When you make a financial Model that pretends to show the development of Tesla’s financials, you should dare to use it and show the results.
The spreadsheet in the middle of this post is the core of the story. It shows my results from playing our SimTesla game. These results are effectively CleanTechnica’s estimates of quarterly Tesla financials. But before the spreadsheet, there are a few notes to consider.
As I have said before, some parts of Tesla’s finances are not possible to predict. For example, I expect the costs of the reorganization to show in the departments that have been reorganized. That is, there should be a slight increase in the costs of revenues of “Energy” and “Services and others” as well as in the R&D and SG&A costs of the “Operating Expenses.” The problem is that I have no idea how to allocate the reorganization costs. So, I chose the simple solution of ignoring these costs. These should not dramatically change the bottom line anyway.
Getting to the heart of the matter, I’ve looked very hard again at the numbers that we should know and don’t know, such as the ASP of the Model S & Model X. See below for more details, take a look at our figures, and chime in with your estimates as well.
Another topic worth highlighting before you examine our sheet is the number of cars leased. The cars leased are delivered, but they are not counted in the company’s revenue — they go directly to “Operating lease vehicles, net” on the balance sheet. However, for simplicity’s sake, the cars leased are counted as cars sold in this model.
What is in the “Automotive” revenue? That includes ZEV credits (if applicable) and the revenue of the showroom/test-drive/loaner cars sold to customers (as far as I could determine). Again, I have taken the easy way out. The ZEV credits are in the 10-Q, so I can put them on their own line.
The problem of the leasing and sale of used-by-dealership cars remains, and I’ve ignored it. I presume these costs and revenue are mostly about the same as in previous quarters, so I have allocated them to the ASP of the Model S & Model X.
We know the numbers delivered, and I’ve estimated that the ASP of the Model X is $5,000 above the ASP of the Model S. After some headache-inducing scribbling on the back of a very large envelope, I ended up with the ASP for Model S & Model X at $98,839 and $103,839, respectively. When I put those numbers in Q1, the model gave about the same results as Tesla put in its 10-Q.
For the prediction of Q2, I copied the delivery numbers that Tesla was so nice (and proud!) to publish on July 2, 2018. The model did the rest.
Tonight / this evening / this afternoon / tomorrow (depending on your location), Tesla is going to tell us how good / stupid / awful our Tesla model is.
But Tesla is not only publishing the profit and loss. In the shareholder letter, there are a few pages telling what has happened, what they expect to happen, what they hope will happen, and what they are very proud of. This is not in our model. Neither is the less interesting (in my view) balance sheet and cash-flow statement.
The only important part of these other two blue and white tables is the last line of the cash-flow statement. This tells us how much Deepak still has in his pocket for daily shopping and such. It will be less than most people hope and expect.
The large number of cars in transit appear here as “Changes in operating assets and liabilities, net of effect of business combinations,” probably some $800 million in cash used to finance this inventory. It is a bit of a permanent cash hog — a growing business has more cars in transit, and needs more cash to finance those cars.
And this is one reason why all other carmakers have dealers — the dealers finance the cars as they hold the inventory of the carmakers. If they didn’t do this, carmakers would much sooner go under with such a large number of unsold cars on the lot.
But I digress.
Tesla will work hard to deliver the cars in transit and keep the content of that pipeline as small as possible. It always does, but the challenge has gotten greater as Tesla Model 3 production has ramped up.
We tried out a new delivery system using an enclosed trailer straight from factory to owner’s home, so super convenient & car arrives in pristine condition without wasting plastic wrap https://t.co/exNyhb0zOT
— Elon Musk (@elonmusk) July 30, 2018
I agree with the analysts that Tesla needs cash, a lot of cash and fast. I disagree with the pessimistic analysts as to how Tesla is going to get that cash. I expect Tesla to spend less in CAPEX and then make a nice profit in Q3 and Q4. And let us not forget that the Wizard, Deepak Ahuja, can find cash where we only see a fog.
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