Tesla has announced it will no longer offer the Full Self-Driving (FSD) package for a one-time payment, shifting exclusively to a monthly subscription model. This decision, announced by CEO Elon Musk, comes as a significant departure from Tesla’s previous strategy, where buyers paid upfront prices ranging from $5,000 to $15,000.
The change follows declining sales of the FSD package, with Tesla’s take rate—buyers opting for FSD—reportedly falling. The company lowered prices earlier in 2023, reducing FSD from $12,000 to $8,000 and cutting subscription costs from $199 to $99 per month. This pricing shift diminishes the appeal of upfront purchases, as subscriptions can take nearly seven years to break even compared to the upfront fees.
By moving to a subscription-only model, Tesla aims to avoid the liabilities tied to unmet promises of full autonomy. This strategy also seeks to boost cash flow amid increased competition in the driver-assistance market, which includes rivals offering similar features at lower prices.
Critics argue this move highlights Tesla’s acknowledgment that FSD is more of a service than a long-term asset, undermining Musk’s prior claims of substantial future value connected to the technology. Existing customers who paid large sums for FSD may feel particularly disadvantaged as the subscription model emphasizes ongoing service rather than ownership of an evolving technology. Ultimately, this shift may stabilize Tesla’s finances short-term while repositioning FSD in the market.
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