1/n $tsla, $tslaq
The update to Russ Mitchell's story clues us in on what actually helped drive TSLA's miracle quarter...
Tesla spokesman told The Times that a large receivable from one of its partner banks for loans issued to US customers is the 10% entity noted in the 10-Q
2/n
1) We know it's 1 entity. So this has to a lease partner for whom TSLA is providing a residual value guarantee (RVG).
2) The increase in AR must be due to TSLA accepting Model SX from customers who leased w this bank. It's likely vehicles were turned in early.
3/n
3) TSLA would have received some cash from the customer and accepted the used model SX for the rest of the purchase price.
4) The partner bank still has a loan out to the vehicle buyer that must be paid. They can either take the used car and sell themselves OR
4/n
4) Get cash FROM tesla for the balancelet TSLA deal with selling the car.
This has important implications for Tesla and addresses a few questions ....
5/n
We now know what drove the spike in AR, But we can also infer why finished goods did NOT go down despite selling far more cars than produced in the quarter. Tesla INCLUDES used vehicles in finished goods. Boom! They are now sitting on a bigger pile of used Model S and X
6/n
The bank either took the cars to sell on their own, or more likely, stuckTesla w the cars. Either way, once the decision is made, The AR would be "settled".
If Tesla gets stuck w the cars, we'd never know and losses on those sales likely get booked in Services segment
7/n
Why did Tesla choose to book these sales in 3q?? It seems that the accounts were not settled, cash had not been delivered (may never be actually); wouldn't it make more sense to wait for 4q?
But shorts must be punished, so into 3q it goes....
One more interesting tidbit
8/n
Reconciliation of recent accnting change shows tesla booked far more RVG related sales this quarter than last.... (its complicated to explain on Twitter) For the financially minded, I've attached the numbers. Bottom line, 113m (roughly 10% of AR..... hmm) was RVG related.
I should have said a partner for whom TSLA provided an RVG instead of saying just leasing. Hard to get everything in.
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