Yes. Only something like 40% of the revenue is recognized in the near term and the remaining is either accounted for as Deferred Reveue or Unsatisfied Performance Obligations, as the name implies the Megapack project must perform to meet certain benchmarks before the remaining revenue hits.
Yes. Further, depending on the project, especially very large ones (that are rapidly increasing), the requirement for performance bonds with payment terms also linked to project performance often have much less than 40%, often 20% or so, up front. Depending on those highly variable terms, sometimes progress payments are purely marginal cost-linked and the final payment can often be staged during actual deployment. Because of the increasing deployment size those terms inevitably become more variable.
As a rough rule, depending on specific accounting preferences in part, Deferred Revenue includes the entire paid balance of the entire project price, Unsatisfied Performance Obligations, when used, tend to refer to the cost basis of the project. During all the large projects i have seen there has been a regular classification debate on large project performance. IME, private companies (eg Bechtel) and public companies tend to differ somewhat in accounting, primarily because for private companies periodic earnings reports are irrelevant but cash flow is paramount.
Having helped issue performance bonds for some huge (i.e. >$1 billion) private and public company projects, albeit a long time ago, I have an acute awareness of the massive effect such status has on accounting policy and disclosure.
Tesla is only now reaching the point of several coexisting huge projects. At some point in number of coexisting projects the variability in P&L and recorded performance liability will smooth. Despite that energy projects specifically tend to have customized schedules to adapt to reporting requirements fo the large customers. Those factors mean we will continue to have 'lumpiness' in TE. Even so, once materiality is unquestioned we will have enough data to decode the seeming 'lumpiness'. That said, now there are numerous established utility and large commercial suppliers that have dealt with such issues for decades. Including the foregoing Bechtel, Siemens, Vestas (wind only), General Electric, CATL, BYD etc are a few of the major companies involved in these projects. That list excludes a large number fo major competitors but does illustrate that this field now has a formidable combination of historically important builders and suppliers to energy projects with others that serve only renewables.
Once again, maybe 'too much information' in the general investment thread. I don't think so since Tesla Energy has now surpassed the long-awaited materiality. As Elon has said this will surpass automotive revenue 'soon' but probably will tend towards lower margins.
The last paragraph is crucial. Several of us are forecasting higher margins, Apple-like, for Tesla Energy. "Ain't gonna happen!" Margins will be quite respectable but not free of competition. nearly every major utility provider is working on these projects now. Those which aren't are trying to. Even traditional wholesale equipment providers to utilities, like WEG are entering the fray. Every large scale power plant contractor is doing this field today! Every battery provider, including some exotics are in this market one way or many ways.
Finally, as Tesla says on their own Tesla Energy site:
"A giant battery designed to change the way we power the world—with clean energy, at an enormous scale." and:
>65 countries, giant deployments. Exciting, profitable, complex, accountants dream!
In short, we should not obsess about quarterly car sales and production. There is a much larger market here now. of course, it is not consumer-based so is easy to ignore.
