If it is successfully realized in California, it could potentially spread across the globe and turn into a revolution of public transportation.
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If it is successfully realized in California, it could potentially spread across the globe and turn into a revolution of public transportation.
Norse
Active Member
This problem is not just in California! And Hyperloop will change the world in more ways that SolarCity will. The reason he is giving it away is beacuse he doesnt like patents and that he cares about the climate and Technology!
My sister and brother-in-law were in the Brea store in LA - they were told that it would take 4-6 weeks to get a new car, but if they waited another month, there would be a longer wait as the European ramp up is going to start deliveries in early September. So I would conclude that the delivery expectations (4500 + 500 in transit) should be exceeded..
ModelS8794
Member
I dunno about that. Depends on where ZEV revenue falls out, and what % of cars went on 'lease'. Each 'leased' car will only produce ~$3750 in sales and $850 - $900 in gross profits this quarter (less actually b/c that's a full quarter worth of amortization and most will have a partial period only), excluding all credits. The credits will, I believe, book in full immediately on sale, so they become even more important on a GAAP basis.
If 1/3 of sales were on the lease, that's $150 - $160 million in cash sales that will only book at around $6 million in GAAP sales this quarter (assuming roughly 50% residual held back, and 1/12 of remaining sales amortized into the current quarter.) At 22% GM that's about $30 - $35 million in gross profit foregone. Tough to see how tesla still covers all their operating costs this qtr with $30-$35 million less gross profit.
(All on a GAAP basis, cash EPS if reported will obv exclude lease accounting and not have this added burden.)
I got the same story from the NYC store and the Short Hills, NJ store. They did push me to order a loaner car for immediate delivery though they are have almost all of the options and are the max price - some cash for miles on the car.
I assumed that they achieved a GM of 23% (overall improvement plus a lot of high margin cars sold - loaners), ZEV at $50 million, just a 10% increase of OPEX (they built less SC than expected) and a forex gain of $6.3 million (the yen again).
Posted elsewhere, but just to remind people: First European deliveries have been confirmed for August 7th in Oslo. So just ahead of the earnings call. I wouldn't be surprised if these 10 (or 18, depending on who you ask) cars were flown in to make it. 
Further deliveries of Norwegian and Swiss Sigs are scheduled during the rest of August. So as we speak, many EU cars are already en route by sea.
Further deliveries of Norwegian and Swiss Sigs are scheduled during the rest of August. So as we speak, many EU cars are already en route by sea.
It has more to do with the wow effect of Elon saying, "We just delivered our first cars in Europe."
ModelS8794
Member
23% GM inclusive of ZEV revenue or exclusive? If exclusive of ZEV, I find that more than a bit ambitious. If inclusive, that would be ~$85 - $90mm gross profit including your ZEV figure (implies 11% GM on non-ZEV sales, realistic IMO, maybe even some room for upside there.) That's on a very ambitious 5400 unit sales for the qtr, but 1/3 of sales on 'lease'.
Don't see that overcoming opex though, so negative EBIT maybe on the order of $15 - $20 million. USD/JPY had an 8% move in 1Q and a 5% move in 2Q, so currency gains probably a few million less that last time ($4 million?) and the particulars of the interest (cash + non-cash amort) expense still a bit of a mystery to me.
I think on this model you'd need another 3-400bp of GM to hit break-even GAAP EPS. If they really sold 5400 units (I don't think so) at $90k ASP or better (they did $99k ASP last qtr, ex-ZEV), did 14% GM on cars and another $50 mm in ZEV credit sales, I can see break even GAAP EPS and would see reason for Mr. Market to get excited beyond the current $120 excitement level. Cash EPS would be closer to $0.15 in this scenario.
All IMO.
NigelM
Recovering Member
Correct, but in reply to someone's earlier comment they wouldn't have been flown in.....that would be a PR disaster and smack of deliberate manipulation.
Acmykguy
Member
Again I'm not trying to be a dead horse but it is not a lease I just purchased a second test this week. I specifically asked them if tesla finances for a lease do they collect and record all the money from sale ? She replied it really isn't a lease it s a purchase with Wells Fargo or northern trust holding the lien. I then asked what a out the buy back. She said that between 32 and -36 months you can ask tsla to buy back but elon is personally backing it. I asked does tsla hold any money in an escrow type account for buy back she said not to her knowledge. So the lease from what I gather is not a lease from an accounting standpoint as either.
Except your understanding is in direct opposition to the financial statements Tesla files with the SEC. They clearly said they expect to use lease accounting for these vehicles even though it isn't a lease. Whether you account for sales up front or amortize over time has absolutely nothing to do with how the actual cash is handled, just how it's accounted for.
Acmykguy
Member
I understand that I was just trying to get clarity on this. This is right from the march 31 10-Q
"In April 2013, we announced a financing plan whereby customers could conveniently obtain financing through one of our partner banks and also receive a residual value guarantee from Tesla. We believe that through this arrangement, customers will be able to realize some of the same benefits as those from a traditional lease. As a result of the residual value guarantee, we expect to apply lease accounting to these sales which would defer the recognition of the associated revenues over time instead of full recognition at delivery. Although lease accounting will not impact our cash flows and liquidity, a significant uptake under this program could adversely impact our 2013 revenues and operating results. Furthermore, while we do not assume any credit risk related to the customer, we are exposed to the risk that the vehicles' residual value may be lower than our estimates and the volume of vehicles returned to us may be higher than our estimates."
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ModelS8794
Member
So you have answered your own question, yes? Or were you looking for further clarification?
It is a sale, tesla receives cash, but the earnings statements account for the sale using lease accounting, with the residual value held back as a contingent liability and the remainder of the sale held back as deferred revenue amortized over 12 quarters. This is why cash (adjusted) EPS and GAAP EPS will differ markedly to the extent customers utilize the 'lease' option (and again, I use lease in quotes to signify what we all recognize, that this is a sale which has characteristics of a lease for accounting purposes only).
I would actually love to see the stock track sideways until the earnings release. If it does I think the magnitude of the pop after a great release will be much more. I think after a second profitable quarter 140-150 is easily within the realm of possibility and since I want to do an earnings play that week it would be much more profitable to see it still sitting around 120-125 going in.
The quiet before the storm... shhhhh ;-) Actually pretty darn happy at the level that it has support now.. 120. Made me a ****load of $$
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