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

[The Accountant]

Question re: Q2 profitability (back of envelop)

Does anyone have any analysis / estimates pertaining to Tesla’s ZEV credits?

In q1, tesla generated record $350m in revenue from ZEV. with approx 89k deliveries, they eeked out about $16m in profits

this quarter, it seems like the big diff will be: 1) SG&A/R&D pay cuts 2) deferred rev from stop signs/stoplight release 3) 2k extra deliveries 4) model y growth/extra margin

back of envelop math: #1 is worth about $100m. #2 could be worth extra 50-100m. #3 $20m in gross profit (50k ASP, 20% margin). #4 maybe 1-2 digit millions in extra gross profit

so it feels like the swing factor will remain will be how big of a difference in ZEV credits for q2 vs q1...

thoughts?

Since the FCA-Tesla EU Pooling Agreement is not public, estimating the Regulatory Credits for Q2 is very difficult.
I am using $280m in my model as follows:

I am assuming that FCA pays Tesla based on a rate per Tesla cars registered in the EU each Qtr. This may be incorrect; we will have more clues when the 10Q is published later this week.

I am also assuming $60m in recognized Deferred FSD Revenue from the release of Traffic Light and Stop Sign Control. In Q3 of 2019, they released $30m for Smart Summon. I am assuming that Traffic Light and Stop Control is worth twice that.

I will publish my Q2 Estimate in the Financial Projection thread shortly.

 

[JHoff90]

Since the FCA-Tesla EU Pooling Agreement is not public, estimating the Regulatory Credits for Q2 is very difficult.
I am using $280m in my model as follows:
View attachment 566087

I am assuming that FCA pays Tesla based on a rate per Tesla cars registered in the EU each Qtr. This may be incorrect; we will have more clues when the 10Q is published later this week.

I am also assuming $60m in recognized Deferred FSD Revenue from the release of Traffic Light and Stop Sign Control. In Q3 of 2019, they released $30m for Smart Summon. I am assuming that Traffic Light and Stop Control is worth twice that.

I will publish my Q2 Estimate in the Financial Projection thread shortly.

THANK YOU SO MUCH!!!

 

[Artful Dodger]

in the course of my business I was sent to Michelle Phillip’s to explain a administrative error with her bill.

I guess LaLaLand really is different. Around here, when the Utility Company sends somebody to your house to explain your bill, they usually send the Sheriff...

Cheers!

 

[Snerruc]

Tobias Lindh visited Giga Berlin today:

The Germans should be embarrassed. It’s like watching paint dry compared to the Chinese.

 

[Jack6591]

I guess LaLaLand really is different. Around here, when the Utility Company sends somebody to your house to explain your bill, they usually send the Sheriff...

Cheers!

Not her error.

 

[traxila]

The Germans should be embarrassed. It’s like watching paint dry compared to the Chinese.

Let’s give the Germans a chance. I am betting on that home grown and present engineering to absolutely blow away expectations with automation and speed of ramp once operational. This should be the most Technologically advanced car factory ever built or I am sure Musk will consider it a failure.

 

[Artful Dodger]

My thoughts are similar, if Tesla plans more aggressive expansion, a raise coupled with the S&P 500 and Battery Day, with outlining of future plans... will not hurt the share price at all...

One way or another the funds will buy much more than the shares issued..

Dilution becomes a major issue when the SP is rising so fast. Each Billion USD raised now will be about $10 Billion in 10-12 years. That's a very steep price when Tesla's cost of capital from conventional loans is so low.


Further, with Tesla's positive operational cash flow right now, and the expected increases in the next 6 months from GF3 phase 2 (Model Y), it's not even clear that Tesla NEEDS more capitalization right now.

Elon already said on a conference call that it doesn't make sense to raise capital to pay off debt. It's unlikely he'd be interested in raising capital that isn't needed. Let's wait to see what Tesla's Q1 cash flow is when we get the Letter to Investors in 4 days time. Then

Elon has said repeatedly Tesla's expansion now self-funding and is not constrained by capital. In the limit, Tesla is constrained by engineering resources. Happily they are, along with SpaceX, the two most sought-after jobs for newly graduated engineers.

TL;dr Throwing money at expansion won't help, and Elon doesn't need a new mansion (side-burn NKLA).

Cheers!

 

[Artful Dodger]

Not her error.

Lol, around here when its the utility company's error, they still send someone to cut off your service (or now they can do it remotely). More power than the Gov't; less accountability. Don't even get me started on eminent domain...

Cheers!

 

[UncaNed]

Indeed, that picture of me was taken some time ago, shortly after the one I'm currently posting as my avatar.

Yeah, about that, @Curt Renz ... you're not going all Benjamin Button on us, are you????

 

[MikeAtkinson]

The Germans should be embarrassed. It’s like watching paint dry compared to the Chinese.

It is literally watching concrete cure.

The process for the paint shop seems to be:
1. dig out to about 2 m
2. put down rock chippings for a base
3. create concrete pads and let to cure for a week.
4. build forms for concrete pillar foundations, fill with rebar, then fill with concrete.
5. let concrete cure for a week or two.
6. fill in between the concrete pillar bases.
7. add rock chippings on top
8. only now can the precast concrete pillars be inserted.

This process is slower than using piles as in Shanghai, but piles could not be used because of groundwater concerns. The precast concrete pillars have been made off site, these also will need forms and a cure, perhaps up to a month long as they look to be prestressed for strength.

The rest of the factory (except the stamping area) will probably go quicker, as they seem just to be digging out small squares for the pillar bases. The seem to have started with the areas that are likely to take the longest to install and set up the equipment. So there will likely still be foundations being laid while the shell of the paint shop is complete.

In Shanghai they did the Model 3 factory more in stages, all the piling for foundation, then all the steel superstructure, then all the outer walls, only then did they start kitting out the factory. [There was some overlap between stages but not much.]

 

[The Martian]

I created a poll to see what everyone think the price level will be by Friday if TSLA posts Q2 GAAP profit.

What's TSLA price by Friday 7/24 if it posts Q2 GAAP profit?

 

[Words of HABIT]

It is literally watching concrete cure.

The process for the paint shop seems to be:
1. dig out to about 2 m
2. put down rock chippings for a base
3. create concrete pads and let to cure for a week.
4. build forms for concrete pillar foundations, fill with rebar, then fill with concrete.
5. let concrete cure for a week or two.
6. fill in between the concrete pillar bases.
7. add rock chippings on top
8. only now can the precast concrete pillars be inserted.

This process is slower than using piles as in Shanghai, but piles could not be used because of groundwater concerns. The precast concrete pillars have been made off site, these also will need forms and a cure, perhaps up to a month long as they look to be prestressed for strength.

The rest of the factory (except the stamping area) will probably go quicker, as they seem just to be digging out small squares for the pillar bases. The seem to have started with the areas that are likely to take the longest to install and set up the equipment. So there will likely still be foundations being laid while the shell of the paint shop is complete.

In Shanghai they did the Model 3 factory more in stages, all the piling for foundation, then all the steel superstructure, then all the outer walls, only then did they start kitting out the factory. [There was some overlap between stages but not much.]

OT @MikeAtkinson, No commercial contractor is waiting one or two weeks for concrete to set. There are many types of quick set concrete available acheiving 90% strength within 24 hours. Use of pile foundation (used in Shanghai) is in response to their soils condition and need to support structure down to bedrock. German plant area soils is different requiring a different foundation type.

Rapid strength concrete[edit]
This type of concrete is able to develop high resistance within few hours after being manufactured. This feature has advantages such as removing the formwork early and to move forward in the building process very quickly, repaired road surfaces that become fully operational in just a few hours. Ultimate strength and durability can vary from that of standard concrete, depending on compositional details.

 

[Curt Renz]

Dilution becomes a major issue when the SP is rising so fast. Each Billion USD raised now will be about $10 Billion in 10-12 years. That's a very steep price when Tesla's cost of capital from conventional loans is so low.


Further, with Tesla's positive operational cash flow right now, and the expected increases in the next 6 months from GF3 phase 2 (Model Y), it's not even clear that Tesla NEEDS more capitalization right now.

Elon already said on a conference call that it doesn't make sense to raise capital to pay off debt. It's unlikely he'd be interested in raising capital that isn't needed. Let's wait to see what Tesla's Q1 cash flow is when we get the Letter to Investors in 4 days time. Then

Elon has said repeatedly Tesla's expansion now self-funding and is not constrained by capital. In the limit, Tesla is constrained by engineering resources. Happily they are, along with SpaceX, the two most sought-after jobs for newly graduated engineers.

TL;dr Throwing money at expansion won't help, and Elon doesn't need a new mansion (side-burn NKLA).

Cheers!

Generally sound arguments. Thank you. However, share dilution itself is not necessarily a problem unless a company is sliding downhill and perhaps toward bankruptcy. Money raised in a subsequent offering is a shared asset of all shareholders. Each shareholder owns a relatively thinner (percentage) slice of a nevertheless larger (more valuable) pie. It would be a wash if the new money were put into a safe, but can become a share price builder if soundly invested in company growth.

 

[Artful Dodger]

Common sense grunglingly accepted at Elecktrik (a full day after the 'clix' are collected):

Panasonic denies ’13 million battery cell per day’ production at Tesla Gigafactory Nevada

"Panasonic denies the ’13 million battery cell per day’ production at Tesla Gigafactory Nevada disclosed in a new inside look at the factory. Yesterday, we reported on the science channel…"​

No linx, No clix for redFay. Deal with it.

 

[smorgasbord]

Since the FCA-Tesla EU Pooling Agreement is not public, estimating the Regulatory Credits for Q2 is very difficult.
I am using $280m in my model as follows:
View attachment 566087

I am assuming that FCA pays Tesla based on a rate per Tesla cars registered in the EU each Qtr. This may be incorrect; we will have more clues when the 10Q is published later this week.

I am also assuming $60m in recognized Deferred FSD Revenue from the release of Traffic Light and Stop Sign Control. In Q3 of 2019, they released $30m for Smart Summon. I am assuming that Traffic Light and Stop Control is worth twice that.

I will publish my Q2 Estimate in the Financial Projection thread shortly.

Look at Q1's 10Q, they said:

Our revenue from regulatory credits fluctuates by quarter depending on when a contract is executed with a buyer and when the credits are delivered. However, we generally expect higher revenue from regulatory credit sales as our production and deliveries increase. For example, our revenue from regulatory credit sales in the three months ended June 30, 2019 was $111 million while it was $354 million in the three months ended March 31, 2020.

and

Deferred revenue related to sales of automotive regulatory credits was $ 140 million as of March 31, 2020 and December 31, 2019. No revenue was recognized from the deferred revenue balance as of December 31, 2019. We expect to recognize the deferred revenue as of March 31, 2020 in the next 12 months.

I'm no accountant, but I'm assuming that revenue that was deferred could be recognized at any time. If they wanted to, could they recognize all $140M in Q2? I'm confused as to what enables recognition and what requires deferral.

 

[printf42]

Common sense grunglingly accepted at Elecktrik (a full day after the 'clix' are collected):

Panasonic denies ’13 million battery cell per day’ production at Tesla Gigafactory Nevada

"Panasonic denies the ’13 million battery cell per day’ production at Tesla Gigafactory Nevada disclosed in a new inside look at the factory. Yesterday, we reported on the science channel…"​

No linx, No clix for redFay. Deal with it.

They could be producing 12.995M cells and claim the 13M number is inaccurate, or they could be doing 15M per day.

Someone slipped the number and it must’ve came from somewhere, hard to take it back now.

 

[Bet TSLA]

They could be producing 12.995M cells and claim the 13M number is inaccurate, or they could be doing 15M per day.

Someone slipped the number and it must’ve came from somewhere, hard to take it back now.

Oh, c'mon. Most things in that video were sloppy. No particular reason to believe any of their numbers. "M3" indeed.

 

[RobStark]

Oh, c'mon. Most things in that video were sloppy. No particular reason to believe any of their numbers. "M3" indeed.

Many TMCers refer to Model 3 as M3.

 

[renim]

Fwiw, another reason for fast chinese industrial construction is that footings and foundation usually precede both building approval and environmental approvals. (Because just being allowed to lease land in an industrial park carries a defacto level of approval anyway.)

 

[GOVA]

Many TMCers refer to Model 3 as M3.

Too many folks refer to ... as TMCers.