Near-future quarterly financial projections

[Fact Checking]

Q4 has accumulated 45 loading days so far, which is +45% over Q3 loading days.

BTW., if we perform an actual apples-to-apples comparison of the first two months of SFO international ship departures, then it's 28.13 loading days in Q3 and 44.94 loading days in Q4: a whopping +60% increase over Q3 ...

I just do not find it credible that in Q3 they were making 60% of the cars for the U.S. and Canada, and only 40% for international markets.

So part of that ~60% rise in outgoing international units must be a production increase IMHO - especially considering that the U.S. is facing a "tax cliff" as well, and Tesla never starved the U.S. market when there was a tax cliff: $1,875 is still a nice federal tax credit sum that can probably be used by a lot more families than the full $7,500 or even $3,750 credit.

How large the production increase is quantitatively in the 0-60% range is anyone's guess, but Tesla only needs a +10% increase in Model 3 production (80k->88k) and the same level of S/X deliveries (17k) to deliver 105k units in Q4 and meet the 360k guidance for 2019.

So I'd say that the odds of a blockbuster Q4 quarter even without GF3 production have increased - and this might explain Tesla's reluctance to use the GF3 pent-up order book cookie jar in Q4...

 

[The Accountant]

BTW., if we perform an actual apples-to-apples comparison of the first two months of SFO international ship departures, then it's 28.13 loading days in Q3 and 44.94 loading days in Q4: a whopping +60% increase over Q3 ...

I just do not find it credible that in Q3 they were making 60% of the cars for the U.S. and Canada, and only 40% for international markets.

So part of that ~60% rise in outgoing international units must be a production increase IMHO - especially considering that the U.S. is facing a "tax cliff" as well, and Tesla never starved the U.S. market when there was a tax cliff: $1,875 is still a nice federal tax credit sum that can probably be used by a lot more families than the full $7,500 or even $3,750 credit.

How large the production increase is quantitatively in the 0-60% range is anyone's guess, but Tesla only needs a +10% increase in Model 3 production (80k->88k) and the same level of S/X deliveries (17k) to deliver 105k units in Q4 and meet the 360k guidance for 2019.

So I'd say that the odds of a blockbuster Q4 quarter even without GF3 production have increased - and this might explain Tesla's reluctance to use the GF3 pent-up order book cookie jar in Q4...

I am really puzzled (in a positive way) with the Q4 international shipments.
See my tables below:
Table #1 Loading Days- as you stated, loading days during the first 2 months of the Q4 are running 60% ahead of Q3
Table #2 Qtrly Production - Qtrly production growth was 13% and 10% in Q2 and Q3, respectively. As production grows, it gets difficult to grow at these rates (especially in light of the MY pre-production efforts). Perhaps Jerome Guillen's email to employees about a step-up in production gets realized in Q4. My table shows that Fremont Q4 production growth of 13%, 15% and 20% gets you Q4 production units of about 109k, 110k and 115k. None of these numbers seem to correlate to the activity we are seeing in Q4 international loading days.
Table #3 Qtrly Inventory- Finished Goods inventory for Q3 2019 is at Q4 2018 levels. So I don't see a reduction in Finished Goods contributing to more units to ship. Current deliveries should tightly mirror current production in Q4.

Something has changed at Fremont ....I'm not sure what it is, but it's positive.

 

[EVNow]

Finished Goods inventory for Q3 2019 is at Q4 2018 levels. So I don't see a reduction in Finished Goods contributing to more units to ship. Current deliveries should tightly mirror current production in Q4.

We know the exact count of M 3 inventory. 15k. After Q3 ‘18 it was 10k.

BTW, they can draw down inventory to sell more. But probably just a few thousand.

 

[Fact Checking]

We know the exact count of M 3 inventory. 15k. After Q3 ‘18 it was 10k.

BTW, they can draw down inventory to sell more. But probably just a few thousand.

BTW., in Q4'18 they reduced M3 inventory from 10,044 to 8,288 - a 1.7k drawdown.

In Q4'19 they probably could draw a similar amount - but inventory levels will probably be higher than 2018 due to international showroom inventory.

If Q4 numbers are otherwise good they might also decide to smooth the wave a bit and push some deliveries into Q1 to help Q1.

 

[Doggydogworld]

BTW., if we perform an actual apples-to-apples comparison of the first two months of SFO international ship departures, then it's 28.13 loading days in Q3 and 44.94 loading days in Q4: a whopping +60% increase over Q3 ...

I just do not find it credible that in Q3 they were making 60% of the cars for the U.S. and Canada, and only 40% for international markets.

That's not now percentages work. If Tesla shipped 100 Model 3s overseas in Q3 and 700 in Q4 that even more whopping +600% increase would not prove they increased production in Q4.

31 loading days worth of ships arrived in Euro/China ports in Q3 (includes GMT Astro that left Pier 80 in Q2 but arrived in China in early July). At ~1000 Model 3s per loading day that's 31k Model 3 arrivals. Against that we have 26.6k Euro deliveries and ~6k China deliveries for almost 33k deliveries. The ~2k difference is inventory reduction in Europe (empty inventory is why October sales were so far below July). You can do similar math for Q1 and Q2, making reasonable inventory assumptions.

I assume the dockworkers took Thanksgiving off, but if I'm wrong that's 45 loading days through end of November. 45k Model 3s in 61 days is 5164/week, well below the Q3 production rate. I do believe they increased production in Q4, but these numbers do not prove it.

I don't expect any December ships. First, I figure they scheduled their production and shipping to ensure all China cars arrived before the potential 12/15 tariff hike. They may have also intelligently sent unsold inventory S/X and 3-AWD/P to sell in 2020. They did something similar in March, sending ~7k Model 3s on 3 ships that arrived on 3/23-25. They cleared customs before the potential 4/1 tariff hike but it's unlikely these were Q1 deliveries. Second, unless a ship docks today or maybe tomorrow we'll pass the Pier 80 Euro-cutoff date. Third, I don't expect them to truck cars to the east coast for last-minute shipment as they did in Q3. Again, I'm giving them credit for planning ahead to avoid inefficient last-minute emergency measures. Finally, they starved the US during October and most of November. With the tax credit ending it makes sense they'd now focus all domestic resources on US production and deliveries.

I could be wrong on any or all of these, but that's my best read of the information we have.

 

[Fact Checking]

31 loading days worth of ships arrived in Euro/China ports in Q3 (includes GMT Astro that left Pier 80 in Q2 but arrived in China in early July). At ~1000 Model 3s per loading day that's 31k Model 3 arrivals. Against that we have 26.6k Euro deliveries and ~6k China deliveries for almost 33k deliveries. The ~2k difference is inventory reduction in Europe (empty inventory is why October sales were so far below July). You can do similar math for Q1 and Q2, making reasonable inventory assumptions.

I'd say that half of the load of the Lydden at the end of Q3 probably remained undelivered as well - so I'd say Q3 was 30.5 loading days, and Q4 gets +0.5 loading days so 45.5 - plus the customary final CN ship which will probably be +1.0 loading day, and maybe a fast EU ship from the EU with 1 loading day worth of cars.

So 46.5-47.5 loading days in Q4, versus 30.5 loading days in Q3 - a +52-56% increase in international shipments, despite having a $1,875 worth of U.S. tax cliff in Q4.

In Q3 there were the following Model 3 deliveries in Europe:

• September: 17,490
• August: 5,286
• July: 3,478
• Total: 26,254

China in Q3 was (from the EV Sales blog):

• September: 4,200
• August: 1,500
• July: 1,800
• Total: 7,500

That's almost 34k international deliveries distributed among 30.5 loading days - so 1,107 cars per loading day. About 50% of Fremont's M3 capacity was dedicated to international production in Q3's first two months.

I assume the dockworkers took Thanksgiving off, but if I'm wrong that's 45 loading days through end of November. 45k Model 3s in 61 days is 5164/week, well below the Q3 production rate. I do believe they increased production in Q4, but these numbers do not prove it.

The last ship left on the 29th, so it's 60 days, and if we take the 1.1k/day loading rate that's 49.5k M3's made in 60 days, or a rate of 5,775/week, which is very close to the Q3 production rate of 5,992/week.

So yes, I believe these numbers do suggest that there's a healthy increase in M3 production, unless your argument is that U.S. and Canada production have come to a virtual standstill in the first two months, with 96% of Fremont M3 production capacity dedicated to international orders.

That notion seems to be contradicted by the Troy's survey cited by @ReflexFunds, which suggests at least same levels of U.S. deliveries in the first two months of Q4 as in Q3:

US delivery date entries in Troy's tracker are up 40% in the first 64 days of the quarter (up to December 3rd) vs the first 64 days of Q3. I have seen many people assume Tesla has been producing 100% international cars this quarter, but this doesn't look to be true at all. It seems US production has also increased QoQ so far this quarter. There are 149 delivery date entries in the spreadsheet in this period in Q4 vs 114 in the same period of Q3, 40% QoQ growth. This did include a large acceleration in the last 7 days. If we assume Tesla stopped International production after 57 days this Q we can instead take just the first 57 days of Q4. Here there are 107 entries or +4% growth vs 103 in Q3. InsideEVs estimated 44k US deliveries in Q3 (I don't trust their monthly breakdown) and in Troy's tracker 1/3rd of Q3 US delivery entries were in the first 57 days - suggesting c.15k US deliveries in the first 57 days of Q3. Taking 4% growth suggests 15.5k deliveries in this period of Q4. If we assume half of these were inventory and half new production it suggests Tesla potentially produced 58-63k Model 3s in the first 57 days - which extrapolates to 93k-101.5k total Q4 Model 3 production and largely reconciling with the datapoints we have from GF1.

While this survey has obvious self-selection bias, there's also the other two pieces of information cited by @ReflexFunds:

• Panasonic suggested 20% QoQ GF1 cell production increase.

• Carsonight reported 20% QoQ GF1 Pack production increase to 8k per week. Cleantechnica reported 7k packs were sent to China in the 12 weeks to mid October before shipments were finished. If we assume this is true and there has been no further pack stockpile build since, then about 10 out of 12 weeks were produced in Q3 and 2 of 12 in Q4 (so 1.2k packs sent in Q4). This puts Q4 packs going to Fremont at 13*8k -1.2k = 104k -1.2k = 102.8k Model 3s produced at Fremont

The Panasonic report is this one:

Thread by @jpr007: "TESLA PANASONIC BATTERIES - UPDATE 20191130 There have been a number of interesting developments taking place at GF1 over the last six month […]"

The underlying data:

• 1Q (June'2019): 379 pixels
• 2Q (September'2019): 401 pixels
• 3Q (December'2019): 481 pixels
• 4Q (March'2020): 495 pixels

That's a +27% increase in cell capacity output in the second half of 2019, and a +19.99% increase from Q3 to Q4, if I'm reading Panasonic's chart correctly.

If we count with a 7% scrap rate, then 30 GWh annualized capacity is enough for about 9.7k/week SR+ battery pack output (if we count with 55 kWh packs) - but certainly a good percentage is used for storage.

Carsonight's report of 8,000 packs/week current Q4 rate is broadly consistent with all this, it extrapolates to annualized cell consumption with 60 kWh average pack size of 25 GWh, with ~3 GWh/year left for storage projects.

 

[EVNow]

Carsonight's report of 8,000 packs/week current Q4 rate is broadly consistent with all this, it extrapolates to annualized cell consumption with 60 kWh average pack size of 25 GWh, with ~3 GWh/year left for storage projects.

There is no real reason to think the production rate is higher than stated capacity of 350k/yr (7k/wk) in Q3 letter. I think the extra packs are going to GF3.

Basically ~90k is the current production limit in Fremont for Model 3. They produced ~80k in Q3. I think it is possible they have hit the long promised 7k/wk consistently in Q4. Along with ~18k s/x, that makes ~110k deliveries in Q4 possible.

Beyond that, it is also not very smart. Much better to delay orders to Q1, a known seasonally low quarter. I think Musk will do his best to have flat(-sh) delivery in Q1 compared to Q4, rather than a blockbuster Q4 followed by a bad Q1. I'd take anything around 100k in Q1 as very bullish.

ps : For eg., 105k+100k is better than 110k+95k. Just imagine the psychological damage 100k in Q1 - the lowest quarter will do to shorts. Esp with GF3 and Model Y coming online. Q1 '20 is really the last best hope for shorts to bring the SP down in a while.

 

[defc0n]

There is no real reason to think the production rate is higher than stated capacity of 350k/yr (7k/wk) in Q3 letter. I think the extra packs are going to GF3.

Basically ~90k is the current production limit in Fremont for Model 3. They produced ~80k in Q3. I think it is possible they have hit the long promised 7k/wk consistently in Q4. Along with ~18k s/x, that makes ~110k deliveries in Q4 possible.

Beyond that, it is also not very smart. Much better to delay orders to Q1, a known seasonally low quarter. I think Musk will do his best to have flat(-sh) delivery in Q1 compared to Q4, rather than a blockbuster Q4 followed by a bad Q1. I'd take anything around 100k in Q1 as very bullish.

ps : For eg., 105k+100k is better than 110k+95k. Just imagine the psychological damage 100k in Q1 - the lowest quarter will do to shorts. Esp with GF3 and Model Y coming online. Q1 '20 is really the last best hope for shorts to bring the SP down in a while.

What do you think Jerome was talking about in his message about production increase?

 

[geneclean55]

There is no real reason to think the production rate is higher than stated capacity of 350k/yr (7k/wk) in Q3 letter. I think the extra packs are going to GF3.

Basically ~90k is the current production limit in Fremont for Model 3. They produced ~80k in Q3. I think it is possible they have hit the long promised 7k/wk consistently in Q4. Along with ~18k s/x, that makes ~110k deliveries in Q4 possible.

Beyond that, it is also not very smart. Much better to delay orders to Q1, a known seasonally low quarter. I think Musk will do his best to have flat(-sh) delivery in Q1 compared to Q4, rather than a blockbuster Q4 followed by a bad Q1. I'd take anything around 100k in Q1 as very bullish.

ps : For eg., 105k+100k is better than 110k+95k. Just imagine the psychological damage 100k in Q1 - the lowest quarter will do to shorts. Esp with GF3 and Model Y coming online. Q1 '20 is really the last best hope for shorts to bring the SP down in a while.

 

[EVNow]

What do you think Jerome was talking about in his message about production increase?

Going from 6k/wk to 7k/wk ? Model Y ?

Do you think they were sandbagging in the Q3 letter ? They said nothing about possible 25% increase in the upcoming quarter .... which looks very uncharacteristic of Musk. Zach, even talked about trying to increase s/x production - but nothing about 3.

What I find difficult to believe is that they would increase production for Q4 - when GF3 & Y are coming online soon. So, they would increase production of 3 in Q4, only to reduce it in Q1/Q2 because of Y ? Afterall, paint shop is limited to some 10k/wk.

 

[Singer3000]

1. On the last call, Musk seemed to have unnerving confidence that Model Y wouldn't cannibalise Model 3 demand.
2. TMC is full of gossip that Fremont Model 3 production might this quarter surge, despite the imminent advent of Shanghai production and Model Y launch.

So what gives?

Q3 saw a decent drop in COGS per vehicle for Model 3. Is there more to squeeze?

Perhaps the big announcement for Q1 will be the mass (rather than temporary and token) release of the $35k Model 3, which would explain the high confidence in demand.

 

[davepsilon]

1. On the last call, Musk seemed to have unnerving confidence that Model Y wouldn't cannibalise Model 3 demand.
2. TMC is full of gossip that Fremont Model 3 production might this quarter surge, despite the imminent advent of Shanghai production and Model Y launch.

So what gives?

Q3 saw a decent drop in COGS per vehicle for Model 3. Is there more to squeeze?

Perhaps the big announcement for Q1 will be the mass (rather than temporary and token) release of the $35k Model 3, which would explain the high confidence in demand.

Elon's guess for long term yearly demand for model 3 is 750k (with ~250k made in China for Chinese market) from the 2019Q2 earnings call. What price do you think one would need to hit to achieve that? Alternatively is that demand generation going to come more from service center expansion or another source?

 

[MC3OZ]

I'm also expecting a 35K Model 3 on menu soon, at least in the US.
Model Y will almost certainly start with the higher priced trims.
Model Y and Model 3 may be in different price brackets for a while.
A performance Model 3 will appeal to many drivers even head-to-head, with a performance Model Y.
Overall Model Y + Model 3 is going to sell a lot more than just Model 3.

Expanding service and Supercharging will also help drive additional demand, word of mouth will take care of the rest.

Everyone I talk to about EVs is totally focused on "range anxiety", there is no doubt a lot of latent demand is being suppressed by this concern.....

 

[Fact Checking]

What I find difficult to believe is that they would increase production for Q4 - when GF3 & Y are coming online soon. So, they would increase production of 3 in Q4, only to reduce it in Q1/Q2 because of Y ? Afterall, paint shop is limited to some 10k/wk.

It would very much make sense to increase Model 3 production in Q4, if the goal is to stress-test both the shared supply chain and the shared facilities between the Model 3 and Model Y.

Any 'excess' supply in Q1 can be safely redirected to GF3, and, maybe, to Model Y as well.

The primary counter-indicator against that hypothesis would be the recent report from a German supplier of a key component of the Model Y:

ElringKlinger receives another high-volume lightweighting order from US electric vehicle manufacturer | Press-Releases | ElringKlinger AG

• "Order for series supply of cockpit cross-car beams in hybrid design for new model of a leading US electric vehicle manufacturer
• Contract over a period of five years from 2020 onwards
• Medium to high double-digit million euro sales volume over the term of the agreement
• Production at ElringKlinger's existing US site in close proximity to customer"

The "leading EV manufacturer" gives away that it's Tesla - but secondary German articles explicitly mentioned Tesla, so there's absolutely no doubt about that aspect.

Note the timing: 5 year contract signed in November, "starting in 2020", expanding Elring Klinger's Fremont factory to make such cross-beams for the Model Y:

Cockpit cross-car beams made with the help of hydroforming hybrid technology: the intelligent combination of plastic and metal | ElringKlinger AG

​

Note that this component is unique, with no easy substitute - and that I just don't see how Klinger could create this at volume in Q1 already: one month of lead time is simply not enough to expand their Fremont factory significantly, especially if it includes Christmas.

I.e. this piece of news would IMHO strongly support volume Model Y production in late Q2'2020 at the earliest - which significantly weakens the Q4 Model 3 ramp-up thesis me and @ReflexFunds have been thinking about, IMHO.

 

[EVNow]

It would very much make sense to increase Model 3 production in Q4, if the goal is to stress-test both the shared supply chain and the shared facilities between the Model 3 and Model Y.

Any 'excess' supply in Q1 can be safely redirected to GF3, and, maybe, to Model Y as well

But at what cost ?

Suppliers asked to increase production for just one quarter for not shared parts ? Are these Chinese manufacturers who will start supplying to GF3 after Q4 ? And none of them leaked the info ?

I don't see them doing any kind of stress test over a quarter. We have also seen earlier that Tesla tries higher production rates in bursts - and usually talks about it - before the new rate becomes steady.

Ofcourse, sending so many ships in the first two months is also unusual. There is not a ready explanation for it, either.
​

 

[Fact Checking]

But at what cost ?

Suppliers asked to increase production for just one quarter for not shared parts ? Are these Chinese manufacturers who will start supplying to GF3 after Q4 ? And none of them leaked the info ?

There's no real cost IMO: 75% of the Model Y parts are shared with the Model 3, which indeed means that 25% aren't. But what if most of those are made by Tesla: panels, chassis beams, window glass, molded plastics, etc.

The suppliers of those are raw materials suppliers, shared with the Model 3.

I.e. it's entirely possible that while only 75% of the parts are shared, in terms of externally sourced parts the sharing between the Model 3 and Model Y is 90%+.

In that case if Fremont increases production in Q4 from 6k/week to 7.5k/week, they could redirect that temporary Fremont supply to 1k/week Model Y and 1.5k/week GF3 production without any problems, even if Fremont demand for Model 3 drops back to 5k/week in Q1'2020.

If they did this, and managed to keep it all secret, then that's both a cunning plan and superb execution.

Which makes me suspect it's not actually true.

I don't see them doing any kind of stress test over a quarter. We have also seen earlier that Tesla tries higher production rates in bursts - and usually talks about it - before the new rate becomes steady.

In all of 2017 and 2018 they were under extreme duress, so they over-promised and under-delivered.

No such duress in Q4'2019, expectations are of 360k deliveries, which seems within reach.

Also, Larry Ellison might have taught Elon a trick or two, such as "under-promise and over-deliver". Oracle did Wall Street expectations management pretty well AFAIK.

Ofcourse, sending so many ships in the first two months is also unusual. There is not a ready explanation for it, either.

Maybe U.S. deliveries were weaker and they were forced to send most of the Model 3's overseas?

Also, who knows what happens to those cars on such a long voyage on dangerous seas? Plenty of space down there for unsellable inventory, and the fish don't talk.

 

[Doggydogworld]

I'd say that half of the load of the Lydden at the end of Q3 probably remained undelivered as well - so I'd say Q3 was 30.5 loading days, and Q4 gets +0.5 loading days...

There are always undelivered cars at EOQ. Otherwise deliveries would drop to zero until the first ship of the new quarter arrives.

The last ship left on the 29th, so it's 60 days,...

First ship docked at Pier 80 on 9/29, so back to 61 days.

That's almost 34k international deliveries distributed among 30.5 loading days - so 1,107 cars per loading day.

If you're going to try for that level of precision you need to look at multiple quarters and try to adjust for inventory. Here's a rough cut using 1150 Model 3s per loading day for Europe and TMC delivery #s:

Q1 - 26,450 arrived, 19,800 delivered. EOQ inventory 6,650
Q2 - 17,700 arrived, 18,400 delivered. EOQ inventory 5,950
Q3 - 23,400 arrived, 26,600 delivered. EOQ inventory 2,750
Q4 - 30,500 expected to arrive, 30,500 expected deliveries

These EOQ inventories line up very well with deliveries before the first ship arrives in the following quarter. Now using 800/day for China and quarterly #s from EV-Sales (their monthly estimates don't always sum properly):

Q1 - 13,600 arrived, 5300 delivered. EOQ inventory 8300
Q2 - 5600 arrived, 8100 delivered. EOQ inventory 5800
Q3 - 8600 arrived, 6000 delivered. EOQ inventory 8400
Q4 - 12,800 expected to arrive, ??? deliveries

Note: this excludes Glovis Sonic which went to Japan in April. So 43,300 shipped from Pier 80 so far in Q4 plus 2.47 loading days for the two ships to Korea. Let's say those are 1000/day for 45,800 total ship loadings over 61 days. That's 5250/week. Still below Q3 production rate of 6000+/week, leaving room for limited US/Canada deliveries in October/November.

I can't explain why ships to China only get 800 Model 3s per day, but that's what the data suggests. In fact, China inventory looks too high so it probably should be even less than 800/day. Your 1100+ per day works for Europe, but gives goofball numbers for China.

That notion seems to be contradicted by the Troy's survey cited by @ReflexFunds, which suggests at least same levels of U.S. deliveries in the first two months of Q4 as in Q3:

I don't know what to make of Troy's data. Sometimes it's predictive, sometimes way off. He predicts 104k deliveries in Q4, FWIW. I say 106k.

The Panasonic report is this one:

I did the same Panasonic math. I just think most of those extra cells go to China and Energy Storage. The latter is laughably short of Musk's 3 GWh goal for 2019 and needs 879 MWh just to hit official guidance of 2 GWh. Carsonight says half of the 2nd floor is now dedicated to storage. The 20% gain is ~1200 MWh, lacking hard data I'd split it 400/400/400 between Storage, China and Fremont as a first approximation. Even it's 200/200/800 that's still only ~91k Model 3s from Fremont, a 7k/week average.

No matter how I work the numbers I can't get Fremont at 8-9k Model 3s per week. My best Q4 estimate is 18k S/X and 88k Model 3s. Maybe add a 1-2k Made in China Model 3s, but that seems iffy for Q4.

 

[TNEVol]

I am posting on this thread because I hope you very analytical posters here will excuse a very casual observation. As I have said before every quarter we have been able to observe in a macro sense the trends of shipment to east coast USA. And after the fact the absence of truckloads corresponded to international shipping. I truly want to believe that US deliveries are happening and we expect to see many car carriers in the next few weeks as in the past. However we have seen none since the first week in October. Usually we see some in the first weeks of a quarter. Are there trains being used now? Could the US deliveries be primarily west coast and Canada? I am aware this is not consistent with Troy's analysis but I am somewhat skeptical and expect a massive EOY push. I will post when i observe it.

 

[XHabjab]

... Larry Ellison might have taught Elon a trick or two, such as "under-promise and over-deliver". Oracle did Wall Street expectations management pretty well AFAIK.
...

^^ THIS ^^

IMHO this simple statement is powerful. It is profoundly simple, explains so many issues from shorts going "huh?" to unexpected and unexplainable profits to lack of Twitter gaffes from Elon to Cramer changing his tune. I think Tesla has turned a corner on this point right here and we'll perhaps start seeing some positive direction to TSLA.

There are still issues from the SEC but these are somewhat latent and I see them going away shortly.

 

[FrankSG]

I know this is kind stretching the definition of near-future, but I'm wondering if any of you have modeled out 2020 and 2021 financials and included all the recent news:

• Better operating efficiency shown in Q3
• Model Y timeline moved up
• Solar roof launch and projections
• Giga 4 announcement and Giga 3's swift construction's implications for Giga 4's timeline

I've included all these in my financial model for Tesla, and as a result Tesla's financials at the end of 2021 almost look too good to be true, especially in terms of profits and cash flow. Here is my model:

I can post the Automotive and Energy models that this is based upon if people are interested, but in short it's based on the following:

• Continued S+X Production of ~17.5k per quarter
• M3 ramp up to 10k/week by end of 2020
• MY ramp up to 10k/week by end of 2021
• Increase to ~400M credits per quarter because of FCA deal
• Storage business slightly more than doubling over the next 9 quarters
• Regular solar staying more or less flat
• Solar roof production ramping to ~1k/week by end of 2020, and ~2k/week by end of 2021, with an ASP of 32.5k per roof.

As you can see, this leads to a yearly revenue run rate of ~65B which I don't think is that crazy, but the yearly EBIT run rate of ~8B at first glance feels way too high. Is this model wrong somewhere, and if so where do you think it is wrong? The two main points I've looked at are:

1. Total gross margin. This model has it increasing from ~19% to 22.5%. Considering FCA credits, higher expected gross margins for MY and Giga 3 (and probably Giga 4 too), more FSD revenue recognition, and other cost improvements, this does not seem crazy to me. What do you think?
2. Further increasing operating efficiency. This model has OPEX as a % of revenue being reduced from ~15% to ~10%. If anywhere, I guess the model could be too optimistic here? But I'm doubtful R&D will go above half a billion per quarter in the next two years, and I already have SG&A about doubling. Even if SG&A stayed the same as a % of revenue at ~10%, Tesla would still reach a yearly EBIT run rate of ~6-6.5B$ at the end of 2021.

Has anybody else modeled this? What is the general consensus here about Tesla's financials in two years from now?