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Near-future quarterly financial projections

Discussion in 'TSLA Investor Discussions' started by luvb2b, May 23, 2018.

  1. electracity

    electracity Active Member

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    My thesis with Musk is that he will spend all the cash flow available. So that makes regular significant profitability not particularly likely. Although it does make the journey interesting.

    But his ambition isn't necessarily a bad thing. Amazon has similar traits, and that aggressiveness eventually hit on AWS. I can't tell if he is actually serious about robotaxis. But I think he is just doing performance art to highlight Tesla's valuation relative to Uber.
     
  2. 9837264723849

    9837264723849 Member

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    That will kill the competition pretty quickly as people start realizing that their next purchase must be a BEV, with near-autonomous driving and built-in car/ride-sharing capabilities.

    Most auto-manufacturers already declared they don't have the resources and the skills to do all three at once. As Tesla start eating their margin (by taking market shares in the high-end segments, increasing their advantage in battery cost, building more plants, spreading the dev cost of FSD over more cars, etc), the competition will soon have to reduce the price of ICE vehicles and record most of their tech as stranded assets.

    The market sees Tesla as having troubles selling EV (moving the goalpost / pivoting into a robotaxi operator) but the company is just exerting itself to throw the biggest final blow to the fossil industry and their henchmen.
     
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  3. winfield100

    winfield100 Active Member

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    So, _NOT_ investors, perhaps _not_ even traders, and believe Musk is a liar it seems

    SO _WHY_ are you spending time here other than spreading dissension?
    It's nice you so selflessly care about our wallets and losses, eh

    "Do not be like that most ungracious preacher, who whilst showing me the steep and rocky path to heaven, himself the primrose path of dalliance treads"
     
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  4. electracity

    electracity Active Member

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    Those two things are mutually exclusive. A robotaxi can't be almost completely autonomous.

    I don't think Musk is serious about his robotaxi time frame. I think he's pissed about Uber's valuation. Just like Rivian got him all worked up about pickups.

    Uber is hard to understand. Their current core business is unprofitable and completely vulnerable to competition. For the future they are just one of many companies pretending that autonomous vehicles are in the near future.
     
  5. Compton

    Compton Member

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    Ie, please close the echo chamber door when you leave?
     
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  6. kbM3

    kbM3 Active Member

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    #1866 kbM3, May 15, 2019
    Last edited: May 15, 2019
    Just two questions:

    1) How do global $40k-$80k hatchback sales compare to $40k-$80k sedan sales?

    2) For the Model 3 premium sedan competitors that provide hatchback versions, how do the worldwide sales breakdown between the hatch and sedan trims?
     
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  7. kbM3

    kbM3 Active Member

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    I value informed takes with a negative slant.

    As a TSLA investor I feel good when I read a positive comment and poorly when I read a negative one. This state often leads to confirmation bias. It’s important for me to guard against it and I especially love technical negative takes like @Doggydogworld provides. He’s given his numbers and reasoning and I would love to see counters from any who will provide them.
     
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  8. Zhelko Dimic

    Zhelko Dimic Careful bull

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    I'd much rather see @Doggydogworld input than yours @winfield100.
    I'm feeling I'm getting more informed opinion, whether he's investor or not, so please don't chase valuable contributors. Thanks.
     
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  9. EVNow

    EVNow Well-Known Member

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    Interesting take on S&GA (+R&D). Currently it is around $4B - so @neroden is assuming a 50% increase to $6B ? So, not really fixed. We should expect slow increase of Opex, rather than linearly with delivery.

    Ofcourse all this assuming solar & energy won't contribute much. I'm sure there is a lot of money to be made there - once Tesla starts concentrating on those areas.
     
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  10. EVNow

    EVNow Well-Known Member

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    Oh yes - there is no Y now ! This year I expect a high of 300k Model 3s. So, yes, profitability will be limited.

    The other part is S+X. I'm not convinced Tesla can sell 100k of them steady state going forward. We should expect some cannibalization by 3 now and X later when Y comes out. May be 80k. So, I think we need a few more than 400k 3+Y for breakeven (something like 450k).

    Ofcourse, if and when they get closer to FSD, all this becomes irrelevant. Infact I think if they hit FC later this year and have some events around that (or even release parts of NOA on city roads to the fleet) - basically anything that makes Wall St think Tesla are not the laggards in FSD they have assumed it to be, few $100M difference in the bottom line doesn't matter !
     
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  11. Doggydogworld

    Doggydogworld Member

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    I won't speak for @neroden , but here's what I see as today's quarterly hurdle for Automotive Gross Profit::
    1100m opex (1088m last quarter, 4400m last year)
    150m loss in Services, other
    150m interest
    50m other exp, income tax, NCI, etc.
    ----------
    1450m total

    Rounding up a bit it's 6b/year. That's for profitability. A chunk of expenses are non-cash and they're underspending on capex, so the cash flow hurdle is quite a bit lower.
     
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  12. neroden

    neroden Model S Owner and Frustrated Tesla Fan

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    #1872 neroden, May 15, 2019
    Last edited: May 15, 2019
    More or less agree with you up to here...

    In my opinion, you need to roughly double that number. You haven't accounted for at least one of the following: the tax credit effect, seasonality, or the slow rise of awareness that the product exists.

    Perhaps the third one there is the big error you're making. If you'd attempted to assess "sustained US demand" for Model S in March of 2013 using a naive model, you'd have come up with something well under 20,000 a year -- they actually started building inventory while producing at a lower rate than that. Once word of mouth started getting around, actual sustained US demand turned out to be about 25K/year. It was at 28K/year before Model 3 was introduced.

    If you're trying to estimate from current numbers, you're still facing the seasonal headwind and the tax credit effects, as well as being before awareness has started to stabilize.

    The ratios still work (since Brazil hasn't opened up shipments yet), but your estimate of long-term order rate appears to be nonsense. This is a period of wild swings in orders due to tax credit expirations, and it's early days regarding awareness.

    During the 4th quarter, Tesla said that about half the orders they were fulfilling were new orders (not reservations). That "half" was about 30825. My simple tax credit expiration model says that about 6 weeks of demand were pulled forward, so I suppose you should divide by 19 weeks and get 1622 orders/week.

    But as noted, we're still on early days regarding awareness; it took three years (2012-2015) for Model S to reach steady state deliveries as awareness increased -- going from about 18K to about 25K per year -- and it's probably going to take a bit longer for Model 3. At the same ratio of sales increase, the stable delivery rate would be about 2238/week -- of the high end variants only. Including the SR+ should more than double it, for about 5000/week.

    Now maybe I'm wrong. But I think the correct rough estimates for long-term Model 3 demand are 5000/week US, 10000/week worldwide -- maybe slightly less. You're estimating half as much!

    My estimates do seem to be in line with Tesla's corporate plans. And so far, they've actually underestimated the long-term sustained demand (they underestimated it for Roadster, Model S, Model X, and reservations for Model 3 and Semi) -- it would be a first for them to overestimate long-term demand.

    Given the geographic split, I think perhaps it's OK that the US factory is getting "stuck" around 5000/week production, which matches US demand long-run. If Europe retaliates against the US with tariffs, it'll make more sense to produce cars destined for Europe in China anyway.

    I tried to look at this another way by looking at the ratio of the total number of cars sold in the $80K price bracket to the total number sold in the $50K price bracket... but I couldn't find either number. :p

    -----
    P.S. People ordering white interior Model 3s in the US are facing long, long waits. Tesla has exceptionally few variants of Model 3; until you can get *all* of them promptly, I'm pretty sure we aren't close to meeting steady state demand.

    P.P.S. Tesla just pulled a major "demand lever". People in a lot of the country were avoiding buying Teslas because of lack of service centers within a reasonable driving distance, which are now opening. This will unlock a lot of the latent demand and push us towards the long-run 5000/week demand level. My SG&A estimates assume some increases due to these new service centers, though they seem to be doing them in a very cost-effective and intelligent manner.
     
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  13. EVNow

    EVNow Well-Known Member

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    #1873 EVNow, May 15, 2019
    Last edited: May 15, 2019
    Its going to be difficult to figure out the long term Model 3 demand. We need China GF to be operational and see how Tesla prices their Model 3 there. Just China can be over 20k/month. Currently BAIC + BYD top 2 models together sell 20k/month. China PEV market is exploding. Currently #1 & #3 are also about 20k/month and are priced around $35k. Tesla can also start getting Chinese incentives.

    EV Sales: China

    Another problem here is the Model Y. When that starts, we can have some cannibalization from 3, S (and X). May be we'll see 80k S+X, 1M 3+Y.

    But, I'm hoping we don't have to worry about all this come 2022. Tesla will not be selling any cars. They will just be making robotaxis and minting money ;)
     
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  14. 9837264723849

    9837264723849 Member

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    No. I can perfectly park a non-autonomous Model 3 in the street and, form the app, put the car into "car sharing" mode for any one to rent it. People would appreciate the self-driving capability when renting the car for an hour or two. Tesla could pay some people to get the car back and park it around where I left it, before it goes back to "private" mode. Like Turo but built-in into the car and the car's application. When this becomes available (before Tesla reach full autonomy), why not ask for this feature when shopping for your next car?
     
  15. kbM3

    kbM3 Active Member

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    Wonderful post. Thanks for the detailed explanation for your take on demand.

    One caveat. My experience with the white interior does not match your comment.
    I went to the store and was able to get a white interior RWD LR in less than a week. When I discovered it did not include Autopilot I went ahead and changed to a white interior AWD for only $2k more. That vehicle was delivered in about a week.
     
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  16. electracity

    electracity Active Member

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    Turo functionality would be a sad consolation prize for not delivering on robotaxi.
     
  17. 9837264723849

    9837264723849 Member

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    I never said Tesla won't deliver robotaxis, I said:
    You don't need robotaxi to start turning non-Tesla cars into stupid purchases. It would be like buying an expensive Pocket PC in 2009 (expecting it to last many years, and telling yourself that the iOS app store has very few good apps anyway).
     
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  18. Doggydogworld

    Doggydogworld Member

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    I started at 5k US/10k back in the day. But as Q3 and Q4 data rolled in my forecasts kept missing so I had to keep cutting back. I don't give much weight to Q1 numbers -- too many moving parts as you say -- but they generally support the trend.
    Tesla makes a non-numeric claim about orders almost every quarter. I've never been able to map these into actual performance. I now just dismiss non-numeric claims as spin. Furthermore, they launched the MR in October so Q4 orders included a new wave of pent-up demand (above and beyond the pull-forward effect you note). I try to tease out sustained demand after the initial wave for a new model crests.
    IMHO the Model S effect was mostly about growing awareness of Tesla and high performance EVs in general. By 2016 Tesla was well known. Musk has 20m++ Twitter followers. He's on the evening news. The Model 3 reveal was a mass market sensation. Could we still see a "growing awareness" effect. Maybe, but it seems more hope than rational expectation.
    Plans which they seem to dial back every quarter....
    It's a rough rule of thumb that 20k of price halves demand for premium cars. Model 3/Y is ~2.5 of those 20k increments below Model S/X, thus by this metric should do 5-6x the volume.

    I cut my sustained demand estimate as the data started rolling in, if the data changes I'll raise it back up. So far that hasn't happened.
     
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  19. EVNow

    EVNow Well-Known Member

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    This is where I'd think Tesla starts. Instead you parking it and Tesla paying someone to park it back in that same place - Tesla will start with autonomous parking & summon - but over long distance, at city speed. This is lower risk and the driver would still be responsible when driving with NOA. As NOA gets better this model slowly transforms in to FSD.
     
  20. EVNow

    EVNow Well-Known Member

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    #1880 EVNow, May 16, 2019
    Last edited: May 16, 2019
    How do you get to any number from Q3/Q4 ? We had US only deliveries of 56k and 63k on production of 61k and 62k. The prices were much higher.

    What you are now estimating is worldwide demand of 65k (5k/wk) - with lower trims and lower prices. Including in China, where now a $32k EV sells 30k a quarter ! Looks low to me.

    ps : A good way to look at China is - the EV marketshare is close to California's mark of 6%. It was 5.8% in March. Ofcourse China's market is much bigger than CA's (infact bigger than US by ~ 50%). EV numbers are growing by > 70% YOY. GF3 can't come soon enough.
     
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