Are the zero-emissions credits that are discussed for TSLA for California-sales only? Is there a definitive article detailing this? The expectation is approximately 0 zev credits for 13Q4 while it was $58MM in Q1.
How are you guys factoring that into valuation? Q2 might have more zev credits but is it a California-only scheme or national one where cars made in California, sold elsewhere, also qualify for a sellable credit? I'd like to read more about this before trading.
From the q1 letter:
"From Q4 to Q1, total gross margin rose from 8% to 17%, as a result of a higher Model S production rate,manufacturing efficiencies, part cost reductions and regulatory credit sales. Zero emission vehicle (ZEV) credits sold to other automakers amounted to approximately $68 million or 12% of revenues. We expect this to decline significantly in future quarters, as ZEV credits will only apply to about 1/6 of worldwide deliveries, versus roughly half of US deliveries, and the price per credit has declined.
However, an important point for investors to note is that we are reaffirming our prior guidance of a gross margin of 25% in Q4 2013, assuming zero ZEV credit revenue. This may turn out to be greater than zero, but we are not counting on it. What really matters is improving fundamental automotive gross margin, excluding regulatory credits. On this front, Tesla improved nine percentage points from the prior quarter and continues to improve every month."
They get an extra credit for the battery swap tech that they just introduced. Sales of ZEV credits should be good because new car sales are up in general. That creates greater demand and higher prices for ZEV credits.
You are correct but I don't think the additional ZEV credits from battery swaps will apply to Q2 but it is important because it will factor into Q3 guidance and I guarantee you none (with the exception of maybe andrea james) of the analysts currently have the additional revenues from this in any of their estimates.
Thanks, I thought that may be the case (in a few articles I read). What I am trying to put together is a case of whether we have what was stated in the movie (by Lutz and Musk) "Revenge of the Electric Car" - the statement was "once everyone who wants one, has one - then what will sales be?" The issue is "why are people buying a Tesla?" I guess I should go read the forums at the Tesla site. But as an EV owner myself, with a Volt, I have my own reasons for buying. I do think that the vast majority of people out there will keep using gasoline even if it was $5-10 a gallon. They don't like change. They don't want inconvenience. Many can't comprehend how to use an EV and most just don't care about the environment. So, take those people away - what are we left with? 50-100K EV enthusiasts, per year, with most buying within the lower-cost realm because they can't afford higher-end cars. Are people buying Teslas for the performance alone? The quiet ride? The green-cred? I get no green cred with my Volt even though I'm well over 85mpg which blows away Prius owners. And I'm very low in the MPG rankings of Volt owners - many of which never use gasoline. I don't need a second car for long trips nor would I have to wait for a super-charger to be installed on my longer-routes. I could use a Tesla 85kWh for 96% of my typical driving, actually, but it's price is roughly 3 times the cost of my Volt.
The Press puts Tesla in another league of EVs outside of the competition. But in fact, if someone bought a lower-mileage EV like those that get 80-miles a charge now, they would be nearly as happy driving electrically. Smaller cars and smaller range, of course. But covers the bases especially those days when driving alone.
That being said, I think Tesla's valuation is at the top of the range now. Others here, the shorts, think it'sa $4 stock. I don't think that's the case but we have seen worse. I wonder what TSLA would trade at today without the ZEV's from Q1?