This thread discusses 2017Q1 results. To start the discussion of, here is my model for profit for the automotive side of TSLA.
To stress again, the below is strictly for the automotive side of TSLA. The energy side is just too complicated and in flux for me to model. Some of the issues : the complicated nature of SCTY's balance sheet before the merger, the convoluted way results were necessarily reported in the 'broken' Q4 quarter (pre/post merger), the lack of visibility on the ramp up and the unknown impact of taking the gigafactory in operation.
So lets start. First off, I will ignore service revenue and costs. It's a stated goal of management that service is not a profit center and it never has been (sometimes losing a few millions, sometimes running at a profit of a few millions). The easiest way to deal with this, is thus not dealing with it at all since impact on profit will me immaterial.
Revenue and costs are broken down between straight sales and leasing. The easiest part is straight sales. This quarter Tesla sold 25 000 cars, last quarter 22 200. Assuming the mix between lease and straight sale remained more or less the same, numbers should be multiplied by 25 000/22 000 or +12.6%. Revenue was 1 739M last quarter, becomes 1 958M this quarter. Add to that the recognition of EAP revenue for 10 000 cars last quarter and 20 000 cars this quarter @5k gives an additional 150M revenue. Cost of goods was 1 373M becomes 1 546M. Total profit in Q1 on direct sales 562M
The above paragraph also assumes that the margins and ASP were more or less comparable between the quarters. I think they were. We had the P100D last quarter and the 100D this quarter as the latest hot thing depressing ASP+margins. There was also the shutdown which likely had Tesla running production a little less efficiently before and after to play catchup and switch things around. There is a general trend for Tesla to become more cost effective as it gets better at manufacturing but I think that effect has largely ran its course for the S and X which are now a mature product. I also think Tesla's focus is now 100% on Model 3 instead of optimizing efficiency of the S/X production line.
On to leasing. These numbers are a little harder because they depend on cumulative sales. In Q4 total leasing net value assets (standing at 3 143M) increased by 184M. Assuming net value increase gained the same +12.6% from overall quarterly deliveries Q1 total leasing net value increase was 207M or +6.6% from a base of 3 134M. We will use this number as the increase for leasing revenue and cost. In Q4 leasing revenue was 255M of which 58M was recognized revenue from expiring resale value guarantees. That leaves us with 197M sales revenue last quarter, becomes 210M this quarter. Cost of goods was 172M becomes 194M. Gross profit of 16M.
To estimate how much resale value guarantees Tesla can recognize this quarter I just took it proportional to the amount of expiring guarantees in the next period (+29%) So 58M becomes 75M.
Total gross profit 562M + 16M + 75M = 653M
Now on to the other costs. Research and development last quarter (excluding Solarcity) was 235M. Sales, general & administration was 382M and interest expense was 43M. Taking a flat R&D and +10% for both SG&A and interest expense we get to 702M.
Final verdict : loss of 49M on the automotive side of business.
Possiblue upsides : every 1% more efficient manufacturing on the Model X increases profit by 6M (9M for the S). ZEV credits can do anything from +0M to +50M. Possible downsides : not fully recognizing EAP may reduce profits by anything from 0M to -50M (it is hard to believe they will already not recognize majority of the features)
What do you guys think? Reasonable? Unreasonable? Where did I go wrong?
To stress again, the below is strictly for the automotive side of TSLA. The energy side is just too complicated and in flux for me to model. Some of the issues : the complicated nature of SCTY's balance sheet before the merger, the convoluted way results were necessarily reported in the 'broken' Q4 quarter (pre/post merger), the lack of visibility on the ramp up and the unknown impact of taking the gigafactory in operation.
So lets start. First off, I will ignore service revenue and costs. It's a stated goal of management that service is not a profit center and it never has been (sometimes losing a few millions, sometimes running at a profit of a few millions). The easiest way to deal with this, is thus not dealing with it at all since impact on profit will me immaterial.
Revenue and costs are broken down between straight sales and leasing. The easiest part is straight sales. This quarter Tesla sold 25 000 cars, last quarter 22 200. Assuming the mix between lease and straight sale remained more or less the same, numbers should be multiplied by 25 000/22 000 or +12.6%. Revenue was 1 739M last quarter, becomes 1 958M this quarter. Add to that the recognition of EAP revenue for 10 000 cars last quarter and 20 000 cars this quarter @5k gives an additional 150M revenue. Cost of goods was 1 373M becomes 1 546M. Total profit in Q1 on direct sales 562M
The above paragraph also assumes that the margins and ASP were more or less comparable between the quarters. I think they were. We had the P100D last quarter and the 100D this quarter as the latest hot thing depressing ASP+margins. There was also the shutdown which likely had Tesla running production a little less efficiently before and after to play catchup and switch things around. There is a general trend for Tesla to become more cost effective as it gets better at manufacturing but I think that effect has largely ran its course for the S and X which are now a mature product. I also think Tesla's focus is now 100% on Model 3 instead of optimizing efficiency of the S/X production line.
On to leasing. These numbers are a little harder because they depend on cumulative sales. In Q4 total leasing net value assets (standing at 3 143M) increased by 184M. Assuming net value increase gained the same +12.6% from overall quarterly deliveries Q1 total leasing net value increase was 207M or +6.6% from a base of 3 134M. We will use this number as the increase for leasing revenue and cost. In Q4 leasing revenue was 255M of which 58M was recognized revenue from expiring resale value guarantees. That leaves us with 197M sales revenue last quarter, becomes 210M this quarter. Cost of goods was 172M becomes 194M. Gross profit of 16M.
To estimate how much resale value guarantees Tesla can recognize this quarter I just took it proportional to the amount of expiring guarantees in the next period (+29%) So 58M becomes 75M.
Total gross profit 562M + 16M + 75M = 653M
Now on to the other costs. Research and development last quarter (excluding Solarcity) was 235M. Sales, general & administration was 382M and interest expense was 43M. Taking a flat R&D and +10% for both SG&A and interest expense we get to 702M.
Final verdict : loss of 49M on the automotive side of business.
Possiblue upsides : every 1% more efficient manufacturing on the Model X increases profit by 6M (9M for the S). ZEV credits can do anything from +0M to +50M. Possible downsides : not fully recognizing EAP may reduce profits by anything from 0M to -50M (it is hard to believe they will already not recognize majority of the features)
What do you guys think? Reasonable? Unreasonable? Where did I go wrong?
