Enhanced Summon, where are you?

[dgatwood]

I’m not convinced the money is set aside for this (other than as an accounting tecnicality) so in my analysis cash still matters — as long as that remains an issue for Tesla as it currently seems somewhat to be. Just my view.

It is an accounting technicality, but legally, there are only two ways that unrecognized income set aside for future use can become income for Tesla:

• When they deliver the feature, they can recognize that as income (which then erases the money spent on delivering the feature).
• They can declare bankruptcy and discharge their responsibility to deliver that feature.

The only interesting questions are whether they set aside enough money and whether they already recognized some of that income to pay for R&D costs involved in delivering some portion of the feature that has already shipped.

 

[EVNow]

Fair enough if that is your thesis. Personally I can’t completely dismiss the idea that Tesla is also interested in conserving cash not just worried about fiscal reports. HW3 retrofits would not go well hand in hand with conserving cash was my point.

If you don’t believe Tesla is interested in conserving cash in this instance then of course the risk of delay in HW3 retrofits is much less than I think personally. I feel Tesla is possibly waiting for a fiscal turnaround — maybe helped by China or Model Y — before starting the retrofits.

Not a question of my "thesis" - you are welcome to do your own cash-flow modeling as I've shared the excel workbook.

Tesla's interest (esp. with the SP being so down now) is to show better financial results. Given that Tesla likely makes hundreds of millions every quarter in free cash flow going forward, it makes definite sense to upgrade to HW3 when the NOA on city roads is released to HW3 fleet.

If there are 100k cars to upgrade and it takes 1k to upgrade - it’s a total of 100M. Not that big an amount, esp if spread over 2 quarters because of service volume constraints.

 

[electronblue]

I think Tesla is setting aside funds for this the same way landlords "set aside" security deposits. Cash on hand is important, however, it is insignificant compared to net income. The sooner they can implement FSD, the sooner they can recognize the revenue.

I specifically do not think Tesla has FSD money in a separate account (or escrow or anything of the sort). I find it likely the FSD money has been used already for other costs and is merely an accounting formality at this stage.

I mean if it was easy as that, fiscally neutral and/or even a benefit for Tesla to start the retrofits, why not do it immediately... instead I expect a rather long wait still...

 

[electronblue]

Not a question of my "thesis" - you are welcome to do your own cash-flow modeling as I've shared the excel workbook.

Tesla's interest (esp. with the SP being so down now) is to show better financial results. Given that Tesla likely makes hundreds of millions every quarter in free cash flow going forward, it makes definite sense to upgrade to HW3 when the NOA on city roads is released to HW3 fleet.

If there are 100k cars to upgrade and it takes 1k to upgrade - it’s a total of 100M. Not that big an amount, esp if spread over 2 quarters because of service volume constraints.

I have a very simple counter question then: Why not start the retrofits immediately to boost current quarter numbers? I mean surely that would allow them to recognize some of the revenue sooner than by waiting. If it is cash neutral too why wait.

 

[TT97]

I specifically do not think Tesla has FSD money in a separate account (or escrow or anything of the sort). I find it likely the FSD money has been used already for other costs and is merely an accounting formality at this stage.

I mean if it was easy as that, fiscally neutral and/or even a benefit for Tesla to start the retrofits, why not do it immediately... instead I expect a rather long wait still...

It would be worse for Tesla to start the retrofits now. The retrofit alone would not be enough to recognize the FSD income; by doing the retrofits now, they would incur the expense today but not be able to recognize the income.

 

[electronblue]

It would be worse for Tesla to start the retrofits now. The retrofit alone would not be enough to recognize the FSD income; by doing the retrofits now, they would incur the expense today but not be able to recognize the income.

But if the cash is already set aside for these retrofits, what would it hurt? And it would minimize the time to recognize the income because the hardware would be there the minute the software is ready (instead of starting the retrofits later/afterwards).

I’m thinking the reason is: the cash is a consideration for Tesla.

 

[TT97]

But if the cash is already set aside for these retrofits, what would it hurt?

It would hurt their quarterly profit. They are desperately trying to get back in the black so they will not incur new expenses unless they can offset it with income.

 

[EVNow]

But if the cash is already set aside for these retrofits, what would it hurt? And it would minimize the time to recognize the income because the hardware would be there the minute the software is ready (instead of starting the retrofits later/afterwards).

I’m thinking the reason is: the cash is a consideration for Tesla.

"Cash" is not "set aside". That is not how it works.

The money they collected from all of us has not been recognized as revenue. Until they do that, that part of revenue can't be counted towards profit & loss. There is no impact on cash flow. They already got the money.

So, yes, when they retrofit all our cars with HW3, they will be spending some cash. But it is quite low - some $50M a quarter as I wrote earlier. For comparison they are expected to make $700M in operating cash flow in Q2. So, as you can see a very minor expense.

BTW, you seem to have got influenced by short sellers who keep talking about Tesla running out of cash, even though they have some $4B in the bank and will be making a lot of cash every quarter. Even in the low deliveries Q1, they only got negative on operating cash flow because of inventory build up (i.e. cars in transit instead of being delivered to customers).

 

[electronblue]

"Cash" is not "set aside". That is not how it works.

I agree and that was my point. I was commenting to people who have claimed otherwise in this thread eg:

No, not at all. That's why they set money aside for it.

I think Tesla is setting aside funds for this the same way landlords "set aside" security deposits.

 

[electronblue]

BTW, you seem to have got influenced by short sellers who keep talking about Tesla running out of cash, even though they have some $4B in the bank and will be making a lot of cash every quarter. Even in the low deliveries Q1, they only got negative on operating cash flow because of inventory build up (i.e. cars in transit instead of being delivered to customers).

One doesn’t have to listen to anyone but Musk to come to the conclusion cash is currently a consideration. I don’t think Tesla is in a danger of running out literally because I believe they can raise more but it is a consideration.

The reasons I think it is: 1) Tesla raised more cash after Musk repeatedly saying he doesn’t want to anymore and that profits will sustain the company. 2) The repeated cost-cutting measures within the company are still on-going after raising the cash. 3) Musk gave a timeline recently how long the current cash lasts suggesting there’s too much of it going out at the moment. If they are currently saving from toilet paper according to reports it could make sense to delay HW3 retrofits to a better time.

If China and Model Y pick up and profits start flowing in around Q3 I’d expect the retrofits to commence too. If not I would not be surprised by a further delay so that’s why I consider there to be a risk of delay due to cash considerations.

I do acknowledge your point that on the flipside recognizing revenue might be an incentive for Tesla to complete the retrofits but I can’t dismiss the risk that if profitability is delayed we might feel the pinch in this area as well.

 

[diplomat33]

Over in the other thread on Enhanced Summon, @willow_hiller has uncovered some interesting new info on Enhanced Summon. Tesla has added new code for Enhanced Summon in the new version 3.8.5 of the Tesla phone app:

Okay, I'm going to document here all the interesting changes.

1. First, there appears to be an "autopark_smart_summon" in addition to "autopark_summon" and "smart_summon"

+ autopark_smart_summon_one_touch_usage_message: "Tap to start,\nor tap the map to choose a destination",
+ autopark_smart_summon_pin_too_far_message: "Please move the pin closer to your vehicle",
autopark_smart_summon_release_message: "Release the button to\n stop your vehicle",
- autopark_smart_summon_usage_message: "Press and hold to start,\nor tap the map to choose a destination",
+ autopark_smart_summon_usage_message: "Press and hold to start",

2. Something new called "occupancy grid", no clue the context

+ OCCUPANCY_GRID: "smart_summon_occupancy_grid",

3. Quite a few changes to smart summon visualisations, new mentions to "fsdMode"

VISUALIZATION: "smart_summon_viz",
- summonMode: ue.AURIX,
- summonModeParkerSupported: !1,
+ summonMode: f.fsdMode ? W.SummonMode.PARKER : W.SummonMode.AURIX,
+ summonModeParkerSupported: f.fsdMode,
summonModeParkerReady: !1,
- summonModeAnimation: new T.Animated.Value(0),
+ summonModeAnimation: new T.Animated.Value(f.fsdMode ? 1 : 0),
summonProgressAnimation: new T.Animated.Value(le),
summonLeashOrigin: null,
- summonLeashRadius: ne,
- }, o.state.parkerTrayBottom = o.state.summonModeAnimation.interpolate({
+ summonLeashRadius: ae,

4. New lines about "follow me mode", new messages about distance from vehicle, and new code about an autoparker deadman switch


+ if (this._isTracking() && this.state.findMeButtonShown) return (0, v.translate)("autopark_smart_summon_release_message");
+ v.translate)("autopark_smart_summon_usage_message") : this.state.followMeModeEnabled ? (0,
+ v.translate)("autopark_summon_error_too_far_from_vehicle") : (0, v.translate)("autopark_smart_summon_pin_too_far_message") : "";
+ if (!this._isExecutingFindMe && !this.state.fsdMode) return (0, v.translate)("autopark_smart_summon_one_touch_usage_message");
- return (0, v.translate)("autopark_smart_summon_release_message");
- return this._isTracking() ? (0, v.translate)("autopark_smart_summon_release_message") : "";
+ if (this.state.isParkerDeadman && this._isTracking()) return (0, v.translate)("autopark_smart_summon_release_message");
+ return !0 === this.state.showSmartSummonCautionText ? (0, v.translate)("smart_summon_caution_text") : null != this.state.smartSummonCompletedText ? this.state.smartSummonCompletedText : this.state.statusLabelText.length > 0 ? this.state.statusLabelText : this.state.statusLabelSmartSummonText.length > 0 ? this.state.statusLabelSmartSummonText : "";
- this._findMePressed = !0, this.state.summonModeParkerSupported && this._prepareFindMe());
+ this._findMePressed = !0, this.state.summonModeParkerSupported && this.state.isParkerDeadman)) {

5. New code about calculating distance to the user

+ w.coordinatesDifferent)(this.props.summonLeashOrigin, t.summonLeashOrigin) || (0,
+ key: "summonCircle",
+ center: this.props.summonLeashOrigin,
+ radius: this.props.summonLeashRadius,
+ if (null != t.props.summonLeashOrigin && null != t.props.summonLeashRadius && t.props.summonLeashRadius > 25 && !l) if (((0,
+ w.distanceBetweenCoordinatesInMeters)(c, t.props.summonLeashOrigin) || 0) > t.props.summonLeashRadius) {
+ var u = -(0, w.bearingFromXToY)(t.props.summonLeashOrigin, c), p = (0, w.getLocationFromDistanceBearing)(t.props.summonLeashOrigin.latitude, t.props.summonLeashOrigin.longitude, t.props.summonLeashRadius - 5, u);
+ if (null == this.props.summonLeashOrigin || null == this.props.summonLeashRadius && this.state.mapProvider === j.BAIDU) return !1;
+ var t = (0, w.distanceBetweenCoordinatesInMeters)(this.state.pinLocation, this.props.summonLeashOrigin) || 0, n = (0,
+ w.distanceBetweenCoordinatesInMeters)(this.props.deviceLocation, this.props.summonLeashOrigin) || 0;
+ var o = .9 * this.props.summonLeashRadius, s = t > o || n > o;

6. Code refers to it as Smart Summon, but the messages still call it "Enhanced summon"

smart_summon_caution_text: "Please check your vehicle's surroundings before using Enhanced Summon",
smart_summon_complete: "Summon complete",
smart_summon_enter_smart_summon_info: "ENHANCED\nSUMMON",
smart_summon_error_bad_weather: "Enhanced Summon unavailable due to poor visibility",
smart_summon_error_camera: "An issue was encountered when reading camera data",
smart_summon_error_ego_gps: "There was an issue getting high accuracy GPS data",
smart_summon_error_max_allowed_distance: "Maximum distance reached",
smart_summon_error_max_allowed_time: "Maximum time reached",
smart_summon_error_no_valid_path_follow: "Cannot find a clear path to you",
smart_summon_error_no_valid_path_goal: "Cannot find a clear path to your goal",
smart_summon_error_not_ready: "Enhanced Summon is currently not ready",
smart_summon_error_ultrasonic_fault: "An issue was encountered reading from ultrasonic sensors",
smart_summon_follow_me_button: "FOLLOW ME",
smart_summon_initializing: "Warming up...",
smart_summon_start_button: "SUMMON",

The fact that Tesla has added all this new code to the phone app is promising that Smart Summon is closer.

 

[EVNow]

2019.20

 

[diplomat33]

2019.20

It looks to be a lot faster and smoother than the previous videos. Good job Tesla!

 

[EVNow]

One doesn’t have to listen to anyone but Musk to come to the conclusion cash is currently a consideration. I don’t think Tesla is in a danger of running out literally because I believe they can raise more but it is a consideration.

This is getting too OT. Happy to discuss all this with you in the investment subforum.

BTW, you seem to be getting confused between profit and cash flow. Very different.

 

[dgatwood]

I agree and that was my point. I was commenting to people who have claimed otherwise in this thread eg:

I'm really not sure what you're getting at here, or why you think we don't understand the concept.

Not recognizing revenue is the accounting equivalent of setting money aside for a specific purpose — specifically setting money aside to pay the company back for a pre-ordered item when that item gets delivered at some later date. Companies do it all the time.

• When you buy a car, that doesn't show up as revenue (or cash) until they actually deliver the car, even if they already have your money.
• When you buy an iPhone, Apple recognize a percentage of the profit over a period of 3 years (IIRC) to cover the R&D costs of delivering future operating system updates for that device.

And so on.

More importantly, until the revenue is recognized, any deferred revenue is recorded on the balance sheet as a liability, which reduces the company's total cash assets. That money does not start to look like cash until the revenue is recognized, in much the same way that it does not appear as revenue.

So when we say that they can potentially cover the cost of the installation using that revenue, we mean exactly that. Tesla cannot deliver the promised product without the installation, so performing that installation constitutes delivering part of the promised goods. Once Tesla determines what portion of the promised goods are embodied by that hardware installation, Tesla can potentially recognize that percentage of the original price of the FSD feature when they install the upgrade. That money would then get recognized as revenue to offset the money spent on actually building and installing that hardware upgrade.

Assuming the cost of installation is equal to the amount recognized, the entire transaction is then cash-neutral, because the money spent is canceled out by a reduction of the corresponding liability.

 

[electronblue]

Over in the other thread on Enhanced Summon, @willow_hiller has uncovered some interesting new info on Enhanced Summon. Tesla has added new code for Enhanced Summon in the new version 3.8.5 of the Tesla phone app:

The fact that Tesla has added all this new code to the phone app is promising that Smart Summon is closer.

Interesting, thank you. Smart Summon seems very Software 1.0 though, that is not exactly machine learning there.

 

[electronblue]

@EVNow @dgatwood

I don’t believe I am at all confused about how the fiscal mechanics work. If I misread or misunderstood someone’s opinion on the matter then I stand corrected there of course but my own opinion is very clear, people just seem to disagree with it which is fine.

My point is: I don’t think Tesla has cash reserved for the FSD retrofits but I do acknowledge recognizing the revenue can be an incentive for Tesla to complete the retrofits... yet because they don’t have specific dollars reserved for this (not an escrow account specific for this use or anything of the sort), the following risk in my view remains.

Look at my opinion this way. Recognizing the revenue is somewhat of a blue skies scenario for Tesla. If all goes well it indeed can make fiscal reporting sense to complete the retrofits, it will improve Tesla’s report for the quarter(s) from this perspective and thus can be an incentive to do it quick. I do acknowledge the views presented on this.

However let’s look at the risk scenario I had in mind. If Tesla’s cash-generation turnaround doesn’t happen and they continue to bleed actual dollars in the bank then recognizing the revenue can become secondary and money in the bank can become primary until the turnaround happens because those dollars in the bank can be used for more important things like making cars to sell.

The FSD liability on the balance sheets can wait longer than an empty bank account can.

In that scenario, if money in the bank is in risk of running out and a new unwanted cash raise looms, delaying FSD retrofits could make sense for Tesla. Let’s hope the turnaround happens in Q2-Q3 for Tesla so we won’t have to find out if this risk existed.

 

[banned-66611]

They won't start retrofits until they are 100% certain that the current version of the hardware is adequate, i.e. until they at least demo their robotaxi service and probably some time after it's been delivered to other customers and they are sure it is reliable.

 

[diplomat33]

They won't start retrofits until they are 100% certain that the current version of the hardware is adequate, i.e. until they at least demo their robotaxi service and probably some time after it's been delivered to other customers and they are sure it is reliable.

I think it is more likely that Tesla will do the AP3 upgrade sooner to at least give owners the traffic light recognition and automatic city driving features promised while they are waiting for robotaxis.

 

[The Enterprise]

I got this message on my account during my 60 day trial period after taking delivery of my MX100D... $4300 for AP, or $15700 for EAP.

Not sure its an error as the current Tesla website states that the Summon is not ready until later this yr.