Q3 2013 results - projections and expectations

[GenIIIBuyer]

I think the balance sheet pretty much confirms that 1000 cars were produced, but in-transit on their way to delivery in Europe at quarter end.

Inventory went from $254.89M

at end of Q2 to $347.54M​

at end of Q3. That is $93M inventory build quarter to quarter.

During Q2, which involved production ramp-up, Inventory only increased from $237.62M

at Q1 end. Assuming Q3 non-finished goods inventory build rate of about $20M. That leaves $70M in finished inventory build for Q3. Which translates into slightly less than 1,000 cars. (Finished goods are kept on the balance sheet Inventory section at Cost of Goods Sold value)
Assuming Cost of Goods Sold of $75K per Model S.
70M/75K = 933 cars

​

:smile:

​

 

[JRP3]

You might want to join the existing Q3 thread where this is being discussed: http://www.teslamotorsclub.com/showthread.php/19907-Q3-2013-results-projections-and-expectations

 

[FredTMC]

I think the balance sheet pretty much confirms that 1000 cars were produced, but in-transit on their way to delivery in Europe at quarter end.

Inventory went from $

254.89M at end of Q2 to $​

347.54M at end of Q3. That is $93M inventory build quarter to quarter.

During Q2, which involved production ramp-up, Inventory only increased from $

237.62 at Q1 end. Assuming Q3 non-finished goods inventory build rate of about $20M. That leaves $70M in finished inventory build for Q3. Which translates into slightly less than 1,000 cars. (Finishedgoods are kept on the balance sheet Inventory section at Cost of Goods Sold value)

Assuming Cost of Goods Sold of $75K per Model S.
70M/75K = 933 cars

​

:smile:

​

Yes, TM should've said his many cars PRODUCED in Q3. It was higher than 5500. Not sure why they didn't.

 

[GenIIIBuyer]

Sorry about the spacing, reposting after fixing in NotePad:

I think the balance sheet pretty much confirms that about 1000 cars were produced, but in-transit on their way to delivery in Europe at quarter end.


Inventory went from $254.89M at end of Q2 to $347.54M at end of Q3. That is $93M inventory build quarter to quarter.


During Q2, which involved production ramp-up, Inventory only increased from $237.62M at Q1 end. Assuming Q3 non-finished goods inventory build rate of about $20M. That leaves $70M in finished inventory build for Q3. Which translates into slightly less than 1,000 cars. (Finished goods are kept on the balance sheet Inventory section at Cost of Goods Sold value)


Assuming Cost of Goods Sold of $75K per Model S.
70M/75K = 933 cars

 

[Discoducky]

Sorry for cross posting, but thought notes were important in both the Battery cost thread and this one...Mod's slap me if you don't agree

Q3 earnings call

1. Update for Q4
   1. 25% excluding ZEV credits
      1. Pretty secure as TM is nearly ½ way through
   2. Production constrained and NOT demand constrained
      1. Alleviate these next year
2. Current assembly line capacity
   1. Main constraint is the cells
      1. Addressing this constraint as it is critical
      2. Announced a deal with Panasonic that alleviates most of the contention next year
3. Pricing of the GenIII vehicle at parity or discount versus ICE
   1. Price around 35K and consider the savings versus ICE car priced at $28 or in the EU priced at $22
   2. See’s leasing as the way to go for EV’s since the savings are essentially viewed as immediate (month to month)
4. Priorities and breadth of investments in 2014
   1. 2014 expanding Model S into Asia and more broadly into Europe and also other parts of the world
   2. X development and fine brush strokes
   3. Styling of the “generation” vehicle
      1. Will take a while to build out capacity for this vehicle
5. Panasonic agreement – Shape the agreement
   1. We’ll make a lot more cars than the current agreement and we’ll need more agreements with possibly other companies
   2. Clear we’ll need more production capacity and we are in the process of figuring that out
      1. Gigafactory!!!
6. Current level of demand – Quantify please
   1. US/NA demand has continued to increase and TM has starved NA to feed Europe
   2. Could sustain 20K/year in NA and maybe more than that
   3. Currently Europe is like NA back in January and it’s like 10K/year demand
      1. But TM is not trying to drive demand as they can’t fulfill it as they are production constrained
7. Production/week #’s – Comment on produced vs sold
   1. Lots of cars in transit
   2. Not a capital issue since the cars are already directed at paid customers
8. China – Allowing for importing percentages
   1. TM would qualify for the % of EV’s that China allows to be imported
   2. February launch
   3. Homologation is finished and have all approvals necessary to ship the car
   4. Put first cars on a boat in January
   5. Seeing good initial demand and TM isn’t doing any marketing
9. Cell supply issue – Building you own battery cell plant
   1. We are not quite ready to make a big announcement on the Gigafactory, but are exploring options
      1. But if Elon were to guess he would guess that a Gigafactory would be the best option and it would be in NA
10. How does the cell issue rank in terms of challenges
    1. Biggest single constraint and that is the critical path item
    2. TM can ensure that everything else is less important
11. Are raw materials an issue?
    1. No, main constituents other than lithium are not an issue either
12. Panasonic supply agreement – What needs to happen on their side?
    1. They are covered for 2014
    2. TM has high confidence they can deliver
13. Model X
    1. Few units in 2014 and high volume production is Q2 2015 (normal ramp)
14. Daimler
    1. B-class is going to be a great car and most compelling electric car on the market
15. Shipping logistics – Risks?
    1. We’ve got it ironed out and shipped partially built cars to Netherlands and ramping up investment there to add more capabilities.
    2. Every countries electrical grid has its own challenges and nuances
    3. 0 cars in Q2 and >1000 cars starting in August
16. Balancing shipments to different countries
    1. TM is aware of the tax credits and sympathetic to customers to achieve satisfaction their
    2. Currently in a normal delivery mode
17. Battery capacity for GenIII
    1. Not the right time to talk about the Gigafactory
    2. Green factory, with a lot of solar panels and recycling with no harmful emissions or toxins
    3. TM is trying to figure out what way to do “Version 1” of the Gigafactory which is comparable to all Li-Ion production in the world
18. Q3 or outlook benefits from tru-ups
    1. No such luck and no one time benefits as it was a clean quarter
19. Comment on wait time in Europe and China
    1. 6 to 7 weeks for Europe is best
       1. Subassembly ships to Netherlands
       2. And there is a backlog so about 3 to 4 months currently
    2. Ordering in China now would receive in mid to late Q2
20. Update on X-country trip
    1. Might do that trip during spring break due to schedules and weather
21. Mexico crash
    1. Car actually went through several structures
22. Is demand leveling?
    1. Huge amount of untapped demand in NA
    2. Saw a huge amount of reservation increase
    3. Less delivered cars was due to starting deliveries in other countries
23. Free cash flow – Update high level guidance
    1. Prefer to give 2014 guidance in the next call
    2. Depends on lots of capex details to be discussed in next call
    3. Balancing growth with cash flow
       1. Infrastructure investment is high
24. GHG and capex
    1. Effects continue to decline in every quarter and slightly over 1%
25. Improvement in tac-time and overtime
    1. Production efficiency is continuing to improve
       1. Room to improve in labor costs
       2. Head count per car should get better
26. Relations with battery suppliers and how they are contributing to IP of the cell
    1. Internals of the cells are evolving quite a lot
    2. TM is being helpful to Panasonic and has a lot of exciting things in the pipeline
27. Cycle time for improvements
    1. General goal is make a material improvement every 4 years and we started this cell step 1.5 years ago, so you’d assume to see another step change in 2 years
28. For GenIII – Is 18650 still the right form factor
    1. No reason to go away from this form factor, but it would be odd that it was perfect for long term
    2. Most likely if change, it would be bigger, but not hugely bigger
    3. Large format cells are not cheaper
29. Configuration of production – S’s and X’s
    1. TM has a game plan and if demand eclipses 100K for both, then they would reconfigure production lines
       1. Not a limiting factor and TM has a handle on how to get there

 

[kenliles]

Yes, the higher NA demand wasn't obvious just from the letter. Continued strong demand was though IMHO. I don't see what the market is doing right now as being justified, but then again the stock is based on psychology so who am I to complain?

I know what you mean regarding the short term reaction; but honestly I believe prices above $140 or so are rooted in a mis-belief that Tesla is next Apple (or similar exuberance) - I think the market catching up to the realization that Tesla scaling doesn't even approach consumer electronics and as such bears absolutely no relation - my 2c

 

[Cattledog]

In very broad terms, there are about 1,000 Model X signature reservations in US, Canada, and Europe @ $40K each, and about 7,000 general production reservations @ $5K each (not sure how many at 9/30/13). That's $40M for signature deposits and $35M for general production deposits with Model X. That leaves $65M for Model S deposits (unless I'm missing something), so that's 26,000 Model S deposits at $2,500 each. Is that right? Perhaps there were still some European signatures on the books at 9/30? They are taking deposits for rides up in the SpaceX Dragon capsule? Other?

Interesting for me is that the Customer deposits number has slightly increased in comparison to end of year 2012. This means that even though they've delivered 15.5k cars including almost all signatures the deposits are at the same amount. So the Model X reservations as well as deposits for Model S are at least on par in the pipeline and considering that the mean deposit for MS is far lower now the Model X can be the only thing offsetting it. We have $140M deposits. Can someone estimate from the Model X tally how many Model S are around in that deposit queue...

 

[Paul Carter]

Interesting for me is that the Customer deposits number has slightly increased in comparison to end of year 2012. This means that even though they've delivered 15.5k cars including almost all signatures the deposits are at the same amount. So the Model X reservations as well as deposits for Model S are at least on par in the pipeline and considering that the mean deposit for MS is far lower now the Model X can be the only thing offsetting it. We have $140M deposits. Can someone estimate from the Model X tally how many Model S are around in that deposit queue...

Approx 22-23k via this quick back of the napkin...

Model X	USA	Canada	North	USD Deposit	Europe	EUR Deposit	Exchange	USD Deposit	Total USD Deposit
Signature	904	34	938	37,520,000	147	4,410,000	1.3219	5,829,723	43,349,723
Production	6,563	271	6,834	34,170,000	1,021	4,084,000	1.3219	5,398,773	39,568,773
Totals	7,467	305	7,772	71,690,000	1,168	8,494,000		11,228,496	82,918,496
									--------------
								Dep. On Balance Sheet	140,000,000
								Est. Model S Total $	57,081,504
								Estimated Count	22,833

Assumes: 1.3219 average 2013 EUR to USD, Model S @ 2.5k / deposit, no cancel/doubles

 

[c041v]

If those numbers are legitimate, it makes sense why they "aren't really even trying" in China. Any sort of marketing campaign would fill out the next year's worth of production, assuming TM is confident they can even build 40K units. I guess that's a whole new set of problems where they can't service all the markets fast enough and you have people cancelling reservations, biting off more than they can chew as it were.

Do the deposits carry over Quarter to Quarter, or are they all new?

 

[gene]

Maybe you are all , already thinking the same thing but if they are supply constrained as it is, and here in the USA. Then why go international at all? Unless....unless..... Tesla has some big plans we don't have even a clue of yet....?

 

[Cattledog]

Way more detail than I, but same conclusion - 20K+ Model S cars reserved? How are they delivering them in a 4-6 weeks then if they are making at best 2,500/month?

Approx 22-23k via this quick back of the napkin...

Model X	USA	Canada	North	USD Deposit	Europe	EUR Deposit	Exchange	USD Deposit	Total USD Deposit
Signature	904	34	938	37,520,000	147	4,410,000	1.3219	5,829,723	43,349,723
Production	6,563	271	6,834	34,170,000	1,021	4,084,000	1.3219	5,398,773	39,568,773
Totals	7,467	305	7,772	71,690,000	1,168	8,494,000		11,228,496	82,918,496
									--------------
								Dep. On Balance Sheet	140,000,000
								Est. Model S Total $	57,081,504
								Estimated Count	22,833

Assumes: 1.3219 average 2013 EUR to USD, Model S @ 2.5k / deposit, no cancel/doubles

 

[Gtoffo]

Way more detail than I, but same conclusion - 20K+ Model S cars reserved? How are they delivering them in a 4-6 weeks then if they are making at best 2,500/month?

Good point.... 6 weeks@550 cars a week produced = 3300 cars preordered. Either Elon was reducing the lead time so as to not discourage new buyers or there must be more Model X preocrders we don't know about..... also the deposit can be significantly higher in some parts of the world. I've read that in china for example it is around 40k$.

 

[austinEV]

Maybe you are all , already thinking the same thing but if they are supply constrained as it is, and here in the USA. Then why go international at all? Unless....unless..... Tesla has some big plans we don't have even a clue of yet....?

Diversification of customer base. If they ever do start to creep up on NA saturation they have Europe and China to seamlessly take up the cars. Plus its a self-financing buildout of the sales, service, charging network in anticipation of the launch of the high-volume Model E in a few years, which is Elon's goal.

 

[bonnie]

Maybe you are all , already thinking the same thing but if they are supply constrained as it is, and here in the USA. Then why go international at all? Unless....unless..... Tesla has some big plans we don't have even a clue of yet....?

This +1000. I'm looking at what they said and the report and figuring out how much more I can buy.

 

[CapitalistOppressor]

In very broad terms, there are about 1,000 Model X signature reservations in US, Canada, and Europe @ $40K each, and about 7,000 general production reservations @ $5K each (not sure how many at 9/30/13). That's $40M for signature deposits and $35M for general production deposits with Model X. That leaves $65M for Model S deposits (unless I'm missing something), so that's 26,000 Model S deposits at $2,500 each. Is that right? Perhaps there were still some European signatures on the books at 9/30? They are taking deposits for rides up in the SpaceX Dragon capsule? Other?

We've had a mismatch between actual observable reservations (ie, reservations that are converted into sales as shown by short wait times) since January. My favorite hypothesis was that there were a large number of reservations which never confirmed and who are waiting for an opportune time (for whatever individual reasons) to purchase the car.

That explains at least 15k+ missing reservations that we used to track here on TMC and which seemed to be rendered defunct when Tesla sent everyone with a reservation a letter asking them to confirm back in December.

When you add folks who are in a similar situation in Europe with the untested reservations in Asia you can get somewhere close to 20k.

The only reason that I am not comfortable with that explanation is just the fact that we are pushing up on a year now since the bulk of those folks got sidelined. Still, there just isn't anything else that fits the data.

Here is the (no longer maintained) reservation tally that shows the kinds of numbers I am talking about. Note the ~18k net reservations as of March 3. By that point the production waiting list was essentially down to what it is now, which essentially means most of those sales were never closed (on a net basis anyways) -

This thread is intended to track Model S reservations.

If your reservation number is greater than the reservation number listed below, please post 1) your reservation number / date received 2) region and 3) type: Signature or General Production.

The Model X Reservation Tally can be found here: Model X Tally

To add / view the locations of Model S and Model X reservations holders, visit: Tesla Model S & X Reservations

The instructions to add to the reservation World Map, can be found here: World Map of Model S Reservation Holders

Delivery Update can be found here: Model S Delivery Update

Here is an updated collection of the numbers posted by members on various threads and forums (i.e., these numbers are to be taken with a grain of salt):

US
SSL 249 (January 4, 2012)
S 1,353 (October 19, 2012)
R 532 (October 30, 2012)
P 19,711 (March 3, 2013)

Canada
SSL 23 (July 18, 2012)
S 177 (September 23, 2012)
P 677 (February 1, 2013)

Europe/Asia
S 500 (July 2, 2012)
R 269 (November 25, 2012)
P 2,891 (February 27, 2013)

UK
S 20 (October 9, 2012)
P 75 (December 21, 2012)

Hong Kong
S 28 (September 27, 2012)
R 2 (July 9, 2011)
P 168 (January 11, 2013)

Australia
S 38 (August 18, 2012)
P 48 (December 12, 2012)

Gross Total: 26,761 - March 3, 2013

Net Total: 17,582 - March 3, 2013*

Official Deliveries: 132 - September 23, 2012**
Official Deliveries: 250 - October 3, 2012 Announcement***
Official Deliveries: 253 - 2012 3rd Quarter - November 5, 2012 Earnings Call ****
Official Deliveries: 2,400 - 2012 4th Quarter - February 20, 2013 Earnings Call *****

* = Net Total subtracts the 6,529 known Signature cancellations/downgrades unit differential & 2,650 Deliveries announced at February 20, 2013 Quarter Earnings Call (See ***** Link)
** = Official Deliveries stated in September 23, 2012 SEC Filing - http://sec.gov/Archives/edgar/data/1318605/000119312512402293/d413621dex991.htm
*** = Official Deliveries stated in October 3, 2012 Blog Post - An Update from Elon Musk | Blog | Tesla Motors
**** = http://files.shareholder.com/downloads/ABEA-4CW8X0/1741885587x0x611344/42cb80fa-6f64-4e48-93ff-2da29de21acc/Q3%202012%20Shareholder%20Letter%20Final.pdf
*****http://files.shareholder.com/downlo...-9c9e-16a8dda99a19/Q4'12 SHL 022013 final.pdf

S = Signature Series (Model S)
SSL = Signature Special List (Model S)
R = Roadster Owner/Friends and Family
P = General Production (Model S)
Red = Signature Series Sold Out for Region

- - - Updated - - -

I think there are just a lot of people who reserved, and who really really want the car but aren't in a position to purchase it right now. Tesla took numerous actions that seemed designed to shake them loose (like changing the requirement to purchase a service agreement, or defusing any of a number of other "controversies" from late 2012 by changing their policies), but finally gave up because underlying demand accelerated enough that they didn't need to close the sale with old reservation holders.

- - - Updated - - -

I suppose that another possibility is that a substantial number of those people intend to roll their reservation over into a Model X or Model E, but just haven't done so yet, either because they are lazy (after all its 18 months before Model X is available) or because they can't reserve a Model E yet.

 

[kenliles]

We've had a mismatch between actual observable reservations (ie, reservations that are converted into sales as shown by short wait times) since January....

I suppose that another possibility is that a substantial number of those people intend to roll their reservation over into a Model X or Model E, but just haven't done so yet, either because they are lazy (after all its 18 months before Model X is available) or because they can't reserve a Model E yet.

Likely a combination of those along with rolling to lease.

 

[DonPedro]

Maybe you are all , already thinking the same thing but if they are supply constrained as it is, and here in the USA. Then why go international at all? Unless....unless..... Tesla has some big plans we don't have even a clue of yet....?

They are supply constrained at the moment, but that situation will not persist. Especially not since they are ramping the production up so fast. International expansion takes time, so they start now to lay the ground work for sufficient demand in 2014 and beyond.

 

[Jack6591]

Jim Sinegal of Costco, was famous for saying: "We are building a company to be here one hundred years from now, not to meet the quarter to quarter expectations of Wall Street."

Maybe, we should rethink this thread.

 

[Paul Carter]

If those numbers are legitimate, it makes sense why they "aren't really even trying" in China. Any sort of marketing campaign would fill out the next year's worth of production, assuming TM is confident they can even build 40K units. I guess that's a whole new set of problems where they can't service all the markets fast enough and you have people cancelling reservations, biting off more than they can chew as it were.

Do the deposits carry over Quarter to Quarter, or are they all new?

Yes, just like Cash.

We've had a mismatch between actual observable reservations (ie, reservations that are converted into sales as shown by short wait times) since January. My favorite hypothesis was that there were a large number of reservations which never confirmed and who are waiting for an opportune time (for whatever individual reasons) to purchase the car.

That explains at least 15k+ missing reservations that we used to track here on TMC and which seemed to be rendered defunct when Tesla sent everyone with a reservation a letter asking them to confirm back in December.

When you add folks who are in a similar situation in Europe with the untested reservations in Asia you can get somewhere close to 20k.

The only reason that I am not comfortable with that explanation is just the fact that we are pushing up on a year now since the bulk of those folks got sidelined. Still, there just isn't anything else that fits the data.

Here is the (no longer maintained) reservation tally that shows the kinds of numbers I am talking about. Note the ~18k net reservations as of March 3. By that point the production waiting list was essentially down to what it is now, which essentially means most of those sales were never closed (on a net basis anyways) -



- - - Updated - - -

I think there are just a lot of people who reserved, and who really really want the car but aren't in a position to purchase it right now. Tesla took numerous actions that seemed designed to shake them loose (like changing the requirement to purchase a service agreement, or defusing any of a number of other "controversies" from late 2012 by changing their policies), but finally gave up because underlying demand accelerated enough that they didn't need to close the sale with old reservation holders.

- - - Updated - - -

I suppose that another possibility is that a substantial number of those people intend to roll their reservation over into a Model X or Model E, but just haven't done so yet, either because they are lazy (after all its 18 months before Model X is available) or because they can't reserve a Model E yet.

Good point. I think the 2.5k division is wrong then. I now have a feeling their way more 5k reservations in there. So my napkin has ran out of space and facts to come up with a reasonable guesstimate at this point.

 

[brian45011]

Any possiblility that the Customer Deposits line on the Balance Sheet also includes Extended Service Plans? If so, there would be a gradual accretion as more cars with Extended Service Plans are sold.