Tesla Q3 Expectations

Visible spike in Inventory cars sold in Q3(Courtesy of EV-CPO.com)

We are expecting 27,500 deliveries in Q3 with an average ASP of $104,000 due to deliveries of the P100D and more Model X's. Service and other revenue should be roughly Overall Revenue should range between: 100-120m due to an increase in CPO sales (expecting 600-700 in Q3) and increased sales within Tesla Energy. Automotive gross margin should decline to roughly 22.5% on a GAAP basis due to an increase of discounts on inventory cars (roughly 1300 inventory cars sold, 2X Q2). Service and other revenue is expected to carry a margin around 5-8% due an increase in CPO vehicle sales and an increased Tesla Energy income.

 

Total Expected Revenue: $2.97bn (Non-GAAP)

Automotive Profit: $643,500,000

Service and Other Profit: $7,150,000

Expected Operating profit: $650,650,000

Expected Expenses: $590,000,000

Interest Expense: $45,000,000

Overall Profit: $15,650,000

GAAP EPS Estimate: ~$.11

(145m shares)



 

*CPO and inventory car data is drawn from ev-cpo.com which does real time tracking on Tesla CPO and inventory sales and pricing.

 

 

 

Tesla: The first automaker to crowdfund development, accidentally…

Last Thursday night at 8:33 PST, Tesla Motors announced their first mass market vehicle: Model 3. 35 hours later, over 250,000 vehicles had been reserved (and counting).

Tesla Model 3    Photo: Tesla Motors 

Tesla Model 3    Photo: Tesla Motors 

 

Each reservation was a $1,000 deposit, representing $250 Million in deposits, and an order backlog worth close to $10 Billion, within one and a half days…

This was something no one: Wall Street, news outlets, Tesla itself, was expecting (except me 😉). Something some people might not realize is, even though the deposits are refundable, Tesla has no restrictions on the use of the funds.

We witnessed the largest and fastest crowdfunding in history, nothing even remotely close has happened. Tesla has amassed an incredible amount of deposits that will allow them to accelerate development and refine their product.

So what caused this to happen?

    1    This has been anticipated for close to a decade (see: Elon’s Blog post in 2006)

    2    Incredible previous product reviews: The Model S and X have been proclaimed some of the best cars on the road, period.

    3    Tesla brought the first long range electric vehicle to market (now to the mass market, we will see if Chevy can follow through😁)

    4    Cult like following of Elon Musk: nuff said

    5    Innovative purchase process. Would you preorder a vehicle at your typical franchised dealer? (Salesman: why don’t you just check out the vehicles we have in stock?)

As we get closer to production who knows how many preorders there will be! (1 Mil+?)

One of the biggest concerns for Tesla going forward: How are we going to be able to build these cars fast enough?

Well, I can assure you, a cool $250 Million sure doesn’t hurt to help figure that out. (New factory?)

Tesla Owner?: Take my new independent Tesla Owners Survey!

Early Indications Show Strong Model 3 Demand

Tesla has long been striving to create a long range mass market electric vehicle. On March 31st, Tesla will reveal the first glimpse of this vehicle and begin taking orders. 

The only things we know about the vehicle are as follows: 200+ mile range, $35K pre-incentive MSRP, approx. 20% smaller than Model S.

Tesla's Tease for the Model 3 Reveal

Tesla's Tease for the Model 3 Reveal

Current Tesla owners will be given priority in the order line (it's unclear whether this goes for Tesla employees too). According to preliminary results of my ongoing Tesla owner survey, roughly 50% of Tesla owners plan to put down a deposit. 

Thats roughly 55,000 orders...

Those won't be the only people ordering the Model 3. Friends, family, jealous colleagues, and even strangers will be logging online March 31st/April 1 to place their Model 3 order. Why? The single most common question a Tesla owner receives: "Is there a cheaper Tesla available? When will there be?" Now, those owners can say, "Yes, go order yours now! Before the line is too long! Run! (or click!)"

Other reports are suggesting that a significant portion of Tesla employees will also be putting down deposits. (Story here) It is also very clear through Tesla's language in their blog that they are expecting extremely large demand.

So, I'm going to go out on a limb here and predict that their will be 100,000 orders for the Model 3 within 24 hours of opening up the online deposit portal...

You heard it here first :)

- Christian P.

P.S. Tesla please don't let your servers crash due to large demand ;)

Coverage Initiated: Tesla Motors (TSLA)

After Tesla's stock exploded in May, 2013 there has been large speculation on the company's lofty valuation. Tesla's revenue grew 50% in FY 14 from it's largely popular Model S. We expect this growth not only to continue, but accelerate. Last year, Tesla sold roughly 32,000 Model S's this year they expect to sell about 55,000 (We expect 65,000). Tesla's growth has been production constrained ever since the Model S went into production. To meet demand, Tesla has built out their factory to handle more than 2000/week production by year end (currently 1000/week). 

We expect Tesla to be producing over 500,000/year by 2020 if not sooner. If Tesla's expansions into the mass market segment go well in 2017 we could see the growth accelerate faster. Details on Tesla's growth potential can be found in our report from last month "Tesla's road to 700 Billion Market Capitalization". 

Tesla's battery technology allows the company to produce large capacity battery packs at lower than market costs. This competitive advantage puts Tesla 4-5 years ahead of competitors. We expect that competitive advantage to continually get larger as Tesla invests heavily into battery technology and manufacturing methods. 

We are initiating coverage at Outperform and a target of $300 per share.