This article will start with a financial comparison of Amazon in 2017 and 2018 with Tesla today and a financial projection for the third quarter and the fourth quarter.
The article will also briefly review expectations and financial impact of battery day, the self-driving update due in 6-10 weeks and the gigafactories.
In second quarter Tesla financial report, Tesla indicated that their factories already had 690,000 car per year capacity. Full capacity production would be 172,000 cars per quarter. This would be 122,000 cars from Fremont and 50,000 cars from Shanghai. 105,000 cars from Fremont and 35,000 cars from Shanghai seems to be very achievable for Q3. The actual figure will be announced within 40 days, around October 1, 2020.
Tesla has had 2 quarters of auto gross margin at 25.5 percent. Going from 90,891 cars delivered to 140,000 would be 54 percent increase over the second quarter. This would be scaling the Tesla auto revenue from 5.18 billion to $7.98 billion. Maintaining 25.5 percent margin means an added $714 million in quarterly revenue.
Capacity was being expanded at Fremont by another 100,000 cars per year and would be done by the end of the year. The Shanghai factory is also undergoing various expansions. Hitting the full Q2 available capacity 172,000 cars and 18,000 more cars for the fourth quarter would be 190,000 cars for the fourth quarter. This would be another $2.8 billion in quarterly revenue.
Tesla is releasing an update to the full self driving autopilot within limited release in 6 to 10 weeks. During the fourth quarter, if this update is widely distributed then it could justify an accounting recognition move from 50 percent to 75 percent of the $8000. 25% of Tesla buyers have full self driving autopilot. This would be another $500 million in net income for the fourth quarter.
$3-4 billion in trailing 12 month net income would compare to where Amazon was at the end of 2017 or in the first quarter of 2018.
The graphic appears to be nanowires.
A 100% silicon nanowire battery anode was developed by Amprius Technologies to provide up to 50% improvement in energy density compared to standard lithium-ion batteries.
The biggest financial impact would be for the battery technology or business deal that will enable Tesla to increase battery production.
The Maxwell Dry Battery Cell technology was reported to be able to made 16 times less factory space. The same size battery factory would in theory be able to produce 16 times the batteries.
Full Self Driving Autopilot
Elon Musk has reported already that the latest rewrite of the Full Self Driving Autopilot allows a commuter to drive from home to office and back with rare human interventions. Increasing the capability by from 50% to 75% has immediate financial revenue recognition benefit.
Billionaire Ron Baron has about $2 billion of Tesla stock. This assumes he did not sell any of his original position. He has access to face to face talks with Elon Musk. Ron Baron stated in a CNBC interview that Tesla’s car capacity factory construction cost had fallen from $15,000 per car per year for Fremont to $4,000 per car per year in Shanghai. This means a 500,000 car per year Fremont cost $7.5 billion while a 500,000 car per year Shanghai costs $2 billion.
The Berlin factory is being built at a faster pace than the Shanghai factory.
Tesla being able to build 500,000 car per year factories for $2 billion with completions in less than 1 year would mean the 8 billion in cash they have on hand could be converted into 2 million car per year capacity. It also means that 200,000 cars per quarter would generate the cash for another 500,000 car per year factory.
By Brian Wang