Alright, we just worked out in a recent video what a big deal price rises mean for Tesla,
and how they are really going to be felt in operating profits, a lot more so than gross
profit. Which is what we're all here for.
Now we want to work out the average selling
price of each vehicle from each factory. To do this we need to count back. I need to go
through instances of Tesla's web site, when you could order each vehicle online, when
the delivery dates were pertaining to Q2. When I have discovered around the time of
the year when people were ordering their vehicles, that were delivered in Q2, I can then look
up the price Tesla were selling them for then. I will also need to do this for each model
from each factory.
Ok Model Y Long Range from Fremont was $55,000
when delivered in April, but $58,000 when delivered in June. Therefore we can take the
average between the two prices, with Model Y Fremont at $56,500. Of course we have the
performance model available too, when we factor that in, the average price rises to $57,000.
On to the Model 3, the prices for the standard range did change, at the start of the quarter
it was $42,000, and then increased to $45,000. The prices of the rest of the Model 3 variants
remained constant at that time, due to a shorter waiting list. Anyway, when we include Long
Range and Performance versions we have an average price of $47,000 for a Fremont Model
3.
Ok, for the Model S and X, I have done the same, and I have estimated an average purchase
price of $113,000.
Alright that is Fremont taken care of, moving
on to Shanghai. Now just another example of how complex this quarter is, we also have
FOREX to deal with. The Yuan dropped about 6% since May against the dollar. Therefore,
although the prices have increased domestically in China, the price in US dollars has actually
decreased. Of course, this is just another example of Tesla's awesome local supply chains.
Remember Tesla does everything it can to source locally. Therefore all parts are also in the
same currency the vehicles sell for. In other words, profit margins will likely remain,
but profits in US dollars will decline. However Tesla did raise their prices still, so despite
actual lower ASPs the margins should be higher, and hopefully the profits are still about
the same. There are plenty of other unknowns, like how
Tesla hedge currencies too. Also it is the exchange rate on when they
accept delivery, not when they order it. And the currency change happened in the middle
of the quarter.
And a cheaper Yuan, also means cheaper batteries when Tesla import LFP cells from China. But
still, this US dollar is going to cause potentially more complications down the road.
Alright, for Shanghia, I just did exactly the same process of calculating the average
selling prices, by working back from the delivery dates. But of course had to convert them back
to the new US dollar rate. It actually resulted in some variants from China actually reducing
in price in US dollars. This still gives us an ASP of $48,500 for
the Model Y, which factors in the potential exchange rate discrepancies, and even factoring
in the time of the lock downs. And gives us $41,500 for the Model 3.
Do you see how much lower Tesla are able to get their costs down in China, China on average
do spend less on cars than Americans. Although there are more people in China buying cars,
they still don't spend as much as America combined. So Tesla have done what they can
to offer lower cost variants, such as an LFP Model Y. They don't even bother selling the
Long Range Model 3 in China any more. Perhaps to save 2170 cells for more profitable vehicles,
when there is likely still some good profit in an LFP version. I would love to know the
cost of one LFP Model Y out of Shanghai.
As for Berlin and Texas, they are likely the
easiest average selling prices to calculate, but we are indeed going to leave them out
of this model. We are going to calculate them separately. Look let's face it, this quarter
is certainly an anomaly, so I dont have systems in place on how to estimate a quarter like
this. I am just trying to work out the best way I see to do this. It's quite a big project,
and I am not sure many people would have time to go through it all in detail, it is taking
me some time. Hence why I am doing it in parts to keep you updated. I thought I would take
a shot and trying to make the most thorough Q2, so bear with me, I think it will be worth
it. Especially, if you happen to be playing options at all.
However, we will add in the sales for revenue purposes, to still try and estimate total
revenue. I have $60,000 for Model Y from Austin and $67,000 from Berlin. I understand there
are also options, but my numbers seem to be more accurate whenever I use the base prices.
So that's what I use.
Anyway, when I also include FSD that takes us to $15.7 billion of revenue. That's kind
of a lot, in fact Q1 revenue $16.2, thats only a difference of $449 million. Wow, is
that due to these price rises? I don't think I've been bullish on the prices, I have tried
to keep them as accurate as possible.
For FSD I have kept the price at $10,000 still,
which is highly possible that's what it was when they ordered. This is with a 20% adoption
rate from Fremont vehicles, and just a 5% rate from China, along with 40% deferred revenue.
If China was actually 10%, and perhaps the exported vehicles have higher adoption rates,
then that would add over $300 million dollars more profit. Just in case you were thinking
5% was not very high.
This quarter does however involve the running cost of 2 new factories that Q1 didn't have,
that's the difference. Anyway, we are going to leave the two new factories in this episode.
And move on, to work out what the margins will be for the cars produced.
Now the margin for cars in Q1 was 30% exactly,
if we remove regulatory credits. So I would like to use that as a rough base on these
margins of each vehicle, but then we will also factor in the amount the prices have
risen since Q1, which will also factor into our margin.
We do have the Shanghai lock downs though. I mean that is time when the factories are
down, with minimal cost. And the additional units they produced to make up for it, were
ramped up and perhaps at a lower marginal cost. I can't quite get my head around this
affects margin. I think potentially obviously there was additional cost of the lock downs,
whilst being unable to produce vehicles. However, a lot of this may also be offset by the sheer
production rate Tesla are at in that factory. So I will take the average margin, and increase
it by around what we have seen the prices increase.
Alright when I add in all the margins for Shanghai and Fremont we get our gross profit
of each factory and vehicle, and it comes to a total of $5 billion gross profit, just
from those two factories.
In case you were wondering, or even if you weren't, you may be interested to know that
this profit from the 2 older factories would come to a 33.5% gross profit margin, this
excludes regulatory credits, and is 3.5% higher than Q1. With regulatory credits it would
be close to 37% margin. Ok, we are also under the impression costs
haven't risen since Q1, in fact a lot of the prices of minerals that go into an EV are
down since Q1.
As you can see this is turning out to be a
lot of work, but I think I can finish it off in one more video. Personally I am quite happy
with that revenue and profit. Next we will work out the losses from the new factories,
and then add in all the other goodies Q2 has to offer us. Bitcoin will be fairly easy to
work out, and Tesla may want to use some more regulatory credits this quarter. Last quarter
Tesla had a massive $679 million which was a bit unexpected. If it comes close to that
this quarter, it will really help, however Q1's regulatory credit was twice the previous
quarter, so we can't really rely on a large credit.
Anyway, I am getting there, and now we have calculated that the other two factories contributed
around $5 billion in gross profit, so that will certainly help. And although Q1 had a
very large regulatory credit, it also had a very large R&D expenditure. This might be
due to further progress in FSD, I believe Elon said that is where the majority of R&D
goes. And it is possible as we are making closer progress then maybe R & D for FSD is
getting more expensive for the finishing touches. Equally they have been making layoffs in the
FSD department. Also lets not forget that Tesla have also
been making some layoffs in other areas, so its possible OPEX is down slightly too. I
think Tesla may have cut costs slightly in Q2, trimming fat for a recession. Anyway,
we should get some more useful figures in the next video.