Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[kengchang]

500/week is 5k over 10 weeks. You are forgetting that FC put a cap of 3k by EOY on GF3 due to glass contracts.

So, +4k from Fremont is needed.

It seems their ramp goes slower than Elon suggested, didn't he say something like 8.5k/w goal of M3 by EOY 2019? Lazy to search for this, but not seeing this kind of growth in the remaining 3mo.

Hitting 8.3K Model 3/week by EoY, but that's not 8.3K every week in Q4.

 

[Reinhard]

​

I agree these results are preferable to 100k with a poor 14/86 mix. But I see no chance of profit barring crazy-high emissions credits and deferred revenue recognition. Deliveries are up ~2000 from Q2, but S/X sales are down ~6% and Model 3 sales roughly flat due to higher lease percentages. That will hurt results.

50-60% more leased vehicles helps with margins too. I wonder how much uptake there was for the solar panels.

 

[Fact Checking]

Vincent update on GF3 trial production:

Vincent on Twitter

"Made in China Model 3 pic"

"A picture from my anonymous follower."

"From the pic we can see at least 8 MIC Model 3 are under trial production inside Tesla Shanghai Gigafactory GF3"

In various colors already: white, red, blue, black and silver.

 

[HG Wells]

OT

On a happy note (for me) version 10 is installing on my SR+ AP only command vehicle.
Today the parking lot, tomorrow the world !

 

[X Fan]

Note that 15% of them are leased (2,600 units), which means less revenue recognized straight away. On the plus side it will result in significantly more profits on those units (50% vs. the usual ~20%) - but the income is spread out over ~3 years.

Good point....in Q3, 800 more S/X's were leased (Model 3 was 2,000 more). There are new FASB rules this year which clouds my view on Financial impact.

More future robo taxis I suppose.....

 

[StealthP3D]

"From the pic we can see at least 8 MIC Model 3 are under trial production inside Tesla Shanghai Gigafactory GF3"
​

In various colors already: white, red, blue, black and silver.

China gets silver ones? That's a real slap in the face to us over here in N.A.!

 

[kengchang]

Vincent on Twitter

A picture from my anonymous follower. From the pic we can see at least 8 MIC Model 3 are under trial production inside Tesla Shanghai Gigafactory GF3

 

[X Fan]

OT

On a happy note (for me) version 10 is installing on my SR+ AP only command vehicle.
Today the parking lot, tomorrow the world !

View attachment 461925

Cute dog....I miss my guy who passed a few months ago at age 16. He was a superb car traveller & went up and down the East Coast between NC & FL at least 15 times with us.

 

[Doggydogworld]

Initial recognized revenues from leased vehicles are around half of straight sale vehicles.

Whoa, this is way off. Leasing revenue is roughly 50% of straight sale price spread over three years.

Leasing revenue has "momentum". If Tesla leased zero cars in a quarter their leasing revenue for that quarter would only drop a few percent. Conversely, their Q2 results included very little Model 3 leasing revenue, probably less than 2m out of 208m total automotive lease revenue.

However, gross margin is 49% vs 17% (leased vs sale). $5.17B in sales. $4.25B in of sales. $0.208B in lease sales. $0.102B in cost of lease sales.

My question is....why don't they push leases more?

Leasing gross margin is roughly 2x sales gross margin. This is because they recognize half the revenue but all of the gross profit over the (typically) 36 month period. Selling a 96k Model S with 72k COGS gives 25% gross margin. Leasing that same car gives something like 4k revenue and 2k of COGS for 12 straight quarters. That's 50% gross margin. The car is still on the books at a 48k residual value when the lease ends. The goal is to resell the off-lease car for the residual value. They report the 48k +/- of revenue and 48k of COGS in Service.

The current lease fleet is mostly S/X that were leased when sale gross margins were >25%, so Tesla is still reporting lease margins of nearly 50%. Recent leases are lower margin, if that continues we'll see leasing margin gradually drift down over the next three years.

 

[Steve m]

From the Tesla Carriers spread sheet 1 ship has already been and left SF bound for Korea. A second one is in SF loading. A third is due in SF tomorrow. A forth on Oct 14th.

In Q3 Tesla didn't hit 4 ships until July 25th a week and a half later in the Q.

No way were the cars being shipped this week made this week.

 

[madodel]

Ok all you stock historians...

Has there ever been a company that has had a record quarter both in production and deliveries and their stock immediately tanks? I honestly don't know. Seems counterintuitive to me.

Ah well, that's TSLA for ya!

Dan

AAPL

 

[Troy]

OK, I was off by 4,012 units. This is a similar error to my past estimates. However, I got the S/X vs Model 3 split wrong. Especially, overestimating Model 3 by 9% is bad. I'm putting these details out there for transparency.

• Q2 2018, I underestimated by 4,011
• Q3 2018, I underestimated by 3,169
• Q4 2018, I underestimated by 11,457
• Q1 2019, I overestimated by 4,800
• Q2 2019, I underestimated by 4,028
• Q3 2019, I overestimated by 4,012 units

My guess is, I might have overestimated UK and North America by 2K each.

 

[Curt Renz]

From my TD Ameritrade newsfeed:

5:34 pm ET
Tesla Beijing Entered Agreement With China Merchants Bank Co. for Unsecured 12-Month Revolving Facility of Up to RMB 5 Billion
Dow Jones

 

[Thekiwi]

Whoa, this is way off. Leasing revenue is roughly 50% of straight sale price spread over three years.

Leasing revenue has "momentum". If Tesla leased zero cars in a quarter their leasing revenue for that quarter would only drop a few percent. Conversely, their Q2 results included very little Model 3 leasing revenue, probably less than 2m out of 208m total automotive lease revenue.

Leasing gross margin is roughly 2x sales gross margin. This is because they recognize half the revenue but all of the gross profit over the (typically) 36 month period. Selling a 96k Model S with 72k COGS gives 25% gross margin. Leasing that same car gives something like 4k revenue and 2k of COGS for 12 straight quarters. That's 50% gross margin. The car is still on the books at a 48k residual value when the lease ends. The goal is to resell the off-lease car for the residual value. They report the 48k +/- of revenue and 48k of COGS in Service.

The current lease fleet is mostly S/X that were leased when sale gross margins were >25%, so Tesla is still reporting lease margins of nearly 50%. Recent leases are lower margin, if that continues we'll see leasing margin gradually drift down over the next three years.

The great thing about those off-lease cars is that Tesla can potentially sell them for considerably more than residual value with a zero cost software update that unlocks FSD (or a relatively small cost of popping in a new CPU if needed), and/or including other benefits like free supercharging etc.

 

[Reinhard]

OK, I was off by 4,012 units. This is a similar error to my past estimates. However, I got the S/X vs Model 3 split wrong. Especially, overestimating Model 3 by 9% is bad. I'm putting these details out there for transparency.

• Q2 2018, I underestimated by 4,011
• Q3 2018, I underestimated by 3,169
• Q4 2018, I underestimated by 11,457
• Q1 2019, I overestimated by 4,800
• Q2 2019, I underestimated by 4,028
• Q3 2019, I overestimated by 4,012 units

My guess is, I might have overestimated UK and North America by 2K each.

I don't think overestimating Model 3 by 9% is bad. The 14K S/X estimate was bad. How did you derive that figure and do you plan to use a different tactic for Q4?

 

[Doggydogworld]

Note that 15% of them are leased (2,600 units), which means less revenue recognized straight away. On the plus side it will result in significantly more profits on those units (50% vs. the usual ~20%) - but the income is spread out over ~3 years.

Just to be clear, the dollar profit is the same. Percentage margins are higher because the same gross profit is divided by a smaller denominator (revenue).

As I mentioned upthread, leasing margins today are near 50% because most cars in the fleet were leased when sale margins were >25%. With clean numbers we'd see leasing gross margin decline about 1% per quarter for a few years. Stuff like early cancellations mush the numbers up, however, so it's not possible to see such a small change from quarter to quarter.

 

[Steve m]

OK, I was off by 4,012 units. This is a similar error to my past estimates. However, I got the S/X vs Model 3 split wrong. Especially, overestimating Model 3 by 9% is bad. I'm putting these details out there for transparency.

• Q2 2018, I underestimated by 4,011
• Q3 2018, I underestimated by 3,169
• Q4 2018, I underestimated by 11,457
• Q1 2019, I overestimated by 4,800
• Q2 2019, I underestimated by 4,028
• Q3 2019, I overestimated by 4,012 units

My guess is, I might have overestimated UK and North America by 2K each.

Your error as a percentage has been dropping even as the number of countries has been increasing. ~+-4% is well within the ball park.

 

[madodel]

Once again Elon f*cks us over with his damn stupid emails. Ugh! He stupidly doesn’t understand everything he sends will be scrutinized.

No it was the crazy people that read so much into these internal leaks and predict based on their best dreams. It sets us all up for this stupidity where they beat the consensus but that isn't good enough. 97,000 is pretty freaking close to 100k. Production and deliveries continue to grow by leaps. In the end we win.

 

[Thekiwi]

 

[KSilver2000]

Ok all you stock historians...

Has there ever been a company that has had a record quarter both in production and deliveries and their stock immediately tanks? I honestly don't know. Seems counterintuitive to me.

Ah well, that's TSLA for ya!

Dan

A lot of companies, including FAANG.