20.5%[/TD2][TD2]20.5%[/TD2] [TD2]19.3%[/TD2][TD2]19.6%[/TD2][TD2]24.3%[/TD2][TD2]25.2%[/TD2] [TD2]-20.0%[/TD2][TD2]-23.5%[/TD2][TD2]-22.2%[/TD2][TD2]-18.5%[/TD2] [TD2]19.5%[/TD2][TD2]19.5%[/TD2][TD2]30.0%[/TD2][TD2]30.0%[/TD2] [TD2]-125.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2][TD2]-100.0%[/TD2] [TD2]-30.0%[/TD2][TD2]-36.8%[/TD2][TD2]-23.7%[/TD2][TD2]-33.0%[/TD2] [TD2]300,000[/TD2][TD2]295,174[/TD2][TD2]306,297[/TD2][TD2]315,848[/TD2] [TD2]575,000[/TD2][TD2]573,929[/TD2][TD2]522,452[/TD2][TD2]599,876[/TD2] [TD2]25,000[/TD2][TD2]43,471[/TD2][TD2]5,615[/TD2][TD2]26,184[/TD2] [TD2]45,000[/TD2][TD2]45,000[/TD2][TD2]50,000[/TD2][TD2]35,000[/TD2] [TD2]130,000[/TD2][TD2]130,000[/TD2][TD2]145,000[/TD2][TD2]130,000[/TD2] [TD2] 1,075,000 [/TD2][TD2] 1,087,574 [/TD2][TD2] 1,029,364 [/TD2][TD2] 1,106,908 [/TD2] [TD2] -187,959 [/TD2][TD2] -521,831 [/TD2][TD2] 413,536 [/TD2][TD2] 416,757 [/TD2] [TD2]17,000[/TD2][TD2]8,762[/TD2][TD2]7,348[/TD2][TD2]6,907[/TD2] [TD2]-115,000[/TD2][TD2]-104,453[/TD2][TD2]-121,723[/TD2][TD2]-122,220[/TD2] [TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2][TD2]-53,000[/TD2] [TD2]25,750[/TD2][TD2]25,750[/TD2][TD2]-14,205[/TD2][TD2]22,876[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2] -313,209 [/TD2][TD2] -644,772 [/TD2][TD2] 231,956 [/TD2][TD2] 271,320 [/TD2] [TD2]23,000[/TD2][TD2]22,873[/TD2][TD2]21,878[/TD2][TD2]16,647[/TD2] [TD2] -336,209 [/TD2][TD2] -667,645 [/TD2][TD2] 210,078 [/TD2][TD2] 254,673 [/TD2] [TD2]25,000[/TD2][TD2]34,490[/TD2][TD2]70,595[/TD2][TD2]-56,843[/TD2] [TD2] -361,209 [/TD2][TD2] -702,135 [/TD2][TD2] 139,483 [/TD2][TD2] 311,516 [/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]172,026[/TD2][TD2]170,893[/TD2] [TD2]176,000[/TD2][TD2]172,989[/TD2][TD2]179,026[/TD2][TD2]178,196[/TD2] [TD2] -2.05 [/TD2][TD2] -4.06 [/TD2][TD2] 0.78 [/TD2][TD2] 1.75 [/TD2] [TD2]-361,209[/TD2][TD2]-702,135[/TD2][TD2]139,483[/TD2][TD2]311,516[/TD2] [TD2]210,000[/TD2][TD2]208,378[/TD2][TD2]205,313[/TD2][TD2]204,728[/TD2] [TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2][TD2]0[/TD2] [TD2]-151,209[/TD2][TD2]-493,757[/TD2][TD2]344,796[/TD2][TD2]516,244[/TD2] [TD2] -0.86 [/TD2][TD2] -2.85 [/TD2][TD2] 1.93 [/TD2][TD2] 2.90 [/TD2]

What fundamentally changed to cause Elon to be off the mark on that prediction? Isn't it primarily the lower production numbers of model 3 vs what Elon anticipated at this point plus lower sales of model S/X? He was overly optimistic in his expectations of Panasonic's ability to ramp battery cell production. I think it seems reasonable for him to have expected more out of Panasonic than what they have delivered. He was also overly optimistic in his expectations of the hit that S, and to a lesser extent, X, would take from both the model 3 effect and the tax credit cliff in Q1, as well as in his expectation of the Raven production ramp. The battery production ramp seems like it should get better over Q3 and Q4, which should allow increased production of model 3. That will help gross margins. On the other hand, the mix will shift toward SR+, which will lower ASP. Future sales of S & X seem more uncertain at this point, particularly S. Perhaps those sales numbers moving forward will end up being lower than he expected. Too early to say.

 

[luvb2b]

it doesn't seem to me like they are close to profits. what it looks like is that demand isn't there unless mix is taken down to lower units, but at that lower mix margins suffer too much to make a profit.

the way the services loss has expanded and stayed high (both percentage and absolute terms) is also disturbing. it makes me think there's a possibility that some items that should go into cogs for production are being shifted into cogs of services. it also makes me think they may be using some of the warranty reserve to cover early repairs. i also wonder if the aggressive used car / trade in strategy is essentially back-door discounting for buyers.

the lack of any clear disclosures around the one-time effects that benefited or hurt q1 (benefits: non-zev credit sales, hurts: refunds and price adjustments) is also troubling.

the only real solution is demand, and with model 3 cannibalizing s/x sales it's hard for me to see how they get the higher mix needed to be profitable.

the "wild card" products you're citing seem to all be having difficulties spooling up. we went so many quarters with the solar roof will begin production in xyz to now it's not even clear when that happens because "testing is taking a long time." storage margins have shown no trend to improvement and my guess is revenue increases are only ~10% yoy this quarter.

the trees are so tall i can't see anything else.

FYI, that is not an important idea to me. I think you're still looking at the trees rather than the forest

So, for a very long time, my very high-level model has been that 5000 Model 3s/week should be roughly breakeven on cash flow, but 10,000/week are needed to get real profits. Well... we're in between at 7000/week, but S & X had a stutter due to a leaked refresh, tax credit effects, etc, and they have outsized influence on profits (I think they'll be back to at least 20K/quarter in Q3). And none of the "wild card" products (Solar Roof, Powerwall, Powerpack, Model Y, Semi) have really released in volume yet.


Nah. We're pretty close really. Swings of a couple of hundred million dollars per quarter are actually in the noise at this point.

The really big issue is the inability to get more than 7000 Model 3/week out of Fremont; the shorter-term issue was the inability to even get to 7000 Model 3/week, which seems to have only been reached near the end of the second quarter. The need to build an additional factory to get to 10000/week was definitely a bad thing. One hopes that Model Y will have larger economies of scale, of course.

 

[EinSV]

@luvb2b during its Q1 ER call FCA said they were facing 390M Euro in EMEA penalties for 2019 and that their pooling arrangement was expected to avoid 80% of those penalties, or $355M using today's exchange rates. Even if Tesla is only receiving 50 cents on the dollar, that would still be about $175-$200M for 2019 on top of any payments for the U.S.

There is also the possibility of increased payments per car in the U.S. with FCA.

In addition, they apparently entered into a new deal with GM, although I haven't seen any details published. That could also result in increased GHG credit payments per car in the U.S.

Here is some of the FCA discussion in case you're interested:


Demian Mizupho Flowers, Commerzbank AG, Research Division - Analyst [35]

--------------------------------------------------------------------------------

Yes. And my first question is on -- going back to EMEA CO2 compliance. So you've got to make up around 30 to 35 grams in order to hit your target. And on my math, the pooling agreement with Tesla will get you, let's say, a quarter of the way there. So -- well, my first question is does that sort of square roughly with the way that you think about the benefit that you get from that. And then secondly, of the remainder that you're going to make up, what's the split that comes from plug-ins and EV that you're going to launch versus the part that comes from improvements that you can make to the traditional parts of the rest of your fleet? <snip>

--------------------------------------------------------------------------------

Michael M. Manley, Fiat Chrysler Automobiles N.V. - CEO & Executive Director [36]

--------------------------------------------------------------------------------

Demian, this is Mike. I'm going to answer your first question because I actually -- it's obviously on many people's minds, so I'm going try and be as accurate and as explicit as I can on this area. If I think about 2019, as we came into the year with 2019, with the fleet that we had without making dramatic changes that would have impacted our profit, I estimate -- and I'm looking at Richard, I estimate, we probably would have picked up a fine of around EUR 350 million, EUR 375 million, something like.

--------------------------------------------------------------------------------

Richard K. Palmer, Fiat Chrysler Automobiles N.V. - CFO & Head of Business Development [37]

--------------------------------------------------------------------------------

EUR 390 million.

--------------------------------------------------------------------------------

Michael M. Manley, Fiat Chrysler Automobiles N.V. - CEO & Executive Director [38]

--------------------------------------------------------------------------------

EUR 390 million in the marketplace. The route that we've taken has dramatically, dramatically reduced that number, and we will achieve compliance. So in 2019, what you're going to see in terms of my split and, obviously, it's not going to be -- it is going to be close, but it's not going to be exact, I would say, we will achieve compliance roughly with 20% of conventional technology because we're in the process of now rolling out high-efficiency energy and other technologies to reduce vehicle demand. Now remember, most of our competitors have already done that. We chose to do it this year. That will bring us about 20% there. The rest 80% will be through credit pooling.

Edited Transcript of FCA.MI earnings conference call or presentation 3-May-19 12:00pm GMT

 

[luvb2b]

my understanding is you can't sell a credit in two different region for a car sold in only one region. that is, a car that sells in europe gets a european credit sale and a car sold in the us gets a usa credit sale. one car sale can't get both.

we have good historical data around levels of credits when us and global sales are included when the company was selling s/x only, and those credits were averaging around 1k per unit over all of 2016-2017. as model 3 sales scaled, the average non-zev credit sales per vehicle in 2018 lifted to about 1.2-1.3k per unit.

regarding the increased credit sale in 19q1, the 10q offers no disclosure:

Automotive sales revenue includes revenues related to the sale of new Model S, Model X and Model 3 vehicles, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates, as well as sales of regulatory credits to other automotive manufacturers. Our revenue from non-ZEV regulatory credits generally follows our production and delivery trends as we have long-term contracts with existing customers for the sale of these credits....
Additionally, there was an increase of $170.6 million in sales of non-ZEV regulatory credits to $200.6 million in the three months ended March 31, 2019 compared to $30.0 million in the same period in the prior year.​

tsla-10q_20190331.htm

there is disclosure around a $140m sale booked as deferred revenue.

Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of March 31, 2019 and December 31, 2018, respectively. We expect to recognize the deferred revenue as of March 31, 2019 over the next 2 to 3 years.​

in 19q1 around 36% of tesla deliveries were in the usa. during 2016-2017 usa was about 55% of delivery. a <20% shift in delivery produces a jump of 2k per vehicle in non-zev credits?

it comes down to a personal analytic choice. you can assume the extraordinary level of 19q1 non-zev credits are going to be an ongoing item, or you can assume that it's a one-time item. i wish they provided some disclosure around the credits, but they either couldn't (see below) or didn't. i believe a portion of the fca deal went into deferred revenue maybe some portion was recognized in 19q1. i believe the sudden jump we saw will not repeat in 2q19.

Philippe Houchois -- Jefferies -- Analyst

Yes, thank you for taking the questions. I'm just wondering if you can comment on the agreement you seem to have reached with FCA on the possibility of selling your CO2 credits to them in Europe and what that means to your potential cash inflow. When that might start occurring? And if there is, by any chance, any of those things already in the Q1 cash position?

Elon R. Musk -- Chief Executive Officer

I think it's a confidential deal with FCA, so we -- and we agreed with FCA not to comment on it publicly, so we must abide by that.​

we could both be right, for example:
80% of eur 390m is eur 312m.
eur 312m is usd 353m.
discount that value a bit to make the deal (say 25% off) and the total is usd 265m.
book 125m into current period revenue and take the balance 140m as deferred.
adjusting the 19q1 non-zev sales by the one time 125m benefit and i would end up at ~1.2k per vehicle of credits, at the historical average.

@luvb2b during its Q1 ER call FCA said they were facing 390M Euro in EMEA penalties for 2019 and that their pooling arrangement was expected to avoid 80% of those penalties, or $355M using today's exchange rates. Even if Tesla is only receiving 50 cents on the dollar, that would still be about $175-$200M for 2019 on top of any payments for the U.S.

There is also the possibility of increased payments per car in the U.S. with FCA.

In addition, they apparently entered into a new deal with GM, although I haven't seen any details published. That could also result in increased GHG credit payments per car in the U.S.

Here is some of the FCA discussion in case you're interested:


Demian Mizupho Flowers, Commerzbank AG, Research Division - Analyst [35]

--------------------------------------------------------------------------------

Yes. And my first question is on -- going back to EMEA CO2 compliance. So you've got to make up around 30 to 35 grams in order to hit your target. And on my math, the pooling agreement with Tesla will get you, let's say, a quarter of the way there. So -- well, my first question is does that sort of square roughly with the way that you think about the benefit that you get from that. And then secondly, of the remainder that you're going to make up, what's the split that comes from plug-ins and EV that you're going to launch versus the part that comes from improvements that you can make to the traditional parts of the rest of your fleet? <snip>

--------------------------------------------------------------------------------

Michael M. Manley, Fiat Chrysler Automobiles N.V. - CEO & Executive Director [36]

--------------------------------------------------------------------------------

Demian, this is Mike. I'm going to answer your first question because I actually -- it's obviously on many people's minds, so I'm going try and be as accurate and as explicit as I can on this area. If I think about 2019, as we came into the year with 2019, with the fleet that we had without making dramatic changes that would have impacted our profit, I estimate -- and I'm looking at Richard, I estimate, we probably would have picked up a fine of around EUR 350 million, EUR 375 million, something like.

--------------------------------------------------------------------------------

Richard K. Palmer, Fiat Chrysler Automobiles N.V. - CFO & Head of Business Development [37]

--------------------------------------------------------------------------------

EUR 390 million.

--------------------------------------------------------------------------------

Michael M. Manley, Fiat Chrysler Automobiles N.V. - CEO & Executive Director [38]

--------------------------------------------------------------------------------

EUR 390 million in the marketplace. The route that we've taken has dramatically, dramatically reduced that number, and we will achieve compliance. So in 2019, what you're going to see in terms of my split and, obviously, it's not going to be -- it is going to be close, but it's not going to be exact, I would say, we will achieve compliance roughly with 20% of conventional technology because we're in the process of now rolling out high-efficiency energy and other technologies to reduce vehicle demand. Now remember, most of our competitors have already done that. We chose to do it this year. That will bring us about 20% there. The rest 80% will be through credit pooling.

Edited Transcript of FCA.MI earnings conference call or presentation 3-May-19 12:00pm GMT

 

[EinSV]

it comes down to a personal analytic choice. you can assume the extraordinary level of 19q1 non-zev credits are going to be an ongoing item, or you can assume that it's a one-time item. i wish they provided some disclosure around the credits, but they either couldn't (see below) or didn't. i believe a portion of the fca deal went into deferred revenue maybe some portion was recognized in 19q1. i believe the sudden jump we saw will not repeat in 2q19.

I agree there is some uncertainty here. Having said that, I believe it is very unlikely that the Q1 increase was a "one-time" only event. As you mention elsewhere in your post it is possible that Q1 non-ZEV reg credits will be elevated on a per vehicle basis compared to later quarters this year -- we probably have to see the Q2 report to know. (Not relevant to this thread but next year reg credit revenue will almost certainly be higher since FCA payments increase substantially.)

 

[Zhelko Dimic]

my understanding is you can't sell a credit in two different region for a car sold in only one region. that is, a car that sells in europe gets a european credit sale and a car sold in the us gets a usa credit sale. one car sale can't get both.

we have good historical data around levels of credits when us and global sales are included when the company was selling s/x only, and those credits were averaging around 1k per unit over all of 2016-2017. as model 3 sales scaled, the average non-zev credit sales per vehicle in 2018 lifted to about 1.2-1.3k per unit.

regarding the increased credit sale in 19q1, the 10q offers no disclosure:

Automotive sales revenue includes revenues related to the sale of new Model S, Model X and Model 3 vehicles, including access to our Supercharger network, internet connectivity, Autopilot, full self-driving and over-the-air software updates, as well as sales of regulatory credits to other automotive manufacturers. Our revenue from non-ZEV regulatory credits generally follows our production and delivery trends as we have long-term contracts with existing customers for the sale of these credits....
Additionally, there was an increase of $170.6 million in sales of non-ZEV regulatory credits to $200.6 million in the three months ended March 31, 2019 compared to $30.0 million in the same period in the prior year.​

tsla-10q_20190331.htm

there is disclosure around a $140m sale booked as deferred revenue.

Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of March 31, 2019 and December 31, 2018, respectively. We expect to recognize the deferred revenue as of March 31, 2019 over the next 2 to 3 years.​

in 19q1 around 36% of tesla deliveries were in the usa. during 2016-2017 usa was about 55% of delivery. a <20% shift in delivery produces a jump of 2k per vehicle in non-zev credits?

it comes down to a personal analytic choice. you can assume the extraordinary level of 19q1 non-zev credits are going to be an ongoing item, or you can assume that it's a one-time item. i wish they provided some disclosure around the credits, but they either couldn't (see below) or didn't. i believe a portion of the fca deal went into deferred revenue maybe some portion was recognized in 19q1. i believe the sudden jump we saw will not repeat in 2q19.

Philippe Houchois -- Jefferies -- Analyst

Yes, thank you for taking the questions. I'm just wondering if you can comment on the agreement you seem to have reached with FCA on the possibility of selling your CO2 credits to them in Europe and what that means to your potential cash inflow. When that might start occurring? And if there is, by any chance, any of those things already in the Q1 cash position?

Elon R. Musk -- Chief Executive Officer

I think it's a confidential deal with FCA, so we -- and we agreed with FCA not to comment on it publicly, so we must abide by that.​

we could both be right, for example:
80% of eur 390m is eur 312m.
eur 312m is usd 353m.
discount that value a bit to make the deal (say 25% off) and the total is usd 265m.
book 125m into current period revenue and take the balance 140m as deferred.
adjusting the 19q1 non-zev sales by the one time 125m benefit and i would end up at ~1.2k per vehicle of credits, at the historical average.

@luvb2b are you up to date on FCA deal signed in Q1 that Tesla said was confidential, so they can't comment?
Details escape me now, but it was supposed to be worth 1B or 2B over this and next 2 years...
Some calculations place value of European credits to between $EUR5K and $EUR10K per car.
Most details about overall value of deal came from FCA conference call...