Near-future quarterly financial projections

[generalenthu]

Here is an article about how awful Tesla's production currently is. If anything, this gives me hope that there is a ton of efficiency to be gained as the process is improved and made more efficient.

It's not just per unit overhead at the moment is high, even material and rework costs are high.

Internal documents reveal Tesla is blowing through an insane amount of raw material and cash to make Model 3s, and production is still a nightmare

 

[Todd Burch]

FUD.

 

[Unpilot]

Headlines with words like "insane" dont get a click from me.

 

[bdy0627]

Here is an article about how awful Tesla's production currently is. If anything, this gives me hope that there is a ton of efficiency to be gained as the process is improved and made more efficient.

It's not just per unit overhead at the moment is high, even material and rework costs are high.

Internal documents reveal Tesla is blowing through an insane amount of raw material and cash to make Model 3s, and production is still a nightmare

This is pretty clearly a hit-piece. The entire report is extremely negative and repeatedly suggests investors should be even more concerned about the company than they already are given the huge drop in the stock price over the last year. There is simply no balance here at all. All sources are "internal documents" or "anonymous employees." Lastly, the report indicates this was based on info from 4-6 months ago, when production really was awful.

 

[generalenthu]

Agree with all the posters above and this is clearly published as a hit piece. My intent was to see beneath the obvious.

For those crunching numbers, if you open up your models, and spread the depreciation and labor over fewer units and try to back into input material costs based on q1 numbers, you'll not end up with 18k that Elon was hinting at. I was scratching my head and this article made it clear to me how improving this process can reduce wasted material and the pathway of higher margin is not just about spreading the non material costs. In the 2+ year time frame, it would not be surprising to see the auto gross margin for 3 be comfortably north of 30% if Tesla maintains a long term asp in the high 40s.

This is the reason I am posting it here in the modeling thread and not in the general thread.

 

[neroden]

There was a long wave of rumors about bad/sloppy practices at the Gigafactory leading to waste late last year. This is certainly fixable, so I agree with enthu, the cost of production is going to drop pretty fast.

 

[Mario Kadastik]

I don't know the US sources, but the chart shown at the shareholder meeting should be usable to estimate Model 3 sales in April and May if some of the other cars shown have published sales data. Anyone up to the task, could help in modeling. Or does someone already do that in some other thread?

 

[schonelucht]

Mercedes C class in April/May were 5148/5419. Can't find details for the BMW 3 but for the Audi A4, we have 3126/3472. Lexus IS is 1816/2180. That gets us to about 5000 for April and 6000 for May on the Model 3.

That would mean Tesla already delivered 11 000 Model 3s this quarter in the US alone.

 

[Mario Kadastik]

Mercedes C class in April/May were 5148/5419. Can't find details for the BMW 3 but for the Audi A4, we have 3126/3472. Lexus IS is 1816/2180. That gets us to about 5000 for April and 6000 for May on the Model 3.

That would mean Tesla already delivered 11 000 Model 3s this quarter in the US alone.

Do you have data for Q1? We could use it to calibrate if the numbers work out a so called closure test. As Q1 as I understand had shipments to US only.

 

[schonelucht]

@Troy did that work already 8 hours ago (and a lot more comprehensive than I did). See here Monthly Model 3 production numbers calculated from the market share chart in the shareholder meeting • r/teslamotors

 

[Reality]

I don't know the US sources, but the chart shown at the shareholder meeting should be usable to estimate Model 3 sales in April and May if some of the other cars shown have published sales data. Anyone up to the task, could help in modeling. Or does someone already do that in some other thread?

this chart is so ridiculously dumb, Tesla is working through a backlog, the others are not, those are not comparable sales numbers


The one interesting note is it does look like the largest demographic hit is bmw, other than that i dont really see much to take from this

 

[luvb2b]

the chart itself is silly, but what is useful is being able to back out april and may usa deliveries from the numbers of other vehicles that were known to be delivered.

approx 10.5-11k model 3's in the usa in april and may, which is several hundred more than inside ev's estimates.

that line should take a dip this month as us deliveries get held back.

this chart is so ridiculously dumb, Tesla is working through a backlog, the others are not, those are not comparable sales numbers

The one interesting note is it does look like the largest demographic hit is bmw, other than that i dont really see much to take from this

 

[Reality]

the chart itself is silly, but what is useful is being able to back out april and may usa deliveries from the numbers of other vehicles that were known to be delivered.

approx 10.5-11k model 3's in the usa in april and may, which is several hundred more than inside ev's estimates.

that line should take a dip this month as us deliveries get held back.

I dont think they are holding back deliveries in June in the US.


I can explain why (admittedly saw the theory on twitter and it makes sense)

 

[luvb2b]

oh yes please do, i hate wading through twitter garbage.

I dont think they are holding back deliveries in June in the US.
I can explain why (admittedly saw the theory on twitter and it makes sense)

 

[bhzmark]

saw the theory on twitter and it makes sense

 

[Reality]

oh yes please do, i hate wading through twitter garbage.

OK, so I think everyone who is remotely unbiased agrees that Tesla needs to raise capital, not just raise capital but via an equity offering (even if its heavily discounted, which it would be). Even if you buy that they will be CF+ in Q3 and maybe Q4, you have to agree it wont be by much, certainly not enough to fund the ridiculous amount of projects they claim to be planning, and probably not positive GAAP income either.


The most likely scenario is that they won't have positive GAAP income (maybe CF+ for 1 Q from accounting trickery, but not GAAP income) in any Q of 2018.


But let's pretend they have to show GAAP profitability in order to raise capital, just pretend (like say, for a shelf registration). Also, they need to show it before running out of cash. If that was the case, what do you do?


You pull as much demand forward as possible and combine that with your highest margin sales, and dump everything into a single quarter.


Q3 will be the period for the highest margin M3 backlog, the performance AWD LR versions, I cant imagine there will be huge demand for a 78k M3 going forward so the backlog might be the only chance to really spike 1 Q with a material amount of them. Next, in order to pull as much demand forward as possible for S&X they actually NEED Q3 to be the last quarter for the FIT credit. It also is conveniently right before some major competition comes to the plate, so having the last quarter in Q3 might actually create more demand than it would in Q4.


By aligning both of these things there is actually a fighting chance to show GAAP profitability and MAYBE get a shelf registration to issue equity and keep the story alive.

It's just a theory, but if they sell the 200k car in Q2, give me a better reason why than what i just laid out?

 

[generalenthu]

What is the opposite of koolaid? Asking for a friend.

 

[Reality]

dorkaid?

 

[luvb2b]

this is the best you got? your reply is well below the level of quality you've typically brought to the forum.

i started this thread with a model of exactly how gaap eps in q3/q4 happens, and how billions of dollars of capex gets funded through the end of 2018. i didn't model through the march 2019 maturity, but i think they can even get through that without an equity raise. so to your first paragraph, i would say it reflects the opinion of someone who doesn't understand how the business operates. to your second paragraph, i provided a detailed model which illustrates how gaap profits are achieved.

the s&x demand pipeline is already full. usa deliveries for s&x is new production delivered in july but eu/asia deliveries are into august and september. by the time people realize that q3 is the last quarter for the big credit (first week of july) it will be almost too late to order and still get a car by september. so they would just waste a bunch of demand.

there's no new inventory of model s/x for sale on tesla.com that i can find:
https://www.tesla.com/inventory/new/ms?arrangeby=plh&zip=94105&range=0
https://www.tesla.com/inventory/new/ms?arrangeby=plh&zip=60606&range=0
https://www.tesla.com/inventory/new/ms?arrangeby=plh&zip=90025&range=0
https://www.tesla.com/inventory/new/ms?arrangeby=plh&zip=10006&range=0
why are no new cars for sale in chicago, la, nyc, or san francisco? not even 1?

i think if you follow the canadian deliveries, you'd realize they aren't going to hit the 200k in q2. we will know in a couple weeks for sure, but be sure you're prepared for 2 quarters of demand pull.

OK, so I think everyone who is remotely unbiased agrees that Tesla needs to raise capital, not just raise capital but via an equity offering (even if its heavily discounted, which it would be). Even if you buy that they will be CF+ in Q3 and maybe Q4, you have to agree it wont be by much, certainly not enough to fund the ridiculous amount of projects they claim to be planning, and probably not positive GAAP income either.


The most likely scenario is that they won't have positive GAAP income (maybe CF+ for 1 Q from accounting trickery, but not GAAP income) in any Q of 2018.


But let's pretend they have to show GAAP profitability in order to raise capital, just pretend (like say, for a shelf registration). Also, they need to show it before running out of cash. If that was the case, what do you do?


You pull as much demand forward as possible and combine that with your highest margin sales, and dump everything into a single quarter.


Q3 will be the period for the highest margin M3 backlog, the performance AWD LR versions, I cant imagine there will be huge demand for a 78k M3 going forward so the backlog might be the only chance to really spike 1 Q with a material amount of them. Next, in order to pull as much demand forward as possible for S&X they actually NEED Q3 to be the last quarter for the FIT credit. It also is conveniently right before some major competition comes to the plate, so having the last quarter in Q3 might actually create more demand than it would in Q4.


By aligning both of these things there is actually a fighting chance to show GAAP profitability and MAYBE get a shelf registration to issue equity and keep the story alive.

It's just a theory, but if they sell the 200k car in Q2, give me a better reason why than what i just laid out?

 

[TSLA_Hopeful]

What is the opposite of koolaid? Asking for a friend.

Hatorade