Tesla's Autonomous Software Is a Never-Ending Source of Profit

Tesla's Autonomous Software Is a Never-Ending Source of Profit

There has never been a bigger difference between Elon Musk's claims on the commercialization of self-driving technology and what Tesla Inc. eventually said in regulatory filings.

There has never been a bigger difference between Elon Musk's claims on the commercialization of self-driving technology and what Tesla Inc. eventually said in regulatory filings.

Tesla published its 10-Q on Wednesday, a quarterly filing that offers a more thorough look at the company's financial situation. For a number of years now, Tesla has consistently updated these disclosures with information on the amount of money it has received from customers but hasn't yet completely recognized. The work-in-progress product Full Self-Driving, or FSD for short, is the subject of a portion of this delayed income.

As of March 31, Tesla's deferred automotive revenue was at $3.5 billion, indicating little variation from the close of the previous year. Tesla anticipates realizing $848 million of that sum over the course of the next 12 months, which means that a large portion of the performance requirements related to the fees it has been charging consumers for FSD will still be unfulfilled in a year.

Despite the software's misleading name, the firm doesn't elaborate on the specific areas where performance is lacking. FSD is a driver-assistance technology that helps drivers maintain their hands on the wheel; it does not render the company's cars driverless.

Additionally included in these papers is Tesla's actual recognition of deferred revenue, which has continuously underperformed the Austin-based company's own projections. In the last 12 months, it has recorded $494 million in deferred revenue, falling short of the $679 million it had anticipated a year earlier.

Given the downturn in Tesla's car industry and Musk's concentration on FSD, the numbers have become more significant. As the first quarter came to an end, the CEO mandated that employees install and show FSD to every client in North America before delivering the automobile.

Indeed, Musk put a new line in the sand on Tesla's first-quarter results call on Tuesday: "I think people should not be investors in the company if they don't believe Tesla is going to solve autonomy." "We are, and we will."

Tesla's first-quarter sales dropped 8.7% to $21.3 billion, despite the company benefiting from more FSD revenue recognition than it did a year earlier as a result of the launch of the Autopark function in North America. This was the company's largest percentage decrease since 2012 and its first year-over-year loss in the last four years.

Musk began the Tesla results conference by calling the most recent iteration of FSD "profound" and quickly advancing. In addition to providing free trials, the firm has reduced the cost to buy the product or sign up for a monthly subscription to access it. The CEO claimed that it has also discussed licensing FSD with a major carmaker.

At the conclusion of the call, Musk said, "I would just like to strongly recommend that anyone who is, I guess, imagining Tesla stock should really drive FSD." "If you don't do this, it's pointless to understand the company."