Near-future quarterly financial projections

[JohnnyEnglish]

They only lost 1 week of production in Fremont. (~3 weeks in GF Shanghai.)

Agree, one week was lost to CV but in addition I believe that Fremont has a factory holiday in January (which is why the start of shipping to Europe/Asia was delayed compared to Q3/Q4). Rounded to 3 weeks for an overall figure.

Current weekly run rates seem to be roughly:

• Fremont 3 - 7k
• Fremont S/X - 1k+
• Fremont Y - 1k
• Shanghai - 3k

So 10k/week total is not a stretch any more from a production perspective.

 

[StealthP3D]

Inclusion in S&P500 and the required profitability would kill off the "perpetual loss" mantra coming from J Chanos and M Spiegel. I hate to give them that much importance in the life of TSLA but the fact is they are heavyweights in the investing (okay okay bear) world.

Ummm...I hate to break it to you but Mark Spiegel is not a heavyweight in any notable world. His fund is smaller than my personal holdings, he's a complete nobody. Unless you count the world of despicable, lying, heartless fund managers with terrible 10 year returns a notable world.

 

[Nate the Great]

With 19% auto non-lease margin, ~100k deliveries will get to profit. Assuming 200M regulatory credits and ~100M profit by recognizing FSD revenue.

If they used all of the FSD revenue could they show a profit in Q1?

 

[XHabjab]

Ummm...I hate to break it to you but Mark Spiegel is not a heavyweight in any notable world. His fund is smaller than my personal holdings, he's a complete nobody. Unless you count the world of despicable, lying, heartless fund managers with terrible 10 year returns a notable world.

He has a big mouth and has used it numerous times on CNBC and other forums. Despite being a geriatric 6 year old, his negative publicity/FUD is heard and accepted by perhaps millions of viewers (or 100,000 viewers 10 times etc.).

Big mouth or not, you have a lot of (mostly) good things to say that are (mostly) worth hearing.
[I meant that to be taken as a realistic compliment, not an arguing point.]

 

[EVNow]

If they used all of the FSD revenue could they show a profit in Q1?

They can't recognize all FSD revenue in Q1 - having not delivered anything of substance in Q1.

 

[EVNow]

Agree, one week was lost to CV but in addition I believe that Fremont has a factory holiday in January (which is why the start of shipping to Europe/Asia was delayed compared to Q3/Q4). Rounded to 3 weeks for an overall figure.

Current weekly run rates seem to be roughly:

• Fremont 3 - 7k
• Fremont S/X - 1k+
• Fremont Y - 1k
• Shanghai - 3k

So 10k/week total is not a stretch any more from a production perspective.

But, how many weeks of full rate production run will they get in Q2 ? Fremont might be closed in April. Hopefully GF3 can operate through Q2 - but a second wave in China can't be ruled out. What happens to EU deliveries if they can't ship anything in April / early May ?

ps : Anyway, don't want to get into covid scenarios here - I've a post in the covid thread on this.

Now that Q1 P&D is behind us, I want to focus on what we think will go on for rest of the year in terms of
- Fremont, Nevada and GF3 factories producing cars
- What happens to the economy which will have an impact on demand
- What happens to the stock market

My sense is that Musk and also the stock market think
- This will all blow over in a month or two
- Q2 will be bad
- Rest of the year will be normal (i.e. no lockdowns because of Covid)

Is the above correct (from watching CNBC etc, which I don't) ?

My guess is we'll have cases/fatalities going up and down in waves as various states try to loosen/tighten restrictions throughout the year.
- Lockdown in April, with selective opening in May
- More opening in June, but we'll start seeing a second wave
- Some things get closed again by mid of July/August
- Re-opening in September (including schools)
- Big 3rd wave in October
- Lockdown reintroduced in Nov/Dec

​

 

[Thekiwi]

They can't recognize all FSD revenue in Q1 - having not delivered anything of substance in Q1.

How much do they claim from deferred revenue from every car upgraded to new hardware? and how many upgrades might they have done in Q1?

Would $500 x 20,000 installs for $10,000,000 in revenue be realistic? too low? too high?

 

[EVNow]

How much do they claim from deferred revenue from every car upgraded to new hardware? and how many upgrades might they have done in Q1?

Would $500 x 20,000 installs for $10,000,000 in revenue be realistic? too low? too high?

With upgrades my assumption is they will claim the revenue close to COGS - h/w + labor. So, the profit would be negligible from upgrades.

Essentially they need to release "City NOA" to claim the revenue. If they do it in phases (like responding to stop sign/traffic light first), they can claim partial revenue. Ofcourse, there is the staggered global rollout as well.

In the last model I had - I assumed $150M revenue and $50M COGS in Q2 & Q3. Could turn out to be quite accurate in the end.

 

[Troy]

Hi everybody. Some news articles are reporting 3,900 Model 3 sales in China in March but I think they are confusing February numbers with March. Let me explain.

The original source for this information appears to be this article:

----

If you read the highlighted text, it mentions two numbers for March:

• 3,900 Model 3
• 1,433 Guangzhou Automobile Group’s Alon S

It also says this is "according to the China Passenger Car Association (CPCA)".

However, both of these numbers are February numbers. 3,900 was reported by Reuters here for February on 20 March 2020.

1,433 was also reported for February here by insideEVs on 24 March 2020.

I contacted Eva, the author of this article, and she says she will correct it if the original source here turns out to be wrong. You can find her on Twitter here.
I contacted Tom, the author of the article here, and he also says they will have to wait. See his response here.

To me, it's very obvious that there is a mistake here and the original source has mixed up February and March numbers.

 

[Troy]

We should eventually find out the actual numbers but here are my estimates for China in Q1 2020:

Shanghai production: 15,894 units (2,625 units in Jan, 3,898 Feb, 9,371 Mar)
Model S/X/3 deliveries: 14,858 units. (Includes 664 units imported from Fremont in Q1 and ~1,000 units Shanghai production they had left from Q4 2019. 664 is my estimate. 1,000 units was mentioned by Tesla on 3 Jan 2020 here)

China sales were 13,003 units in Q4 2019. Anything above that would be a new record.

 

[FrankSG]

Hi everybody. Some news articles are reporting 3,900 Model 3 sales in China in March but I think they are confusing February numbers with March. Let me explain.

The original source for this information appears to be this article:

----

If you read the highlighted text, it mentions two numbers for March:

• 3,900 Model 3
• 1,433 Guangzhou Automobile Group’s Alon S

It also says this is "according to the China Passenger Car Association (CPCA)".

However, both of these numbers are February numbers. 3,900 was reported by Reuters here for February on 20 March 2020.

1,433 was also reported for February here by insideEVs on 24 March 2020.

I contacted Eva, the author of this article, and she says she will correct it if the original source here turns out to be wrong. You can find her on Twitter here.
I contacted Tom, the author of the article here, and he also says they will have to wait. See his response here.

To me, it's very obvious that there is a mistake here and the original source has mixed up February and March numbers.

Thanks for this!

The 3,900 in March made no sense to me considering the reports we've been getting about the production output last month. A misreporting makes way more sense.

 

[EVNow]

Does anyone know how Tesla handled 2 weeks off in GF3 and 1 week off in Fremont ? Did they pay the hourly workers ? Might make a difference in auto margin ...

 

[StealthP3D]

Does anyone know how Tesla handled 2 weeks off in GF3 and 1 week off in Fremont ? Did they pay the hourly workers ? Might make a difference in auto margin ...

Shanghai was only down for 1 week for Coronavirus - the rest of the time was the normal Chinese New Year.

Read the CARES act - it establishes enhanced unemployment insurance for laid-off workers in the US.

As far as the one week in Shanghai - I don't know but I expect they have a version of unemployment insurance as well, probably tailored to the needs of the government-mandated 1-week shut-down.

 

[hobbes]

Tesla plans to resume production in Fremont on May 4 per email leaked to electrek: Tesla announces pay cuts, furloughs, and aims to get back to production by May 4 - Electrek

Hi Everyone,

Thank you for your continued commitment to Tesla and our mission during this unprecedented time. We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world.

While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans. Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.

• Pay will be temporarily reduced for salaried employees.
• For U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
• For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.
• These reductions are expected to be in place until the end of Q2
• Employees who cannot work at home and have not been assigned to critical work onsite will be furloughed.
• Under furlough, you remain an employee of Tesla (without pay) and retain your healthcare benefits. You will not report to work until the furlough ends and you are directed to return by management, which we expect to be May 4.
• A furlough notice will be emailed to you in the coming days with additional instructions on how to apply for unemployment benefits through your state agency.
• For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay.
• Certain employees will be assigned to critical functions and they will continue to report onsite. Those employees will be communicated to directly by their manager or HR partner.

For the merit review cycle:

• Salary and hourly rate adjustments will be put on hold.
• Equity grants will be on hold as well.

If you would like to take a voluntary leave of absence, as some have reached out to request, please discuss with your manager and HR partner.

We continue to monitor the situation closely, and our top priority is to ensure the safety of our employees. As usual, for those who are onsite, if you are sick or are uncomfortable coming to work, please contact your manager and stay at home. We respect your decision and you will not be penalized. For HR-related questions, contact your HR partner or email [redacted].

Thank you all so very much for everything you do to ensure the success of our company.

Valerie

Valerie Capers Workman | North America HR + AU/NZ/JP/KR Registered In House Counsel

This would mean 6 weeks downtime for Fremont. That would be the time when usually cars for Europe would be produced and shipped. But if I remember correctly shipping takes about two weeks SFO to Zeebrugge (need to add some time for production and distribution) so they have a small time window of a few weeks left plus the cars they were not able to deliver in March due to corona.

Would be interesting what your models say when you plug in the pay cuts and estimated loss in revenue.

 

[mrdoubleb]

Tesla plans to resume production in Fremont on May 4 per email leaked to electrek: Tesla announces pay cuts, furloughs, and aims to get back to production by May 4 - Electrek



This would mean 6 weeks downtime for Fremont. That would be the time when usually cars for Europe would be produced and shipped. But if I remember correctly shipping takes about two weeks SFO to Zeebrugge (need to add some time for production and distribution) so they have a small time window of a few weeks left plus the cars they were not able to deliver in March due to corona.

Would be interesting what your models say when you plug in the pay cuts and estimated loss in revenue.

SFO to Zeebrugge takes about 21-22 days. They can cut that by a week or more, if they ship from the East Coast which they have done occasionally.

 

[hobbes]

SFO to Zeebrugge takes about 21-22 days. They can cut that by a week or more, if they ship from the East Coast which they have done occasionally.

So the time window could be even smaller if they don´t decide to ship via east coast.

If they start on May 4 as planned, they´d have 8 weeks and 2 days till end of quarter for production+shipping+deliveries. Minus 2-3 weeks getting to Europe, minus say a week combined for Fremont-SFO and Zeebrugge to delivery center. So best case cars would have to come off the line 3-4 weeks before being delivered in Europe. That would leave another 4-5 weeks for building them.

To be conservative, I´d assume just 4 weeks of production making it to Europe in Q2. Next big question would be how many they can make in that time frame, it all depends on GF Nevada delivering battery packs.. (Sorry if this is becoming off topic, maybe we should first discuss this here: EU Market Situation and Outlook and then come back with the results).

 

[Doggydogworld]

So the time window could be even smaller if they don´t decide to ship via east coast.

If they start on May 4 as planned, they´d have 8 weeks and 2 days till end of quarter for production+shipping+deliveries. Minus 2-3 weeks getting to Europe, minus say a week combined for Fremont-SFO and Zeebrugge to delivery center. So best case cars would have to come off the line 3-4 weeks before being delivered in Europe. That would leave another 4-5 weeks for building them.

To be conservative, I´d assume just 4 weeks of production making it to Europe in Q2. Next big question would be how many they can make in that time frame, it all depends on GF Nevada delivering battery packs.. (Sorry if this is becoming off topic, maybe we should first discuss this here: EU Market Situation and Outlook and then come back with the results).

They haven't started loading a Zee-bound ship at Pier 80 beyond the end of the 2nd month, and I think the 28th is about the latest they start any more. And it takes time to start the line - e.g. cars are in the paint shop the better part of a day. I'd say ~3 weeks of EU production assuming a 5/4 start.

 

[dc_h]

So the time window could be even smaller if they don´t decide to ship via east coast.

If they start on May 4 as planned, they´d have 8 weeks and 2 days till end of quarter for production+shipping+deliveries. Minus 2-3 weeks getting to Europe, minus say a week combined for Fremont-SFO and Zeebrugge to delivery center. So best case cars would have to come off the line 3-4 weeks before being delivered in Europe. That would leave another 4-5 weeks for building them.

To be conservative, I´d assume just 4 weeks of production making it to Europe in Q2. Next big question would be how many they can make in that time frame, it all depends on GF Nevada delivering battery packs.. (Sorry if this is becoming off topic, maybe we should first discuss this here: EU Market Situation and Outlook and then come back with the results).

The ships can go faster at cost of increased fuel consumption. I think they can take 4-5 days off the trip at full speed. That would likely be lower risk and cheaper then cross country to east coast port.

 

[EVNow]

To be conservative, I´d assume just 4 weeks of production making it to Europe in Q2.

Yes - they have one month to produce and start shipping to Europe (and China, ROW). 1/2 of what they get in usual quarters.

I don't know whether they can make EU spec model 3s in China and ship to Europe (yet).

 

[davepsilon]

There is enough money in the bank for Tesla to weather one quarter of lowered production. Will it be Europe or US that get shorted or will it be shared evenly. I don’t know and I frankly I don’t care. It’s a more bullish signal I think to just ignore Europe as it would show robust US demand. That’s the real tail risk I’m tracking lower demand over some period of time which would increase inventory and probably lower margins through sales incentives.

Q2 would be the perfect time to finally unwind the wave.