TSLA Investor Discussions

[clmason]

Can someone explain this, from the shareholder letter, "halfway to the 25% gross margin". I'm not sure what they are really saying with this comment. Thanks!

Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway
to the 25% gross margin target by end of year.**

 

[Longhorn92]

Can someone explain this, from the shareholder letter, "halfway to the 25% gross margin". I'm not sure what they are really saying with this comment. Thanks!

Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway
to the 25% gross margin target by end of year.**

In my mind, it means that they are expecting to be making about 12-13% profit on each car by the end of the year.

 

[Johan]

Can someone explain this, from the shareholder letter, "halfway to the 25% gross margin". I'm not sure what they are really saying with this comment. Thanks!

Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway
to the 25% gross margin target by end of year.**

I think they mean that om cars sold in say late Dec. they have 12.5% margin? As production ramp continues the cost/car becomes lower, while sales price remains, there margin goes up (to 25%).

 

[Discoducky]

In my mind, it means that they are expecting to be making about 12-13% profit on each car by the end of the year.

Or that they will only realize their anticipated profit margin once they hit 400/week or 20K/year.

 

[Yelmurc]

They need to hit a production rate of 400 cars per week for 2013. That is just over 20,000 Units for the year. Their current reservations are coming it at 2900 a month. While they did have 1200 reservation cancellations this month that number is expected to drop. So if we split the difference hopefully it will stabilize around 2300 a month net in the next few quarters. They would need to ramp up production a additional 25% to meet their current demand. And I have no doubt that their demand will rise.

 

[Oyvind.H]

They need to hit a production rate of 400 cars per week for 2013. That is just over 20,000 Units for the year. Their current reservations are coming it at 2900 a month.

Where did you get 2900 a month from? Did he state that in the conference call?

 

[joefee]

Very positive overall for TSLA, TSLA Analyst Opinion | Tesla Motors, Inc. Stock - Yahoo! Finance

Price Target Summary
Mean Target: 35.67
Median Target: 34.50
High Target: 50.00
Low Target: 19.00
No. of Brokers: 12

I see the $36 level as a new support level for yearend and $50 by Q2 2013 :tongue:

 

[FalconNinetyD]

Where did you get 2900 a month from? Did he state that in the conference call?

They stated 2900 reservations for the quarter, not per month...

 

[NuclearPowered]

Where did you get 2900 a month from? Did he state that in the conference call?

It is from the share holder letter and is actually 2900 per quarter.

http://files.shareholder.com/downloads/ABEA-4CW8X0/2145341462x0x611344/42cb80fa-6f64-4e48-93ff-2da29de21acc/Q3%202012%20Shareholder%20Letter%20Final.pdf

 

[Oyvind.H]

They stated 2900 reservations for the quarter, not per month...

Saw that in the shareholders letter, but as he wrote "currently 2900 per month" I thought maybe Elon had said something about the reservation rate we see today.
I`ve earlier estimated just abouve 4000 reservations in Q4, but the EU PR campaign might put Tesla well above 4000.

 

[Zzzz...]

Very positive overall for TSLA, TSLA Analyst Opinion | Tesla Motors, Inc. Stock - Yahoo! Finance

Price Target Summary
Mean Target: 35.67
Median Target: 34.50
High Target: 50.00
Low Target: 19.00
No. of Brokers: 12

I see the $36 level as a new support level for yearend and $50 by Q2 2013 :tongue:

I agree.

$31+ while feels good for now, still underpriced. It do looks like Obama will win, and that will also remove some fears.

$35 is a fair price, and under $40 still a strong buy. IMO.

But lets wait few days and see who is next US president and how market will react.

 

[nygiants242]

Speaking of elections, I feel as if the downside risk if Romney wins for TSLA is pretty big. If Obama wins, I'm hoping for a bit of a pop. What do you guys think? I'm fairly confident Obama will be re-elected (although the popular vote may be close).

 

[mdh]

300 million is low?

From the shareholder letter.

They burned a ton of cash.... working capital needs will increase as they ramp. Wonder how much cash they will consume in Q4?

 

[Zzzz...]

the downside risk if Romney wins for TSLA is pretty big

Yes, I agree. TSLA would have to prove that they will have a demand without federal incentives. Share price on the long run will go north, but it would take longer to reach whatever level. And short term it might drop, not sure to what level if Romney gets in the office.

 

[Oyvind.H]

If they can sustain a 200-400/week production and delivery rate, and see a decent profit margin, then their drain on cash for Q4 should go to zero, and Q1 go positive. So I say no.

If they make 400 cars per week with an average price of 80.000USD with 25% profit margin, they make about 416 million USD in profits in 2013. But what`s their cost base in 2013? Are their annual overhead costs lower than 416 million?

 

[Zzzz...]

They burned a ton of cash.... working capital needs will increase as they ramp. Wonder how much cash they will consume in Q4?

Cash & equivalents as of 2012-06-30 210.55
Cash & equivalents as of 2012-09-30 85.69

So they burned 125M. They still got 85M at the end of Q3. Plus they got 220M additional cash shortly after Sep 30.

They probably do not even needed that 220M, because in Q4 even if Tesla would not be cash flow positive, they would be close enough to barely burn anything. Anyhow 220M helped.
And inventory already jumped from 66M to 159M...

 

[Yelmurc]

Where did you get 2900 a month from? Did he state that in the conference call?

My bad was thinking month for some silly reason. Previous post is invalid. At 2900 a quarter and using 2300 as our base from cancellation your looking at about 750 a month which is just under their current production rate. They will need to double demand to keep up with production.

 

[Jkam]

I think Tesla can double demand once they really start opening up foreign markets. At present, Tesla is mainly relying on domestic demand for the bulk of the reservation tallies. Once the car hits Europe and Asia, I think the 20,000 cars per year demand will be achievable.

 

[CyberDutchie]

Morgan Stanley's bottom line on the earnings release:

Tesla seems to have near term expectations right where it wants them. Given the ability of a new auto company to consume cash, better visibility on the pace of production ramp is critical. Tesla appears confident and has already made more progress on weekly production than we felt would be achieved before early 2013. The 2 biggest questions going forward remain: (1) can the Model S produce a variable profit and (2) how big is the addressable market?

MS earlier this year revised their estimated Model S production target for 2012 to 2,200 with a reset of their TSLA one-year target price to $47. Now they are seeing Tesla confident at beating that low estimate.

Good possibility MS will raise their price target in Q4 to $70, where it was before, if Tesla can deliver on their promise.

 

[Citizen-T]

Speaking of elections, I feel as if the downside risk if Romney wins for TSLA is pretty big. If Obama wins, I'm hoping for a bit of a pop. What do you guys think? I'm fairly confident Obama will be re-elected (although the popular vote may be close).

I think the concerns about a Romney White House are overblown. Unless he were to win handily and win a lot of red seats in the Senate, he's not going to have enough leverage to make very big changes. And I'm sure he'd be more concerned with things like Obama Care than the measly EV tax credit.