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oren

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Re: Tesla glory/failure
« Reply #2650 on: June 20, 2019, 08:21:14 PM »
Bob, here's the outlook section from Tesla's Q1 shareholder letter.
https://ir.tesla.com/static-files/b2218d34-fbee-4f1f-ac95-050eb29dd42f

Quote
OUTLOOK
Although we are driving towards higher internal goals, we reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019,
representing an increase of approximately 45% to 65% compared to 2018. Please note that vehicle production will be significantly higher
than deliveries, as it takes several weeks to transport cars from California to distant customers, especially in other countries, where they
must also be processed by customs. Deliveries, production and customer orders, which are all materially different, are often conflated
when analyzing Tesla.
If our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000
vehicles globally in 2019. This is an aggressive schedule, but it is what we are targeting. However, based on what we know today, being
able to produce over 500,000 vehicles globally in the 12-month period ending June 30, 2020 does appear very likely.
We continue to target a 25% non-GAAP gross margin on Model S, Model X and Model 3, depending on variant mix and option take rates
as our product offerings change.
In response to the operational challenges we experienced with international expansion in Q1, we are in the process of balancing our
regional vehicle builds throughout the quarter. This provides an opportunity for additional cost efficiencies in our factory, supply chain,
logistics operations and delivery centers.
With the recently announced product improvements on Model S and Model X, as well as continued expansion of Model 3 globally, we
expect our order rate to continue to increase throughout the year as our production levels increase. We believe we will deliver between
90,000 and 100,000 vehicles in Q2
. Although it is possible to deliver a higher number of vehicles, we believe it is important to begin
unwinding the "wave" approach to vehicle deliveries, where overseas cars have been made in the first half of the quarter and North
American cars have been made in the second half. This puts extreme stress on Tesla, negatively affects our working capital needs and
adds to our cost structure.
Energy generation and storage revenue should increase significantly in 2019. This increase is driven mainly due to the storage business
as we increase production to address our backlog in Powerwall orders and deliver on our pipeline of orders for commercial storage and
an expected growth in retrofit solar deployments in the second half of 2019. The gross margin of our Energy generation and storage
business should grow as the energy storage margin continues to improve from its current level.
We expect our Services and Other business to grow as our fleet size and used car volumes increase. We have refocused on
operational efficiency of these businesses and are targeting gross margin improvements throughout this year.
Our 2019 capex, the vast majority of which will be to grow our capacity and develop new vehicles, is expected to be about $2.0 to $2.5
billion. We believe this amount should be sufficient to continue to develop our main projects, such as Gigafactory Shanghai, Model Y
and Tesla Semi, as well as for the further expansion of our Supercharger and service networks.
Operating cash flow less capex should be positive in every quarter including Q2. As the impact of higher deliveries and cost reduction
take full effect, we expect to return to profitability in Q3 and significantly reduce our loss in Q2.

Sigmetnow

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Re: Tesla glory/failure
« Reply #2651 on: June 20, 2019, 08:24:37 PM »
How are leases accounted for? We should expect a significant number of sales to be leases.I’m not sure how that affect quarterly profits.

Quote
ValueAnalyst (@ValueAnalyst1) 6/18/19, 4:48 AM
Tesla’s leases have historically had 2x gross margin than its cash sales. This will not be the case, as Model 3 leases are priced differently, but I also don’t expect a major hit. Nonetheless, institutional investors would look through the any temporary impact on GAAP financials.
https://twitter.com/valueanalyst1/status/1140904173300572160
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Bob Wallace

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Re: Tesla glory/failure
« Reply #2652 on: June 20, 2019, 08:42:34 PM »
How are leases accounted for? We should expect a significant number of sales to be leases.I’m not sure how that affect quarterly profits.

I'm posting Q4 2018 numbers as Q1 2019 was a 'disrupted' quarter for sales due to S/X changes and a large number of cars in transit.  In millions thousands of dollars.

Vehicle sales revenue $6,073,471
Vehicle lease revenue $249,748

Vehicle sales cost of revenue $4,658,517
Vehicle lease cost of revenue $127,731

Leasing revenue/cost is a fairly small component of overall financial activity.  And we might see strange things with non-business leasing.  No longer will people be able to purchase their leased Tesla at the end of the lease period, Tesla wants them back for their robotaxi business.

The robotaxi business is likely to produce huge demand increases.  Let's assume for sake of argument that Tesla has a FSD system ready to roll in short years, that individual car owners will be able to place their Teslas 'in service', and owners stand to earn $30k per year for the first 11 years of their car's life.

Note:  This is a could discussion.  Not a will discussion.  Please treat it as such.

OK, purchase a Model 3s for $40,000.  Earn $30,000 per year.  Pay out $5,391 in payments (no down, 5 years at 5%).  That leaves $24,000+ per year minus insurance and maintenance.  It's not clear if the $30k includes electricity costs.  Anyone not comfortable with earning at least $20k per year after all costs covered?

If you've got the ability to borrow $200k or have $200k available to invest where might you get the same return on investment?  Where could you set yourself up in business for $200k and start earning $100k the first year?

People with a few hundred thousand in rental real estate would quickly jump to converting their property into Tesla taxis.  And there are a lot of those people.  People making nice annual salaries but would like to get out of their line of work are going to find this attractive.  If you bought one Tesla per year after five years you'd have a six figure income from your cars.

At this point in time Tesla intends to use its 'returned from lease' vehicles as backup for privately owned robotaxis.  I assume some businesses will continue to lease to some extent.  Although this could get very strange if a three year old used Tesla sells for more than the cost of a new one if demand greatly exceeds ability to produce.

It's fun watching this all develop....
« Last Edit: June 21, 2019, 07:00:03 AM by Bob Wallace »

Bob Wallace

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Re: Tesla glory/failure
« Reply #2653 on: June 20, 2019, 08:56:04 PM »
Oren - from your post

Quote
We believe we will deliver between 90,000 and 100,000 vehicles in Q2.

That would put Q2 deliveries (which are sales) higher than the profitable Q3 and Q4 2018 average.  I don't see any guidance on changes in OpEx.  Put those two factors together and one should expect a profitable Q2 2019.

Quote
Energy generation and storage revenue should increase significantly in 2019.  This increase is driven mainly due to the storage business as we increase production to address our backlog in Powerwall orders and deliver on our pipeline of orders for commercial storage and an expected growth in retrofit solar deployments in the second half of 2019. The gross margin of our Energy generation and storage business should grow as the energy storage margin continues to improve from its current level.

This would be additional Tesla profit, in addition to vehicle profits.  For the four previous quarters Tesla had generation and storage revenues of $1,469,883,000 and costs of $1,306,420,000.  A net profit of $163,463,000.  A significant increase in energy/storage profits should help nicely.

(edited: I had too many zeros in my numbers)
« Last Edit: June 21, 2019, 06:59:17 AM by Bob Wallace »

Sigmetnow

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Re: Tesla glory/failure
« Reply #2654 on: June 20, 2019, 09:17:18 PM »
Quote
EV News Daily (@EVNewsDaily) 6/20/19, 8:28 AM
I’m at the handover event for the first ever Right Hand Drive @Tesla #Model3 cars in the UK. Lots of white interiors, lots of Performance versions. Going to talk to some buyers soon too!
https://twitter.com/evnewsdaily/status/1141684179551346689
Brief video.  “Warehouse full of them,” “lots of Performance models,” “many gone already.”

June 19: Grand Mark has arrived in Zeebrugge.
6th Q2 load of Teslas for Europe and the 2nd load of RHD Model 3 for the UK

H/t: https://twitter.com/mortenlund89/status/1141525758692777984
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oren

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Re: Tesla glory/failure
« Reply #2655 on: June 21, 2019, 02:25:32 AM »
Oren - from your post

Quote
We believe we will deliver between 90,000 and 100,000 vehicles in Q2.

That would put Q2 deliveries (which are sales) higher than the profitable Q3 and Q4 2018 average.  I don't see any guidance on changes in OpEx.  Put those two factors together and one should expect a profitable Q2 2019.

Maybe one should expect, but one should be wrong... here's the very same question raised in the Q2 conference call. Elon Musk tells a nice story, but I think Zach Kirkhorn gives the real answer - lower prices, lower margins.
Quote
Pierre Ferragu -- New Street Research -- Analyst

And my follow-up was really on Q2 like with 90,000 to 100,000 units you are getting back to fairly nice volumes and I am surprised you don't -- you just still expect a loss. So maybe if you could take us through where we will see in Q2 pain points compared to Q4 and Q3 where you had a profit for similar volumes? How much of the loss in 2Q will be one-off cost, how much is the price points coming down in the mix and how much is related to pricing and other things?

Elon R. Musk -- Chief Executive Officer

Sure. So quite a bit -- we think if we didn't unwind or pulled the wave where we -- yeah, we made cars in the first half of the quarter almost exclusively for Asia and Europe and in the second half almost exclusively for North America. And then actually even that is subdivided depending upon whether it's West Coast or East Coast, then we could deliver more cars. But we think it is important to unwind this wave, because it ends up being sort of optimizing for one quarter, but really adding a lot of cost and difficulty and not just -- not being a good expense for customers and pretty aggressive Tesla team. So, if we have to fully optimize for profitability in Q2, I think we can do it, but then we would be unable to unwind this crazy wave of deliveries, and it also helps our working capital within the quarter to not have the wave.

And then, Zach, do you want to talk about some of the other items?

Zachary Kirkhorn -- Chief Financial Officer

Yeah. No, I think you summarized it well, Elon. Two other things that I would add. One is that, we did make pricing adjustments to our products in Q1, which puts pressure on margin. And so, that's part of what we will see in Q2. The teams are working extremely hard and making terrific progress on improving the cost efficiency of the business without sacrificing growth, and that in combination with the efficiencies from unwinding the wave is where we feel we will be comfortable returning to a place of profitability in Q3 once all of those pieces are in place.

Bob Wallace

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Re: Tesla glory/failure
« Reply #2656 on: June 21, 2019, 03:01:58 AM »
You mean this part?

Quote
One is that, we did make pricing adjustments to our products in Q1, which puts pressure on margin. And so, that's part of what we will see in Q2.

Tesla made two pricing adjustments in Q1 that I can think of. 

First, they sold some number of $40k long range T3s for $35k.  They did so, I think, to end the drumbeat from the shorts about not delivering the promised $35k Model 3s.  Tesla isolated part of the battery pack and turned off some features on the $40k version.  That means that they sold cars that cost them "$40k" costs at a $5k discount.  I just took a look at Tesla's web site and I don't see a way to buy a $35k T3 any longer.  If that's so then Q1 pricing adjustments on the T3 are in the past, meaning that T3 GPMs are likely to increase.

Second, S/X sales were way down in Q1 2019.  Starting in Q3 2016 when S/X sales first climbed into the 25k range S/X sales averaged 24,888 per quarter.  In Q1 2019 S/X sales fell to 12,091.  Tesla explained the drop this way...

Quote
Deliveries of Model S and Model X declined to 12,100 vehicles in Q1 compared to our two- year run rate of roughly 25,000 units per quarter. This decline was mainly caused by weaker Q1 demand due to seasonality, pull-forward of sales into Q4 2018 in the U.S. due to the first scheduled reduction of the federal EV tax credit in Q1 and discontinuation of our 75 kWh battery pack. We also had a mismatch between orders and deliverable cars. For example, due to adjustments in pricing mid-quarter, the take rate for the performance versions of Model S and Model X increased faster than we were able to supply.
                                       

If some S/X line costs continued to occur even though production was halved then that would lower the GPM.  Plus the S/X has a higher GPM than a T3 so this would also eat into the quarter's margin.

Something that makes me think Q2 is going to be OK is this part - "the take rate for the performance versions of Model S and Model X increased faster than we were able to supply".

Perhaps "unwinding" will move significantly more sales from Q1 to Q2 but that seems unlikely to me.  At least not enough to put Tesla into a Q2 loss when one considers the reported higher production levels, assumes a S/X recovery, and credits Q2 with Q1's in transit earnings.

The only scenario I can see for a Q2 loss is for S/X sales to remain very depressed (which is argued against by Tesla's statement) and a huge number of cars in transit at the end of the month.

GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2657 on: June 21, 2019, 05:04:32 AM »
The robotaxi business is likely to produce huge demand increases.  Let's assume for sake of argument that Tesla has a FSD system ready to roll in short years, that individual car owners will be able to place their Teslas 'in service', and owners stand to earn $30k per year for the first 11 years of their car's life.

Note:  This is a could discussion.  Not a will discussion.  Please treat it as such.

This is actually a can't discussion. FSD is total BS. The tech will eventually get there sure, but there is no chance Tesla will be leading the charge. Also, it is completely impossible to make FSD with the hardware Teslas' currently have.

"Tesla wants them back for the robotaxi business." LOL
big time oops

GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2658 on: June 21, 2019, 05:09:37 AM »
The real answer - lower prices, lower margins.

Woah. Easy does it. You don't want to blow the Bulls' minds.
big time oops

Bob Wallace

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Re: Tesla glory/failure
« Reply #2659 on: June 21, 2019, 06:23:46 AM »
Mr. Youngins

This actually won't be a discussion with you about FSD.

You have outstanding questions you have yet to address. 

You demonstrated some grown up behavior when you dropped the name calling.  Now it's time to step up further and explain why you think Tesla has an unsolvable problem earning profits, please.  In case you've forgotten what you claimed I'll copy it here for  you...

Quote
TSLA is the new ZERO.

The only chance the equity has is some form of a bailout, whether public or private. There is no chance the company Tesla, without restructure, ever makes an annual profit.

If Tesla makes an annual profit (or if any other Musk company ever does, [currently about 0/50 ]) I will quit posting.


FYI, if you think you are pro green stuff, you shouldn't be pro business's turning "X" amount of value into "X minus billions of dollars". It is a serious waste of fossil fuel resources.

NeilT

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Re: Tesla glory/failure
« Reply #2660 on: June 21, 2019, 12:11:34 PM »
The teams are working extremely hard and making terrific progress on improving the cost efficiency of the business without sacrificing growth

I would have said it was this bit.  Granted lower margin just makes it worse.  But until growth, in all products, reaches the required levels, then these costs will continue.  Launch for revamped Model S/X, Model Y and the Semi, plus the ramp up of Solar Roof and Powerwall are not one time costs. They are ongoing recurring costs which must be borne by the existing vehicle sales.

This will continue to weigh on profit until Gigafactory 3 is producing the same volume as Giga2, assuming the Chinese market has the demand.

The responses did not really answer the question. But it is possible to read between the lines.
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Sigmetnow

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Re: Tesla glory/failure
« Reply #2661 on: June 21, 2019, 12:14:33 PM »
“But... but... Tesla will never make an annual profit!”  ::)  ;D

True, but if you read the S&P article, Annual profit and a current profitable quarter are the entry barrier..

However, annual profit is the next barrier to stabilised share price and solid performance.  But, again, you are right.  Every time the next hurdle falls, the bears go onto the following hurdle and state that Tesla will "never" make it.

None so blind..

Not “annual profit,” but the four most recent quarters.  Don’t need to wait until 2020. :)

“the S&P 500's methodology requires that the sum of a firm's four most recent quarterly earnings, as well as the most recent quarter, must be positive.”


——
The current stock price manipulation is pure ‘politics’:
Quote
Alter Viggo (@AlterViggo) 6/20/19, 1:31 AM
Was seeing chatter this afternoon from several traders thinking $TSLA might have a big move up tomorrow.

That kind of sentiment is usually ripe for some sort of analyst downgrade coming. #Tesla
https://twitter.com/alterviggo/status/1141579332394946560
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crandles

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Re: Tesla glory/failure
« Reply #2662 on: June 21, 2019, 01:07:55 PM »
Oren - from your post

Quote
We believe we will deliver between 90,000 and 100,000 vehicles in Q2.

That would put Q2 deliveries (which are sales) higher than the profitable Q3 and Q4 2018 average.  I don't see any guidance on changes in OpEx.  Put those two factors together and one should expect a profitable Q2 2019.

So you know better than Tesla. Hmm.

Anyway, yes little change in operating expenses and interest from q4 to q1 and no particular reason to expect change there.

50% higher deliveries than q1 at same margin and everything else same as q1 only halves the loss. So where is the difference?

Q4 auto sales $6.07bn Q1 auto sales $3.5bn
50% higher q1 auto sales is only $5.25bn  not the $6bn of q4.
so partly a turnover difference
Also auto sales margin q4 23.3% q1 only 18.6%
mainly a margin difference.

It is possible to look on bright side, think S and X sales recover improving the mix back to more like q4 in sales value and margin. Alternately we can think it is not going to be better than Tesla guided and price cuts to keep demand high enough to get 50% increase in deliveries will erode margins and mean it could be worse than assuming 50% increase on q1 with same margin.

Guess we wait and see.

In the meantime, assuming you know better than Tesla on the positive side looks excessively optimistic.

GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2663 on: June 21, 2019, 02:40:22 PM »
Mr. Bob,

I will name call forevermore.

Tesla won't make a profit because it isn't part of their business model. They only ever make a quarterly profit or two when they first release a new model. The surrounding Qs have about a 5-10x greater loss than any temporary profit. This is because Tesla is a cult company and sell to the cultists first for the best prices.

The models with the highest margins (S & X) are aging and their sales are slowing. The Model 3 hasn't seen production increases in the last year and the prices have been dropping quite rapidly since the cultist backlog orders have been filled, and thus margins have been dropping.

(Also, there are tons of expenses Tesla has been putting off like Service and Supercharging infrastructure. The Capex in recent Qs has been pathetic for a "growth" company.)

New models are years away. Tesla will go BK first. No Musk company ever makes an annual profit...never will.
big time oops

GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2664 on: June 21, 2019, 02:50:50 PM »
Not “annual profit,” but the four most recent quarters.

WTF. Has your brain gone FSD? The 4 most recents Qs' net income = $969M LOSS
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GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2665 on: June 21, 2019, 03:08:06 PM »
I'm sure Tesla's getting almost $2k more expensive next week is going to help margins!

I'm sure Honda, Kia, VW, Hyundai, Porsche, Audi, Fiat, Nissan, Aston Martin, Ford, Mercedes, Bollinger, Volvo, Mini, and Rivian all coming out with EVs while Tesla's models go stale will help with sales!

I'm sure if Tesla sells a 100-year bond yielding neg 0.666% it is a safe buy!
big time oops

crandles

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Re: Tesla glory/failure
« Reply #2666 on: June 21, 2019, 03:46:37 PM »

Tesla won't make a profit because it isn't part of their business model.

"Tesla won't make a profit" is pure bear rhetoric. I have some sympathy for a position that Tesla and other Musk companies will never pay a dividend while Musk is in charge because he will always find useful things to develop. Of course profits are part of their business plan, they wouldn't be able to raise finance if it wasn't and saying so is just repetition of your prejudices, which we are well aware of by now. Don't think such repetition adds anything to discussion.


>"Not “annual profit,” but the four most recent quarters.  Don’t need to wait until 2020. :) "

Suspect they will have to wait til April 2020 or July 2020 to have a decent chance, but yes, at least it isn't wait for y/e Dec 2020 figures and if not then wait a whole year longer before another chance.

I'm thinking a $200 million loss in q2 would demonstrate good progress and match Tesla guidance for "significantly reduced" losses.

-717 +311 +139 -702 = 969 loss for y/e Mar 2019
+311 +139 -702 ~-200   = loss for y/e June 2019
+139 -702 ~-200or worse +? = still a loss for y/e Sep 19
-702 ~-200or worse +? +? doubt these are going to be good enough to get to profit for 2019.



RikW

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Re: Tesla glory/failure
« Reply #2667 on: June 21, 2019, 04:58:54 PM »
Not “annual profit,” but the four most recent quarters.

WTF. Has your brain gone FSD? The 4 most recents Qs' net income = $969M LOSS

Yeah, but 2nd quarter 2018 'disappears' in 10 days time and Q2 2019 appears. If they get a positive result of 252 or higher, they have a 4-quarter-period profit. And of course that's highly unlikely, but not as impossible as your number suggests.

And I think you are at least safe to post for the next 9 months, because Q1 2019 was bad.

oren

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Re: Tesla glory/failure
« Reply #2668 on: June 21, 2019, 05:28:39 PM »
The models with the highest margins (S & X) are aging and their sales are slowing. The Model 3 hasn't seen production increases in the last 6 months and the prices have been dropping quite rapidly since the early adopter backlog orders have been filled, and thus margins have been dropping.

Also, there are tons of expenses Tesla has been putting off like Service and Supercharging infrastructure.
Putting the tiresome "bear cult" rhetoric aside, I tend to agree with these (slightly edited) concerns about Tesla's business. And the demand/actual orders curve going forward is unclear, despite optimistic guidance by Tesla. But new models will come out and start selling 18 months from now - the Model Y for near-certain, and the Semi with some low probability. These models could have a greater attraction for the general market, which will also be more mature by then thanks to all the various announcement by other car makers, and to shifting media and public perception of EVs. And Tesla's newer models (3, Y, Semi) will still enjoy a strong lead in powertrain, battery design and efficiency/range. So if Tesla survives until the end of 2020 in its current form, the road forward could be much clearer.
I am not taking into account autonomy/robotaxis since I see zero probability that it will pay off and start making money by then.

sedziobs

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Re: Tesla glory/failure
« Reply #2669 on: June 21, 2019, 05:30:57 PM »
Tesla made two pricing adjustments in Q1 that I can think of. 

First, they sold some number of $40k long range T3s for $35k.
...
Second, S/X sales were way down in Q1 2019. 
Prices across all models were cut by at least $2,000 in Q1.

In 2018 the mid range was being sold for $46,000 without autopilot. The SR+ is currently $39,900 with autopilot included.

I purchased the long range RWD without autopilot for $49,000. That configuration is no longer available, but now long range AWD with autopilot is $49,900. That's a very significant price cut (around $7k).

All model S/X were cut by $2,000. It's easy to see how margins could be quite a bit lower than 2018 Q3/4.

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Re: Tesla glory/failure
« Reply #2670 on: June 21, 2019, 06:29:20 PM »
They are producing close to 7k cars a week in the same line and with less employees than when they were producing 4K cars a week. The ASP is lower and lease accounting may have a role to play that, but the cost of manufacturing has very likely gone down.
« Last Edit: June 21, 2019, 06:34:45 PM by Archimid »
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Bob Wallace

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Re: Tesla glory/failure
« Reply #2671 on: June 21, 2019, 06:32:27 PM »
The teams are working extremely hard and making terrific progress on improving the cost efficiency of the business without sacrificing growth

I would have said it was this bit.  Granted lower margin just makes it worse.  But until growth, in all products, reaches the required levels, then these costs will continue.  Launch for revamped Model S/X, Model Y and the Semi, plus the ramp up of Solar Roof and Powerwall are not one time costs. They are ongoing recurring costs which must be borne by the existing vehicle sales.

This will continue to weigh on profit until Gigafactory 3 is producing the same volume as Giga2, assuming the Chinese market has the demand.

The responses did not really answer the question. But it is possible to read between the lines.

Tesla was profitable in quarters three and four of 2018.  In the first quarter of this year two events occured which created a loss.  First, there the number of S/X dropped to around half of what it had been for the preceding ten quarters.  Second, a larger than usual number of vehicles were in transit between the factory and owners' hands.

I've seen nothing that indicates S/X production won't return to normal levels.  But there is a chance demand will be somewhat lower since it is widely known that Tesla is making significant changes to the S/X this year.

The uptick in 'in transit' vehicles should be a one quarter event.  Tesla has said that they are smoothing out delivery over the quarter.  Unless a much higher number of vehicles are in transit on June 30 than were in transit on March 31 then that loss will not reoccur.  The March 31 in-transit vehicles will be "sold" in this quarter because that is when they reached buyers' hands.

If Tesla was overburdened by unnecessary spending in Q1 2019 then that should have been true in Q3 and Q4 2018, which showed profits.  Cutting unnecessary spending is something that will help Tesla but it is not the explanation for Q1 showing a loss following two profitable quarters.
 

Bob Wallace

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Re: Tesla glory/failure
« Reply #2672 on: June 21, 2019, 06:59:19 PM »
Oren - from your post

Quote
We believe we will deliver between 90,000 and 100,000 vehicles in Q2.

That would put Q2 deliveries (which are sales) higher than the profitable Q3 and Q4 2018 average.  I don't see any guidance on changes in OpEx.  Put those two factors together and one should expect a profitable Q2 2019.

So you know better than Tesla. Hmm.

Anyway, yes little change in operating expenses and interest from q4 to q1 and no particular reason to expect change there.

50% higher deliveries than q1 at same margin and everything else same as q1 only halves the loss. So where is the difference?

Q4 auto sales $6.07bn Q1 auto sales $3.5bn
50% higher q1 auto sales is only $5.25bn  not the $6bn of q4.
so partly a turnover difference
Also auto sales margin q4 23.3% q1 only 18.6%
mainly a margin difference.

It is possible to look on bright side, think S and X sales recover improving the mix back to more like q4 in sales value and margin. Alternately we can think it is not going to be better than Tesla guided and price cuts to keep demand high enough to get 50% increase in deliveries will erode margins and mean it could be worse than assuming 50% increase on q1 with same margin.

Guess we wait and see.

In the meantime, assuming you know better than Tesla on the positive side looks excessively optimistic.

In what way am I saying I know more than Tesla? 

If S/X production and sales returning to what they were over the previous ten quarters and T3 sales are higher that takes car sales revenue higher than any previous quarter.  Tesla has very good gross profit margins.  Q1 GPMs were down some, most likely due to lower S/X production.  The S/X models have higher GPMs than the the T3. 

There is no indication that Tesla has significantly increased operating expenses.  Capital expenses for the Shanghai Gigafactory are not part of operating expenses other than creating interest expense on any money borrowed. 

Tesla has made no claim that they will lose money in Q2.  There was an email to employees stating that as of the end of May Tesla was falling behind the goal of 1,000 T3s per day. 

https://www.livemint.com/

Third week in May they averaged 900 per day according to the email.  But the email states that if they can average about 1,000 per day for the remaining of the quarter then they would set a record for quarterly T3 production. 

Record EV production gross profits - unchanged operating expenses should equal profits.

Obviously, there could be other expenses happening inside Tesla which aren't yet public and obviously, S/X production may not recover.  We will have to wait a bit longer to find out.

Bob Wallace

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Re: Tesla glory/failure
« Reply #2673 on: June 21, 2019, 07:20:27 PM »
Mr. Bob,

I will name call forevermore.

Tesla won't make a profit because it isn't part of their business model. They only ever make a quarterly profit or two when they first release a new model. The surrounding Qs have about a 5-10x greater loss than any temporary profit. This is because Tesla is a cult company and sell to the cultists first for the best prices.

The models with the highest margins (S & X) are aging and their sales are slowing. The Model 3 hasn't seen production increases in the last year and the prices have been dropping quite rapidly since the cultist backlog orders have been filled, and thus margins have been dropping.

(Also, there are tons of expenses Tesla has been putting off like Service and Supercharging infrastructure. The Capex in recent Qs has been pathetic for a "growth" company.)

New models are years away. Tesla will go BK first. No Musk company ever makes an annual profit...never will.

Tesla had a profitable quarter in Q3 2016.  This was 13 quarters after introducing a new model.  Tesla had two profitable quarters in Q3 and Q4 2019.  This was 5 quarters after introducing a new model.  Your claim "They only ever make a quarterly profit or two when they first release a new model." is incorrect.

"The models with the highest margins (S & X) are aging and their sales are slowing. "

S/X sales were down in Q1 2019.  Aging might be part of the reason but pull-forward sales, dropping the least expensive model, and changes to the running gear are more likely the reasons.  Especially seeing how Tesla reported late quarter demand exceeded Tesla's ability to produce.  Furthermore, both the S and X are scheduled for a revamp this year.

GPMs most likely dropped because fewer higher margin S/X models were sold.  The T3 has tighter margins. 

"Also, there are tons of expenses Tesla has been putting off like Service and Supercharging infrastructure." 

Tesla has been installing Superchargers at a good rate.  Check the location maps on their website. 

Tesla has been struggling with establishing service centers as rapidly as sales are growing.  They're now doing a lot more repair work, including minor body work, using mobile service vehicles. 

"The Capex in recent Qs has been pathetic for a "growth" company."

Equipment is now being installed in the Shanghai factory.  Production could start late in the coming quarter.  Capital is being invested.  Tesla is growing nicely.  And Tesla is now deciding on where to locate their first European factory.

"New models are years away."

Production of the Model Y, Roadster and Tesla semi are scheduled for 2020.  That's one year away, not years.

I can see why you think Tesla is likely to fail.  You're making decisions using faulty data.  It's that old garbage in, garbage out issue.






Bob Wallace

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Re: Tesla glory/failure
« Reply #2674 on: June 21, 2019, 07:27:06 PM »
I'm sure Tesla's getting almost $2k more expensive next week is going to help margins!

I'm sure Honda, Kia, VW, Hyundai, Porsche, Audi, Fiat, Nissan, Aston Martin, Ford, Mercedes, Bollinger, Volvo, Mini, and Rivian all coming out with EVs while Tesla's models go stale will help with sales!

I'm sure if Tesla sells a 100-year bond yielding neg 0.666% it is a safe buy!

If sale prices do increase that will increase margins.  I'm not sure what price increases 'next week' you're talking about.  Do you have a link to that upcoming event?

Thankfully a lot of other car manufacturers seem to be moving past the 'compliance car' stage of their EV production and are now dipping in their little toe.  But so far no company has produced an EV that equals Tesla's range and performance.  It will be many years before EVs are produced in amounts equaling demand and a few more years before Tesla has a serious challenger for those looking for the best performing EV.


crandles

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Re: Tesla glory/failure
« Reply #2675 on: June 21, 2019, 07:30:43 PM »
In what way am I saying I know more than Tesla? 
...
Tesla has made no claim that they will lose money in Q2. 

Yes they have, last sentence of q1 update letter says
Quote
As the impact of higher deliveries and cost reduction
take full effect, we expect to return to profitability in Q3 and significantly reduce our loss in Q2.

'significantly reduce our loss' they will make a loss.
 whereas you wrote as previously quoted
"one should expect a profitable Q2 2019"

Bob Wallace

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Re: Tesla glory/failure
« Reply #2676 on: June 21, 2019, 07:42:56 PM »
Tesla made two pricing adjustments in Q1 that I can think of. 

First, they sold some number of $40k long range T3s for $35k.
...
Second, S/X sales were way down in Q1 2019. 
Prices across all models were cut by at least $2,000 in Q1.

In 2018 the mid range was being sold for $46,000 without autopilot. The SR+ is currently $39,900 with autopilot included.

I purchased the long range RWD without autopilot for $49,000. That configuration is no longer available, but now long range AWD with autopilot is $49,900. That's a very significant price cut (around $7k).

All model S/X were cut by $2,000. It's easy to see how margins could be quite a bit lower than 2018 Q3/4.

Thanks.  I hadn't been tracking price drops.  Unfortunately we can't see cost to produce changes for the T3 and S/X separately so we don't know how much, if any, of those drops were offset by lowering production costs. 

Late in 2018 Tesla announced a new battery pack design for the T3 which would lower costs and that new pack design was supposed to be incorporated in early 2019, IIRC.   Don't know if that happened but if it did then margins should be, at least, less impacted.

Looking forward to the release of Q2 numbers. 

crandles

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Re: Tesla glory/failure
« Reply #2677 on: June 21, 2019, 07:50:30 PM »

The uptick in 'in transit' vehicles should be a one quarter event.  Tesla has said that they are smoothing out delivery over the quarter.  Unless a much higher number of vehicles are in transit on June 30 than were in transit on March 31 then that loss will not reoccur.  The March 31 in-transit vehicles will be "sold" in this quarter because that is when they reached buyers' hands.


Here you go again trying to dismiss the huge q1 loss again.

The wave pattern meant huge numbers of vehicles in transit during the quarter and few in transit at end of quarter. Unwinding this wave to a more stable flow therefore means fewer in transit during the quarter and more in transit at the end of the quarter. So we should expect more in transit because
1. Unwinding the wave
2. Delivery volumes up 50% ish
and the only reason for expecting fewer in transit is one off delays as shipments began.


>"that loss will not reoccur"
not sure if you are referring to q1 loss in which case increasing deliveries ~50% - of course not as large.

If you are attempting to talk about a loss on the delayed vehicles in transit, then no they are counted in inventory at cost including attributable overheads so no significant loss (or profit).

Bob Wallace

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Re: Tesla glory/failure
« Reply #2678 on: June 21, 2019, 07:51:03 PM »
In what way am I saying I know more than Tesla? 
...
Tesla has made no claim that they will lose money in Q2. 

Yes they have, last sentence of q1 update letter says
Quote
As the impact of higher deliveries and cost reduction
take full effect, we expect to return to profitability in Q3 and significantly reduce our loss in Q2.

'significantly reduce our loss' they will make a loss.
 whereas you wrote as previously quoted
"one should expect a profitable Q2 2019"

May 30 2019

Quote
Tesla CEO and major shareholder Elon Musk has urged employees to hasten deliveries of its electric vehicles by the end of this quarter to ensure the company will not only avoid a repeat of the losses experienced last quarter, but post a record profit for this quarter.

In an email sent to staff last night (US time), Musk said that Tesla has “a lot of vehicles to catch up to in order to have a successful quarter.” It follows a sharp fall in the company’s stock price as analysts reacted to the poor first quarter results and fears the company will not make its delivery targets for the year.

“If we execute well, Q2 will be an all-time record for Tesla vehicle deliveries and an awesome victory,” Musk wrote to shareholders. It followed another email sent on May 22 where he said 50,000 new orders for this quarter meant it had every chance of exceeding its previous record of last year’s Q4 delivery of 90,700 EVs.

https://thedriven.io/2019/05/30/elon-musk-appeals-to-tesla-staff-to-ramp-up-car-deliveries-to-make-quarter-profitable/

I'm looking at more current information from Tesla than what was in their earlier letter to shareholders. 

Bob Wallace

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Re: Tesla glory/failure
« Reply #2679 on: June 21, 2019, 08:03:18 PM »

The uptick in 'in transit' vehicles should be a one quarter event.  Tesla has said that they are smoothing out delivery over the quarter.  Unless a much higher number of vehicles are in transit on June 30 than were in transit on March 31 then that loss will not reoccur.  The March 31 in-transit vehicles will be "sold" in this quarter because that is when they reached buyers' hands.


Here you go again trying to dismiss the huge q1 loss again.

The wave pattern meant huge numbers of vehicles in transit during the quarter and few in transit at end of quarter. Unwinding this wave to a more stable flow therefore means fewer in transit during the quarter and more in transit at the end of the quarter. So we should expect more in transit because
1. Unwinding the wave
2. Delivery volumes up 50% ish
and the only reason for expecting fewer in transit is one off delays as shipments began.


>"that loss will not reoccur"
not sure if you are referring to q1 loss in which case increasing deliveries ~50% - of course not as large.

If you are attempting to talk about a loss on the delayed vehicles in transit, then no they are counted in inventory at cost including attributable overheads so no significant loss (or profit).

Total EVs in transit end of Q1            10,600
Total EVs in transit end of Q4            2,907
In transit increase Q4 to Q1            7,693

That is a lot of additional cars that do not add to Q1 revenue.  When I look at the Condensed Consolidated Statements of Operations page from Tesla's 10Q, where the $702,135,000 loss is calculated I see no entry line for inventory on hand.  Is that buried somewhere under some category?

What I am saying is that overall revenue was down because a lower number of cars were sold.  Tesla, unlike other car manufacturers, does not credit a sale until the vehicle reaches the final owner's hands.

If you are right and Q2 sees more vehicles 'in transit' that will lower Q2 revenue.

crandles

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Re: Tesla glory/failure
« Reply #2680 on: June 21, 2019, 08:12:15 PM »

Quote
Tesla CEO and major shareholder Elon Musk has urged employees to hasten deliveries of its electric vehicles by the end of this quarter to ensure the company will not only avoid a repeat of the losses experienced last quarter, but post a record profit for this quarter.

In an email sent to staff last night (US time), Musk said that Tesla has “a lot of vehicles to catch up to in order to have a successful quarter.” It follows a sharp fall in the company’s stock price as analysts reacted to the poor first quarter results and fears the company will not make its delivery targets for the year.


“If we execute well, Q2 will be an all-time record for Tesla vehicle deliveries and an awesome victory,” Musk wrote to shareholders. It followed another email sent on May 22 where he said 50,000 new orders for this quarter meant it had every chance of exceeding its previous record of last year’s Q4 delivery of 90,700 EVs.

https://thedriven.io/2019/05/30/elon-musk-appeals-to-tesla-staff-to-ramp-up-car-deliveries-to-make-quarter-profitable/

I'm looking at more current information from Tesla than what was in their earlier letter to shareholders.

how do you read "post a record profit for this quarter" ?
'There is only one Q2 2019 so it is bound to be record profitable.' is a silly reading.

If it was 'record quarterly profit' I assume he would say that.

That leaves record profit for any q2. Which begs the question: Has there been a profitable q2?
2018 $743 million loss
2017 $336 million loss
2016 $293 million loss
2015 $184 million loss
2014 $62 million loss
2013 $31 million loss
2012 $105 million loss
2011 $59 million loss

So does this mean a $30 million loss would qualify as a 'record profit for any q2'?

More importantly:
Is it sensible to compare an email to staff (presumably intended to be motivational) as having same authority as official update to shareholders as a source for what to expect of q2 results?


Do I have to tell you again that inventory is in the balance sheet not the P&L (or Condensed Consolidated Statements of Operations)?

NeilT

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Re: Tesla glory/failure
« Reply #2681 on: June 21, 2019, 08:15:59 PM »
If Tesla was overburdened by unnecessary spending in Q1 2019 then that should have been true in Q3 and Q4 2018, which showed profits.  Cutting unnecessary spending is something that will help Tesla but it is not the explanation for Q1 showing a loss following two profitable quarters.

Except that Tesla launched a brand new computer, using Tesla designed chips, at the beginning of Q2.  These computers were actually being installed in Q1.  Under Tesla 90 day invoicing, these computers were ordered in Q4 (almost certainly), and paid for in Q1.  As they were a completely new design with a contract for delivery direct from the chip manufacturer, it's likely that Tesla started with at least 2Q of orders.  All to be paid in Q1 2019.  It is also likely that the rest of 2019 will be invoiced and paid in Q2.  Once that is out of the way, normal lean, JIT, practises will come into play and operational costs will fall.

Equally, the S/X refresh will have created new demand which is not part of the existing operational structure.  The launch will be in Q2, the orders will have gone out in Q1.  Again, in Q3, normal Lean practises will kick in and costs will stabilise.  This will happen, again, with the Model Y and also with the Semi.

Hence my statement that neither Musk nor the CFO actually answered the question posed.  They talked around it.

Granted the impact in Q1 was a perfect storm of lower orders, lower deliveries, lower prices, lower profit and a halving of sales for the most profitable vehicles.

The proof of this won't come until Q3/4 2019, so it is just surmise at this time.

What is certain is that Q1 2020 will be nothing like 2019 as Giga3 will be up and running at high volume.  This will change the entire picture.
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Bob Wallace

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Re: Tesla glory/failure
« Reply #2682 on: June 21, 2019, 08:21:11 PM »
I well know inventory is on the balance sheet.  I knew that long before you started waving your attitude flag.  But does that inventory show on the sheet where profits and losses are calculated?  If not, then any profits from the cars produced during Q1 but not delivered in Q1 are not included in the P/L calculation.

I have no idea where you got off on your silly Q2 to Q2 tangent.  Read the posted email more carefully.

Quote
will not only avoid a repeat of the losses experienced last quarter, but post a record profit for this quarter

Elon's email to employees was written later in the quarter.  By then there was more data available as to demand, production, and expenses.  The email did not say that if we work diligently we can minimize our loss but rather that we can create a record profit.

sedziobs

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Re: Tesla glory/failure
« Reply #2683 on: June 21, 2019, 08:22:52 PM »
Elon's email to employees was written later in the quarter.  By then there was more data available as to demand, production, and expenses.  The email did not say that if we work diligently we can minimize our loss but rather that we can create a record profit.

That's the author's interpretation, which I think is incorrect. The actual emails say:
Quote
Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!
...
if we execute well, Q2 will be an all-time record for Tesla vehicle deliveries.

Musk is making comments in emails about record sales, not record profit. Actual guidance is for a loss in Q2.

crandles

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Re: Tesla glory/failure
« Reply #2684 on: June 21, 2019, 08:25:23 PM »

Total EVs in transit end of Q1            10,600
Total EVs in transit end of Q4            2,907
In transit increase Q4 to Q1            7,693

That is a lot of additional cars that do not add to Q1 revenue.  When I look at the Condensed Consolidated Statements of Operations page from Tesla's 10Q, where the $702,135,000 loss is calculated I see no entry line for inventory on hand.  Is that buried somewhere under some category?

What I am saying is that overall revenue was down because a lower number of cars were sold.  Tesla, unlike other car manufacturers, does not credit a sale until the vehicle reaches the final owner's hands.

If you are right and Q2 sees more vehicles 'in transit' that will lower Q2 revenue.

>"If you are right and Q2 sees more vehicles 'in transit' that will lower Q2 revenue."
If Tesla was guiding 90,000-100,000 vehicles produced then more cars in transit would mean lower q2 revenue. However they are guiding 90,000 - 100,000 deliveries so if vehicles in transit increase, as I expect, that means more q2 production.

But I guess it depends on what you are comparing to.

There is a big step up in 'in transit' vehicles from q4 to q1 because they only started international deliveries in 2019. It isn't going to step back down until China factory is producing at a decent rate.

Perhaps a fuller explanation of stock in P&L is in order:

The cost of sales line in a P&L Or consolidated operations statement can be split into 3 lines being
Opening stock
Plus parts purchased, direct wages etc for quarter
Less closing stock

The stock figures are on the balance sheet so you can do that expansion yourself if you want.

Bob Wallace

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Re: Tesla glory/failure
« Reply #2685 on: June 21, 2019, 08:26:52 PM »
Neil, it is entirely possible that new expenses, undisclosed to the public, have occurred in Q2.  But as of May 30 there seems to be no worry about that on the part of Musk.  He told employees three weeks ago that if they are diligent and get cars delivered to owners efficiently Tesla could post a record profit.

Bob Wallace

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Re: Tesla glory/failure
« Reply #2686 on: June 21, 2019, 08:30:24 PM »
Elon's email to employees was written later in the quarter.  By then there was more data available as to demand, production, and expenses.  The email did not say that if we work diligently we can minimize our loss but rather that we can create a record profit.

That's the author's interpretation, which I think is incorrect. The actual emails say:
Quote
Based on current trends, we have a good chance of exceeding the record 90,700 deliveries of Q4 last year and making this the highest deliveries/sales quarter in Tesla history!
...
if we execute well, Q2 will be an all-time record for Tesla vehicle deliveries.

Musk is making comments in emails about record sales, not record profit. Actual guidance is for a loss in Q2.

Yes, thank you.  I misread.  Sorry.

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Re: Tesla glory/failure
« Reply #2687 on: June 21, 2019, 08:33:37 PM »
Neil,
concerning 'new' computers:
Quote
it's likely that Tesla started with at least 2Q of orders.  All to be paid in Q1 2019.  It is also likely that the rest of 2019 will be invoiced and paid in Q2.
If a part (e.g., computer) is going into a car, it doesn't matter when that part was ordered, delivered, put into a car or paid for.  If the car has not been delivered, the cost of the item is in the balance sheet, not the profit/loss (P/L) statement.  All the costs of the components of the car go into the P/L statement at the time of delivery, regardless of whether it was paid for yet or not.

I know Crandles had written this before...
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Bob Wallace

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Re: Tesla glory/failure
« Reply #2688 on: June 21, 2019, 08:39:27 PM »
Quote
There is a big step up in 'in transit' vehicles from q4 to q1 because they only started international deliveries in 2019. It isn't going to step back down until China factory is producing at a decent rate.

The question is whether there will be an additional large step from March 31 to June 30.  If not, that Q1 delayed revenue event is past.  And, yes, Tesla should show additional profits when the China factory replaces imports from the US.  And again, probably, when a European factory is built and producing.

Quote
The cost of sales line in a P&L Or consolidated operations statement can be split into 3 lines being
Opening stock
Plus parts purchased, direct wages etc for quarter
Less closing stock

I will have to spend some time digging into this.  What you are saying is that cars in transit are part of "closing stock"?  Do you have a link where this can be seen and save me some digging time?

Bob Wallace

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Re: Tesla glory/failure
« Reply #2689 on: June 21, 2019, 08:43:00 PM »
Neil,
concerning 'new' computers:
Quote
it's likely that Tesla started with at least 2Q of orders.  All to be paid in Q1 2019.  It is also likely that the rest of 2019 will be invoiced and paid in Q2.
If a part (e.g., computer) is going into a car, it doesn't matter when that part was ordered, delivered, put into a car or paid for.  If the car has not been delivered, the cost of the item is in the balance sheet, not the profit/loss (P/L) statement.  All the costs of the components of the car go into the P/L statement at the time of delivery, regardless of whether it was paid for yet or not.

I know Crandles had written this before...

Isn't he saying that the costs and value of the undelivered cars are in the profit/loss statement as "closing stock"?

Quote
The cost of sales line in a P&L Or consolidated operations statement can be split into 3 lines being
Opening stock
Plus parts purchased, direct wages etc for quarter
Less closing stock

crandles

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Re: Tesla glory/failure
« Reply #2690 on: June 21, 2019, 08:51:48 PM »

I will have to spend some time digging into this.  What you are saying is that cars in transit are part of "closing stock"?  Do you have a link where this can be seen and save me some digging time?

Small businesses are more inclined to show that analysis e.g.
https://martinjquinn.com/2010/01/11/the-profit-and-loss-account-income-statement/

but 'cost of goods sold' is always opening stock + purchases (+wages and possibly other costs like depreciation of manufacturing equipment) - closing stock.

crandles

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Re: Tesla glory/failure
« Reply #2691 on: June 21, 2019, 09:42:03 PM »

Isn't he saying that the costs and value of the undelivered cars are in the profit/loss statement as "closing stock"?


No: Note the 'less'.

This can be seen as a method of transferring the cost of goods still held to the balance sheet rather than it being left in the P&L.

There are alternative methods: Some businesses on purchasing send the cost direct to the balance sheet:
I.e. on purchasing items
Dr Stock (BalS)
Cr Creditors

On sale of goods (as well as Cr sales Dr cash/Accounts receivables)
Dr Cost of sales
Cr Stock (balS)

The above only works for a business that can keep track of the cost of each item e.g. a car dealer.

The more common approach and the one that manufacturers are pretty well bound to use.

On purchasing items

Dr Purchases (P&L)
Cr Creditors

After this the cost is in the P&L A/c.

At end of period, calculate cost of inventory and
Dr Stock (BalS)
Cr Closing Stock (P&L)

This transfers the cost of items still held to the balance sheet and out of the P&L Account.


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Re: Tesla glory/failure
« Reply #2692 on: June 21, 2019, 10:17:47 PM »
Model 3 begin pouring into the UK, in time for Q2.
Quote
Quote
Tesla (@Tesla) 6/21/19, 1:45 PM
Model 3 never felt so "right" ...
https://twitter.com/tesla/status/1142126323852181504
Photos below.

Quote
Alex (@alex_avoigt) 6/20/19, 8:12 AM
Many don’t know that Tesla is the only car manufacturer globally with a mirrored interior - all what you need to do to switch a LHD M3 into a RHD is to reinstall the steering wheel and the paddles on the other side.
Costs....
https://twitter.com/alex_avoigt/status/1141680194878627842

(The only cheaper option would be to put the steering wheel in the middle — like the Tesla Semi….)

Quote
“Tesla staff in the UK supposedly said that a 1000 RHD load would arrive soon….”
https://twitter.com/mortenlund89/status/1141999822515396608
People who say it cannot be done should not interrupt those who are doing it.

NeilT

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Re: Tesla glory/failure
« Reply #2693 on: June 22, 2019, 01:37:42 AM »
All the costs of the components of the car go into the P/L statement at the time of delivery, regardless of whether it was paid for yet or not.

I know Crandles had written this before...

You missed the point.  If the initial order is a 2q initial ramp up, they have the costs for unfitted computers. Now this may be somewhere under assets, but it will not be as manufactured vehicles in stock as they will have more computers than they can fit into cars.  Equally the cost of turning the chips into computers for more than 1q will be borne in that quarter.

This will even out in future quarters (q3 onwards).

Believe me on this one.  You do not do all of the work and purchases to introduce a brand new computer, you manufactured yourself, then run operational costs as if you were just buying a new model from Nvidia. Tesla may not be calling it out, but they are running some fairly expensive programmes for future initiatives and the implementation of them goes into operational costs and not R&D.

In short, they are experiencing short term reduction of profit margin from initiatives which will become cheaper in future quarters. Hence you can sell more vehicles but still not make the same profits.

Unless you see a highly detailed breakdown of the manufacturing costs, this can be hidden.
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Tor Bejnar

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Re: Tesla glory/failure
« Reply #2694 on: June 22, 2019, 04:55:19 AM »
Thanks, Neil, for trying to explain.  I know I understand some of what you wrote (and I agree with you) and I think I understand most of it  :) :o  Virtually all of my finance background is with not-for-profit organizations that didn't/don't sell material products, so my understanding on some things is rather vague.  Part of my vague understanding tells me that a warehouse full of paid-for things that will go into future cars will affect cash flow (and balance sheet) but not the P/L statement.  Once in a sold car, both the costs and revenue will be part of the P/L.  I do not have a clue on how a company handles the value of intellectual property that enhances the stuff in the warehouse.  Is this what you're saying gets expensed up front, causing Q1 to have a loss and Q2 a chance for real profit?
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Re: Tesla glory/failure
« Reply #2695 on: June 22, 2019, 06:21:24 AM »
Thanks, Neil, for trying to explain.  I know I understand some of what you wrote (and I agree with you) and I think I understand most of it  :) :o  Virtually all of my finance background is with not-for-profit organizations that didn't/don't sell material products, so my understanding on some things is rather vague.  Part of my vague understanding tells me that a warehouse full of paid-for things that will go into future cars will affect cash flow (and balance sheet) but not the P/L statement.  Once in a sold car, both the costs and revenue will be part of the P/L.  I do not have a clue on how a company handles the value of intellectual property that enhances the stuff in the warehouse.  Is this what you're saying gets expensed up front, causing Q1 to have a loss and Q2 a chance for real profit?

And a finished car which is "parts sitting in a warehouse" is priced at cost?  Or at expected sales price?  I assume at cost which pushes Q1 earnings into Q2.

GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2696 on: June 22, 2019, 01:53:50 PM »
They are producing close to 7k cars a week in the same line and with less employees than when they were producing 4K cars a week. The ASP is lower and lease accounting may have a role to play that, but the cost of manufacturing has very likely gone down.

So the last #s available are from Q1, where Tesla made less than 5k model 3s per week. Pretty sure I recall Tesla making a big deal about producing 5k model 3s a year ago. (BTW, there is no sign Q2 will have greater production than 5k weekly model 3s.)

I agree the cost of manufacturing has to have gone since they were cranking them out by hand in a tent last year. And they are selling them for about $20k less.
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GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2697 on: June 22, 2019, 01:58:44 PM »
Virtually all of my finance background is with not-for-profit organization...

Shouldn't hinder you a bit with examining Musk's companies...
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GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2698 on: June 22, 2019, 02:02:55 PM »
Believe me on this one.  You do not do all of the work and purchases to introduce a brand new computer, you manufactured yourself, then run operational costs as if you were just buying a new model from Nvidia. Tesla may not be calling it out, but they are running some fairly expensive programmes for future initiatives and the implementation of them goes into operational costs and not R&D.

You make up the dumbest stuff. This is total nonsense. Believe me on this one.
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GoSouthYoungins

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Re: Tesla glory/failure
« Reply #2699 on: June 22, 2019, 02:07:31 PM »
"By continually dropping prices, Elon Musk may have found a demand level that can sustain production of about 5,000 cars per week in Q2. However, these steeply discounted pricing levels cannot sustain Tesla. Even the meager demand is not sustainable as competition increases and as Federal Tax credits reduce by half effective July 1st and disappear altogether by the end of the year. Looking ahead, Tesla is faced with lower demand in what is already an unprofitable business."


lol

https://seekingalpha.com/article/4271538-tesla-may-need-heavy-fleet-sales-meet-q2-guidance
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