Tesla Motors Club
Plenty of discussion on the business decisions around the EAP/FSD changes but many do not realize that accounting rules are playing a big part on why things are happening the way they are.
Accounting 101
If Tesla gives anything away for free with a car purchase, the freebie must be accounted for in the period in which the car sale took place. If Tesla were to give free EAP or discounted FSD to owners of vehicles sold in 2018, the value of those giveaways would need to have been accounted for in 2018 (i.e. - reflected as a reduction in revenue).
Fiasco context
Since they've already announced their 2018 financials, they cannot provide the freebies to 2018 owners as they do not want to restate 2018 numbers.
2019 deliveries get the freebies. Why? Because they can still account for the freebies in the first quarter of 2019 financial statements. They've already announced that the first quarter will be a losing quarter so taking the negative revenue hit for these freebies in the first quarter makes financial sense (vs any other period) and they can justify it by stating that this is to help make up for the reduced IRS rebate.
The reduced prices for EAP/FSD will be made available in 1 month? Why? 1 month gets you into the next fiscal quarter. The flood of excited non EAP/FSD owners who will plunk down cash for the functionality will help boost the second quarter revenue rather than taking in all that revenue in the first quarter which will be a relatively bad quarter as noted above.
Accounting is not the only reason for all the actions being taking but certainly a consideration.
Bean counters matter
Accounting 101
If Tesla gives anything away for free with a car purchase, the freebie must be accounted for in the period in which the car sale took place. If Tesla were to give free EAP or discounted FSD to owners of vehicles sold in 2018, the value of those giveaways would need to have been accounted for in 2018 (i.e. - reflected as a reduction in revenue).
Fiasco context
Since they've already announced their 2018 financials, they cannot provide the freebies to 2018 owners as they do not want to restate 2018 numbers.
2019 deliveries get the freebies. Why? Because they can still account for the freebies in the first quarter of 2019 financial statements. They've already announced that the first quarter will be a losing quarter so taking the negative revenue hit for these freebies in the first quarter makes financial sense (vs any other period) and they can justify it by stating that this is to help make up for the reduced IRS rebate.
The reduced prices for EAP/FSD will be made available in 1 month? Why? 1 month gets you into the next fiscal quarter. The flood of excited non EAP/FSD owners who will plunk down cash for the functionality will help boost the second quarter revenue rather than taking in all that revenue in the first quarter which will be a relatively bad quarter as noted above.
Accounting is not the only reason for all the actions being taking but certainly a consideration.
Bean counters matter