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1) Panasonic helped Tesla out in Q2 and Q3 2018 by extending for 6 months the payment deadlines of LiBs that Tesla ordered & used. Unfortunately, I was so busy trying to get the numbers owed by Tesla (which Panasonic wouldn’t divulge), that I didn't ask why they did this.
2) Can’t follow up now, as Panasonic is in “silent period”. My bad. But Panasonic did say that they “paid for the inventory on Tesla’s behalf” and were being paid back this sum during Q4 2018 and Q1 of 2019. From thereon, all is paid up by Tesla.
3) I’m willing to bet that this had much to do with propping up Q2 numbers, when Model 3 production was behind schedule, and then showing how profitable Tesla could be with their Q3 numbers.
4) Note that when Tesla began paying Panasonic back for those LiB inventories in Q4, this coincided with Tesla delaying a $180m debt payment due in December 2018 to April 2019. Cash must’ve been severely tight.
5) This is pure speculation, but there was a huge incentive in trying to get the share price above the convertible note’s $360 strike price so that Tesla could get bond holders to convert into shares, rather than Tesla paying back the $920m amount due on March 1st in cash.
6) As can be seen, once Tesla began paybacks in the Q4 2018, profit margins deteriorated. Excluding ZEV/GHG credit sales plus Nevada State’s $195m in tax incentives, Tesla actually generated a $32m operating loss in Q4, versus a $144m OP in Q3 (on the same basis).
7) Even on Tesla’s own pro-forma numbers, the operating margin of 6.1% in Q3 went down to 5.7% in Q4, despite the +8% QoQ increase in deliveries. Tesla’s Q1 2019 earnings will also be negatively impacted by the last installment of the payback to Panasonic.
8) One can only imagine how Tesla booked these deferred payments to Panasonic in Q2 and Q3 of 2018. Most likely Accounts Payable or Accrued Liabilities. But Q2 & Q3 2018 profits and FCF undoubtedly had positive impacts, as COGS and inventory were lower than they should’ve been.
