Noted above, but there's some 127 days of S/X inventory. Wouldn't say there's a lack of inventory for those.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Near-future quarterly financial projections
- Thread starter luvb2b
- Start date
Noted above, but there's some 127 days of S/X inventory. Wouldn't say there's a lack of inventory for those.
Doggydogworld
Active Member
Models S/X
Cumulative production: 628,961
Cumulative production: 610,844
Calculated inventory: 18,117
Model 3/Y
Cumulative production: 3,538,732
Cumulative production: 3,461,834
Calculated inventory: 76,898
Total calculated inventory: 95,015
Actual inventory is a bit less because a few cars are totaled during shipping or whatever and never get delivered. I also don't know how they count cars they crash test or otherwise use internally without ever selling them. In theory those shouldn't count as production, but maybe Tesla counts everything with a VIN. Also note that Tesla's early production and delivery reporting was a bit haphazard, so there are small errors/estimates in the S/X numbers. Shouldn't be off more than a couple hundred.
The P&D report is accurate for production, but off a little for deliveries. I update my numbers with deliveries from the earnings report once it comes out.
My calculated days of inventory is usually ~1 day higher than Tesla's. Perhaps they don't include demo cars in inventory or something (they do eventually count as deliveries). A few years ago it was more random, sometimes we'd match and sometimes our numbers would differ by 2-3 days. I don't know why.
Historically at EOQ there were no cars on boats, at shipyards/railyards/etc. That's changed lately w.r.t. China, e.g. some of the 13,870 cars exported from Shanghai in December were delivered that month in nearby markets but many were not. It'll be a few days before we know the export number for March.
Fremont still builds west coast cars the last couple weeks of the quarter, kind of a mini-wave. I don't see more than a few days of true "in transit" inventory for Fremont. I presume Austin (for now) and Berlin are similar.
petit_bateau
Active Member
I use the Tesla quarterly reported days-of-inventory number. Given that this is rounded to integer days then it could be misleading by several thousand in either direction. (Obviously I then added in the Q1 P&D delta to look at the overall picture at end Q1 prior to full quarterly).
I guess I could use your preferred method of using the cumulative P&D which would have the advantage of increased precision, but the disadvantage (as you point out) of an accumulation of written-off inventory for a variety of reasons. Using the quarterly inventory days resets any accumulation of error.
I think this would explain why I calculated 88k whilst you calculated 95k. Looks like there are pros and cons both ways. Your way is probably best if a way exists to periodically reset any accumulated error.
====
Regarding the actual P&D numbers themselves it is interesting that they have ended up with 10k S/X in transit at EOQ, so one or two shiploads (depending to an extent whether there are any mixed ships out there for some particular markets). If I recall correctly the S/X only recently started delivery again outside USA/CAN, or is it only some versions that stopped delivery. Anyway given that the build rate is constant at 20k I'm guessing that global S/X demand isn't down. Whether they'll now finish every quarter with a steady state of 10k in transit, or whether the timing will oscillate between no transit and 10k transit wil be something to watch out for as a confounding factor. The S/X is a little pricey for a lot of buyers so let's hope that they find the sweet spot on the pricing curve.
Certainly not as detailed as @The Accountant's models, but here is my first pass at it. Definitely willing to listen to feedback on where I might be wrong and why and I'll go back and update before earnings. Estimates in yellow compare to prior year and prior quarter.
My past estimates have been within 2-3% and are archived out on Imgur (somwhere) for posterity, if anyone cares. But I readily admit I'm probably off quite a bit in the above estimate, so let me know where you disagree.
Doggydogworld
Active Member
Even at constant ASP Auto Sales Revenue would only rise 1% or so from Q4, due to mix shift (fewer S/X) and higher leasing fraction. And with the price cuts we know ASP will be down quite a bit. The ASP drop won't be anywhere near the 20% headline price cut for reasons Zach spelled out in the Q4 call. But I could see 10%. That means Auto Sales Rev would be down almost 2 billion from Q4.
A Q4 call questioner asked if auto gross margin excluding leasing and credits would drop below 20% and Zach said their forecast was higher than that. He might have been talking about the full year, though. Leasing and credits usually add 300 bpp or so to gross margin, but it varies and credits especially are a bit of a cookie jar. It seems unlikely that gross margin percentage would be higher than Q4, though.
Not sure how you could have ASP flat from Q4 to Q1. A 10% drop in ASP would be an optimistic scenario, and a 15%+ drop more likely I would think.
damonbrodie
Member
As mentioned - this is my prediction - please post yours so we can see the difference after the results on the 19th.
Not being cheeky, just stating my opinion and encourage others to share theirs, this is where to put them for all to see.
My flat ASP is mainly due to vehicles delivered in Q4 being those ordered well before price increases took hold. That in my model has a very modest amount (less than 7%) delivered in Q3 and Q4 (less than 8%) being of a higher ASP.
So the cars delivered in Q1 2023 are closer in fact to the ASP of Q1 and Q2 of 2022 and thus making the price cuts a flat impact to EPS.
In addition, I think my model is more on the conservative side and I have been low 3 out of the last 4 quarters (Q2 2022 being the outlier)
The things I really don't have any insight into are -
Material cost declines
Cost savings due to removing USS
How the I.R.A. act is going to effect margins for cars in 2023 (at all....)
Cost savings from smoothing "The Wave"
Ramp production efficiencies from Berlin and Austin getting close to or at volume production
Because of the above - I stand by my prediction and again would love to see some additional responses now that we have delivered numbers to benchmark against.
EVNow
Well-Known Member
Apart from ASP that others have commented on - one other big unknown are the regulatory credits. For eg., there are new manufacturer credits in US (IRA related). Will Tesla be already booking those credits this quarter ? We could see a huge jump in reg. credits, enough to offset loss in margin.
Speaking of margin, since the raw material costs are coming down, what effect will that have on COGS ?
This quarter is going to be difficult to forecast.
EVNow
Well-Known Member
Just watching Farzad … he reminds us Zack said their ASP will be above 47k. So we get a floor for GM and ASP - 20% and 47k. So auto revenue with 422k - 5% lease = 400k * 47k = $18.8 B. To this we have to add lease auto revenue.
Farzad thinks $20.8B auto revenue and $4.9B gross profit.
Farzad thinks $20.8B auto revenue and $4.9B gross profit.
Last edited:
What’s everyone’s thoughts on how big a hit services revenue will take from the plummet in used Tesla pricing?
Actually, I was using a 10% drop in ASP for my optimistic Q1 earnings model, but I might actually be wrong on this and you maybe right and I should stick closer to Q4 ASP.
Zach did mention on the last earnings call in response to a question that tesla is expecting ASP to be above the $47k assumption listed in the question, which means a single digit percentage ASP drop at worse.
“Zachary Kirkhorn
Yeah, I'll jump in on this. So there is certainly a lot of uncertainty about how the year will unfold, but I'll share what's in our current forecast for a moment. So based upon these metrics here, we believe that we'll be above both of the metrics that are stated in the question, so 20% automotive gross margin, excluding leases and rent credits and then $47,000 ASP across all models.
And so two other comments I want to make on this. Just tactically on sequential ASP changes from Q4 to Q1. And just as a reminder, the ASP reduction is not as large as the reduction in configurator prices. As in Q4, we had backlog customers that were delivering cars to at a lower price book, given that backlogs had been so long for so much of 2022. But then also, there are various programs in place that we used in Q4 that lowered ASPs.”
Doggydogworld
Active Member
IMHO they don't hold used inventory long enough for this to matter. Their MO seems to be wash and vacuum, add FSD, mark it up a few thousand and sell it quickly. They don't maintain huge lots full of depreciating cars.
Lower base cost will likely lead to more options being added, which are typically high margin. Paint colour, wheel upgrade etc. So the decline in ASP hopefully cushioned by this.
petit_bateau
Active Member
For interest here are mine, if anyone wishes to start tabulating the various offerings. Reminder, I usually come in high. I've put the previous quarters in for comparitive purposes.
and this are some share price calculations I keep running:
and this are some share price calculations I keep running:
Agree on trade-in vehicles, however there should be some impact from lease returns - as the RV was set at the time the lease was written, the prevailing used vehicle price will determine the gain or loss on sale on those vehicles. I've been assuming Tesla has been making exceptional profits from these vehicles over the last 1-2 years with used prices high, but will now be reverting to a more neutral position with the used price dropping. Hopefully they didn't get carried away with RV pricing (e.g. holding it consistent with the % of purchase price) over the last couple of years as they put vehicle prices up or we could see the opposite effect in the next couple of years.
Doggydogworld
Active Member
Yeah, nutty resale values must have boosted margins. Looks like the first 21k 3/Y leases expired in the past 12 months. If actual resale was 10k higher than assumed that'd be 50 million of margin uplift each quarter. And 10k might be conservative for a couple of those quarters.
Tesla used to securitize leases. I'm pretty confident buyers of the securitizations would not let them boost RV much based on what was pretty obviously a temporary blip. But if they've been keeping deals in-house they have more freedom to use silly numbers. Still, I think the effect will be loss of uplift in future quarters vs. losses on the lease returns themselves.
I hope you're right. If the difference between the new vehicle price and the RV was increasing too much then lease costs would become uncompetitive and we should have seen a reduction of sales subject to lease accounting. From a spot-check of the delivery reports over the last few years there does appear to be a bit of a drop (although there isn't a clear trend).
Tesla has certainly slowed their securitisation issuance cadence - this could be because they like the yield on the leases and a comfortable with the exposure (timed with a stronger balance sheet), or because securitisation costs have increased sufficiently to make issuances less appealing. Or possibly they have found an alternative funding source.
(disclaimer - I worked in securitisation of autos and mortgages for more than half a decade).
Doggydogworld
Active Member
FWIW, sales subject to lease accounting did drop from 7% in late 2020 and into 2021 to 3% for all of 2022. It was 5% in Q1 2023. FWIW, the Model 3 lease was very attractive most of Q1 but Model Y was not. $349 vs. 629/month (both plus upfront cash of 3-4k). Someone said the implied 3 residual was 60% while Y was 70%, but I never did the math.
I'm having some trouble reconciling your estimate for automotive total revenue with the drastic price drops in Q1.
In Q4 Tesla delivered 388,131 Model 3/Y and 17,147 Model S/X, for a total revenue of $21,307 billion. If we assume the average Model S/X sold for $120,000 then the average Model 3/Y sold for $49,600.
In Q1 Tesla delivered 412,180 Model 3/Y and 10,695 Model S/X. Even if I use the same ASP as in Q4 ($49.600 and $120,000) I only get to $21,720 billion of automotive total revenue. Yet your estimate is $22,234 billion, which implies a 2,4% increase of the ASP. What is your reasoning behind this? Are you adding IRS credits to the ASP?
My estimate is that Tesla dropped average prices for 3/Y by at least $4000 (it's more, but I'm accounting for extra option uptake). S/X had probably the same average price drop. I hear some people counter that customers are still paying old, higher prices, but as far as I know Tesla reimburses the price difference for cars that were ordered before a price drop.
This $4,000 lower ASP would result in total automotive revenue of $16,915 billion.
What am I missing?
