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Model 3 FSD Conspiracy Theory

Discussion in 'Autopilot & Autonomous/FSD' started by MXWing, Aug 18, 2019.

  1. EVNow

    EVNow Well-Known Member

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    We don't "know" - but we can make an informed guess.

    Musk has repeatedly said they will upgrade to HW3. Including in autonomy day and possibly ER.

    Auditors have to agree to whatever revenue Tesla brings in from deferred. There will be COGS associated with that revenue which they should have put into contingency account. They will reverse out the contingency account and move from deferred revenue to sales. Standard accounting procedure.

    Tesla has also indicated they will recognize about ~190M per quarter by putting the amount in current account (rather than long term). So, they are making their plans clear.
     
    • Informative x 1
  2. TIppy

    TIppy Active Member

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    An informed guess should certainly include all of the previously missed deadlines on FSD.
     
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  3. EVNow

    EVNow Well-Known Member

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    We are talking about two different things.

    All I was commenting is that - if they upgrade to HW3 they can definitely recognize some of the deferred revenue. Do you see any problems with that ?
     
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  4. TIppy

    TIppy Active Member

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    I suppose if they need to recognize the deferred revenue now versus the additional costs of providing multiple hardware upgrades per vehicle, I have no problem. But if that is reasonable, why didn't they move some bs features into FSD in the transition from HW2.0 to HW2.5, update the hardware and recognize income then?
     
  5. EVNow

    EVNow Well-Known Member

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    I can't even follow what you are saying.

    Why are you assuming they would need multiple hardware upgrades ? If you are speculating, let us be clear about that.

    They don't think they need multiple hardware upgrades - so they will recognize parts of revenue whenever they deliver something that they agree with auditors would be material.
    - additional FSD features
    - HW3 upgrade
     
  6. TIppy

    TIppy Active Member

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    #26 TIppy, Aug 19, 2019
    Last edited: Aug 19, 2019
    Why are you assuming they won't need further hardware upgrades, all history to the contrary. I thought your point was they were going to upgrade to HW3.0 so that they could claim they had provided FSD. Otherwise, why do we care about their accounting shenanigans?
     
  7. EVNow

    EVNow Well-Known Member

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    No - you misunderstood. They can only recognize part of the revenue deferred - probably equal to the cost they incur in upgrading.

    "accounting shenanigans" = gaap. Search, if you don't know what it is.
     
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  8. TIppy

    TIppy Active Member

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    #28 TIppy, Aug 19, 2019
    Last edited: Aug 19, 2019
    Right. But there is a very high probability that if they upgrade HW2.0 and HW2.5 now, they will have to do it again. They have been as certain in the past about FSD as they are now. That was my point earlier. Why didn't it make sense to upgrade the hardware when they went from HW2.0 to HW2.5?

    Unless your point is assuming HW3 is adequate, why wouldn't they provide HW3? Then, never mind. But it's probably not adequate.
     
  9. TIppy

    TIppy Active Member

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    I should have read the OP. I guess your point is this is how the cost of the hardware upgrade could be covered.
    Was the cost of the original HW3 hardware subtracted from the amount deferred for future delivery, or is the total FSD option cost deferred?

    I guess this is why they've decided to move eap features into fsd. Now the will try to convince the auditors that they've provided something material. This seems to imply they know real fsd is sometime in the distant future. But they still have the regulatory requirement as an excuse for not updating to HW3.
     
  10. sixela

    sixela Active Member

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    Conspiracy theories indeed...
     
  11. S4WRXTTCS

    S4WRXTTCS Active Member

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    It's too early for conspiracy theories.

    We're not even supposed to get HW3 enabled features till towards the end of the year.

    When March of 2020 rolls around we can start the engines of conspiracy theories.
     
  12. TIppy

    TIppy Active Member

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    Where does the requirement that they segregate the funds come from? Is this an SEC requirement? As far as I can tell deferred revenue is just an accrual accounting construct. Do we know whether they use the percentage-of-complettion or the completed contract method to recognize revenue?
     
  13. Daniel in SD

    Daniel in SD Active Member

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    I still want someone to explain how what was demonstrated in the autonomy day demo video, which I believe is what people expect the "automatic driving on city streets" feature to be, is not subject to AV testing rules in CA.
     
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  14. MXWing

    MXWing Well-Known Member

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    Let me add one thing that might not be intentional from the start on Tesla’s part but I’m sure has been discussed privately:

    The longer HW3 is delayed, the less cars get retrofitted.

    I have a friend who asked me about trading in her 2016 Model S with AP2 for a Model 3. She paid for FSD.

    I told her not to do that, drive it until at least near the end of the warranty period or the Y whatever comes first.

    If she gave the car to Tesla, it’s really off the books for obligations.

    My own X is less than 18 months until no warranty. Being depreciation sensitive, I will add my holding period and extended warranty. Maybe car will live long enough to see HW3.

    Not all will - to Tesla’s benefit.

    As a tangent you’d be a fool to keep an X with no warranty. When the ceo calls your car a faberge egg, an exercise in hubris, almost killed the company, will never make it again -

    You uhh know what to do.
     
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  15. EVNow

    EVNow Well-Known Member

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    It comes from gaap, IIRC. We don't know the exactly how they recognize the revenue - those methods don't directly apply (or are very subjective). For eg., if Tesla finishes City NOA, what % of FSD is complete ?

    You can find some details on deferred revenue in 10Q, page 9 onwards. But mostly dealing with things other than FSD/AP.

    The move was welcome - as well as clearly defining what to expect. They should have done this earlier.

    I don't see how it ties to upgrading to HW3 at all.
     
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  16. EVNow

    EVNow Well-Known Member

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    Classic case of projecting your personal opinion to rest of us to add weight to the argument ;)

    Nope - City NOA will only be allowed with hands on the wheel. Just like Highway NOA.
     
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  17. MaryAnning3

    MaryAnning3 Supporting Member

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    I am guessing that the marginal cost of one hardware 3 to Tesla is about $100. And that the labor to install it is about 30 minutes? Is that way off?
    In other words, I am thinking that the HW3 upgrades are not really a big deal or a big burden to Tesla. Maybe I am way off. Does anybody know?
     
  18. EVNow

    EVNow Well-Known Member

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    May be $200 + $50 for service. Once they deliver City NOA, they would be able to recognize most of FSD revenue - some $5k. To even think that they won't spend $250 so that they can recognize $5k is insane.
     
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  19. Daniel in SD

    Daniel in SD Active Member

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    We shall see. I do not believe that “nags” are what differentiate AV testing and a Level 2 driver assist system. You think that if Uber had added “nags” they could have continued testing without complying with AV testing rules?
     
  20. MXWing

    MXWing Well-Known Member

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    How does one get only $50 in service cost? That's literally the most bizarre and off target thing I probably have EVER read when it comes to costing things.

    Assuming its only a single tech, it will cost FAR more than $50 for them to get to your car for mobile service. I've seen two for 5/6 visits.

    It's even worse when you go to a service center. How many touch your car before it's back in your hands?

    Hourly rate.. non salary compensation.. workers comp.. payroll taxes.. liability insurance.. PTO accrual.. paid sick time accrual.. management (department) overhead.. administration overhead.. (legal, human resources, payroll)
     

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