Tesla has enabled its customers to subscribe to their full Self-Driving feature instead of having to buy it in full outright. Subscribers can cancel at any time, and after cancellation, full Self-Driving features will remain active until the end of the current billing period.
According to the official website, “Tesla cars come standard with advanced hardware capable of providing Autopilot features and full self-driving capabilities—through software updates designed to improve functionality over time.”
“Eight surround cameras provide 360 degrees of visibility around the car at up to 250 meters of range. Twelve updated ultrasonic sensors complement this vision, allowing for detection of both hard and soft objects at nearly twice the distance of the prior system.”
— NY Post Business (@nypostbiz) July 12, 2021
Previously Tesla only offered access to the Full Self-Driving feature set as a purchase rather than a subscription. The cost has increased over time and currently stands at $10,000. At $199 per month, customers can meet even the original cost in four years and two months.
The up-front purchase option was not very popular among its customers since it was with the vehicle rather than the owners. While it does help resale value, options generally do not recover their total cost on the used market.
That can make upgrading to a newer Tesla vehicle complex — especially as the cost of the option has risen over time. A subscription could be a more attractive option for someone who wishes to own a car for only a short period.
The subscription option will reduce both revenue and profitability on new sales and create a new recurring line of business for Tesla, one that should boast incredible margins. In October, Tesla’s Q3 earnings report will be the first opportunity for investors to judge the impact, though Tesla will likely discuss more details on their second-quarter earnings call in a little over a week.