Elon Musk doubles down on his claim that Tesla cars are now “appreciating assets” and says that they should be worth $100,000 to $200,000 with the Full Self-Driving package.
Earlier this year, Musk claimed that Tesla vehicles are now “appreciating assets” due to their self-driving capability.
He aims for Tesla vehicles to become revenue-generating assets for their owners, but if the price doesn’t increase, the value would still depreciate since new buyers could still buy the vehicles for the MSRP.
The CEO later confirmed that Tesla plans to “substantially” increase the price of the Full Self-Driving option over time:
Please note that the price of the Tesla Full Self-Driving option will increase substantially over time.
He confirmed that it is what he meant by Tesla vehicles becoming “appreciating assets”:
— Elon Musk (@elonmusk) April 13, 2019
The Fully Self-Driving package still hasn’t delivered its namesake capability, but Musk claims that it will achieve full autonomous driving capability by the end of next year.
Tesla did already start to increase the price of the Full Self-Driving package.
Now Musk claims that Tesla’s cars “should be worth $100,000 to $200,000” with full self-driving capability:
If we make all cars with FSD package self-driving, as planned, any such Tesla should be worth $100k to $200k, as utility increases from ~12 hours/week to ~60 hours/week
— Elon Musk (@elonmusk) July 16, 2019
The CEO says that the vehicle will be worth more because they will be used a lot more often as self-driving taxi vehicles on Tesla’s upcoming Uber-like network.
Musk added that Tesla will charge a fee to put your car on their network and earn money:
Tesla will charge a percentage fee for being in our robotaxi fleet, but it will rise to whatever the clearing price is, otherwise all our cars will be bought by scalpers.
When arguing about the difference between Tesla cars becoming revenue-generating assets or actual appreciating assets, Musk said:
Straw man fallacy. To appreciate, your car just needs to be worth more than you paid for it, so probably ~$75k is enough if you bought a 3. FSD will be bundled in all cars (important point). Something is not a commodity if you can’t make enough of them & we won’t be able to.
— Elon Musk (@elonmusk) July 16, 2019
Musk’s new comments come after Tesla updated its pricing and options across its lineup last night — resulting in several price cuts.
Now he says that Tesla will increase the price of the Tesla Full Self-Driving package by “~$1000 on August 16.”
I agree with Elon about the difference between a revenue-generating asset and an actual appreciating asset, but there’s another problem here.
Elon is right that with full self-driving capability, if Tesla keeps increasing prices, Tesla’s vehicles would become appreciating assets.
However, Musk claimed that Tesla should now be considered appreciating assets, and people would be making a bad financial decision to buy anything else right now.
That’s dependent on people believing his claim that Tesla will achieve full self-driving capability with its current hardware and approach, which is clearly not the case based on the current depreciation.
Furthermore, Tesla is not helping by actually decreasing the price of its vehicles, like it did for several variants last night.
I think it could happen, but Elon is getting a little ahead of himself here.
Tesla vehicles are currently still depreciating assets. If Tesla does deliver on self-driving and then increases the price accordingly, then yes, it does become an appreciating asset.
For now, there are too many ifs.
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