Tesla booked deferred FSD revenues but didn't disclose how much. Stripping out the estimated amount leaves real GAAP EPS at $0.12 or 65% below reported EPS
Remember that no auto company has made serious profits (except Toyota) on basic transportation. They all depend on either luxury or pickup trucks/big SUV for good margins. And given labor costs, they can only make the super cheap car in China, not the most stable production platform at this time. Don’t forget they have 15-20% fewer employees this week compared to last week.
Very interesting and helpful! It seems as if Musk pulled all rabbits he could find to help the stock price. That's where he is best. Announcements are getting as big and bold as felt necessary. These will haunt Tesla sooner or later.
This is explains why lease penetration (leased vehicles as a % of deliveries) is now near record lows. Leased vehicle sales have gone from a post-Model 3 launch of 9.3% in Q3 2019 (the most fraudulent quarter on record for Tesla) to a record low of 1.9% last quarter.
Tesla also has "Resale Value Guarantee" leased vehicle sales but they stopped disclosing the amounts in Q4 2022. If that quarter was flat with the Q4 2021, Tesla clocked up the following amounts of RVG deals:
2020: $551m
2021: $939m
2022E: $922m
Total: $2.4 billion
Assuming these are all 3-year deals, the chickens are coming home to roost as Tesla's average used cars prices are around 60% below their July 2022 all-time highs.
I'm surprised that the profitability of their car leasing division is still near record highs and even more surprised that they haven't booked any impairments, given how much used Tesla prices have plunged. They had $551m of resale value guarantee deals in 2020 and $939m in 2021.
Given that new Tesla prices were 20% higher back then & used Tesla prices have fallen by 40% since then, one would assume there would be some write-offs. In 1H of 2019, they wrote down $555m of Model S lease deals.
Great article. I’m looking forward to the 10q. In figure 1, it looks like your adjusted net income number is the full $700m difference from the reported number. Wouldn’t it be appropriate to tax-effect it? I believe they would have provided tax on the recognized FSD revenue.
Remember that no auto company has made serious profits (except Toyota) on basic transportation. They all depend on either luxury or pickup trucks/big SUV for good margins. And given labor costs, they can only make the super cheap car in China, not the most stable production platform at this time. Don’t forget they have 15-20% fewer employees this week compared to last week.
Excellent points. Wish I would've included them in my Final Thoughts section.
Very interesting and helpful! It seems as if Musk pulled all rabbits he could find to help the stock price. That's where he is best. Announcements are getting as big and bold as felt necessary. These will haunt Tesla sooner or later.
Apparently tesla books leases
As sales with right to sell back. This prevents a balance sheet overhang until they are returned
This is explains why lease penetration (leased vehicles as a % of deliveries) is now near record lows. Leased vehicle sales have gone from a post-Model 3 launch of 9.3% in Q3 2019 (the most fraudulent quarter on record for Tesla) to a record low of 1.9% last quarter.
Tesla also has "Resale Value Guarantee" leased vehicle sales but they stopped disclosing the amounts in Q4 2022. If that quarter was flat with the Q4 2021, Tesla clocked up the following amounts of RVG deals:
2020: $551m
2021: $939m
2022E: $922m
Total: $2.4 billion
Assuming these are all 3-year deals, the chickens are coming home to roost as Tesla's average used cars prices are around 60% below their July 2022 all-time highs.
I suspect tesla has a lease value overhang
I'm surprised that the profitability of their car leasing division is still near record highs and even more surprised that they haven't booked any impairments, given how much used Tesla prices have plunged. They had $551m of resale value guarantee deals in 2020 and $939m in 2021.
Given that new Tesla prices were 20% higher back then & used Tesla prices have fallen by 40% since then, one would assume there would be some write-offs. In 1H of 2019, they wrote down $555m of Model S lease deals.
Do you think that the speed with which the 10Q was released is suggestive that a capital raise is coming sooner rather than later?
Yes, that was my first thought when I saw that the 10Q was out.
Should be investment advice. It's damn good.
According to their 10Q, looks like tesla recognized 281m of deferred revenues in Q1 2024, up 110% vs. Q1 2023.
Great article. I’m looking forward to the 10q. In figure 1, it looks like your adjusted net income number is the full $700m difference from the reported number. Wouldn’t it be appropriate to tax-effect it? I believe they would have provided tax on the recognized FSD revenue.