Alright carrying on from our previous video, just a quick recap,
we have estimated that there is potentially about $5 billion gross profit from Shanghai
and Fremont. Now we have a starting point, we need to add in all the other variables,
and then find out how much of that $5 billion is left.
Firstly we will add the last element
to auto profits, the regulatory credits. Now every element in this report could have a big effect,
and regulatory credits are no exception. Except in Q1 regulatory credits were an exception,
as an exceptionally high regulatory credit. We have a credit of $679 million last quarter.
This was Tesla's highest ever regulatory credits, and was unexpected. In fact this was the only ever
time the credits were above $500 million, except for Q1 2021 when it reached $518 million. i.e.
last quarter had regulatory credits over 30% higher than the highest quarter previously.
Now if there ever was a quarter that was in need of some regulatory credit TLC,
then this was the one. I would like to place $500 million in there, but it has rarely even hit $400
million many times. Perhaps it's possible Tesla can put down another $600 million,
but judging by history I think we are possibly still being generous at $400 million,
which is what I think I will place. Perhaps a little on the high side,
due to last quarter being so high and this quarter needing it so badly.
Now on to what is likely the hardest part of this
to calculate. The Texas and Berlin money furnaces. I am not sure what others are estimating,
but I think an average of $200 million dollar loss per factory is probably over budgeting.
I have been through the numbers, and I would have a hard time to believe that it would be over $400
million total loss for those new factories. I think the number may actually be closer to $300
million, but I am trying to work hard getting a good result without having to be overly bullish.
For the record, I didn't just pull these numbers for the factories out of thin air.
We have done a full model in a past video as to what these factories might
have cost to run during Q2. And despite Elon saying they were costing billions,
those numbers don't stack up, unless we are talking about construction or lost opportunity
costs. I would guess that this is potentially where other estimates are likely to differ.
Now we've added regulatory credits
and the factories, well I am happy to report that we are now at a total auto gross profit of
$5 billion dollars. That is not nothing. In fact it's only $550 million less than last quarter.
Remember Zak Kirkhorn said that the increased margins might offset the 2 new factories,
of course this was before the China lock downs, and likely the 4680 struggles. Either way,
he seems to think there is going to be a bit of extra profit from the price rises.
As for the other operations of Tesla,
it would appear services and others did well last quarter, and perhaps now with Tesla's
leases expiring, then Tesla are able to re-sell these used Teslas. And let's face the very real
possibility that Tesla possibly made a Model 3 in 2019, received 3 years leasing income,
and now Tesla are possibly able to re-sell this 3 year old Tesla, for more than it cost back
in 2019, and with the additional leasing profits too. That is pretty impressive.
Energy has also been growing a bit lately too, Q1 saw some good numbers, however still losses,
but perhaps Tesla are making less losses now using more LFP cells in storage.
With all that said, I am going to estimate $0 profit. Hopefully it's that high, and Tesla
haven't rapped up more losses by expanding energy. These areas of the business are not going to
have a major impact for sometime anyway, sometime in the second half the decade.
Alright, that brings total gross profit, to obviously exactly the same.
And I'm
sure you guessed what was coming up next, we can't neglect our old friend Bitcoin.
Now I think it was Elon who hinted that Tesla were holding close to 42,000 Bitcoin.
I have Tesla's last Bitcoin impairment at $31,576, and the new low
of $17,601, yes, Bitcoin got that low. Resulting in an additional impairment for Q2
of $586 million. Ouch, that is definitely going to be felt in the earnings, one way or another.
I think we
place Bitcoin impairments in OPEX under restructuring and other. Now there is
another potential restructure this quarter, which could be moving headquarters to Texas.
That is tough to guess. But I will increase restructuring to $650 million including Bitcoin,
in case there are some costs there like severance pay, as Tesla have also been making layoffs in Q2.
As for the rest of OPEX,
well this is where is gets interesting too. Last quarter we had our highest ever expense in R & D.
I am not sure if this is a one off event, or if it is possibly going to increase even further.
The most expensive part of Tesla's R & D is their FSD. So perhaps there is more
to spend as we are approaching human level FSD. Actually, that's a thought,
all other EVs are struggling so much to make a profit, partly because their OPEX is so high,
significantly higher than Tesla's was at any equivalent stage. But most of Tesla's R & D
expenses were FSD, so where are the likes of Polestar's equivalent R & D dollars going?
Anyway, I do think the chances are that last quarter's R & D was likely high,
and this quarter's may not be, but it still could be high.
I am going to place $750 million in for R & D, this is still $115m less than last quarter. Now
there is a chance this could be as much as $250 million less. There is also a chance it could be
$100 million more. It is definitely on the high side, but might be what Tesla is spending now.
S, G & A is going to be another
fun one this quarter. Tesla doe have layoffs. If Tesla had to pay severance pay to their layoffs,
than that would have also been included in our restructuring, but there may be less wages.
And potentially the new HQ has lower overheads in Texas compared to Silicon Valley.
I am going to keep it about where it's been for over the last year,
at around $1 billion. No joke, S, G and A was still around there mid-2020. You see
this pretty much a fixed cost, and once you have covered it with your margins,
and rest of OPEX, it's all profit from there. Yet Tesla are producing 4 times more as many
cars since then. S, G and A up 10%, production up 400%, you see what I mean? Economies of scale.
Alright, this brings us to a total for OPEX of $2.4 billion, ouch! That is pretty big.
Let's hope there is still some decent profit left.
This leaves us with an operational profit of $3 billion. Alright,
that's not bad. We are down $600 million from the previous quarter. I am going with
the same tax rate as last quarter, although I have a feeling this might actually be lower.
When we calculate all of that we come to a net income GAAP earnings of $2.7 billion,
actually only $500 million lower than Q1. Wow, well $500 million is about the bitcoin
impairment. And perhaps the increased prices have compensated for the rest of the discrepancies.
This comes to a GAAP earnings EPS of $2.38. And I non-GAAP earnings EPS of $2.72.
Ok, I didn't expect it to be this high,
it feels a bit too high, but I don't think I have any errors, and have got the numbers too far from
their actual numbers. In fact I have a theory as to why it is so high. I even reported the theory
in a recent video building up to this, that I discovered. The video discovered that if Tesla
raised their prices 10%, it would have increased their profits by 50%. Well we have been seeing
price rises, ok perhaps cost rises too, but this model compares costs from the previous quarter.
I am not sure costs could have risen that dramatically over the quarter. However I may
be wrong. So I would also like to do another bear model for this quarter. That will be interesting,
to see if EPS can realistically get below $2. I don't think I need to make a bull case for Q2,
as I am guessing this might have been more bullish than most expected.
I mean there were 70,000 few vehicles from Shanghai produced this quarter, this is
quite significant. They do have good margins too, however they also have a lower ASP, and
lower adoption of FSD. So perhaps the increased margins elsewhere have offset some of this loss.
I am actually really happy with this model,
as I should be, as it was a lot of work. I think that is all as accurate as I could get it. Even
if it is however leaning overly bullish when compared to every other single estimate out there.
But yea, even if I am somewhat off, I have at least shown the potential for a better Q2
than most people expect. I am also not sure how many people went this thorough either,
so we have a good chance, and I'm going to certainly put my money where mouth is.