Zhelko Dimic
Careful bull
I'm going to gently disagree on observation re raw material. Rough approximation, raw material is what will be used to build cars in the future, say next quarter.Two Insights from Tesla's Inventory Details:
I just started looking at the 10K. I went straight to the Inventory details because I had seen a pattern developing in Q2 & Q3.
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Raw Materials
While Cost of Goods Sold (COGS) grew 49%, Raw Materials grew by 87% and now sits at a whopping $2.8B. Raw Materials should increase as your production grows but the $2.8B in raw materials is high even taking into account the 49% growth and the Austin/Berlin launch inventory. I suspect, Tesla increased its safety stock on key components by at least $600m.
Key Take Away: Tesla enters 2022 with a better stock position to deal with shortages than 2021 (edited to correct years mentioned).
Work In Progress (WIP)
WIP grew 121% vs PY and this cannot be the automotive division as Tesla did not double it's manufacturing lines and we don't see thousand of unfinished cars anywhere. My guess is that this increase is related to Energy and its Megapacks. We have seen many megapacks sitting around at the Sparks GF. I suspect, these Megapacks are waiting for a part. This is the reason why Energy sales and margins were so disappointing in Q4.
Key Take Away: Once the missing parts arrive and megapacks delivered, we could see a nice bump in sales possibly adding $0.25 to EPS for the Qtr.
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Tesla delivered 185K in Q1 '21 and for Q1 '22 will likely beat last Q, i.e. over 310K cars. This is easily 70% higher output, perhaps 80% and more. Add a bit of inflation, and it seems Tesla keeps raw materials proportional to the production output.
Now, there is discrepancy of COGS being only 49% YOY, while both raw materials and revenue are 70%+?
To me, this only means that Tesla succeeded in finding significant savings elsewhere(labor, efficiency, productivity, simplification, vertical integration, localization), and NOT in the cost of the input - this is the very point of first principle thinking.