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HW2.5 capabilities

Discussion in 'Autopilot & Autonomous/FSD' started by verygreen, Aug 1, 2017.

  1. iTech

    iTech Member

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    Are you reading a different balance sheet for Tesla?
     
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  2. mongo

    mongo Well-Known Member

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    Nope, the same one that has 630 million in deferred revenue under liabilities. They've tracked FSD deposits separately from the start.

    I was in automotive, I've stood in a parking lot at an airport and looked over a sea of cars that all needed a module replaced (which was done by an outside firm, just like a recent engine part replacement was). No thank you.

    My lack of an automotive company does not mean there are not solutions to these problems that are common in industry. Nor does it mean bandwidth, storage, and computing power are too expensive.

    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.
     
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  3. rnortman

    rnortman Active Member

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    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?
     
  4. mongo

    mongo Well-Known Member

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    Are you saying the use of the cash on hand allocated to undelivered FSD would put the company in a bad position?

    You were the one who, for whatever reason, asked why I had not released a self driving car. Since you made it about me personally, I shared an anecdote regarding a 'self driving' (note the use of (air) quotes both times) vehicle. Of course it did not use a vision system (though I could have added line following) since hobby size CCD would not exist for many years.
    I have been involved in a massive, time critical, automotive module retrofit. Thus I can speak to the existence of companies that exist to do exactly that sort of thing.
     
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  5. rnortman

    rnortman Active Member

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    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.
     
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  6. mongo

    mongo Well-Known Member

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    ???
    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.
     
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  7. rnortman

    rnortman Active Member

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    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.
     
  8. mongo

    mongo Well-Known Member

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    In my example, the FSD software was fully featured (new definition) so no more deferring.
    I disagree with you assessment of the cash position (and the use of buckets for the money sources). Tesla was profitable the last two quarters and the Dec 31, 2018 cash and cash equivalents line item was $3,685,618,000.
     
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  9. scottf200

    scottf200 Active Member

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    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?
     
  10. rnortman

    rnortman Active Member

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    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.
     
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  11. paaltio

    paaltio Member

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    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?)
     
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  12. BinaryField

    BinaryField Member

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    I'm preparing an L5 system in my garage. I'd be happy to pre-sell it to you. Delivery will occur upon a full validation and regulatory approval.
     
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  13. rnortman

    rnortman Active Member

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    IANAL and particularly I am not versed in non-US law, but I do know two things. First, Tesla made lots of promises in writing about AP1 and never got held to account for them, so whatever the law says clearly they can get away with this.

    Secondly in US law I am pretty sure there is a concept of "specific performance" meaning you get exactly what you were promised, and this is relatively rarely required as a remedy to breach of contract if there is another option to provide you with something functionally equivalent or suitable. What they are promising with the current FSD description is certainly limited enough that they can deliver it on HW2/2.5, so I highly doubt that anybody currently ordering FSD has a leg to stand on to demand a hardware upgrade.

    People that bought previously, when the descriptions promised far more, might have a leg to stand on, if they actually manage to deliver a higher level of autonomy on HW3. It still remains to be seen whether HW3 will ever be more than an L2 driver assistance system, but if it does become L3+, eventually, I think people who bought FSD prior to the recent product description changes would have a strong argument to make that they should be upgraded.
     
  14. mongo

    mongo Well-Known Member

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    Which says more about you than Tesla...
    1Billion??? What are your volumes and upgrade cost assumptions?
    Within the bounds of the unclaimed FSD purchase revenue, they have a chunk of cash.

    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.
     
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  15. electronblue

    electronblue Active Member

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    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.
     
  16. mongo

    mongo Well-Known Member

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    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.
     
  17. iTech

    iTech Member

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    He didn't start Tesla.
     
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  18. rnortman

    rnortman Active Member

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    500,000 cars (from Elon at Y unveil) x $2000 = $1B

    You can pick apart the 500k number easily and probably you're already working on that before I even finish this sentence. You probably want to pick apart the $2k number also but I wouldn't be so sure it'll be much cheaper than that... it all depends on a lot of things we don't know. But even if you drop both of those numbers a bit, it's not hard to see how this could be $100M. That represents a lot of opportunity cost for Tesla -- they could spend $100M in a lot of useful ways. "Goodwill" for existing customers may not be a good use of funds.

    Basically here is what I'm saying: If they can deliver the current scope of FSD (as recently redefined) on HW2/2.5, I believe they will do that, or at least do their best to get away with that. And I think they stand a chance of getting away with it.

    That said, I think it is also pretty likely that they will upgrade FSD purchasers, who are clearly smaller in number than 500k, to HW3, after HW3 reaches volume production such that they're producing more than they need to install in new vehicles. There's not a chance that FSD purchasers will get upgraded before they start putting it in new cars. In fact they will probably let it "burn in" in the fleet of new vehicles for many months, maybe a year or more, before gaining enough confidence in it to begin retrofitting at a large scale.

    I'm just saying, there is still a lot of uncertainty here. If you cannot recognize uncertainty about the future then I'm not sure how to help you.

    I also think that this is all really beside the point because HW3 will probably remain an L2 driver assistance package forever -- maybe, if you're lucky, L3 on the highway or in your driveway and some suitable parking lots.
     
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  19. rnortman

    rnortman Active Member

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    I don't even know where to start with this, but I'll start here: Yes, I believe that Musk earnestly cares about the future of civilization. I believe that is his core motivation, or at least his core conscious motivation. (I believe that subconsciously he is motivated more by being the savior of civilization than actually saving civilization, but that's beside the point.)

    But the thing is, taking care of early customers is probably counter-productive to that mission. He is on a very, very difficult and expensive mission. He simply cannot afford to spend money that doesn't advance that mission. How does being nice and true to his word advance this mission? He may be true to his mission, but we have a lot of evidence that he is not true to his word. I believe it is mission uber alles for Mr. Musk.
     
  20. Soda Popinski

    Soda Popinski Member

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    I don't believe that includes the income from purchasing FSD at $3000. I think FSD pre-purchase uptake has been about 15%, so that's 75,000 cars that get the upgrade at no additional charge. Anybody else that upgrades pays $3000, with your estimated cost to Tesla of $2000.
     
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