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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.

Go deeper:

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.

Go deeper

"Atmospheric river" swings Northern California from drought to flood

Satellite view of the bomb cyclone swirling off the coast of the Pacific Northwest and the atmospheric river affecting California on Oct. 24. Photo: CIRA/RAMMB

A series of powerful "atmospheric river" storms are delivering historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest.

Why it matters: The atmospheric river, packing large amounts of moisture, was causing Northern California to whiplash from drought to flood, as it slowly moved south overnight. It's triggered widespread power outages, flooding and mudslides.

In photos: Drought-ravaged California lashed by major storm

Workers try to divert water into drains as rain pours down on Oct. 24 in Marin City, California. Photo: Justin Sullivan/Getty Images

A major storm system was pummeling Northern California and parts of the Pacific Northwest with heavy rains overnight.

The big picture: "Atmospheric river" storms, associated with a record-strong "bomb cyclone" offshore from the Pacific Northwest, have brought flooding and mudslides to parts of California that were razed by recent wildfires and in severe drought. It's also caused widespread power outages in California and Washington state.

4 hours ago - World

Sudan's military places civilian prime minister under house arrest

Sudanese Prime Minister Abdallah Hamdok during a 2020 news conference in Khartoum, Sudan. Photo: Mahmoud Hjaj/Anadolu Agency via Getty Images

Sudan's civilian Prime Minister Abdalla Hamdok was put under house arrest and several other ministers were also detained Monday in what appears to be a military coup in the country, per local reports.

Why it matters: The arrests of the civilian faction in the Sudanese government came a day after U.S. envoy Jeffrey Feltman met with the head of the military faction of the Sudanese government General Abdul Fattah al-Burhan and warned him against staging a coup.