Monday, July 24, 2023

Tesla filed its latest quarterly report on Monday morning — and since we couldn’t schedule something more fun to do like a root canal, let’s take a look at what the world’s most exasperating electric vehicle company had to say.

We call Tesla ($TSLA) exasperating because it is one of the very few publicly traded companies that makes its reports difficult to analyze. For example, the company files its earnings releases as image files rather than as searchable text. That is perfectly legal, but it means financial analysts must squint at every line of that image and jot down important data by hand. Really, Elon? 

The good news is that all GAAP disclosures in the full quarterly report are filed as tagged and searchable text (as required by law), so Calcbench can pull those numbers. We decided to begin with total revenue, which clocked in this quarter at $24.9 billion, up an impressive 47.2 percent from $16.9 billion in the year-ago period.

Beyond that headline, however, we looked at Tesla revenue by geographic segment. Tesla reports sales in the United States, China, and rest of the world; using our Show Tag History feature, we tracked quarterly revenue growth in each region from the start of 2020. See Figure 1, below. 

That’s some mighty sharp and steady growth in the U.S. region (blue line) with rest of the world (yellow line) following a similar trajectory except for one dip in mid-2022. China (red line) is poking along at a somewhat lower pace. 

We then reframed those numbers as a column chart, complete with trend lines for each region. See Figure 2, below. 

This is a much better understanding of the full picture. The trend line for the U.S. region had clearly been much higher than either China or the rest of the world, but look at those last two quarters of U.S. sales. They’re down from the end of 2022 and stuck in neutral. 

One could speculate that this is partly due to pricing competition, since Tesla has been cutting prices to remain competitive with other automakers now racing into the EV market. In theory, Tesla could preserve its dominance in the market through lower prices and greater unit sales, which preserves market share. 

Unfortunately this brings us back to Tesla’s frustrating disclosure habits. The numbers that would answer that question — unit sales, unit sales by region, average profit per unit, and so forth — aren’t GAAP-required disclosures, so they aren’t easy to find in Tesla’s reports. You need to look for them manually. 

Adventures in Manual Research

For example, Tesla does disclose in the Q2 report that it has produced 920,508 consumer vehicles through the first half of this year (Page 24 of the report, second paragraph of Management Discussion & Analysis). Tesla also said in its first-quarter report that it produced 440,808 consumer vehicles. Do the math and that means Tesla produced 479,700 consumer vehicles in Q2. Figure 3, below, is the comparison of the MD&A disclosures. 

On the other hand, Tesla delivered 889,015 vehicles through the first half of the year, which (using the same manual math process) breaks down to 422,875 and 466,140 vehicles in the first and second quarters, respectively. 

Could we therefore say that if $20.42 billion in auto sales in Q2 (which it did), spread across 466,140 vehicle deliveries, that means the average vehicle sold for $43,804? Because that would be a decline in average vehicle revenue compared to Q1 2023, when Tesla reported $18.88 billion in auto sales and 422,875 vehicle deliveries. 

Mathematically those calculations are correct; we’re just not sure they’re an entirely fair representation of Tesla’s economic activity because Tesla is so cagey with what it discloses. 

For example, are vehicle deliveries the right metric to use, or should it be vehicles produced? Plus, historically Tesla has required customers to make a small deposit ($250 when one of our folks here bought one 18 months ago) upon sale agreement, and then you pay the rest upon delivery. Where does that $250 deposit land in the quarterly reports? It’s only about $105 million or so ($250 multiplied by 422,000 deliveries), but you have to report it somewhere. 

You get the picture. Financial analysts trying to identify the most important metrics from Tesla can make a try at the task, but it won’t be easy. It involves lots of flipping back and forth between quarterly reports, earnings releases, whatever notes you scribble on paper, and any math you do in Excel. 

Regardless, it can be done, and Calcbench does have the tools to help you do it.

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