Illustration: Sarah Grillo/Axios

Elon Musk predicts full self-driving features — which Tesla is now selling as a $6,000 option on its electric vehicles but aren't yet available — will transform the company's bottom line.

The big picture: Right now, Tesla's Autopilot has only limited self-driving capabilities on highways. When Tesla can offer a fully self-driving car, Musk said this week in Tesla's Q2 earnings call, profit margins will soar to as much as 30% (from today's 19%). Revenue that had been deferred will be recognized, but more importantly, Musk expects orders for the full self-driving package to increase significantly.

"The gross margin over time will be really quite compelling when factoring in the full self-driving option."
— Elon Musk

Between the lines: Tesla had about $1 billion of deferred revenue on its balance sheet as of March 31, for "unsatisfied performance obligations."

  • Deferred revenue is common in businesses where customers prepay for a subscription or service, for example.
  • In Tesla's case, these aren't just self-driving features that have yet to be activated but certain other services, including access to Tesla's Supercharger network and internet connectivity.
  • Of the $1 billion in deferred revenue, Tesla expects to recognize $462.3 million in the next 12 months — a sign that it intends to add some of the promised features. The remainder will be counted over time, up to the 8-year life of the vehicle.

Tesla's timetable for driverless cars is far more ambitious than the rest of the industry.

  • While most carmakers say fully automated vehicles are still a decade away, Musk says Tesla will have a million robotaxis on the road by next year.
  • Tesla timetables have proven unreliable, however, and the company is still working on two promised features — traffic signal recognition and automated city driving — in the "full self-driving" package.
  • Since Tesla says it will keep improving the technology — and raise prices accordingly — the package description could also change.

What to watch: Tesla, which had said it expected to return to profitability in the third quarter, has changed its outlook slightly.

  • The company now says instead of "expecting" a profit, it is "aiming" for one but adds its main focus will be boosting deliveries, expanding factory production and generating cash.

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Editor's note: This story has been corrected from a previous version that stated erroneously that Tesla did not have access to the money it is collecting for fully self-driving features.

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Trump says he intends to give RNC speech on White House lawn

President Trump speaking to reporters on South Lawn in July. Photo: Jabin Botsford/The Washington Post via Getty Images

President Trump told the New York Post on Thursday that he plans to deliver his Republican National Convention speech from the White House lawn, despite bipartisan criticism of the optics and legality of the location.

Why it matters: Previous presidents avoided blurring staged campaign-style events — like party conventions — with official business of governing on the White House premises, per Politico.