This is phantom revenue and will only be released once phantom braking is solved
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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This is phantom revenue and will only be released once phantom braking is solved
Knightshade
Well-Known Member
Not understanding your 10 million # here.
Tesla won't have come at all close to 10 million HW3 chips by the time HW4 replaces it for example- not even 5 million unless they're planning to keep a massive backstock on hand- yet it was still not "ridiculous" for them to do it.
It's not like Cruise is building their own fab to make them- it's a contract job with an existing fab, just like everyone does who wants their own chips- including Tesla.
Dubious of their software capabilities I totally get-- but the custom HW bit I do not.
There are 2 Tesla chips per board, Tesla most likely hit 5 million already if you add inventory to the equation.
Very different, that is a safety feature of the software and only requires shifting to park to reactivate.
Semi-permaban for safety strikes effectively undelivers FSD and would theoretically require a shift of revenue back to deferred had it been recognized (or refund if permanently disabled).
Knightshade
Well-Known Member
They've had beta via specific safety score for roughly a year now- and recognized 0 revenue.
Why do you think changing the required score from 95 to 80 would change their revenue recognition?
Especially given it can be taken away (and has been from some) suggests as others have they aren't planning to recognize until genuine fully-delivered-to-everyone-and-you-keep-it wide release in a given Geo.
(I expect there'll still be lockouts for bad behavior as AP as always had- but that they reset on the next drive like AP does- not that they take away a paid feature entirely as FSDB can do right now)
Knightshade
Well-Known Member
Well, was referring to the whole unit- but even then they're not gonna hit 10 million before HW4 unless HW4 ends up very late--like at least a year late- and some folks have speculated we'll see it at AI day which is in... heh...2 weeks... and that seems the "minimum" # he was suggesting made any sense for a custom chip.
The Accountant
Active Member
Right now it is not 95% or higher. I have been at 98% for 3 months and still don't have the beta. It is limited to 100k cars today.
Starting soon it goes to everyone at 80% or higher. That's different.
Having the right to take FSD away from someone can be accounted for similar to the way Tesla estimates and reserves for product returns.
If they have statistics that show they lockout 5% of the FSD beta users, they can hold back 5% and adjust each month based on updated stats.
Or HW3 is here to stay and HW4 is only for the CT and Semi because they might be putting in more cameras since they are bigger vehicles.
While I am still optimistic about FSD beta, I am also one of those for which it doesn't work particularly well. What I have noticed in the past few updates is that it's sort of a game of whack-a-mole. Some things get much improved, and others regress. For instance, there is a Y intersection I travel at which the car often had a hard time picking the correct lanes and taking the correct split. With the latest update it finally chooses well.... but then about 1/4 mile down the road it tries to change lanes into the middle turn lane "to follow the route". But the route is straight and it has no intention of turning, it seems to now think that the yellow painted turn lane is a viable lane for driving. Certain turns it used to handle poorly now work much better, but others that it handled well have regressed. The latest version also seems to have regressed in its ability to place itself correctly in residential streets with no lane markings. It loves to just fully center the car, and it definitely waits way too long to move over for oncoming traffic (though it does move over). It used to sometimes slow a bunch at a particular constant yellow flashing light, then it improved, and in the latest update it likes to slam on the brakes and stop as if it is a red light.
Interestingly Dirty Tesla records videos in the same area as me, but does not tend to go on the streets that are problematic for me.
I *do* think these issues will be eventually worked out though. But I'm not very optimistic about the timeframe.
On a side note, it really irritates me that they have not added support for "no right turn on red" signs. I know they could easily identify those, and prevent the car from making illegal maneuvers. It forces many very unnecessary disengagements.
Interestingly Dirty Tesla records videos in the same area as me, but does not tend to go on the streets that are problematic for me.
I *do* think these issues will be eventually worked out though. But I'm not very optimistic about the timeframe.
On a side note, it really irritates me that they have not added support for "no right turn on red" signs. I know they could easily identify those, and prevent the car from making illegal maneuvers. It forces many very unnecessary disengagements.
That assumption, however optimistic, 'ain't gonna happen'. Why? Auto and other consumer durable finance, in North America and many other countries, almost always permits well over MSRP 100% financing. There are three major reasons; First, with poorer credit risk through captives, especially, there is a deeply entrenched 'get 'em done' culture that allows financing of total selling price including taxes and fees. Second, the same practices permit 100% financing of selling price for very, very high margin items including additional dealer margin, dealer installed options, credit life insurance, extended service contracts, etc. Third, the typical practice is to allow dealer markup fo a financing contract by as much as 300bp or more.
That means that so long as dealers exist so too will Finance and Insurance (F&I), the 'closers' in dealers. New vehicle sales per se usually are not profit makers. F&I, though is hugely profitable.
Collateral value of typical dealer financed vehicles is relevant, but not the principal issue.
[some will argue with this, but anybody who has ever been a dealer or F&I person knows it is true]
Artful Dodger
"Neko no me"
TSLA 200-Day Moving Average MA(200) sits at $293.55 as of 09:45 am. I expect hedgies to push for a MMD to stay in contact with the MA(200) 'cuz that's how they roll. I also expect MMs to herd the SP back toward $300 for the Close.
Anybody care to post the Open Interest chart from 7 a.m. this morning?
Cheers to the Longs!
Anybody care to post the Open Interest chart from 7 a.m. this morning?
Cheers to the Longs!
Max pain was at 280 this morning. How much will that influence MM today?
BrownOuttaSpec
Active Member
StealthP3D
Well-Known Member
Elon has said their goal with FSD is to get it to run with only one stack (merge city driving and highway driving). I think when they initially accomplish this, performance of both will become more inconsistent (unless they withhold single stack in-house until it can demonstrate its superior). It seems to me this planned merge of the two stacks is more difficult than anticipated so I would be cautious about modelling FSD revenue recognition in advance of actual FSD breakthroughs such as single stack that is at least as good, if not better, than what we have now. I mean, they wouldn't have the goal to merge the two stacks if they didn't think it was necessary and they are obviously having trouble doing that.
My impressions of the most recent FSD versions (I've installed two recent versions) where I most often test it (rural mountain highways) is there are no significant improvements over the version I've been running for many months previous, unless you consider being more cautious with respect to speed around corners an improvement. It may be safer than it was but, if it achieves that via more cautious speeds, I don't consider it a significant improvement. And, in fact, it does not feel any safer judging simply by confidence and smoothness in my normal test areas. That is not to say there might not be significant improvements on the city driving side of things as I have not been testing that to a large enough degree to form a strong opinion.
I'm beginning to think they might need another magnitude of compute power rather than a bunch of optimizations that make it work with existing compute power. I could be wrong but that's what it's beginning to feel like to me. The first solution seems quite expensive, and the second solution increasingly seems like it might take another year or more. That's why I wouldn't model any recognition of deferred revenue without better visibility of success. And the stock doesn't need that to continue to appreciate because the share price doesn't really reflect the solving of FSD in the near-term.
That said, is anyone getting the feeling that a breakout of the energy division is imminent, either this quarter or next (or both)? I'm mostly basing this on Viecha's recent comment that they have enough batteries for both divisions. However, I don't know how that can be accurately modelled with so little to go on. I don't envy anyone trying to model (especially) profits, with any accuracy, going forward from here.
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Artful Dodger
"Neko no me"
My limited experience (just a few years) says 'Max Pain' is a made-up number with little resemblance to MM's real exposure. That's primarily due to hedging, which is especially true on a 'Triple-witching Friday' like today (ie: these Options contracts have been traded for so many month/years now that MMs have already hedged their positions on deep-in-the-money contracts).
Only the contracts in play today matter to MMs (they can only do so much if real buying interest show up). That's why the FedEx news is being played up today; it's 'convenient'.
Then recall that their are ~28 MMs in total for TSLA options and not all of them have the same exposure/risk profiles. So a single number like "Max Pain" is a fantasy. I developed a metric I called the "Put-Call Breakpoint" last year (you can search TMC), which I felt was somewhat better, but I don't trade on it.
TL;dr dunno.
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Used FSD again yesterday. Here is a major problem I'm seeing right now with left turns that I suspect is a hardware issue (the way the cameras are pointed). It goes into the intersection, and then it wants to turn about 10 degrees left and stop. The problem is that means it goes a little into oncoming traffic (scaring them) and then stops with wheels turned left (so if you get rear ended you get pushed into oncoming traffic). It needs to stay in the turn lane with wheels straight, and then turn and go when clear. But I don't think it can "see" what it needs to see if the car is straight ahead. It also hesitates when it should go, and then after starting/stopping a few times (and not going when it was clear with plenty of time to the oncoming car), it then finally tries to go when the gap with the oncoming car is now getting too tight (scaring everybody).
This is one of the exceedingly rare times when I disagree with an Elon Musk pronouncement.
First, 'residual value' has nothing to do with 'resale value'. Residual value is a contractual termination value in a lease or 'baloon payment' loan. In the contract the amortization si for the total contract value less the 'residual value'. Resale value is what the collateral sells for at the end of the contract.
The only comparable event in recent decades was the replacement of piston aircraft by turboprops first, then by turbojets. The old pistons did have values plummet, but they were largely recycled to less developed areas, so did not lose anything close to all their value. There is data existing on that transition, mostly within ancient archives of aircraft financiers and manufacturers. That was not the financial catastrophe that would ahem been expected.
So, too, there is a deeply 'first world bias' in this assumption. Much of the world population lives in poor conditions that have no reliable electrical supply at all. Despite they Chinese ability to put BEV charging at the Mount Everest Base Camp, most of Africa, South America, and Asia will absorb used ICE for decades to come.
I really wish this were not so. However, many regions largely remain as they were before the industrial revolution, often with a handful of modern accoutrements but nothing much more. Thus, the BEV adopters will not junk their ICE, they'll just export the pollutants to poor people. It will be as it has ever been.
Again, I wish it were not so.
But those poor people buying them won’t pay anything close to what the people in the countries those were exported from paid before. Considering the cost to even get them there.
So Elon is actually right, the value of ICEs will completely plummet once the supply overwhelms the demand. No?
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