Near-future quarterly financial projections

[XHabjab]

copying @Gigapress

There can certainly be upside with ASP in my model but I have some reasons for this.

First is "sales mix" with the Models S&X:
S&X account for 6.3% of deliveries in Q2 and I have that dropping back to 4.4%/4.2% as Shanghai, Berlin and Austin increase output of Models 3/Y
View attachment 824171

There is also a Leasing Impact:
Leases were a low 12% in Q2 for S&X and I assume it goes back up (I have 16%). The lease revenue is earned over 36 months.
Thus the increase in lease % from 12% to 16% spreads the good ASP on S&X sales to future periods.
View attachment 824172

Overall, my ASP pricing is not aggressive:
I am being cautious here as I assume that much of the S&X Plaid sales were aggressively pushed in Q2 leaving a lower mix of Plaid in Q3 & Q4.
The same is true for Model 3 SR. I had heard that very few Model 3 SR's were produced in Fremont in Q2 and I assume this lower price model increases in mix for Q3 & Q4.
Then there is China. A good portion of the sales in China which will increase significantly in Q3 and Q4 are lower trim models and they have a very low sales price. The model 3 RWD in China is about $41.6k and the Model Y RWD is only $47.4k. As China increases sales into the local market, I expect that to impact overall ASP.
View attachment 824173

I agree that there is potential upside but I will wait to get more details from the Q2 10Q before adjusting.
Thanks to you both for your input.

We have had a Model Y LR (aka ”Model Y”) on order since November 2021 and it is not delivered yet. The estimated delivery date has moved around and is currently Nov22 -Jan23. There have been a few price increases since order date but we will be paying the Nov 2021 price. I don’t know how widespread this is but this will surely suppress ASP numbers a little.

 

[Usain]

There may be confusion due to ambiguity of terms.
Autosteer on City streets is a specific feature of FSD and its success is a prerequisite for moving Navigate on Autopilot to single stack.
FSD (Current option package) is only waiting on city street functionality.
Level 4 FSD (functionality beyond what is being sold now) will possibly wait on single stack.

Potential timeline:
Autosteer on City streets wide release (full revenue recognition for recent sales)
Navigate on Autopilot moved to single stack (after much testing)
Driverless FSD

I don't think that timeline ordering is possible. Single stack is the ultimate goal, and it's not that far away. I don't think there is any way that wide release of autosteer on city streets will happen until single stack is fully tested through the beta program.

If wide release of autosteer on city streets comes first then Tesla runs a big risk. They would have to continue supporting dual stack until single stack is completed. And supporting single stack and dual stack at the same time takes a lot of manpower (and computing power) away from that ultimate goal.

 

[Question]

On top of this, Model Y prices in Europe are higher than other major markets, so increasing the European percentage of overall sales will have even more effect. Ys cost about $2-10k more in Europe than in North America, depending on which country you look at. Some Eastern European countries get cheaper Ys though, but they don’t buy as many.

Someone already corrected that you are missing VAT, but I'll add one more fact: there is no cheaper model Y's in eastern Europe. You are most likely referring to countries that Tesla does not sell directly. In those countries, the tesla.com price does not include VAT and buyer has to pick up the car from central Europe and take care of VAT payment manually. So it might look like Estonia or Poland has cheaper Model Y than Finland according to Tesla.com, but that's not the case.

Tesla.com price include VAT/sales tax:

NA: No
Europe: Yes
Eastern Europe: No

 

[mongo]

I don't think that timeline ordering is possible. Single stack is the ultimate goal, and it's not that far away. I don't think there is any way that wide release of autosteer on city streets will happen until single stack is fully tested through the beta program.

If wide release of autosteer on city streets comes first then Tesla runs a big risk. They would have to continue supporting dual stack until single stack is completed. And supporting single stack and dual stack at the same time takes a lot of manpower (and computing power) away from that ultimate goal.

NoA is running on the old software topology.
AoCS is using the new design. They already support two stacks (plus old HW support)
Single stack is when NoA is transitioned to the new software design which would not occur until after AoCS has been highly vetted and shown to be better than current NoA (likely implying wide release).

Are you thinking of unified vector space which they are working on moving everything in AoCS to? That would likely be done before wide release.

AoCS goes to unified vector space (UVS)
AoCS wide release, FSD fulfilled
AoCS validated
NoA moved to UVS, FSD now single stack
L4+ FSD

However, in October last year, Elon has Tweeted that V11 was going to be single stack, so it may be that full roll out will not occur until after single is intergrated. Or, Tesla may do a full access 10.x version.

This may be moving into something more applicable to the Enigeering thread.

More this thread: is the impact of end of lease FSD option revenue recognition known/ factored in? (Guessing low # and minimal data)

 

[Gigapress]

Someone already corrected that you are missing VAT, but I'll add one more fact: there is no cheaper model Y's in eastern Europe. You are most likely referring to countries that Tesla does not sell directly. In those countries, the tesla.com price does not include VAT and buyer has to pick up the car from central Europe and take care of VAT payment manually. So it might look like Estonia or Poland has cheaper Model Y than Finland according to Tesla.com, but that's not the case.

Tesla.com price include VAT/sales tax:

NA: No
Europe: Yes
Eastern Europe: No

So then Ys are actually cheaper to order in Europe right now in most countries. Maybe this is because of the drop in € to $ exchange rates.

For example, excluding the VAT in France the Y LR base price is 54.100€ which is worth $56,400 today. That’s $10k less than the current price in USA and Canada.

 

[Doggydogworld]

All feedback is welcomed.

My feedback is to use Troy Teslike's numbers and save yourself a lot of work

 

[The Accountant]

My feedback is to use Troy Teslike's numbers and save yourself a lot of work

LOL - you're probably right.
We are not too far off. He has 846k for the 2nd half and I have 850k.

 

[The Accountant]

Tesla should have about 4,300 Model 3s coming off lease this quarter (that's how many were leased in Q2 2019).
Two questions:
1. Does anyone know if these were all with the no buyout option? Meaning they all come back to Tesla?
2. The fair value of these 3 year old cars today is likely higher than the original residual value assigned to the cars at the time. What could be the gain on the sale of these cars by Tesla? $5k per car?

I wonder if this could add $21m in profits this qtr (4,300 cars x $5,000).

 

[unk45]

There clearly are major FX movements poised fro the last half of this year. We do not have access to the details fo Tesla hedging nor even of the model mix per factory. Thus is seems a trifle overly abritious to try to become too detailed on model mix. Another major impediment to that is the lack of creditable evidence on volumes for 4680 and specifically how costs are developing for those.

Within model mix questions we also know that semiconductor shortages still exist, supplier disruption still is problematical. A counter to that is that shipping costs appear be improving. Hyundai Glovis is the one to watch, but we really do not have insight in their Tesla pricing, only spot.

The balance of these and other factors convince me that @ The Accountant is wise to be conservative.
Many of these factors could end out being very positive; that does not alter the reality that these are now guesswork.

The structural realities, as they are known, are well considered in the present model in my opinion.
We are almost certain to have new material;information within the next month. If that is mostly positive there is plenty of time to become more optimistic on several items.

It seems to me the things most important to watch as leading indicators are:
- continued ramping of Grüneheide and Austin;
-public release of improved 4680 performance (charging speeds, range, production volumes);
-adding any significant new countries;
-Actual shipping of 4680 from one of the new suppliers (not likely, but...)

There are many other factors too, but these seem to me to be the most likely critical developments. Frankly, I'm taking 4680 as a surrogate for everything from new model launches, more Gigaporess use, and improved manufacturing economies. I view 4680 as the closest limiting factor to the Model 3 launch debacle.

 

[mongo]

Tesla should have about 4,300 Model 3s coming off lease this quarter (that's how many were leased in Q2 2019).
Two questions:
1. Does anyone know if these were all with the no buyout option? Meaning they all come back to Tesla?
2. The fair value of these 3 year old cars today is likely higher than the original residual value assigned to the cars at the time. What could be the gain on the sale of these cars by Tesla? $5k per car?

I wonder if this could add $21m in profits this qtr (4,300 cars x $5,000).

Yeah, Tesla 3 lease never had an end of lease purchase option domestically. Same with Y. April this year they expanded to all vehicles.

 

[unk45]

Tesla should have about 4,300 Model 3s coming off lease this quarter (that's how many were leased in Q2 2019).
Two questions:
1. Does anyone know if these were all with the no buyout option? Meaning they all come back to Tesla?
2. The fair value of these 3 year old cars today is likely higher than the original residual value assigned to the cars at the time. What could be the gain on the sale of these cars by Tesla? $5k per car?

I wonder if this could add $21m in profits this qtr (4,300 cars x $5,000).

They were not. The total buyout option was removed only this year.
Vehicles purchased after April 2019 have a $350 purchase fee.

Lease-End Options | Tesla Support

If you’re looking to return your vehicle and upgrade before the end of your lease, we offer several options to end your lease early.

www.tesla.com

I suggest conservatives to add $350 per car, since that should be the typical minimum gain.
AFAIK, we have no idea about early termination volumes. In this market comparably prices cars (BMW 3 series, for example) tend to about 1/3 early termination on two year leases. (that from some 2018 data). Early terminations tend to be accidents, thefts and trades so I suggest Model 3 is probably around 10-15% not more).

 

[Gigapress]

There clearly are major FX movements poised fro the last half of this year. We do not have access to the details fo Tesla hedging

Tesla does not hedge for foreign exchange rates. They’ve said this on earnings calls and it’s also in the SEC filings such as the latest 10-Q.

“Foreign Currency Risk

We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar (primarily the Chinese yuan, euro, pound sterling and Norwegian krone in relation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates affect our revenue and other operating results as expressed in U.S. dollars as we do not typically hedge foreign currency risk.

We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances).

We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at the balance sheet date to compute the impact these changes would have had on our net income before income taxes. These changes would have resulted in a gain or loss of $63 million at March 31, 2022 and $277 million at December 31, 2021 assuming no foreign currency hedging.”

 

[Buckminster]

Tesla should have about 4,300 Model 3s coming off lease this quarter (that's how many were leased in Q2 2019).
Two questions:
1. Does anyone know if these were all with the no buyout option? Meaning they all come back to Tesla?
2. The fair value of these 3 year old cars today is likely higher than the original residual value assigned to the cars at the time. What could be the gain on the sale of these cars by Tesla? $5k per car?

I wonder if this could add $21m in profits this qtr (4,300 cars x $5,000).

They were not. The total buyout option was removed only this year.
Vehicles purchased after April 2019 have a $350 purchase fee.

Lease-End Options | Tesla Support

If you’re looking to return your vehicle and upgrade before the end of your lease, we offer several options to end your lease early.

www.tesla.com

I suggest conservatives to add $350 per car, since that should be the typical minimum gain.
AFAIK, we have no idea about early termination volumes. In this market comparably prices cars (BMW 3 series, for example) tend to about 1/3 early termination on two year leases. (that from some 2018 data). Early terminations tend to be accidents, thefts and trades so I suggest Model 3 is probably around 10-15% not more).

Can someone explain this a little more. Surely for some vehicles Tesla will own them outright at the end of the lease and have already charged the COGS. If they sell to a new customer for $40k isn't it all profit minus cost of sales? - ie. ~$38k.

 

[The Accountant]

They were not. The total buyout option was removed only this year.

@mongo states that the buyout option removed this year was for the Model S&X and that the Model 3 in the USA never had a buyout option when leases began in April 2019. I think I remember reading at the time that Tesla wanted these Model 3 leased vehicles back to join the Robotaxi fleet.

 

[The Accountant]

Can someone explain this a little more. Surely for some vehicles Tesla will own them outright at the end of the lease and have already charged the COGS. If they sell to a new customer for $40k isn't it all profit minus cost of sales? - ie. ~$38k.

My $5k gain may have been grossly underestimated. Tesla depreciates the leased vehicle down to it's residual value. Let's say that the residual value is $15k. That means the car is on the balance sheet as an asset at $15k when the vehicle returns . . . so when they sell the leased vehicle for say $40k, the have a $25k gain.

hmm . . .we may be talking about a lot of money here.

 

[unk45]

@mongo states that the buyout option removed this year was for the Model S&X and that the Model 3 in the USA never had a buyout option when leases began in April 2019. I think I remember reading at the time that Tesla wanted these Model 3 leased vehicles back to join the Robotaxi fleet.

True, but the Model 3's in Europe all had buyouts until this year. Do we know the proportions?

 

[unk45]

Tesla does not hedge for foreign exchange rates. They’ve said this on earnings calls and it’s also in the SEC filings such as the latest 10-Q.

“Foreign Currency Risk

We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar (primarily the Chinese yuan, euro, pound sterling and Norwegian krone in relation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates affect our revenue and other operating results as expressed in U.S. dollars as we do not typically hedge foreign currency risk.

We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances).

We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at the balance sheet date to compute the impact these changes would have had on our net income before income taxes. These changes would have resulted in a gain or loss of $63 million at March 31, 2022 and $277 million at December 31, 2021 assuming no foreign currency hedging.”

That is slightly misleading. They say they do not enter into hedging contracts. The definitely do use funding and payment terms to minimize exposures. Rather similar to the normal Apple process, although Apple does use some forward contracts. I would be surprised if Tesla did not do sue fo that without violating their "no hedging" statement. They do not hedge for "rates" but they do buy and sell forward amounts. I'm informed they also do some swaps. Thus they reduce risks without buying those expensive interest rate hedges.

When looking at the currencies they list they seem to imply that those are vehicle sales rather than capital items. This is the operative loophole "...These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies."

"Other than our local currencies" allows them to hedge Euro, US$ and Renminbi with a few other currencies potentially included also. Thus this really means 'vehicle sales to countries without enough activity to be considered "local".

 

[unk45]

Can someone explain this a little more. Surely for some vehicles Tesla will own them outright at the end of the lease and have already charged the COGS. If they sell to a new customer for $40k isn't it all profit minus cost of sales? - ie. ~$38k.

Yes, except for transaction costs, which are not trivial.

 

[heltok]

I have to dig into Q3 and Q4 a bit more. At the moment, here are my production and delivery numbers per site:
View attachment 824295

All feedback is welcomed.

I love your work. I think you might be around the correct ballpark. But I also feel that there is chance that Austin and Berlin will do a lot more in Q4 than 24+30k compared to shanghai 255k. I would not be suprised if Tesla aims at getting to say 50+50k in Q4, heck even 100k+100k feels reasonable in comparison to Shanghai 255k. They have had bottle necks, but once these clears it is not guaranteeed that the next bottle neck will be in the same ballpark, it might a lot higher. And by Q4 they should be ready with 24/7 shifts right? It’s not like Berlin and Austin are small plants and they use even more gigapress and other stuff.

So what are the current bottle necks? Batteries, chip and some random other parts such as seats/harness etc?! Batteries we have plenty of new capacity coming online and some backlog from Q2. Chips they have tried to solve for so long and may just have over-orded and get around Q3-Q4. Everything else? Maybe, maybe not?!

 

[The Accountant]

True, but the Model 3's in Europe all had buyouts until this year. Do we know the proportions?

When they started leasing in April 2019, it was all US from what I am reading in articles written at that time.
It looks like leases began in Europe in Sept 2019.