* Posts by Avg_Joe

1 post • joined 3 Feb 2020

In your face short sellers! Tesla goes two quarters in a row without losing money

Avg_Joe

Re: Real profit or phony profit

Tesla has total long term debt of $15billion. They have on hand cash of $6.3billion. The GAAP was only about $115million but the free cash flow (money after minus money before) of $900million.

They produced 367,500 cars in 2019 with the top-end cars (largest margin) more or less stagnant at 35-40,000. The Model 3 is the current cash cow with margins of about 20% or so.

The interesting bit is that the MY is coming out at the end of Q1 with (I expect) about 80,000+ cars due to be produced this year (with a somewhat higher margin than Model 3). China is expected to produce about 150,000 cars this year (lower margin type with reduced costs, so probably flat margins compared with the US (a mix of high and low).

Guidance is for "Easily" 500K cars in 2020. Actual, seems a lot more like 600K cars in 2020 with higher all-around margins (especially as Tesla moves component content toward 100% China for their Chinese cars), realizes production efficiencies from robotically installed wiring harnesses in MY and single cast unibody (replacing 70 parts with 1).

So they are currently making $900m/quarter in free cash flow now. I expect a small dip in Q1 2020 (seasonally the weakest quarter). then all quarters after bringing in about the same or larger as they have already ramped their California production rate to 415K cars. The dip should account for unprofitably low MY production and ramping Chinese production. After as output grows, stand-alone profitability of these two components will grow.

Short version... 2020 is going to be a surging year in profitability despite the financial drain of the construction of GF4 and possible expansion of GF1.

The wild card in this will be the Dry Anode batteries that promise to dramatically increase cell production rates while dropping prices 20% or so over solvent based designs (and pushing MS/MX past 400 mi EPA range). The question is: This will dramatically improve performance and push down costs - but how fast can they ramp?

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