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

[Krugerrand]

I hesitated responding to this because it's requires some accounting-speak and we're going to put @Krugerrand to sleep. He probably opted to watch paint dry at this moment.
The Reddit post is partially correct.
When Tesla enters into an Operating Lease with a customer, they estimate what the value of that vehicle will be at the end of the lease (the residual value).
If the residual value of the car changes (in this case it goes up as used car prices are rising), then they take the benefit of this increase over the remaining term of the lease, they don't wait until the car returns to take the benefit. So there is a financial benefit but it occurs sooner than upon resale of the leased car.
The biggest aha for me from the Reddit post was the claim that Tesla adds FSD to these returning cars. I believe that Tesla recognizes 60% of FSD upon sale. 60% of 12k is $7.2k of pure profit per car. 5,000 cars coming off lease and sold with FSD would be $36m in pure profit for a quarter.
I know 100% uptake on resold leased vehicles is not likely - so the number would be somewhere below $36m.
But more and more leased vehicles are coming off lease each quarter and the number will grow.
This is something I have not considered in my financial models.

The heads up was much appreciated. Still, I’m pretty sure you could have explained the previous with pictures. I suggest pizza pictures. That worked real well when TSLA split and in understanding why Tesla wouldn’t be worth more after it.

 

[The Accountant]

https://twitter.com/x/status/1508090207723462656

https://twitter.com/x/status/1508085112381927426

 

[Mengy]

https://twitter.com/x/status/1508090207723462656

https://twitter.com/x/status/1508085112381927426

Wow, that's a long shutdown right at the end of the month.

 

[lafrisbee]

Hey Mods!
Did we get our Group Invitation to The Giga barbeque?

Do we need to RSVP?

 

[ZeApelido]

Hopefully dedicated TMC unprotected left tester @Chazman92 will be pleased.

https://twitter.com/x/status/1508105232584044555

 

[ZeApelido]

@Krugerrand to sleep. He probably opted to watch paint dry at this moment.

 

[Knightshade]

Shanghai rules out total lockdown due to economic concerns.

Shanghai rules out citywide Covid-19 lockdown to protect economy

Health expert rejects calls for swift, broad action, urging residents to think of the big picture.

www.scmp.com

https://twitter.com/x/status/1508090207723462656

That reversed quickly!


Little/no impact on Q1 deliveries for logistics reasons I imagine- but some impact to production total.

 

[2daMoon]

So, um, that's what she looks like while watching paint dry?

Or, is this the look after sitting on the wet paint, then watching it dry?

 

[dhanson865]

I hesitated responding to this because it's requires some accounting-speak and we're going to put @Krugerrand to sleep. He probably opted to watch paint dry at this moment.
The Reddit post is partially correct.
When Tesla enters into an Operating Lease with a customer, they estimate what the value of that vehicle will be at the end of the lease (the residual value).
If the residual value of the car changes (in this case it goes up as used car prices are rising), then they take the benefit of this increase over the remaining term of the lease, they don't wait until the car returns to take the benefit. So there is a financial benefit but it occurs sooner than upon resale of the leased car.
The biggest aha for me from the Reddit post was the claim that Tesla adds FSD to these returning cars. I believe that Tesla recognizes 60% of FSD upon sale. 60% of 12k is $7.2k of pure profit per car. 5,000 cars coming off lease and sold with FSD would be $36m in pure profit for a quarter.
I know 100% uptake on resold leased vehicles is not likely - so the number would be somewhere below $36m.
But more and more leased vehicles are coming off lease each quarter and the number will grow.
This is something I have not considered in my financial models.

You'll have to pick some percentage of cars you think won't be resalable by Tesla (the ones they sell off at auction won't get FSD added).

Basically a car coming off least will go one of 2 routes

* It's got functional or cosmetic damage that is too severe to be worth the effort of Tesla refurbishing so it goes to auction
* It's in good enough shape they can do minor, little, or no refurbishment

those then have 2 subsets

* It had FSD already
* It didn't have FSD and they added it.

So for example if you assume 10% of the lease returns go to auction and 10% already had FSD, then you have ~80% of the lease returns getting FSD added to them before resale. Adjust those numbers as you see fit for auction and prior FSD percentages.

And with the long lead times on Model 3 and Model Y I'm sure they can pretty much force the FSD on anyone that wants that used car instead of waiting for a new one.

 

[Ogre]

They still aren't intended to be mass produced general purpose robots of course- that's not the business BD is even in, so it's weird people keep insisting that's who Elon is trying to "beat" but I guess it's the only robotics company most people know.

While BD isn’t in the business of general purpose robots, I suspect many of the things BDs robots get put to use for could be replaced by a general purpose robot. The Spot robot in particular is likely easily replaced by Optimus in a lot of situations. Walk a route at 3mph, report the state of things along that route, this is something Optimus will be able to do.

It will be very much like the way smartphones replaced many single purpose devices. Not exactly a direct competition, but able to be programmed to fit the purpose.

 

[mongo]

I hesitated responding to this because it's requires some accounting-speak and we're going to put @Krugerrand to sleep. He probably opted to watch paint dry at this moment.
The Reddit post is partially correct.
When Tesla enters into an Operating Lease with a customer, they estimate what the value of that vehicle will be at the end of the lease (the residual value).
If the residual value of the car changes (in this case it goes up as used car prices are rising), then they take the benefit of this increase over the remaining term of the lease, they don't wait until the car returns to take the benefit. So there is a financial benefit but it occurs sooner than upon resale of the leased car.
The biggest aha for me from the Reddit post was the claim that Tesla adds FSD to these returning cars. I believe that Tesla recognizes 60% of FSD upon sale. 60% of 12k is $7.2k of pure profit per car. 5,000 cars coming off lease and sold with FSD would be $36m in pure profit for a quarter.
I know 100% uptake on resold leased vehicles is not likely - so the number would be somewhere below $36m.
But more and more leased vehicles are coming off lease each quarter and the number will grow.
This is something I have not considered in my financial models.

Relatedly: a car on lease with FSD had 60% recognized ...
That means 40% was not.
However, upon completion of lease, Tesla no longer has an obligation to deliver the remaining functionality.
So, is it the case that the remaining 40% gets removed from the deferred revenue liability line item, and also is entered as income ?
Not that I have any idea what lease FSD take rate is.

 

[betstarship]

https://twitter.com/x/status/1508090207723462656

https://twitter.com/x/status/1508085112381927426

I suppose if installed capacity is (much) higher than production rate, then Tesla could easily test to see just how close to production rate <-> installed capacity they can get for Q2 deliveries after the lockdowns end in China, yeah?

 

[H Mak]

This afternoon I was stopped at traffic lights in the university area of Liverpool with my window down. 2 women about 25 were walking past and looking at the car. One of them shouted over "I love your car". Now, I've had some nice cars over the years and that's never happened.

Price increases? Bring it on, I'll pay whatever it takes! . The power of Tesla

 

[dhanson865]

Relatedly: a car on lease with FSD had 60% recognized ...
That means 40% was not.
However, upon completion of lease, Tesla no longer has an obligation to deliver the remaining functionality.
So, is it the case that the remaining 40% gets removed from the deferred revenue liability line item, and also is entered as income ?
Not that I have any idea what lease FSD take rate is.

For the cars sent to auction with FSD removed that would make sense, for the remaining cars that get resold with FSD enabled it would be a wash because the liability would continue.

 

[dhanson865]

https://www.reddit.com/r/nextfuckinglevel/comments/tphms8

The claim is if this battery is at exactly 2v charge level when you disassemble it you can just soak the anode and cathode in two containers of water and each one cleans itself then you just pull the clean anode and cathode materials out shortly after with no chemicals or expensive energy costs.

So they have a charging stand that drains/charges the cells to 2v and when that's done he dissembles the cells and cleans the anode and cathode with plain water and then sends the clean parts away for recycling.

 

[Rarity]

Karpathy on a 4-month sabbatical, according to Elon...

https://twitter.com/x/status/1508110810614181890

 

[mongo]

For the cars sent to auction with FSD removed that would make sense, for the remaining cars that get resold with FSD enabled it would be a wash because the liability would continue.

Lease with 8k FSD: 4.8k already recognized, 3.2k at turn in
Resold with 12k FSD: 7.2k recognized, 4.8k deferred
Net: 10.4k recognized 4.8k deferred (1.6k increase)
Bottom line gain is offset by FSD residual on lease.

 

[Artful Dodger]

Teslagram

X.com is an obvious choice. Hosting an SMS-style messaging app does not prevent Elon from using the Domain for other ventures, like a Musk umbrella company. It might even help publicize the new effort. Separate IPO?

Cheers!

 

[ruralectric]

Karpathy on a 4-month sabbatical, according to Elon...

https://twitter.com/x/status/1508110810614181890

Right. Got it. Thanks for sharing, Elon.

 

[StarFoxisDown!]

Wow, that's a long shutdown right at the end of the month.

Actually, it has little to no impact on end of the quarter. Anything produced in the last 3-4 days of the quarter wouldn’t make it to delivery anyways.

Considering Tesla is still supply constrained and haven’t been able to run Shanghai at max capacity, they can easily make up those 3-4 days of lost production by running the factory closer to max capacity in Q2 thank to a buildup of parts/supplies.

Maybe it effects Q1 delivery numbers by 1-2k. Not really a “wow” moment I’d say