Perseid Capital - Tesla Q1 2019 Cash Burn Analysis

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Tesla Q1 2019 Cash Burn Analysis

Now that we have Tesla’s delivery numbers for Q1 2019, I’ve attempted to estimate the net impact of Q1 2019 operations on their cash balance.

Cashflow Assumptions

Most of the outflow assumptions are unchanged from my original cashflow projection.

The changes are:

  • Updated methodology for projecting impact of deliveries and production (discussed in detail below)
  • -$500M Customer Deposits Used
    • Telsa reported $793M in customer deposits at the end of Q4 2018
    • Because Tesla already received a portion of the funds for sales in the order backlog, Q1 sales against the order backlog would deplete the deposits, yielding lower cash per sale than the ASP would otherwise indicate
  • +$450M from ABL increase
    • I had originally modeled this a non-cash transaction aimed to keep Tesla out of default on the ABL due to price reductions that would impact the borrowing value of inventory
    • In reading the amendment to the ABL, I now believe the amendment did increase the cash available to Tesla by $500M
    • The ABL terms require that Tesla either maintain a cash balance of at least 50% of the ABL line or avoid drawing down the last 10% of the ABL funds
    • If Tesla fails to meet these conditions, ABL contingencies go into effect—meaning that Tesla can only access 90% of the $500M ABL increase
  • +500M Other
    • This is intended to capture the impact of the moves that Tesla may have made that are difficult to anticipate from the outside
    • For example: reduction in Accounts Receivable, the FCAU pooling deal, etc.
  • +$80M Other Activities
    • Telsa had just under $800M of revenue from their Energy and Services division
    • I’ve assumed $800M for Q1 2019 and a 10% contribution margin for these activities
  • -$349M Taxes Payable
    • Tesla came into Q1 with $349M of taxes payable. I assume all were paid in Q1
  • -$130M Panasonic Catch Up
    • @BradMunchen reports that Panasonic deferred invoicing Tesla for batteries delivered in 2018,
    • Tesla must make catch up payments for parts delivered and used, resulting in a net cash drain
    • I’ve estimated the impact at $130M, based on smoothing Panasonic’s operating profit across the impacted quarters

Cashflow Impact of Deliveries

To forecast Q1 2019 revenue, we need an estimate for current-quarter ASPs. This task is made harder by the aggressive price cuts announced on 2/28.

Using Tesla’s historical quarterly totals of deliveries and automotive revenue, I backed into reasonable-enough ASPs.

Note that Tesla usually reported Model S and X deliveries combined. I’ve broken them out here using information from Inside EVs.

The above provides a starting point for estimating Q1 2019. The next step is to estimate the impact of the mid-quarter price cuts to ASPs.

To estimate Q1 2019 revenue, I assumed monthly ASPs of:

Note: January and February estimated based on historical. March assume a 15% decline for MS/MX and a 17% decline for M3.

Finally, I broke out the quarter’s total deliveries by month and model using a combination of Tesla’s quarterly deliver report and Anton Wahlman’s updated estimates.

Putting together monthly deliveries and ASPs, my estimated of total revenue for Q1 2019 is $3.8B, broken out below by month and model below.

Cashflow Impact of Production

Usually, I’d try to calculate the cashflow impact of production by calculating the net change in Inventory and Accounts Payable. However, that type of analysis only works when we have strong visibility into a company’s inventory.

I don’t feel comfortable with any of Tesla’s inventory numbers, so I’m taking a non-traditional path to analyzing the cashflow impact of production.

I modeled the cashflow impact of production as the entire Accounts Payable balance of $3.4B brought into the quarter.

All current-quarter production is assumed to have no impact in Q1 (though it will need to be modeled when analyzing Q2cashflows).

Q1 2019 Results

Putting everything together, I estimate that Tesla’s unrestricted cash balance has been reduced by $1.3B.

In my original cashflow projection, I performed a scenario analysis for various starting cash balances between $1.7B and the reported $3.7B. Below, I’ve broken out the various factors impacting cash starting from the reported cash balance of $3.7B.

Some additional thoughts on the chart above:

  • Window Dressing
    • Telsa’s reported cash balance is likely overstated to improve optics. Assumed impact: $500M
  • Cash Locked Overseas
    • This cash is likely required to maintain Tesla’s operations in various countries and not easily repatriated for expenses like payroll or bond payments
  • GF3 Deposit
    • There have been a few questions regarding the validity of this transfer
    • Here’s a screenshot of a filing from Singapore’s BizFile system that confirms that the $610M has been moved to Singapore, which makes me confident it is no longer available as unrestricted cash
  • CapEx
    • I’ve assumed Tesla has cut all capital expenditures (even maintenance level), since that would make sense if they’re worried about running out of cash

Gross Reported Cash

Gross reported cash will likely include:

  • +$200M cash held overseas (not China)
  • +$610M cash held in china for GF3
  • ?? Window dressing

I expect gross reported cash to be in the $1.8B - $2.3B range.

Disclaimer: Perseid Capital is short Tesla via puts.



  • Updated the assumptions, cashflow waterfall chart, and notes to make my assumptions more easily understood. No net impact on projection
  • Updated assumptions for new insights in the to ABL, deposits, etc. Net impact on projection: -$200M