Near-future quarterly financial projections

[The Accountant]

So only a 0.7% bump in GM (2.4% change)? Seems like removal of radar, phase in of price increases, reduction in EoQ expedite fees, and increased units across existing plants (including 2.5k more S/X deliveries compared to Q3) should all boost the numbers, though I don't know by how much.

Is the drop in credits % due to dilution of amount across higher revenue? With the issues other OEMs are having, seems like they may be in high demand.

Thanks !

My conservative numbers on margins come from my concern that the higher sales within China have lower margins as pricing is much lower. I have heard from some analysts that the margins within China is higher but I will bake that in when I see it. So we have huge upside to my numbers here potentially.

On Regulatory credits, I am assuming that this will drop each qtr going forward just based on comments that Zach has made in the past. There can be an upside here too.

 

[LiveLong&Profit]

I believe my estimates may be lower than the Tesla bulls on Twitter and YouTube as I took a conservative approach to margins.
Margins are still impressive:
View attachment 751229

Thanks for the great contributions!

Is there any chance you would hazard a guess going a couple of years forward? (i.e continuation of above table)
I have some guesses regarding production of vehicles (which are crazy bullish) for the next 4-5 years, but I find it very hard to model Teslas gross profit and operating margin.

All I know is the Teslas abillity to execute, innovate, optimize, control costs and invest strategically continues to surprise me.

 

[Cosmacelf]

So only a 0.7% bump in GM (2.4% change)? Seems like removal of radar, phase in of price increases, reduction in EoQ expedite fees, and increased units across existing plants (including 2.5k more S/X deliveries compared to Q3) should all boost the numbers, though I don't know by how much.

Is the drop in credits % due to dilution of amount across higher revenue? With the issues other OEMs are having, seems like they may be in high demand.

Thanks !

Presumably higher input costs ate into margins. While Tesla was increasing prices, inputs could easily have been increasing more.

 

[The Accountant]

That operating margin % is a big increase from Q3. More S/X?

By the way I really appreciate what you do

Mostly coming from 49k more units produced in Shanghai. That has the potential to drop costs by about $1,000 per car for the cars produced in China.
The Fixed Costs get spread over more cars. Just as an examples (numbers are not verified) but we could have $4,000 in fixed costs per car in Q3 and only $3,000 per car in Q4 for production coming out of Shanghai.

 

[The Accountant]

Thanks for the great contributions!

Is there any chance you would hazard a guess going a couple of years forward? (i.e continuation of above table)
I have some guesses regarding production of vehicles (which are crazy bullish) for the next 4-5 years, but I find it very hard to model Teslas gross profit and operating margin.

All I know is the Teslas abillity to execute, innovate, optimize, control costs and invest strategically continues to surprise me.

I have a 5 year forecast that I need to update. I can share it in a day or two and we can compare my production numbers with yours once I complete the forecast.

 

[mongo]

So @The Accountant ... about that deferred tax credit [revenue] ...
Do the the new factories provide sufficient uncertainty to prevent assured profitability ?
And whatever happened with those hedge calls Tesla had?

 

[H Mak]

Mostly coming from 49k more units produced in Shanghai. That has the potential to drop costs by about $1,000 per car for the cars produced in China.
The Fixed Costs get spread over more cars. Just as an examples (numbers are not verified) but we could have $4,000 in fixed costs per car in Q3 and only $3,000 per car in Q4 for production coming out of Shanghai.

Thanks. 18% is unbelievably impressive! I was blown away by the 14.6% at Q3 but 18% is staggering. I think Ford and GM are well under 10%. Seriously, they have no chance. It must be getting to the point where Tesla's operating margin is better than legacy auto's gross margin

 

[Buckminster]

James has a GAAP net income of 4.5Bn. Trailing p/e ratio in Oct would be 50 ish. AMZN currently at 65. TSLA currently at 342.

https://twitter.com/x/status/1477731824814235650

 

[Mengy]

The Annual Progression is Amazing

View attachment 751226

That really is something to behold.

 

[Gigapress]

Poll: When do y'all predict Tesla will post their first quarter with earnings over $10 billion ($40Bannualized)?

I'm estimating Q4 2022.

600k deliveries
$53k avg selling price
A few tens of thousands of trimotor Cybertrucks
A few thousand Semi and Roadster
32% gross automotive margin
Opex $2 B
Energy starting to scale and hit positive gross margin, earning maybe $150 B gross profit

I’m not sure that will get you $10 Billion earnings - its closer to $6 Billion.

Late response... you're right; that was a mistake. I probably subtracted opex wrong because gross profit in that scenario is $10B and net would be about $8B. So now I think Q1 '23 or Q2 '23 is more likely the first $10 B quarter. Much depends on FSD revenue though...

 

[Gigapress]

The only question for Q4 profits is margins. I think the biggest difference Q3 vs Q4 is that Shanghai made cars were sold mostly in China, while Q3 there was a lot of exports to Europe. This was because of China tax credits were fading out at the end of 2021 so there was a huge local delivery push for Chinese customers.

Tesla prices are quite a lot higher in Europe than China, and European exports are more often long ranges and performances than locally sold models. However, with exports, there is bigger shipping fees plus import tax (at least Fremont to EU was 11% import tax, I assume the same applies to Shanghai to EU).

In addition to the Europe vs China shipment allocation effect, prices were raised worldwide several months ago and due to the long wait times between order and delivery, much of the price increases from Q2 and Q3 didn't start hitting the financials until Q4. Due to the lag, this alone is probably a $3-5k/vehicle bump over Q3 that flows straight to gross margin.

They also seem to be heavily prioritizing builds with addons like nonstandard paint, wheels, FSD, etc. And S/X deliveries began in higher volume in Q4. ASP will be much higher this quarter and even higher than that in Q1.

 

[Thekiwi]

Just realized I haven’t updated my share count for use in the Basic EPS calculation after all of Elons options were exercised. Anyone got a good approximate number to use for Q4? I am assuming it uses an average outstanding share count for the quarter rather then the quarter end number.

 

[The Accountant]

So @The Accountant ... about that deferred tax credit [revenue] ...
Do the the new factories provide sufficient uncertainty to prevent assured profitability ?
And whatever happened with those hedge calls Tesla had?

The Deferred Tax benefit timing is too difficult to predict so I am going to keep excluding it and hope it surprises us to the upside some day.
The Hedge Calls was something that @Fact_Checking had written about extensively but I am not well versed on how those were suppose to work.
I'll look at the 10K or 10Qs to see if I can figure that out.

 

[generalenthu]

The Deferred Tax benefit timing is too difficult to predict so I am going to keep excluding it and hope it surprises us to the upside some day.
The Hedge Calls was something that @Fact_Checking had written about extensively but I am not well versed on how those were suppose to work.
I'll look at the 10K or 10Qs to see if I can figure that out.

I vaguely recollect a conversation where, for the options Elon exercises, the actual market price less exercise price becomes a tax expense. This is unlike the GAAP expense which is a black-scholes based cost that's fixed up front.

I think @The Accountant or @st_lopes or someone else has to set me straight, but if that is the case, I don't think the reserve release is a near term thing.

Edit: This link supports my assertion. 17.3 Income tax accounting for nonqualified stock options

 

[EVNow]

Here is my Q4 estimate as compared to Q3 2021.
In a mere 3 months, from Q3 to Q4, Tesla increases Non-GAAP profit by almost $1B (from $2B in Q3 to $3B in Q4)

View attachment 751223

Wow a Billion dollars more selling 65k more cars. Hope you are right !

 

[st_lopes]

I vaguely recollect a conversation where, for the options Elon exercises, the actual market price less exercise price becomes a tax expense. This is unlike the GAAP expense which is a black-scholes based cost that's fixed up front.

I think @The Accountant or @st_lopes or someone else has to set me straight, but if that is the case, I don't think the reserve release is a near term thing.

Edit: This link supports my assertion. 17.3 Income tax accounting for nonqualified stock options

There is some debate as to whether or not this compensation plan would be subject to the $1M deduction limit under s.162 https://www.meridiancp.com/wp-content/uploads/162M-Compensation-Deductibility.pdf

I haven’t dug too deep in to it, but if s.162 doesn’t apply, strong likelihood we see a release either in Q4 or early 2022. If s.162 does apply to the CEO plan, then it likely gets pushed out a few more quarters (highly dependent on FSD and Texas).

 

[petit_bateau]

Just realized I haven’t updated my share count for use in the Basic EPS calculation after all of Elons options were exercised. Anyone got a good approximate number to use for Q4? I am assuming it uses an average outstanding share count for the quarter rather then the quarter end number.

It was 998/1123 for Q3 and I am using 1009/1134 for Q4 as a SWAG.

 

[Gigapress]

Wow a Billion dollars more selling 65k more cars. Hope you are right !

Last quarter they made $15k gross profit per car. This quarter it will probably be higher than that.

$15k * 65k = $1B

 

[Artful Dodger]

Could one also view it as 49k vehicles with $0 fixed cost?

I don't think so. I think its far more likely that Giga Shanghai has added a 2nd GA line for Model Y, and that capital costs/amortizement will be similar or slightly reduced from the 1st GA line.

I do not see how its possible to double production this quickly without adding a 2nd line.

Paging @The Accountant

 

[st_lopes]

I don't think so. I think its far more likely that Giga Shanghai has added a 2nd GA line for Model Y, and that capital costs/amortizement will be similar or slightly reduced from the 1st GA line.

I do not see how its possible to double production this quickly without adding a 2nd line.

Paging @The Accountant

While it won’t be $0 fixed cost it won’t be linear to rest of factory as major costs relating to structure, heating, electrical were all already in place. Plus it’s also likely that several parts of the production process are already capable of handling more volume without increasing capital costs.