Urgh. I feel a bit dirty for reading that and all the comments below. The main argument seems to be that Tesla has committed fraud by under-declaring depreciation in Q3. Because tooling is depreciated on a per unit basis rather than straight line basis and depreciation hardly went up despite Model 3 deliveries doubling.
Tooling is indeed depreciated on a per unit basis:
Depreciation for tooling is computed using the units-of-production method whereby capitalized costs are amortized over the total estimated productive life of the respective assets. As of December 31, 2017, the estimated productive life for Model S and X tooling was 250,000 vehicles based on our current estimates of production. As of December 31, 2017, the estimated productive life for Model 3 tooling was 1,000,000 vehicles based on our current estimates of production.
But, it's just tooling that's done this way:
Property, plant and equipment, including leasehold improvements, are recognized at cost less accumulated depreciation and amortization. Depreciation is generally computed using the straight-line method over the estimated useful lives of the respective assets, as follows: Machinery, equipment, vehicles and office furniture 2 to 12 years Building and building improvements 15 to 30 years Computer equipment and software 3 to 10 years
If you look at a breakdown of fixed assets (prior to accumulated deprec and amortisation) as at June 2018, we had:
$5.2bn Machinery, equipment, furniture
$3.9bn Buildings, building improvements, land
$1.3bn Construction in progress
$0.9bn Leasehold improvements
$0.4bn Software
and only...
$1.4bn Tooling.
Looking back through past accounts and using Dec 2016 / Mar 2017 as the approximate cut-off time, +$800m of Tooling pre-dates the Model 3 programme (i.e. S&X, energy). Which implies a maximum amount of tooling of only $600m for Model 3. Tesla have told us they intend to depreciate that tooling over a million vehicles, so call it about $600 of incremental depreciation per Model 3 produced. Q3 saw 53,200 M3 produced, vs 28,500 in Q2. So the incremental Model 3 Tooling depreciation in Q3 vs Q2 is only $15m.
If this is really the best argument a Tesla bear can come up with, I feel like I should be buying more stock. However I suspect that whoever wrote doesn't believe it themselves, it's just click-bait to feed the mob.
