With the focus back on Tesla’s A/R balance, I looked at the trend in A/R over time. For the most part, over the past 3 yrs, Tesla’s DSO has been in the 17-22 range. A/R spiked in 3Q18, but they nearly doubled sales QoQ, so this should have been expected.

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However, 1Q19 is when the problem starts revealing itself. Tesla’s sales plunged 40% QoQ, yet A/R INCREASED by 10% ($100m). We would have expected A/R to decrease by $175m given the decline in sales.

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If some of the “miracle” sales in 3Q18 were to a related party like SpaceX on credit, it would inflate sales in the quarter. But SpaceX would have no intention to actually pay for the cars. This would explain the stubbornly high A/R balance even as sales plunge.

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A more innocent explanation is: According to the 10-k, Tesla does not carry significant A/R related to vehicle sales because customers pay in advance. However, they do carry A/R related to sales of regulatory credits to other auto manufacturers.

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Recall that in February of this year, FCA formed an open pool with Tesla and agreed to pay Tesla hundreds of millions of dollars for Tesla’s regulatory credits.

https://www.ft.com/content/7a3c8d9a-57bb-11e9-a3db-1fe89bedc16e

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If Tesla booked this as a receivable, it seems like a plausible explanation for the persistently high A/R balance. But then why is Tesla being so shady about it if it’s as simple as this?

What's going on @elonmusk? This is really messed up!

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6/6