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Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters (page 24) and it the only company with increase in # of deliveries among the 10

Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters (page 24) and it the only company with increase in # of deliveries among the 10 largest autos globally (page 7). Gross margins >20% is also best in class in the auto industry The list goes on in terms of growth & profitability

almost_usual 6y ago
Off of credits though right? Also isn’t Tesla considered a “tech” stock by a lot of investors? A 20% gross margin is not good for a tech stock.
- toomuchtodo 6y ago
  “Regulatory credits” are getting paid for making electric cars other automakers won’t make. Fiat alone must pay Tesla $2B for credits to keep selling internal combustion vehicles in Europe.
  - deleted 6y ago
    [deleted]
  - almost_usual 6y ago
    So Tesla is a good investment because they get paid by other automakers to make cars they don’t want to make right now? This doesn’t seem like a good long term strategy.
    - toomuchtodo 6y ago
      My Tesla stock with a $17/share cost basis says otherwise. Take the the other side of the bet and short it if you doubt the long term value. The world isn’t going to suddenly stop supporting climate change mitigation through policy. It’s only going to ramp up, leaving legacy Orgs in the dust.
      - itsoktocry 6y ago
        >My Tesla stock with a $17/share cost basis says otherwise. Tesla's IPO price was $17. So you got in right on the lowest price the stock has ever been and never bought another share since? Amazing.
        toomuchtodo 6y ago
        Mostly correct. I performed swing trading along the way up, but still hold all of the initial IPO investment (yolo’d my Roth IRA). Was sold after my first Roadster test drive.
        toomuchtodo 6y ago
        s/Was sold/Was sold on the company and investment/, after realizing my comment might be ambiguous.
        zaroth 6y ago
        OP never said all his stock had a $17 basis, just that they held stock with a $17 basis. I agree, the capital appreciation of TSLA stock is truly amazing though.
      - zacksinclair 6y ago
        Your good investment from years ago does not make Tesla a good investment at today's price.
        toomuchtodo 6y ago
        Something being potentially overpriced today does not mean it’s not a good investment. It definitely is or was for those who identified the value arb prior to today and executed based on that. Is Tesla overpriced today? We can only speculate based on potential and execution ability.
  - DanCarvajal 6y ago
    > “Regulatory credits” are getting paid for making electric cars other automakers won’t make. The problem long term is that's basically not the case anymore aside from FCA.
xoxoy 6y ago
they earn 100% margins on selling $400M in mysterious regulatory credits
- baggachipz 6y ago
  There's nothing mysterious about them. Car companies are required to produce clean vehicles, or they can instead buy credits from companies who do. Companies are paying right now rather than producing, and Tesla is there to benefit from it. There's nothing shady or mysterious here.
  - xoxoy 6y ago
    they don’t break out who the buyers of these credits are. i cannot find any information from a Ford or Toyota or GM describing the millions of credits they’ve purchased from Tesla shrug
    - baggachipz 6y ago
      So this suggests to you that it's somehow shady or below the table? Why would they disclose that information if they don't have to?
      - xoxoy 6y ago
        yes it is objectively shady because it appears they have full discretion to decide when to recognize these credits, and also unclear who is actually buying them. they also don’t have credits listed as an asset on their balance sheet when you’d otherwise expect these credits to go from asset -> revenue when they decide they should be recognized, instead it is as if these credits just appear out of thin air and sold.
        baggachipz 6y ago
        Again, they are not required to report that so there is no reason to. I'm sure they have squirreled away lots of these credits in their war chest to break out at opportune times (like today). They're not fabricating the numbers, they are audited and exist. There's nothing illegal about it. They just don't have to disclose them publicly so they don't, because it would needlessly give information to competitors.
itsoktocry 6y ago
>Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters Can you explain how their capex is decreasing as they build out more factories and invest in new technology? Seems odd, doesn't it? Yet is sure makes that cash flow number look good. These are the kinda things that analysts consider red flags. >it the only company with increase in # of deliveries among the 10 largest autos globally Do you think this is a reasonable comparison when Toyota builds as many cars in a few days as Tesla does in a quarter? Tesla can futz a few thousand cars with a fleet sale or inventory build and drastically change their growth trajectory. By the way, what's a "delivery"? I don't think I've ever seen them define it. I would assume it means "car delivered to customer", and yet they build inventory. Very opaque.
- guardiangod 6y ago
  >capex is decreasing Could you give more detail on that? The last big capex increase was due to Model Y rollout. Now that most of the lines are completed, it's just replicating what Fermont's Y production line has in Shanghai's. I do, however, agree that Tesla's definition of 'delivery' is suspect.
  - itsoktocry 6y ago
    >Could you give more detail on that? The last big capex increase was due to Model Y rollout Capex: 2017 - $4 Billion 2018 - $2.5 Billion 2019 - $1.5 Billion 2020 to date - ~$1 Billion Where was the big increase in capital expenditure?
- marc__1 6y ago
  >Can you explain how their capex is decreasing as they build out more factories and invest in new technology? Seems odd, doesn't it? Yet is sure makes that cash flow number look good. These are the kinda things that analysts consider red flags. From 2017 to 2018, they were focused in ramping-up production at the Fremont factory [0]. And compared to Q2 2019 Capex is actually 118% * higher ! * (546m vs 250m), so I can't see how they are slowing investments. >Do you think this is a reasonable comparison when Toyota builds as many cars in a few days as Tesla does in a quarter? Tesla can futz a few thousand cars with a fleet sale or inventory build and drastically change their growth trajectory. I do believe they did a tremendous job in ramping-up deliveries (page 18) in such a short period of time). It is 2x the number from just 3 years ago. >By the way, what's a "delivery"? I don't think I've ever seen them define it. I would assume it means "car delivered to customer", and yet they build inventory. Very opaque. By delivery Tesla probably needs to recognize revenue according to ASC 606, or when the product is delivered instead of paid. I'm sure theirs auditors must pay close attention to this number. [0] https://en.wikipedia.org/wiki/Tesla_Factory https://en.wikipedia.org/wiki/Tesla_Factory
ckastner 6y ago
> "The list goes on in terms of growth & profitability" It better. Tesla has a market cap of 4x that of VW, a car maker with €256bn revenue and ~€17bn profit in 2019. It is beyond me why anyone would buy this stock over VW, let alone pay 4x the price for it. Even if Tesla could put out 900K cars in a quarter instead of the current 90K, they'd still not come even close to the competition is terms of financial success. Tesla would need to utterly dominate the car market to live up to its current valuation. Dominate as in market share, not relative quarter-to-quarter growth.
- adventured 6y ago
  > It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it. The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs; along with the inevitable rise of China's domestic automakers, which will eat a very large amount of market and sales away from the old giants. VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached. Which also isn't the same as saying that Tesla should be bought at its present absurd valuation.
  - philwelch 6y ago
    > The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs VW is an EV manufacturer and is investing heavily in the transition to EVs themselves. And they’re already at a much larger scale than Tesla in terms of distribution and manufacturing the rest of the car.
    - brianwawok 6y ago
      To some extent, the 1900s distribution model of dealerships is a burden. When you buy a tesla, tesla gets 100% of the revenue. When you buy a VW or a ford, what % cut does the dealership take? How much does it cost to have 800 cars sitting on a lot, vs order on demand? Auto industry is ripe for innovation, glad we have someone innovating. I will hopefully never need to talk to a car salesmen or do the dealership thing again.
curious_fella1 6y ago
> and it the only company with increase in # of deliveries among the 10 largest autos globally I'm sure others have commented, but this is some real silly logic. Yes, going from (fake numbers) 100k -> 110k cars sold is a lot easier than going from 1M -> 1.1M.
- brianwawok 6y ago
  May be easier, but it means something. Growing in a down market is a thing.

almost_usual 6y ago

Off of credits though right? Also isn’t Tesla considered a “tech” stock by a lot of investors? A 20% gross margin is not good for a tech stock.

toomuchtodo 6y ago
“Regulatory credits” are getting paid for making electric cars other automakers won’t make. Fiat alone must pay Tesla $2B for credits to keep selling internal combustion vehicles in Europe.
- deleted 6y ago
  [deleted]
- almost_usual 6y ago
  So Tesla is a good investment because they get paid by other automakers to make cars they don’t want to make right now? This doesn’t seem like a good long term strategy.
  - toomuchtodo 6y ago
    My Tesla stock with a $17/share cost basis says otherwise. Take the the other side of the bet and short it if you doubt the long term value. The world isn’t going to suddenly stop supporting climate change mitigation through policy. It’s only going to ramp up, leaving legacy Orgs in the dust.
    - itsoktocry 6y ago
      >My Tesla stock with a $17/share cost basis says otherwise. Tesla's IPO price was $17. So you got in right on the lowest price the stock has ever been and never bought another share since? Amazing.
      - toomuchtodo 6y ago
        Mostly correct. I performed swing trading along the way up, but still hold all of the initial IPO investment (yolo’d my Roth IRA). Was sold after my first Roadster test drive.
        toomuchtodo 6y ago
        s/Was sold/Was sold on the company and investment/, after realizing my comment might be ambiguous.
      - zaroth 6y ago
        OP never said all his stock had a $17 basis, just that they held stock with a $17 basis. I agree, the capital appreciation of TSLA stock is truly amazing though.
    - zacksinclair 6y ago
      Your good investment from years ago does not make Tesla a good investment at today's price.
      - toomuchtodo 6y ago
        Something being potentially overpriced today does not mean it’s not a good investment. It definitely is or was for those who identified the value arb prior to today and executed based on that. Is Tesla overpriced today? We can only speculate based on potential and execution ability.
- DanCarvajal 6y ago
  > “Regulatory credits” are getting paid for making electric cars other automakers won’t make. The problem long term is that's basically not the case anymore aside from FCA.

xoxoy 6y ago

they earn 100% margins on selling $400M in mysterious regulatory credits

baggachipz 6y ago
There's nothing mysterious about them. Car companies are required to produce clean vehicles, or they can instead buy credits from companies who do. Companies are paying right now rather than producing, and Tesla is there to benefit from it. There's nothing shady or mysterious here.
- xoxoy 6y ago
  they don’t break out who the buyers of these credits are. i cannot find any information from a Ford or Toyota or GM describing the millions of credits they’ve purchased from Tesla shrug
  - baggachipz 6y ago
    So this suggests to you that it's somehow shady or below the table? Why would they disclose that information if they don't have to?
    - xoxoy 6y ago
      yes it is objectively shady because it appears they have full discretion to decide when to recognize these credits, and also unclear who is actually buying them. they also don’t have credits listed as an asset on their balance sheet when you’d otherwise expect these credits to go from asset -> revenue when they decide they should be recognized, instead it is as if these credits just appear out of thin air and sold.
      - baggachipz 6y ago
        Again, they are not required to report that so there is no reason to. I'm sure they have squirreled away lots of these credits in their war chest to break out at opportune times (like today). They're not fabricating the numbers, they are audited and exist. There's nothing illegal about it. They just don't have to disclose them publicly so they don't, because it would needlessly give information to competitors.

itsoktocry 6y ago

>Tesla posted positive free cash flow (CFO - capex) for 4 of the last 5 quarters Can you explain how their capex is decreasing as they build out more factories and invest in new technology? Seems odd, doesn't it? Yet is sure makes that cash flow number look good. These are the kinda things that analysts consider red flags. >it the only company with increase in # of deliveries among the 10 largest autos globally Do you think this is a reasonable comparison when Toyota builds as many cars in a few days as Tesla does in a quarter? Tesla can futz a few thousand cars with a fleet sale or inventory build and drastically change their growth trajectory. By the way, what's a "delivery"? I don't think I've ever seen them define it. I would assume it means "car delivered to customer", and yet they build inventory. Very opaque.

guardiangod 6y ago
>capex is decreasing Could you give more detail on that? The last big capex increase was due to Model Y rollout. Now that most of the lines are completed, it's just replicating what Fermont's Y production line has in Shanghai's. I do, however, agree that Tesla's definition of 'delivery' is suspect.
- itsoktocry 6y ago
  >Could you give more detail on that? The last big capex increase was due to Model Y rollout Capex: 2017 - $4 Billion 2018 - $2.5 Billion 2019 - $1.5 Billion 2020 to date - ~$1 Billion Where was the big increase in capital expenditure?
marc__1 6y ago
>Can you explain how their capex is decreasing as they build out more factories and invest in new technology? Seems odd, doesn't it? Yet is sure makes that cash flow number look good. These are the kinda things that analysts consider red flags. From 2017 to 2018, they were focused in ramping-up production at the Fremont factory [0]. And compared to Q2 2019 Capex is actually 118% * higher ! * (546m vs 250m), so I can't see how they are slowing investments. >Do you think this is a reasonable comparison when Toyota builds as many cars in a few days as Tesla does in a quarter? Tesla can futz a few thousand cars with a fleet sale or inventory build and drastically change their growth trajectory. I do believe they did a tremendous job in ramping-up deliveries (page 18) in such a short period of time). It is 2x the number from just 3 years ago. >By the way, what's a "delivery"? I don't think I've ever seen them define it. I would assume it means "car delivered to customer", and yet they build inventory. Very opaque. By delivery Tesla probably needs to recognize revenue according to ASC 606, or when the product is delivered instead of paid. I'm sure theirs auditors must pay close attention to this number. [0] https://en.wikipedia.org/wiki/Tesla_Factory https://en.wikipedia.org/wiki/Tesla_Factory

ckastner 6y ago

> "The list goes on in terms of growth & profitability" It better. Tesla has a market cap of 4x that of VW, a car maker with €256bn revenue and ~€17bn profit in 2019. It is beyond me why anyone would buy this stock over VW, let alone pay 4x the price for it. Even if Tesla could put out 900K cars in a quarter instead of the current 90K, they'd still not come even close to the competition is terms of financial success. Tesla would need to utterly dominate the car market to live up to its current valuation. Dominate as in market share, not relative quarter-to-quarter growth.

adventured 6y ago
> It is beyond me why anyone would by this stock over VW, let alone pay 4x the price for it. The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs; along with the inevitable rise of China's domestic automakers, which will eat a very large amount of market and sales away from the old giants. VW's position is its weakness, it has everything to lose and nothing to gain from the peak they've reached. Which also isn't the same as saying that Tesla should be bought at its present absurd valuation.
- philwelch 6y ago
  > The better answer is that nobody should buy VW either. Their business has zero potential upside and a huge downside risk in the transition to EVs VW is an EV manufacturer and is investing heavily in the transition to EVs themselves. And they’re already at a much larger scale than Tesla in terms of distribution and manufacturing the rest of the car.
  - brianwawok 6y ago
    To some extent, the 1900s distribution model of dealerships is a burden. When you buy a tesla, tesla gets 100% of the revenue. When you buy a VW or a ford, what % cut does the dealership take? How much does it cost to have 800 cars sitting on a lot, vs order on demand? Auto industry is ripe for innovation, glad we have someone innovating. I will hopefully never need to talk to a car salesmen or do the dealership thing again.

curious_fella1 6y ago

> and it the only company with increase in # of deliveries among the 10 largest autos globally I'm sure others have commented, but this is some real silly logic. Yes, going from (fake numbers) 100k -> 110k cars sold is a lot easier than going from 1M -> 1.1M.

brianwawok 6y ago
May be easier, but it means something. Growing in a down market is a thing.