So there will be two versions of 8.1, one for HW2 cars without all the features that Elon has promised and another for everyone else? That makes little sense.
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So there will be two versions of 8.1, one for HW2 cars without all the features that Elon has promised and another for everyone else? That makes little sense.
ucmndd
Well-Known Member
This seems highly suspect to me, but I've seen it repeated many times. What is the source for this?
theslimshadyist
Active Member
This is referred to as "deferred revenue" and they simply can't recognize until the goods sold have been delivered. In this case there is revenue received on a software component that is not functional based on evidence. It's very similar to a professional services engagement where a company can recognize booking credit but can't recognize the revenue until the services have been consumed and/or delivered. You can also go look up VSOE rules as well.
I'm very familiar with rev rec as I work for a global tech company and run sales for the Southeastern US and Caribbean.
I'm very familiar with rev rec as I work for a global tech company and run sales for the Southeastern US and Caribbean.
GasKilla
No Gas Know Peace
Good to know I'm not the only one who said WTF about the equalizer... Is there a thread just for that issue? The Tesla folks who read the forums need to know how messed up that EQ bug is for everyone
Sounds like there is a LOT of incentive to get the firmware released by tomorrow then. Can they realize the revenue on all AP2 cars this quarter, or just that actually get the firmware update installed?
But, since they're releasing it incrementally do you just do a percent at each release point?
Like lets say they reach feature parity with AP 1.0 with this release. That's obviously not what eAP is, but it could be argued that they could start taking part of the money.
This is another reason I actually wish they'd just license AP. So they didn't have to try to predict what all they would be able to release.
GeekfromFRL
Member
The source is some law. Don't ask me what paragraph or what not. Same in my line of work (software), we're not allowed to book revenue for those parts of the contract that haven't been delivered yet. If a customer buys the base (shrink-wrap) product, and add-on customizations, we can't book the customization money until the promised feature is delivered to the customer.
Andyw2100
Well-Known Member
There is:
New Equalizer In Version 8.0.2.50.114 - Please Share Settings
It doesn't. (Please see posts in thread listed above.)
Yes, pretty simple: advances are liabilities/deferred income until services are rendered/delivered unless you're using cash accounting. So there is no revenue recognition unless product delivery is made.
theslimshadyist
Active Member
Sort of but not really but I'll attempt to expand upon this. I can't remember the exact costs but I will use fictitious numbers as an example for the scenario. Keep in mind that EAP is just a 2nd gen of AP so a lot of the basic functionality is on parity with the addition of different hardware and software that allows for it to provide similar functionality but with refined improvements.
For those who purchased EAP for $5K: This functionality is not yet available because there is no software to enable. If they pushed it out today for let's say 1000 cars, they will be allowed to recognize $5M of revenue during the Q4 period. If you are able to enable the associated features that accompany EAP, then they are good. If those features don't work correctly, ie bugs, limitations, etc. they can still recognize the revenue. TSLA can provide evidence that there is software that triggers this to be enabled even though things may not 100% work as designed. As of this writing, they can't provide any evidence that the software is present that allows EAP to be enabled and they will have to defer all of this revenue until they can provide evidence.
For those who purchased both EAP and FSDC for $10K: Same scenario as above but let's say EAP was enabled today, TSLA would only be able to recognize the revue on the EAP component and not FSDC until that functionality has been delivered. The challenge for TSLA and why I personally only opted for EAP is that FSDC is a component they can't control and is out of their hands due to if/when regulatory approval is granted. I may no longer own the car when FSDC becomes available so I didn't want to take a gamble on potentially throwing that money away.
theslimshadyist
Active Member
We recognize revenue on all products shipped regardless of when the client decides to actually install or implement. Because we require maintenance/support to be coupled with any hardware or software for the first year, the clock for that portion also starts when we ship product. We have proof or evidence that we delivered within the parameters but we can't control what our clients do on their end.
Nice explanation, thanks for it. Would also add that cash flow is an equally important metric. Maybe even more important than quarterly revenue in the case of Tesla (think capital raise). Regardless of when they enable AP2 hardware, I don't believe the release date will impact their quarterly cash flow statement which is a key statistic that investors will focus on.
theslimshadyist
Active Member
I guess my use case example of 1000 cars was pretty spot on. Elon just tweeted that AP2 will be uploaded to 1000 cars this evening. They must have needed an additional $5M in revenue for Q4. 
model3fan
Member
Link for those interested
"HW2 Autopilot software uploading to 1000 cars this eve. Will then hold to verify no field issues and upload to rest of fleet next week."
"HW2 Autopilot software uploading to 1000 cars this eve. Will then hold to verify no field issues and upload to rest of fleet next week."
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