Regulation Credit Release For Tesla
Summary
- data for chart on article.
- Tesla: Revelation of Regulatory Credits And 'Ludicrous Mode Accounting'
- Note this info has rarely been compiled as the detail is within each quarterly financial statement. From each pdf, data was taken to excel.
- Rather than match the regulatory credit with the sales of a given quarter, Tesla has afforded itself the discretion of booking it when it is sold!
- This adds incredible discretion in managing quarterly earnings. For example, if in q2 2020 the average rate of reg/qtr had been constant, the profit boost would have been less than half the $428 booked! But voila, Tesla is eligible for inclusion in the S&P 500!
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The Regulatory Credit quantum if normalised to reflect sales, the basis on which ii is awarded.
What would Tesla's second quarter GAAP net income have been, if a normalised regualtory credit amount was booked? Using the average (orange line above) of 0.21% of sales, the quantum would have been $193m, versus the $428m actually posted. Hence the 'Ludicrous Mode Accounting for Regulatory Credits' is revealed. You read it here first.
Analyst's Disclosure: I am/we are short TSLA.
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