Oct 17, 2013
fjm9898 Tesla Motors Announces Date for Third Quarter 2013 Financial Results - Yahoo Finance�
Oct 17, 2013
blakegallagher he did say that they were capable of producing 800 week or 40k a year. I forget which one. Once they got the supplier issues worked out which he said would be by January of Febuary and then they could really test the depth of the demand
I think they will hit that number before the year is out and I dont think they will know where the true level of demand is at. More than 40k a year.�
Oct 17, 2013
ItsNotAboutTheMoney Remember, remember the fifth of November.�
Oct 18, 2013
Mario Kadastik Heh, so Tesla's planning a birthday gift for me, how sweet of them
�
Oct 18, 2013
vgrinshpun Well, do you think it just the coincidence that Tesla Motors confirmed Elon as the buyer of the James Bond car on the same day they released the date of the Q3 ER? According to CNN Money article Elon said:" I was disappointed to learn that it can't actually transform". Hence the addition to the To Do list: make it actually work as was originally imagined.
http://money.cnn.com/2013/10/17/autos/musk-bond-sub-tesla/index.html?source=yahoo_quote
I think this is brilliantly surreal cryptic message Elon is sending to all the Tesla fanboys :wink: about the Q3 results. I will not be surprised if the most daring predictions on the Q3 results posted here will turn to reality.�
Oct 18, 2013
mrdoubleb For both of us, actually. They will announce the results on your B-day, on the 5th, after markets close, so the next day - my birthday - I hope to get an ATH for a gift. :tongue:�
Oct 18, 2013
DaveT I just posted a megapost in the short-term movements thread and some of it is related to Q3 ER so I'll link to it here. Would love to have more people share "first data" points for Q3 production (ie., from factory tours or conversations with store employees).
Short-Term TSLA Price Movements - Page 1085�
Oct 19, 2013
Chickenlittle I do not believe its a coincidence that we don't have many data points. I don't believe people are more secretive. No comments by musk or high level execs. No tour signs reported. Suspect they have become better at keeping lid on data. Everything appears to be going by schedule. Super chargers going in deliveries in Europe. Haven't read about inordinate delays in deliveries. Have seen estimate of up to 3 month order to delivery of a nonperformance 85. Hopefully that represents more of a comment on demand than a lack of production. If supply chain not issue, question hiring for third shift?�
Oct 19, 2013
c041v This might be a bit late for Q3 and I know it came up once a long time ago, but is their no way for the collective TMC community to figure out a way to count the trucks (and railcars) leaving the factory? Every truck and railcar has got to be full, or nearly full and I wouldn't be surprised if they left with relatively predictable frequency.
Even if someone could figure out a way to track this for just a week using a parked car and a camera or something, I think we'd get a pretty accurate number.
Just a thought now that they've been scrambling the VIN's.�
Oct 20, 2013
DonPedro The idea at the time was to put up a web cam. Alternatively to pool some funds to pay a group of students or similar to sit there and keep count.�
Oct 20, 2013
Gtoffo Would just like to point out that every factory tour comes with an NDA............ and store employees are "just" store employees.�
Oct 20, 2013
NigelM For the non-Brits this was a rhyme warning that everything could go up in flames.....Not sure that's what the OP intended though. ;-)�
Oct 20, 2013
drinkerofkoolaid I don't think it's a coincidence that Tesla is not reporting earnings on the same day as Solar City, and I have a strange feeling this quarterly earnings report will never be forgotten.�
Oct 20, 2013
Benz Well, it seems that the exitement is building up already.
There is going to be some interesting info in the upcoming Shareholder Letter of Q3 2013, that's for sure.�
Oct 20, 2013
ckessel I think DaveT nailed it with his points about future guidance. Everyone (street included) knows Tesla is going to be profitable and a fairly broad range of profit is to be expected given it's hard to know ahead of time what investment expenses are on the SC rollout and Model X development.
What's going to shock, I think, is the production rate and guidance. We've got various data points of 700+ cars per week being manufactured. Tesla wouldn't have cranked to that level without demand.
Q2 was a surprise profit, so the stock rocketed, but the yearly guidance didn't go up that much. Q3, I think, is going to be surprise guidance, particularly for 2014, rather than surprise profit. Maybe not the same level of impact as Q1 or Q2 since, as sleepyhead noted, we're past the easy money portion of the curve, but I'm getting popcorn ready since it could be the last truly interesting quarterly report until the X shows up. One of the last talking points I see a lot is "what happens when initial demand runs out?", and I'm hoping Q3's guidance puts that to rest.�
Oct 20, 2013
Norse Btw we will get the norwegian October numbers on the 1st of November, so it will be easy to see if there have been many cars in transit. I will post them as soon as I get them.�
Oct 20, 2013
Benz That would be some useful info indeed.�
Oct 20, 2013
kenliles I'm generally in this camp as well- well said from my perspective�
Oct 20, 2013
DrDave I think an assumption of producing 700+ per week is very high, think they are closer to the 550-600 range at best.�
Oct 20, 2013
ItsNotAboutTheMoney At this point supply constraint might make it difficult to maintain, but based on previous quarters it wouldn't be surprising that they'd pushed them to that rate with a view to the future. There's also the possibility of bottlenecks in options which would allow them to produce some batches at a higher rate. (Tesla's assembly, er, network? should allow for a great deal of production flexibility).�
Oct 20, 2013
AlMc Since TM does not regularly report production or delivery numbers/rates we are all left to speculate. The best info (albeit not perfect) is from VIN assignment numbers. A member of this forum and TM forum has been collecting these numbers, doing some regression analysis, and graphing his results. Using this information (again for what it is worth) production numbers have exceeded 600/week for much of Q3 and approached 700 some weeks.�
Oct 20, 2013
ckessel I suppose it could be the TMC echo chamber, but I've heard multiple times Tesla has been pushing for an annualized run rate of 35000, so 700 a week. The Q2 shareholder letter had some emphasis on removing bottlenecks and investing in production capacity to meet "world wide demand" (that emphasis from the shareholder letter).
I think it goes somewhat hand in hand with Tesla pushing for 25% gross margin. Part of that is cost reduction, but part is efficiency and producing more cars per week off the line is an efficiency increase.�
Oct 20, 2013
bonnie I think quite a few people are being overly optimistic. I'm with DrDave on production targets. As of mid-September, it is my belief they had not yet quite hit 600/week. I have no doubt they will reach their targets -- but I don't believe they are there yet.�
Oct 20, 2013
ckessel True, I guess the question is what is the target? If Tesla wants to sell 40k next year, that requires 800/week so even at 700/week they'd have some non-trivial work to do by year's end.�
Oct 20, 2013
DaveT Bonnie and DrDave - can you share your reasoning (and/or data points) for your 550-600/week estimates at end of Q3?�
Oct 20, 2013
bonnie It's probably not going to be a satisfying answer. It has more to do with gut than any actual data points. (If I had actual data points, someone would be guilty of insider trading.) Years of knowledge of manufacturing ramp up (read 'and associated problems to be worked out as speed picks up') and bits of conversations with various people. To do it right takes time.
To steal a line from a favorite software project mgmt book, "I don't care how many women you put on the job, it still takes 9 months to have a baby." The more people, the more interactions, the more complicated it gets. Build it slowly and it will stay under control. Ramp too quickly and you have a manufacturing line that will crumble at the first problem.
Realistically, they may MAY have hit 600 by the end of the quarter. But I'm willing to bet that they had not by mid-September.�
Oct 20, 2013
redharel where can i find analyst expectation apart from yahoo finance? it seems something went wrong there as i've already seen expectation of 0.11 EPS and 500M+ of revenue and now it looks like the numbers of previous quarter!�
Oct 20, 2013
DrDave +1.�
Oct 20, 2013
DaveT DrDave - can you share your specific reasoning (and/or data points)? I can't imagine they'd be exactly the same as Bonnie's. I just want to seek clarity.�
Oct 20, 2013
DaveT Bonnie - Is there something about "mid-September"?�
Oct 20, 2013
bonnie No, just the point in time that I had a definite opinion about where things were. I doubt two weeks more to EOQ would have made much of a difference.�
Oct 20, 2013
kevin99 By the same token, it is prudent to re-examine the data points for the 700/week or even 800/week by Q4 2013 statement. I did a search on what is been discussed, but have not found a solid source. Most of the number are based on he says, she says or my guesstraplolation. I am all too willing to embrace these impressive numbers, but it can't be just my willingness.�
Oct 20, 2013
tslafan123 This is the latest Musk video I could find. It's from Aug 20, Musk says they are at 500 to 550 per week. Also says he hopes to be above 600 by end of the year and complains about supplier issues.
See from 8min point: EenVandaag Wie is Elon Musk? Full interview 20-08-2013 - YouTube
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Also in the same video from 7min mark, he says, wait time in US will get very long as they are allocating half the production for Europe. It's about 2 months now. I only see S85 go from 2 months waittime to "2-3 months" at the same time S65 dropped from 3months to "2-3 months". What could this mean? US demand is going down??�
Oct 20, 2013
DaveT Weekly production numbers are all too important because they allow us to formulate somewhat accurate quarterly production estimates. That's why anyone sharing weekly production numbers should also back it up with their reasoning in detail. For anyone posting estimated weekly or quarterly production numbers, I'm going to ask for detailed reasoning if not already included.
The 700/week number was something a few people shared several weeks ago. It comes from conversations from store employees. It was also a number brought up in sleepyhead's investnaire article (now removed).
The 800/week number was not for end of 2013 but something Elon mentioned they'd hope to achieve by end of 2014.
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Thanks tslafan123 - I'd say this is probably one of the strongest data points we've got so far for weekly production rates in Q3.�
Oct 20, 2013
Chickenlittle I hadn't heard that before (half us production). The longer European demand I heard resulted In 5 month wait. So I would interpret that as
1. Increased production rate so us only 3 month wait and very large European demand�
Oct 20, 2013
tslafan123 DaveT, How does this change your views on expected deliveries, revenues, eps and thus the stock price? how do you plan on playing the Q3 ER?�
Oct 20, 2013
DaveT If Tesla was really at 500-550/week around Aug 20, I can still see them deliver over 600 cars for Q3 (ie., 12 weeks x 550 avg = 6600 cars produced - 300 cars in transit - 200 cars for loaners/stores = 6100 cars). But this scenario would have required them to have no european cars on the boat at the end of Q3, as the 300 cars in transit would be just U.S.
Also, if they were at 500-550/week around Aug 20, then I would imagine it would be difficult for them to guide more than 35k for 2014. (ie., if they started 2014 at 700 cars and ended 2014 with 900 cars and we count about 48 weeks of production, that would be about 38,400 cars produced. Tesla wouldn't want to over-promise with guidance so they would likely guide for 35k or perhaps even less, depending on how confident they are with their production forecasts for the end of 2014. For example, if they're confident they can ramp to 1000 cars/week by the end of 2014, then they might give higher than 35k guidance but otherwise I think 35k might be the most we can expect if they are forecasting to end 2014 at 900 cars/week.
We know that demand is likely going to be higher than 35k or even 40k for 2014, especially since they will be starting to deliver to Asia. So, if they can't ramp up higher than 1000/week before the end of 2014, then demand will be far greater than supply. But this goes against Elon saying that they want to test the depths of demand in 2014 (I thought I remember him saying in Q2 or Q3 timeframe).
I'm open to Tesla producing more than an average of 550/week in Q3 but haven't seen anything definitive in terms of data points. The 700/week from various store employees is an interesting number but it contradicts Elon's Aug 20th interview. VIN analysis is interesting but it's more of a generalized indicator, but I'd love to see more info with this. I might take some time this week and look at VINs myself and see what I can make out of the data we have.�
Oct 20, 2013
bonnie I'm confused as to why people think that store employees know what is happening on the factory floor. We have countless data points that have demonstrated that the majority of store employees are not well connected to what is happening at the corporate level. I'd go with what Elon publicly stated. Period. As far as the VIN analysis goes, agree that it is interesting data, but to me it's more of an indicator, not a data point (meaning taken with other VIN data from other quarters, will be meaningful as part of a trend). I guess we'll know what is the right answer in a few weeks.�
Oct 20, 2013
ckessel I'm not finding this interview or what he stated in terms of production, do you have a link?�
Oct 20, 2013
bonnie See post #313, above.�
Oct 20, 2013
ckessel Ah, video, I was looking for transcripts and wasn't hitting
8/20 was quite a while ago though, so I'm not sure what it'd imply for today's run rate which is what would guide 2014 guidance and, to a lesser extent, Q4.�
Oct 20, 2013
Convert2013 Expectations should stay as realistic as possible on production rates.. meaning around 600 to 650 per month for now. Information from store employees can no doubt sound exciting (or dull) but should not be included in any analysis. If there is a leak from someone who works in Tesla's production area that would be more believable. If Elon in fact has somehow been able to get to 700 to 800/ week by September 31st we're talking about a tremendous achievement. I mean it still could happen but unlikely. If it happens I think the stock will shoot up significantly as he is executing WAY above expectations and tremendous momentum would return to TSLA with price targets of $300 from various bullish analysts.�
Oct 20, 2013
sleepyhead I find the first sentence in your post to be ironic :wink:
When I asked a Tesla employee if they are producing 700 cars/week, he didn't really say anything just kind of bobbled his head, which I interpreted as "pretty close to 700", but I could not tell if he meant more or less than 700, because it could have been either one.
In any case he clearly said (without me asking him) that they plan on getting to a 800/week run rate in Q4. And I have also heard about that goal somewhere else about 3 or 4 months ago.
I would not use Craig's VIN assignment numbers to extrapolate a production rate for Q3 either, and would caution people from getting too excited about those numbers. I have my own ways of determining how many cars were produced/delivered but I have not had enough time to go through the process.
But I can already tell that at a maximum Tesla produced 7,000 cars in Q3. When I say maximum, I mean that it could be a number anywhere from 5,500 to 7,000; and not higher. I am not saying they actually produced 7,000 or that they came close to it. All I am saying is that I would not be using a production number above 7,000 to determine deliveries like I have seen some people doing.�
Oct 20, 2013
ckessel Agreed. I'm thinking more about future guidance based on an improved run rate rather than a big surprise on Q3 production.�
Oct 20, 2013
DaveT Can anyone confirm if the factory is still currently running 2 shifts? Or if they added a 3rd shift?�
Oct 20, 2013
vgrinshpun I am much less skeptical that the majority on using the information from store employees as a data points. For example, there is an independent evidence that Tesla targets 800/week in Q4, 2013 and not by the end of 2014 as Elon mentioned prior to Q2 ER.
According to Jeff Howell, president of the Panasonic Industrial Devices Sales Company of America �Panasonic views Tesla as a very strategic customer.� He said the company was �committed to supplying and supporting Tesla business with the goal of providing 300 million battery cells by next year.� (see NYT Wheels Blog Article linked below)
According to report from Global Times linked below: "The electronics maker will resume operation of idled lines at the Suminoe Plant in Osaka Prefecture, which produces batteries for US automaker Tesla Motors Inc., as early as next January" Theses idled lines comprise Phase I of Suminoe plant which was built to produce 300 million cells per year - see the third link below
Since 300 million cells is enough to build more than 42,000 85kWh Model S, Tesla is set to achieve more than 800 cars/week production in Q4, as not all of the cars will be built with an 85kWh battery. This also means that target for for 2014 is at least 42,000 cars
Regarding the Craig's data on VIN assignment rates, I think that average rate for Q3 was above 600 cars/week. Review of the deliveries threads show that there was no increase wait time during the Q3. This could mean only one thing: that production rate kept pace with the rate of VIN assignment, i.e. on average, production was above 600 cars/week in Q3.
http://wheels.blogs.nytimes.com/2013/09/06/as-it-increases-production-tesla-worries-about-battery-supply/?_r=0
Panasonic to increase lithium-ion battery production capacity - BUSINESS - Globaltimes.cn
Panasonic's New Lithium-Ion Battery Plant to Start Mass Production Next Month | Headquarters News | Panasonic Global�
Oct 20, 2013
blakegallagher Thank you for this. Your analysis has long been top tier and once again has strengthened my own conviction about the upcoming quarter / Next year ! Thanks
Would like to include Julian's post below in my thanks�
Oct 20, 2013
Julian Cox IMO there are a couple of simple points worth noting.
Q2 Q&A left the total Q2 production figure unresolved.
We know production was already hitting 550 per week in June i.e. c6600 quarterly run rate vs c 5100 announced sales. (Musk's 8th August figure is a well-rehearsed reiteration of last known public data point, nothing more).
It would be extremely surprising if the delivered production from a standing start did not exceed 6600, but it was not a standing start owing to the carry over from Q2 on its way to Europe. I believe we can count on a 500 to 1000 one-time carry over that does not feature in any bearish estimates, and barely features in bullish estimates either. Just looking at a linear ramp from 550 to 600 units weekly across Q3 we are looking at 7500~8000 units sold in Q3 Non-GAAP with greater than 85% sold GAAP (6375~6800 units direct to bottom line) of which a higher than normal % will be Euro Sigs. It will be a monumental blow-out quarter at most likely north of 21% gross margin and both GAAP and Non-GAAP profitability assured per guidance.
Note the disciplined rate of supercharger roll outs and store/service center openings.
My greatest concern for Q3 was that the pattern of silence and surprise seen in Q1 and Q2 would be anticipated and factored into the stock price in advance. Given the overburden of nonsense about valuation* against a background of political distraction in Washington, it is not. The element of surprise is very much alive and well for Q3 earnings.
*By nonsense, there is no such thing as "overvalued", there is only overvaluation by comparison to something similar and readily available cheaper elsewhere. There is no other company on this scale that is simultaneously both profitable and in unchallenged hyper-growth for the foreseeable future. Definitely not in the auto industry where if anything (autopilot) Tesla is actually expanding its technological lead, and consolidating its contractual strangle hold on the global supply of suitable batteries for the mass production of cost-effective EVs.
Note also to paraphrase almost precisely from a previous interview with Elon Musk. "We will be looking to test the limits of demand in 2014'. 300 M cells from Panasonic plus Samsung readying to come on stream, plus LG, plus the possibility of BYD - the latter no doubt required to overcome import restrictions to China by installing 50% of the base cost of manufacture with Chinese components (the battery pack). It is fair to say that the lowly 800 p/w by end 2014 and the well rehearsed whining about supply constraint that was clearly on its way to being well in hand was a set up to lure in the shorts for yet another total pounding. 800 p/w straight off the bat in January would be the sort of commitment traded with Panasonic in return for bringing cell production plants on stream and locking down exclusivity of supply, not just with Panasonic but a route to exclusivity across all four of the main suppliers. It also makes some sense of the efforts to expand geographic sales territories in advance of what will obviously be a very big push indeed in 2014.�
Oct 20, 2013
StapleGun I like data point, and hopefully Samsung will be supplying a non-trivial amount of batteries before the end of the year as well. I think Tesla's internal goals are much higher than 40k. Looking short-term though that data is too speculative to really affect the price unless Tesla officially guides for those kind of numbers on the ER.�
Oct 20, 2013
DaveT Julian - How do we/you know production was 550/week in June? (I thought we were under 500/week in June.)
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The phrase "by next year" can be interpreted as:
1. 300m cells delivered by [the beginning of] 2014.
2. 300m cells delivered by [the end of] 2014
* I think #2 is the more plausible explanation.
The "300m battery cells" goal can be interpreted as a cumulative goal (ie., since 2012) or as an annual goal (ie., 300m in 2014).
I'm not following you here. Can you explain? When are you figuring the 300m cells to be delivered by - end of 2013 or end of 2014?�
Oct 21, 2013
justdoit I have definitely noticed this. I was really surprised when I heard about the Palo Alto store opening because just a week before I was driving down El Camino in the Sunnyvale area and saw a building that had two Tesla's parked out front and with a banner that had the Tesla logo and said "Coming Soon". For those that know the area, Sunnyvale is maybe only 10-15 miles south from Palo Alto. Not to mention there already is a Tesla store in Santa Clara (Santana Row) which is less than 10 miles south of Sunnyvale. Also, the location of the store was right in the heart of where all the other dealerships where (Toyota, GM, etc). So just in this 25 mile strip along El Camino there will be 3 Tesla stores! This will definitely be testing the depths of demand here in the Bay Area.�
Oct 21, 2013
Julian Cox Just to clarify, I wrote "550 per week in June i.e. c6600 quarterly run rate", meaning reaching 550p/w by end of June (convert that into a "quarter-ized" run rate and you get c6600). Looking backwards over Q2 that number was reached from a starting point of around 400, but looking forward across Q3 it would seem fair that 550p/w can be treated as a starting point and as a minimum. Production may well have averaged 600p/w or sloped in some other pattern to 600 or perhaps 700 depending on the weight given to the evidence for that. Personally I think that is quite likely, nevertheless starting at a wholly reliable 550pw in Q3 and going level or anywhere up from there is sufficient to look forward to Q3 results the trigger for another squeeze when adding Q2 carry over to go north of 7000+profits+>20gross + GAAP & Non-GAAP profits. If the figure turns out to be 7500~8000+ then the only question is the scale of the carnage.�
Oct 21, 2013
DonPedro I think we have to face that fact that we are not able to predict the production in this quarter with any accuracy. I have tried to look back through this thread to see what I could find of original data points or analysis, rather than just echo:
VIN assignment
This method is actually very clever. It assumes that although Tesla have been intentionally skipping back and forth in the VINs to throw off any analysis, they will still over time be assigning VINs at a pace that corresponds to production. So rather than tracking the VINs themselves, it tracks the number of people who get VINs assigned. Having said that, Q3 assignment rates are clearly higher than production, because many EU customers got VINs assigned for production way into the future, while that was not the case in Q2. The method may become more accurate in Q4. As an indication of the lack of accuracy, the VIN assignment rate was actually falling recently. At best the rate could be used as a ceiling for Q3. The rate has been 728 VINs per week over the past two months. (Source: http://www.teslamotors.com/forum/forums/new-vin-thread-please-post-your-newly-assigned-vins-here)
Max VINs produced/delivered
Several contributors have posted analyses based on tracking VINs that have been produced or delivered. I am not including these, due to my complete conviction that this is an inherently unreliable method. I am waiting for delivery of my car in early December, and higher VINs than mine have been delivered long ago. Many others are in the same situation. q.e.d.
Aug 20 video
This: http://www.youtube.com/watch?v=TMYmSuicTXE
Elon says "Now we are at around 500 to 550 a week". Assuming this is the average for the quarter, this means a production of 5,900-6,490 cars. Taking into account that they are generally sandbagging in good times, maybe go with the higher number of ~6,500?
Note that although the video was posted on Aug 20, it is unclear when it was recorded.
Employee chatter and rumors
2pearls: "I Have heard from an informed source that they are presently manufacturing 700+ cars per week. 500 for US and 200 for Europe. Has anyone else heard this or taken a tour to see what they are manufacturing?"
brianstorms: "I went on a 1300-mile drive up to Northern CA and along the way spoke to various Tesla employees who I asked about the 700+ week figure and they pretty much confirmed that that is what the factory is up to"
Sleepyhead: "I have my own ways of determining how many cars were produced/delivered but I have not had enough time to go through the process. But I can already tell that at a maximum Tesla produced 7,000 cars in Q3. When I say maximum, I mean that it could be a number anywhere from 5,500 to 7,000"
New analysis from me:
Exponential extrapolation
Just a simple exercise of mine. Q1 shareholder letter says they built "more than" 5000 cars in that quarter. A report on this forum cites a congratulatory sign at the factory reporting 5454 cars in Q2. There were 60 working days in Q1, which means 83.3 cars/working day assuming the 5000 figure. In Q2 there were 58 work days, taking into account the week they closed the factory. This gives 94.0 cars per working day, an increase of 12.8%. Assuming they were able to do 12.8% again in Q3, their daily production would be 106.1 cars/working day. Based on 59 working days (taking into account one week off for the factory), this would give a Q3 production of 6,258 cars.
One could wonder whether the recall depressed production. However, seeing that they reported the cost at only $150,000 and that the cars were fixed at service centers I don't think there was any significant impact.
Conclusion: Taking the above together, I feel that we are going to be in the 6,500-6,900 range, going for a middle estimate of 6,700. It is tempting to put a higher figure based on the employee chatter/rumors, but this data feels like an outlier that must be disregarded. At the same time, the video gives me confidence of at least 6,500.
A summary of the firm predictions of others that I could find:
DaveT: 6600
Sleepy: 5500-7000 (said 6000 in a post in early September)
Vgrinshpun: >7080 (>600/week)
Julian Cox: >6600
Convert: 7340-7930
DrDave: 6490-7080 "at best" (550-600 at best)
Clprenz: 7,750
bonnie, Kevin99 and others: No firm prediction, but expressing a feeling that others are too optimistic
To discuss the other items that go into the analysis of deliveries:
Increase in inventory of loaners and showroom cars: I cannot see how this would not be higher than zero. The word at end of Q2 was that all loaners had been sold off, and they have opened new showrooms. On the other hand, they seem to be pushing hard to maximize Q3 numbers and there are rumors of low stock of loaners also now. I will guesstimate an increase in the inventory of some 150 cars.
Increase in cars-in-transit to delivery: Some (Julian Cox I think) have claimed that cars-in-transit was high at the start of the quarter. I do not have hard data, but here in the biggest EU market there were few reports of deliveries prior to Aug 15. In the Netherlands and Switzerland, the total for July and August was 51, and many of those cars would have been produced in July. I will guesstimate the ingoing inventory at 100. Outgoing is going to be lower than expected, based on a data point of an 80% drop in the rate of new registrations of Model S in Norway from September to October. Guesstimate: 500-700 cars outgoing, will assume 600. The increase would then be 500.
Unless the train crash killed a significant number of cars, Q3 deliveries would then be 6,700-150-500 = 6,050.
----
EDIT: The more I think about it, the more I think this estimate should not be considered pessimistic in any way. They key question that is going through my head is: "Why would they drop EU deliveries almost to zero in October, and then ramp them up wildly afterwards?". The effect of doing so is boosting Q3 at the expense of Q4 (and some logistics disruptions). If they were beating Q3 massively, there would be no reason to do so.
EDIT2: Felt that a sensitivity analysis would be in order. So here goes:
Pessimistic: 6,200-150-600 = 5,450
Optimistic: 6,900-50-400 = 6,450
Assumptions for pessimistic scenario: 525 cars/week (the middle of the 500-550 cited by Elon in the Aug 20 video). 150 net new non-delivery cars. 700 cars in transit to Europe at end-of-quarter, 100 at beginning.
Assumptions for optimistic scenario: 585 cars/week (an increase of 26.5% on previous quarter, as compared to the 12.8% they managed in Q2). Only 50 non-delivery cars (incl. train wreck). 500 cars in transit to EU after quarter, 100 before.
My gut feeling is that the optimistic scenario is really a stretch. The pessimistic scenario, on the other hand, still implies a similar quarter on quarter increase in production than they managed in Q2 (of whice they were justly proud).�
Oct 21, 2013
Julian Cox
There is no -150-500 without a corresponding 500+ carry over from Q2 to Europe for delivery in Q3.
There has only been one break in the delivery chain and that was the one that depressed the results in Q2 to only as good as they were. There seems to be some strange resistance to accepting this obvious point nevertheless this is the key point that I am trying to get home.�
Oct 21, 2013
DonPedro Am I understanding you right that you are claiming that there were 500 cars on their way to Europe at the end of Q2? I would challenge you to come up with some sort of support for that assertion. EU deliveries in July and the first half of August were virtually zero. As you will see in my post, I have assumed that the cars-in-transit were 100 at the end of Q2. I think that this figure might even be on the high side.
UPDATE: I now have the confirmed numbers of registrations. In July and August, there were 190 Model S registered in Norway, 45 in Switzerland and 6 in the Netherlands. Of these, only a handful were registered in July (5 in Norway, 1 in the Netherlands etc.), and those were probably demo cars. From the delivery reports on the Norwegian forum and the EU Delieveries thread here on TMC, it is my very clear impression that most of there 241 cars were delivered at the end of August and beginning of September. That makes them July production.
Given that people saw shipping-ready EU-bound cars at factory visits in June, we know that the carry over is not zero. Based on the figures cited above, we also know that it was far below 241. I think the 100 I used in my post is probably a spot on estimate.�
Oct 21, 2013
Mario Kadastik I think the registration data in EU shows that the number of EU cars in transit cannot be more than ~100-150 cars because those would have been registered in July-August timeframe and there is close to no registration data from July and the registrations in August are smallish. The true hit in EU came in late August/September that would be actually cars produced in Q3.
I think also that the outgoing rate will not be too high, but the 500 outgoing cars for early EU deliveries in Q4 is about the right ballpark so I do agree with the reduction in DonPedros post. There might be a bit larger outgoing rate if the October registrations in central EU region are higher by far (we know in Norway the October numbers will be minuscule), but I'd not put it beyond 500 much.
And I have to say the logic in DonPedros assumptions does give a good baseline. It can be more optimistic, but it presents in my opinion a realistic view. My own tracked excel table shows ca 6500 registrations in US+EU for what I was able to find, but it's dominated by the US numbers which have to be taken with a grain of salt due to some discrepancy in numbers between July and August that made me derive some of the numbers. It surprisingly gave me Aug and Sep numbers to be the same. Also I'm missing some September numbers i.e. Switzerland and France so all-in-all I'd put the number of delivered cars to 6500 with about a 10% as one standard deviation giving 5850-7150 as the 68% probability range.
Edit: link to my google docs: Google Docs - Online documents, spreadsheets, presentations, surveys, file storage and more�
Oct 21, 2013
Benz One of the most interesting points that I am looking forward to hear Elon Musk speak about (during the Q3 2013 Earnings Conference Call) is his view on the current "production constraints" situation. During the Q2 2013 Earnings Conference Call in August 2013 he mentioned that they would have solved those "production constraints" issues in Q2 2014, but I personally think that they can have them solved sooner. Therefore, I would like to hear is current view on this situation.
If they will have solved them before the start of 2014, then the total number of Model S sales in 2014 will be at least 40,000 (even a total of 50,000 would be realistic prediction).�
Oct 21, 2013
vgrinshpun #2 is not plausible because of the earlier report by Panasonic that cumulative deliveries by end of June 2013 were 100 million cells. Assuming that end of 2014 cumulative deliveries would be 300 million cells yields total of (300m-100m)/7104=28,153 85kWh cars over 6 quarters, or average of 391 cars/week - impossibly low production. Assuming that end of 2013 deliveries would be 300 million cells yields total of 28,153 85kWh cars over 2 quarters, or average of 1,173 cars/week in Q3-Q4 2013 - impossibly high production.
This is why I interpret 300 million cells as an annual production rate at the end of 2013.
http://news.panasonic.net/archives/2013/0612_22989.html
- - - Updated - - -
300m cells is the annual run rate at the end of 2013, this is the only way I can make three links provided in my original post be accurate at the same time. Considering that this also matches what Sleepy reported learning from the conversation with store employee (800 cars/week in Q4), I think that is proven beyond reasonable doubt that Tesla is set to achieve annual rate of at least 42,000 cars in Q4 2013.
This also means that guidance for 2014 will be at least 42,000 cars, and production likely be considerably higher.�
Oct 21, 2013
RationalOptimist Great, thoughtful post, DP. Too much pre-earnings froth may come back and bite us all.�
Oct 21, 2013
Mario Kadastik I think your data points and most of the analysis is correct, but the guidance you draw is not. Yes Tesla internal goal for 2014 is most likely going to be > 42k cars, but the guidance in Q3 and Q4 ER will be way smaller. Remember the underpromise-overdeliver part. I think they will guide ~35k-37k range for 2014 and slowly revise that upwards over the 2014 FY ERs.�
Oct 21, 2013
vgrinshpun I do not think Tesla would guide to less than 40,000 cars in 2014 because it will contradict the information available from Panasonic. I have a feeling that few thoughtful and diligent analysts that do ask the questions during the ER calls would likely challenge Tesla during the call if their official guidance will be lower. In fact I might ask this question if none of the analysts will be up to it. :smile:�
Oct 21, 2013
Benz Maybe it's yet a bit too early (because up to now we only have figures of 4 quarterly earnings reports) but we could start a graph that shows the rise of the number of deliveries of the Tesla Model S per quarter that already has been realised/reported. And besides of that line we could also add a line (of a different colour) in the same graph that shows a certain "to be expected" prediction of the number of deliveries of the Tesla Model S per quarter that still have to be realised/reported.
Realised/Reported:
Q3 2012: 250
Q4 2012: 2,400
Q1 2013: 4,950
Q2 2013: 5,150
Yet to be realised/reported:
Q3 2013: 6,500?
Q4 2013: 8,500?
Q1 2014: 10,000?
Q2 2014: 12,000?
This graph could then be updated after every earnings report.
I wonder if there is a demand for such a graph anyway. It's just an idea.�
Oct 21, 2013
sleepyhead Great post DonPedro. Now that you made a couple of "edits", I am inclined to agree with you completely.
I just wanted to point out that when I said 7,000 max, I was referring to number of cars produced. I agree with you that you have to subtract -150 and -500 (give or take), which means that in my opinion there is less than a 1% we exceed 6,350 delivered. Some people are talking like 6,500 is a done deal and I would be careful using that number when deciding which options to purchase (if you are into that stuff, and a lot of people are on this forum).
I have not had the time to run the numbers, so that 6,350 is likely to go down from here and end up closer to my original estimate from September (that DonPedro pointed out) of 6,000 delivered.
If Tesla did deliver 6,500 cars then it would be a 30% beat vs. guidance and imo they would have to preannounce earnings. I actually bought some options to play this potential preannouncement, but have sold them since it didn't materialize. If they were to do a preannouncement, it would have been done by last week. I think that we are getting too close to earnings to do it now.
Even at 6,000 delivered, that is still a 20% beat and on the border of preannouncement territory.
One data point that we do have is the Deutsche Bank expectations that Tesla will hit a 600/week production run rate by the end of the year. I quickly dismissed this, since DB also said that deliveries in Q3 will be similar to Q2; and we all know that they will be at least 10% higher.
But from my experience working as an analyst, I know that these analysts have access to management and inside information (this is inevitable and as much as the SEC wants to level the playing field, simply talking to Elon gives you some kind of edge and inside information; that is why these analysts can't trade the stocks they cover). Therefore, maybe this analyst knows something that we don't. Since DB is the most bullish analyst (sorry Wedbush, nobody cares...), companies tend to give these guys the best information. Not saying that is what Elon does, but it is just human nature to supply the most bullish analyst with the best info.
On a different note, I passed along info that I have heard from multiple sources that Tesla is aiming for 800/week production by end of 2013. I first heard this 3 or 4 months ago and these are just unsubstantiated rumors that could have come from the same source. I am just passing along this information since people always ask for things like this and that is the whole benefit of having this community - to share any and all information.
It is up to each individual to weed out the bad information from the good.
As I pointed out already, I am about 98% in solar right now and only have a couple minor TSLA bull call spreads, as well as 1 share of TSLA. My main focus right now is on solar, because I personally like that risk/reward (a lot) better. I still think that TSLA is a great long term investment and that the stock will double again by the end of next year, but I am not heavily invested as some people here so please do your due diligence before making investment decisions based on rumors.
I think that we are getting close to a period where buying shares and LEAPS is the best way to play TSLA. Short-term options to "play" the earnings are going to be hit or miss. I still think that we will have a great Q3 and the stock will pop 10%, but that is not enough to make good gains on options vs. the amount of risk you are taking. That said, I will probably buy a couple of Nov calls before earnings, but I will do it more for the adrenaline rush this time than to make a lot of money. It is not as easy anymore as it was during Q1.�
Oct 21, 2013
DonPedro I totally agree, Sleepyhead, although I think Q3 will be strong enough for a short term adventure.
Here is my projection (non-GAAP):
About the assumptions:
Cars and CARB credits 6000 cars x $105k ASP 630 000 ZEV credits Guesstimate 25 000 Development services Guesstimate 1 000 Total revenues
656 000
Gross profit 20% GM ex. ZEV 157 510
R&D expenses
41 000 Selling, G&A expenses
60 000
Net income
56 510 Net income/share
0.47
- 6000 cars delivered: See previous post
- $105k ASP: I am going to go for a very strong number here, due to EU sigs and high specced cars. Q1 was $98.4k and Q2 was $97.3k (dropped due to S60s coming into production big time)
- ZEV credits: Was $68M in Q1 and $51M in Q2. Has been guided to zero in Q4. Lacking other data I assume $25M. The bottom line is highly sensitive to this assumption
- Dev't services: Were $6.6M in Q1 and $3.6M in Q2. $1M feels right based on that trend.
- 20% gross margin excl. ZEV credits. Development in recent quarters is -3% ---> 6% ---> 14%. Guided to 25% in Q4. Seems reasonable that they would improve 6% in Q3 and 5% in Q4.
- R&D expenses: Recent quarters: $68M ---> $47M ---> $44M. $41M sounds right.
- Selling and G&A: Recent quarters: $31M ---> $41M ---> $50M. Given continued rapid expansion of stores, service centers and superchargers, $60M sounds right.
PS: Note how sensitive the Net Income is to ZEV credits. If you set them to zero, then almost half the projected earnings are gone. If you set them to Q2 levels, you increase projected earnings almost by half.�
Oct 21, 2013
JRP3 So if Tesla beats estimates by a large enough margin they are required to notify early?�
Oct 21, 2013
sleepyhead I don't think there is a requirement. Companies do it because they want the stock price to have a chance to catch up to fundamentals.
When the preannouncement is because of bad earnings, the companies tend to spill all the beans up front. When the preannouncement is good, the companies only tend to give half of the information, such as TSLA during Q1 or SOL during Q2, so that leaves them more ammo for the actual earnings call.
Companies preannounce for transparency reasons and are not required to do so. At least this is my understanding.�
Oct 21, 2013
brianstorms FYI DonPetrol, I am "brianstorms" not "briansman"�
Oct 21, 2013
DonPedro LOL, sorry. I will update to ensure further errors.�
Oct 21, 2013
ckessel Well, the relation of Tesla's stock price and classic stock fundamentals is pretty tenuous anyway�
Oct 21, 2013
fjm9898 Don I just want to point out the train wreck. If Cars were written off due to the wreck Tesla would still get the money for those cars via insurance. Now of course we have no way of knowing when Tesla would receive the insurance check, but you cant say those cars disappear, they will be realized when the Insurance check clears.
The torn in my side is the level of EU cars from Q2 realized in Q3 and the number for cars in transit at the end of Q3. I am real curious to know these numbers. We can get a good idea on the out going of Q2. With 800 just in Norway we could assume Tesla batched roughly 1000 cars for the EU. Its hard to figure out timing but lets just make it 600 for rounding reasons. 600 + the 5150 = 5750 cars for Q2. 5750* your 12.8% would be 6486 produced for Q3. Assuming the outgoing to EU in Q2 to be realized in Q3 vs the outgoing in Q3 to be in Q4 to be the same amount of cars. So your increase of 12.8% nearly directly matches my 6500 number for the quarter, if i am correct and we had 600 in transit to the EU at end of Q2. Anyone have a more accurate number for in transit Q2?
I think your 105k ASP is a bit high. S60s are still being sold here in the US so it would drag on the high ASP cars in the EU. But we also have the price increases for options. I would venture a guess the ASP at just at or under 100k.�
Oct 21, 2013
vgrinshpun I had my VIN assigned in Q2 (June 09) and was following various threads on this Forum pretty closely at that time. My long standing conclusion based on information gleaned from various posts was that there were indeed large blocks of European VINs assigned during the Q2. I think that your main premise for dismissing VIN assignment=Production during Q3 is not accurate. Since there were large number of VINs for European deliveries assigned prior to Q3, this pipe was already primed, so to speak.
I need to do little more research to provide exhaustive data confirming my conclusion, but here is quick link to your own post indicating assignment of european VINs in Q2: :smile:
http://www.teslamotorsclub.com/showthread.php/17598-2Q-2013-Model-S-Deliveries-Potential-Surprise?p=361116&viewfull=1#post361116
Could clarify why you think that there were no European VINs assigned in Q2?�
Oct 21, 2013
DonPedro You are right of course, except it is unclear whether the insurance would cover the sales price (which would give Tesla a margin on the cars), or whether it would cover the production cost (which wouldn't). However, I think we can assume that the number of cars was very limited (a few dozen at most), so this is not really important anyway.
I believe you are way out in the woods on this one. It takes about 45-50 days from the end of production and until a car is delivered in Europe. This means that the carry-over would be delivered in July and the first half of August. The first Model S was delivered in Norway on August 7 and in the Netherlands on August 22. This shows clearly how late in June they started production for the EU, and how few cars that really meant. By the end of August, 186 had been registered in Norway, 6 in the Netherlands and 45 in Switzerland, for a grand total of 237. That is the absolute maximum possible figure for the carry-over. Most of these deliveries were made in the last week of August, and I think those cars were produced in early July. Furthermore, some of these cars would be showroom cars and loaners. Therefore I have assumed that the carry-over was 100 cars. If I am wrong, it could be 150, 200 or even 250. But certainly not more than that.
There is a factory visit report that refers to a sign celebrating 5,454 cars produced in Q2. That is quite consistent with what I wrote above.
Quite possible. The ASP feels like the most bullish of my assumptions. However, there was a surge of S60s in Q2, since that is when they started production. Now it should be more "averaged out". And I can sure tell you that Norwegian cars are very high specced - maybe 50% P80s and many of those P80+, and most people taking a significant portion of the upgrades. To some extent this is likely to be the same in the rest of Europe. I am very confident that we will be above the $98k from Q1. In my initial analysis I put $103k - maybe that is a good assumption.�
Oct 21, 2013
fjm9898 Good point on the carry over. Thanks for clearing that up for me. That is the one thing I had not taken the time to investigate closely.
It will be interesting to see what kind of carry over from Q3 to Q4 there will be. If they plan on keeping it love to keep ER numbers up.
As citizen t pointed out guidance is going to be key. Since we have reports of 700 a week production, no factual eveidence though, if it turns out those production constraints have been cleared up and Tesla can guide for 700 a week in Q4, this would be awesome.�
Oct 21, 2013
DonPedro I didn't say "no European VINs", i said "not many". But I didn't state my point clearly, so I will restate it: When we are looking at production rates for a quarter, we want to get to a number that is a few hundred cars away from what the actual production is. That means that, for VINs to be a useful metric, the number of pre-assigned VINs at the start of each quarter would have to vary by at most a few hundred. There is no reason to believe it is that stable. Between any two quarters, the number of pre-assigned VINs could for instance increase by 1000 or decrease by 1000 - we would not be able to tell. That means there could be a 2000 cars margin of error to a prediction based on VINs.
In fact, I think it is a reasonable assumption that Tesla started the practice of pre-allocating VINs with the exact purpose of obscuring this information. (Why else would they assign VINs more or less at random - some people get them assigned a few weeks in advance, others many months, some cars get produced together for which VINs were allocated at wildly different times, and nobody has been able to find any system or logic to the assignments). As long as it is likely that Tesla is intentionally obscuring the VIN count, there is every reason to believe that the metric has little information value.
UPDATE: Just for the fun of it I read the first posts of the thread that emerged when the first batch of VINs was assigned in the EU (June 12). One of the first guys who posted his VIN then has not yet got his car. On the other hand, many sigs who were expecting to be first in line did not get VINs assigned for a long time. One of them wrote to Tesla to ask why, and got the following response (my translation and emphasis):
�
Oct 21, 2013
maekuz I updated my numbers (car registrations for Q 3 per country). Some explanations:
- US numbers for august and september are supposedly registration data from Polk (although i am not 100% sure).
- Sweden and France are missing direct data sources and i think these numbers might be a bit on the low side
- these are car registrations and therefore these should be deliveries in Tesla's books (non-GAAP), but maybe there are reasons for Tesla to discount some of these deliveries (although i cant think of one)
EDIT: Some show cars and loaners probably should be subtracted since they are registered but not sold/delivered.�
Oct 21, 2013
tslafan123 This is a quote from Deutsche Bank report released on 18 Sep 2013.
"Finally, we believe that the production rate continues to rise, as Tesla breaks supply chain bottlenecks. We expect that Tesla will achieve its 600/week 2013YE target sometime in Q4. Despite the production increase, we believe that deliveries will be similar to Q2 (as Tesla guided to) because vehicles in-transit to Europe will be substantially higher at the end of Q3 than the end of Q2."�
Oct 21, 2013
RobotGrease If I recall correctly, you were very accurate in using this methodology last quarter. Do I remember correctly? Has anything changed in the reliability of your info/method? If not, this (~6600 deliveries) is pretty bullish for Q3.�
Oct 21, 2013
maekuz
Last time i used the VIN-based method. This time its car registrations. I would think this method is a more accurate one but to be honest 6600 deliveries seems pretty bullish to me as well.
I think i found the flaw: Show cars and loaners are registered as well but they dont count as deliveries. On the other hand: Most loaners have been sold at the end of the quarter according to the rumor mill.
Oh well...back to work. I have to come up with a number for these.�
Oct 21, 2013
RobotGrease Thanks for the clarification. A couple comments: looks like your numbers for July and August for US vary slightly from the sources. Also, cant find your source for US September in the link. Thanks!�
Oct 21, 2013
maekuz Thanks! You are correct, the number for july is slightly too low:
US July: 1470
US August: 2120 (see the video in the link at 4:24)
US September: 1689 (see the video in the link at 0:54)�
Oct 21, 2013
fjm9898 Awesome work. Thanks for taking the time to put this together.�
Oct 21, 2013
tslafan123 Appreciate your good work!�
Oct 21, 2013
DonPedro Very interesting work, Maekuz. I tried to dig into the source of the US figures. It is a consultancy called Ward's Auto. However, even after searching their site it is unclear how they have arrived at these numbers. I would guess that this would mean that these are registration numbers? Hopefully they are "clean numbers", i.e. individually verified. Sometimes consultancies do funny stuff to numbers - for instance they could have access to numbers for some states/countries and not others, and "correct" them by applying a factor to take into account the unknown territories.
You are coming up with estimates that are definitively higher than mine above. That is comforting, as I already feel that Tesla are doing well based on my own numbers.�
Oct 21, 2013
maekuz The data by WardsAuto is certainly a weak part. Rumor has it that WardsAuto get their numbers from Polk and Polk is known to rely on registration data. But thats about it. I would classify the US numbers as an indication. Its a guesstimate and it feels like WardsAuto (or Polk) are a bit more accurate than the Autodata numbers.�
Oct 21, 2013
DonPedro I guess the Q3 report will tell us a lot about the quality, since the European data should be quite accurate (except for including some loaners and showroom cars, which should be a relatively low number - I guesstimate we are talking ~20 cars in Norway, so maybe 50-60 cars for all of EU?).�
Oct 21, 2013
Mario Kadastik So another data point for guidance numbers. According to the Munich event (11/20 Munich Tesla Event with Elon Musk) Elon's made now an official statement that battery commitment is there for up to 1200 cars / week production.
Assuming we enter 2014 with 650 cars / week (i.e. end of Q4) for pessimistic estimates and finish the year with 1200 cars / week with linear increase (each month the rate is increased by 50) we get 8400 cars in Q1, 10200 in Q2, 12000 in Q3 and 13800 in Q4 with total 44.4k.
Doing the same math, but assuming that the first half we increase the weekly rate every other month with third quarter increasing it every month and final quarter doubling the rate so somewhat a parabolic increase over the year we get to 8k in Q1, 8.8k in Q2, 10.2k in Q3 and 13.2k in Q4 with total 40.2k.
And now the reverse of the previous one with the parabolic rise happening early on (the most optimistic estimate) we get 9k in Q1, 11.4k in Q2, 12.8k in Q3 and 14k in Q4 for a total of 47.2k.
So just assuming various ramp-up speeds from 650 / week to 1200 / week we can get total FY2014 guidance between 40k-47k. Of course Panasonic having capacity for 1200 cars / week might not mean that we'll actually hit that number end of 2014 so take this as a mental exercise to give a ballpark measure.�
Oct 21, 2013
Wenche With regards to the decrease in Norwegian deliveries, I have another theory, that I would like to share.
I�m wondering if this �drop� in deliveries for Norway in October, has something to do with the new plant in the Netherlands that opened on the 22.ndAugust. The big rush in Norwegian deliveries was in late August and September, and then it became more silent. As you all know the cars to the Norwegian market are delivered directly to Norway, because we are not a �real� EU member. I expect it was as simple, as there was a need to fill up the plant in the Netherlands with enough cars to keep the workers busy, and simultaneously getting the deliveries out to please EU signature and early reservation holders, which leads to fewer deliveries in Norway.
Cut from Tesla�shomepages:
�With a size of 18.900 square meters, this new state-of-the-art facility iswell prepared to receive the brand new Model S which is shipped over from the US.Having crossed the ocean and reached Europe, Model S arrives at the Tilburg plant for finalassembly before being delivered across the continent.�
Just my thoughts about the decrease in Norwegian deliveries. Any thoughts?�
Oct 21, 2013
DaveT Julian - I'm quite confident that Tesla did not enter Q3 at over 500 cars/week. In Q2, they most likely produced 5450 cars. There were 13 weeks of production in Q2. So 5450 divided by 13 = 419 cars/week avg in Q2. They started Q2 likely at slightly below 400/week and probably ended Q2 at 480/week at the most IMO. So I think using 550/week as a starting number for Q3 would not be accurate.
I'm also growing more convinced that Tesla did not reach 600 cars/week by end of Q3 (ie., DB report, Elon statements, and other).
There were also only 12 weeks of production (because first week of July was vacation for the factory).
So if Tesla started Q3 at 480/week and ended at 570/week, then the avg would be 525/week x 12 weeks = 6300 cars produced.
For cars delivered, I'm thinking of subtracting 500-600 cars for transit, loaners and store cars.
So, Q3 cars sold might be 5700-5800.
- - - Updated - - -
I think Tesla stopped delivery of European cars starting last week of August (or so) until the end of September so they could reserve all the cars produced during that time for U.S. customers to minimize time of transit and insure no (or little) cars were on the boat to Europe at end of Q3. Considering transit time, I would think actual deliveries to Europe in October would be very, very small. (Can someone in Europe confirm if October deliveries are minimal?)
I also think they restarted European shipments at the first week of October, so that we'll see another big increase in European deliveries starting November.�
Oct 21, 2013
AlMc DaveT, As always, I, like others, always appreciate your input. Maekuz, did a nice analysis of registrations in the US and Europe for Q3 and comes up with a number of deliveries that exceeds your prediction by roughly 1,000. I claim no special insight and based on VIN assignments I believe the delivery total will be over 6,000 and perhaps even 6,500. Can you give us your reasons for not embracing Maekuz's numbers?
Thanks Al�
Oct 21, 2013
Johann Koeber Elon did say in Munich that the production is restrained by the parts situation. As an example he mentioned the batteries.
He also said his time at Tesla is split between ramping up production and designing model X.
My impression ist that he really is pushing hard to ramp up production, because all the cars Tesla can sell help improve the bottom line. This will be used to fund future developement and grow the company.�
Oct 21, 2013
MikeC They take a week off every quarter, including the first week of April, IIRC. So 5450/12 = 454 car average. Also, I remember at least 2 people that took factory tours in June that reported ~540/week. There was also the Kimbal Musk tweet from 6/5/13 saying 80 cars per day, but I'm not sure if that is a 5 or 6 day week.�
Oct 21, 2013
DaveT Do you have a link to the 540/week from 2 people on factory tours in June?
The tweet from Kimbal Musk could mean that Tesla was making 40 cars/shift (total 80 cars/day). 5 day work week (which I thought they were doing) would be 400 cars/week. 6 day would be 480 cars/week.
- - - Updated - - -
I appreciate Maekuz' work. I do have doubts on the actual data behind the numbers because it not available in "first data" form. Meaning, if we could see the actual registration data (for all states) then that would be a legitimate "first data" point. As it stands, the registration data that we have from the links in the Excel sheet is more of a "second data" point. Meaning, the sources aren't showing us the actual data but just giving us a summary number (ie., # registrations for a month). But we don't know exactly how they came up with that number as we're not privy to the actual hard data.
This is why I think while registration data like Maekuz' can be helpful in some ways, it's not the best way to gauge an accurate prediction of the actual # cars delivered in Q2. But if we can verify the actual hard data, then the registration data could be very accurate. So, I guess it's a matter of how the source collected and analyzed the data which we don't know and can't confirm the actual numbers.
In terms of "first data", VINs are a "first data" point because they're the actual hard data from users. (One of the problems with VINs is that delivery can happen 1-3 months after, or even longer if in Europe so it's difficult to use VINs to get an accurate # of actual deliveries in Q3.)
I also consider interviews from Elon Musk (or other management) as "first data" points as well. This is why his interviews in August stating they were slightly over 500 cars/week should be taken seriously.
The DB report which states that Tesla should reach 600 cars/week in Q4 is an interesting data point. It's not "first data" but it's interesting because as sleepy noted these analysts often do have access to management (and at least Tesla's investor relations) and often can confirm important "first data" points.
Top reporters (ie., CNN, Bloomberg, etc) often also have access to Tesla's PR lead and can confirm data points as well.
- Bloomberg noted on July 11th that production had passed 400 cars/week (Elon Musk: Tesla Model S Output Speeds Past 400 a Week - YouTube)
- CNN noted on August 5th, that Tesla started Q2 at 400 cars/week and ended it slightly below 500 cars/week (Tesla shares surge after surprise profit - Aug. 7, 2013 )
- CNBC noted on August 21 that Tesla had passed 500 cars/week production (Elon Musk: Tired but optimistic about Tesla's future)
There is also data points that people can't share because they might be under NDA (ie., factory tours).
Putting this altogether, I think Tesla began Q3 at under 500 cars/week and ended it at under 600 cars/week.
There has been talk of 700 cars/week (from conversations from store employees). I was open to this but now I think that these employees might have heard ORDER numbers not PRODUCTION numbers from Tesla. Meaning, Tesla probably shared with their employees that their at 700 orders week (ie., 500 north america, 200 europe) and would be at 800 orders per week in Q4 (and 1000 orders/week by end of 2014). I think some employee(s) might have confused this with production (thinking it was the same as orders) and shared that.�
Oct 21, 2013
aznt1217 I thought it was for sure that Tesla was T 500-550 cars a week after the Q2 call. There was the whole interview with Elon in early July that said they exceeded 400 cars/week and not trivially and on the call I believe it was stated at 550.�
Oct 21, 2013
DaveT Just found this on the Q2 2013 Shareholder Letter (http://files.shareholder.com/downloads/ABEA-4CW8X0/2010772170x0x682962/f9e27702-90ed-4516-a16e-dc720c411089/Q2'13%20Tesla%20Motors%20Shareholder%20Letter.pdf):
"During Q2, we improved our production rate by 25% from 400 to almost 500 vehicles per week."�
Oct 21, 2013
ckessel Is there any reason to believe they didn't increase again by 100 to 600? So a 550 average * 12 weeks is 6600 produced. There's always some debate about produced versus delivered, but I'm not sure I see much reason to believe the quantity of unrecognized Q3 cars is all that much larger than those same types of cars held over from Q2.�
Oct 21, 2013
AlMc So, continuing our discussion. If we can say that we exited Q2 just under 500 (if not 500 per week) and exited Q3 at a production rate of roughly 600 could we justify a conclusion more in line with both Maekuz's Registration analysis and CfOH's VIN analysis and come up with 6600 production (12weeks * 550/week) with 500 in transit and come to a reasonable consensus of methods to predict 6000+ deliveries for Q3?�
Oct 21, 2013
sleepyhead I agree with this and that is why I have not re-posted my article, since the store employee seemed a little too optimistic. With the exuberance running at an all-time high, I did not want people to get even more excited and put their whole life's savings into deep OTM Nov. call options (sounds like something I would do :wink: ).
I just wanted to add that there is evidence that Tesla did in fact build 550, 550, and 600 cars in the last three weeks of Q2. This data comes from witnesses on the factory tours. It looked to me as if Tesla was doing 400/week and then all of a sudden a supplier constraint got solved and they were able to ramp up to 500 virtually over night. That 600 number was probably an anomaly though.�
Oct 21, 2013
aznt1217 Precisely. They achieved that in Q2, but when Elon was speaking he was talking about The current state (Q3).�
Oct 21, 2013
DaveT That's what I originally thought (ie., last week)... 500 beginning of Q3, 600 end of Q3... avg 550 x 12 weeks = 6600 production. Then minus 500-600 for transit, loaners, store cars.
But I'm actually now doubting if Tesla actually reached 600/week in Q3, and thinking it could be a goal that they're targeting during Q4 (ie., DB report says this).
Also, regarding CfOH's VIN analysis, it's tough to use his data to come up with an accurate Q3 production or delivery number. His data IMO is helpful to see the pace of orders more so than deliveries or production. The reason being is that often a VIN is assigned not to long after an order is confirmed, but delivery can take any where from 1-3 months(?) depending on country and also when you ordered. And delivery times might be getting longer as well (but this doesn't show up in CfOH's analysis since he tracks just the initial VIN date and not production or delivery dates).�
Oct 21, 2013
Convert2013 Whatever the number is, it should really reflect getting ready for their annual target for 2014. If Tesla wants to deliver 50K cars in 2014, 6 to 7 K deliveries in Q3 should provide them the appropriate growth rate needed to make that target for 2014 (they should be able to achieve a 20 to 25% q over q growth rate in production). Any more will prepare them for Model X and any Model S surge from China, etc for 2014. Important is gross margins for q3 and guidance.�
Oct 21, 2013
gregincal Just to be clear, Sunnyvale is going to be a service center, not a store. There's currently no service center in the South Bay.�
Oct 21, 2013
Convert2013
We are getting a new store here in Mission Viejo Mall right in the city of Mission Viego in Southern California where I live. Can't wait.�
Oct 21, 2013
arashlzy You are also getting a super charger soon, near San Diego�
Oct 22, 2013
DonPedro Having read the discussion, I feel that the 6,000 deliveries estimate is still on target. While I feel that 6,600 production is on the optimistic side, I increasingly believe that the adjustment for cars-in-transit, loaners etc. was exaggerated in my previous post. I think that 100 cars in transit after Q2 is too low, and I think that they kept the number down after Q3. An adjustment of 3-400 sounds right to me now, meaning that they would have had to produce 6,300-6,400 cars to deliver 6,000.
I also think I overshot with my ASP estimate (as was pointed out), and I forgot to take into account the Q2 guidance on R&D costs ("will increase significantly in Q3"). I've also added 1% GM due to EU sigs in Q3. Here is the updated projection:
To recap assumptions:
Cars and CARB credits 6000 cars x $101k ASP 606 000 ZEV credits Guesstimate 25 000 Development services Guesstimate 1 000 Total revenues
632 000
Gross profit 21% GM ex. ZEV 152 470
R&D expenses
60 000 Selling, G&A expenses
60 000
Net income
32 470 Net income/share
0.27
- 6,000 cars: Ref. above
- $101k ASP: Q1 was $98.4k and Q2 was $97.3k (dropped due to accumulated batch of S60s coming into production in Q2). EU deliveries in Q3 had a lot of sigs and high-specced cars - assuming those were 1/5 of total and have 15% higher ASP (as compared to "normal" Q1).
- ZEV credits: Was $68M in Q1 and $51M in Q2. Has been guided to zero in Q4. Lacking other data I assume $25M. The bottom line is highly sensitive to this assumption
- Dev't services: Were $6.6M in Q1 and $3.6M in Q2. $1M feels right based on that trend.
- 21% gross margin excl. ZEV credits. Development in recent quarters is -3% ---> 6% ---> 14%. Guided to 25% in Q4. Seems reasonable that they would improve 6% in Q3 and 5% in Q4. However, bumping up 1% due to EU sigs in Q3 and giving credit for some overperformance.
- R&D expenses: Recent quarters: $68M ---> $47M ---> $44M. Guided "significant increase". Gut feel = $60M - could be more.
- Selling and G&A: Recent quarters: $31M ---> $41M ---> $50M. Given continued rapid expansion of stores, service centers and superchargers, $60M sounds right.
PS: Note how sensitive the Net Income is to ZEV credits. If you set them to zero, then almost half the projected earnings are gone. If you set them to Q2 levels, you increase projected earnings almost by half.
- - - Updated - - -
Will go out on a limb an also try to do a GAAP projection:
I am not surprised that GAAP is still in the red. The guidance from Q2 was: "Going forward, we expect to be non-GAAP profitable and generate positive cash flow from operations every quarter this year excluding any benefit from ZEV credits.".
Revenues (non-GAAP) 632 000 Deferred due to lease accounting 137 000 Revenues (GAAP) 495 000
Net income (non-GAAP) 32 470 Deferred profit 27 000 Stock based comp 22 000 Non-cash interest on convertibles) 1 800 Net Income (loss) (GAAP) -18 330
EPS -0.15 �
Oct 22, 2013
brianman Yes, this is why you must use pipelining. Multiple production lines and such.
Note: This post is neither a recommendation for nor an admonition against applying techniques such as pipelining for population growth augmentation.�
Oct 22, 2013
DonPedro Consensus seems to be $0.00 per share, with a range of -$0.03 to $0.03: http://www.nasdaq.com/symbol/tsla/earnings-forecast�
Oct 22, 2013
brianman LOL. I think there's a missing "not", or you just have a really awesome sense of humor.�
Oct 22, 2013
Gtoffo Thank you all for the excellent work done so far.
I think we are getting closer to more realistic numbers.
Estimating how many cars are in transit/loaners/display at any given moment will be extremely hard/impossible. But I believe we don't really need those numbers. Correctly estimating all of Tesla's numbers might help in the short term... but any long term projection of Tesla's trajectory (and therefore stock price) will be mainly driven by only two factors: the number of cars currently in production (as long as Tesla has no problems selling all of those) and margins. (UPDATE: should have included future guidance, although that is a function of the rate of change during this quarter of those two key factors. Some interesting info regarding that came out of Elon's Munich speech)
I don't think we have any data points that can help to estimate margins....(except faith in Tesla's guidance)
However we have a lot of info regarding production (which is already a big advantage). I would like to give more weight to primary sources such as Elon/official statements, so what I am seeing right now is this:
Q2 shareholder's letter: "During Q2, we improved our production rate by 25% from 400 to almost 500 vehicles per week." "While we expect production to increase from Q2, a considerable number of vehicles produced during the quarter will be in transit to European markets at the end of Q3. As a result, we plan to deliver slightly over 5,000 Model S vehicles in Q3, and remain on plan to deliver 21,000 vehicles worldwide for 2013."
Elon Aug 20 video: "Now we are at around 500 to 550 a week"
We have 1 month (the quarter ended September 30) of missing data. (Or am I missing some other primary data point?)
If we did reach 600 cars at the end of Q3 that would be another 25% increase in production (from ~480 to 600) which I think is the maximum we can expect (it would already be an extraordinary feat!).
So I think the realistic production estimate bracket shrinks to 580-610 cars a week by the end of Q3 with a confidence level of around 75%. Of course we shouldn't ignore the possibility that the previous production rates might have been limited by some specific supplier problem and that the resolution of those issues has bumped production rates up significantly in the last month.�
Oct 22, 2013
Grant Gerke I was looking into the VIN # issue on the board and saw your post on the German reaction. Confirms my suspicion of the German market, see my blog post below from this morning.
See post below, has video from the Munich event:
Musk and Tesla Motors Cater to the German Market
Event Coverage: Musk and Tesla Motors Cater to the GermanMarket - Blog Posts - Electric Vehicle Parade - Insight on advanced vehicles and next generation manufacturing.�
Oct 22, 2013
DonPedro I'm worried that they may not break even on GAAP, when the street seems like it expects them to. So I have looked at how many cars would they have to deliver in Q3 to break even on GAAP. Turns out that it very much depends on three key assumptions. The most important one being ZEV credit revenues and the two others R&D spending and Gross Margin.
Here is the analysis:
You can see that the break even point could be anywhere from 5875 to 7210, depending on these assumptions.
GM excl. ZEV credits 20 % 20 % 21 % 21 % 21 % 22 % 22 % ZEV credit sales $25M $25M $25M $30M $35M $30M $35M R&D expenses $60M $55M $55M $55M $55M $55M $55M Deliveries to break even 7210 6960 6630 6395 6160 6100 5875
I bet they found a way to break even (for instance limiting R&D to exactly what they could afford). ;-)�
Oct 22, 2013
blakegallagher During the stanford interview he said they could have a medium amount of profit now but have chose to go with a low profit as they invest into Model X and store roll outs..... I think they will have a small gap earnings.�
Oct 22, 2013
tslafan123 As this relates to guidance for 2014, which might be announced in Q3 ER, posting it here:
"Musk reassured his audience about the current anxiety surrounding Tesla's battery cell supply. He stated that Panasonic is set to increase its battery manufacturing capacity to allow Tesla to build between 1,200 and 1,500 cars a week by the end of next year. Samsung and LG are also stepping up as secondary suppliers to make sure the supply of battery cells keeps up with the demand."
http://www.fool.com/investing/general/2013/10/22/elon-musk-a-prototype-of-teslas-gen-iii-in-12-mont.aspx�
Oct 22, 2013
NStar
Thanks for the nice work helping put things into perspective. I�d like to add my two cents.
Personally I don�t feel the ZEV credit revenue is important because it has nothing to do with the future growth rate which is the basis for elevated stock price. Therefore the GAAP profitability might not be very important either as it�s highly dependent on the ZEV credit as you said.
On the other hand I think the growth margin (ex ZEV) and the total production/delivery number are extremely important since they�re direct indicators of future profitability and growth. In Q2 conference call Elon had explained why he was so confident about 25% GM (ex. ZEV) for Q4 and he also mentioned 6% improvement in Q3 and Q4 from Q2�s 14%. So probably 20% GM for Q3 and 25% for Q4 are what priced in right now. this was also what DB said on Sept. 19th when the price target was updated to $200:
�We believe that Gross Margin (ex ZEV Credits) will likely hit 20% in Q3 (vs 14% in Q2). We see this as modestly higher than expected (largely due to better-than-expected positive impact from option pricing increases), providing good visibility on hitting the 25% target in Q4, and supporting higher levels in the future as production increases and supply chain continues to mature. On the demand side, Veh ID Number assignment rates appear to support order rates approaching 30k units annualized vs our estimate of <25k in Q2. Both US and European order rates appear to be increasing. Finally, we believe that the production rate continues to rise, as Tesla breaks supply chain bottlenecks. We expect that Tesla will achieve its 600/week 2013YE target sometime in Q4. Despite the production increase, we believe that deliveries will be similar to Q2 (as Tesla guided to) because vehicles in-transit to Europe will be substantially higher at the end of Q3 than the end of Q2�
Deutsche: Tesla 'Margin Progression, Demand Appear Strong' - Stocks To Watch - Barrons.com
if the GM (ex ZEV) can get to 22% it should be a nice surprise that may drive price up. It�s highly dependent on ASP, delivery # and cost of Revenues. It�s interesting that the cost of revenues (of Auto Sales) dropped significantly from $461.8M in Q1 to $303.6M in Q2 while the delivery increased slightly from 4900 to 5150 between Q1 and Q2. Are these mostly cost of materials and parts? Does anyone know more about the reason for this significant cost reduction? If it continues in Q3 so much so that the cost of revenues for 6000 cars delivered does not increase >10% than Q2 then we can probably get to 22% GM (ex ZEV)
DB still just expects delivery slightly above 5000 as guided though. Some analyst had much higher expectation based on VIN analysis but it does not seem his number made any impact. So maybe lower 5K is still what being priced in, and it sounds like 6K delivery will be a big surprise.�
Oct 22, 2013
bonaire NStar,
I think most folks are predicting 6000 or more sales in Q3. Wedbush said 7000. I'm with a few others here in the 6200-6400 range. About 1300 in EU.
The lower cost (303.6M) would be associated with lease arrangements and placing that money elsewhere in the income statement.�
Oct 22, 2013
NStar You're right the lower 303.6M auto sales cost in Q2 is due to lease accounting. total auto sales cost is 427.5M including the cost related to deferred revenues (compared to 461.8M in Q1). If it increases only by 10% to 470M then my calculation of GM ex ZEV is ~21% assuming 6000 delivery/$101K ASP.
I know on this forum most people predict 6000+ delivery#, much higher than guided. What do you think is the number that the street has priced in? Per DB it seems still in the lower 5000 range. I believe Wedbush mentioned that the 7000 # was based on the VIN analysis found on the forum, and it did not make much impact on the stock price. it feels like people don't even remotely believe that number. I hope this is the case, or there will be no earning beat at all.�
Oct 22, 2013
DonPedro This is the million dollar question. In previous quarters, my sense has been that the market has reacted in a knee-jerk fashion. That is why I brought up GAAP figures. I found somewhere that consensus is break even - I took that to mean GAAP. That would be very optimistic, in a quarter where guidance says that ZEV will drop sharply and R&D increase significantly! I am surprised that R&D is not put on the balance sheet, but maybe that is for tax reasons? Or maybe it is not common to activate R&D in US GAAP?
Otherwise, I completely agree with your statements. ZEV credits will have virtually zero impact on Tesla's future, and increased R&D is a good thing. The key Q3 figures are production and gross margin. The key guidance is anything that has to do with Q4 and 2014 production and demand. Those four factors are what the market should? look for on Nov 5.�
Oct 22, 2013
StapleGun I'm currently putting together some production analysis from a new angle and I have a couple questions that are imperative to the analysis, hopefully someone here can answer. At what point is a car registered with the DMV compared to the day it is delivered? Secondly, are loaners and showroom cars registered with the DMV? Any help is much appreciated!�
Oct 22, 2013
sleepyhead Where did you find that?
Not the best source, but finance yahoo has consensus at $0.11. And consensus estimates are most certainly non-GAAP, at least the ones that are quoted on finance websites or CNBC, Bloomberg, etc. The only media that uses GAAP is a Reuters or Forbes and I haven't figured out why. Wall St. always talks in non-GAAP numbers and those are the ones we should be focusing on as investors.
Sometimes different analysts have different ways of calculating non-GAAP. E.g last quarter Wall St. was using Lease Accounting in Non-GAAP as well as GAAP. But Elon set them straight in the Q2 letter and said that they will be providing non-GAAP only after adjusting for lease accounting to show higher revenues.�
Oct 23, 2013
DonPedro Here: http://www.nasdaq.com/symbol/tsla/earnings-forecast
Good to hear that it would probably be non-GAAP. I think the projection I did would be a quite spectacular success for Tesla, even with negative GAAP.
At the same time, I am still pondering the question: Why would they game the Q3 results at the expense of Q4, by halting EU shipments in September? Could it be because they saw an opportunity to break even on GAAP?
*Based on Norwegian registration numbers and anekdotal evidence from Norwegian forum, I am quite sure they did�
Oct 23, 2013
maekuz Loaners have to be registered since they are used in public traffic. For show room cars this might be different, but i saw the show car in Munich, Germany, and this car has been registered (it got license plates and so on...). And for the other question: At least in germany the car is delivered first and registered afterwards.
I came up with roughly 6,600 registered cars worldwide for Q3. I am thinking to subtract about 500 - 600 cars (show room cars and loaners).�
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