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Tesla Q4 2020 Earnings

36 points by giacaglia 6y ago

giacaglia 6y ago
Here is a pdf version as well: https://tesla-cdn.thron.com/static/78Z2ZX_2020_Q4_Quarterly_Update_Deck_SMXBZX.pdf https://tesla-cdn.thron.com/static/78Z2ZX_2020_Q4_Quarterly_...
- zaroth 6y ago
  Projected average annual production growth of 50% per year, with greater than 50% growth in 2021. Fully redesigned Model S interior pics in the PDF!
- soheil 6y ago
  Whoa, for a second I thought what of kinda PDF looks like this and then realized my Chrome updated so it must be its new PDF viewer, looks very different with the thumbnails and all.
deleted 6y ago
[deleted]
itsoktocry 6y ago
Another quarter, another loss ex-regulatory credits. I think that's 5 in a row?
- alexandros 6y ago
  So we're taking out regulatory credits but leaving in the CEO award, right? I guess if you cherry pick your one time items you can make any number appear.
  - brianwawok 6y ago
    This is why there is GAP
  - itsoktocry 6y ago
    This company is worth a trillion dollars, is barely growing, makes no money and is starting to lose share in some markets. I don't think I'm the one that has to do the cherry picking.
- bryanlarsen 6y ago
  It's fair to exclude vulnerable non-recurring revenue such as regulatory credits to get a better picture of a companies health. But if you do that, you also need to exclude vulnerable non-recurring expense as well -- aka the stock-based compensation which has no impact on cash and will disappear if the company stops growing.
  - itsoktocry 6y ago
    I'll bet you it will be a long time before stock based compensation slows down. It's part of the game.
    - bryanlarsen 6y ago
      Elon gets $0 without revenue growth. https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche-compensation-plan-worth-million/ https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche...
      - itsoktocry 6y ago
        It's mostly market cap based, says so right in the article you linked.
        bryanlarsen 6y ago
        He's already hit the market cap goal for the 12th milestone. It's the EBITDA goal that's holding him back from collecting all of them.
  - itsoktocry 6y ago
    FYI, apparently the adjusted EPS number adds back stock comp, but doesn't remove the reg credits.
- viscanti 6y ago
  Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?
  - itsoktocry 6y ago
    >and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.
    - dhnajsjdnd 6y ago
      I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
      - itsoktocry 6y ago
        Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
        dhnajsjdnd 6y ago
        Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
    - viscanti 6y ago
      Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?
- hntrader 6y ago
  Well their competitors are benefiting from unpriced externalities. I could also say "Another quarter, another profit for Toyota ex-externalities". They're also going to optimise their pricing around the existence of credits. The pricing that maximises the equation margin*volume will differ with and without credits. Ideally we do away with the credits and get straight to the point by taxing carbon directly.
ckastner 6y ago
Revenues of $10.7bn are a notable improvement. However, even if one would add a zero to that number, it would be less than VW's and Toyota's combined revenue, yet Tesla is valued almost three times as much as those companies combined. There's one paragraph on FSD, basically an empty statement of "we're iterating". That sounds realistic. Back in April 2019 (Autonomy Day), Musk predicted that they will have a million robotaxis on the road in 2020. Solar deployments up 18% to 205MW, which is totally negligible. Total new solar in 2020 globally was projected to be around 140GW.
- deleted 6y ago
  [deleted]
- bryanlarsen 6y ago
  Toyota's Enterprise Value is $350B, VW's is $230B and Tesla is $840B. That's not triple both combined.
  - nemetroid 6y ago
    Presumably, then, the GP comment is not referring to enterprise value.
    - ckastner 6y ago
      I was indeed referring to market cap, but even acknowledging the sibling comments and going by enterprise value, the situation still appears incredulous for a company that is, as of yet, an emerging car manufacturer, a possible FSD contender, and an energy niche player.
    - georgeecollins 6y ago
      Well it should. Market cap is meaningless for companies with a lot of debt (industrial companies typically). And if you don't understand that you will make a lot of meaningless comparisons. Also, if you believe in efficient markets (and lets admit this is a hard week to do that) then you know that companies are valued based on future profits, not future revenues. Google and Ford had very similar revenue in say, 2019. But there enterprise values were completely different because of gross margins and profits.
stunt 6y ago
It's not Tesla's quarterly earnings report that drives TSLA, It's Elon's tweets. They should publish quarterly metrics of his Twitter account.
JoshGlazebrook 6y ago
The Model S and Model X have both had their long awaited interior refreshes. Live on the configuration pages. Looks like a drastic improvement overall.
- threeseed 6y ago
  Not sure if refreshing the interior is going to be enough to combat declining sales. Most car companies would have refreshed the exterior design at least a couple of times in the same 10 year timeframe to avoid it looking stale and dated.
  - trsohmers 6y ago
    There were a lot of people waiting for the refresh for one-two years now... they are going to be production limited for a long time on the new S and X.
  - zaroth 6y ago
    Note: They didn’t just refresh the interior.
  - SomewhatLikely 6y ago
    I don't think most people avoiding an S or X purchase are doing so because they think the exterior is stale and dated. Primarily it would be price, but interior may be playing some role. When compared to luxury vehicles I have seen Tesla's interior criticized in the past. Exterior form less so, but panel gaps yes.
  - nickik 6y ago
    Tesla did make an exterior refresh in 2016 and and a limited interior refresh as well. It also added a drastically improved suspension then. The exterior here is in fact refreshed. Chrome delete, different front end, different lights and other details. If you see the car on the road, the outside doesn't look dated at all in my opinion.
bilal4hmed 6y ago
that new steering wheel is something Im unsure of. How about hand over hand turns ? Does it even make it to production?
- mschuster91 6y ago
  Reminds me of Knight Rider a bit? Definitely gonna be interesting what the regulatory agencies, especially in Europe, will be saying.
- CarVac 6y ago
  I suspect it'll have a strongly variable steering ratio.
RivieraKid 6y ago
Without regulatory credits they would lose 130M in Q4. This is relevant because government money is not scalable. If they grow revenues by 1000% and don't improve efficiency, they will lose money. Ridiculous for a company with P/E = 1700. Energy generation and storage has a gross profit of -$30M. But "they're not just a car company". Edit: Why the downvotes? Is it because this is a skeptical view that goes against the crowd?
- itsoktocry 6y ago
  Hacker News has admitted longs pumping this company while accusing others of being "short sellers". Happens every quarter, is normal.
- zaroth 6y ago
  The downvotes are because “If they grow revenue by 1000% and don’t improve efficiency then...”. That is a fundamentally unsound premise. They expect to grow at 50% CAGR which means 1000% in about 6 years. Which in and of itself would be an insane growth trajectory to achieve at this scale. But at the end of those same 6 years you would reasonably need to model some significant efficiency improvements. Tesla has predicted their battery costs, for example, will be reduced by 50% in that time frame. There will also be significant efficiencies achieved elsewhere in the manufacturing line beyond just their tech roadmap for structural batteries, but certainly I would assume not quite a full halving of the cost to produce the entire car.
  - johnhartigun 6y ago
    Ok, that's a fair point, although it was not implied that Tesla will not improve efficiency, it was just a quick illustrative calculation. They've been cost-cutting very aggressively so I assume there are few low-hanging or middle-hanging fruits left. The big picture is that their business is currently not profitable without government money, which doesn't scale linearly with revenue. Sure, I guess they will slowly improve their margins in the future. But my point is that it's unlikely that their car manufacturing business will become a massive cash cow as the market seems to think. Batteries becoming cheaper won't directly translate to margins because of competition.
RivieraKid 6y ago
Informative charts from a Tesla skeptic I follow: https://twitter.com/teslacharts https://twitter.com/teslacharts
nickik 6y ago
Not as good as I had hoped on margins, this is a bit of letdown. But I am really happy about the Solar and Storage. Overall its still pretty good. Overall 2020 was very successful, specially considering the situation. Solar collapsed quite a bit after Solarcity and introducing the Solar roof was difficult. However it seem like now they should increase growth, they are adding their own teams and they are working with 3rd company installers. Overall 2020 doesn't look good but Q3 and Q4 look like a return to solid growth Storage is problematic area because it requires the same manufacturing as battery packs. So Tesla always had a fight for storage and it was of secondary importance. In the long run however it could be a huge market. Doubling the mount deployed from last Q is really great. Both Berlin and Texas are moving along very well and Model Y in China coming online only now, promises continued growth for next year. The refresh Model S should again help to drive profitability as well. I'll have to look at the numbers in more detail.

36 points by giacaglia 6y ago

Here is a pdf version as well: https://tesla-cdn.thron.com/static/78Z2ZX_2020_Q4_Quarterly_Update_Deck_SMXBZX.pdf https://tesla-cdn.thron.com/static/78Z2ZX_2020_Q4_Quarterly_...

zaroth 6y ago
Projected average annual production growth of 50% per year, with greater than 50% growth in 2021. Fully redesigned Model S interior pics in the PDF!
soheil 6y ago
Whoa, for a second I thought what of kinda PDF looks like this and then realized my Chrome updated so it must be its new PDF viewer, looks very different with the thumbnails and all.

deleted 6y ago

[deleted]

itsoktocry 6y ago

Another quarter, another loss ex-regulatory credits. I think that's 5 in a row?

alexandros 6y ago
So we're taking out regulatory credits but leaving in the CEO award, right? I guess if you cherry pick your one time items you can make any number appear.
- brianwawok 6y ago
  This is why there is GAP
- itsoktocry 6y ago
  This company is worth a trillion dollars, is barely growing, makes no money and is starting to lose share in some markets. I don't think I'm the one that has to do the cherry picking.
bryanlarsen 6y ago
It's fair to exclude vulnerable non-recurring revenue such as regulatory credits to get a better picture of a companies health. But if you do that, you also need to exclude vulnerable non-recurring expense as well -- aka the stock-based compensation which has no impact on cash and will disappear if the company stops growing.
- itsoktocry 6y ago
  I'll bet you it will be a long time before stock based compensation slows down. It's part of the game.
  - bryanlarsen 6y ago
    Elon gets $0 without revenue growth. https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche-compensation-plan-worth-million/ https://electrek.co/2020/05/28/tesla-elon-musk-first-tranche...
    - itsoktocry 6y ago
      It's mostly market cap based, says so right in the article you linked.
      - bryanlarsen 6y ago
        He's already hit the market cap goal for the 12th milestone. It's the EBITDA goal that's holding him back from collecting all of them.
- itsoktocry 6y ago
  FYI, apparently the adjusted EPS number adds back stock comp, but doesn't remove the reg credits.
viscanti 6y ago
Would we expect Tesla to optimize for profitability ex-regulatory credits? It seems like they know what they'll get from that, and they invest in building out new gigafactories based on the total net income they have, or they pass the savings onto customers (which leads to more sales). What makes ex-regulatory credit profitability a metric that anyone should care about?
- itsoktocry 6y ago
  >and they invest in building out new gigafactories based on the total net income they have Oh look, another person making the claim capex comes off top line income.
  - dhnajsjdnd 6y ago
    I didn’t interpret the comment that way. If a company is trying to be cash flow neutral, they could (very roughly) consider the net income to be the amount left over for capex.
    - itsoktocry 6y ago
      Is that how you imagine billion dollar automotive factories get built? Tesla saves up some money and buys the parts as they have the cash?
      - dhnajsjdnd 6y ago
        Of course not, finance people make a bunch of spreadsheets and then the factories poof into existence. The regulatory credits factor into those spreadsheets.
  - viscanti 6y ago
    Tesla just announced they were profitable for the full year of 2020. What's the compliant about top line income? They make money from sales and from credits because governments want to incentivize the sale of electric cars. My point is that the relevant thing seems to be unit economics. They seem to make a profit on most models, and the ones that aren't profitable at the point of sale, seem to have the price of the credits factored in. What value would anyone get from looking at profitability ex-credits?
hntrader 6y ago
Well their competitors are benefiting from unpriced externalities. I could also say "Another quarter, another profit for Toyota ex-externalities". They're also going to optimise their pricing around the existence of credits. The pricing that maximises the equation margin*volume will differ with and without credits. Ideally we do away with the credits and get straight to the point by taxing carbon directly.

ckastner 6y ago

Revenues of $10.7bn are a notable improvement. However, even if one would add a zero to that number, it would be less than VW's and Toyota's combined revenue, yet Tesla is valued almost three times as much as those companies combined. There's one paragraph on FSD, basically an empty statement of "we're iterating". That sounds realistic. Back in April 2019 (Autonomy Day), Musk predicted that they will have a million robotaxis on the road in 2020. Solar deployments up 18% to 205MW, which is totally negligible. Total new solar in 2020 globally was projected to be around 140GW.

deleted 6y ago
[deleted]
bryanlarsen 6y ago
Toyota's Enterprise Value is $350B, VW's is $230B and Tesla is $840B. That's not triple both combined.
- nemetroid 6y ago
  Presumably, then, the GP comment is not referring to enterprise value.
  - ckastner 6y ago
    I was indeed referring to market cap, but even acknowledging the sibling comments and going by enterprise value, the situation still appears incredulous for a company that is, as of yet, an emerging car manufacturer, a possible FSD contender, and an energy niche player.
  - georgeecollins 6y ago
    Well it should. Market cap is meaningless for companies with a lot of debt (industrial companies typically). And if you don't understand that you will make a lot of meaningless comparisons. Also, if you believe in efficient markets (and lets admit this is a hard week to do that) then you know that companies are valued based on future profits, not future revenues. Google and Ford had very similar revenue in say, 2019. But there enterprise values were completely different because of gross margins and profits.

stunt 6y ago

It's not Tesla's quarterly earnings report that drives TSLA, It's Elon's tweets. They should publish quarterly metrics of his Twitter account.

JoshGlazebrook 6y ago

The Model S and Model X have both had their long awaited interior refreshes. Live on the configuration pages. Looks like a drastic improvement overall.

threeseed 6y ago
Not sure if refreshing the interior is going to be enough to combat declining sales. Most car companies would have refreshed the exterior design at least a couple of times in the same 10 year timeframe to avoid it looking stale and dated.
- trsohmers 6y ago
  There were a lot of people waiting for the refresh for one-two years now... they are going to be production limited for a long time on the new S and X.
- zaroth 6y ago
  Note: They didn’t just refresh the interior.
- SomewhatLikely 6y ago
  I don't think most people avoiding an S or X purchase are doing so because they think the exterior is stale and dated. Primarily it would be price, but interior may be playing some role. When compared to luxury vehicles I have seen Tesla's interior criticized in the past. Exterior form less so, but panel gaps yes.
- nickik 6y ago
  Tesla did make an exterior refresh in 2016 and and a limited interior refresh as well. It also added a drastically improved suspension then. The exterior here is in fact refreshed. Chrome delete, different front end, different lights and other details. If you see the car on the road, the outside doesn't look dated at all in my opinion.

bilal4hmed 6y ago

that new steering wheel is something Im unsure of. How about hand over hand turns ? Does it even make it to production?

mschuster91 6y ago
Reminds me of Knight Rider a bit? Definitely gonna be interesting what the regulatory agencies, especially in Europe, will be saying.
CarVac 6y ago
I suspect it'll have a strongly variable steering ratio.

RivieraKid 6y ago

Without regulatory credits they would lose 130M in Q4. This is relevant because government money is not scalable. If they grow revenues by 1000% and don't improve efficiency, they will lose money. Ridiculous for a company with P/E = 1700. Energy generation and storage has a gross profit of -$30M. But "they're not just a car company". Edit: Why the downvotes? Is it because this is a skeptical view that goes against the crowd?

itsoktocry 6y ago
Hacker News has admitted longs pumping this company while accusing others of being "short sellers". Happens every quarter, is normal.
zaroth 6y ago
The downvotes are because “If they grow revenue by 1000% and don’t improve efficiency then...”. That is a fundamentally unsound premise. They expect to grow at 50% CAGR which means 1000% in about 6 years. Which in and of itself would be an insane growth trajectory to achieve at this scale. But at the end of those same 6 years you would reasonably need to model some significant efficiency improvements. Tesla has predicted their battery costs, for example, will be reduced by 50% in that time frame. There will also be significant efficiencies achieved elsewhere in the manufacturing line beyond just their tech roadmap for structural batteries, but certainly I would assume not quite a full halving of the cost to produce the entire car.
- johnhartigun 6y ago
  Ok, that's a fair point, although it was not implied that Tesla will not improve efficiency, it was just a quick illustrative calculation. They've been cost-cutting very aggressively so I assume there are few low-hanging or middle-hanging fruits left. The big picture is that their business is currently not profitable without government money, which doesn't scale linearly with revenue. Sure, I guess they will slowly improve their margins in the future. But my point is that it's unlikely that their car manufacturing business will become a massive cash cow as the market seems to think. Batteries becoming cheaper won't directly translate to margins because of competition.

RivieraKid 6y ago

Informative charts from a Tesla skeptic I follow: https://twitter.com/teslacharts https://twitter.com/teslacharts

nickik 6y ago

Not as good as I had hoped on margins, this is a bit of letdown. But I am really happy about the Solar and Storage. Overall its still pretty good. Overall 2020 was very successful, specially considering the situation. Solar collapsed quite a bit after Solarcity and introducing the Solar roof was difficult. However it seem like now they should increase growth, they are adding their own teams and they are working with 3rd company installers. Overall 2020 doesn't look good but Q3 and Q4 look like a return to solid growth Storage is problematic area because it requires the same manufacturing as battery packs. So Tesla always had a fight for storage and it was of secondary importance. In the long run however it could be a huge market. Doubling the mount deployed from last Q is really great. Both Berlin and Texas are moving along very well and Model Y in China coming online only now, promises continued growth for next year. The refresh Model S should again help to drive profitability as well. I'll have to look at the numbers in more detail.