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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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    Half an hour, with $100 loaded hourly cost. Would need good planning and scheduling. Do the upgrade in parking lot.
     
  2. MXWing

    MXWing Well-Known Member

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    Travel time to and from is more than 30 minutes.

    It's not like Jack Bauer in 24 where he crosses the entirety of Los Angeles over the span of a commercial break.

    I would bet my entire worth they could not get a Model 3 spoiler installed for $50 let alone HW3. I'd go as far as to bet my life but that's not mine to give way.
     
  3. EVNow

    EVNow Well-Known Member

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    Do the upgrade in the parking lot of service centers. Shouldn’t take more than 30 minutes.
     
  4. TIppy

    TIppy Active Member

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    #44 TIppy, Aug 20, 2019
    Last edited: Aug 20, 2019
    Deferred revenue can be used to delay payment of income taxes, but I don't think it prevents you from spending the money you obtain in advance. You are not taxed because it remains as a liability that you might have to repay. I don't think tesla says you can get a refund on your prepayment for fsd, so I am not sure this is deferred revenue. They, or the irs, could contend that the hardware constitutes delivery of goods. Although I don't now why tesla would want to, since they would have to pay taxes on it.

    So it seems that recognizing the income would not free up the funds, since they were never encumbered. Instead it creates more of a cost by having to pay taxes on the funds if they were, in fact, deferred.
     
  5. Octo

    Octo Member

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    haha. Why not fedex a box with HW3 and IKEA style DIY leaflets (including an allen wrench) and use the App to update the car’s config after installation?
     
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  6. Big Dog

    Big Dog Member

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    Taxes are only imposed when Tesla makes a GAAP profit for the whole year, so little chance of that happening anytime soon. (unfortunately, for us fans)

    Yes, funds are not encumbered, i.e., put in a lockbox. Cash is fungible, so it can be spent on anything Elon desires.

    Unlikely that IRS/Tesla will consider installing HW3 as 90+% of delivery of goods. Tesla will still have to hold back, i.e., Defer, enough of the revenue for future promises (hello Elon and his RoboTaxi claim). Moreover, at this point, do we/Tesla engineers really know that HW3 will suffice? Perhaps HW5 is required for full FSD (ignoring RoboTaxis)? Or, perhaps more/udpated cameras are required to be installed? All such considerations will go into the discussion on how much of the revenue can be taken FSD deferred?
     
  7. TIppy

    TIppy Active Member

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    I think it's irrelevant whether the funds have been deferred for accounting purposes. Can they even be deferred? I don't think there is any provision for tesla returning the cost of FSD to consumers.

    The original context was whether there were funds available to spend on upgrading HW2.0 and HW2.5 cars. The supposition was that there was some pool of money that had been put aside because the revenue was deferred. But, alas, Elon can spend FSD revenue, and probably has, on any thing he wants.
     
  8. Eno Deb

    Eno Deb Active Member

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    I have worked on embedded systems and I think your estimate for the hardware is probably off by about an order of magnitude. Intel SoC, 2 x their proprietary neural net accelerator chip, miscellaneous electronics and connectors, liquid cooling plate, automotive grade case and PCB, assembly cost ... probably closer to $1000 than $100.
     
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  9. CarlK

    CarlK Active Member

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    I do not agree with the capex/opex theory. Tesla will sell a lot of FSD at $6,000+ a pop when advanced features are released. The should be more than enough to offset upgrade HW2.0/2.5 cars which have already paid for the FSD. Knowing Elon I'm sure he's pushing the release very hard too.
     
  10. EVNow

    EVNow Well-Known Member

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    No - I don't think you understand what I was saying.

    From a P&L perspective, upgrading to HW3 doesn't need to be "bad" for Tesla i.e. they don't have to show the cost of upgrade with nothing to show on the revenue side. This is because they can recognize some of the deferred revenue.
     
  11. EVNow

    EVNow Well-Known Member

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    I've heard this $1K mentioned elsewhere. So, possible.

    Irrespective, Tesla has a LOT of incentives to quickly upgrade, deliver some FSD features and recognize revenue.
     
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  12. Eno Deb

    Eno Deb Active Member

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    I'm not convinced of this "regonize revenue" theory. Since FSD was re-defined, every FSD owner technically has already received FSD features (navigate on autopilot). Perhaps that was done precisely so they can claim it was actually delivered.
     
  13. TIppy

    TIppy Active Member

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    #53 TIppy, Aug 21, 2019
    Last edited: Aug 21, 2019

    The op's point was that even though fsd had already been paid for, that cash was already gone. When I asked you where the requirement for segregating the funds came from, you indicated you thought it was gaap. But there is no requirement. So as I said originally, shenanigans. It has some bearing on the financial health of the company, but its says nothing about whether they have the actual cash to pay for the retrofit. It wasn't that long ago that tesla was weeks away from folding.

    You keep saying the revenue was deferred. But how could they defer it if they had complete control of it as soon as they received it? There is no provision to return any of the revenue to the purchaser if they don't provide any fsd features.
     
  14. EVNow

    EVNow Well-Known Member

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    No - you have to satisfy the condition that went with the original sale.
     
  15. EVNow

    EVNow Well-Known Member

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    You are confusing multiple things.

    "Deferred revenue" just shows how to account for the money received. Nothing to do with how the money is put away or used. Deferred revenue is not in an escrow account - if that's what you thought of it.

    Basically this deferral prevents a company from taking money from some other company / individual for some promised work in the future and showing that as earned revenue that could boost their profit.
     
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  16. Eno Deb

    Eno Deb Active Member

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    When I purchased my car there was no mention of a hardware upgrade ...
     
  17. EVNow

    EVNow Well-Known Member

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    That's not the point. If they said they will deliver X, Y, Z when you bought - but now it says only X, they can't deliver X and recognize the revenue from sale to you.

    But they can definitely say HW upgrade is part of the what is needed to deliver X, Y, Z and recognize some revenue for that.

    There is some judgement & negotiation with auditors involved here.

    ps : They have been quite conservative and defer revenue for all kinds of things. I expect them to continue to be somewhat conservative when it comes to recognizing FSD revenue.
    - Warranty repairs
    - Free Supercharging
    - Regular software upgrades
    - Regulatory / ZEV credits
     
  18. TIppy

    TIppy Active Member

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    #58 TIppy, Aug 22, 2019
    Last edited: Aug 22, 2019

    And would also defer taxes, if they had any. But my point is, how does making some marks with red and black ink on ruled paper provide capital to pay for the actual hardware upgrade? If they have to borrow, doesn't that make them look bad?


    They're not going to give the money back, so it is profit.

    Do you know if they actually deferred the revenue from fsd?
     
  19. Daniel in SD

    Daniel in SD Active Member

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    Not according to accounting rules (and common sense). That would be a huge loophole that would allow companies to sell promises to deliver goods and recognize revenue before they actually delivered them.
     
  20. EVNow

    EVNow Well-Known Member

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    They don't have to borrow. They have $5B in cash - and will probably make nearly $1B in cash per quarter going forward (may be a little less in Q1/Q2).

    If there are 100k FSD cars that need upgrading and each upgrade costs $1k - it is still just $100M, which is a rounding error (they actually have $5.4B in cash).

    Yes - they say that in 10Q.
     

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