Tesla's Profit Powerhouse Has Awakened.
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- Опубліковано 4 жов 2024
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I worked at Tesla starting in July of 2017 as an Operations Analyst out of the Bethlehem, PA distribution center facility and left as a Program Manager based out of Austin, TX as of September 2021. I spent most of my time in the distribution and supply chain organizations.
Before Tesla, I was a Director of Business Intelligence and Pricing at the largest Pet Food & Supply distributor in the US, Phillips Pet Food & Supplies based out of Easton, PA. My wife and I also owned a small business in Bethlehem, PA between 2016 and 2019.
I have been a shareholder of Tesla since 2012 and currently own Tesla stock. Nothing I say constitutes as investment or financial advice.
My thoughts are my own and are not representative of everyone who currently works, or has worked at Tesla.
If you like this content I would greatly appreciate your likes and shares!
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A whiteboard explanation would be good here....Thanks, gents.
Jason Fenske YT EE.
King of the Whiteboard.
I agree.
BRB buying whiteboard.
😂😂
Love you guys ❤
Been waiting for this day for energy storage
I bought my shares in 2020. Can’t believe I’ve been holding for 4 years !!!
HFS - Tesla is going to be a freaking MONSTER
The Matt & Farzad ❤ Is in it self worth the listening😂
How the accounting is done for mega packs is great information! 🐂
When thinking about how fast things will change going forward make sure you include a knowing/believing factor. As more large storage gets installed and demonstrates value reluctance to adding storage should fade away. Companies that benefit by lower cost will start trying to figure how to speed up the process. Solutions to roadblocks that now slow the process will be worked on, probably developed.
At 35:48 Farzad points out the energy by 2025 when China’s 40 GW are ramped up could be delivering $8 billion a year in extra profit that can be used to fund AI, bots, new factories and other growth.
ELON disagrees. They need several more factories for batteries @@richb2229
Tesla does need more factories @@tireddad6541
Both Lathrop and Shanghai factories are due to expand capacity in the future.
Lathrop is fully ramped to 40gwh as we speak so Shanghai should ramp to full quite quickly, probably see expansion 1 year after that aka ~2026.
There has been talks about a third spot for a megapack factory, and at that point it have surpassed (current) automotive sales net profits
“Welcome to my world!” - TeslaLarry
Awesome video Farzad... thanks so much! One thing I wanted to say about your mention of greater funding of other projects due to the high margin deferred revenue flowing through... capital projects are funded from cash, not from the income statement profits. The accounting of revenue and expense recognition doesn't relate to cash available to fund projects. Project funding is a capital expenditure, which flows through the cash flow statement, not the income statement... two different animals. Just a minor point... Wall Street pays more attention to EPS, so this vid is super exciting. I tripled down on TSLA share a few weeks ago, thanks partly to your content so all your content is much appreciated! Thank you, Farzad, and belated congrats on your new baby!
When you are in hypergrowth, like energy storage, the deferred revenue grows faster than you recognize it increasing the amount over time. Expect it to grow from $3.86 billion to over $5 billion this quarter, even if they recognize one quarter of the $1 Billion they expect to recognize this year.
I have big faith in megapack. As they sell more, the word spreads between the power companies, so far I've seen reports of the megapacks doing more than expected, saving huge money. It isn't just about what the megapacks can provide, but also what the fossil fuels generators that megapacks can prevent needing to come online during surge situations.
There also is no 'politics' baggage to them, power companies don't give a shit what Elon says on Twitter, just what the product can do for them.
Super hyped for megapack mass distribution
Farzad - we need to differentiate between deployment and production of the MP. The fact they deployed 9,4 Gwh does not imply that they produced the same in the same quarter. These could have been produced over the preceding quarters and deployed/commissioned in Q2. I will not be surprised if we are down below 9 Gwh next quarter. It would be great if Tesla provided production information as well
Anyone else notice that Elons' timing for cash generation for AI has been absolutely perfect? From what? 15 years out? Mind blowing.
Thank you for framing up how the energy side of TSLA may play out - finally “here it comes”!
There is Tesla autobidder software and potentially revenue share on pack profit generation
Thanks for giving me something to listen to while at work 😂
Elon Musk stated energy will be bigger than the car market. Said that long time ago
Just nobody will buy it from Tesla!
@@BrunoHeggli-zp3nl They’re the largest seller of grid-scale storage in the world so you’re wrong already I’m afraid.
Never though I'd want to get this far down the rabbit hole on these subjects 😂.
Thanks guys, & shout out to Larry
I find the accounting information quite interesting. So I understand that a portion of the revenue is deferred for up to 18 months. However when Tesla says they deployed 9gwh - is the 'deployment' only considered once those 18 months are up? Or is the 'deployment' of 9gwh separate from the revenue realized from past 'deployments'? That is one thing I am unclear about.
DON'T FORGET :: Tesla's (1) Corpus Christie (2) CATL's plant going into Novada (3) Cathode & 4680 in Austin are adding to Tesla's in-house cell capacity.
Matt, you’re forgetting that Tesla has drastically cut staff, so even if the factories are not working to max capacity, which indeed makes unit sales more costly but seeing as their staff costs have simultaneously been cut, so the unit cost could still potentially be less.
Tesla has cut staff about five different times. Then rehired what they actually needed. Companies that don't do that end up with a lot of people wasting time at their desk.
Plus it's easier to ax a department that needs to make a huge change in direction. Make the new direction clear and then hire people who can help. Don't waste energy trying to reform people locked into 'old thinking'. Legacy has a massive problem getting pistonheads thinking like EV folks.
Don't they have some sort of severance payment? Maybe the savings comes later.
Thank you everyone for this update. Matt is yet another great individual and member of the community. So much knowledge and amazing ability to communicate the point. I always learn a lot. And it is also nice to hear validation of my stock holding 🙂
TSLA UP!
A couple of considerations.. governments (US, Europe, India..) are slapping big import taxes on foreign EVs to protect their car industries.. is there a similar risk that Tesla will get slapped with big battery import taxes from the future Shanghai factory built batteries or is there less concern? Also who is the competition for Tesla in the battery storage industry today? Can’t believe the Chinese who are the biggest battery manufacturers are going to sit back and watch this opportunity slip through their fingers !!!??? Thanks Energy BULLS !
Look at the SIZE of the TAM
There's not a single Company OR Country that can cover it ALL.
For North America, wouldn't product manufactured at Lathrop be exempt from big import taxes?
I see this as a nothing 🍔. China has enough trade partners with little to no tariffs. Tam is too big on this one.
Love you guys. But can you try to add thumbnails where you don’t look like criminals 😂
Name that band.
@@farzyness the smooth criminals
“The criminals”
maybe it's the tough investor look, shorts beware kind of thing.
@@lars2638kinder than the original name for Motörhead. 😉
How does the development that, with tesla, the utility doesn't require a substation impact things?
Margins can't go up when it is growing so fast and new deferrments come on board in larger amounts.
Margins could go up if demand grows significantly. The potential total addressable market is enormous. It's not unreasonable to consider that some utilities might do the math and find it profitable to them to pay something more in order to get the savings started sooner.
So the mega pack guys were correct all this time ?
They charge some thing for the performance contract. And it’s usually highly profitable. And the time span is set by the contract and when the contract is completed, any money left over, belongs to the contractor.
This is the nerdiest and most relevant stuff I’ve heard regarding Tesla in a long time. I actually like that it’s so hard to understand. More time to invest.
If Megapacks are in such huge demand that they can't keep up with orders & they are so beneficial that people will pay pretty much any price to get them... then why the heck would Tesla cut prices???? Keep bringing production costs down but keep the prices fixed (heck, why not raise them?) for as long as possible???? Use the extra profits to fund construction of new Megapactories and/or 4680 battery factories
This might be true if they stop getting contracts. So more future contracts means increase capEx. How do we know it is not already priced in?
Take a deep dive into this updated number to see how much is pegged to the energy delopments and deferred revenues 🙂. Sorry guys accounting principles wont produce a windfall in revenue wiithout the correspinding COGS for it unless it is a software product.. " Tesla reported prepaid expenses of 3.205 B for the latest quarter ending March 31, 2024 on its balance sheet."
So,Keep Delaware Un Mega Packed,Screw That Judge.
Take Delaware's money ! :-)
All the hype this year was AI. But all that computing power needs lots of energy. Next year, it will all be about energy. But more importantly, sustainable energy.
It's not hype. If's real. And these very large batteries should play a major role in providing sustainable energy for AI. A large AI supercomputer site isn't going to want to get hurt by having their rate set by peak demand and TOU charges. Store up less expensive off peak power to lower costs.
And my guess is that we will see some supercomputer sites installing large amounts of solar. If they have some affordable real estate close enough they could avoid the utility distribution charges. Build a solar panel shade umbrella over the plant and over the parking lot for starters.
SIMPLE ANSWER " Have a third line ready for production the hour cells are available "
1.E4 wins by force - Bobby Fisher
but they laided off 15% of their work force so fixed cost goes down
Minimal
@@rogerstarkey5390all to bottom line though. 🤔
Laid off ~15%. Then hired back what they really needed. Left the less valuable employees behind. It's quicker and cleaner than picking out who to get rid of.
@@bobwallace9753 yeah I heard about that. It’s the life of working in a corporation
Honest question, what about the COGS of many new contracts deploying? They are also going to have the same rules causing revenue to be deferred. So could be always upside down in revenue while expanding deployments. Am I missing something?
While production is ramping up (new factories built, etc.) it is likely expenses will outstrip profits. All that means is that the really big payoff will be postponed for a while. And the big payoff will be much bigger.
Short term, it's likely we'll see a profit jump because Lathrop is ramped and Shanghai is almost finished. Major money spent.
The cost of goods may not be an issue if the turnover is rapid. Tesla typically gets up to three months to pay suppliers. As long as cells, electronics, and cabinets are turned into deliverable products within that supplier finance window COGs should not hurt profits. With just in time supply it's likely Tesla will be using free financing from suppliers.
Now that I'm in the green, I subscribed to your channel again. 😀 fuck that bear market! 😅
Don't unsubscribe because there's a price slump. Keep on learning more about the company so that you can make the wisest decision going forward. Maybe you'll pick up information that tells you to bail, or to hold, or to buy more.
Anytime you invest in an individual company you should learn as much as you can about that company. Otherwise, put your money in index funds.
@@bobwallace9753 I didn't stop learning about the company, I didn't want to hear Uber bulls mouth anymore. Lol
@@jdskates.69
The bulls are going to tell you the positive news. The media is going to push the negative and false because Tesla does not buy advertising from them.
Best to stay tuned into both. If the media posts FUD then the bulls will likely tell you why it's FUD.
Please, lets not muddy communications any more than Americans already do. Accounting & general business terminology would refer to being "in the 'black' ". Of course you're refeeing to your stock but in the 'black' would still be prefered.
I understand your happy, me too. I have been in the 'red' with my Tesla for 3 yrs. Things are finally looking up ! :-)
As a numbers guy love this stuff.
Bro the thumbnail 😂 😂 nicely played boys!
When Zack says they target 25% he means in 2030 at 2TWh/year. Not for next quarter...
Begs the question - why aren't they building 4-5 more Megapacktories at the same time right now?
good content, bookmarks r nice.
Okay but what about the droid attack on the wookies?
Tesla's energy storage looks good; Farzad's chess game needs some work. Perhaps more puzzles?
Very good news.
Sorry, the cost recognition vs the revenue recognition under battery megapack business as discussed by the first speaker just doesn't feel right. You can't just write off all (100%) the battery cost prior to delivery and recognize 0% revenue. Doesn't sound right!
FSD is an entirely different business. FSD development costs are more like costs of a building which are depreciated over many years!
Disappointed that I had to hear that HW3 likely won't support Tesla's improved FSD models from Linus Tech Tips instead of the Tesla community. Guess I'm in a bubble.
Edit the ums out
Errr
Ouch. 1.5+ hours plus video and no bookmarks. Sorry, man. Gotta skip this one.
Bye!
The video thumbnail looks like mugshots of the three of you. Might want t rethink that one.
If they deployed 9 in the last quarter ok great. But were they all produced in that quarter or were some carried over from the previous quarter. Maybe they are producing 7 per quarter?
correct
whens it gonna go up again, august?
Do China deployments have the same revenue deferral problem?
Dude, y’all are making this way too complicated. There is near infinite demand for grid storage, many variables. There will not be a cell shortage for long!
I love listening, but Farzad, why do you swear so much?
If Tesla wants to run 500 megawatts of compute off of solar, that is let's say about 4 gigawatts of deployed solar. Or around a 70 square mile solar farm. 3 days of backup would be about 400 megapacks. All to run 1 computer. Going to be hard to go green on this.
I suspect the days of Tesla producing more power through solar that they have deployed than all the cars they have produced and all their factories is long over. Stepping into a giant carbon footprint.
Not much profit yet
Question. Do people like Matt and the other guys that are often on the show own a piece of Farzad's channel? Because if not then what is their incentive to spend hours on his podcast weekly after doing hours of research?? Why would like want to grow his channel and give it value for free constantly? He doesn't add their socials or anything in his description to boost their personal brands.
Farzad, I understand that this is your livelihood but the ads every 14 seconds make it really hard to watch your videos now
If mega pack is so profitable why aren’t we making more MP factories?
"previously battery constrained"?
@@rogerstarkey5390
And it's necessary to prove the concept to the market first. Makes no sense to build a bunch of factories that sit idle.
Dont worry BYD will sell a lot Megapacks and way cheaper then Tesla,so Nobody has to buy the overpriced ones from Tesla!The Future is looking good!
No Megaoacks for Delaware 😂😂
My Prediction.... Teska Mega Packs will be sold to shipping companies to be installed into Ocean Ships.
Hmm sounds perfect for electric ships going forward.
Is this a parallel universe, the rest of the world has been shown that Tesla has lost 55% profit from the previous year and you fanboys seems to think Tesla is a great company to invest in. If I was an investor I would want to see growth in profit this year, next year etc. That is not what is happening!
Talking in circles and continually correcting himself makes it extremely frustrating to listen to mega pack accounting guy. To Farzad’s credit he tries to offer a conclusion based on the massive word salad mega pack guy spewed for 20 minutes.
Having struggled with public speaking myself, I can suggest a quick fix. Write out every word you said, and then start removing all those words that added no information. Add a summary at the beginning and a conclusion at the end. You should be able to condense it down by about 90%, most of what you stated, actually does nothing but provide confusion and gets in the way of understanding your point which you made extremely difficult and painful to understand.
Coherent, speaking, dictates that you spend a sentence or two supplying the overall point. Then you can give the 20 minutes of data if you want, but then at the end you need to conclude and reinforce the initial point that you made in order that the list is not sitting there going what the heck is the point for 20 minutes straight.
Others commenting on here have complained about all the ums and ahs in a row. Joining toastmasters where they actually count your ums would be helpful to recognizing how many hundreds of them you had in there which supplies no additional information and is extremely annoying to have to put up with. Listen to Obama for an hour and you will not see a single um.
FARZAD I can't even have my kids watch your show because you cuss for no reason. As a new dad you will soon understand this, soon enough.. Also your constant jabbing of Matt is tiresome. It's not funny or enjoyable to listen to.
Wow, people sitting through an hour and a half technical discussion, only to criticise the style of speech and some swearing....what sort of movies do you watch ? Disney animations only ?
Tesla needs to upscale the Megapack FACTORY production business...message to Elon : we've got millions of sunsoaked acres of lithium and silicon rich earth in Western Australia !
Conhecimento e vida
You guys bicker like old married couple. Nice to see haha
Have you ever had an accting course ? It is all nit & pic. How do you apply theory to daily/actual money flows. Then the govt and accting principles people try to establish Generally Accepted Accting Principles , known as GAAP. In general, unless you have a real heart fir it, it will make your head explode ! :- )
Sorry, I can't listen to anyone who uses ummm so many times. Take speak training please.
Talking in circles and continually correcting themselves doesn’t help either; particularly mega pack accounting guy. To Farzad’s credit he tries to offer a conclusion based on the massive word salad mega pack guy spewed for 20 minutes.
Coherent, speaking, dictates that you spend a sentence or two supplying the overall point. Then you can give the 20 minutes of data if you want, but then at the end you need to conclude and reinforce the initial point that you made in order that the list is not sitting there going what the heck is the point for 20 minutes straight.
HANS! 🤨😂 Gentlemen… MURICA! 🇺🇸
As a non- chess player, this is even more boring than watching spilled paint drying, while changing a diaper.
no way changing a diaper is boring, i guarante u wont forget the experience very fast
@@Charless_Martel
More like "Focussing"!? 😂
@@Charless_Martel at 70, I remember still. Once you get to that position, get back with me. While watching the DorkFest
If the energy margins do go up and the selling price is going down 40%, i guess the 25% gm still stands
if the packs underperform they could be deductions from the margin due to compensation requirements.
Why would they "underperform"?
The project SUPPLYING them may underperform, but the packs are a known input/ output
Incorrect. There is a holdback until the product is confirmed to work as advertised. That holdback is not recognize (not put into income) until hold back period is over.
I thought Tesla just won
2nd 🎉
Man the videos are too long
🚀 🌙
Tesla has lost!
Matt like like like like like like like like like like
Oh god, you are terrible at chess.
Good day from GOONELLABAH, NSW! 🌏🏖🤑Tesla is a 💥Profit Powerhouse💥🤑✅✅✅✅