Short-Term TSLA Price Movements - 2016

[TMSE]

I suppose Tesla's leasing arm somehow can claim the tax credit? But even then, especially the 2 year leases on classic P90Ds that they've been handing out like candy are a financial time bomb. Check this thread. Cars with MSRPs of 140k discounted 30k and then set with a residual of 95k. Gets you a lease for $700 dollar or so with 5-10k down just because the car is a pre-facelift. And that's not just one lease but likely hundreds of them if you go by the amount of reports in that thread. Highly questionable that those cars will still fetch 95k after 2 years of leasing abuse. Current leasers are quite clear they'll never buy the car after their term is up so they will saddle Tesla with the loss. Anyway, all that loss is for 2 years down the line. Either the model 3 is a successfully launched by then making all this a rounding error on the balance sheet or either it just adds to the hole Tesla would already be in.

You got your math wrong. It is a 1 year old used car with 4500 miles on it, although it is treated as new with tax credits. It's MSRP is $133K, not $140k.

Discount of $31K, is actually for the first year depreciation. Lease cost over next 2 yrs is about $25k. In total, $56k is the cost of ownership over 3 yrs.

The residual value: $133k - $56k -$7.5k (tax credit) = $69.5k.

As long as Tesla can sell this 3 yr old car at the end of lease term for $69.5k or better, it will do fine. The $95k is the sell offer price to the lease customer at the end of lease term, not the residual value.

 

[brian45011]

Also, a major reason Tesla is able to price these so favorably is they get the benefit of the $7500 federal tax credit.

How?

 

[BobSk]

added more TSLA @$155 via SCTY proxy @$17.21

I also added around $17.3, and will vote yes on both my TSLA and SCTY shares.

 

[trentxintong]

I also added around $17.3, and will vote yes on both my TSLA and SCTY shares.

I also added SCTY shares at ~17.3 and vote Yes for both company shares.

 

[phigment]

Let me add some support too. I jumped in at $17.28. Will vote yes!

 

[WarpedOne]

Hello fellow SCTY holders!
Now where is the ShortTerm SCTY thread?

 

[CorneliusXX]

You got your math wrong. It is a 1 year old used car with 4500 miles on it, although it is treated as new with tax credits. It's MSRP is $133K, not $140k.

Discount of $31K, is actually for the first year depreciation. Lease cost over next 2 yrs is about $25k. In total, $56k is the cost of ownership over 3 yrs.

The residual value: $133k - $56k -$7.5k (tax credit) = $69.5k.

As long as Tesla can sell this 3 yr old car at the end of lease term for $69.5k or better, it will do fine. The $95k is the sell offer price to the lease customer at the end of lease term, not the residual value.

Why the difference in the sell offer price v the RV? Does Tesla think they will be able to sell the vehicle for $95k when it is returned or is there some reason leaseholders would be willing to pay over market rate?

 

[TMSE]

Why the difference in the sell offer price v the RV? Does Tesla think they will be able to sell the vehicle for $95k when it is returned or is there some reason leaseholders would be willing to pay over market rate?

I wouldn't pay $95k for a 3 yr old used car. The point is that Tesla doesn't need to sell at $95k as the original poster alluded to. As long as it can sell at or above $69.5k, it will do fine.

 

[schonelucht]

You got your math wrong. It is a 1 year old used car with 4500 miles on it, although it is treated as new with tax credits. It's MSRP is $133K, not $140k.

I am unclear which of the many cars referred in that thread you mean exactly. I was speaking more broadly on the principle. Here is a concrete case from that thread. MRSP 142k, discount/depreciation 35k, down 5k, residual 94k. Total lease cost : 23k.

The residual value: $133k - $56k -$7.5k (tax credit) = $69.5k.

You are forgetting Tesla is paying roughly 2% interest per year on their outstanding cost balance (see recent warehouse facility disclosure). That adds another 6k (roughly). In the case of car linked above : $142k - 23% margin = 108k cost of goods. Add 3 year @ 2% financing cost to Tesla and the total outlay is $114k. Meanwhile Tesla receives $7.5k EV credit (although no one seems to know how exactly, me included) and $23k from the leaser, leaves $83.5k. That's without any refurbishments cost as they bring up the car back to spec after pulling it from inventory. Will they fetch that for a car that is 3 years old, has been through the wringer as a loaner and a lease, is pre-autopilot 2.0, and has a battery that compares poorly to then current 120kWh?

 

[racer26]

What the heck. Me too, in for some more SCTY @ 17.47, for shares to round out the TSLA I'll end up with (when combined with my previous SCTY holdings). Also snagged up some SCTY Jan'17 calls @ $20 for $1.75. (represents buying TSLA for the equivalent of $197.73)

 

[sunhelm]

I am unclear which of the many cars referred in that thread you mean exactly. I was speaking more broadly on the principle. Here is a concrete case from that thread. MRSP 142k, discount/depreciation 35k, down 5k, residual 94k. Total lease cost : 23k.



You are forgetting Tesla is paying roughly 2% interest per year on their outstanding cost balance (see recent warehouse facility disclosure). That adds another 6k (roughly). In the case of car linked above : $142k - 23% margin = 108k cost of goods. Add 3 year @ 2% financing cost to Tesla and the total outlay is $114k. Meanwhile Tesla receives $7.5k EV credit (although no one seems to know how exactly, me included) and $23k from the leaser, leaves $83.5k. That's without any refurbishments cost as they bring up the car back to spec after pulling it from inventory. Will they fetch that for a car that is 3 years old, has been through the wringer as a loaner and a lease, is pre-autopilot 2.0, and has a battery that compares poorly to then current 120kWh?

One other thing to consider is that perhaps the majority of these leases are software limited S60s. The accounting treatment for this is nowhere in the books as far as I know but I don't think it is insignificant. Essentially, one turns in an S60 and after a few keystrokes, Tesla sells it back as S75s!

 

[Crowded Mind]

I am unclear which of the many cars referred in that thread you mean exactly. I was speaking more broadly on the principle. Here is a concrete case from that thread. MRSP 142k, discount/depreciation 35k, down 5k, residual 94k. Total lease cost : 23k.



You are forgetting Tesla is paying roughly 2% interest per year on their outstanding cost balance (see recent warehouse facility disclosure). That adds another 6k (roughly). In the case of car linked above : $142k - 23% margin = 108k cost of goods. Add 3 year @ 2% financing cost to Tesla and the total outlay is $114k. Meanwhile Tesla receives $7.5k EV credit (although no one seems to know how exactly, me included) and $23k from the leaser, leaves $83.5k. That's without any refurbishments cost as they bring up the car back to spec after pulling it from inventory. Will they fetch that for a car that is 3 years old, has been through the wringer as a loaner and a lease, is pre-autopilot 2.0, and has a battery that compares poorly to then current 120kWh?

Why are you assuming a 23% margin on a top-end Model S?

 

[Oil4AsphaultOnly]

I suppose Tesla's leasing arm somehow can claim the tax credit? But even then, especially the 2 year leases on classic P90Ds that they've been handing out like candy are a financial time bomb. Check this thread. Cars with MSRPs of 140k discounted 30k and then set with a residual of 95k. Gets you a lease for $700 dollar or so with 5-10k down just because the car is a pre-facelift. And that's not just one lease but likely hundreds of them if you go by the amount of reports in that thread. Highly questionable that those cars will still fetch 95k after 2 years of leasing abuse. Current leasers are quite clear they'll never buy the car after their term is up so they will saddle Tesla with the loss. Anyway, all that loss is for 2 years down the line. Either the model 3 is a successfully launched by then making all this a rounding error on the balance sheet or either it just adds to the hole Tesla would already be in.

Leases have mileage restrictions and wear/tear limits on non-powertrain items. So the car interiors will be returned in servicable conditions. The abuse that ICE's depreciate on wouldn't really apply to an EV. Jack-rabbit at every stop light? Not a problem, since the powertrain warranty is unlimited miles anyway, so it's the same cost from a lease vs. purchase perspective. So there shouldn't be an issue with excess depreciation from leasing vs. buying.

 

[TMSE]

I am unclear which of the many cars referred in that thread you mean exactly. I was speaking more broadly on the principle. Here is a concrete case from that thread. MRSP 142k, discount/depreciation 35k, down 5k, residual 94k. Total lease cost : 23k.



You are forgetting Tesla is paying roughly 2% interest per year on their outstanding cost balance (see recent warehouse facility disclosure). That adds another 6k (roughly). In the case of car linked above : $142k - 23% margin = 108k cost of goods. Add 3 year @ 2% financing cost to Tesla and the total outlay is $114k. Meanwhile Tesla receives $7.5k EV credit (although no one seems to know how exactly, me included) and $23k from the leaser, leaves $83.5k. That's without any refurbishments cost as they bring up the car back to spec after pulling it from inventory. Will they fetch that for a car that is 3 years old, has been through the wringer as a loaner and a lease, is pre-autopilot 2.0, and has a battery that compares poorly to then current 120kWh?

Now you are mixing up and fudging facts to fit your narrative. Your new example lease payments is 770/mo and lease cost is $26.5k, not 23k.

From your first post, you mentioned $700 monthly payment and linked a thread. The first post is what you referred to. Here it is again: Snagged a P90D Inventory car for $700/mnth on the new 24 month lease

That example has complete details if you check the JPEG image https://teslamotorsclub.com/tmc/attachments/image-png.190879/

 

[schonelucht]

Why are you assuming a 23% margin on a top-end Model S?

It's the best number we have without speculation.

 

[schonelucht]

Leases have mileage restrictions and wear/tear limits on non-powertrain items. So the car interiors will be returned in servicable conditions.

Yes, about that. The overages are so cheap ($0.25) that everyone is taking the lowest mileage tier and just plans to pay the overages. So we are looking at cars that will have around 40k miles after 3 years. Will they be servicable? Sure. But will the full cost of that service be able to be billed to the leaser?

Now you are mixing up and fudging facts to fit your narrative. Your new example lease payments is 770/mo and lease cost is $26.5k, not 23k

Huh? 24*770 + 5k down = 23 480? Am I missing something?

One other thing to consider is that perhaps the majority of these leases are software limited S60s.

No. These are all fully loaded P90D(L)s we are talking about. Check the thread.

 

[techmaven]

It's the best number we have without speculation.

It's also clearly wrong.

For example, just try to sort out the gross margin on the ludicrous mode upgrade.

 

[esk8mw]

It's the best number we have without speculation.

As you know, 23% is a very poor estimate of top end margins. In mid 2015 (i.e., prior to X ramp and effect on margins), the total auto GM (non-GAAP)-meaning S only- was 23.8% (avg of Q2 and Q3). Since then, productions costs have come down significantly as production has doubled and Elon has said on record that S margins on a combined basis (yes, after introducing the popular and cheaper 60) will approach 30% by year end.

Are you attempting to argue with a straight face that the highest priced S is less than the combined S margin in mid 2015 and just 1 point above where things are currently on a combined basis (S+X, which was 21.9% in 2016 Q2 even factoring in extreme X ramp issues)?

I usually find your posts pretty reasonable (a negative slant to be sure, but usually defensible). This estimate is completely bogus. P90DL margins conservatively approach 35-40% depending on options, otherwise the disclosed S margins make no sense at all.

 

[TMSE]

Yes, about that. The overages are so cheap ($0.25) that everyone is taking the lowest mileage tier and just plans to pay the overages. So we are looking at cars that will have around 40k miles after 3 years. Will they be servicable? Sure. But will the full cost of that service be able to be billed to the leaser?



Huh? 24*770 + 5k down = 23 480? Am I missing something?



No. These are all fully loaded P90D(L)s we are talking about. Check the thread.

Not 5k. 8k due at signing.

 

[techmaven]

Examining the P90D+L gross margin... here are some ways to look at it.

Take the erroneous assumption, but helpful simplification that the 90D has 21% gross margin. Using the latest pricing sheets, that's $89,500 for the base 90D, and $112,000 for the P90D. That's $22,500. There's a slight seat upgrade, a bigger rear motor, bigger inverter, and red brake calipers. Let's say the seat upgrade is worth $1,500. The rear motor is the same motor as the original S... the entire drive unit was reportedly $15,000. So, putting about $5,000 in the difference is high, but reasonable. Red brake calipers... say $500? Brembo has to make some dough too. Add in another $1,000 in warranty holdback. So that's $8,000 more in COGS, but $22,500 in retail price. So the COGS for the 90D was about $70,500. The COGS for the P90D is $78,500 but priced at $112,000. Gross margin is now about 30%.

Then let's look at the ludicrous mode upgrade. The 90D's have the exact same hardware. They can be upgraded to ludicrous mode with a settings change. So let's price in $2,000 for warranty holdback. So $10,000 upgrade cost, the COGS looks like $80,500, but the price is now $122,000. Gross margin is now... about 34%. Remember, we took the erroneous simplification that the 90D has 21% gross margin. Likely, fully configured P90D+L's had in excess of 40% gross margin since they take all the high margin options.

Another way to look at it, Tesla could price a P90D+L at $105-110k and still make average gross margin.