"Am I correct about the way that deferred RVG revenue becomes recognized over time? "
Here's how I think it works: one half of the GM is deferred in GAAP during the RVG period (unless the car is sold or traded-in before 39 months). For the other half of GM, the deferred Revenue is amortized over the 39 months and the cost of the car is carried on the Balance Sheet as an asset under Operating Lease Vehicles, and depreciated quarterly during the guarantee period to COGS. The depreciation rate is not time based but allows Tesla discretion to adjust the depreciation amount based on its estimation of the value of the vehicle if the RVG option were to be exercised, i.e the depreciation will be lower if they believe the car will be more valuable than the guaranteed amount,
If the car is sold or traded-in early, all unrecognized GM hits GAAP . The same thing happens at the end of the RVG period if the return put option is not exercised. So you are correct: the prior recognition of all GM under non-GAAP is gradually and partially reversed during the guarantee period and the balance of non-GAAP previously recognized GM is reversed all at once when the return put option is extinguished.
I think your spreadsheet blew up because Tesla shows the non-GAAP adjustments cumulatively, ie. it combines all non-GAAP GM for new RVG transactions for the periond plus reversals for GAAP ratable amortization and depreciation from prior periods' transactions plus the GAAP effects of early extinguishment of the return put options. The 3Q15 10Q stated::"Resale value guarantees available for exercise within the next 12 months are $85.6 million and relate to 1,921 vehicles. Tesla reported 3,095 RVG transactions in 2Q13 and 3Q13, so about 1,174 or about one third of those RVG transaction appear to have been extinguished early.
The C type leases make it even more arcane, because the lease period is unstated (may or may not be 36 months)
The credits are available for a manufacturer's first 200,000 qualifying vehicles sold or leased in the USA,. They phase out beginning the SECOND quarter AFTER the quarter in which 200,000 is reached-- over the next four quarters.
The SH letter showed US deliveries as:
There were no more than 2,000 qualifying Roadster, all of 2012's 2,650 deliveries were in the USA as were most of 2013"s 22,477 deliveries, so the count of qualifying vehicles through the end of 2015 was no higher than 69,000. Tesla will be fortunate to sell 50,000 each in the USA in 2016 and 2017.
There will be plenty of credits available at the beginning of 2018 and during the 5 plus quarters after 200,000 is reached.
The problem will be how does Tesla equitably deliver cars to domestic and international S,X and M3 reservers beginning in 2018?
Here's data on quarterly "Lease" deliveries.
A. Resale Value Guaranteed Vehicles
B. Tesla direct Leases
C. Sales of Vehicles to Lessors who have a residual value guarantee from Tesla:
Delivered by type of "lease"
Note: Type C leases only started in 2015. Info on the A and C types will not be available until the 10k is published. B type leases do not affect non-GAAP GM add backs; they are treated the same for GAAP and non GAAP.
I suspect there will be a big jump in C type leases in 4Q15.
Kalyfornia reports ZEV credit sales annually on a FY basis. From 10/1/14 through 9/30/15, Kalyfornia shows Tesla sold 44,423 credits. During the same period, Tesla reported $170 million in ZEV credit revenue. That's bout $3,827/credit, but the numbers are confounded by the fact that 9 other states ( CT, MA, MD, ME, NJ, NY, OR, RI, VT) .follow the Kalyfornia regime. Each credit can be used to offset a $5,000 fine if a manufacturer has insufficient credits. GHG/CAFE credits also contribute significantly to Tesla's bottom line--somewhere between a third and a half of the ZEV amount.
Tesla gets either 4 or 7 ZEV credits per car sold in participating states (depending on whether the regulators award extra credits for "fast re-fueling" aka battery swap scam)
"What you can accurately state is that Obama reduced his own deficits."
Much of the reduction was mandated by the sequester which the clown hated. He had a unique opportunity to lead after the Simpson-Bowles recommendations but the "best man for the job" fumbled.. He does not know how to make a decision so he did nothing.
"Does Tesla have revenue from Superchargers?"
Back when they sold 60 kwh model , they charged an extra $2,000 for SC capability ($2,500 if added after delivery of the car.) My understanding is they only offer 70's and 90's now and all are SC enabled. They defer some of the revenue from the car sale: "As of September 30, 2015, we had deferred $50.3 million, $40.1 million, $23.4 million, and $11.6 million related to the purchase of vehicle maintenance and service plans, access to our Supercharger network, internet connectivity, and future software upgrades. As of December 31, 2014, we had deferred $39.7 million, $25.6 million, $14.4 million, and $1.5 million related to these same performance obligations."
But: "We continue to increase our sales and service footprint worldwide and expand our Supercharging network. With the continued global expansion of our customer support and Supercharger infrastructure, selling, general and administrative expenses were $236.4 million for the three months ended September 30, 2015, compared to $155.1 million for the three months ended September 30, 2014."
The COGS vs R&D charges guidelines are admittedly subject to interpretation--There are a couple of dueling SA articles discussing the opposing views.
If you are contacting SEC, consider complaining about:
A. Hiding regulatory profits in Auto Sale Revenue rather than breaking it out in Other Income. Regulatory credit profits accrue from different customers than auto buyers, at far different times than when the cars are sold, and under entirely independent contractual arrangements--It's a clear distortion of gross margin
B. Booking all Supercharger-related revenue in Auto Sales but charging most Supercharger operating expense in SG&A--another clear distortion of Gross Margin (one of the performance triggers for executive option grants is GM above 30%)
C. Reporting model specific development expense as Operating Expense (R&D) rather than COGS again distorting GM.
"Is that non-GAAP fraudulent EPS ....I think so ....look for accounting probe by SEC"
IMO the likelihood of an SEC investigation is low (about the same probability as the mythical imminent margin call to Musk who has only pledged about 20% of his TSLA holdings)
Non-GAAP EPS is reasonably explained/reconciled and has 3 principal components:
1. Stock based compensation--much of SV engages in the same non-GAAP practice.
2. Non-cash interest expense--caused by the notes' convertibility feature
3. "Lease" accounting--FASB (Financial Accounting Standards Board) recognizes the inadequacy of current GAAP rules: " In May 2014, the Financial Accounting Standards Board issued an accounting update which amends the existing accounting standards for revenue recognition. The new guidance provides a new model to determine when and over what period revenue is recognized. Under this new model, revenue is recognized as goods or services are delivered in an amount that reflects the consideration we expect to collect. The guidance is effective for fiscal years beginning after December 15, 2017; early adoption is permitted for periods beginning after December 15, 2016. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application." Tesla's comment: " We have not yet selected a transition method and are evaluating the impact of adopting this guidance."
Everything in the non-GAAP reporting can be gleaned from analysis of the Income Statement, Balance Sheet and Cash Flow Statement. Tesla claims it uses the non-GAAP approach for its internal financial management, and it does provide a crutch for those too lazy or too inept to use the GAAP statements.
"they screwed up years ago when they should have just went for the M3."
Battery costs were (still are) too high. They were counting on passage of time sufficient for someone to commercialize a lower cost cell.
I agree with KB about the simultaneous design, but that's hindsight because Tesla did not have the cash (only the DOE loan) and really no assurances that the S let alone the X would sell. IMO, Tesla's error was not insisting on more interchangeability of parts between S and X (it's less than 60%) and much of the non-interchangeable 40% is inordinately complex.
"So somewhere in there the plan changed and Model X was inserted into the roadmap."
There are Investors Presentations from about 2009 through 2011 showing the S skateboard design with different top-hats--the Sedan, SUV, Van, and Cabriolet. The pitch was they could capitalize on the versatile platform by just tweaking the different body styles above it. The SUV was promised to be revealed in 2011, then late 2011 and finally slipped to February, 2012. But, Musk and von Holzhausen lost their way. ( IMO, Musk has too much of a tinkering engineer"s mindset and not enough of the discipline of a C-level executive.)
That said, it has always been about the cost of batteries. There is a reason Straubel's Powerpoint slides, even for presentations in 2014 and 2015, show "exponential" improvements in Li ion cell technology that doesn't graph beyond 2005. The GF idea was conceived during TeslaLive in July 2013. Musk latched on to it through the remainder of 2013 as a way of justifying another large capital raise in early 2014, less than 9 months after floating the 2018 notes and the 4th equity offering in May 2013.
Once Tesla decided to run with the GF gambit, M3 timing was linked to the GF schedule. Evanson made a Jan 2014 Investors Presentation showing it would be available in ~3 years or early 2017. Now no one thinks it will be available before the end of 2017.
The S was revealed in April 2009 and first produced in June 2012. The X was revealed in Feb. 2012 and first produced in Sept. 2015. M3 reveal is the day before April Fools' Day 2016, yet it will be first produced in Dec, 2017? (The 2018 notes mature 6 months later.)
About a month and a half before the M3 reveal, and the CEO hasn't decided whether it will be a driveable proto-type?
Did you catch the exchange about toxic substances at the GF? The CTO must not understand what emissions/ chemicals are involved in metal smelting & refining processes or GF plans about everything on site have changed.
"So TSLA invested $250M over a year ago to upgrade the paint shop but they wait a year to write off the old one and then feature the "new" one *again* as a sign of progress?"
A new CFO broom sweeps up a few of the past transgressions (Same with Excess & Obsolescent Inventory). It remains a yarn until the financial reports show reality is undeniable.)
IMO, the $1,000 M3 deposit is a clever ploy. It will stimulate reservations which will be used to show PENA that Tesla has sufficient "demand" for PENA to make an larger investment in the GF. It will also increase the year-end cash balance (which IIRC the CFO said would increase, or at least not decline, during the year).
Cash from Customer Deposits is no where near as valuable as cash that is produced by positive net income. Cash from Deposits just pushes reality over the horizon a bit longer. The deposits are refundable, and those deposits will reduce cash payments when the cars are delivered.
IMO, the share price will decline through early March as the 10k is published, and institutions evaluate the risk of their positions as revealed by more complete 4Q15 informations. The decline might reverse in early March in anticipation of the M3 reveal and cash deposits. The share price might head back down in early May when once again Tesla has to file earning (losses) details rather than just tweeting.
Place your bets
I think you misunderstood. The write-down was for the old NUMMI paint shop. He was using it as an example of the "dogs' breakfast" excuse that caused losses to be three times what they were in 4Q14 even though car deliveries were 78% higher. Not sure how much of a write down there could have been since Tesla only paid ~$40 MM for NUMMI and something like another ~$7.5 MM for equipment, and has to have been depreciating the value since the old paint shop was placed back in service in 2012.
" I challenge anyone to find an earlier prediction of M3 production ramp."
On July 27, 2007, BloombergBusiness published "Tesla:A Carmaker with Silicon Valley Spark"
"Any hope Tesla has of achieving Eberhard's dream of producing higher volumes of cars annually rests on cutting this cost. The company also is going to have to boost the range of its cars beyond the current maximum of slightly more than 200 miles and provide owners with a reasonably glitch-free product (never an easy thing for a new manufacturer to do). The next vehicle on Tesla's drawing board is a five-passenger sedan code-named White Star. The target price will be from $55,000 to $68,000. In five years, Eberhard wants to be producing a $30,000 electric car known as Blue Star." That would be around 2012.
You might remember Marty. He was the first CEO and original founder that sued Musk and won.
The plan was reaffirmed in the IPO filing:
" Our long-term goal is to offer consumers a full range of electric vehicles, including a product line at a lower price point than the planned Model S. In May 2010, we publicly announced our intent to develop a third generation electric vehicle to be produced at our planned manufacturing facility in Fremont, California. We intend to offer this vehicle at a lower price point and expect to produce it at higher volumes than our planned Model S. We expect that this vehicle will be produced a few years after the introduction of the Model S."
The S was first produced in June, 2012. Most would interpret "a few years" to mean some time in 2015.
Y/E 2014 cumulative gross reservations were 23643, a cumulative 75% growth would be 41,375. Cumulative at 3rd quarter was only 32,299, so 4Q15 would still need 9,076
"what gives there?"
There were two grants in 2009. One vested based on the passage of time and the other vested based on achievement of performance goals. Both grants had an exercise price of $6.63.
With out trying to research it, my guess is he is reporting transactions under each grant separately on different form 4s.