Canuck
Well-Known Member
Citation please. I don't see this in the financial statements but perhaps I missed it.
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Sent letter asking for a refund for FSD paid feature
- Thread starter BestRadar
- Start date
Citation please. I don't see this in the financial statements but perhaps I missed it.
Raddoc
Member
I suspect this is the relevant portion:
page 3, Revenue & Gross Margins, 3 bullet, 2nd sub-bulletTSLA_Update_Letter_2016_4Q.pdf said:
Canuck
Well-Known Member
Doesn't that mean that once EAP is working better, and FSD is working, a "new" revenue stream will come in from people who bought vehicles but didn't enable one or both at the time of purchase? The "almost" suggests some people did pay for EAP since they did get that working somewhat. Isn't that also what "new" means when it comes to that revenue? And won't they get a ton of new revenue once FSD is working from all the people who did not enable it?
Or, do they actually separate out EAP and FSD that is paid for on a new purchases, and then bank it in escrow or trust, and deal with it separately than revenue? If so, were do we see that line item on the financials?
I guess what I am asking is if this is true:
I'm one of the kids in the back with their hand up asking him where did they bank this revenue then? Did Tesla have to wait to bank AP1.0 revenue until it was working too? If not, why not? This all seems odd to me. Hopefully, @u00mem9 will back up his statement or someone else who knows how this works will answer this question.
Lol. No worries, we are all doing our best to read between the lines with Tesla financials! This item was also discussed in the call and the way I understood it is as you started. The revenue from sale of a Q4 car had the EAP or FSD portion split out for GAAP rules or whatever. I don't think it's actually in escrow but it just can't be moved over to income side until they 'deliver'.
But from the way they worded it they are planning on recognizing the EAP money in Q1. Obviously FSD money is further off. (Though Elon said that they were going to deliver FSD features in the next few months, and that may specifically be so that they can start recognizing the FSD prepayments.)
NikeWings
Active Member
This is known as deferred revenue. Simply stated, Tesla treats this revenue as a liability on the balance sheet until it is earned. As it is earned, the liability reduces and the revenues increase in an equal amount. It is identified on Tesla's balance sheet as Unearned Revenue and as of 12.31.16 totalled ~$763MM. Tesla has carried these liability balances since 2011, although insiginficant until 2013-2016 when Y/E results show $92MM, $192MM, $424MM and $763MM respectively.
Those value (I think) are mostly lease related. The values are certainly too large to be explained by AP2 EAP/FSD.
P100DHG.
Member
Tweeted on 1/24/17 clock is ticking people.
Tesla to transition from ‘Enhanced Autopilot’ to ‘Fully Self-Driving’ as soon as ‘3 to 6 months’, says Elon Musk
You do understand that 3 to 6 months in Tesla time means 2018, right?
P100DHG.
Member
I mean if Space X sends people to the moon and back with this math they are never coming back.
Space X does use this math. The Falcon Heavy and Dragon 2 capsule are several years late.
NikeWings
Active Member
I tried to keep it simple.
There are all kinds of activity flowing through but all have the same characteristics....cash received prior to earning it whether feature/function, leases, maintenance plans etc.I think they had to run a portion of the old residual value gurantees thru it as well, at least during the guaranty period.Should be interesting to see what Tesla does in this situation.
I really don't see any reason why they wouldn't refund the money where they deactivated the feature in the car. Now that isn't to say the OP didn't make a mistake in getting the FSD. He was never promised that on any timeline. But, it's not like he can retain that if he gives up EAP.
In the long term he's probably going to end up getting EAP, and he'll be down that $1K. But, he might never enjoy FSD so he could be up by $2K total. So I don't think it's a bad move overall by the OP.
I really don't see any reason why they wouldn't refund the money where they deactivated the feature in the car. Now that isn't to say the OP didn't make a mistake in getting the FSD. He was never promised that on any timeline. But, it's not like he can retain that if he gives up EAP.
In the long term he's probably going to end up getting EAP, and he'll be down that $1K. But, he might never enjoy FSD so he could be up by $2K total. So I don't think it's a bad move overall by the OP.
dhanson865
Well-Known Member
It's not plain English in the PDF that stands out but its in the numbers and they did the same for AP1. They discuss it each time it goes on and off the books in the respective quarterly conference calls. Just go back to TSLA IR and listen to a few quarterly calls and I'm sure you'll hear both a question about it by some investor analyst and a thorough answer by Deepak Ahuja CFO.
Annoying and unhelpful post.
No, it exactly means what OP said. That the cash paid was not counted in the revenue statement. This is common accounting practice. And yes, Tesla also did it for AP1. It also does it for things like supercharging (where they'll deliver the service over the average lifetime of the car) or even cars sold under the resale value guarantee (where they have a legal obligation to buy back the car should the customer want them to).
It's not under escrow. It goes right in the general cash flow of the company (like the customer deposits too btw). The company can use the money as it wishes. But it doesn't go under the revenue line item. It goes under 'deferred revenue' and it listed as a liability (i.e., a burden that the company still need to take on sometime in the future) See page 55 in the most recent annual report in the overview of liabilities.
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