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Tesla Motors, Inc. (TSLA) Message Board

  • n0m0renancy n0m0renancy Mar 9, 2013 2:39 PM Flag

    4Q12 Model S GM is NEGATIVE TEN PERCENT (-10%)

    "Accountants" would you mind double checking the following:?

    Fourth quarter revenue was $306.3 million, consisting of $288.9 million in North America, $16.7 million in Europe, and $0.7 million in Asia.

    If the $12.0 million for 4Q12 Development Services revenue was all for Daimler in Europe, that would leave $4.7 million in revenue for Roadster sales in Europe.

    If the $14.0 million for 4Q12 Power train Component Sales was all in North America, that would leave $274.9 million for North American Model S sales and regulatory credit revenue. Reducing that by the $40.5 million in regulatory credit revenues leaves $234.4 in model S revenue, or an ASP for “the approximately 2,400” Model S’s delivered” of about $97,700/vehicle.

    To deduce the cost of the Model S revenue, reduce the 4Q12 cost of auto sales revenue, $278.7 million, by 87% (equivalent to a GM of 15%) of the following 4Q12 revenue categories:

    -Power train Component Revenue ($14.0 million) or $12.1 million.
    -European Roadster Sale Revenue ($4.7 million) or $4.1 million.
    -Asian Roadster Sale Revenue ($0.7 million) or $0.6 million.

    That leaves the 4Q12 cost of Model S revenue of $261.9 million or about $109,100/vehicle or negative gross margin of just over ten percent (-10%.)

    Note: assuming an ASP for Roadster of ~$140k, it looks like about 34 Roadsters were sold in Europe and 5 in Asia during 4Q12.

    But for the $40 million in regulatory credits, 4Q12 would have been an absolute disaster. As a long, you may want to contemplate:
    “Longer term, regulatory credit revenue should decline relative to our automotive sales as we grow our sales outside the United States and earn fewer credits on the smaller battery packs. While we will pursue opportunities to monetize the credits we earn from the sales of our vehicles, we do not need to rely on such sales to be a significant contributor to gross margin, and our business model is not predicated on such credits”

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    • In other words Ballcoach was right and Tesla will never be profitable.

    • Nomo,
      The situation a NUMMI a true disaster. The plant was runing 75 hours per week and only made 2500 cars. That is about two weeks production at a regular plant.

      Shorts need to be cautious because things will get better. That is human nature. We adapt and learn. The people running Tesla are not stupid they are just in over their heads.

      On the bright side the company is probably doomed by costs.

    • All those numbers don't matter much.

      Expenses are higher per vehicle as production line is ramping up and bugs ironed out. So calculating current expense/unit is misleading in predicting future production costs. Regulatory credits should decline relative to auto sales as sales increase, with increasing production. That makes sense to me. Parsing those numbers is a boneheaded exercise, in my opinion. there are analysts to do it, short selling hedge funds to do it, Law firms looking for plaintiffs to do it. The only thing that really matters is sales numbers for Model S in 2013, and particularly as we get to end of year. Will the S have sustaining popularity after the initial 10,000 or so units have been sold? We will have to wait for mid year or late year to find out the answer to that question.

      I have to think that as the production line gets settled in they will approximate their Gross margin projections, if they can get the sales at their listed price.

      • 5 Replies to budwashougal
      • IMO, the big news in the 10k is the quantification of “regulatory credits.” To a great extent, Tesla’s near term fiscal health (at least until they can float another dilutive public offering) hinges on just how reliable cost-free revenue from that source really is. Yet Ahuja, the CFO, refuses to disclose the purchaser. Accounts receivable nearly tripled from 3Q12 to 4Q12 (from $9.2 million to $28.8 million), and the likely buyer of those credits is “Company A” which owes 56% of the receivables. Again IMO, there is something odd going on with “regulatory credits” and could be more related to GHG regulation rather than ZEV requirements. In the long run, you don’t curry confidence with institutional investors by playing hide the ball, particularly after admissions like:

        “our management concluded that our internal control over financial reporting was ineffective as of December 31, 2012 because a material weakness existed in our internal control over financial reporting related to the presentation and disclosure of non-cash capital expenditures in our consolidated statements of cash flows”

        Regulatory credits are good news/bad news. The good new is that some entity is willing to buy them from Tesla rather than Nissan, GM, Ford, etc. The bad new is that they demonstrate that the 8-10%/year improvement in battery technology has yet to materialize to the extent that Tesla can produce a bigger more luxurious car with a bigger battery that the Roadster and cover its operating expenses.

        Good luck with your enlightened approach to allowing others to use your investible capital.

      • OK, Bud, if you prefer to don a blindfold, stick your fingers in your ears, and chant “Elon is great…Elon is great…Elon is great” to “boneheaded exercises,” be my guest! You might also want to kneel down, bend over and kiss the ground multiple times.

        You “have to think that as the production line gets settled in they will approximate their Gross margin projections” Based on what? Elon promised it? Elon said: “Roadster GM was 25 to 30%.” However, if you were to go through another boneheaded exercise and parse all those meaningless ancient numbers by eliminating GM from Development Services and Power Train Component Sales, you’d know Roadster GM averaged less than 15% for the last 4+ years. There is a reason Tesla’s cumulative loss is almost $1.1 billion: it cannot build and sell cars profitably enough to cover operating expenses, let alone pay back its DOE loan.

        Sales numbers in 2013 will be critical, but they are NOT “the only thing that really matters.” Unless you are Milo Minderbender, selling units in volume for less than cost is also generally survival threatening.

        IMO, the big news in the 10k is the quantification of “regulatory credits.” To a great extent, Tesla’s near term fiscal health (at least until they can float another dilutive public offering) hinges on just how reliable cost-free revenue from that source really is. Yet Ahuja, the CFO, refuses to disclose the purchaser. Accounts receivable nearly tripled from 3Q12 to 4Q12 (from $9.2 million to $28.8 million), and the likely buyer of those credits is “Company A” which owes 56% of the receivables. Again IMO, there is something odd going on with “regulatory credits” and could be more related to GHG regulation rather than ZEV requirements. In the long run, you don’t curry confidence with institutional investors by playing hide the ball, particularly after admissions like:

        TO BE CONTINUED

      • Bud, how can you say numbers don't matter much? Then again, Tesla has been saying this for the better part of 10 years. Now that vehicles are actually being produced, numbers ARE pre-imminent and cannot be ignored. N0m0re has it correct. There is simply no way Tesla can become profitable. Of course, Tesla will likely employ Voodoo Math in the 1st quarter and tout some sort of contrived profit. But realistically those numbers will live just as short a life as that one month of profits in 2009, I believe.

        I'll say it once more. Tesla does NOT have the huge list of deposits the zombies here have been saying. Tesla, IMO, is quickly running out of deposits. In fact, simply watch as this unfolds. Musk, IMO, is making a fatal mistake by not being transparent. Believe what you wish, Bud. Tesla has no hope of moving into mainstream no matter how much you folks hold your collective breath and say otherwise.

        Remember what I said about two years ago, Bud? I said it's suicide to tell the world your intent is to garner a 25% gross margin in the auto business. Consumers aren't stupid. Aside from the true-believers, people mostly see autos as a product that is supposed to be negotiated. Paying sticker price would entail a complete paradigm change for world-wide consumers. That is NOT going to happen at least in our lifetime, Bud. It's time you come to grips with it!

      • Bud, I’m not saying you’re wrong, but I could not disagree more about the value of understanding costs, revenues, and profitability. As a sanity check on Nomore’s cost build-up, let’s look at it from the other end and see if the answer is the same. Tesla reported a gross profit of $30M last year. Of that, $16M was from development services and $40.5M was from ZEV+GHG credits. That means that they lost $26.5M on automotive sales. If you assume that Roadster and Toyota sales are breaking even, then the Model S lost $10,000 on every car delivered last year. Do you honestly think that they can improve margins by $35,000 per car to get to 25% GM? That’s a whole lot more than just overtime and premium freight. Keep in mind that if they can’t get to 25% GM, they have no hope of covering expenses.

        Everyone has their own perspective on investments. But I honestly think that by doing a few simple calculations, you can do a much better job of predicting the future.

      • What sales? Game over!

        Sentiment: Strong Sell

 
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