Elon Musk warns that Tesla is about to increase the price of its “Full Self-Driving” package as the company now sits on around half a billion in unrecognized revenue from the unreleased feature.
There are many things about how Tesla is approaching self-driving technology that makes it different from the rest of the auto industry.
The automaker refuses to use lidar sensors and instead plans to rely mainly on computer vision technology using cameras.
It also started installing the needed hardware in all its vehicles years ago when it believed that self-driving had become mostly a software problem.
But most notably, Tesla started to pre-sell a “Full Self-Driving” package in its vehicles years before it planned on making the technology available through the software.
That’s a somewhat bold move that has been criticized for different reasons.
Some say that it is confusing customers in thinking that Tesla vehicles are currently capable of self-driving, which is not the case.
Others have also criticized Tesla for often changing the price of the package up and down, even though they haven’t delivered the features promised in the package.
Now Tesla has gone back to its original promise to gradually increase the price of the package as they release more features under it.
Musk said that Tesla would increase the price after the release of its V10 software, and now the CEO confirmed that the price will increase by $1,000 at midnight on November 1:
Just a reminder that the Tesla Full Self-Driving option goes up by $1000 at midnight on Nov 1 for all regions that have Smart Summon. Order your car online at https://t.co/7FlnbrMxOl.
— Treelon (@elonmusk) October 30, 2019
With the $1,000 increase, the “Full Self-Driving” package is going to cost $7,000.
These price increase warnings have been really successful in convincing Tesla owners to order the package.
Tesla cannot recognize the revenue from the package since they haven’t delivered the whole features, and CFO Zachary Kirkhorn said that Tesla currently has “$500 million to 600 million” in recognized revenue from the package.
With Smart Summon, Tesla started releasing some features under “FSD,” but Musk said that it won’t be “feature-complete” until the end of the year.
It’s hard to estimate how many people went for it since the price changed so much. If I remember correctly, it was sold between $3,000 to $6,000.
I would imagine the number is between 100,000 and 130,000 Tesla owners.
Now I know that many people don’t believe that Tesla can deliver functional, full self-driving anytime soon, but I think Tesla could recognize those revenues sooner than those people might think.
That’s why Elon has been calling it “feature-complete.”
As he explained during the earnings, it doesn’t mean that owners are going to be able to use it without supervision, but if they still deliver it and people use it the same way they use Autopilot today, Tesla could probably technically recognize the revenue.
What do you think? Let us know in the comment section below.
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