Tesla Motors dealership in Pleasanton, California.
An Elon Musk Tweet on Tuesday confirms past predictions that Tesla will raise the price of the “Full Self Driving” add-on on Nov 1.
This means the price to add it to your car will jump from $6,000 to $7,000. The price of this function has ranged from $2,000 (a short-lived offer to those who paid for the earlier “enhanced autopilot”) to this new price. For a long time, the typical price was around $5,000.
You get very little today if you order this product. It is mostly the promise of future software updates, yet to be released or even yet to be written, that provide more autopilot, and eventually self-driving functionality to the car.
Earlier I wrote a guide to deciding if you should buy this add on. What was written still stands, but the price increase warrants an update and some new numbers.
Forbes
Tesla has reported that it has a large pool of “deferred revenue,” namely revenue they have collected for services and products not yet delivered. It is reported that about $500M of that revenue comes from people purchasing the “FSD” package, which suggests roughly 100,000 Tesla owners have made the purchase, depending on what price level they did it at. That’s around 1/8th of all Teslas sold, though models from the first few years can’t buy this package. Tesla realized about $30M of this revenue recently by shipping (prematurely in the view of many) the “smart summon” feature for parking lots.
Tesla has promised that 2019 will see functions like traffic light detection in Autopilot, and most boldy, Autopilot style operation on city streets. It is now speculated that this is what Elon Musk referred to as “Feature Complete” “full” self-driving. This would be a version of Autopilot (including “navigate on autopilot”) that will drive down city streets, make turns, stop at stop signs and red lights, go at green lights and more while the driver watches, hands-on, ready to grab the controls if needed.
People in the robocar (or “self-driving”) communities have bristled at the use of the term “full” self-driving by Tesla for such functionality. They are working on something far more advanced than this, and if Tesla’s offering is “full” then what is the more advanced offering? One wonders if we now need to have “real full self driving” and “real true actual full self driving” to compare with what might better be called “City Autopilot.”
It will be interesting to see how drivers react to such functionality. I’ve heard at least one report of a beta tester enjoying it, but there will be many who will find it frightening to do the job of a robocar safety driver with the vehicle making much more dramatic motions, and coming upon much more complex situations, including pedestrians, bicycles and children on the streets. In my own experience, even testing the red light detection has been a harrowing experience. You approach the light, or other such situations wondering, “is it going to see it?” “Do I need to intervene now?” You are torn between taking over and trying to find out if it would have figured it out, and that’s not relaxing. It may make the most sense being used on uncrowded streets, without vulnerable road users, but turned off in complex situations. Tesla’s current instructions tell drivers to turn off Autopilot in places like construction zones, though they frequently do not. It seems likely Tesla’s instructions on this product will also advise not using it in complex places.
Some actual self-driving features – where the driver becomes, even if temporarily, a passenger – are still some distance away. Musk has promised this will happen next year, but warns that regulators may not allow it even after Tesla has made it work. I predict that likely features that will arrive earlier might include traffic jam self-driving and certain levels of general highway self-driving.
Again, customers will ask if those functions, delivered in the future, are worth $7,000 today. More, the open question is whether these price increases will continue, as Musk states, or if the price will change according to market conditions as competitors start to offer similar products. If new car buyers can get similar functions for less, Tesla will be forced to lower their price, which means they probably have to lower it for prior customers too. On the other hand, Tesla is a leader in this space, and the cars that are arriving that compete with Tesla’s models are currently more expensive are are not matching its capabilities. This may presage a period of market dominance that can demand premium prices.
The full $7,000 or more price includes a hoped-for future value of a car that can do “real, true, actual full self-driving,” which is to say it can operate with no driver at all, and even join the Robotaxi fleet Tesla has promised and make big dollars for the owner. My recommendation, however, is that if that is going to happen, you take your $7,000 and buy Tesla shares or options. I suspect that if Tesla actually delivers on that well before anybody else, you will make more than enough on those shares to pay for any price increase. Of course, if they don’t deliver, you might not do so well with the investment.
