- Tesla is eliminating a one-time $8,000 purchase option for its Full Self-Driving (FSD) technology, moving to a subscription-only model starting this weekend.
- The monthly subscription will start at $99 in the U.S., but CEO Elon Musk has warned the price will increase as the system’s capabilities improve.
- Musk noted the technology’s value will see a “massive value jump” when it allows drivers to be completely unsupervised, but provided no definitive timeline for that milestone.
- The shift to subscriptions is expected to impact automotive margins in the short term, despite FSD already having nearly 1.1 million paid customers globally.
Electric vehicle leader Tesla Inc. (TSLA) is making a pivotal shift in its business model this Sunday, permanently retiring the one-time purchase option for its driver-assistance software and converting it to a subscription-only feature. Until the end of Feb. 14, customers could still buy Full Self-Driving (FSD) for $8,000 upfront, but now the only path is a $99 monthly fee.
CEO Elon Musk announced this strategic change last month, framing it as a move aligned with the software’s evolving value. However, he also cautioned that the monthly subscription price for FSD will not stay static and is set to rise as its capabilities improve. The “massive value jump is when you can be on your phone or sleeping for the entire ride,” Musk stated, highlighting the ultimate goal.
Consequently, the company is being “very cautious” with its rollout, as Musk has not provided a definite timeline for when FSD will transition to being wholly unsupervised. Meanwhile, regulators continue to scrutinize the system’s efficacy, even as Tesla tests a few Model Y vehicles in Austin as robotaxis without a safety monitor.
In late January, Tesla revealed in a call with analysts that FSD adoption reached nearly 1.1 million paid customers globally in the fourth quarter. The company acknowledged that the transition to a subscription-based model will primarily drive future net additions, impacting automotive margins in the short term. On retail trading platforms, sentiment around TSLA stock remained ‘bullish’ over the past 24 hours according to community data, while the stock has gained 18% over the past 12 months.
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