Tesla (TSLA) to stop selling Full Self-Driving package, moves to subscription-only: why it’s a big move

Tesla is officially killing the option to purchase its Full Self-Driving (FSD) package upfront. CEO Elon Musk announced today that the automaker will stop selling FSD as a one-time option and will instead only offer it as a monthly subscription.

It marks a massive shift in Tesla’s strategy for the software, which Musk has famously claimed for years would become an “appreciating asset.”

For years, the main way to get access to Tesla’s self-driving promise was to pay a large upfront fee, ranging from $5,000 in the early days to a high of $15,000 in late 2022. The narrative was simple: buy it now, because the price is only going to go up as the software gets better and eventually enables your car to be a robotaxi worth hundreds of thousands of dollars.

Now, that era is over.Tesla started slashing prices in 2023 and they never went back up:

In a post on X (formerly Twitter) today, Musk announced the change:

Tesla will stop selling FSD after Feb 14. FSD will only be available as a monthly subscription thereafter.

— Elon Musk (@elonmusk)

The move is significant as it detaches Tesla from its promise of delivering unsupervised self-driving to vehicles with FSD since every new FSD customer would only be subscribing for the month rather than buying the promise that their vehicle will eventually be unsupervised self-driving.

It essentially puts an end to FSD as a purchasable product attached to the vehicle.

A Turbulent History of FSD Pricing

This move comes after a roller-coaster few years for FSD pricing that directly contradicted Musk’s claims.

The CEO famously said that Tesla would keep increasing the price of FSD as the system became more capable. “The FSD price will continue to rise as the software gets closer to full self-driving capability with regulatory approval,” Musk said in 2020. He even went as far as saying that buying a Tesla with FSD was an “investment in the future” and that the cars were “appreciating assets.

Tesla seemed to stick to that plan for a while, raising the price to $10,000, then $12,000, and finally $15,000.

But in 2023, reality set in. As Tesla’s delivery numbers came under pressure and the FSD “take rate” (the percentage of buyers who opt for the software) reportedly plummeted, Tesla reversed course.

In April 2024, Tesla slashed the price of FSD from $12,000 to $8,000. Around the same time, they cut the subscription price in half, from $199 to $99 per month.

At $99/month, the math for buying FSD upfront for $8,000 barely made sense anymore; it would take nearly 7 years of subscribing to break even. It would only make sense if you believed Musk’s promise that it would become autonomous without the need for supervision – something Musk said would happen every year for the last 7 years, and it never happened.

Now, Tesla is simply removing the choice altogether.

Why the pivot?

As previously mentioned, moving to a subscription-only model kills the promise. Tesla owners who subscribe to FSD are paying for what they get that month: a level 2 driver assistance system and they can’t really complaint or sue Tesla for FSD not being what they paid: unsupserivsed self-driving.

Tesla is still liable for having sold this promise to previous owners, but at least, it is not actively adding to this liability pool.

It could also help Tesla bring in a bit more cash this quarter, which is expected to be rough for Tesla as it lost many subsidies.

We have reported on Tesla’s low FSD take rate in the past, with some data suggesting it is in the low double digits. By forcing a subscription model, Tesla might be betting that more users who plan to keep their vehicles long term will pay up-front within the next month, boosting Tesla’s profits this quarter.

It is also worth noting the history here. Tesla only launched the FSD subscription in 2021 after years of delays. At the time, early Tesla owners were asked to pay $1,500 for a hardware upgrade to even use the subscription they were promised their cars were ready for, a controversy Tesla eventually mitigated by lowering the retrofit price after Electrek reported on it.

On the other hand, the move is also coming as there is significant competition in the advanced level 2 driver assist space similar to Tesla’s FSD.

Rivian just announced its own FSD competitor, Autonomy+, and it is selling it for $50 a month or a one -time $2,500 fee.

NVIDIA just launched an open-sourced platform for automakers to launch their own FSD competitors, starting with Mercedes-Benz.

In China, there are several Tesla competitors with systems similar to FSD, and they offer it for a fraction of the cost, or sometimes, it’s even included in the car.

Electrek’s Take

This is the final nail in the coffin for the “appreciating asset” narrative.

For years, Elon told customers that they needed to buy FSD now because it would cost $100,000+ later when the car became a robotaxi. If you bought FSD for $8,000 or even $15,000, you were supposedly locking in that value.

By moving to a subscription-only model, Tesla is admitting that FSD is a service, not an asset attached to the car.

It enables Tesla to detach itself from a promise that it consistently failed to deliver.

From a business standpoint, I get it. The upfront take rate was dead. No one was paying $8,000 for a Level 2 driver-assist system that still requires supervision, especially when you can rent it for $99.

But you have to feel for the people who paid $15,000 for this package in 2022. They paid the equivalent of 12 years of subscriptions for a product that is still arguably in beta.

Now, I bet the next step is to lower the price of the subscription to increase the take rate.

This smells like a desperate lever being pulled to try and salvage the financials for a tough quarter, but long term, it’s probably the more honest pricing model for what FSD actually is today: a driver assist feature, not a robotaxi license.