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Near-future quarterly financial projections

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Thanks, good idea - I used his S&X data as starting point and then calculated the Model 3 cogs.

This makes more sense !

Except the Cogs M3 for Q1 2019. I don`t understand the Driver for an increase vs Q4 2018 - especially as the produced volume increased slightly.

I think you are aware that your and luv2b`s number differ in Q2 in Sales and Cogs - not so much in Gross Profit...

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M3 COGS in Q1 would be slightly higher because of EU deliveries, extra shipping alone could cause that.

I think you are aware that your and luv2b`s number differ in Q2 in Sales and Cogs - not so much in Gross Profit...
Yes - mainly because of S&X ASP difference. I think the extra regulatory credit is recurring (FCA), he is assuming that to be one time.

BTW, for Q2 on s&x, the basic driver is sale of large # of inventory cars. Their COGS would be like in earlier quarters (we don't know which) but ASP lower because of deep discounts. This is one of the major unknowns in Q2.
 
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Hmmm … when you have such a big drop in deliveries, you will see such "swings". Your revenue and operating profit goes down while your fixed costs remain.
This basic concept is well understood. But it does not explain the complete swing from profit to loss. Let's do some basic math:

Q4 GAAP income 139m, Q1 loss 702m, difference 841m.
One time costs Q1: write-down inventory 80m, restructuring 43.5m, remaining Q1 loss 578.5m.
One time gain Q4 (if we assume evenly distributed over 4 Q's, see my former post): 217m, Q4 becomes now a loss of 78m.
New difference 500m, i.e. 341m less. That's more in line with the drop in deliveries.
 
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Why the low margin? The Q1 margin is not realistic. There were serious issues, the margin will be more in the range of 18%-19%. Especially with the recent price adjustment, I cannot imagine the will accept a margin of 14%.

Also note: Elon changed his behaviour and is now in a state of under promise and over deliver. I expect a positive Q2.
His 14% margin excludes the benefit from emissions credits. That was worth ~500 bpp in Q1.

I don't see a path to 18k and 20k S/X production, though. They can do 14.5k with one shift. They can add another 1-2k with OT, but 18-20k requires adding a half shift or something weird. If there's enough demand they can re-hire a second shift and go back to 27k, but IMHO killing off the SR/75D (again) says they will stick with one shift plus seasonal OT.

I'd estimate S/X at 15k for Q3 and 17-18k for Q4. Maybe a bit higher in Q4 with further inventory drawdown. I also can't see a return to 100k+ ASPs with the new 80/85k LR price. Even with a much higher take rate for Performance how does ASP get much above 90k?
 
The 763m current liability relates to revenue they expect to recognize in the next 12 months. The other 1157m is 12+ months. The total 1920m is a mix of RVG-related mess and the EAP/FSD/Supercharger/etc. stuff mentioned above. The RVG stuff has significant COGS, EAP/FSD has almost none.

@EinSV - we're talking about the same thing, I'm just triangulating from the other side. You're looking at a feature they deployed and estimating it's value. I treat the ~262m of EAP/FSD they expect to recognize in the next 12 months as a cookie jar. It's ~65m per quarter on average, but they have a lot of discretion over which quarter to recognize it thus will tend to put it where it will do the most good. 100m is almost 200 bpp of margin uplift, which Q2 could use. But Q3 may need it even more assuming Europe goes in heavy for SR+.

Perhaps they'll take 100m in each Q2 and Q3 and let Q4 fend for itself since EOY margins don't need much help. Q1 will suck, as usual, but by then Model Y will be the story.

Q1 story will likely be Shanghai ramping to volume production (or already entering the quarter at volume)
 
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Interestingly enough, deferred revenues were reduced from 1015m to 630m 2017 to 2018 y/y, but increased from 630 to 762 from Q4 to Q1. Similarly, Deferred revenue net of current portion was reduced from 1177m to 990m y/y, but increased from 990 to 1157 q/q. It has also to be noted that, although deferred revenues have been increased q/q substantial, sales were quite low.

I see that there was a change in accounting standards, leading to a reduction of deferred revenue of 436m and net of current of 429m as per end of 2018.

Nevertheless, Gerome stated in his email to employees that "quality is also reaching record highs" and in Q1 Tesla was not able to deliver. Net/net, might deferred revenues increase in Q2 at a much lower rate, compared to revenues, and therefore contribute to better earnings?

Edit: I always found that wild swing from profits in Q3 and Q4 to such a big loss in Q1 suspicious. If we look at this from the above angle, than 2018 earnings have been helped by 436+429m=865m, average 217m per quarter. Accounting games.....
The big changes in deferred are due to the RVG mess. First the change in RVG accounting on 1/1/18 then the reversal of 500.5m revenue and 408.8m COGS in Q1 2019. Because they lump RVG-related deferred rev in with Superchargers, EAP, FSD, etc. it becomes tough to untangle it all. Barring any more RVG gyrations, the big Q2 effect would be recognition of deferred EAP which we guessed at above.

Beyond the 500.5/408.8 reversal I mentioned, I don't think deferred revs played a role in Q1's disaster. Instead of selling 27k S/X at 25k+ gross profit each they sold 12k @ 20k each. That's about half the Q4->Q1 delta. We also so 12k fewer Model 3 sales at lower ex-emissions margins for another ~200m hit. Since the quarter was a disaster anyway, they threw in the kitchen sink: 92m RVG reversal, inventory writedown, "one-time" restructuring charges, etc.

Q1 story will likely be Shanghai ramping to volume production (or already entering the quarter at volume)
Shanghai's pace is impressive, but I don't see it helping the story much. Bulls assume Model 3 sales in China will leap from 30-40k/year to 150k once Shanghai is cranking. I see more like 50-75k with the rest being exported, many to Europe. That's an offshoring story, not a growth story.
 
Because they lump RVG-related deferred rev in with Superchargers, EAP, FSD, etc. it becomes tough to untangle it all. Barring any more RVG gyrations, the big Q2 effect would be recognition of deferred EAP which we guessed at above.

Lame but possible: For a car purchased with FSD, but traded in to Tesla, They get to claim all the deferred revenue, right? Interesting source of revenue going forward depending on option trade in value vs resale price.
 
Shanghai's pace is impressive, but I don't see it helping the story much. Bulls assume Model 3 sales in China will leap from 30-40k/year to 150k once Shanghai is cranking. I see more like 50-75k with the rest being exported, many to Europe. That's an offshoring story, not a growth story.

It’s much better than that: it’s a flexible growth story. If China sales grow to 150k+, great. If not, Tesla has the ability to export lower-cost, higher-margin Model 3s not just to Asia but to Europe. With European SR+ coming from China rather than Fremont, battery and assembly capacity is freed up to produce higher-priced Model Y.

The Shanghai Gigafactory facilitates fast growth, whether that growth is concentrated in China or diffused around the world.
 
Lame but possible: For a car purchased with FSD, but traded in to Tesla, They get to claim all the deferred revenue, right? Interesting source of revenue going forward depending on option trade in value vs resale price.
They should be able to recognize all deferred revenue when they take a car back in trade. Same thing when a car comes back off lease.
 
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Any idea what sort of cost increase the increased tariff on the FSD computer was per unit? $100? More? Less?

What was the tariff before the increase? If it was 10%, then it would probably be a maximum increase of $150 assuming the value of the computer is ~ $1000 or less, for a total additional cost due to tariffs of $250 or less, which would be about a 30-40 PT hit to long-term gross margin on the Model 3 (just from the computer) if the tariffs stay in place. But what I'm really wondering is if this is the only component facing new tariffs? There must be some that have gone under the radar. They have been granted an exemption for tariffs on Japanese aluminum, but what is the total value of components facing increased tariffs as of late?
 
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I wonder what the income from Superchargers will be. Probably not so much now but, going forward, it could turn into a cash cow. It's like owing all the gas stations.

For the next five years, I think Tesla should approach the Supercharger Network sort of like Apple thought of iTunes, especially in the beginning. Something that is not a profit center but run at break-even or above in order to support a growing base of cars or devices. New superchargers mean increased demand generation (mainly by reducing or eliminating range anxiety at a local level), as the company has acknowledged on many occasions.

Long-term, this dynamic will change. At some point, more superchargers won't lead to more demand for vehicles. It might be the right move to focus on increased profitability from the charging network. Again, there might be some similarities with Apple, where services are now turning into the main revenue and profit driver.
 
bloomberg estimates:


eps adj: -.35 (beat 4 of 8)
eps gaap: -1.437 (missed 6 of 8)
rev: 6.435b (beat 7 of 8)
gr mg: 17.06%
op profit: 86.469m
ebitda: 598m
net inc adj: -44.132m (missed 5 of 8)
net inc gaap: -261.769m
net debt: 8.895b
deprec: 476.289m
fcf: 235.541m
capes: -583.875m
nav: 5.777b
FCF jumps out as an easy beat to me.
 
I wonder what the income from Superchargers will be. Probably not so much now but, going forward, it could turn into a cash cow. It's like owing all the gas stations.

Unless the majority of people driving Tesla’s are are doing so mostly on road trips, I doubt they’re making a lot of money. I am willing to bet most of the usage comes from locals with free supercharging, whether with credits or free lifetime. And all the SC stations are located in shopping centers and grocery stores. So, it’s super convenient for locals to charge for free if they have that option. At least in my area, the Tesla SC rates are more expensive than charging at home, more than twice as much if you compare with off-peak EV rates. Doesn’t make any sense to pay those rates when day to day driving.
 
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