Near-future quarterly financial projections

[UltradoomY]

I'm having some trouble reconciling your estimate for automotive total revenue with the drastic price drops in Q1.

In Q4 Tesla delivered 388,131 Model 3/Y and 17,147 Model S/X, for a total revenue of $21,307 billion. If we assume the average Model S/X sold for $120,000 then the average Model 3/Y sold for $49,600.

In Q1 Tesla delivered 412,180 Model 3/Y and 10,695 Model S/X. Even if I use the same ASP as in Q4 ($49.600 and $120,000) I only get to $21,720 billion of automotive total revenue. Yet, your estimate is $22,234 billion, which implies a 2,4% increase of the ASP. What is your reasoning behind this? Are you adding IRS credits to the ASP?

My estimate is that Tesla dropped average prices for 3/Y by at least $4000 (it's more, but I'm accounting for extra option uptake). S/X is probably the same price drop. I hear a lot of talk about people still paying old, higher prices, but as far as I know Tesla reimburses the price difference for cars that were ordered before a price drop.

This $4,000 lower ASP would result in total automotive revenue of $16,915 billion.

What am I missing?

I believe what's missing is the statement from Zach (earlier upthread) -
“Zachary Kirkhorn

Yeah, I'll jump in on this. So there is certainly a lot of uncertainty about how the year will unfold, but I'll share what's in our current forecast for a moment. So based upon these metrics here, we believe that we'll be above both of the metrics that are stated in the question, so 20% automotive gross margin, excluding leases and rent credits and then $47,000 ASP across all models.

That gets us to just under $20B in Autorev before options and increased ASP for software.

This would get the alignment pretty close.

 

[petit_bateau]

I'm having some trouble reconciling your estimate for automotive total revenue with the drastic price drops in Q1.

In Q4 Tesla delivered 388,131 Model 3/Y and 17,147 Model S/X, for a total revenue of $21,307 billion. If we assume the average Model S/X sold for $120,000 then the average Model 3/Y sold for $49,600.

In Q1 Tesla delivered 412,180 Model 3/Y and 10,695 Model S/X. Even if I use the same ASP as in Q4 ($49.600 and $120,000) I only get to $21,720 billion of automotive total revenue. Yet your estimate is $22,234 billion, which implies a 2,4% increase of the ASP. What is your reasoning behind this? Are you adding IRS credits to the ASP?

My estimate is that Tesla dropped average prices for 3/Y by at least $4000 (it's more, but I'm accounting for extra option uptake). S/X had probably the same average price drop. I hear some people counter that customers are still paying old, higher prices, but as far as I know Tesla reimburses the price difference for cars that were ordered before a price drop.

This $4,000 lower ASP would result in total automotive revenue of $16,915 billion.

What am I missing?

I simply assume it all gets smoothed out, both changes in price and changes in cost. Not all the global prices move in lockstep. We can't directly see the cost changes in advance. Nor can we see the extent of high-GM upsells driven by price reductions. Nor do we really even know blend. And we cannot that accurately predict when changes in any of these will feed through into actual client delivery (i.e. in-quarter revenue). So I am much less drastic in my QoQ step-change assumptions in this area than most other people. My underlying view is that Tesla is trying to keep GM% and OM% fairly stable whatever the headline pricing might lead us to think otherwise.

 

[Zaddy Daddy]

Troy estimates ASP under $47k based on emperical data.

 

[MP3Mike]

Troy estimates ASP under $47k based on emperical data.

That would seem difficult.. Currently, for the US, if deliveries were 50% Model 3 RWD and 50% Model Y AWD, the cheapest variants available with no options added, the ASP would currently be $46k. But we know there aren't that many Model 3 RWDs sold... Nor are there that many Model Y AWDs...

But maybe I'm not paying enough attention to the prices in the rest of the world...

 

[petit_bateau]

That would seem difficult.. Currently, for the US, if deliveries were 50% Model 3 RWD and 50% Model Y AWD, the cheapest variants available with no options added, the ASP would currently be $46k. But we know there aren't that many Model 3 RWDs sold... Nor are there that many Model Y AWDs...

But maybe I'm not paying enough attention to the prices in the rest of the world...

Even if it were $47k ARPV it is still necessary to know the cost figure. Having only half the puzzle doesn't solve it.

 

[MP3Mike]

Even if it were $47k ARPV it is still necessary to know the cost figure. Having only half the puzzle doesn't solve it.

How does cost impact ASP?

 

[petit_bateau]

How does cost impact ASP?

It is EPS that really matters over the next few weeks, and that will be largely driven by the gap (GM) between ARPV and ACPV. As we all know, given that we now know volume.

 

[Zaddy Daddy]

That would seem difficult.. Currently, for the US, if deliveries were 50% Model 3 RWD and 50% Model Y AWD, the cheapest variants available with no options added, the ASP would currently be $46k. But we know there aren't that many Model 3 RWDs sold... Nor are there that many Model Y AWDs...

But maybe I'm not paying enough attention to the prices in the rest of the world...

China ASP's are way below that. RWD's are low to mid 30's...

 

[mongo]

China ASP's are way below that. RWD's are low to mid 30's...

3 China:
RWD: 229,900 = $33k
AWD: 329,900 = $48k
Paint: 8,000 = $1k

Y
RWD: 261,900 = $38k
LR: 311,900 = $45k
Performance: 361,900 = $53k

 

[EVNow]

Can someone just assume $47k ASP and 20% GM and see what that gets us ? Anything over would be a bonus.

In other words, what does the consensus 0.86 EPS assume in terms of GM and ASP ?

 

[Troy]

3 China:
RWD: 229,900 = $33k
AWD: 329,900 = $48k
Paint: 8,000 = $1k

Prices in China include 13% VAT (Value Added Tax). Tesla collects VAT and passes it on to the government without the money ever counting as revenue. That's how VAT works everywhere. Without VAT, the price of a Model 3 Standard Range before options is 229,900/1.13= ¥ 203,451.

In addition to the 13%, there is a 10% purchase tax but EVs are currently exempt from that. If they were not, the 10% would apply to the pre-VAT price of ¥ 203,451. In other words, the purchase tax would be ¥ 20,345. That's why Tesla's website mentions the ¥ 20,345 number.

VAT is 20% in most of Europe.

 

[petit_bateau]

Can someone just assume $47k ASP and 20% GM and see what that gets us ? Anything over would be a bonus.

In other words, what does the consensus 0.86 EPS assume in terms of GM and ASP ?

I am assuming vehicle GM% of 26%, rather than the 20% you suggest.

My 26% auto GM yields EPS of $1.05.

A very crude calculation - that you can do - is to reduce that using a factor of 20/26, i.e. 4/5 or 80%. So $1.05 x 0.8 = $0.84.

(The auto GM% I assume is in my original post #54235 that sets all this out ....

Near-future quarterly financial projections

I expect shipments of Y from China to Europe to go down which in itself should lower the number of days in inventory. Many countries still lack S/X for both deliveries and inventory, so expect these to keep being shipped around the world. Imo Tesla should make sure they always have a few...

teslamotorsclub.com

.... so you can do the more detailed version yourself and allow for fixed overheads if you want.)

The auto GM% has slid from 33% to 26% over the last four quarters, i.e. almost 2% reduction per quarter. I have previously flagged up this worrying trend, and pointed out that if it does not get stopped and ideally reversed then Tesla will one day become just another high volume low margin unprofitable manufacturing company. I remember a lot of people told me Tesla was different.

I have held auto GMi% constant at 26% in my model because the 33% was the recent high point, and before that it had run in the 20-30% range for many quarters.

This GM% is something to watch very closely. Usefully we can see it in the reported data. Looking only at ARPV misses the other half of the equation, ACPV.

A rapid collapse to a auto GM% of 20% in this quarter would be something that should get very careful scrutiny and would have severe share price ramifications if it were to have happened.

 

[mongo]

The auto GM% has slid from 33% to 26% over the last four quarters, i.e. almost 2% reduction per quarter. I have previously flagged up this worrying trend, and pointed out that if it does not get stopped and ideally reversed then Tesla will one day become just another high volume low margin unprofitable manufacturing company. I remember a lot of people told me Tesla was different.

I have held auto GMi% constant at 26% in my model because the 33% was the recent high point, and before that it had run in the 20-30% range for many quarters.

Ramping a plant, let alone two, is going to hurt GM.

Q3 2022 call: sans Austin and Berlin, they would have been near 30% GM

Your 2% a quarter is one way to look at the data. Here's 2.5 years of automotive GM (with credits because I'm lazy). Is it chronological ascending or descending?

27.7
24.1
26.5
28.4
30.5
30.6
32.9
27.9
27.9
25.9

As to fears "Tesla will one day become just another high volume low margin unprofitable manufacturing company"
1) Toyota, Ford, and GM are all around 14% even with a 2% decline QoQ it would 2 years to match them. Which is unlikely to occur because:
2) Tesla is still ramping and adding entire product lines to their existing factories, although:
3) Tesla is ramping and adding new factories each of which induces a GM dip proportional to new vs established capacity, big picture:
4) Operating margin is the overal profit #, and Tesla keeps getting more efficient. Toyota and GM: 7%, Ford 5%, Tesla 17%

A rapid collapse to a auto GM% of 20% in this quarter would be something that should get very careful scrutiny and would have severe share price ramifications if it were to have happened.

Q1 is an IRA quagmire, historically the weakest quarter, and low on S/X deliveries. While all numbers should be scrutinized, acting on it alone seems excessive.

 

[petit_bateau]

Ramping a plant, let alone two, is going to hurt GM.

Q3 2022 call: sans Austin and Berlin, they would have been near 30% GM

Your 2% a quarter is one way to look at the data. Here's 2.5 years of automotive GM (with credits because I'm lazy). Is it chronological ascending or descending?

27.7
24.1
26.5
28.4
30.5
30.6
32.9
27.9
27.9
25.9

As to fears "Tesla will one day become just another high volume low margin unprofitable manufacturing company"
1) Toyota, Ford, and GM are all around 14% even with a 2% decline QoQ it would 2 years to match them. Which is unlikely to occur because:
2) Tesla is still ramping and adding entire product lines to their existing factories, although:
3) Tesla is ramping and adding new factories each of which induces a GM dip proportional to new vs established capacity, big picture:
4) Operating margin is the overal profit #, and Tesla keeps getting more efficient. Toyota and GM: 7%, Ford 5%, Tesla 17%


Q1 is an IRA quagmire, historically the weakest quarter, and low on S/X deliveries. While all numbers should be scrutinized, acting on it alone seems excessive.

To be honest I think you are addressing the wrong person. I was simply responding to a what if question. My personal forecast is for 26% auto GM% and $1.05 EPS

Anyway I've just checked what my forecast does witgh the OM% and it is nice and stable, which apparently is what Tesla is now targetting. Soon I guess we get to find out if they manage that.

 

[mongo]

To be honest I think you are addressing the wrong person. I was simply responding to a what if question. My personal forecast is for 26% auto GM% and $1.05 EPS

Anyway I've just checked what my forecast does witgh the OM% and it is nice and stable, which apparently is what Tesla is now targetting. Soon I guess we get to find out if they manage that.

View attachment 928015

You're right, my mistake, I misread your post and the context of your reply. Sorry about that.

 

[generalenthu]

I believe what's missing is the statement from Zach (earlier upthread) -
“Zachary Kirkhorn

Yeah, I'll jump in on this. So there is certainly a lot of uncertainty about how the year will unfold, but I'll share what's in our current forecast for a moment. So based upon these metrics here, we believe that we'll be above both of the metrics that are stated in the question, so 20% automotive gross margin, excluding leases and credits and then $47,000 ASP across all models.

I was just thinking about how Zach made these comments after price cuts across geographies in Q1, and I believe there was a slight adjustment upwards in the latter half of the qtr. Unless there has been an unexpected mix shift towards China, (I dont think this happened), the 47k ASP is a solid number to go by.

The other part i didnt see discussed was the manufacturer incentives that were in the IRA. Aren't they supposed to start this qtr? May be that contributes to the Auto GM and would be above the 20% number (which excludes credits).

Of course, Zach did say OM is what everyone should focus on and not GM, especially as Energy comes into its own. On that note, I feel that @petit_bateau Auto Revenue forecast is a tad too high unless that includes the new manufacturing incentives.

 

[EVNow]

I was just thinking about how Zach made these comments after price cuts across geographies in Q1, and I believe there was a slight adjustment upwards in the latter half of the qtr. Unless there has been an unexpected mix shift towards China, (I dont think this happened), the 47k ASP is a solid number to go by.

Here was the question that was asked.

Thank you very much. The next question from investors is, after recent price cuts, analysts released expectations that Tesla automotive gross margin, excluding leasing and credits, will drop below 20% and average selling price around $47,000 across all models. Where do you see average selling price and gross margins after the price cuts?​

​

As people like Rob (DailyTesla) noted, this leaves the time horizon open i.e. was Zach talking about 20% GMA and 47k ASP for the whole year or every quarter ?

Irrespective of that - IMO if they don't hit 47k ASP and 20% GM, the market will punish TSLA. I'll dust out my (very) old model and try to get ball park revenue & EPS for a range of ASP & GM - something like ASP of $46k, $47k & $48k. GM of 19%, 20%, 21%.

ps :

My personal forecast is for 26% auto GM% and $1.05 EPS

27.7
24.1
26.5
28.4
30.5
30.6
32.9
27.9
27.9
25.9

IMO, the high GM% was a Covid anomaly. They could raise prices and get high GM because of tight supplies. The price cuts have brought the prices back to pre-covid levels (or slightly less?) - but I doubt the raw material and supplier costs have come down much (or at all in some cases), because of inflation. We should not be suprised if GM comes down quite a bit this quarter (even below 20%) and slowly goes back up as costs come down and efficiencies take hold.

 

[EVNow]

Ok here goes.

I assumed everything would be exactly same as Q4, except
- No extra FSD revenue recognition
- Deliveries are higher (duh!)
- Varied ASP & GM as shown
- No Buyout of noncontrolling interest
- Assumed same lease revenue and cost. Too complicated to compute based on current and past lease deliveries

The Yahoo consensus forecast is EPS of 0.86 and Revenue of $23.34B (in Yellow). To get that we need
- $49,177 ASP (vs $52,689 in Q4) and 21.5% GM (vs 25.9% in Q4) or
- Lower on the GM/ASP compensated by higher revenue & margin on energy & services or
- some combination of the above
- One thing to note, reg credits that were quite high in Q4. May not happen this quarter (except we don't know about IRS)

If we just take $47K ASP and 20% GM as per the question answered by Zach - we get 0.72 EPS and 22.46B revenue (assuming everything else remains the same).

I think it is possible, but can't rule out a miss.

ps : Anyone have breakout of consensus revenue/COGS break-down by auto/energy/services ?

 

[DarkandStormy]

Ok here goes.

I assumed everything would be exactly same as Q4, except
- No extra FSD revenue recognition
- Deliveries are higher (duh!)
- Varied ASP & GM as shown
- No Buyout of noncontrolling interest
- Assumed same lease revenue and cost. Too complicated to compute based on current and past lease deliveries

The Yahoo consensus forecast is EPS of 0.86 and Revenue of $23.34B (in Yellow). To get that we need
- $49,177 ASP (vs $52,689 in Q4) and 21.5% GM (vs 25.9% in Q4) or
- Lower on the GM/ASP compensated by higher revenue & margin on energy & services or
- some combination of the above
- One thing to note, reg credits that were quite high in Q4. May not happen this quarter (except we don't know about IRS)

If we just take $47K ASP and 20% GM as per the question answered by Zach - we get 0.72 EPS and 22.46B revenue (assuming everything else remains the same).

I think it is possible, but can't rule out a miss.


View attachment 928719

ps : Anyone have breakout of consensus revenue/COGS break-down by auto/energy/services ?

The Yahoo "consensus" at the start of the quarter was $1.19/share, fwiw.

 

[FUTURECHAT]

What is this forum's estimate of EPS and revenue growth for next quarter due April 19th?
Apologies if I am not in the right place but new here and still trying to find my way round