An analysis of Tesla

1. 1
Tesla (NASDAQ: TSLA)
Party of Dotcom or The rise of the Tech forerunner?
13 Feb 2020
Louis Tsang
Commented by Louis Tsang

2. 2
Commented by Harson Lin &
invbots.com
Call on Tesla
• Short-Term [Hold]
• Bearish Doji Star Pattern; Overbought as shown in Technical Analysis
• Long-Term (Blue-Sky Scenario)[Buy] – PT: $889 (15.8% upside, closed at
$767.29 on 12/02/2020) (Pegged to 69x forward Non-GAAP PE)
• Model Y Production ahead of Schedule; Producing in the end of Q1 2020.
• Blended ASP of Model X,S,3 increased
• 2020 : Top-line Growth > OPEX
• Current Backlog of Cyber-truck will be produced within 3-4 years timeframe.
Commented by Louis Tsang

3. 3
Beat in EPS
Due to better operating cost control and above-expectation delivery
Earnings Update – Q4 Beat
Metrics (USD) Actual Consensus
EPS (Non-GAAP) $2.14 $1.72
Revenue $7.348bn $7.048bn
EBTIDA $1.175bn $0.99bn
TSLA released the earnings result on 19 Jan 2020:
Commented by Louis Tsang

4. 4
Guidance/ Investor Comment
• “It’s an autos business and that will probably be the case forever... albeit an autos business led by management/talent who are
exponentially more tech- oriented than competitors, which is a huge advantage.”
• “Of course the stock looks expensive vs. auto companies... but it’s also a tech company and looks cheap vs. many tech
companies.”
• “Tesla is experiencing a wave of rotational tailwinds... as traditional industrials/consumer PMs hand the reigns over to tech and
ESG-oriented PMs that have increasing sources of capital and a scarcity of new ways to deploy it.”
Source: Morgan Stanley
We believe the market started to price in a Tech valuation instead of pure automobile/industrial valuation comp. Investors
concern over the profitability gradually subsided, viewing TSLA as the industry gamer changer like AMZN and deserving
RERATED.
Guidance
• ”Comfortably above 500k of Sales Volume in 2020” We revised up our delivery figures from 470k to 550k in 2020.
Sell-side consensus was at ~476k before the earnings. A bullish FY20 hinges on the fulfillment of the expectations
• Tesla continues to expect positive quarterly FCF “with possible temporary exceptions” arising from the launch of new
products. Management reiterates their view on “self-funding”business.
• “continuous volume growth, capacity expansion and cash generation” remain prime focus

5. 5
Operating Metrics
Delivery 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Forecast Surprise
Model S 14470 13500 6050 8825 8741 9750 8300 17%
Model X 13190 14050 6050 8825 8741 9750 8300 17%
Model 3 55840 63150 50900 77550 79837 92550 81150 14%

6. 6
Target Market
• Model 3 / Model Y Mass Production in Fremont (US) , Berlin
(EU), Shanghai (CH)
• We believe the Mass Localization of the Model Y and Model 3 in
China will be the major driver of Tesla.
• China NEV Production Number: 900k units in 2019 , China
Government targets at “NEV accounts for 25% of the total
production volume in 2025”, equivalent to 5mn units (6Y CAGR
33%).
Sedan
49%
SUV
44%
MPV
7%
Target Market in China
Sedan SUV MPV
12.09 11.46 12.08 11.66 11.17 10.11
3.82 6.17
8.77 10.10 9.53
9.17
1.85
2.05
2.43 2.02
1.67
1.38
0.00
5.00
10.00
15.00
20.00
25.00
2014 2015 2016 2017 2018 2019
Units (mn) China Auto Market Sales Volume
Sedan SUV MPV
V E H I C L E C A P A C I T Y
Frem o nt
The p rod uct ion ram p of Mod el Y st arted in January 20 20 . Tog et her w it h
Mod el 3, our com b ined inst alled p rod uct ion cap acit y for t hese vehicles is now
4 0 0 ,0 0 0 unit s p er year.
The ram p of Model Y w ill be gradual as w e w ill be adding addit ional m achinery
in various p rod uct ion shop s. After such exp ansions are d one by m id -20 20 ,
inst alled com b ined Mod el 3 and Mod el Y cap acit y should reach 50 0 ,0 0 0 unit s
p er year. W e w ill st art d elivering Mod el Y vehicles by t he end of Q1 20 20 .
Shang hai
W e have b een g rad ually ram p ing local p rod uct ion of b at tery p acks since late
Q4 20 19. The rest of t he Mod el 3 m anufact uring p rocesses are running as
exp ected . Due to st rong init ial custom er resp onse in China, our g oal is to
increase Mod el 3 cap acit y even furt her using exist ing facilit ies.
Inst alled A nnual Cap acit y Current St at us
Frem ont Mo d el S / Mo d el X 90 ,0 0 0 Product ion
Mo d el 3 / Mo d el Y * 4 0 0 ,0 0 0 Product ion
Shanghai Mo d el 3 150 ,0 0 0 Product ion
Mo d el Y - Const ruct ion
Berlin Mo d el 3 - In developm ent
Mo d el Y - In developm ent
Nort h A m erica Tesla Sem i - In developm ent
Ro ad st er - In developm ent
Cy b ert ruck - In developm ent
* Mod el 3/ Mod el Y inst alled cap acit y in Frem ont w ill extend to 50 0 ,0 0 0 by m id -20 20

7. 7
Target Market / Our outlook
• Battery Supply remains overhang/ Management hinted the concern
over the mass production of additional models impeding the overall
sales volume trend; Expecting postponing production plan of Semi and
Cyber Truck.
• Cost cut from localization of the production facility. (Reportedly , 30%
of the raw materials localized/Company targets at 70% by the end of
2021). Overall cost cut will translate to maximum 65% decline in
production cost and so on lower ASP to compete with other NEV
players in China.
Gross margin :ASP(43000USD*(1-(22%~25%) )* 65%) with discount;
Expecting 10000~15000USD potential adjustment
• Expecting OPEX uptrend due to program of Model Y in Q1 and China
Model 3 Campaign yet top-line growth should exceed the growth of
OPEX. Enjoying operating leverage
• Negative Impact of Corona virus is limited to Tesla. Q1 Estimated Total
delivery in SH (150000/12*3) =9375 units.
• Model Y(SUV) with 4.1miles per kilowatt hour (Model Y) ; Start
producing in Jan 2020 with limited quantities) / Shanghai (2021)
• Expecting postponing production plan of Semi and Cyber Truck
Geographical
Revenue FY14 FY15 FY16 FY17 FY18 CAGR %
U.S. 1471.643 1957.397 4200.706 6221.439 14871.507 78%
China 477.082 318.513 1065.255 2027.062 1757.147 39%
Netherlands N/A N/A 305.184 330.343 965.596 N/A
Norway 412.198 356.419 335.572 823.081 812.73 18%
Other 837.433 1413.696 1093.415 2356.826 3054.288 38%
Total 3198.356 4046.025 7000.132 11758.751 21461.268
Proportion FY14 FY15 FY16 FY17 FY18 FY18 9M FY19 9M
U.S. 46% 48% 60% 53% 69% 65% 52%
China 15% 8% 15% 17% 8% 10% 12%
Netherlands N/A N/A 4% 3% 4% 4% 5%
Norway 13% 9% 5% 7% 4% 4% 6%
Other 26% 35% 16% 20% 14% 16% 25%

8. 8
Technical Analysis
Bearish Doji Star Pattern indicates the market adjustment despite the strong MACD and over bought signal of
RSI (Cautiously Optimistic)