Most are predicting a slight loss, I am predicting a slight positive earnings report
Just a guess: Break even to slightly negative, 10¢ or so a share.
Slight profit. because this is crucial to having four quarters with profit that get TSLA listed on S&P and ends the reign of the shortsellers. Elon has tweeted hints of this over the weekend.
I suspect there will be a gain or loss over Q4. Doubtful it will be the same. Likely another 5 weeks before we know.
Whatever your Q1 predictions were time to chuck 'em out the window and make some better ones.
You know how Tesla used to sell those ZEV Credits to the rest of the US Auto Manufacturers to let them continue to make even more gas guzzlers for more $$$ ? And remember how the ZEV seem to have mostly gone into abeyance of late in Teslas financials due to the abundance of Compliance cars released in ZEV credit states only by the usual suspects.
Well, Financial Times is reporting (as is Reuters now) that Telsa inked a deal with FCA (The merged Fiat Chrysler for folks not familiar with FCA). And it was made at FCAs request to come to an arrangement over "Emission credits".
Whereby FCA pays "hundreds of millions of Euros" to Tesla for it to share its valuable (zero) "emissions" with FCA as per EU requirements/rules by opening an "pool fleet" with FCA cars and Teslas as of Feb 25 2019.
In effect Telsa and FCA vehicles together will count as one entity for measuring Average emissions of the vehicles.
Thus allowing FCA to avoid a lot of EU fines for non compliance with EU pollution rules.
This means that whatever the Q1 financial numbers were predicted to be. They won't be that any longer, nor for the next few quarters too I'd bet.
These are basically EU ZEV Credits - in Euros, so are worth 12% more than any old USD ZEV credits.
I bet no one saw that one coming. Neither the Shorts, the Anlsysts, the FUDsters, the boosters, anyone.
Its a logical step, but it will totally take the heat of Teslas Q1 financials for sure. That "sufficient cash on hand" question? Well Tesla just basically a free hand out of likely half a billion dollars. Possibly more.
And also means that each and every Tesla delivered into the EU will more or less be worth a lot more per vehicle than just about any other market. So much so that in fact, Tesla could well stop supplying the rest of the world and just supply the EU with cars and make an absolute bomb full of money. and they could probably all be SR "$35,000" models because I'm sure the EU rules count vehicles in the fleet, not the size of the battery in each vehicle. So its quantity over high margin top spec P and LR models for the EU from now on.
This may give the RHD production line a boost too - while the UK remains in the EU. Because why bother supplying cars to the North American market [or even China], when you can do what the rest of the worlds automakers have been doing for years. And supply "Compliance Cars" to solve your financial problems. And if both LHD and RHD models count, well Tesla can kill several birds with one stone!
Except now this is US car makers doing to the EU.what the EU car makers (and Ford, GM and such) have been doing tot he US for years!
@greg - wow!!!!!!
I was going to say what @greg posted. That is a wild card. Those ICE companies are essentially paying Tesla to support its EV development. That in turn does nothing but to help Tesla to increase its lead in the market. No complain about it at all.
good info @greg!
I am somewhat on the fence about this. Basically this gives the other car companies a way out from building EVs. If it's financially more beneficial to pay for another company's credits than it is to invest/make EVs of their own, then they will simply continue to do so. So in the FCA case they can either invest/build their own EVs (most expensive), pay fines which seems to less expensive than building their own but more expensive than the cheaper option which is to buy Tesla's credits. So where exactly is the incentive (financial pain) for them to make their own.
I mean, we talk about how companies make just enough compliance vehicle just so they can continue to sell their high profit trucks/SUVs. That's exactly what this FCA deal does. They get to pay the least amount of money by buying credits, while continuing to build their high profits trucks/SUVs.
If Tesla can sell a new EV at the same price of a Corolla, gas cars will be done.
Tesla can make better use of FCA money vs. the cheating ICE companies.
We don't know how much the "Tesla tax: to FCA will be compared to the EU fines. Which have been estimated at $2 billion Euro a year.
I should think that Telsa should be aiming to get 50% of whatever the EU fines that FCA would otherwise be charged, which could add a 1 billion dollars a year to the bottom line if the above 2 billion Euro figure is correct.
ICE companies should also consider the PR appearance of such deals. They are basically the bad guys paying sin taxes to the good guys.
So FCA is going to fund a competitor (TESLA) so that it can be an even more effective competitor. Good idea! Put out the fire by pouring gas on it.
As any firefighter will tell you when fighting forest/grass fires, sometimes you deliberately set back fires to ensure the fire runs out of fuel sooner.
Using fire to fight fire, is not a new thing here is elsewhere.
FCA will run out of rope long before Tesla runs out of cars, so why shouldn't Tesla give FCA a little more rope in the meantime?
Actually, just owning an FCA product increase the risk of a gasoline fire. :-)
The FCA credit deal will likely not boost any cash this year, the new limits go into effect next year.
From 2021, phased in from 2020, the EU fleet-wide average emission target for new cars will be 95 g CO2/km.
This emission level corresponds to a fuel consumption of around 4.1 l/100 km of petrol or 3.6 l/100 km of diesel.
A phase-in period will also apply to the target of 95 g/km. In 2020, the emission targets will apply for each manufacturer’s 95% least emitting new cars. From 2021 on, the average emissions of all newly registered cars of a manufacturer will have to be below the target.
The current limit is 130 grams per mile, FCA achieved 120 grams per mile in 2018, so FCA does not need to pool their fleet with Tesla this year.
limits are per kilometer not per mile
There was talk by some allegedly "in the know" about the deal of Telsa getting payments and having them split between 2019 and 2020 years to spread the financial load for FCA.
However, Tesla probably won't recognise that as revenue until the cars it represents are delivered/qualify for the pool.
But we don't know all the details of how the deal was put together nor how much and when it impacts the 2019 financials. So I guess in the Q1 financial update we will no doubt hear about it, and if not, there will be questions about it from the analysts.
@greg I would be surprised if this deal has an impact on Q1 2019 numbers, just from a general accounting principles perspective. But agree this should be a subject to discuss during CC and still is overall great news!
For this year it might help Tesla to secure better loan conditions if needed.