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

[jbcarioca]

Today's reminder:

'Unthinkable': Scientists Shocked as Polar Temperatures Soar 50 to 90 Degrees Above Normal | Common Dreams

"With everything going on in the world right now, the dual polar climate disasters of 2022 should be the top story," says Eliot Jacobson.

www.commondreams.org

The Earth has given us many, many warnings about what we are doing and why we should stop. If we eventually make our planet uninhabitable by our species, we will have only ourselves to blame.

But we won't. We'll be dead.

 

[heltok]

https://twitter.com/x/status/1506255163388010503

 

[Artful Dodger]

But we won't. We'll be dead.

It's not a 50F+ air temp anomoly that lasts for 1 Antarctic day that we need be concerned about; it's a +5F sea temp anomoly that has risen continuously over the past 40 years that we should worry about.

For humanity, Carbon = Fate.

 

[ThisStockGood]

https://twitter.com/x/status/1506255163388010503

https://twitter.com/x/status/1506258180237664262

That drone is getting some bad ass shots! Must be some kind of official Tesla video production. Great idea.

Cheers and happy opening day to everyone

 

[thx1139]

So after the 30 are delivered right at the Berlin Gigafactory will car carriers start leaving for delivery centers with more cars to deliver? Or are no additional production ready cars complete? Or have some already left for deliver centers, but not being delivered until after todays event?

 

[mongo]

@The Accountant may be able to let us know if I am mistaken, but AFAIK amortization and depreciation of the Berlin factory and operational costs will start hitting margins once the new factory starts deliveries. For this reason it would be unfortunate to start deliveries at the end of the quarter as the cost would be split among a very low number of cars (few hundreds to a few thousands) and would make them look worse than they actually are. If they tart deliveries April 1st, those costs are split among all deliveries in Q2, which will still be kind of low, and thus bad, but not that bad.

I am not sure I have the details right, but I think this is the general idea. For this reason I am surprised Berlin starts deliveries today.

Variable (material and direct labor) costs flow directly into COGS.
Depreciation can be done on a useful life basis as opposed to straight time.
Training is non-COGS.
So, if a single car was built in Q1, it would not carry the full cost of the factory. Therefore, the impact of a small number of vehicles on margin is limited by the max amount of COGS attributable to them.
i.e. 1/250,000 of tooling cost + 20 labor hours + parts + amortized factory cost.

Costs also stay with the vehicle so a Q1 build sold in Q2 would have the same impact as if it were were sold in Q1.

If they only deliver 15 cars in December, there will not be a drag on profits. Most of the 2019 costs are capitalized to inventory and equipment (which sits on the balance sheet). For the most part, the only costs from Shanghai that will impact COGS in 2019 are training costs and the COGS related to any cars delivered in 2019 (15-30 cars)?

Costs to install, calibrate and validate equipment gets capitalized to Equipment
Cost to produce the cars get capitalized to inventory (attached to each car) and does not get released to COGS until the car is sold.

EDIT: There will be some increased costs to SG&A as delivery centers ramp up.

You both have it right....but here's a short Accounting 101 refresher:
- Cost to produce the vehicles at GF3 are assigned to each car (let's say $40k per car)
- the 15 Cars that were delivered in Dec 2019 would result in $600k in COGS (15 cars x $40k) in our example.
- If there are another 1,000 cars produced but not delivered, they sit in Inventory not COGS (on the balance sheet not P&L) at $40m (1,000 cars x $40K)
- Some costs may go directly to COGS such as training costs (not capitalized to vehicles) but I assume that is no more than a $2-$3m hit to COGS

We may be able to understand this better once the 10K is published

Yes, you can keep inventory on the balance sheet until the inventory is used (thus not impacting COGS/margins).
There is a concept of "net realizable value" which is not relevant in the scenario you describe.

As an aside, I don't expect an overall margin decrease when Austin and Berlin come on board.
When Shanghai came on board in Q1 2020, auto margins excluding credits came down from 20.9% in Q4'19 to 20.0% in Q1'20 but this was largely due to the COVID impact on Fremont in Q1 2020 and not the Shanghai launch.

Here was Lars Moravy's (Vice President, Vehicle Engineering) during the Q1 2021 earnings call giving a response to an Analyst on how Tesla could get vehicle costs down:

". . . when you look at some of the other advancements that we're including in the Model Y, factories into Austin and Berlin, we've reduced the body part count by as much as 60%, and the parts cost money. So we continue to find optimizations there as well as we get the economies of scale when we start to talk about the volumes we're considering worldwide with four factories building the same vehicle. So both of those things on the vehicle side will improve our COGS as well, and powertrain continues to be integrated into that".

I keep thinking that I am underestimating how quickly Tesla will get to strong margins at Austin and Berlin. This could be a positive surprise.

 

[Big Time]

Can’t wait for Berlin deliveries to start padding the balance sheet!!
Congrats all!!!
Go Tesla!

 

[SOULPEDL]

So after the 30 are delivered right at the Berlin Gigafactory will car carriers start leaving for delivery centers with more cars to deliver? Or are no additional production ready cars complete? Or have some already left for deliver centers, but not being delivered until after todays event?

No, 30 was all that was allowed in the permit. The ramp to 100 units is still pending.

 

[jbcarioca]

I claim the Alaskan Gigafactory gets first place as it’s constructed out of pure madeitupium.

Maybe not. Putin wants ir back for Russia! How's your Russian?

 

[Nocturnal]

Our friend Gordon is back. Bullish.

I feel bad that Gene is always placed opposite him.

 

[thx1139]

Our friend Gordon is back. Bullish.

I feel bad that Gene is always placed opposite him.

Gordon grasping at straws. Sad sad little man.

 

[elasalle]

Our friend Gordon is back. Bullish.

I feel bad that Gene is always placed opposite him.

Suspense ... CNBS hasn't suspended Mr Suspenders?

 

[bkp_duke]

Our friend Gordon is back. Bullish.

I feel bad that Gene is always placed opposite him.

CNBS LOVES GoJo. They either win b/c it looks like comic relief when he is on, or if he is ever right (ha ha ha), they look like geniuses for having him. They won't give him up.

 

[maxdrive10]

https://twitter.com/x/status/1506255163388010503

Making it rain!

 

[Nocturnal]

Taking delivery of a MYP today. It was due in next week but came in early. Mostly my GF will be using it but I'm also excited to have something with a bit more room around for trips etc. 12/24 order date. Already have 4k in equity due to price increases. Opted to wait on FSD on this one because I'd rather keep that 12k in the stock.

 

[Artful Dodger]

Can’t wait for Berlin deliveries to start padding the balance sheet!!
Congrats all!!!
Go Tesla!

I expect Giga Berlin to achieve a 1K/wk run-rate in April, then hold that through June until the 2nd shift is added. So minimum 2K/wk for 10 wks in Q3, then working up to 5K/wk for 10 wks in Q4 (production is limited by the max 5K/wk supply capacity / logistics for Shanghai/LG bty packs).

All told, I'd estimate at least 80K Models Y from Giga Berlin in 2022. Of course if things go well (esp. w. the supply chain) Berlin production could easily be 100K by year's end.

Tesla told us to expect the ramp-up at Berlin to be comparable to Shanghai. Tesla has a lot of experience now rolling out Model Y production: 1 line in Fremont, 2 lines in Shanghai, now simultaneously 1 more line in each of Texas and Berlin.

In Berlin, once all 8 Gigapresses are online and the 4680 cell factory is operational, numbers go up quickly. I expect Giga Berlin will get to their tgt 500K/yr run-rate some time before in 2023. Of course, we'll need a local supply of LFP packs soon for Europe...

Best of all, if the Germany authorites execute on their green commitments, we should also see Tesla break ground for Giga Berlin Phase 2 sometime next year. This could get really big (I'm still rooting for an LFP 'hot-hatch' aka Model Zwei).

Cheers!

 

[GOVA]

Elon's speech and deliveries, I believe:

 

[bruce4000]

CNBS LOVES GoJo. They either win b/c it looks like comic relief when he is on, or if he is ever right (ha ha ha), they look like geniuses for having him. They won't give him up.

Gordon is the Generals so the Harlem Globetrotters have sometime to show off against. Gets paid to be the clown.

 

[SunCatcher]

Elon's speech and deliveries, I believe:

This is so awesome. What a great day!

 

[Christine69420]

So after the 30 are delivered right at the Berlin Gigafactory will car carriers start leaving for delivery centers with more cars to deliver? Or are no additional production ready cars complete? Or have some already left for deliver centers, but not being delivered until after todays event?

Can’t wait for Berlin deliveries to start padding the balance sheet!!
Congrats all!!!
Go Tesla!

Edit: Followup message suggests delivery to customer and delivery to Norway may have been mixed up. We will have to wait and see. Mea culpa!

Some customers in Norway report they have delivery dates before the end of the month for their TMY P cars made in Germany.