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

[mongo]

I’m not understanding what you are saying here. Specifically to quote the link you provided.

So your link seems to support the idea that deferred tax assets can be added to GAAP income when it is decided they are likely to be used. But you are saying that is not correct somehow?

edit: to be clear I meant deferred tax assets kept in the valuation reserve. Anything outside the reserve has already been recognized as income.

I agree, that section is confusing. I think they messed up, or I'm confused. At a 25% tax rate, they could release 8 million, reduce taxible income by that amount, save 2 million in taxes, and cover the 2 million shortfall.

Looking at the NOL is simplier. X loss (or earlier taxed income) in the past gets deducted in the future. If they are tracking direct tax credits, those would flow 1:1 (against the taxes, which still requires profit to begin with)

Spoiler: example that I think is correct, but may not be

Say there was a 1 million warranty reserve created. That is still taxed as income by IRS, but not recognized by shareholders. When the warranties are paid out, the company offsets their income at that time by the 1 million they already paid taxes on. The 1 million paid out comes from the cash sheet, not the P&L, but P&L is boosted by the reduction in taxes now that were paid then.

 

[KarenRei]

1. Projections for energy storage growth by 2040 show that it's not going to be nearly as big of a market opportunity as EVs. 3TWh per year for storage, vs say 100KWh per vehicle per 50M vehicles (conservative) is 5TWh per year for EVs. Furthermore, energy storage are basically just batteries with some inverters and software, whereas EVs are much more than just batteries and sell for much more $/KWh than energy storage does.

I'm automatically highly skeptical of any energy-related forecast that shows only a shallow change over multi-decadal timecales. It reminds me of the terrible IEA wind and solar forecasts:

The world is expected to need nearly $50T in new energy investment by 2035. The notion that storage isn't going to be a major part of this is frankly nonsense.

The biggest problem is that most forecasters have repeatedly failed to understand how fast storage will drop in price - to the point that they even get it wrong in realtime. The notion that Tesla could do the Hornsdale battery for $387/kWh installed was laughed at by many supposed experts. Yet they did so, and without blowing their margins. Yet this is still very early in terms of large-scale storage products for Tesla. Tesla is at ~$100/kWh at the cell level, and 5 years from now I wouldn't be surprised to see them pushing ~$50/kWh cell cost (assuming mining tech cooperates in terms of supply pricing). Certainly well under $100/kWh at the very least. And meanwhile, manufacturing improvements will continue to push the total hardware cost down closer to the cell cost . This will radically alter the economic picture for mass storage projects.

Indeed, even the demand for mass storage is thrown off by the continual failure to predict how quickly wind and solar production would grow. They're now getting to the point where the cost of building new wind and solar projects is lower than the cost of just keeping existing coal plants running.

Storage, even with major price drops, won't entirely eliminate the need for backup power. But there's no shortage of plants that will be driven out of the baseload market that can transition to a peaking / load-following / backup role... so long as they're given sufficient time to ramp. And in terms of rapid-response peaking, nothing competes with battery storage - even today.

Additionally, once you start getting grid-scale storage costs low enough, you're no longer just looking at just a market for rapid-response peaking (and voltage/frequency maintenance on remote lines); you're now starting to make overnight battery storage practical in increasingly large markets.

 

[The Accountant]

I was loath to post last night (not an accountant), but @FrankSG's post matches my understanding/ research.
Unfortunately, the scenario painted by @The Accountant is not how it seems to work.
The valuation line tracks the difference between income as reported to shareholders vs income reported to the IRS. This difference is due to things like warranty reserves and such which are hedged against in terms of shareholder value, but are not realized until expensed.
This line also includes Net Operating Loss (NOL) from previous quarters.

The purpose of the item is to track unclaimed income reductions for tax purposes in the future. When the company becomes profitable, they can use this amount to offset their positive net income before taxes to reduce their tax. Apparently, they can claim up to 80% of pre tax income each year.

It will be a benefit in terms of better earnings after taxes, but it does not flow down directly into P&L, nor does it at a 1:1 rate. (No idea how they track a tax credit vs NOL though)

Links on the topic:
Understanding Deferred Tax Assets | The Motley Fool

Loss Carryforward

You state that you're not an accountant but you're pretty good at following this. Your point is clear.
Although I'm not a tax accountant, I have audited Deferred Tax Assets for many years in my prior career.
I think what may be throwing you off is the concept of Tax Financials and Book (10K) financials.
For tax purposes - you take the Net Operating Loss benefit in the future as you generate income.
For book (10k) purpsoes, you take the tax benefit now and tuck it away as a Deferred Tax Assset.
Tesla has not been taking the tax benefit now for "book financials" because realization was not certain.
Once it is certain (better than 50% likely) they can catch-up on the benefit they had not been taking.

 

[Buckminster]

so our superbulls weekend off topic hype gives us additional 2.7B$ of profit for Q4!?! 1.8 tax and 0.9 of sold calls.
we just need one of both to become true...

why did these topics came up just now and why are they on noones radar since months?

At least we can all agree that this is a game changer for Tesla finances over the next year. Combined with another $1Bn from FCA.

=~$4Bn
=P/E ratio of 23 without any other operational profits. So the calls may never show as profit but the tax has to at some point - right?

 

[FrankSG]

I'm automatically highly skeptical of any energy-related forecast that shows only a shallow change over multi-decadal timecales. It reminds me of the terrible IEA wind and solar forecasts:

Love your informative post! And the 3TWh energy storage in 2040 might be too low as you and others seem to believe, but the forecast is not exactly "shallow" either. It forecasts 122x growth compared to today's energy storage market. That's 2 orders of magnitude.

 

[kbM3]

@ammulder , @Thumper

Before I address your robotaxi concerns, let's start with this. I don't believe Elon's claim that Tesla Energy has the potential to be bigger than its automotive business because:

1. I'm not that optimistic about Tesla's non-Solar Roof solar business. Unlike batteries, Tesla/Panasonic does not make the world's best solar modules. It's a much older technology ((around since 1880s, used in space applications since 1950s) and is much more commoditized.
2. Projections for energy storage growth by 2040 show that it's not going to be nearly as big of a market opportunity as EVs. 3TWh per year for storage, vs say 100KWh per vehicle per 50M vehicles (conservative) is 5TWh per year for EVs. Furthermore, energy storage are basically just batteries with some inverters and software, whereas EVs are much more than just batteries and sell for much more $/KWh than energy storage does.
3. Solar Roof could be pretty big, but according to my calculations does not have as big a market potential as energy storage.

View attachment 501962

A monopoly (aka total market potential) of a 3TWh energy storage market at $200k / MWh (Powerwall 2 is $480k / MWh today, utility scale likely much cheaper) is worth $600B in annual revenue.

View attachment 501964

A monopoly of a global 25M roofs per year Solar Roof market at $20k avg cost per roof (about 50% of today's prices, assuming technology improvements) would be worth $500B in revenue per year. This is if every single roof worldwide will be a solar roof, which might or might not happen.

View attachment 501965

The potential of a 50M vehicles per year EV market at an ASP of $40k would be $2T in annual revenue. Even at an ASP of $30k, it would still be $1.5T, which is still more than the $600B + $500B = $1.1T of the combined energy storage + solar roof markets.



No offense taken! I understand your skepticism.



I understand your viewpoint which is based on what car ownership is like today. However, car ownership is going to be vastly different from what it is today when full autonomy arrives. When Tesla has an FSD system that is safer than a human and gains regulatory approval, I expect them to bundle this as standard on every single vehicle just like they've done with autopilot. I also expect the price of this FSD system to be significant. Elon has talked about $100k+ in the past, but even if it just costs costs a lot less like $20k, up front costs of vehicle purchases will increase significantly, while at the same time robotaxis will reduce the price of transportation on demand significantly.

As a result, car ownership will change drastically from what it is today. Many more people will simply rely on robotaxis for transportation, because it will be cheaper than private car ownership is today. Private car ownership today is about $0.60 per mile, but transportation by robotaxi is likely to be similar or cheaper (in my model it's $0.33). If the increased up front costs of cars increases the cost of private car ownership from $0.60 to say $0.70 or $0.75 per mile, while at the same time a robotaxi costs $0.50 per mile, simple economics indicate that most people will no longer own a car without renting it out as a robotaxi. And probably most cars will be bought by fleet operators rather than individuals.



I agree with a lot of this. I think most of Tesla's customers after full autonomy is here will be fleet operators/companies rather than individuals. And I think Tesla's vertical integration of insurance and service is going to come in extremely handy. Also, don't forget the inward facing camera that will record people who really vandalize a vehicle.



The model isn't supposed to give a pin-point accurate prediction of the future, but rather to help understand the potential economics of the Tesla Network AMaaS business. Full FSD not being here in 2024 would shift the numbers around a little bit, but not by that much, because it's a simple software update that Tesla has to send out to its vehicles. The biggest impact on these numbers far and away are Tesla's production numbers. If Tesla produces significantly more or less vehicles than the estimations in this model (that is a little aggressive btw), that'll impact the numbers quite a bit.

More details on this model, the assumptions, and reasoning behind it, can be found in my blog:

My Tesla Investment Thesis 2.0: Tesla's Monopoly Potential

Thanks for doing the detailed estimates. I always love to see them.

Since they are long range, the question arises as to whether future financial amounts are in 2020 dollars, or include inflation.

If inflation is not included, then I don't believe the potential markets are as large as you predict at those prices.

E.g. Will there really be a market for 50M cars / year worldwide at a $40k ASP (and the same for Solar Roofs at $20k ASP)? Most of the world’s current auto sales are very, very cheap cars.

 

[mongo]

You state that you're not an accountant but you're pretty good at following this. Your point is clear.
Although I'm not a tax accountant, I have audited Deferred Tax Assets for many years in my prior career.
I think what may be throwing you off is the concept of Tax Financials and Book (10K) financials.
For tax purposes - you take the Net Operating Loss benefit in the future as you generate income.
For book (10k) purpsoes, you take the tax benefit now and tuck it away as a Deferred Tax Assset.
Tesla has not been taking the tax benefit now for "book financials" because realization was not certain.
Once it is certain (better than 50% likely) they can catch-up on the benefit they had not been taking.

Thanks for the feedback
So these terms mean different things in different ledgers? Ack!
So is this line item a representation of previously paid tax? That explains the combination of tax credits and operating loss.
It which case it is a tax adjustment, not an income adjustment?
That would still require a profit to adjust the taxes on, wouldn't it?

 

[KarenRei]

Love your informative post! And the 3TWh energy storage in 2040 might be too low as you and others seem to believe, but the forecast is not exactly "shallow" either. It forecasts 122x growth compared to today's energy storage market. That's 2 orders of magnitude.

Only 27% annualized growth.

If 122x (2 orders of magnitude) in 20 years sounds like a lot, here's what solar has done:

3 orders of magnitude.

Grid-scale battery storage has only recently been taking its first baby steps. It's due for an explosion.

 

[M3Rider]

Oh, man! Tuesday's looking good unfrickenbelievable!

I've been looking forward to a mass-extinction. And if it happens to involve dinosaurs, even better!

First, some of the dinosaurs saw the meteor and became afraid, but the extinction didn't happen until after the impact. I bet some dinosaurs never even saw it coming.

I think you are mis-reading the tweet.

Shorts are not dinosaurs, they are nuisance. Nothing is coming for them on Tuesday. There was another stormy weather(song) tweet for shorts, but that was a reflection of the current(then) SP.

ICE are dinosaurs. The meteor could be Y with the start of deliveries announced in ER.

However, if 2-5k are delivered in Q1, they could be more of a drain on Q1 financials, than a boost.

That tweet has a longer term horizon for those that can see. Not sure that all will see after the ER, but even more unlikely, on Tuesday.

 

[The Accountant]

Update on Deferred Tax Asset Impact on GAAP Financials

This is a rough estimate of how Tesla has deferred the tax benefit since 2004:

As you can see, some of the benefits start to expire in 2024 but the significant benefits begin to expire in 2035.
Due to US tax policy changes, the 2018 loss has no expiration.

I used @FrankSG 10 year plan (adjusting his EBIT to Pretax income) and further forecasted to 2037 (the year all tax benefits expire).
As you can see below, Tesla should be able to use all of their tax benefits before expiration.
However, after reviewing the table below, I am concerned that there is not much benefit utilized in the next 3 years and I'm wondering if that will have the auditors delaying the benefit recognition to a future date.
On the table below, Telsa would only utilize 330m of the 1.8B in the next 10 years - may be too much of a risk taking the entire 1.8B.
As I said earlier, let's see how this plays out.

View attachment 502065

MODERATOR EDIT: All readers: Do not view this post without ALSO viewing an extremely important correction here: Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

 

[kbM3]

Love your informative post! And the 3TWh energy storage in 2040 might be too low as you and others seem to believe, but the forecast is not exactly "shallow" either. It forecasts 122x growth compared to today's energy storage market. That's 2 orders of magnitude.

Only 27% annualized growth.

If 122x in 20 years sounds like a lot, here's what solar has done:

And Tesla is forecasting 100%-200% annual growth in storage.

 

[dww12]

Realisticaly, I dont even like my wife driving my model S, and I consider her to be a very good driver. I just cant see the idea of private owners adding their vehicle to some robo taxi fleet. But another ownership model, and a properly developed robo-taxi membership structure does seem more viable. I dont see it as being quite as open to all comers as the Uber model though.

I don’t think that is how it is going to happen. I think the vast majority of current owners are unwilling to rent out their car, however if there is a shortage of cars available for RT and RT is profitable what will they do if their car is suddenly worth $150k to someone who is willing to RT. A lot of Model 3 owners will sell and buy a Bolt/Leaf/Ipace or even ICE. $50k-$100k in the bank is worth a lot more to a lot of people than having a private Tesla. Model S/X owners may be different since $100k may not be a life changing amount of money, but for a lot of model 3/Y owners it would be and they will cash out.

 

[The Accountant]

PwC Podcast on Valuation Allowance for Deferred Tax Assets

For those still interested in this topic.
Go to the 22:10 min mark to see the discussion about reversing the allowance back to income.

Valuation allowance for deferred tax assets – the basics

 

[uselesslogin]

Thanks for the feedback
So these terms mean different things in different ledgers? Ack!
So is this line item a representation of previously paid tax? That explains the combination of tax credits and operating loss.
It which case it is a tax adjustment, not an income adjustment?
That would still require a profit to adjust the taxes on, wouldn't it?

It would have been GAAP income but it is not because Tesla has no expected tax liability. If they suddenly have an expected tax liability then that GAAP income shows up. But, when the benefit is actually realized it comes out of the asset, since the income was already realized. That is how I read it anyway.

 

[FrankSG]

I used @FrankSG 10 year plan (adjusting his EBIT to Pretax income) and further forecasted to 2037 (the year all tax benefits expire).
As you can see below, Tesla should be able to use all of their tax benefits before expiration.
However, after reviewing the table below, I am concerned that there is not much benefit utilized in the next 3 years and I'm wondering if that will have the auditors delaying the benefit recognition to a future date.
On the table below, Telsa would only utilize 330m of the 1.8B in the next 10 years - may be too much of a risk taking the entire 1.8B.
As I said earlier, let's see how this plays out.

View attachment 502065

The numbers from my blog are in thousands, so they would utilize 330B in tax benefits over the next 10 years

The model you took the numbers from is not meant to be super accurate year by year, especially in the first few years, because it excludes Service & Other revenue for example. This should be 0% margins long term, but is currently losing them some money.

I'm expecting EBIT of $3B - $4.5B for 2020 and $5B - $11B for 2021.

 

[ammulder]

Before I address your robotaxi concerns, let's start with this. I don't believe Elon's claim that Tesla Energy has the potential to be bigger than its automotive business because:
[...]

Thanks for sharing your numbers. As the other poster, I feel like the BloombergNEF numbers probably don't take into account the potential of replacing a decent chunk of the current grid power generation capacity with wind/solar/storage. And the 122x number is big but too far in the future. I'd rather look at a more detailed picture of the next 10 years than a fast and loose guesstimate of the next 20. If we're already today at the point where utilities are closing current coal plants and natural gas peaker plants in favor of cheaper renewables, I have a hunch we may be at the start of an S-curve of deploying renewable power generation -- it shouldn't take much of a cost benefit to entice operators to switch, and there's only a little more incremental advance in price/efficiency before "borderline cheaper" becomes "obviously you'd be stupid not to do that." One of the articles I read said it won't be economical to replace fossil fuel plants elsewhere in the world until at least 2024... but I read that and hear "those fossil fuel plants are going to be non-economical REALLY SOON."

The wild card is that I don't know how much storage will actually be batteries -- I've heard of a number of alternatives. Though I guess in the real world, something already mass-manufactured like batteries will probably win the next 10 years over something that's currently being demonstrated in a lab/on a small scale.

On a related note, if the subsidized-home-battery-as-distributed-grid systems take off, I think any estimates of the organic growth of PowerWall systems would prove to be way too low.

This will be a lot easier after the Battery & Powertrain Day -- if they give target dates for 2 TWh, we can split auto/energy and work backward from the battery capacity and see how it lines up with any estimates of future market size of each, and maybe meet in the middle.

I understand your viewpoint which is based on what car ownership is like today. However, car ownership is going to be vastly different from what it is today when full autonomy arrives. When Tesla has an FSD system that is safer than a human and gains regulatory approval, I expect them to bundle this as standard on every single vehicle just like they've done with autopilot. I also expect the price of this FSD system to be significant. Elon has talked about $100k+ in the past, but even if it just costs costs a lot less like $20k, up front costs of vehicle purchases will increase significantly, while at the same time robotaxis will reduce the price of transportation on demand significantly.

As a result, car ownership will change drastically from what it is today. Many more people will simply rely on robotaxis for transportation, because it will be cheaper than private car ownership is today. Private car ownership today is about $0.60 per mile, but transportation by robotaxi is likely to be similar or cheaper (in my model it's $0.33). If the increased up front costs of cars increases the cost of private car ownership from $0.60 to say $0.70 or $0.75 per mile, while at the same time a robotaxi costs $0.50 per mile, simple economics indicate that most people will no longer own a car without renting it out as a robotaxi. And probably most cars will be bought by fleet operators rather than individuals.

OK, so let's say the average cost of a new car is $60K (up from roughly $40K today) and it includes full autonomy:

• I can't think the market for used cars or cheap non-autonomous cars is going to go away. The quantity of "people who can't afford a $60K car" is vast, and some car manufacturer will see that and address it.
• I don't think the economics of earning money from your car as a Robotaxis outweigh the feeling of (as another poster put it) "I don't even let my wife drive my Model S." Don't forget, your Model S is my Model 3 -- the most expensive car I've ever bought by a huge margin, and not one I want strangers riding around in without me. I mean, let's say 100K miles billed per year and I earn 10 cents a mile (somewhat splitting the difference between $0.33 cost and $0.50 bill with Tesla)... There's no way I would accept $10K/year in return for not loving my ride, but instead constantly worrying about the condition it's in and whether I'd even be ABLE to take it for a drive and needing to clean and maintain it and etc. Just daily washing in the winter when a couple hours of driving makes the outside look like complete crap would be an enormous chore. Today I pick the 50 degree days to do it, and they're not very frequent. The next week the highs are all in the 30s and 40s and this isn't even really the cold part of the country. No thank you!

The model isn't supposed to give a pin-point accurate prediction of the future, but rather to help understand the potential economics of the Tesla Network AMaaS business. Full FSD not being here in 2024 would shift the numbers around a little bit, but not by that much, because it's a simple software update that Tesla has to send out to its vehicles. The biggest impact on these numbers far and away are Tesla's production numbers. If Tesla produces significantly more or less vehicles than the estimations in this model (that is a little aggressive btw), that'll impact the numbers quite a bit.

Well... so that's I guess the root of my issue. I don't disagree that this is a useful exercise to understand the potential economics. Completely true. But if we're going to say "this stock is heading to $2500 on the basis of earnings of $50/share" then I am not willing to base that on understanding the potential economics.

I wrote about this awhile ago

I'm sorry, this quote lost the meaningful part. If I can paraphrase, it was "if you mistreat the Robotaxi, you may get kicked out of using the network. Therefore people won't do it."

I don't find that at all realistic:

• We can't say both "nobody will be able to afford cars and everyone will use Robotaxis" and "the undesirables won't be allowed to use Robotaxis." Talk about post-apocalyptic! The underclass of people who are denied basic transportation.
• Maybe there will be fines or surcharges instead, except it doesn't take very much of that before $0.50 per mile plus charges for a Robotaxi outweighs $0.70 per mile for a personal vehicle.
• There's a park I take my kids to, two miles down the road. There's busy roads and crossroads with no sidewalks or shoulders; for basic safety we have to drive there. It has a muddy creek. My kids like to play in it, whether planned or not. Afterward, we have to get home. Are you saying if we call a Robotaxi to do it, and muddy up the seats, we'll get kicked out of the network? And yet, we have to get home! And yet, we won't have a personal car any more because it's so much cheaper to use Robotaxis? Today, we just clean up our car afterward. We intentionally got one with seats that are easy to clean, because kids. But I wouldn't keep a Robotaxi on the clock just so we can clean it. If we summon a Robotaxi all wet and muddy and the one that shows up has cloth seats, we're not going to keep retrying, we're just going to make them dirty. Sorry. (There's also the park with a sand lot, there's the days we go hiking on dirt trails, there's the times a kid unexpectedly vomits in the car, etc.)
• It's one thing to be in an Uber with the driver/owner right there. It's another thing to be in an anonymous Robotaxi with a camera. I think the potential for misbehavior is much higher when there's no human there. Especially if you think it's just owned by some large anonymous fleet. Worst case, slap some duct tape over the camera. You know how people behave on the Internet vs in person; I think there will be an element of that in the Robotaxi vs the taxi-with-driver.

Also, what about car seats? If my kids and I Robotaxi to the grocery store, we what? Carry a bunch of car seats around in the grocery cart so we can get home in a different Robotaxi? Keep the original one needlessly on the clock for an hour? Besides, have you every tried to actually install a bunch of car seats at once with your kids waiting? Who wants their Robotaxi to show up while they're standing around with cranky kids and melting ice cream and a pile of car seats that need to be installed? And what are the odds that all those hurriedly-installed seats will be fully and correctly attached?

Maybe you can summon a Robotaxi with car seats installed, but with the various combinations of kid ages and seat types (forward, backward, booster, etc.) and he-doesn't-want-to-sit-by-her-today it seems unlikely that just the right configuration will be standing by.

We also keep an empty plastic cup or bin in the car in case we see a kid vomit coming in time, and a cleanup bag with wipes and cleaning spray and paper towels and plastic bags and a minimal clean kid outfit... Not going to be carrying that around for every Robotaxi ride.

Also we have spare tubes for the bikes (several sizes). And puzzle magazines in case instant entertainment is required. And headphones, for those long trips where iPads come out. And a hair band, for my daughter with long hair. (At least we won't need the change for parking meters any more!)

And my kids leave random food/drink containers or individual french fries or peanuts or the occasional chicken nugget behind all the time. Not to mention toy wrappers and unwanted Pokemon cards and chunks of crayons and favorite sticks and rocks and whatever. I mean, they're kids! We clean the inside of the cars from time to time, because we need to. We use a vacuum. Will Robotaxis come with a vacuum so we can clean it out if it drops us somewhere other than home? Or do we need to carry one of those around too?

If I could take Robotaxis but had to make them spotless after every single trip, that would not be an attractive offer. Yeah, we do that when we take a cab in NYC, but not in everyday life.

All right, sorry, this got a little out of control. Rant over! I just feel... there are so many reasons why major changes to human attitudes and daily life would be required Robotaxis take over the world. It's not like we'll up and make all those changes for $5K. Or $10K. Or whatever. It will take time, and I'm not sure how high the percent-Robotaxi can actually go. We have this personal ownership model because it works really well. Not that nothing can be better, just there will be a transition, and I suspect it will take much longer than the transition from ICE to EVs.

Not that I'm necessarily right.

 

[KarenRei]

We see where some of those big steel pipe segments have been going:

You often see those sort of stiffener rings in pressure vessels - both for positive and negative pressures (although large-enough columns of non-pressurized liquids can need them too). My mind immediately jumps to distillation columns, but you usually see lines branching off of those at regular intervals, and not here. Wet scrubbers would have huge ducts leading out of the top. Hmm... if this were over Christmas, I'd ask my father; he used to manage refineries and could likely identify them.

Wonder what they're storing / processing in there? I thought that that building was supposed to just be used for pack and seat assembly, but this looks like they're at least doing chemical storage there, if not outright chemical processing. They're set up to exhaust gases just to the right.

 

[The Accountant]

Update on Deferred Tax Asset Impact on GAAP Financials

This is a rough estimate of how Tesla has deferred the tax benefit since 2004:
View attachment 502064

As you can see, some of the benefits start to expire in 2024 but the significant benefits begin to expire in 2035.
Due to US tax policy changes, the 2018 loss has no expiration.

I used @FrankSG 10 year plan (adjusting his EBIT to Pretax income) and further forecasted to 2037 (the year all tax benefits expire).
As you can see below, Tesla should be able to use all of their tax benefits before expiration.
However, after reviewing the table below, I am concerned that there is not much benefit utilized in the next 3 years and I'm wondering if that will have the auditors delaying the benefit recognition to a future date.
On the table below, Telsa would only utilize 330m of the 1.8B in the next 10 years - may be too much of a risk taking the entire 1.8B.
As I said earlier, let's see how this plays out.

View attachment 502065
View attachment 502066

Stop the Presses !!!
@FrankSG informed me that I have not had enough coffee this morning. When using his projections, I had incorrectly used Millions instead of Billions (a small point ).
What this means is that the Tax Benefits would likely be used up over the next 2 years giving me more confidence that we can see an upside to GAAP profits in Q4 2019. A $4B pre-tax profit is in line with most of our members' forecasts for 2020 and $4.3B for 2021 is all that is needed to absorb the remaining deferred benefit.

See new table below:

 

[ZeApelido]

Great, so in 2 weeks we will have

1) suprise 2019 profitability and imminent S&P inclusion
2) surprise Model Y deliveries
3) surprising release of surface street self driving



.... If your extraordinarily bullish

 

[lklundin]

Points For Recognition in Q4

• Tesla has been profitable in 4 of the last 6 Qtrs

Is this assuming that 19Q4 will be profitable?