Near-future quarterly financial projections

[yak-55]

I’m now 2 for 2 in these contests. ... I have a lovely MS mug on my shelf somewhere from the last one. Guess I should hang out my shingle as a consultant/analyst.
Just don’t ask me where the stock is going !

Troy,
Thanks for making this so easy. Was fun.
yak-55

Here are the scores of the Q2 2018 Tesla production and delivery estimates survey. You can find the spreadsheet here. @yak-55's overall accuracy was 95.9% which I think is excellent. @Bokonon's both Model 3 estimates were amazingly accurate. 99.9% and 99%, wow!

 

[Troy]

Here are the results of the 5 estimates I posted yesterday. The accuracy was as expected. Generally speaking, I'm happy with my estimates.

Both of my production estimates are based on VIN calculations. Besides the Model 3 spreadsheet, I also manage the Model S/X Order Tracker spreadsheet. In this spreadsheet, the S+X production estimation process is completely automated. Therefore hopefully it will display similarly accurate estimates for all quarters from now on. Tesla only publishes S+X production numbers but they publish the delivery numbers separately.

The interesting thing here is that Tesla didn't hold back on S/X deliveries. Therefore it will be interesting to find out what happened with the 200K situation.

 

[brian45011]

The Cumulative difference between production and deliveries is 12,637 yet only 11,166 were In-Transit at 6/30/18. Does that imply that over 1,471 M3s are showroom models, service loaners, and test drive vehicles? [Or is my record keeping deficient?]

QUARTER	CUMULATIVE
Produced
Delivered
In-Transit

[TD2] 3Q17 [/TD2][TD2] 4Q17 [/TD2][TD2] 1Q18 [/TD2][TD2] 2Q18 [/TD2] [TD2]260[/TD2][TD2]2,425[/TD2][TD2]9,766[/TD2][TD2]28,578[/TD2][TD2]41,029[/TD2] [TD2]220[/TD2][TD2]1,550[/TD2][TD2]8,182[/TD2][TD2]18,440[/TD2][TD2]28,392[/TD2] [TD2]40[/TD2][TD2]860[/TD2][TD2]2,040[/TD2][TD2]11,166[/TD2][TD2]N.A.[/TD2]

 

[Waiting4M3]

The Cumulative difference between production and deliveries is 13,637 yet only 11,166 were In-Transit at 6/30/18. Does that imply that over 2,471 M3s are showroom models, service loaners, and test drive vehicles? [Or is my record keeping deficient?]

QUARTER	CUMULATIVE
Produced
Delivered
In-Transit

[TD2] 3Q17 [/TD2][TD2] 4Q17 [/TD2][TD2] 1Q18 [/TD2][TD2] 2Q18 [/TD2] [TD2]260[/TD2][TD2]2,425[/TD2][TD2]9,766[/TD2][TD2]29,578[/TD2][TD2]42,029[/TD2] [TD2]220[/TD2][TD2]1,550[/TD2][TD2]8,182[/TD2][TD2]18,440[/TD2][TD2]28,392[/TD2] [TD2]40[/TD2][TD2]860[/TD2][TD2]2,040[/TD2][TD2]11,166[/TD2][TD2]N.A.[/TD2]

Q2'18 M3 production is 28578, not 29578, you just had a typo and off by 1000

 

[Reality]

The Cumulative difference between production and deliveries is 13,637 yet only 11,166 were In-Transit at 6/30/18. Does that imply that over 2,471 M3s are showroom models, service loaners, and test drive vehicles? [Or is my record keeping deficient?]

QUARTER	CUMULATIVE
Produced
Delivered
In-Transit

[TD2] 3Q17 [/TD2][TD2] 4Q17 [/TD2][TD2] 1Q18 [/TD2][TD2] 2Q18 [/TD2] [TD2]260[/TD2][TD2]2,425[/TD2][TD2]9,766[/TD2][TD2]29,578[/TD2][TD2]42,029[/TD2] [TD2]220[/TD2][TD2]1,550[/TD2][TD2]8,182[/TD2][TD2]18,440[/TD2][TD2]28,392[/TD2] [TD2]40[/TD2][TD2]860[/TD2][TD2]2,040[/TD2][TD2]11,166[/TD2][TD2]N.A.[/TD2]

This is a good question

 

[neroden]

Here are the results of the 5 estimates I posted yesterday. The accuracy was as expected. Generally speaking, I'm happy with my estimates.

Both of my production estimates are based on VIN calculations. Besides the Model 3 spreadsheet, I also manage the Model S/X Order Tracker spreadsheet. In this spreadsheet, the S+X production estimation process is completely automated. Therefore hopefully it will display similarly accurate estimates for all quarters from now on. Tesla only publishes S+X production numbers but they publish the delivery numbers separately.

The interesting thing here is that Tesla didn't hold back on S/X deliveries. Therefore it will be interesting to find out what happened with the 200K situation.

I'm expecting a humungous number of Model 3s delivered to Canada. There's a lot of evidence for it. Combined with the "date title passes under state law" rule and the cumulative error present in previous estimates of US vs. non-US deliveries, and the fact that the early Roadsters don't count against the limit, I am pretty sure they're on the right side of 200K. I wouldn't be totally surprised if they screwed it up because they have been known to make counting errors, but I would be surprised.

 

[brian45011]

Q2'18 M3 production is 28578, not 29578, you just had a typo and off by 1000

Thanks Corrected

 

[schonelucht]

Plugged the delivery numbers for this quarter in my model. Lower deliveries on S,X and 3 than estimated lead to a shortfall in gross profit of $50M. Net loss before NCI worsens with about the same amount to -$700M. Gross margin on Model 3 declines from 3% to 0%.

 

[generalenthu]

Plugged the delivery numbers for this quarter in my model. Lower deliveries on S,X and 3 than estimated lead to a shortfall in gross profit of $50M. Net loss before NCI worsens with about the same amount to -$700M. Gross margin on Model 3 declines from 3% to 0%.

Gross margin on the 3 should be driven by production and not deliveries. The depreciation and direct costs will be allocated to all the vehicles produced and will become part of the finished goods inventory.

 

[Zhelko Dimic]

Thanks Luv.
To add to @schonelucht, I expect at most 18-19K M3s in Q2.
Mostly because production so far has not been stelar. Couple of slowdowns and interruptions to production so far (the best I can tell). That 5 day stoppage seems to have been 7 days, etc... Focus seems to be on achieving good exit run-rate and not optimizing for how many cars are produced in Q2.
Further, I expect that Q2 turns into a bit of the dog's breakfast, any expense that can be thrown into it will be. It's a write-off quarter anyhow and cleans the slate for Q3 and Q4. The only thing Tesla will try to protect is cash at the end of the quarter, as otherwise that number can cause panic. Of course, this is all my speculation.
I also expect more S+X in transit as they are trying to get away from optimizing for a quarter. Which alligns with attempts to delay onset of 200K limit.

Hey, I think I did alright here.
Opening order book to everyone in NA? That would fit with protecting cash at the end of the quarter...

 

[luvb2b]

my understanding is that some of the depreciation is time-based vs. unit-based, and so deliveries do matter as the time-based depreciation gets spread into cogs for the delivered units.

example: say a 1.2b piece of equipment is involved directly in production but depreciated straight line over 12 quarters (100m per quarter).

if 100 cars are delivered in a quarter, 100m in depreciation / 100 cars = 1m per car of depreciation in cogs. note: there will be other depreciation in cogs, i am for now just focusing on this example equipment.

if 1000 cars are delivered that quarter then 100m in depreciation / 1000 cars = 100k per car of depreciation in cogs.

i believe @schonelucht was correct to pull gross margin estimates down a few percent given the shortfall of deliveries vs his estimates.

Gross margin on the 3 should be driven by production and not deliveries. The depreciation and direct costs will be allocated to all the vehicles produced and will become part of the finished goods inventory.

 

[generalenthu]

example: say a 1.2b piece of equipment is involved directly in production but depreciated straight line over 12 quarters (100m per quarter).

if 100 cars are delivered in a quarter, 100m in depreciation / 100 cars = 1m per car of depreciation in cogs. note: there will be other depreciation in cogs, i am for now just focusing on this example equipment.

if 1000 cars are delivered that quarter then 100m in depreciation / 1000 cars = 100k per car of depreciation in cogs

Think about inventory that is built, but not delivered. You have to hold it at lower of cost or market. So how do you calculate the cost of this inventory without accounting for depreciation (whether time based or unit based)?

If you spread your depreciation only on delivered items, what is the COGS of cars that have been built using this machinery, but delivered after the machinery was retired? It doesn't fit.

 

[schonelucht]

Gross margin on the 3 should be driven by production and not deliveries. The depreciation and direct costs will be allocated to all the vehicles produced and will become part of the finished goods inventory.

True. But the obvious underlying implicit assumption in my model is that deliveries correlate with production good enough that'd be a wash. And sure enough, I had predicted 36k Model 3 production and we only got 28k.

 

[schonelucht]

my understanding is that some of the depreciation is time-based vs. unit-based, and so deliveries do matter as the time-based depreciation gets spread into cogs for the delivered units.

No @generalenthu was certainly correct that those time based costs for current quarter are allocated to current produced units, not current delivered units.

i believe @schonelucht was correct to pull gross margin estimates down a few percent given the shortfall of deliveries vs his estimates.

Just for completeness' sake : the margins reduced themselves through lower deliveries (which I assume correlate well enough with production to counter above), they are not a variable that I directly manipulate (they are a directly manipulated value for the S and X because I assume those are pretty much in a steady state)

 

[schonelucht]

Other topic : what's everybody's feeling about the S/X? Q1 was supposedly highest net order quarter ever. Yet deliveries (once you account for a slightly lower pipeline) were flat q-o-q. On top of that we're down slightly y-o-y. And remember last year was supposedly an anomaly with a shortfall in large battery manufacturing. Neither was production a constraining factor since it outpaced deliveries with 1000-2000 units for a sequand straight quarter. This makes me fear that Tesla will have to dig into aggressive lease deals and assorted 'showroom discounts' again to make their 100k target. If so, it could easily put a few percentage points downwards pressure on S and X.

 

[mongo]

Other topic : what's everybody's feeling about the S/X? Q1 was supposedly highest net order quarter ever. Yet deliveries (once you account for a slightly lower pipeline) were flat q-o-q. On top of that we're down slightly y-o-y. And remember last year was supposedly an anomaly with a shortfall in large battery manufacturing. Neither was production a constraining factor since it outpaced deliveries with 1000-2000 units for a sequand straight quarter. This makes me fear that Tesla will have to dig into aggressive lease deals and assorted 'showroom discounts' again to make their 100k target. If so, it could easily put a few percentage points downwards pressure on S and X.

S/X produced, delivered, transit from number's letters starting in '16
Q1: ??? , 14,820, 2,615
Q2: 18,345, 14,370, 5,150
Q3: 25,185, 24,500, 5,500
Q4: 24,882, 22,200, 2,750
Q1: 25,418, 25,000, 4,650
Q2: 25,708, 22,000, 3,500 3,000 (100kWh pack)
Q3: 25,076, 25,930, 4,820
Q4: 22,140, 28,320, 2,520
Q1: 24,728, 21,800, 4,069
Q2: 24,761, 22,300, 3,892

What is your pipeline adjustment? The base deliveries and in-transit YoY are up for S/X. Production numbers are back within 4% of the high water mark, post 17Q4.
It does look like they are increasing loaner or inventory numbers...

If the tax credit does not get extended, I see that as sufficient catalyst to hit the 100k delivered mark. Especially with end of year tax opportunities for the X. (Short term possession allowing for 100% business use and 100% first year depreciation). Could explain the discrepancy between built/delivered and in-transit to catch 11th hour orders now that the 200k trigger has passed (relative to Q2).

Edit: corrected 17Q2 in-transit number. Does shift things.

 

[schonelucht]

Q2: 25,708, 22,000, 3,000 (100kWh pack)

I need to go back to my sources for this but I have it as 3500 in my spreadsheet.

If the tax credit does not get extended, I see that as sufficient catalyst to hit the 100k delivered mark. Especially with end of year tax opportunities for the X. (Short term possession allowing for 100% business use and 100% first year depreciation).

Good point! Why didn't I think of that? Will hold off changing margins because this is obviously a big sales catalyst.

 

[mongo]

I need to go back to my sources for this but I have it as 3500 in my spreadsheet.

You're correct, it is 3,500.
I'll fix if possible.

 

[Mario Kadastik]

I think part of the S+X production may have been constrained with Model 3 ramp. While they did the last week at 7k/week where the S+X line didn't suffer it doesn't mean this was the case throughout the quarter. A couple of weeks at 20-50% reduced capacity for S+X lines due to workforce reallocation could easily explain everything.

 

[schonelucht]

I think part of the S+X production may have been constrained with Model 3 ramp. While they did the last week at 7k/week where the S+X line didn't suffer it doesn't mean this was the case throughout the quarter. A couple of weeks at 20-50% reduced capacity for S+X lines due to workforce reallocation could easily explain everything.

Explain what? Production was perfectly in line with guidance : 25k exactly. The main issue is demand for the Model S. That's at a 3 year low (with the exception of production hell quarter 2016Q2). It's not a surprise : the 3 is a fine alternative for lowend Model S and for many buyers maybe even the better alternative. This suggests that Tesla needs to reposition the S. Either by adjusting the pricing mix, which it already started to do through internet connectivity add-on. Short term, there will be a bump from the end of the federal credit. But ultimately Model S needs a refresh. With resources spread thin, it could be a while before we that relief.