Comments on: Getting to gross margin: Tesla’s year ahead

By: Adam Lesser

Adam Lesser — Fri, 01 Mar 2013 20:16:47 +0000

@Mark: Tesla still booked 68 million in R&D expense in Q4 (one of the most expensive R&D Qs in its history) despite the fact that the Model S was designed and being delivered. The company is still running heavy R&D costs and while there may be a lot of learning from the Model S, I haven’t seen compelling reason yet that that number will come down drastically. It also will incur SGA expenses when it starts marketing the Model X. I still think the company is very well positioned and I think the Model X could be a nice surprise to the bottom line for investors but Tesla will have to control opex.
Residual value can impact lease interest rates because the bank considers the certainty of the residual value when determining interest rates (in addition to credit scores and cost of capital). I’ve seen wells fargo indicate it considers the vehicle, in addition to consumer credit and market interest rates. I’m not sure the 2500 roadsters constitute a large enough data set that a leasing company would want. Not to mention it’s a sports car not a sedan.
And I agree, Tesla is production constrained, not facilities constrained. Thank you for that.

By: Adam Lesser

Adam Lesser — Fri, 01 Mar 2013 19:52:11 +0000

@CrispB: You can finance a Model S. But Tesla does not offer a leasing program. I’ve seen reports from customers who have attempted to lease through a 3rd party and they have been unsuccessful.

http://www.teslamotors.com/forum/forums/anyone-lease-their-model-s
http://www.teslamotors.com/forum/forums/car-lease-option-not-avaliable-until-springsummer-2013

This is why, during the recent investor call, Elon Musk discussed the possibility of Tesla rolling out a leasing program at some point.

By: Mark

Mark — Fri, 01 Mar 2013 10:03:05 +0000

This article confuses the interest rate on leasing and the residual value.

Interest rates are set by banks and the market not any concern about future value.

Residual value, the uncertain future worth of Model S out 3-4 years is something Tesla would have to figure out (with its financing source) to lease the cars. But it’s not like they have no experience there, either. First of all, cars have pretty well understood depreciation curves. Second of all, they are buying back used Roadsters already.

Also, I doubt there is much R&D left to spend on Model X. The powertrain is mostly a Model S, with the all-wheel drive option obviously. But it’s a very similar powertain that has been developed. The core bodywork obviously exists, although there is certainly tooling.

R&D for that vehicle is likely a tiny fraction of what was spent on Model S and plus what has already been spent on Model X. They wouldn’t be accelerating DOE payments if there was a significant R&D cash need.

The company doesn’t “lack the facilities to meet demand”, it lacks the production capacity to meet demand at the moment. It’s producing at an 18K per year rate and there are nearly that many cars already reserved. It has the facilities to meet demand for about 200K cars, it just can’t produce those at anywhere near its gross margin targets nor is there steady-state demand for 200K Model S/X-priced vehicles.

By: Crispb

Crispb — Thu, 28 Feb 2013 14:35:32 +0000

First of all, they do have financing and lease options. Have you been to teslamotors.com? Also have you toured or seen video of the tesla factory? They only use 20% of the space available. Do your research before writing presumptions in your article!