Near-future quarterly financial projections

[The Accountant]

I still having a hard time thinking that during this quarter with higher deliveries and smaller inventory at the end of the Q that Tesla wouldnt be profitable. That is compared to previous quarter. I would think somewhere in finances that shutdown saved on some expenses. At the bare minimum electricity and things like that. I would think the majority of costs to actually shutdown would have been incurred Q1 since thats when shutdown started. I know that prices were reduced, by I am assuming that costs also reduced.

I see where we are mixing our signals.
yes - Variable Costs are reduced (furloughs, etc) but less cars are produced and thus cost per car goes up as fixed costs stay flat.
Here is an example - the numbers are not 100% accurate - just for illustrative puposes.

Fremont produced 86k cars in Q1 and about 50k cars in Q2.
As you see below, variable costs dropped with the reduced production.
However, Fixed Costs stayed constant and as a result, the cost per car in Q1 is $42K and the cost per car in Q2 is $45k.
If the cost per car is $3k higher in Q2....multiply that by 50,000 cars and that comes out to $150m.

So yes - the overall costs are lower - you're correct.
I build my Q2 model using Q1 data. To adjust for the 40 day shutdown, I had to increase my costs by $127m ($150m in this example) to arrive at the higher cost per car.

Cost Accounting is a B#%tch

 

[jerryfan2000]

Tesla started charging $10 for premium connectivity since May. Considering there are 1M+ Tesla on road right now. Say 50% of Tesla owners sign up, that would be $5 mil profit a month and $10 mils for this quarter. Not sure has this income been considered in the forcast?

 

[Congo Line]

Tesla started charging $10 for premium connectivity since May. Considering there are 1M+ Tesla on road right now. Say 50% of Tesla owners sign up, that would be $5 mil profit a month and $10 mils for this quarter. Not sure has this income been considered in the forcast?

Unlikely that it would be pure profit, they probably have to pass a lot of that along to whichever telecom provider they're using. However, on the other hand they were probably paying telecom beforehand anyway, whereas now they're having users pay for it. So could go either way.

 

[StarFoxisDown!]

Unlikely that it would be pure profit, they probably have to pass a lot of that along to whichever telecom provider they're using. However, on the other hand they were probably paying telecom beforehand anyway, whereas now they're having users pay for it. So could go either way.

It was still helps profits just like pure profit because as you mentioned yourself, Tesla was paying this costs before with every car sold. It's profit from reducing costs

 

[MP3Mike]

It was still helps profits just like pure profit because as you mentioned yourself, Tesla was paying this costs before with every car sold. It's profit from reducing costs

It depends on how their contract with AT&T is written. If they pay per megabyte, then it isn't going to be pure profit unless the people don't use any of the premium content.

 

[mongo]

It depends on how their contract with AT&T is written. If they pay per megabyte, then it isn't going to be pure profit unless the people don't use any of the premium content.

It's pure profit compared to not charging $10 a month though.
Free premium -> 0 extra revenue - prem cost
Subscribed premium -> $10 extra revenue - prem cost
Free standard -> 0 - some cost

 

[adiggs]

Tesla started charging $10 for premium connectivity since May. Considering there are 1M+ Tesla on road right now. Say 50% of Tesla owners sign up, that would be $5 mil profit a month and $10 mils for this quarter. Not sure has this income been considered in the forcast?

At least some of us have that premium connectivity grandfathered, at least so far. Maybe S/X is the pattern there? In any case, there is less than $10 premium connectivity payments needed for everybody that has premium connectivity.

 

[Doggydogworld]

428m regulatory credits, holy crap. Despite only 14k cars delivered in Europe! I sure didn't see that coming.

Cash up to 8.6b, debt only up ~200m. TSLAQ favorite metric AR up again, for no apparent reason. AP down a little due to Fremont shutdown, Accrued and other up a bit. No big changes, really.

Good work by @The Accountant and @FrankSG estimating a very difficult quarter.

 

[ggr]

428m regulatory credits, holy crap. Despite only 14k cars delivered in Europe! I sure didn't see that coming.

I think that includes the US sales in the CARB states, not just Europe?

 

[Doggydogworld]

I think that includes the US sales in the CARB states, not just Europe?

CARB states have ZEV credits, but that revenue has been near-zero for a long time. US has GHG credits, but that was generally in the 100m/quarter range even back when Tesla's US sales were roughly 2x their recent level. The huge leap in 2020 is presumably the FCA deal, which includes US but is mostly focused on Europe's 95g mandate which FCA would otherwise miss by a mile.

TSLA shareholders should put a huge bouquet of flowers on Sergio Marchionne's grave

 

[dc_h]

I think that includes the US sales in the CARB states, not just Europe?

Are the euro credits based on current sales, or are they cumulative? Could Tesla have credit in the bank?

 

[The Accountant]

I was off $35m on the GAAP Income line.

Main Differences:
- ASP was lower
- Reg Credits Higher
- Stronger Energy & Service Revenue
- Much higher Stock Compensation

 

[kengchang]

Are the euro credits based on current sales, or are they cumulative? Could Tesla have credit in the bank?

No one knows the detail of Tesla/Fiat agreement other than the amount of money that Fiat will pay

 

[FrankSG]

428m regulatory credits, holy crap. Despite only 14k cars delivered in Europe! I sure didn't see that coming.

Cash up to 8.6b, debt only up ~200m. TSLAQ favorite metric AR up again, for no apparent reason. AP down a little due to Fremont shutdown, Accrued and other up a bit. No big changes, really.

Good work by @The Accountant and @FrankSG estimating a very difficult quarter.

I was way off in a couple of places, but I kind of expected that tbh.

• Energy revenue was almost double what I forecasted. No clue how they pulled off triple solar roof installations and a massive energy storage increase QoQ in the middle of a global pandemic. I'm honestly stunned.
• Much higher credits than I expected.
• Much lower ASPs than I forecasted, even after accounting for my $60M mistake in calculating revenue from FSD sales. Will have to look into this more later, why it was off by this much.
• CEO compensation package. Looks like it might've increased OPEX by as much as $100M. We'll have to wait for the 10-Q to find out the exact number.

My EPS was somehow very close, but that was mostly due to luck

 

[MP3Mike]

CEO compensation package. Looks like it might've increased OPEX by as much as $100M. We'll have to wait for the 10-Q to find out the exact number.

Well the update does say: "These positive contributions were offset by significant costs related to factory shutdowns, as well as a sequential increase in non-cash SBC expense primarily attributable to $101M related to 2018 CEO award milestones."

 

[FrankSG]

Well the update does say: "These positive contributions were offset by significant costs related to factory shutdowns, as well as a sequential increase in non-cash SBC expense primarily attributable to $101M related to 2018 CEO award milestones."

Thanks., I missed that number somehow.

 

[The Accountant]

I was way off in a couple of places, but I kind of expected that tbh.

• Energy revenue was almost double what I forecasted. No clue how they pulled off triple solar roof installations and a massive energy storage increase QoQ in the middle of a global pandemic. I'm honestly stunned.
• Much higher credits than I expected.
• Much lower ASPs than I forecasted, even after accounting for my $60M mistake in calculating revenue from FSD sales. Will have to look into this more later, why it was off by this much.
• CEO compensation package. Looks like it might've increased OPEX by as much as $100M. We'll have to wait for the 10-Q to find out the exact number.

My EPS was somehow very close, but that was mostly due to luck

I was off as well on the items you outlined above.
I too am stunned about the Tesla Energy revenues. $370m in Q2 vs $293m in Q1.......with the COVID lockdowns throughout April and May, this is an incredible result.
Tesla Energy may finally become the big story!

 

[vikings123]

I was off as well on the items you outlined above.
I too am stunned about the Tesla Energy revenues. $370m in Q2 vs $293m in Q1.......with the COVID lockdowns throughout April and May, this is an incredible result.
Tesla Energy may finally become the big story!

I completely agree, I don’t think the market gets it though. Every single sound byte today was about how Tesla is a “car manufacturer and valuation does not make sense”. I know this was a tough quarter to estimate so hats off to you and Frank for coming close on a number of different metrics.

I think we still need a few more quarters to show the true potential for energy but energy revenues in Q3 could surprise a lot of people. This plus any manufacturing efficiencies(comment from Jerome I thought was very insightful) they gain + battery day are things I’m looking forward to.

 

[The Accountant]

428m regulatory credits, holy crap. Despite only 14k cars delivered in Europe! I sure didn't see that coming.

Cash up to 8.6b, debt only up ~200m. TSLAQ favorite metric AR up again, for no apparent reason. AP down a little due to Fremont shutdown, Accrued and other up a bit. No big changes, really.

Good work by @The Accountant and @FrankSG estimating a very difficult quarter.

Regarding the increase in A/R, this is my hunch....only a hunch:
I believe the FCA payments due Tesla for joining the EV EU pool sits in A/R (not paid) for both Q1 & Q2.
If FCA had not pooled with Tesla, the FCA EU penalty for 2020 would have been due in 2021 (that's what I have read in the regulations). So it is possible that FCA successfully negotiated with Tesla that payments for participating in the pool in 2020 would be made in 2021.
For Tesla this is proper revenue for 2020 but it may all be booked in A/R and cash received in 2021. FCA likely provides Tesla with a Letter of Credit to ensure they don't default on the payment.
We may learn more when the 10Q is published.

 

[FrankSG]

I was off as well on the items you outlined above.
I too am stunned about the Tesla Energy revenues. $370m in Q2 vs $293m in Q1.......with the COVID lockdowns throughout April and May, this is an incredible result.
Tesla Energy may finally become the big story!

I uploaded my estimates to Estimize (after correct the $60M credits mistake), and ended up getting rank 3, in spite of being way off in a number of places.

Reasons that I ended up so close are:

• Energy upside surprise ended up correcting for my huge overestimation of automotive.
• Huge uptick in SBC ended up correcting for my large overestimation of GAAP net income.

I guess sometimes being more wrong can mean being more right