Near-future quarterly financial projections

[gerebgraus]

I've similar delivery numbers - but 3x the profit. Mainly because I assume margins will be at Q3 levels - and they can recognize 400M in FSD deferred revenue + they will get extra FCA credits (though just 100M more than in 2019 per quarter).

Good to have a range of perspectives.

My estimate would be something similar for Fremont only. But by Q4 GF3 should have conservatively 60,000 cars between Model 3 and Y that I would add also.
Costs of production will go down by ~10%, so to sell all the increased production Tesla could cut the e.g. the futher improved Model 3 SR+ price to $35K.
I suspect that the demand will be high enough, so the price reduction will be much smaller probably around 6%, so margin will become higher. Tesla has a high tech manufacturing operation, and that should be part of the model.

 

[SouthSeas]

The estimates are largely just my personally derived digestion of most of the information and datapoints discussed here (TMC). I am probably being overly optimistic with the Y ramp, but I think Tesla is looking to pull a fast one on us and is going to start delivering them quickly.

They aren't delivering them yet and they've already moved up the reported schedule. What will be critical though is the profitability for Q4 and the coming Q1. They really need to get into the black and stay there to be taken seriously. If they have a new quarter in the red the stock price will drop like a hammer. It doesn't really matter if you keep making more and more cars if you lose money on each one you sell.

I saw one analyst report who said Tesla pulled all sorts of one time levers to get a profit in Q3. We'll find out in a month if that is true.

 

[EVNow]

But by Q4 GF3 should have conservatively 60,000 cars between Model 3 and Y that I would add also.

From the latest news - GF3 is doing 28/hour, 280/day on a 10 hour shift. They say over the next year they will double this (2 shifts ?). That would be 560/day or 4k/wk or 48k/quarter. So, Fremont + GF3 could be 90k+48k = 150k. I've it conservatively as 130k. BTW, we still don't know what the demand looks like in China - would it be 50k/quarter ? What is the current market for $50k cars there ?

Y is an interesting problem. Before they start tooling etc for Y in GF3, they want to smooth out all the problems in Fremont first. If they take 2 or 3 quarters to get to volume production in Fremont - they may not have enough time in 2020 to start volume production in GF3. I expect Y production in GF3 and GF4 to happen in 2021. It is possible that they will be with Y at the same stage now they are with 3 in GF3 i.e. production has started but no volume deliveries yet.

 

[gerebgraus]

From the latest news - GF3 is doing 28/hour, 280/day on a 10 hour shift. They say over the next year they will double this (2 shifts ?). That would be 560/day or 4k/wk or 48k/quarter. So, Fremont + GF3 could be 90k+48k = 150k. I've it conservatively as 130k. BTW, we still don't know what the demand looks like in China - would it be 50k/quarter ? What is the current market for $50k cars there ?

Y is an interesting problem. Before they start tooling etc for Y in GF3, they want to smooth out all the problems in Fremont first. If they take 2 or 3 quarters to get to volume production in Fremont - they may not have enough time in 2020 to start volume production in GF3. I expect Y production in GF3 and GF4 to happen in 2021. It is possible that they will be with Y at the same stage now they are with 3 in GF3 i.e. production has started but no volume deliveries yet.

They say that they double GF3 shofts to two this quarter. I am not the best qualified to analyze Chinese demand, but I would start with the total sales of Audi, BMW and Mercedes in China ~1 mil/year as the order of magnitude. So I would not worry about the demand at this level.

 

[kbM3]

This is my financial model.
Leasing, FSD and Credits are not modeled in detail.

For 2020, I assume that:
- some Model 3 production at Fremont will be reduced during Model Y ramp-up
- Model Y volume production is reached in Q3
- 1k price adjustment of Model 3 due to federal tax credit end
- slight seasonal reduction in Model 3 Q1 demand
(all are rather conservative assumptions)

Non-GAAP EPS 2020 ~ 8 USD

View attachment 495336

thanks so much for the model. I am surprised to see that you do not have deliveries higher than production for Q4 of 2019. It seems to me, like Tesla has gone to great extremes to flush all available inventory last quarter.

 

[Todesbuckler]

Thanks for sharing - nice job.
My only criticism is that I believe your R&D and SG&A growth is too high.
You show Q4 2020 21% higher than Q4 2019. I don't believe Tesla will let costs run that high. I would estimate about 10% to 12% growth.

I've similar delivery numbers - but 3x the profit. Mainly because I assume margins will be at Q3 levels - and they can recognize 400M in FSD deferred revenue + they will get extra FCA credits (though just 100M more than in 2019 per quarter).

Good to have a range of perspectives.

Thanks for your feedback. My assumptions regarding OPEX growth are rather high and for gross margins rather low.
However, even with those pessimistic assumptions I have for FY20:
~8 USD non-GAAP EPS compared to ~5.5 USD average analyst expectations.
Smaller OPEX growth or higher gross margins due to higher FSD revenues or FCA-Credits would strongly increase EPS.

thanks so much for the model. I am surprised to see that you do not have deliveries higher than production for Q4 of 2019. It seems to me, like Tesla has gone to great extremes to flush all available inventory last quarter.

This is mainly based on strong Model 3 production in China and the absence of made in China Model 3 deliveries (except for 15 cars to employees). Hence, for US Model 3 I assume higher deliveries than production.

 

[Singuy]

From the latest news - GF3 is doing 28/hour, 280/day on a 10 hour shift. They say over the next year they will double this (2 shifts ?). That would be 560/day or 4k/wk or 48k/quarter. So, Fremont + GF3 could be 90k+48k = 150k. I've it conservatively as 130k. BTW, we still don't know what the demand looks like in China - would it be 50k/quarter ? What is the current market for $50k cars there ?

Y is an interesting problem. Before they start tooling etc for Y in GF3, they want to smooth out all the problems in Fremont first. If they take 2 or 3 quarters to get to volume production in Fremont - they may not have enough time in 2020 to start volume production in GF3. I expect Y production in GF3 and GF4 to happen in 2021. It is possible that they will be with Y at the same stage now they are with 3 in GF3 i.e. production has started but no volume deliveries yet.

The Chinese people LOVE gimmicks. When it comes to technology, it's a very progressive country. Apple is only falling out of favor vs before is because Huawei and XiaoMi can do somethings better. The Chinese has brand loyalty, but loves the newest gimmick even more. Tesla has the brand value and unlimited amount of gimmicks..the Chinese will eat this up.

 

[EVNow]

The Chinese people LOVE gimmicks. When it comes to technology, it's a very progressive country. Apple is only falling out of favor vs before is because Huawei and XiaoMi can do somethings better. The Chinese has brand loyalty, but loves the newest gimmick even more. Tesla has the brand value and unlimited amount of gimmicks..the Chinese will eat this up.

Here is some interesting data.

Mercedes-Benz China auto sales figures

BMW in 2018 3L / total : 135k/465k
Audi 3+4 / Total : 250k / 620k
Merc C / Total : 150k / 500k

So, Model 3 can sell about 40k/quarter, if they sell in about the same volume as one of these 3. This would be similar to the numbers in US.

 

[Singuy]

Anyone ever been to the country? You know they will put led lights on bridge suspension cables just to play videos off them? This is how much they like gimmicks because everyone loves to flex. Most people in the states come back from China with their jaws dropped as if they just came back from a city from Judge Dredd(and I would say shanghai looks pretty close to a future city).

 

[Fact Checking]

Here is some interesting data.

Mercedes-Benz China auto sales figures

BMW in 2018 3L / total : 135k/465k
Audi 3+4 / Total : 250k / 620k
Merc C / Total : 150k / 500k

So, Model 3 can sell about 40k/quarter, if they sell in about the same volume as one of these 3. This would be similar to the numbers in US.

With the VAT exemption and the EV subsidy Tesla will apparently be able to drop the entry price below the psychological 300,000¥:

Jason Man on Twitter

"BREAKING: China Made Tesla Model 3 price drops to less than 300,000 RMB

Today, Tesla announced that the standard range plus Model 3 has a price of 323,800RMB. After subtracting 24,750RMB EV subsidies, the price is 299,905 RMB"​

BMW's average ASP in China is around $47k, or 327,000¥. Entry price of BMW 3-series is around ~320,000¥.

Note that Chinese buyers will know about the EV subsidy and VAT advantage, so they'll consider the MIC Model 3 as a car that has a value of 355,000¥, but can be purchased for 299,000¥.

This is I believe the main reason the MIC will be listed for 355,000¥ until shortly before the first wave of deliveries - to imprint this price advantage.

I have to say Tesla China marketing efforts are top-notch.

 

[mmd]

Four days ago.

....

• yet they are sold at ASPs of around $50,000, close to the Fremont prices.

These look like incredible margin advantages, even with the transportation costs of battery packs and seats.

(Also paging @ReflexFunds and @The Accountant.)

Right after the price cut:

Today, Tesla announced that the standard range plus Model 3 has a price of 323,800RMB. After subtracting 24,750RMB EV subsidies, the price is 299,905 RMB"​

BMW's average ASP in China is around $47k, or 327,000¥. Entry price of BMW 3-series is around ~320,000¥.

Note that Chinese buyers will know about the EV subsidy and VAT advantage, so they'll consider the MIC Model 3 as a car that has a value of 355,000¥, but can be purchased for 299,000¥.

This is I believe the main reason the MIC will be listed for 355,000¥ until shortly before the first wave of deliveries - to imprint this price advantage.

I have to say Tesla China marketing efforts are top-notch.

Whatever it is, it is always good news.
A 9% price cut to move 1000 cars a week. How many more cuts to move 3000 per week?

 

[Fact Checking]

Whatever it is, it is always good news

As I commented on in the main thread, my comment above was bogus, I misunderstood the tax exemption: it's a 10% consumer tax exemption, not a VAT exemption which was already at 0%.

So Tesla did cut the MIC SR+ price to $43k, it wasn't just a VAT cut pass-through, to bring the ASP to below 300,000¥.

 

[EVNow]

Here is my latest model.

 

[FrankSG]

Here is my latest model.

View attachment 495983

I'll post mine tomorrow (about to go to bed), but mine are a bit more conservative. I got $200M profit.

~$125M difference in gross profits, and ~$175M difference in OPEX.

Do we have a detailed breakdown of past restructuring/other costs? I know the $100M ones were mostly layoffs, but since they've started reporting that line number, they've only had $0 once (Q3'19). Feel like they might have $20-40M in random 'other' OPEX costs? Or am I crazy for thinking this?

 

[The Accountant]

Here is my latest model.

View attachment 495983

$2.11 EPS - GAAP
$3.24 EPS - Non-GAAP

Wow - that would be terrific.
And you have only a slight increase in improving auto margins. They may deliver better margins...fingers crossed !!

 

[EVNow]

Do we have a detailed breakdown of past restructuring/other costs? I know the $100M ones were mostly layoffs, but since they've started reporting that line number, they've only had $0 once (Q3'19). Feel like they might have $20-40M in random 'other' OPEX costs? Or am I crazy for thinking this?

Restructing was 43M in Q1 and 117M in Q2. IIRC layoffs - but will have to go back and check the reports for sure.

 

[EVNow]

Maybe this was discussed on the main thread.

What does this mean?

"excluding local battery pack production which began in late December."

Their extrapolated rate of production is 3k/wk - except for Battery pack - which is lesser.

We already had the 28 cars / hr rate. So, nothing new on that front. That they have started making the packs is new information - and not surprisingly they are not yet at 3k/wk rate.

Actual 3k/wk sustained rate won't be achieved for several quarters, though.

 

[Todesbuckler]

Here is my update (cautious estimates with potential upside), including some 2021 calculation.

I was pleasantly surprised with global deliveries and the Model 3 trim mix in NL/Norway/Spain in December.

 

[mongo]

Here is my latest model.

View attachment 495983

I see only 80k Model 3 for Q1 2020.
Am I correct that you have 0 deliveries from GF3? Or are you expecting a cliff for Fremont sourced production?

 

[JohnnyEnglish]

Here is my latest model.

View attachment 495983

As you seem to be assuming that FSD will be delivered in Q1 2020 and that the deferred revenue will be released in Q1 and Q2 do your ASPs need increasing in 2020 to reflect the quarterly revenue from FSD (which is no longer being deferred)?