Even though I am a fan of tsla, I have to disagree. If there is one thing that has been bugging me, it is that tesla consistently come out at the lower end of their guidance. Projections are anything but conservative and gets guided down numerous times.
I understand the need for healthy pessimism, and that was exactly the reason I’ve put qualifier “cautiously” before the word optimism in my original post. On another hand, I was pretty diligent on doing my homework, as investing decisions that are baseless can be very costly.
The two metrics that I based my statement about Tesla being conservative with their guidance were margin and sales.
MARGIN
During the Q4 2012 CC EM indicated that Tesla expects gross margin to be in “the mid-teens”, i.e. 16.5%. I’ve used two reference points to try to verify this: Tesla’s initial guidance on selling 4500 cars in Q1 and being marginally profitable on non-GAAP, and Tesla consequent announcement on being profitable on both GAAP and non-GAAP basis while selling 4750 cars. Calculation based on these two reference points indicate that Tesla achieved approximately 20.5% gross margin in Q1, beating their own guidance of 16.5%. See my post (#130) in the “Thinking about Q1 earnings “ thread.
SALES 2013
Tesla clearly beat their guidance of 4,500 cars for Q1 and Q2. They sold 4,750 cars in Q1 and currently are building at least 500 cars a week, which yields 6,500 cars in Q2. We also know that they are planning to increase production to 650 cars a week in early fall. So we can conclude that they are going to deliver at least 6,500 cars in Q3 and 8,450 cars in Q4. The total = 4750 + 2 x 6,500 + 8,450 = 26,200 cars in 2013. Once again they were conservative with their guidance of 4,500 in Q1 and Q2 and “more than 20,000 cars in 2013”.
SALES 2014
The 2014 guidance given in Q4 2012 CC was that Tesla will deliver 10-15K cars in NA, 10K in Europe and 10-15K in Asia. Based on tracking information that was available before Tesla eliminated sequential numbering of reservations, NA reservations were around 33 cars per day or approximately 12K per year. This compares well with the 10-15K guidance given by Tesla, especially if one considers that January and February are usually lower yield months as far as automotive sales are concerned. Regarding the projection for worldwide sales they are conservative if one takes ratio of luxury car sales in US vs. worldwide. In 2012 BMW Series 5 sales worldwide were 6.3 times sales in US (359,016 worldwide vs. 56,798 in US). The ratio of worldwide to US sales for MB Class E was 4.8 (310,408 worldwide vs. 65,171). The projections given by EM are more conservative as the ratio of worldwide to US sales is 40 / 15 = 2.67.
It would be very interesting to get Tesla’s update on the above numbers and projections during the Q1 2013 earnings call.
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