Near-future quarterly financial projections

[willow_hiller]

I would like to get feedback from members on two questions:

One observation and one anecdote:

Not sure if it will make a huge difference to estimates of take rate, but I noticed EAP is only being offered via the Tesla App post-delivery. New orders are not given the opportunity to select EAP. But it does seem to be offered worldwide; I've seen EU, CA, and US screenshots. And likewise I've read posts from Model 3 and Y owners already having bought it, so it's probably safe to assume it's offered across S, 3, X, and Y.

And for the anecdote, Reddit tends to be very critical of FSD. Almost every "Should I buy FSD?" thread gets bombarded with folks saying no way. But this morning, Reddit seems to be very positive about EAP. I'm seeing lots of talk about the upgrade being a "no brainier." https://www.reddit.com/r/teslamotors/comments/ivncsn/enhanced_autopilot_option_is_back_4k

 

[bkp_duke]

Honestly, and this is just my own data point, I'm waiting for EAP/FSD to be available via a subscription-based service.

I don't drive enough to justify the one-time cost, but I would pay say $100/mo or $150/mo for a month at a time when long road-trips are planned.

Just an N=1, I know, but that has been my thought process.

 

[Stretch2727]

Help Needed with EAP & FSD Revenue Recongition.
Linking to @mongo 's post on Enhanced Auto Pilot for discussion here:
Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

I would like to get feedback from members on two questions:
1. EAP - The full $4k would be fully recognizable to sales as all compoents are delivered.
What is your estimate of a take-rate? 2%? .... 5%?

2. FSD - Not all of the $8K is fully recognizable. Some of the revenue is deferred due to features not yet delivered. In my model I have been using 50% reconized and 50% deferred but I can see now that this is wrong. If EAP is $4k and FSD deliveres more (e.g. Traffic Light/Stop Sign), then the recognized portion of the $8k has to be higher than $4k (50%).
Should FSD be $5k recognize now and defer $3k or $6k recognize now and defer $2k?
It depends on how you value what is left to be delivered.

View attachment 589858

Not sure if your question is for new or existing cars.

New cars get Autopilot (AP) for free. It is basically lane keeping only. Enhance Autopilot was offered on older cars I believe prior to 2019 which includes auto parking, summon, and navigate on Autopilot, etc. Basically in between today's Autopilot and Full Self Driving.

Today the only option for new cars is Full Self Driving. I read the take rate is around 20% but would have to find a reference.

 

[bkp_duke]

Not sure if your question is for new or existing cars.

New cars get Autopilot (AP) for free. It is basically lane keeping only. Enhance Autopilot was offered on older cars I believe prior to 2019 which includes auto parking, summon, and navigate on Autopilot, etc. Basically in between today's Autopilot and Full Self Driving.

Today the only option for new cars is Full Self Driving. I read the take rate is around 20% but would have to find a reference.

It is for existing cars with Basic AP, that can support EAP and FSD.

As of last night EAP is available on the Tesla App for people to purchase (separate from FSD).

EAP - $4k upgrade from basic AP
FSD - $8k upgrade from basic AP

 

[willow_hiller]

Found a poll up for the last ~20 hours on the Model 3 forum @The Accountant : EAP (Enhanced Auto Pilot) for $4k. Who’s in?

Looks like 27% take rate among forum members at time of writing; presumably folks who frequent TMC are slightly more likely to purchase EAP than those who don't, so it's definitely not an unbiased sample.

 

[Stretch2727]

It is for existing cars with Basic AP, that can support EAP and FSD.

As of last night EAP is available on the Tesla App for people to purchase (separate from FSD).

EAP - $4k upgrade from basic AP
FSD - $8k upgrade from basic AP

Got it. I see on one of my 2018 it has both AP and EAP available.

On new orders on the Tesla website it is only FSD available. Can they order EAP as well today after purchase?

 

[bkp_duke]

Got it. I see on one of my 2018 it has both AP and EAP available.

On new orders on the Tesla website it is only FSD available. Can they order EAP as well today after purchase?

I would assume so. If you want EAP and it's not a website option, just have the car delivered then upgrade.

Unless of course this is a limited-time opportunity by Tesla.

 

[The Accountant]

Thanks all for your comments on this topic.

This EAP offer is a nice profit maker:
1,000 cars would be $4m in revenue and $4m in profit
10,000 cars would be $40m in revenue and $40m in profit

I don't see any information on this being a "one time offer" with an expiration date....so people may wait.
As such, I will be very conservative for my Q3 estimates and assume only 1,000 cars take it in the next 12 days through Sept 30.
(Unless someone can make me comfortable with a higher number)
Thanks again!

 

[mongo]

Vaguely possible idea: could this be a step toward EAP becoming standard? Raise base price, get more active data, and improve fleet safety?

 

[dc_h]

Help Needed with EAP & FSD Revenue Recongition.
Linking to @mongo 's post on Enhanced Auto Pilot for discussion here:
Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

I would like to get feedback from members on two questions:
1. EAP - The full $4k would be fully recognizable to sales as all compoents are delivered.
What is your estimate of a take-rate? 2%? .... 5%?

2. FSD - Not all of the $8K is fully recognizable. Some of the revenue is deferred due to features not yet delivered. In my model I have been using 50% reconized and 50% deferred but I can see now that this is wrong. If EAP is $4k and FSD deliveres more (e.g. Traffic Light/Stop Sign), then the recognized portion of the $8k has to be higher than $4k (50%).
Should FSD be $5k recognize now and defer $3k or $6k recognize now and defer $2k?
It depends on how you value what is left to be delivered.

View attachment 589858

If they are charging $4000, but still enhancing, will they still defer some percentage? Maybe they’ll only accrue 75% now? That said, I do think that recognizing FSD at 60-75% may be justified for Q3.

 

[dc_h]

Thanks all for your comments on this topic.

This EAP offer is a nice profit maker:
1,000 cars would be $4m in revenue and $4m in profit
10,000 cars would be $40m in revenue and $40m in profit

I don't see any information on this being a "one time offer" with an expiration date....so people may wait.
As such, I will be very conservative for my Q3 estimates and assume only 1,000 cars take it in the next 12 days through Sept 30.
(Unless someone can make me comfortable with a higher number)
Thanks again!

Maybe @troyteslike can branch out and track software purchases. Longer term this is another reminder that the OTA company could be a software services powerhouse in the auto and home energy business. I think conservative estimates are good, but I think 5000 is very conservative. I think under 5000 is about 10% odds, about 5000 25% about 25% 5-10k and 50% chance of over 10,000 subscribers.

 

[st_lopes]

As such, I will be very conservative for my Q3 estimates and assume only 1,000 cars take it in the next 12 days through Sept 30.

I would find that to be extremely conservative. If FSD take rate is 20%, would that not mean that TAM for EAP would be 80% of the current fleet (since this is an after purchase upgrade)? Forum members polling at 27% is one data point, but even if we assume 10% take rate... that would be 8% of fleet... which is 80,000+ vehicles. I would say uberbear scenario would be 10,000 vehicles.

If they are charging $4000, but still enhancing, will they still defer some percentage? Maybe they’ll only accrue 75% now? That said, I do think that recognizing FSD at 60-75% may be justified for Q3

Even if they are still enhancing EAP, they should be able to recognize 100% of the value given they have contractually satisfied all stated features upon OTA update.

As for FSD component, only undelivered feature is city streets, all else is delivered. Considering that first four features are included in EAP, I would think it completely reasonable to say that city streets is worth 50% of 4K (so 2K).

So, on that basis, I would be comfortable modeling (and if I were their accounting team or auditor- would be comfortable with same position) with a recognition rate of 75% on each FSD sale.

 

[MP3Mike]

Got it. I see on one of my 2018 it has both AP and EAP available.

@Stretch2727 So what are the prices listed for all three options on your car? (AP, EAP, and FSD.)

 

[Stretch2727]

@Stretch2727 So what are the prices listed for all three options on your car? (AP, EAP, and FSD.)

Yeah, I did not get AP on my Model 3 Performance. It's a drivers car and the we use the long range RWD for trips as the range is much better.

M3 Performance no AP

AP - $3K
EAP - $4K - Needs AP first. --> So - $7K
FSD - $8K - Needs AP first --> So - $11K

M3 Long Range - RWD with EAP.

FSD - $5K

But it has the first 4 features listed for FSD already!

Navigate on AP
Auto Lane Change.
Autopark
Summon

 

[Doggydogworld]

I would find that to be extremely conservative. If FSD take rate is 20%, would that not mean that TAM for EAP would be 80% of the current fleet (since this is an after purchase upgrade)?

I don't see this offer appealing much to EAP-era buyers. It doesn't really improve on what they already turned down. It could appeal to some who bought cars after Tesla eliminated EAP and who declined FSD. That's ~400k owners assuming 20% FSD take rate. Those who turned down 5-6k FSD in spring/summer 2019 probably don't see 4k EAP as a great deal, but recent buyers who balked at 8k might. I could see 20k buyers.

As for FSD component, only undelivered feature is city streets, all else is delivered.

FSD used to include the ability to drop you off and go find a parking spot. I'm not sure when they decided that wasn't part of Full Self Driving. Maybe next year they'll include it in Fuller Self Driving or Really, Truly Full Self Driving. Only 3k for those who already have Full Self Driving

 

[st_lopes]

FSD used to include the ability to drop you off and go find a parking spot. I'm not sure when they decided that wasn't part of Full Self Driving. Maybe next year they'll include it in Fuller Self Driving or Really, Truly Full Self Driving. Only 3k for those who already have Full Self Driving

Wholly expect that they will eventually offer individual add on features for 1-2k a pop to existing vehicles and sold as a “bundle” on purchase.

Won’t it be great... when the check list of offers at car purchase won’t be nickel and diming for things the car should already have and instead are “here’s what else the car can do”.

 

[JohnnyEnglish]

FSD used to include the ability to drop you off and go find a parking spot. I'm not sure when they decided that wasn't part of Full Self Driving. Maybe next year they'll include it in Fuller Self Driving or Really, Truly Full Self Driving. Only 3k for those who already have Full Self Driving

I am guessing this is what they are referring to as Autopark - which is included in EAP (and FSD)

 

[The Accountant]

I would find that to be extremely conservative. If FSD take rate is 20%, would that not mean that TAM for EAP would be 80% of the current fleet (since this is an after purchase upgrade)? Forum members polling at 27% is one data point, but even if we assume 10% take rate... that would be 8% of fleet... which is 80,000+ vehicles. I would say uberbear scenario would be 10,000 vehicles.

I was trying to estimate a Q3 number. With no expiration to this offer, it's a bit difficult to estimate how many will purchase in the next 11 days. Even so, my 1.000 upgrades for Q3 may be extremely conservative as you stated. I will monitor discussion on this and may take it up to 3k-5k. Thanks

 

[willow_hiller]

Vaguely possible idea: could this be a step toward EAP becoming standard? Raise base price, get more active data, and improve fleet safety?

Possible Reddit post supporting this theory, @mongo : https://www.reddit.com/r/TeslaLounge/comments/iw3hoz/new_delivery_model_3y_auto_lane_change_without

Says he took delivery of a new Model 3 and new Model Y this week, and both have automatic lane changes standard.

Maybe dramatic cost reduction announced on Tuesday, and instead of reducing the prices of the cars they are bundling EAP in.

 

[bkp_duke]

Looks like the EAP upgrade offer is only through the end of the quarter.

Attached just hit my inbox.