Tesla’s latest subscription coup could be a gamechanger for the industry

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The price for Tesla’s Autopilot is considered too high by many customers. Now the electric carmaker has made improvements and is offering a subscription model.

Tesla drivers can now also rent Tesla’s Autopilot functions. The assistance package, which includes functions for semi-autonomous driving, was previously only available as a purchase option and cost an additional $10,000. Tesla has now reacted to the criticism of the high price and the fact that users who switch to another model cannot take their package with them, and is now offering a subscription model: For $199 a month, Tesla drivers can use the technology and cancel again if necessary.

Mail sent to Tesla drivers

The industry portal “Electrek” reports on an e-mail that was sent to Tesla customers. In it, the automaker writes that the full self-driving feature is now available as a monthly subscription. “Upgrade your Model 3 […] for $199 per month (excluding taxes) to experience features like navigating on autopilot, automatic lane change, automatic parking, summoning, and traffic light and stop sign control.” The company explicitly notes that the features are not fully autonomous, so a driver would need to actively monitor them.
Subscriptions will flush money into Tesla coffers
Tesla’s assistance package for partially autonomous driving for rent makes it more flexible and affordable for Tesla drivers to use. However, it can be assumed that Tesla is speculating on convincing vehicle owners of the benefits of the FSD package on a permanent basis – in this case, the rental model would already be more expensive in 50 months than if the package were purchased once. So, if you drive your vehicle for more than 2 years and use the functions every month, you will be better off with a direct purchase in the long run.

The subscription option could prove to be a gamechanger for Tesla and the entire autonomous driving market. In the first quarter, for example, the rise in the price of Bitcoin and trading in emissions certificates had a far greater impact on the group’s operating result. This could now change, as the rental model for the FSD software could put a lot of money in the company’s coffers in the future. Pierre Ferragu, an analyst at New Street Research, recently calculated how big the impact could be: Tesla is likely to make $7,000 in profit per car by 2030. Meanwhile, the sale of FSD subscriptions is expected to generate an additional 23,000 U.S. dollars per vehicle, “Barrons” quotes the analyst as saying. Against this background, the expert assumes that other car manufacturers will follow suit and in the future will rely on rental instead of purchase offers in connection with autonomous software offerings.

At the beginning of the year, the expert had still sharply criticized the previously applicable practice of not being able to transfer his fully paid FSD package to another Tesla model and publicly demanded of Elon Musk: “Change that!”

Whether Ferragu alone was the reason that the FSD functions were now made available in a monthly subscription model remains open. However, the analyst was obviously convinced by the offer:

“Thank you, Elon Musk for the $199 subscription,” he wrote on Twitter. He loves the impact on Tesla’s EBIT and multiple. “Tesla rocks!” the expert added.

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