Outsource to contract labor house...
Are you reading a different balance sheet for Tesla?
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Outsource to contract labor house...
Are you reading a different balance sheet for Tesla?
Everything is simple to you, isn't it? Simple, cheap, easy. Any particular reason you haven't released your own self-driving car yet?
Nope, the same one that has 630 million in deferred revenue under liabilities. They've tracked FSD deposits separately from the start.
However, not that it matters, when I was 12 I did build my own interface card, modified an as-is remote control truck and created a 'self driving' vehicle with increased battery capacity/ power.
Are you saying the use of the cash on hand allocated to undelivered FSD would put the company in a bad position?This is not a question of assets and liabilities. This is a question of cash on hand and cash flow.
Not that I'm belittling your accomplishment, because that's cool and I did the same sort of thing when I was that age. But the fastest way to become over-confident about how easy something is is to do a proof of concept under controlled conditions -- and this is what has happened with Elon and FSD. Was your "self-driving" RC truck actually autonomous, or did it remain remote controlled by you?
Are you saying the use of the cash on hand allocated to undelivered FSD would put the company in a bad position?
This is no cash on hand allocated to undelievered EAP and FSD. They carry this as a liability. That doesn't mean they have cash on hand to cover that liability.
???
My understanding:
They take an order for FSD at say 3k (old definition of FSD).
Cash on hand goes up $3k. Deferred revenue goes up $3k. Bottom line stays the same.
Spend $2k to swap HW with full FSD feature set: Cash on hand goes down $2k, deferred revenue goes down $3k, bottom line goes up $1k.
This argument is also ignoring all the new orders for AP/ FSD. At $3k for AP with no HW swap and 8k for AP+FSD with future HW swap, assuming a 50% take rate and 100k cars a quarter, that is $400 million a quarter for development and swapping.
That is true but that cash then gets spent, while the deferred revenue stays on the books. Tesla clearly (and Musk confirmed this during the Model Y unveiling yesterday) had a huge cash crunch during the Model 3 production ramp-up, and appears to still be working through that.
So my point is -- all of the FSD money paid in the past has been spent. It is not sitting in a savings account waiting for them to deliver or refund. It was spent long ago. And when they collect more cash for upgrades and new orders, that cash is also probably mostly being spent almost immediately -- at least until they get through the cash crunch.
Of course, Model Y is coming, so probably another cash crunch then... basically Tesla will not be sitting on a large pile of cash any time in the forseeable future, and as revenue increases so will Elon's ambition so the company will always be walking the line, never very far beyond the threat of bankruptcy. And the more HW2.5 cars they sell, the larger the cost to upgrade them all to HW3.
So it is a big deal and smart move that they were fairly conservative with the Model Y. Similar roof to S, taller 3 with 75% same parts will make supplier issues and production issues much much less of a challenge that the Model 3 production cycle was. Now they also will be building the Y in GigaFactory1 so less shipping issues/cost with the battery. Now they also will have the timing of the Y such that it will come with HW3 already. Now they will have the China factory making 3's and Y's to a population 4 times the size of the USA so maybe 1.5-2 times the potential sales as the USA target audience?Of course, Model Y is coming, so probably another cash crunch then...
So it is a big deal and smart move that they were fairly conservative with the Model Y. Similar roof to S, taller 3 with 75% same parts will make supplier issues and production issues much much less of a challenge that the Model 3 production cycle was. Now they also will be building the Y in GigaFactory1 so less shipping issues/cost with the battery. Now they also will have the timing of the Y such that it will come with HW3 already. Now they will have the China factory making 3's and Y's to a population 4 times the size of the USA so maybe 1.5-2 times the potential sales as the USA target audience?
This is all true. The future is more sunny for Tesla than the present. But that doesn't mean it will make business sense for them to spend $1B+ upgrading HW2/2.5 cars to HW3 if they think they can get away with not doing that. And I think they might just think they can...
Remember always, Tesla is a for-profit business, not a social movement. In fact, if they can get away with not upgrading to HW3, or if the resulting liability and PR hit to future sales is less than the cost of the upgrades, then they in fact have a fiduciary duty to their investors to make the better business decision.
Everything is simple to you, isn't it? Simple, cheap, easy. Any particular reason you haven't released your own self-driving car yet?
Except in many countries the fact that they have said to customers in writing that they will receive the HW3 hardware constitutes a contract. They would not be getting out of installing HW3 with simply a PR hit, there would be fairly serious actions from consumer protection authorities. This probably won't apply to the US though. (or does it?)
Which says more about you than Tesla...This is all true. The future is more sunny for Tesla than the present. But that doesn't mean it will make business sense for them to spend $1B+ upgrading HW2/2.5 cars to HW3 if they think they can get away with not doing that. And I think they might just think they can...
Remember always, Tesla is a for-profit business, not a social movement. In fact, if they can get away with not upgrading to HW3, or if the resulting liability and PR hit to future sales is less than the cost of the upgrades, then they in fact have a fiduciary duty to their investors to make the better business decision.
Tesla is a social/ environmental movement to accelerate the transition to renewal transportation.
Not everyone believes that to be true, of course. We know Tesla claims so but whether or not they really mean it in any practical manner is another thing. It is a nice thing to say and helps elevant Tesla. Some see it as virtue signalling if you will.
I guess people could view it that way. However, given that Elon almost went broke starting Tesla, there are better ways to make money, his statement that if someone makes a better EV and Tesla goes bankrupt it's still a win, the open sourcing of their patent portfolio, and the strong appearance that Tesla is forcing the advance of green transport, I'll give him the benefit of the doubt.
1Billion??? What are your volumes and upgrade cost assumptions?
Nope, Tesla is a social/ environmental movement to accelerate the transition to renewal transportation. The Secret Tesla Motors Master Plan (just between you and me) The 'fiduciary duty' does not mean CEO or BoD must do everything possible to make the most money.
500,000 cars (from Elon at Y unveil) x $2000 = $1B