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发帖数: 2318 | 1 "Every normal automaker produces 500 or so beta test units of an all-new car
, especially one that’s produced on an all-new platform. These 500 or so
cars are driven by employees in various stages for at least 1-2 years in all
sorts of climates around the world, so as to be torture-tested."
https://seekingalpha.com/article/4103361-tesla-selling-beta-test-cars-
employees-model-3-revenue-recognition-remains-joke?app=1&auth_param=1eblcj:
1cqgf84:1d12846d66ad8bbf8e02da579e8000df&dr=1
Tesla Selling Beta Test Cars To Employees: Model 3 Revenue Recognition
Remains A Joke
Aug. 31, 2017 12:44 PM ET|
Summary
Tesla may soon report how many Model 3s it delivered in August. It guided to
100 units but that’s such a low number that it must have done much more.
However, it makes no difference whether it did 100 or 1,500 or whatever,
seeing as all units supposedly went to employees and equivalent for beta
testing.
Normal automakers don’t sell test cars to employees. They test them for a
year or two first, and then start selling them when the car is 100% ready.
Can you imagine if Apple recognized revenue from selling a few iPhone 8 beta
test units to Tim Cook, Jony Ive and Warren Buffett? Wall Street would deem
it a joke.
Nissan is far more likely to produce and sell more LEAF 2.0 cars by early
2018 than Tesla will deliver Model 3 cars to non-employees.
We are likely about to hear some update from Tesla (TSLA) in terms what its
production or sales of the Model 3 was in the month of August. Tesla’s
guidance has been for delivering 100 units in August. Surely this ultra-tiny
number - five cars per day, no kidding - must have been almost totally a
joke, and Tesla should easily be able to exceed that number several times
over.
Mind you, Nissan’s (OTCPK:NSANY) factory in Tennessee spits out on the
general order of 1,700 cars per day, not three. That’s a ratio of 567:1, or
Nissan making more cars in that one factory in a day as Tesla does in a
year..
But here is the thing: Forget 100 cars. Let’s say Tesla managed to deliver
1,500 Model 3 cars in August. Even then, should they count these deliveries
as legitimate sales at all?
Tesla held a “customer handover” event on July 28, 2017, a ceremony in
which it “handed over” 30 cars to “employees and investors and whatnot.”
(to quote CEO Musk)
From the 4Q16 transcript:
Tesla (NASDAQ:TSLA) Q4 2016 Results - Earnings Call Transcript
"The initial cars, sort of Founder Series, actually go to company employees,
because I think it's important for us to have a good feedback loop on the
product that we're making. And if there are any issues, bugs or things that
need to be addressed that we can address those before customers experience
them." - Elon Musk
A little later in the transcript:
"Probably going to be pretty close to production. We'll open it internally.
So, the first cars will go to Tesla employees and investors and whatnot and
so forth so that we can experience any challenges before our customers do.
So we'll obviously do it internally sooner than we would do it externally.
So I think it's probably three months or four months away." - Elon Musk
So in other words, employees will be testing the cars before customers do,
because the car isn’t good enough to be sold to actual customers yet. How
is that not a revenue recognition issue? If the car isn’t good enough to be
sold to customers (non-employees), but rather must be tested by employees
first, what kind of “sale” is this?
Yes, I know that these employees are paying full price for the car. That’s
not the point. The primary point is whether Wall Street should care whether
Tesla has achieved a critical milestone by having its employees pay for beta
-testing its own car.
Every normal automaker produces 500 or so beta test units of an all-new car,
especially one that’s produced on an all-new platform. These 500 or so
cars are driven by employees in various stages for at least 1-2 years in all
sorts of climates around the world, so as to be torture-tested.
Those beta test cars are never sold to anyone, employees or otherwise. After
the end of the testing cycle, once regular production has begun, those cars
are either crushed or otherwise disassembled and recycled, so that the
parts never end up in a civilian’s hands. There are many reasons for this,
but legal liability is a key one.
Take the Nissan LEAF 2.0, for example. It will be unveiled in Tokyo on
September 5. It will be competing with the Tesla Model 3 to some extent,
given that it will likely have similar interior space and with an initial
battery capacity of 40 kWh and eventually a year or so into production, also
a 60 kWh battery. The price is said to start below $30,000.
Nissan has not been running around selling 30, 100, or 1,500 or whatever
beta units of the LEAF 2.0 to its employees to test before it starts
production of the LEAF 2.0 this fall. It has been testing the car for at
least a year or two already. When it starts production, the car will be 100%
ready and will be sold to the general population from Day One.
This is why Tesla delivering 30 cars in July and 100 (or more) Model 3 cars
in August simply isn’t the same as when any other automaker such as Nissan
starts to deliver a new car. If Nissan wanted to impress people by smoke and
mirrors, it would have told people that some time back in 2016 or even 2015
, it was “delivering” 200 LEAF 2.0 cars, by virtue of selling them to its
own employees.
But of course, Nissan did not do that. When the LEAF 2.0 goes on sale
imminently this fall, everything will have been torture-tested already, and
production will easily overwhelm the Tesla Model 3 for, at a minimum, many
months to come. The product will be available around the world from the get-
go, instead of a year or more later if you live in Europe or Asia.
To pick another analogy, let’s assume we were talking about Apple (AAPL)
and an all-new iPhone. Timely, given that we are approaching the iPhone 8
launch here in September.
Let’s assume that Apple held a ceremony in which it declared that the
product was now in production and has been launched. However, only 30
iPhones were delivered to Jony Ive, Tim Cook and other members of the
management team. Perhaps Warren Buffett also got one, given that he’s one
of the company’s biggest investors. It was now up to these fine folks -
first 30 and then another 100 or more the following month - to work out the
software kinks in the product, before the product was sold to the general
population.
What would you say about Apple if it did that? Would you consider these 30 +
100 units to be legitimate sales? Should Apple recognize revenue from
selling an iPhone 8 test unit to Tim Cook and Warren Buffett?
I am not worried that, eventually, Tesla’s Model 3 somehow won’t turn out
to be a quality product. I assume that it will. It will be easier to do so
than the Model S and X for all the good reasons Tesla has articulated. The
Model 3 is not as complex to build, doesn’t have any crazy features such as
“self-presenting door handles,” “falcon wing doors” and so forth, and
so it had better be as easy to produce as any other car from any other
regular automaker. As such, I estimate that Tesla will be able to deliver
close to 100,000 of them in 2018, for total company sales of close to 200,
000 units.
However, the proper definition of the timing of that ramp didn’t begin in
July 2017, and it may not have begun in August 2017 either - assuming these
“deliveries” are only to employees and close friends of the company.
Conclusion: When you hear the number of Model 3 cars Tesla delivered in
August, you have to realize that it is not the same as any other automaker
delivering its first few hundred cars of an all-new model. Tesla’s
deliveries are only to employees and equivalent who will be doing the kind
of testing that other automakers do in the quiet for a year or two in
advance.
For this reason, it doesn’t matter whether Tesla achieved or exceeded its
guidance of 100 Model 3 cars in August. You should assume that it will be a
lot more than that for perhaps another month or two to come. In contrast,
regular customer deliveries of the Model 3 that are non-related-party
transactions, are unlikely to be in the thousands of cars per month until
perhaps around November-December 2017 at best.
Of course, making so-and-so many units of cars really shouldn’t matter as
far as the stock is concerned. What should matter is net profitability (or
lack thereof) regardless of unit volume, and its relation to Tesla’s
skyrocketing debt service needs. |
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