Musk says Tesla likely to launch full self-drive technology 'this year'

By Hyunjoo Jin

SAN FRANCISCO, April 19 (Reuters) - Elon Musk said on Wednesday that electric vehicle (EV) giant Tesla (TSLA.O) likely will launch full self-drive technology this year and generate significant profits that offset some of the margin pressure it’s facing due to aggressive price cuts.

“I hesitate to say this but I think we’ll do it this year,” said Tesla CEO Musk, speaking on a conference. Musk has missed his previous targets to achieve self-driving capability dating back years.

The test version of what Tesla calls Full Self-Driving (FSD) software will be “two steps forward, one step back between releases,” Musk said, “but the trend is very clearly towards full self driving, towards full autonomy.”

The technology as it stands now has drawn legal and regulatory scrutiny following crashes. Tesla has said the technology does not make the car autonomous, and requires driver supervision.

Tesla’s financial chief Zachary Kirkhorn said its automotive margin in the first quarter was hurt not only by price cuts, but also increased deferred revenue for FSD software and that “this deferral should get recognized once some of the software catches up.”

Kirkhorn did not elaborate.

Guidehouse Insights analyst Sam Abuelsamid said Tesla is making some changes to the car’s hardware, which disables some FSD features on newer vehicles temporarily.

Tesla sells FSD software as an option for as much as $15,000.

Late last year, Tesla removed ultrasonic sensors from Model 3 and Model Y cars, and said some features such as “smart summon” and “autopark” would be temporarily unavailable.

“We do have this unique strategic advantage,” Musk said. “We are making a car that, if autonomy pans out, that asset will be worth a hell of a lot more in the future than it is now.”

Tesla reported a lower-than-expected quarterly margin on Wednesday but Musk said he would prioritize sales growth over profits in a weak economy.