Near-future quarterly financial projections

[The Accountant]

BTW, we have to see if they reserve something for CEO compensation. That can really hurt gaap bottomline.

At the moment I am going to estimate Q2 Stock Based Compensation (SBC) to be equal to Q1.
Elon's CEO Award vesting will increase SBC by $22m (see excerpt from Q1 10Q below) but I am assuming this will be offset by the freezing of new stock option awards recently announced by Tesla. I will drill more into this when I work on my Q2 forecast.

If the first tranche under the 2018 CEO Performance Award vests during the second quarter of 2020 as currently expected, the remaining unamortized expense of $22 million for that tranche, which was expected to be recognized in the third quarter of 2020 as determined on the grant date, would be accelerated into the second quarter of 2020

 

[The Accountant]

For people who are forecasting Q2 result, is the salary cut and no equity grant in Q2 are being factored in?

I have not started working on my Q2 forecast but I will be sure to include the items you mention.
One important item to factor for Q2 is that there is special accounting when a factory is idle. All factory costs during the idle period go straight to COGS (expensed immediately) and none of it gets capitalized to inventory. So Fremont margins will be lower than Q1.
May not be a big deal as they cut a lot of costs during the shutdown. I will be assessing this.

 

[ggr]

Not yet in my model - but really first we need a good delivery estimate.

BTW, we have to see if they reserve something for CEO compensation. That can really hurt gaap bottomline.



Yes, that’s too low. My assumption was about 10k less than in Q1 end. BTW, Q1 end inventory was quite low in US because last week production stopped. Of course in EU they couldn’t deliver towards the end.

We have to wonder how much of old inventory they can liquidate because of production disruptions.

Tesla already said all stock-based compensation was on hold. I have to believe that includes Elon's.

 

[MP3Mike]

Tesla already said all stock-based compensation was on hold. I have to believe that includes Elon's.

But didn't their 10Q warn that they would likely have to recognize it in Q2? Most places that put stock compensation on hold included the exclusion for things that they were contractually bound on. Which Elon's award likely is.

 

[EVNow]

Tesla already said all stock-based compensation was on hold. I have to believe that includes Elon's.

For CEO comp, they are only recognizing the accrued liability - not actually granting stock. For others, are they going to not grant stock and also not accrue I.e. is there no liability created in this quarter ?

 

[Nate the Great]

In an internal email that referenced pay cuts. It also covers the merit review cycle. It states that equity grants will be on hold for Q2.

For the merit review cycle:

• Salary and hourly rate adjustments will be put on hold.
• Equity grants will be on hold as well.

Tesla will slash employee pay and furlough employees

 

[dc_h]

In Q1, there was 14K more of cars produced than sold, which makes sense as finished goods inventory increased from $1.3B to $1.9B, and this $600M increase averages to around $40k cost per car which also makes sense (as $50k per ASP makes 20% margin).

However, there is still $1.3B of finished goods inventory on hand at the end of Q1, excluding the 14k cars. I do not know the breakout between finished goods energy products and finished goods cars as they are lumped together. However, if you make a guess that half of the $1.3B is cars, there could be potentially another ~16K of cars on hand, if you do the math of $650M divided by $40k avg cost of car.

TLDR, I think it's possible that there may have been as many as 30K cars available for sale at the end of Q1. Therefore I am anticipating that deliveries may be significantly greater than production in Q2, assuming there is no demand problem.​

If Shanghai was still only 30% local goods, in transit would be about 300 million. If they are 50% local content by June 1, that could reduce in transit by about 100 million? I am guessing they would have at least 30-45 days supply in stock or transit to support Shanghai at 3000 cars per week. Assume COGS for MIC Model 3 at 70% of car closer to $20,000 per vehice (FSD chipset made in China) so 14,000 * 20,000 or 280 million, down to about 200 million in parts in transit with 50% local content.
Cost of local goods should be cheaper as well, so less inventory and better margins.

 

[hobbes]

With production starting this week, it appears they will get 1-2 ships to Europe this quarter.

Why would they have August as target for European deliveries in that case? Conservative and move it up only when the ship is actually on the way? Unlikely IMHO. I think they´d rather maximize production and if they don´t have to switch from EU builds to North American they save time.

 

[dc_h]

Why would they have August as target for European deliveries in that case? Conservative and move it up only when the ship is actually on the way? Unlikely IMHO. I think they´d rather maximize production and if they don´t have to switch from EU builds to North American they save time.

You may be right, but there are pictures of the dock being loaded and Morton grove is posting a ship on the way to SFO. I’d like to see two ships to Europe. Got to think demand is down significantly, so feeding all markets and increasing mix of Y vs 3 will help them sell more then they can make.

 

[Doggydogworld]

If Shanghai was still only 30% local goods, in transit would be about 300 million. If they are 50% local content by June 1, that could reduce in transit by about 100 million? I am guessing they would have at least 30-45 days supply in stock or transit to support Shanghai at 3000 cars per week. Assume COGS for MIC Model 3 at 70% of car closer to $20,000 per vehice (FSD chipset made in China) so 14,000 * 20,000 or 280 million, down to about 200 million in parts in transit with 50% local content.
Cost of local goods should be cheaper as well, so less inventory and better margins.

Parts don't count toward Finished Goods Inventory. Also, $20k COGS seems way too low.

Franco now shows 3 ships scheduled for SFO Port 80. All could (barely) make it to Europe, but demand in unlocked-down Korea, Japan and Taiwan may be higher. Plus perhaps a few AWD or Performance models to China.

Telling customers than new orders won't arrive until August is Tesla's way of steering customers to inventory cars. I don't think Europe is out of inventory yet, but will run low pretty soon. I'd expect one ship to Europe, maybe two. If so, people who previously placed orders should get notice of June delivery this week. Does anyone watch those forums?

 

[kengchang]

Why would they have August as target for European deliveries in that case? Conservative and move it up only when the ship is actually on the way? Unlikely IMHO. I think they´d rather maximize production and if they don´t have to switch from EU builds to North American they save time.

It could be that the backlog already exceeded the 1-2 ships Tesla can send to Europe this quarter. Remember the delivery estimate is for people who place order NOW, not when one did it a month ago

 

[elasalle]

Parts don't count toward Finished Goods Inventory. Also, $20k COGS seems way too low.

Franco now shows 3 ships scheduled for SFO Port 80. All could (barely) make it to Europe, but demand in unlocked-down Korea, Japan and Taiwan may be higher. Plus perhaps a few AWD or Performance models to China.

Telling customers than new orders won't arrive until August is Tesla's way of steering customers to inventory cars. I don't think Europe is out of inventory yet, but will run low pretty soon. I'd expect one ship to Europe, maybe two. If so, people who previously placed orders should get notice of June delivery this week. Does anyone watch those forums?

3 ships to EU, is my take. 26 day route via Panama Canal means they could send ships till May 31st. If the use East Coast ports to ship in parallel, they could send more.
This is like 1st quarter they don't have to send any to China as well. cheers!!

 

[elasalle]

3 ships to EU, is my take. 26 day route via Panama Canal means they could send ships till May 31st. If the use East Coast ports to ship in parallel, they could send more.
This is like 1st quarter they don't have to send any to China as well. cheers!!

Ship #2 scheduled to arrive @ Pier 80 on 5/29. (So looks like just 2 ships from Pier 80).

 

[hobbes]

Ship #2 scheduled to arrive @ Pier 80 on 5/29. (So looks like just 2 ships from Pier 80).

1st ship left for Korea, not Europe.
MarineTraffic: Global Ship Tracking Intelligence | AIS Marine Traffic
Tesla Carriers - Google Drive

Expected delivery for new German orders still August (production next quarter).

EDIT: Should I post this somewhere else as this is somewhat off topic here? Thought it was relevant to the modelling.

 

[Doggydogworld]

1st ship left for Korea, not Europe.
MarineTraffic: Global Ship Tracking Intelligence | AIS Marine Traffic
Tesla Carriers - Google Drive

Expected delivery for new German orders still August (production next quarter).

EDIT: Should I post this somewhere else as this is somewhat off topic here? Thought it was relevant to the modelling.

Definitely on topic here. They would send ships to Europe before Korea, so I consider this the nail in the EU coffin for this quarter. The second ship will probably go to Japan/Taiwan and perhaps drop a few 3Ps off in China. So my guesses for Q2 deliveries are:

30k - North America
30k - China
8k - Europe
7k - ROW
------
75k - Total

Maybe a little upside for NA and China, but it's hard to see much over 80k with no ships to Europe.

 

[elasalle]

Franco Mossotto on Twitter

 

[kengchang]

Definitely on topic here. They would send ships to Europe before Korea, so I consider this the nail in the EU coffin for this quarter. The second ship will probably go to Japan/Taiwan and perhaps drop a few 3Ps off in China. So my guesses for Q2 deliveries are:

30k - North America
30k - China
8k - Europe
7k - ROW
------
75k - Total

Maybe a little upside for NA and China, but it's hard to see much over 80k with no ships to Europe.

I am wondering if Tesla sent Model 3 to Houston or Philly to save time? otherwise where did the European Model 3 that came off production line go?

 

[hobbes]

I am wondering if Tesla sent Model 3 to Houston or Philly to save time? otherwise where did the European Model 3 that came off production line go?

How do you know there were European Model 3 coming off the line this Q? They shut down Fremont on March 23, so they only just started production for this Q and first ship we know of went to Korea. I would assume they never made any European cars this Q.

 

[kengchang]

How do you know there were European Model 3 coming off the line this Q? They shut down Fremont on March 23, so they only just started production for this Q and first ship we know of went to Korea. I would assume they never made any European cars this Q.

European car leaving factory on May 11th

 

[MP3Mike]

European car leaving factory on May 11th

How do you know those are European? Don't other places like Hong Kong use the longer license plates as well?