ok. i think i agree with your interpretation. i checked in with my accounting expert too and he gave me this link, which describes what you described.
https://www.aipb.org/pdf/DEPRECIA.pdf
so.... going with your interpretation, i think it means margins are going to improve more than i expected. i haven't yet posted an update because i wanted to make sure i understood how to evolve model 3 gross margin to this quarter.
let me present the following view for discussion purposes. the idea here is based on the depreciation insights provided above and some assumptions of the level of production related depreciation. i think we should see a 19% improvement in gross margin just from depreciation math and not including any other efficiency benefits.
presented for discussion purposes and very interested to hear comments related to the methodology, assumptions, and conclusion. note that the blended depreciation calculation is using units in-transit from the prior quarter and assigning them the depreciation per vehicle from the prior quarter's production. that means some vehicles sold get the current depreciation "per model 3" and some get the prior quarter's "per model 3" line. the gross margin impact is based on my asp assumptions, dollar wise you can see it's around 10.7k per vehicle improvement from 18q1 to 18q2.
depreciation assumptions based on this comment from abuja on last conference call (excerpted from seeking alpha)
... if we look at our depreciation costs on a per unit basis at steady run rate of 5,000 or so cars per week, we are in my mind well below most of our competitors – well below $2,000 per unit depreciation cost.
so 5,000 model 3's x 13 weeks x $2,000 = $130,000,000 in production related depreciation per quarter (or perhaps less).
… |
3 deliveries |
3 production |
3's in-transit |
est model 3 production-related depreciation |
per model 3 |
blended production related depreciation per 3 |
gross margin impact |
[TD2]
luv q4-18e
[/TD2][TD2]
luv q3-18e
[/TD2][TD2]
luv q2-18e
[/TD2][TD2]
Mar-18
[/TD2][TD2]
Dec-17
[/TD2]
[TD2]
60,000
[/TD2][TD2]
50,000
[/TD2][TD2]
18,440
[/TD2][TD2]
8,182
[/TD2][TD2]
1,542
[/TD2]
[TD2]n/a[/TD2][TD2]n/a[/TD2][TD2]28,578[/TD2][TD2]9,766[/TD2][TD2]2,425[/TD2]
[TD2]n/a[/TD2][TD2]n/a[/TD2][TD2]11,166[/TD2][TD2]2,040[/TD2][TD2]860[/TD2]
[TD2]n/a[/TD2][TD2]n/a[/TD2][TD2]145,000[/TD2][TD2]130,000[/TD2][TD2]80,000[/TD2]
[TD2]
n/a
[/TD2][TD2]
n/a
[/TD2][TD2]
5.07
[/TD2][TD2]
13.31
[/TD2][TD2]
45.36
[/TD2]
[TD2]
n/a
[/TD2][TD2]
n/a
[/TD2][TD2]
5.99
[/TD2][TD2]
16.68
[/TD2][TD2]
45.36
[/TD2]
[TD2]
n/a
[/TD2][TD2]
n/a
[/TD2][TD2]
-10.7%
[/TD2][TD2]
-29.8%
[/TD2][TD2]
-85.6%
[/TD2]