Near-future quarterly financial projections

[DarkandStormy]

The 50% YoY is ALWAYS reported as a multi-year average. Tesla keeps emphasizing that, but people keep ignoring it.

They've only walked that back to a multi-year average once they started missing the annual average, though.

Last year, I believe on the Q2 call Elon said "it would be close" in regards to achieving 50% YoY unit growth (compared to FY2021). Once it became apparent that wasn't going to happen, they then made the switch to emphasizing multi-year horizon.

Perhaps that was the intent all along but the communication was very poor on that in 2020, 2021, and into 2022, imo.

 

[Thekiwi]

This is the first time I've seen Zach blow his credibility. He threw in "uncertainty about how the year will unfold" weasel words, but the question pretty specifically said ex-Credit, ex-Lease after the cuts and Zach said "above" 20% GM. Actual was 18.3%. FWIW Tesla did beat 47k ASP at 47,132.

Q4: 51.9k ASP - 39.5k COGS = 12.4k gross profit per car sold
Q1: 47.1k ASP - 38.5k COGS = 8.6k gross profit per car sold

The 4.8k ASP decline (9.2%) was less than the headline price cuts because, as Zach pointed out in January, many Q4 sales were lower priced backorders from earlier in the year and they also did some backdoor discounting in Q4 (e.g. giving US customers 7500 off to take delivery before the tax credit kicked in). I estimate dramatically lower S/X sales contributed about $800 of ASP decline and $600 of COGS decline. Adjusting for that 3/Y ASP only declined 4k, which is pretty impressive. Not so impressive is the $400 adjusted COGS decline, which pretty much debunks the "passing cost savings along" narrative.

Two things:
- Zach said it was the additional second round of price cuts in Q1 (AFTER the earnings call), combined with unexpected one offs (Warranty reserve adjustment & AP recognition related event) that lead to margins coming in worse than guided.
- They said during the earnings call that commodity costs were still at maximum negative impact in Q1 (the cheaper falling commodity rates hadn’t flowed through to Q1 supply contracts yet), but will start to kick in during Q2.

 

[DarkandStormy]

Sasha has a great video out that summarises things pretty well IMO. Tesla the company is doing well but the stock is going to be in the toilet until they can regain control of their vehicle margins. The cageyness on some of the responses yesterday was also disappointing.

I believe they said their margins will basically be in line with auto industry average (until they achieve full autonomy / robotaxis).

 

[Thekiwi]

Agree with some of the above thoughts - Tesla had a period of golden weather in 21/22 where multiple factors lead to them being able to achieve abnormally large profits (Tesla simply had supply when other didn’t/low interest rates/consumers with larger than normal amounts of cash), and it is now being followed by a period of multiple compounding factors (interest rates making it harder to buy cars/commodity costs increasing/significant production capacity coming online).

End result is Tesla is still going to grow revenue & unit shipments nicely year on year, but net income is not or barely increasing - even with generous subsidies being added in its biggest market. Most on Wall Street will not see this as a company worth a 40x PE, let alone a 50x PE.

Tesla has overnight gone from a company generating significant income & EPS growth, to a stock reliant on a medium/long term story of one day returning to above market average earnings growth.

 

[Thekiwi]

I believe they said their margins will basically be in line with auto industry average (until they achieve full autonomy / robotaxis).

No they said margins amongst the highest in the industry.

(but of course we also had Elon saying they could hypothetically sell vehicles for zero profit - insert faceplam emoji)

 

[bkp_duke]

They've only walked that back to a multi-year average once they started missing the annual average, though.

Last year, I believe on the Q2 call Elon said "it would be close" in regards to achieving 50% YoY unit growth (compared to FY2021). Once it became apparent that wasn't going to happen, they then made the switch to emphasizing multi-year horizon.

Perhaps that was the intent all along but the communication was very poor on that in 2020, 2021, and into 2022, imo.

That's not true. It actually was stated as such as far back as 2018. "Around 50%"

Elon Musk said he expects Tesla to deliver around 50% more cars than last year, even if there's a global recession

Tesla CEO Elon Musk expects the automaker to deliver around 50% more vehicles in 2019 than it did in 2018, even if there's a global recession.

www.businessinsider.com

 

[bkp_duke]

I believe they said their margins will basically be in line with auto industry average (until they achieve full autonomy / robotaxis).

Source please. Because even at 18.3%, their AGM is multiples of the auto industry average (~6%).

 

[mongo]

Source please. Because even at 18.3%, their AGM is multiples of the auto industry average (~6%).

6%ish is the auto industry operating margin, gross is closer to 14-18%

 

[bkp_duke]

6%ish is the auto industry operating margin, gross is closer to 14-18%

Sort of. We have to remember it's an apples to potatoes comparison, because most of the other autos include their lending revenues in those gross figures. You subtract those out to be a more "like Tesla" comparison, and things . . . get ugly for them.

 

[EVNow]

Tesla has overnight gone from a company generating significant income & EPS growth, to a stock reliant on a medium/long term story of one day returning to above market average earnings growth.

This statement ignores the fact that recession is coming and industry earnings will go down quite a bit. Tesla will still over perform the market.

 

[DarkandStormy]

That's not true. It actually was stated as such as far back as 2018. "Around 50%"

Elon Musk said he expects Tesla to deliver around 50% more cars than last year, even if there's a global recession

Tesla CEO Elon Musk expects the automaker to deliver around 50% more vehicles in 2019 than it did in 2018, even if there's a global recession.

www.businessinsider.com

Tesla (TSLA) Q2 2022 Earnings Call Transcript | The Motley Fool

TSLA earnings call for the period ending June 30, 2022.

www.fool.com

And finally, despite losing more builds in Q3 than expected, we're still pushing to reach 50% growth this year. This target has become more difficult but it remains possible with strong execution.

50% over FY2021 would have been 1.4m in 2022, which a lot of people were forecasting. 50% CAGR from the 500k in 2020 would have been 1.125m.

Pretty obvious they were signaling 50% over 2021. Anyone with a brain could see they were going to clear 1.2m easily in 2022. But once the 1.4m was out of reach, they reverted back to the multi year timeline so they could technically say they didn't "miss."

This is quite obvious.

 

[Thekiwi]

This statement ignores the fact that recession is coming and industry earnings will go down quite a bit. Tesla will still over perform the market.

I hope you are right, but they aren’t outperforming so far - their Q1 earnings result is much worse than most other S&P500 companies that have reported Q1 results (in terms of EPS decline), and those companies do not have earnings multiples anywhere as high as TSLA.

 

[Thekiwi]

Just posting here for some discussion - thought on some ballpark 2024 figures - would appreciate some feedback of where you think the numbers are high or low:

 

[DarkandStormy]

Source please. Because even at 18.3%, their AGM is multiples of the auto industry average (~6%).

Misheard. Zach was discussing possibly margins for megapack, saying they expect it to be in line with autos - their own auto GM.

 

[bkp_duke]

Tesla (TSLA) Q2 2022 Earnings Call Transcript | The Motley Fool

TSLA earnings call for the period ending June 30, 2022.

www.fool.com

50% over FY2021 would have been 1.4m in 2022, which a lot of people were forecasting. 50% CAGR from the 500k in 2020 would have been 1.125m.

Pretty obvious they were signaling 50% over 2021. Anyone with a brain could see they were going to clear 1.2m easily in 2022. But once the 1.4m was out of reach, they reverted back to the multi year timeline so they could technically say they didn't "miss."

This is quite obvious.

No, because 2020 to 2021 was an 87% jump. You don't RESET each year, this is what people such as yourself keep mis-assuming.

Start at 2018, do 50% YoY each year. Some years they are over that 50% (sometimes a lot), some years they are below that 50%.

If you do it correctly, 50% beginning from the 2018 base number (first year of Model 3 production), it comes out to:
2019 - 367,800
2020 - 551,700
2021 - 827,550
2022 - 1,241,325


Elon has been consistent in the message, WS just keeps wanting to "reset the base" each year in order to manufacture a "miss" for their FUD machine.

 

[damonbrodie]

Misheard. Zach was discussing possibly margins for megapack, saying they expect it to be in line with autos - their own auto GM.

yes - to reign in the people YT and Twitter talk about it being 50%. Glad he piped up with that to clarify Energy margins.

 

[Hiline]

No, because 2020 to 2021 was an 87% jump. You don't RESET each year, this is what people such as yourself keep mis-assuming.

Start at 2018, do 50% YoY each year. Some years they are over that 50% (sometimes a lot), some years they are below that 50%.

View attachment 930409

If you do it correctly, 50% beginning from the 2018 base number (first year of Model 3 production), it comes out to:
2019 - 367,800
2020 - 551,700
2021 - 827,550
2022 - 1,241,325


Elon has been consistent in the message, WS just keeps wanting to "reset the base" each year in order to manufacture a "miss" for their FUD machine.

I’m pretty sure the first time Tesla mentioned a 50% annual growth rate was on the Q4 2020 earnings call, so you need to start from the 2020 actual figure.

 

[bkp_duke]

I’m pretty sure the first time Tesla mentioned a 50% annual growth rate was on the Q4 2020 earnings call, so you need to start from the 2020 actual figure.

I already linked an article where Musk mentioned 50% back in 2018.

 

[Hiline]

I already linked an article where Musk mentioned 50% back in 2018.

Yes, for 2019, not for subsequent years, unless I misread the article. 50% long-term annual growth rate was mentioned for the first time much later.

 

[EVNow]

Just posting here for some discussion - thought on some ballpark 2024 figures - would appreciate some feedback of where you think the numbers are high or low:

View attachment 930393
View attachment 930394

I don't see how Tesla can sell 2.6M cars at 20% margin if they can't sell 1.8M cars at that margin.