so just recently Tesla has had the earnings call and earnings report in which we have seen that
they have over five hundred million dollars in deferred revenue what is deferred revenue we're
going to be getting into that in this video so deferred revenue as the term state is revenue
that is not recognized so why is this revenue not recognized well the reason is that this
revenue is meant for a different purpose when Tesla sells their cars they receive revenue or
the cost of the car which we as consumers pay if the car is sixty thousand dollars we pay
sixty thousand dollars whether we get it on a loan or we pay it outright Tesla receives sixty
thousand dollars now with the lease it's a bit different but I'm not going to be getting into
that you just yet so when Tesla actually gets a sixty thousand dollars that goes into the revenue
stream so Tesla is to separate revenue streams or revenue titles for accounting purposes one is
called deferred revenue that's the one I'm going to talk about so deferred revenue is revenue that
Tesla actually has but they can't really use okay I'll just I'll just simplify the entire thing or
I'll try to simplify the entire thing so when you buy a Tesla pretended sixty thousand dollars which
I think one model actually might be model three some maybe long-range or something I'm not sure
but we're just gonna say sixty thousand dollars now sixty thousand dollars that's for the car
itself obviously we add taxes on top of it but that's just for the car itself that actually
goes to Tesla now there's a software component to it which Tesla only which only Tesla has so that
software component is full self-driving now what is full self-driving well it's basically you're
buying full self-driving so that in the future that car the car that you bought will have full
self driving when Tesla actually gets enough data and builds out their software so that the car can
actually drive itself you're basically buying a cheap right now so yet you get a better value in
the future that is why Tesla uses these two terms so that sixty thousand dollars goes towards the
car itself which is recognized as regular revenue regular everything and all that so right now as of
shooting this video the full self-driving option is 6000 USD so that's $6,000 that I am going to
give to Tesla is not really going to Tesla in the sense that they're gonna use it and report
it just how you're supposed to report everything they are putting that six thousand dollars into
deferred revenue so the reason Tesla is putting it into deferred revenue is because they don't have
it yet they don't have full self-driving cars yet they don't have the feature that they have
literally named and told us about they don't have that yet when Tesla says that they have
deferred revenue of over five hundred million u.s. dollars that means that they are referring to five
hundred million u.s. dollars of value that they have as deferred revenue for full self-driving
so when Tesla actually leases their entire full self-driving line I mean everything the software
everything it'll basically be a software update to cars that are compatible you as a consumer
will have full self-driving and Tesla will be able to release that over five hundred million dollars
into the actual revenue stream to be accounted as regular revenue so why don't they do it yet well
for example what if tests are can't deliver on that promise what if teza for whatever reason they
can't deliver full self-driving it's very very rare that Tesla will actually it would it would
be very astonishing if Tesla did not do that it would be next to impossible if tazza didn't do it
I'm not saying in which timeframe I'm just saying if Tesla didn't do it as Tesla keeps releasing
these full self-driving features throughout the software updates as the car gets they can then
start releasing some of that deferred revenue for example just last month in September Tesla
released v10 for pretty much every one version ten that's their biggest software update till to date
now in that they have something called advanced summon or smart summon so if you've bought the
full self-driving options you have this feature now so by releasing this software update Tesla has
actually released over three million US dollars from their deferred revenue into normal revenue
that's another reason why I R that's another reason why it has actually made a profit I
talked more about that up here you can watch it over there so as Tesla improves their software
improves everything that they're doing improves full self-driving as a whole they can then start
releasing more of the different revenue and put it into their income stream or their actual not
regular revenue that they are receiving it's meant so that because you don't have full self-driving
yet you they will only release the cash when you get full self-driving so it's more in time or in
line with the time as everything is progressing so it could literally just be that tells up for
example just tomorrow releases full self-driving for everyone they can then in their q4 statement
literally put that they have over five hundred million dollars of revenue coming from deferred
revenue they already had the cash they had they had everything it's just it's being transferred
from a name to a different name that's really it and it's just basically a stack of cash that they
can't use and nor do anything with until they get the software out now once they do get the software
out a more people will actually start buying full self-driving because they actually see it working
which we've seen happen with the version 10 update with smart summon and be people will be astonished
and see Tesla will get over five hundred million dollars come on tell me that's not good they just
made 144 million dollar profit just last quarter partially due to the version ten update and
partially due to the credits the Zen TV credits talked all about it up here in this video just
go ahead and watch it if you want to know more about it so if Tesla actually released its 500
million dollars in deferred revenue that could literally mean Tesla can have a profit of over
five hundred million dollars in q4 now that's not realistic that's just an explanation explanation
purposes I highly doubt they're gonna do any sort of thing to you on did state that they will have
full stuff there would be feature complete full self-driving by the end of this year so
by 2019 so that's about two months now there'll be feature complete what that means is if they
send out an update they can then start releasing more of that cash and then in q4 and the current
earnings call in the earnings report we will actually see how much of that deferred revenue
has actually been transferred into their regular revenue stream I hope I simplified that enough
I hope you understand if you if you don't just leave a comment down below I'll try to explain
it then or maybe make a new video or I don't know I'll do something so leave a like comment
down below how you thought what is your opinion on different revenue and how-to's actually does
things you know if you would actually see a car that's full self-driving within the next year
or two that's gonna be a whole different topic for a whole nother video maybe couple of maybe
many videos honestly if I'm being honest so I'm honestly from being honest yeah I should
take a nap I'm getting tired a bit I'm getting a bit tired so I'm gonna see you next time peace