Tesla deferred revenue
Jeremy Johnson's picture

Tesla's Hidden Revenue Sources

I just listened to Rob Mauer from Tesla Daily and he talked about some hidden revenue sources from Tesla. Some of these are not obvious unless you dive into Tesla's 10-Q filing and look. Let's see what he's talking about.
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Elon Musk compensation now 1% of sales instead of 3%

There is about $500 million dollars left in Elon Musk's CEO compensation plan of the about $2.3 billion total. That's just over 20% of the entire package and the average quarterly recognition and cost to Tesla is going to be significantly down in Q3 and Q4 of 2021.

The majority of Elon Musk's compensation plan was realized in 2020. The question is, won't there be a new CEO compensation plan once this one ends? I agree with Rob and hope there will be. It has rewarded investors just like Elon Musk has been rewarded and could likely build Tesla into a multi trillion organization. Elon Musk only gets rewarded if Tesla grows to a point shareholders are equally rewarded.

Energy Solar Roof Margins

Tesla energy, in particular, the Solar Roof, has contributed disproportionally to margin loss for Tesla. What this means is that Tesla Solar Roof is a negative margin project, equaling a loss for Tesla.

Tesla is continuing to improve on the margins for Solar Roof and I would expect this to no longer be a loss in the future, equaling more revenue for Tesla.

FSD Deferred Revenue

There is deferred revenue from FSD (full self-driving) and over the air updates. This is about $2.13 billion. This is very high margin revenue and will add mostly to the bottom line.

Once Tesla actually delivers FSD out of Beta, it will be able to realize most of this money and will continue to add to revenue in the future as people buy FSD in full or subscribe to it.

The other part of this revenue is for over the air updates and the supercharger network.

Deferred Regulatory Credits Revenue

Regulatory credit sales were down in Q2, 2021. Tesla has about $41 billion in deferred regulatory credit revenue. Tesla cannot recognize this money until the other party they got these credits from puts them on their own income statement. Then Tesla can put them on Tesla's income statement.

Reduction in Debit Interest

Tesla is aggressively paying off debt as can be seen by the reduction in cash from Q1, 2021 to Q2, 2021. At the end of Rob Mauer's video, you can see the change in debt, which was from $9.5 billion in Q1, 2021 to $8 billion in Q2, 2021. This is why Tesla's cash on hand decreased from Q1, 2021 to Q2, 2021.

I expect Tesla's debt to continue to decline.

Tax loss deferred revenue

At some point in Tesla's past, there was a tax loss that has not yet been realized in revenue. When it does, it will greatly boost Tesla's earnings per share for the quarter it is realized as it will all be added to the bottom line to the tune of about $2 billion.

If you take a look at James Stephenson's forecast for Tesla in the future, you can see a very high earnings per share in Q4, 2021. This is when he is forecasting that tax loss to be realized, but nobody knows for sure when Tesla will do this.

What do you think about these hidden revenue sources? Are investors not realizing these are coming and that Tesla is growing faster than anticipated?

Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter, Facebook, LinkedIn and Instagram to stay in touch and follow his Tesla news coverage on Torque News.


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Comments

FSD is a wild card at best. It will NOT be a factor any time soon, except as a possible LIABILITY as paid customers continue to be frustrated and fanboys get irritated by their internet tormentors. By my estimation Tesla will become a net profit operation by mid 2023, having absorbed all the losses and emerged a mass market leader. It's difficult to conceive that legacy automakers will get caught up by then. Their current parts-bin offerings suffer in most comparisons and their margins won't be good. And, their build tech can't catch up until IRDA can make more GigaPress volume, as they're sold out for 3 years ahead. So Tesla can defy the odds and emerge a winner. What the stock does? It's already rich. Can it get more so? Only if the Fed keeps pumping up the money supply. When the music stops, all stocks will sink, but perhaps Tesla less so.