I updated my spreadsheet with the delivery numbers and the easiness of doing some sensitivity analysis on discount uptake rates, improvements on COGS, Model X's additional COGS compared to S (due to early production).
Assumptions:
A. On the automotive business
1. COGS for supplier parts (glider) has a 10% reduction compared to 1H 2016 and before due to doubled production rate of S and X and the reservation numbers of 3 giving Tesla leverage. This parameter will be part of the sensitivity analysis, using 5% and 7.5% as alternatives.
2. Fixed COGS cost reduction of 37% due to more production.
3. Model X costs 10k more in COGS to a comparable base Model S, down from $16.5k last quarter due to improved efficiency. This may sound huge, but I think this is reality, otherwise Model X's gross margin couldn't be that low in the past quarters. I also think this will continue to fall in the future. Alternative scenarios are 8k and 12k.
4. Distribution of Model S are 2700 for 60, 60D, 75, 75D. 2150 for 90D and P90D, 700 for P90DL
5. Distribution of Model X are 4300 for 75D, 2150 for 90D and P90D, 100 for P100DL
6. Discount on base prices for 75 kWh Model S and Model X at 10%, for 90 kWh models at 30%. Based on my impression of the discounts I've seen
7. Discount uptake rate for all Model S 30%. Also based on my impression of the aggressive sales starting in August outside of US and getting more and more apparent in the US in September.
8. Discount uptake rate for Model X 75 at 30%, X 90 at 10%. Lower for the 90 based on speculation on more 90 versions going to outside US customers who have been waiting for 3 years so no need to discount to push sales.
B. On the services and others business
1. Keeping it same as Q2, i.e. 88M. With an assumed 5% gross margin. This is because of
2. No significant ZEV, I expect this to be the same in Q3 based on reasons I've stated elsewhere and I have high confidence in this assumption.
3. Although there were some great news on TE, but I highly doubt any of those news made way into Q3 results.
4. Pure service (like serving owners and selling CPO) has razor thing margins. TE has better but still not taking the larger part of this top line.
C. On operating expenses
1. Assumed they went up with the same QoQ as Q2 over Q1. I am a bit worried about this one though. The longer they wait on ramping up OpEx, the higher the risk we would see a messy Model 3 early deliveries. Same goes with CapEx.
D. On interest and others
1. Interest income assumed the same as in Q2. Because I have no idea how to guess this.
2. Interest loss assumed going up with the same QoQ as Q2 over Q1.
3. Other expenses assumed to be the average over the past 6 quarters, as it seems fluctuating randomly to me.
E. On GAAP and non-GAAP differences
1. I don't know how the GAAP revenue will change this quarter. Not a bit. Therefore, I take two scenarios here. One is going along with the average of GAAP revenue from automotive being about 80% of non-GAAP, more of a business as usual scenario. The other one is going with 98% of the non-GAAP. Having GAAP and non-GAAP revenue the same is simply impossible because the wireless connection, future costs for the Superchargers, and other small things are not going to be affected by obsoleting Residual Value Guarantee.
2. Assumed service and others having no difference between GAAP and non-GAAP
3. Applied same change ratios for both GAAP and non-GAAP calculations on the OpEx.
F. Shares outstanding
1. 148.69 M
Results:
Base case
Glider 10% improved COGS, Model X additional COGS $10k
ASP for Model S $92.7k, gross margin 24.0%
ASP for Model X $112.2k, gross margin 23.3%
non-GAAP EPS $0.24
GAAP EPS with the 80% of non-GAAP automotive assumption $-0.78
GAAP EPS with the 98% of non-GAAP automotive assumption $-0.08
Best case
Glider 10% improved COGS, Model X additional COGS $8k
ASP for Model S $92.7k, gross margin 24.0%
ASP for Model X $112.2k, gross margin 26.0%
non-GAAP EPS $0.42
GAAP EPS with the 80% of non-GAAP automotive assumption $-0.63
GAAP EPS with the 98% of non-GAAP automotive assumption $0.10
Worst case
Glider 5% improved COGS, Model X additional COGS $12k
ASP for Model S $92.7k, gross margin 21.2%
ASP for Model X $112.2k, gross margin 18.4%
non-GAAP EPS $-0.35
GAAP EPS with the 80% of non-GAAP automotive assumption $-1.25
GAAP EPS with the 98% of non-GAAP automotive assumption $-0.66
