Tesla and Elon Musk have accomplished a lot over the past ten years since June 2010 when they became a public company. This will review key aspects of what was done and how 8 months of continued execution will make Tesla a $1 trillion technology giant like Apple, Amazon, Microsoft and Google.
In 2005, Tesla contracted with Lotus Group to make gliders, which are cars without the drivetrain. Those were used for the first Tesla Roadsters.
On June 29, 2010, Tesla Motors had an initial public offering where 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share. The IPO raised US$226 million for the company. In early 2013, Tesla had problems producing the Model S, and was running out of money. Improved production and a sales push gave Tesla its first profitable quarter, and an $11 billion deal with Google was abandoned.
The Model 3 was unveiled in March 2016. There were production problems through 2017 that were overcome in the first quarter of 2018.
Tesla production and sales over 8 years is showing 50%+ growth in car sales
22,000 cars in 2013
31,500 cars in 2014
40,000 cars in 2015
76,000 cars in 2016
103,000 cars in 2017
244,000 cars in 2018
357,000 cars in 2019
e 510,000 cars in 2020 (despite COVID-19 shutdowns that reduced by 70,000)
Auto margin (money made on the car business) grew from 15% in 2018 to 26% in 2020.
Tesla has the capacity at its car factories to produce 690,000-790,000 cars per year. Fremont has shown it is capable of producing 110,000 cars each quarter when it is not impacted by COVID-19. The China factory has ramped up production and will be able to produce 40,000-50,000 cars in the third quarter and 50,000 + cars in the fourth quarter.
Producing and selling at the capacity that exists will show quarterly results in earnings that will overcome denial in the valuation of Tesla.
If 140,000 cars are built and delivered in the third quarter, then the additional 50,000 cars will add about $2.5 billion in auto revenue compared to the first and second quarters. The 26% auto margin will mean $620 million should be added to net income. The earnings should be at or near $1 billion for the quarter. This will mean the Q3 delivery number will be announced Oct 1 and the earnings will be announced late in October.
If Tesla completes expansions at Shanghai and Fremont then 190,000 cars are built and delivered in the third quarter, which would be another $2.5 billion in revenue. Tesla will also release a major full self-driving update. It will be in limited release in 6-10 weeks but should be widely distributed in Q4. Tesla has already sold the Full Self Driving option to 25% of its buyers. A major software update should allow Tesla to recognize 25% of the revenue they were already paid. 50% was recognized when they originally collected the payments. Increased production and full self-driving revenue recognition should put Tesla at $2 billion for the fourth quarter.
Tesla already has more value than Walmart. Tesla with annualized net income of $8 billion would be about to thirds of the annual net income of Amazon. Amazon is valued at $1.65 billion.
Tesla is on track to having the Berlin and Texas factory completed and producing cars early in 2021. There will be a continued expansion in Shanghai.
Billionaire Ron Baron was an early Tesla investor and has access to Elon Musk. Ron said that the cost of the factory car capacity in Shanghai was $4000 per car per year. This means a 200,000 car per year Shanghai factory costs $800 million. A 500,000 car per year Shanghai factory costs $2 billion. $2 billion per quarter means Tesla can start building a new 500,000 car per year factory every quarter.
Tesla already has over $8 billion in cash.
Tesla being added the SP500 could involve issuing more stock. If Tesla sold $20 billion in stock, then Tesla could start 10 more factories with that cash. Tesla is building the Shanghai and Berlin factories up to 150,000 cars per year phase 1 in less than a year.
Through 2021 and 2022 and onwards there will be a constant stream of new factories announced and new factories completed and ramped.
New car models will be released or announced. Cybertruck will get released as will the SEMI. There will be new minivans, vans and buses based on the Cybertruck. There will be Model 2 in the $20,000 range.
Expected Key Events
Aug 31. Stock splits 5:1
Sept SP500 inclusion announcement and implementation
Sept 22 Battery day
Oct 1 Q3 sales and delivery announcement
Oct 25 Estimated Q3 earnings report
October New Full Self Driving limited release
Jan 2 Q4 sales and delivery announcement
Jan 31 Estimated Q4 earnings report
SOURCES – Tesla, Barchart
Written By Brian Wang, Nextbigfuture.com (Brian owns shares of Tesla)
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.