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

[The Accountant]

Early Thoughts on Q2 & Q3

Here are Non-GAAP EPS actual results and wall street estimates for recent and upcoming quarters:

$1.86 - Q3 2021 Actual​

$2.54 - Q4 2021 Actual​

$3.22 - Q1 2022 Actual​

$2.19 - Q2 2022 Wall Street Estimate (my preliminary estimate of $2.36 is +8% higher)​

$3.16 - Q3 2022 Wall Street Estimate (my preliminary estimate of $4.19 is +33% higher)​

My estimates are very preliminary at this point and I will update them as we get more information on Shanghai, Austin and Berlin ramps.
Although my Q2 2022 estimate currently sits higher than wall street at +8% ($2.36), I am a bit worried.
Q2 numbers have strong headwinds.

1. I assume 255k deliveries* but the actual number may come in lower​

2. Although average selling prices in the US for Models 3 & Y will be higher than Q1, Tesla is losing high priced, high margin cars in Europe for Q2.​

3. Margins will suffer due to lower production in Shanghai and Austin/Berlin ramping.​

4. There was a one time gain with Regulatory Credits in Q1 which we won't see in Q2.​

Although I have tried to properly account for these headwinds, I may still be over-shooting on the results. I would like to see wall street consensus move toward $2.00 for Q2. The good news is that Q3 is looking like a blowout.

*255K Q2 Deliveries as Follows:
140k Fremont
107k Shanghai
8k Berlin/Austin

Shanghai Q2 monthly as follows:
1.5k April
25.5k May
80.0k June

Of course I could paint a more bullish picture for Q2 but I will need to see some positive delivery news over the next few weeks for that.
Another point to make is that we may be looking at a bear trap. Shorts get excited over poor Q2 results and falsely see a negative narrative on Tesla only to get wiped out with Q3 results. Tesla is rarely drama-free . . .there won't be a dull moment.

 

[jbcarioca]

Not in 2011, but at least 3/4 years ago. I think further back than that I said it, but don’t recall exactly. I claim no maths involved, pure instinct.

...

So, yeah. My gut says bigger than anyone can really wrap their brain around because it would mean a complete upheaval of the world as we know it. #epiconaginormousscale.

We all know that the world is undergoing change at an accelerating pace. Adoption rates for things that transform human behavior have mostly been very rapid: sewing machines, the loom, mechanical harvesters, electricity(grids),telegraph, telephone, steam engines, The Otto cycle, motor cars/trucks, railroads, steamships, radio, television, solar panels, nuclear technologies, nano-meter technologies.The facilitations often happened long before people really learned how to use them. Electricity was one, but the loom was probably the slowest because electrical power waited so long.
The transistor spawned our modern world, and lithium-Ion batteries have enabled their ubiquitous restructuring of Telephony, television, transportation and nearly everything else including agriculture and fishing.

So how do Tesla, SpaceX, The Boring Company etc fit in? We all seem to think they are transformational. It remains to be seen if the world can actually succeed in this transformation. In my view these are the only demonstrated successes to date. Will they continue? I do not know but I also see no better choice to mankind than to try as hard as possible to help them to do so. The alternatives are too frightening to consider.

 

[Iain]

Yes. I have wondered if maybe my car has a calibration problem but I have not tried to have that checked at a service center. My previous Model 3 with FSD seemed to be better than is my Model S Plaid, but that is entirely subjective.

One issue that becomes possibly material for TSLA FUD is the sensitivity of all systems as the technologies advance, with other owners and drivers perhaps being as indolent as am I to check out discrepancies.

From some decades flying aircraft with avionics that were very advanced for their day I learned that if I could not diagnose a problem myself it was unlikely that an avionics technician could do it. This situation is similar in that it is possible that there is nothing wrong with my FSD, but I'm trying to use it in urban settings for which it is not yet prepared. If not, I really need to document each discrepancy, which I have not yet done in any systematic way. In aircraft OTOH I documented everything.

Some years back @Papafox and other aircraft CFI's (Certified Flight Instructor) had threads supporting the @Papafox orientation to Tesla use. Then, as now, those tend to be even more relevant as the technologies advance. Once Level 4 and 5 arrive that may begin to decline as an issue.

In the meantime it really is my obligation to understand the issues I am having with my FSD. Specifically whether the issues are mine or the FSD or both.

An analogy comes to mind with the early-1990's adoption of GPS in aviation, first as another signal in multi-sensor navigation, later as a single source. The biggest issue was knowing when the system was working well. With GPS allowed for single-source in 1994 the former VOR and Loran based systems almost instantly moved to GPS. My aircraft immediately moved since the new were almost plug-compatible with the predecessors. Suddenly diagnosis of problems was crucial, but some pilots understood the issues but a handful did not so it was a horrible problem differentiating between system problems and operator problems. I ended out forcing all my pilots and trainees go through a week-long technology training course prior to solo flight in those aircraft.

I do think Tesla needs a similar approach. It is possible that I have not done enough myself to know whether the problems are me, the system or both.

Sorry for the long winded response. I shall do more to define the facts about which I am posting. In the meantime, long honored aviation traditions says: "It's clearly political error". It's up to the pilot to prove otherwise. (ok, that's the classic Boeing rule, but the whole industry follows it normally)

By definition it's me whose errors count, not FSD. Hence, I need to determine if sensors and/or warning trigger logic are part of the problem. Sometime my insurance rate could depend on those distinctions.

I understand what you are saying. In the earlier days on the Airbus we called it the A-360 (since we returned to the gate so often) time fixed it and I found the Airbus far superior to any Boeing I flew ( mainly B-576 B-767)

 

[dgodfrey]

Hadn't seen this posted yet, hopefully not a repeat. A refreshingly civil bull/bear debate (more of a discussion) with Emmett Peppers and Matt Smith of Good Soil Management, discussing TSLA with Drew Dickson. Very good perspectives with Emmett and Matt doing a good job of countering Dan's conservative outlook for Tesla.
Much more informative than the emotionally charged tension we see with GoJo and Gali types.

 

[hobbes]

@avoigt posted a nice compliation of famous last words by German automotive CEOs:

https://www.patreon.com/posts/48581019

Direct link to pdf

This is from March last year..

 

[scaesare]

Another $100 million to $200 million in profit per quarter.

https://twitter.com/x/status/1531073648118964230

Hmmm, whilst that post stipulates ~$200M for the leases expiring currently, he suggests that will grow:

"... a gain of up to $9.4B recognizable over the next 12 quarters"

Unless I'm missing something, that's actually an average of over $750M per quarter, no?

 

[TheTalkingMule]

So how do Tesla, SpaceX, The Boring Company etc fit in? We all seem to think they are transformational. It remains to be seen if the world can actually succeed in this transformation. In my view these are the only demonstrated successes to date. Will they continue? I do not know but I also see no better choice to mankind than to try as hard as possible to help them to do so. The alternatives are too frightening to consider.

We're now entering the promise of Battery Day. 4680 is ramping, 2 new Gigafactories ramping, and the next 2 apparently in the chute. That's a LOT of production.

As we start seeing Energy products and solutions scaling, the math becomes a lot easier for regular folks to grasp. Then the TWh scale suddenly becomes an achievable goal.

It makes sense to me that this covid reopening oil price gouging we're in is gonna crater oil & gas for 2024 onward. So I think the biggest tipping point of the transition happens once the Putin-based issues are resolved. Cheap oil fueling the steepest part of the renewables + storage S-curve.

Good times?

 

[Gigapress]

I realized today I might've been majorly misinterpreting European prices and if so I'll need to adjust my earnings model. As an uncultured American, I'm accustomed to seeing sales tax added after the listed price and I'm not sure I understand how the value added tax (VAT) works.

For example, in Germany (link) the Model Y Performance is listed for 63,990 € and in the details window the English-translated statement is:

Pay the vehicle price by bank transfer to become the owner of your vehicle after delivery.​

​

Cash payment price 64,970 €​

​

Incl. VAT of approx. 10,373 €​

​

Processing fees of 980 €​

​

Incl. €2,500 environmental bonus (net)​

How much revenue would Tesla receive from this order? Is the VAT embedded in the 64970 € cash price? Is the environmental bonus also embedded in the listed price where the government pays 2500 to Tesla, or is it a personal tax credit?

If Tesla only gets 64970-10373 = 54597 € = $ 58.8k then the revenue on a German Perf Y is $10k less than in the US. That would be surprising to me considering the fuel price situation in Europe right now and the lack of supply of Teslas with Berlin barely making anything yet and Shanghai having been restricted so much this year.

 

[Artful Dodger]

Early Thoughts on Q2 & Q3

Here are Non-GAAP EPS actual results and wall street estimates for recent and upcoming quarters:

$1.86 - Q3 2021 Actual​

$2.54 - Q4 2021 Actual​

$3.22 - Q1 2022 Actual​

$2.19 - Q2 2022 Wall Street Estimate (my preliminary estimate of $2.36 is +8% higher)​

$3.16 - Q3 2022 Wall Street Estimate (my preliminary estimate of $4.19 is +33% higher)​

How is EPS affected if Tesla begins to claim it's valuation allowance?

c..f. your Jan 31, 2020 comment: (for which it's time may finally have arrived)

A Path to S&P Inclusion - valuation allowance - "Net Operating Loss Carryforward" $1.8 B

Cheers!

P.S. Correct me if I'm wrong, but VA has now ballooned to ~$5B claimable amount

 

[AudubonB]

An observation, albeit one without a definitive conclusion, starting with the current macroeconomic environment. A few preambles in seriate:

* All here - whether in North America, Europe, Asia, AU/NZ, Latin America or Mars - are personally aware of the inflationary environment present for the past 12-18 months or so. Likewise, most have noted the comments by the Bernankes and Lagardes of the world that signs are showing that inflation has peaked and is easing; most such comments include “significantly”.

*This is disinflation. It is NOT a reduction in prices, which is deflation. Instead of prices rising by, for example, 10% they are increasing at 5%. Thus, (bear with me please) something that at t=Past had been $100, went at t=Present, to $110 and now will be going at t=Next, to $155.5.

In general, central banks, businesses and the markets tend to like disinflation and abhor deflation. The former suggests calm seas and following winds; the latter….a lee shore. Non-sailors, figure out the imagery on your own.

Gotta go; to be continued.
With the Great Big BUT, which is why I’m writing this post.

Rats. The holiday weekend is nearly over and I’ve not found the time to devote to finishing this. And though our nighttime temps are still below freezing, we’re seeing daytime highs in the high 60s throughout the next ten days…..which means the likelihood of catastrophic flooding from snowmelt is something for which we have to plan. Our snowpack never has been this large - not in the oldest of the old-timers’ memories.

So, brutally concise conclusion: This time it really, truly might be different. Because….

* So much of the inflation we have experienced is the direct result of infrastructural and raw materials calamities that, as they subside or otherwise are reversed, and their own prices drop, a follow-through not normally found in the macroeconomic situation may and I believe will develop in the manufacturing AND service sectors in a cascading fashion causing a healthy deflation. That is, a deflation that is accompanied not by a recession but by strong growth.

* As others also have brought up in this thread, we already are seeing price decreases in shipping rates and in some parts of the semiconductor sector. Also, the container ship loading/unloading backlog is diminishing, although it has a long way to go in many major ports. Wholesale raw materials - the St. Louis Fed Index for lumber is smartly down over several months, boding well for housing etc. costs in the near future.

* Energy is the one very large sector that, mostly because of the Russo-Ukrainian conflict, is not seeing meaningful price abatement yet nor in the short- or medium-term future. We can take solace in that phenomenon may be the most powerful force yet for driving vast, important geographical regions (NoAm, Europe, AuNZ, large chunks of Asia) to turn permanently away from hydrocarbons. Foodstuffs also have been disrupted by the war and prices of such commodities as wheat and cooking oil, for which Ukraine traditionally is an important supplier, are less likely to trend down. This hits the lesser-developed parts of the world more cruelly than elsewhere.

Apologies again at not being able to spend more time with this conclusion but to me, the unique factors at play suggesting deflation together with economic growth are too important - and almost unprecedented* - not to bring to others’ attention.
* I believe one can make the case that the supply-constrained (diversion to war effort; disruption by war itself) crunch that was WWII, and the subsequent boom that followed, may be shown to be another such case. Yet even here, the benefit was vastly UNequal: the US, Canada and Australia smartly benefited, but Europe and Japan were long-delayed in seeing the economic benefits of the end of the conflict.

 

[SarahsDad]

No he does not. A simple Google search yields the result that he drives a Mach-E.

Mayor Pete may not own a Tesla but his Mom clearly does. Here's a post from this thread from Dec '20. "When I'm driving her somewhere I feel like I'm halfway to autopilot". He describes it being "just like a spaceship" but avoids saying "Tesla" - he's answering a question from a Wayne County Michigan (Detroit) Commissioner so maybe he didn't want to inflame the base. The whole segment is worth watching (32:40-38:10) - he clearly sees FSD coming much sooner than most government officials do.

‘Mayor Pete’ talks transportation issues with county officials

Kinda sounds like Buttigieg's mother owns a Tesla.

"Buttigieg also talked automation and innovation as well as getting federal dollars to local governments.


“I may not be the only one here whose mother has a much more sophisticated car than I do,” said Buttigieg, who noted that he drives a Chevy Cruze. “It has cruise control that is pretty straightforward. She has this car — it’s just like a spaceship. And it feels to me like it’s already halfway automated.”
@32:40 in the video.

 

[betstarship]

The world's car buyers are ready to go electric

More than half of global buyers say their next car will be electric.

www.axios.com

"Consumer interest in electric vehicles has hit a global tipping point, with more than half of car buyers saying they want their next car to be an EV, new research from Ernst & Young shows."


"
52% of respondents to EY's annual Mobility Consumer Index who are looking to buy a car want an EV, according to the survey of 13,000 people in 18 countries.

• That's a leap of 22 percentage points in two years, and the first time that EV interest exceeded 50%, the company said.
• Buyers in Italy (73%), China (69%) and South Korea (63%) were the most interested.
• Consumers in Australia (38%) and the U.S. (29%) showed less interest.

"

 

[saniflash]

I realized today I might've been majorly misinterpreting European prices and if so I'll need to adjust my earnings model. As an uncultured American, I'm accustomed to seeing sales tax added after the listed price and I'm not sure I understand how the value added tax (VAT) works.

For example, in Germany (link) the Model Y Performance is listed for 63,990 € and in the details window the English-translated statement is:

Pay the vehicle price by bank transfer to become the owner of your vehicle after delivery.​

​

Cash payment price 64,970 €​

​

Incl. VAT of approx. 10,373 €​

​

Processing fees of 980 €​

​

Incl. €2,500 environmental bonus (net)​

How much revenue would Tesla receive from this order? Is the VAT embedded in the 64970 € cash price? Is the environmental bonus also embedded in the listed price where the government pays 2500 to Tesla, or is it a personal tax credit?

If Tesla only gets 64970-10373 = 54597 € = $ 58.8k then the revenue on a German Perf Y is $10k less than in the US. That would be surprising to me considering the fuel price situation in Europe right now and the lack of supply of Teslas with Berlin barely making anything yet and Shanghai having been restricted so much this year.

Aa a general rule, the laws in all European countries that I know of -- UK, F, E, IT, D, CH, CZ, SE, FI, DK, NO, ME, AT, SK,... -- prescribe that all prices communicated to a consumer have to be inclusive of VAT.

In your example, Tesla would receive 64,970 - 10,373 (VAT goes to the government; however because Tesla can deduct the VAT on its raw materials, the net VAT owed is likely lower than that) + 2,500 (which is a government subsidiary) + 980 = EUR 58,077

 

[hobbes]

I realized today I might've been majorly misinterpreting European prices and if so I'll need to adjust my earnings model. As an uncultured American, I'm accustomed to seeing sales tax added after the listed price and I'm not sure I understand how the value added tax (VAT) works.

For example, in Germany (link) the Model Y Performance is listed for 63,990 € and in the details window the English-translated statement is:

Pay the vehicle price by bank transfer to become the owner of your vehicle after delivery.​

​

Cash payment price 64,970 €​

​

Incl. VAT of approx. 10,373 €​

​

Processing fees of 980 €​

​

Incl. €2,500 environmental bonus (net)​

How much revenue would Tesla receive from this order? Is the VAT embedded in the 64970 € cash price? Is the environmental bonus also embedded in the listed price where the government pays 2500 to Tesla, or is it a personal tax credit?

If Tesla only gets 64970-10373 = 54597 € = $ 58.8k then the revenue on a German Perf Y is $10k less than in the US. That would be surprising to me considering the fuel price situation in Europe right now and the lack of supply of Teslas with Berlin barely making anything yet and Shanghai having been restricted so much this year.

Cash price includes the VAT, so revenue is 19% less.
Environmental bonus is not a tax credit, but an actual bonus given to the customer by both Tesla and the federal government - Tesla is supposed to decrease the price by 2500 EUR (but that decrease is already built into the cash payment price so doesn´t affect the revenue from there) and the government pays another 2500 EUR to the customer also (which obviously doesn´t affect revenue either). So all you have to take into account is that the cash price includes VAT.

 

[Krugerrand]

So how do Tesla, SpaceX, The Boring Company etc fit in? We all seem to think they are transformational. It remains to be seen if the world can actually succeed in this transformation. In my view these are the only demonstrated successes to date. Will they continue? I do not know but I also see no better choice to mankind than to try as hard as possible to help them to do so. The alternatives are too frightening to consider.

I don’t think the world has a choice. Elon will force the issue or die trying. If he dies before the tide turns, we’re screwed. Those at the top of the money/food chain will put a halt to everything he’s started and go back to what they want. Unless you can name a person who will take his place? I can’t, if and until one or more of his children take up the gauntlet.

If Elon can continue his relentless march forward for 30 more years, then absolutely the transformation will continue and we have a chance. The top of the money/food chain will have had enough turnover in that time to no longer represent much of an obstacle, if at all.

 

[FEERSUMENDJIN]

Yes. I have wondered if maybe my car has a calibration problem but I have not tried to have that checked at a service center. My previous Model 3 with FSD seemed to be better than is my Model S Plaid, but that is entirely subjective.

One issue that becomes possibly material for TSLA FUD is the sensitivity of all systems as the technologies advance, with other owners and drivers perhaps being as indolent as am I to check out discrepancies.

From some decades flying aircraft with avionics that were very advanced for their day I learned that if I could not diagnose a problem myself it was unlikely that an avionics technician could do it. This situation is similar in that it is possible that there is nothing wrong with my FSD, but I'm trying to use it in urban settings for which it is not yet prepared. If not, I really need to document each discrepancy, which I have not yet done in any systematic way. In aircraft OTOH I documented everything.

Some years back @Papafox and other aircraft CFI's (Certified Flight Instructor) had threads supporting the @Papafox orientation to Tesla use. Then, as now, those tend to be even more relevant as the technologies advance. Once Level 4 and 5 arrive that may begin to decline as an issue.

In the meantime it really is my obligation to understand the issues I am having with my FSD. Specifically whether the issues are mine or the FSD or both.

An analogy comes to mind with the early-1990's adoption of GPS in aviation, first as another signal in multi-sensor navigation, later as a single source. The biggest issue was knowing when the system was working well. With GPS allowed for single-source in 1994 the former VOR and Loran based systems almost instantly moved to GPS. My aircraft immediately moved since the new were almost plug-compatible with the predecessors. Suddenly diagnosis of problems was crucial, but some pilots understood the issues but a handful did not so it was a horrible problem differentiating between system problems and operator problems. I ended out forcing all my pilots and trainees go through a week-long technology training course prior to solo flight in those aircraft.

I do think Tesla needs a similar approach. It is possible that I have not done enough myself to know whether the problems are me, the system or both.

Sorry for the long winded response. I shall do more to define the facts about which I am posting. In the meantime, long honored aviation traditions says: "It's clearly political error". It's up to the pilot to prove otherwise. (ok, that's the classic Boeing rule, but the whole industry follows it normally)

By definition it's me whose errors count, not FSD. Hence, I need to determine if sensors and/or warning trigger logic are part of the problem. Sometime my insurance rate could depend on those distinctions.

Hi JB. We had an exchange regarding the competency of Stellantis to make EVs a while back. Here is my capitulation on that conversation. A Fiat500e convertible charging at a supercharger bought for the wife. The car is great but the software REALLY sucks. Managed to get charging at 75Kw here though.

 

[Prunesquallor]

…
These pricks are literally hoarding uranium for nuclear power plants to try and gouge utilities.
…

Uranium hoarding has a tendency to blow up on you.

(I crack me up)

 

[FEERSUMENDJIN]

Hmmm, whilst that post stipulates ~$200M for the leases expiring currently, he suggests that will grow:

"... a gain of up to $9.4B recognizable over the next 12 quarters"

Unless I'm missing something, that's actually an average of over $750M per quarter, no?

The UK Model 3 inventory is now full of ex leases. Definitely this has become a thing.

 

[UCF3]

How is EPS affected if Tesla begins to claim it's valuation allowance?

Dave thinks that the deferred tax (valuation allowance) is 80% likely to be taken in this coming ER.

27 mins in:

For this same reason, I expect Tesla to claim a portion of their deferred Tax allowances / Valuation Allowance (VA) which IIRC had ballooned to ~$8B by 2021Q4. Here's the background:

Finally, we've learned via James Stephenson (@ICannot_Enough) / Twitter that VA can be claimed at the rate of 80% in the first tax year, and 20% the following year.

So, do people think Tesla will deploy their now bulging ~$8B deferred tax assets / valuation allowance in Q1, or wait for the low tide in Queue Too?

From information provided by James Stephenson, 80% of the VA can be claimed in a single quarter, then the remaining 20% must be deferred until the following FY. That'd be 2023Q1 at the earliest, albeit Q1 is traditionally a light quarter.

Cheers!

They will not any time soon.

They still have a huge loss carry foward of $31B federal and the US has low to negative net profit due to SG&A, R&D, and other abbreviations .

Note 14:
https://www.sec.gov/Archives/edgar/data/1318605/000095017022000796/tsla-20211231.htm

Portion:

Valid question but i think @mongo response still applies to this quarter

 

[betstarship]

I don’t think the world has a choice. Elon will force the issue or die trying. If he dies before the tide turns, we’re screwed. Those at the top of the money/food chain will put a halt to everything he’s started and go back to what they want. Unless you can name a person who will take his place? I can’t, if and until one or more of his children take up the gauntlet.

If Elon can continue his relentless march forward for 30 more years, then absolutely the transformation will continue and we have a chance. The top of the money/food chain will have had enough turnover in that time to no longer represent much of an obstacle, if at all.

If my opinion counts for anything, I think we're all personally in a race condition:

human progress vs. fighting against the limits of our environment

Context: Since the start of the industrial revolution, we've seen a remarkable amount of progress in human productivity and wellness. People are living much longer, population is growing quite a bit (until recently...), wealth is more freely available and not just available for a very small percentage of the population. All since the start of the industrial revolution.

https://www.theactuary.com/general-features/2012/08/2012/08/20/planet-under-pressure

World population, comparison of different historical sources

An interactive visualization from Our World in Data.

ourworldindata.org

Human history, in one chart

Almost all the gains in human well-being in history happened since the Industrial Revolution.

www.vox.com

A meaningful life is becoming more and more easily reachable for any newborn. Unfortunately, this progress is coming up against the limits of the environment, Earth, our species is in. Here's a timeline of tracking climate change. I think Elon Musk knows and read into this and is pushing humanity than letting it falter and fall apart. Maybe many people know this. Hence, BUILD. Keep on building. Get off the planet; meanwhile, make it SUSTAINABLE.

I was all-in on Tesla as a result. I've grown to be all-in on Musk too. He's our best applied engineer.