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Hi, I was wondering if any peeps who have read any of TSLA or SCTY research reports by any Street analysts (not that those people can be trusted) or have done d

Hi, I was wondering if any peeps who have read any of TSLA or SCTY research reports by any Street analysts (not that those people can be trusted) or have done due diligence as a investor care to share about, (1) Projection of what exactly is TSLA's market share for the next five years with the introduction of Chevy Bolt on the lower-end; and potential new competitors like GOOGL and self-driving/electric cars of traditional auto makers on the higher-end. (2) Profit margin of TSLA cars without the green credits from gov't and tax breaks from any US gov't alternative energy research incentives; any risk from regulatory landscape due to the most recent US regime change. (3) The trajectory/projection of household solar panel adoption pegged to the trajectory of traditional energy cost trends (e.g., natural gas and oil commodity price due to recently supply glut); the break-even number of new households growth for SCTY division or a number that Crude/Gas need to stay above. (4) Cash flow projection for TSLA/SCTY as far as I understand it, combined entity relies heavily on fundraising via gov't grant, issuing new bonds and occasional issuing of new equity shares. What percentage of TSLA net revenue goes to meeting bond payments, and what percentage of net income comes from financial engineering vs. sales of cars? These questions I think could shed critical (both positive and negative) light to otherwise generally very positive but shallow coverage of TSLA on HN? Thanks in advance for any inputs by more informed peeps!

_ph_ 10y ago
(1) Chevy currently plans to build 30k cars per year, a fraction of the Tesla build numbers, not even taking the Model 3 into respect. I wished they would plan for greater numbers as the electrical car market is large enough for both (and more!) (2) The Tesla cars are profitable with a 20+% margin - they are growing with 100% year over year and that eats up any profits. There is actually very little government money involved. (4) cash flow comes from 80+k cars sold this year with a $15 billion backlog on Model 3 orders.
- dmoy 10y ago
  I think the question on (2) may be more focused on - will consumers buy as many tesla cars if they all cost $7,500 more? Will tesla drop the price of their cars instead (thus eating into their profit margin)?
  - _ph_ 10y ago
    The $7,500 are US-only. Tesla cars are popular outside of the US too. Also, with the new Gigafactory, battery prices will come down. So Tesla has the ability to reduce costs, and if they decide to, reduce prices.
- spoinkaroo 10y ago
  The backlog is from ~2% down 'preorders', so isn't exactly accurate. Though there is undoubtedly >15bn worth of demand for the M3, especially in light of tax incentives winding down.
  - _ph_ 10y ago
    It would be very rare, if the demand would be limited to the preorders. Usually the main amount of buys happens after the product becomes available on the market. So I would recon the preorders are a very conservative indicator for the volume in the first year.
dave1619 10y ago
(1) Tesla is aiming for 1 million cars in 2020. At an average price of $45,000/car ($42k for Model 3/Y but higher for Model S/X) that would be $45 billion a year in revenue. And they would still likely be growing fast at that point, with expansion in Europe and Asia. (2) Current gross margin is 25%, but is trending up as they scale Model X. Model S/X gross margin is likely going to be 30% within a year. Tesla is targeting a gross margin of 25% on Model 3. This gross margin is excluding ZEV credits. Tesla will soon use up the federal tax incentive ($7500 going to buyer) as they pass their 200,000th car sold in the U.S. But they still will have state and ZEV incentives that aren't depending on the federal government. There is risk with the new administration possibly delaying Tesla's autonomous driving plans. (4) For cash flow analysis, look at Tesla's most recent Q3 financials. It was a breakthrough quarter, as they are selling 25k cars/quarter (100k cars/year run rate). Financials show that S/X gross profit now covers all operating expenses. And when you deduct depreciation expenses and stock-based compensation, Tesla is actually cash flow positive by a large amount (over $400M just last quarter). They used some of that cash for capex, but still have over $100M left over. Tesla's finances have turned a corner, and they look very positive. For Solarcity, they had good Q3 earnings as well. Looks like Solarcity will not impact cash flow for Tesla in Q4 as Solarcity look to be cash flow positive in Q4. Next year, Solarcity's cash flow is projected to be neutral.
- spoinkaroo 10y ago
  Absurdly optimistic. Gross margin is ~20% excluding ZEV on their very high end models, the average price per car will be closer to 60k in 2020, probably around 55k (35k base will probably go to 60-70k with add ons), and Tesla will (maybe) be selling 300-500k cars annually in 2020. 3) accurate 4) Model 3 will be very capital intensive, especially in light of unforeseen problems such as recalls, competition (unlikely in the near term), and consumers opting to get the base model instead of the decked out one. I don't pay attention to solarcity, but generally have mixed vibes about the company. SpaceX, on the other hand, has very positive prospects IMO.
  - dave1619 10y ago
    "Gross margin is ~20% excluding ZEV"... where are you getting your data? Have you checked their latest Q3 earnings report? Here's a quote from their Q3 shareholder letter: "Q3 GAAP Total automotive gross margin was 29.4%, while non-GAAP Automotive gross margin was 25.0% excluding SBC and $139 million of ZEV credit revenue." source: http://files.shareholder.com/downloads/ABEA-4CW8X0/2123516573x0x913801/F9E5C36A-AFDD-4FF2-A375-ED9B0F912622/Q3_16_Update_Letter_-_final.pdf http://files.shareholder.com/downloads/ABEA-4CW8X0/212351657...

_ph_ 10y ago

(1) Chevy currently plans to build 30k cars per year, a fraction of the Tesla build numbers, not even taking the Model 3 into respect. I wished they would plan for greater numbers as the electrical car market is large enough for both (and more!) (2) The Tesla cars are profitable with a 20+% margin - they are growing with 100% year over year and that eats up any profits. There is actually very little government money involved. (4) cash flow comes from 80+k cars sold this year with a $15 billion backlog on Model 3 orders.

dmoy 10y ago
I think the question on (2) may be more focused on - will consumers buy as many tesla cars if they all cost $7,500 more? Will tesla drop the price of their cars instead (thus eating into their profit margin)?
- _ph_ 10y ago
  The $7,500 are US-only. Tesla cars are popular outside of the US too. Also, with the new Gigafactory, battery prices will come down. So Tesla has the ability to reduce costs, and if they decide to, reduce prices.
spoinkaroo 10y ago
The backlog is from ~2% down 'preorders', so isn't exactly accurate. Though there is undoubtedly >15bn worth of demand for the M3, especially in light of tax incentives winding down.
- _ph_ 10y ago
  It would be very rare, if the demand would be limited to the preorders. Usually the main amount of buys happens after the product becomes available on the market. So I would recon the preorders are a very conservative indicator for the volume in the first year.

dave1619 10y ago

(1) Tesla is aiming for 1 million cars in 2020. At an average price of $45,000/car ($42k for Model 3/Y but higher for Model S/X) that would be $45 billion a year in revenue. And they would still likely be growing fast at that point, with expansion in Europe and Asia. (2) Current gross margin is 25%, but is trending up as they scale Model X. Model S/X gross margin is likely going to be 30% within a year. Tesla is targeting a gross margin of 25% on Model 3. This gross margin is excluding ZEV credits. Tesla will soon use up the federal tax incentive ($7500 going to buyer) as they pass their 200,000th car sold in the U.S. But they still will have state and ZEV incentives that aren't depending on the federal government. There is risk with the new administration possibly delaying Tesla's autonomous driving plans. (4) For cash flow analysis, look at Tesla's most recent Q3 financials. It was a breakthrough quarter, as they are selling 25k cars/quarter (100k cars/year run rate). Financials show that S/X gross profit now covers all operating expenses. And when you deduct depreciation expenses and stock-based compensation, Tesla is actually cash flow positive by a large amount (over $400M just last quarter). They used some of that cash for capex, but still have over $100M left over. Tesla's finances have turned a corner, and they look very positive. For Solarcity, they had good Q3 earnings as well. Looks like Solarcity will not impact cash flow for Tesla in Q4 as Solarcity look to be cash flow positive in Q4. Next year, Solarcity's cash flow is projected to be neutral.

spoinkaroo 10y ago
Absurdly optimistic. Gross margin is ~20% excluding ZEV on their very high end models, the average price per car will be closer to 60k in 2020, probably around 55k (35k base will probably go to 60-70k with add ons), and Tesla will (maybe) be selling 300-500k cars annually in 2020. 3) accurate 4) Model 3 will be very capital intensive, especially in light of unforeseen problems such as recalls, competition (unlikely in the near term), and consumers opting to get the base model instead of the decked out one. I don't pay attention to solarcity, but generally have mixed vibes about the company. SpaceX, on the other hand, has very positive prospects IMO.
- dave1619 10y ago
  "Gross margin is ~20% excluding ZEV"... where are you getting your data? Have you checked their latest Q3 earnings report? Here's a quote from their Q3 shareholder letter: "Q3 GAAP Total automotive gross margin was 29.4%, while non-GAAP Automotive gross margin was 25.0% excluding SBC and $139 million of ZEV credit revenue." source: http://files.shareholder.com/downloads/ABEA-4CW8X0/2123516573x0x913801/F9E5C36A-AFDD-4FF2-A375-ED9B0F912622/Q3_16_Update_Letter_-_final.pdf http://files.shareholder.com/downloads/ABEA-4CW8X0/212351657...