I am trying to determine what was the Model S Q1 margin. I've put sizable portion of my resources in TSLA because I believe in their great potential, but somewhat concerned that they are yet not able to make money on Model S.
The analysis below is based on Tesla’s original Q1 2013 projection made during the Q4 2012 call and in the corresponding letter to the shareholders: break even on non-GAAP basis with mid-teens gross margin (assumed 15%) on a volume of 4,500 cars. It also uses Tesla revised Q1 results released on April 1: breaking even on the volume of 4,750 cars, GAAP basis.
According to these calculations the original Q1 projection was based on -9.4% margin. Using revised projection yields improved gross margin (16.8% vs 15%) and improved, though still negative, Model S margin of -6.2%. Note that original projection seemed to be using essentially the same margin as Q4 2012.
During the Q4 2012 call Elon was emphatic that Tesla will meet or beat internal goal of 25% margin on Model S without considering the regulatory credits. It is hard to understand how the margin could improve from -6.2% to 25% assuming that Tesla was already able to eliminate most of the manufacturing inefficiencies during Q1. Could it be that Tesla will realize step improvement in battery cell pricing once production increases into the second half of the year?
Any thoughts on the analysis?
Assumptions:
Regulatory credits per car – same as Q4 2012
Total for Credits, Power Train & Sales – as required to break even on non GAAP basis (4,500 cars)
Power Train Sales = Services Sales
Stock Based Compensation – same as Q4 2012
Services Margin - same as Q4 2012
Power Train Margin = 0.3
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true and that's a great resource to have for future; but I think the issue at hand is what production could be accomplished under the same CapX (no more lines). I'm not sure 500/week is just one shift though. Is that a known?
Based on what Elon said during the Q4 2012 call the 500/week is a one shift output. This also matches the goal of under 5 min for final assembly time per car that was mentioned in the National Geographic mega-factories video.