Tesla has increased the price of its Full Self-Driving package to $8,000 as promised, and it may have saved its quarter.
The decision to pre-sell a “Full Self-Driving” package in its vehicles years before it planned on making the technology available through the software has been controversial, to say the least.
It’s a bold move from Tesla that has been criticized for many reasons.
Some say that it’s 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.
Over the last year, CEO Elon Musk has made Tesla’s pricing strategy clearer when it comes to the “Full Self-Driving” package: Tesla is going to increase the price of the package as it introduces new features.
During the second quarter, Musk signaled several times that Tesla would increase the price of the “Full Self-Driving” package by $1,000 at the end of the quarter.
Now it’s official: Tesla’s “FSD” package now costs $8,000:
Musk also warned that the price will keep increasing in the future:
The FSD price will continue to rise as the software gets closer to full self-driving capability with regulatory approval. It that point, the value of FSD is probably somewhere in excess of $100,000.
As more features are released toward the go of full self-driving, Tesla plans to incrementally increase the price of the package going forward.
That right there might very well be what saved Tesla’s quarter.
I’ve heard from several owners who decided to take advantage of the lower price last quarter. Tesla not only incentivized people to order the FSD package last quarter ahead of the price increase, but they also discounted enabled early Model 3 owners to order basic Autopilot for $2,000 and Enhanced Autopilot owners to upgrade to the FSD package for $3,000.
Many Tesla owners have also taken advantage of those programs, which Tesla publicized through an email campaign to owners.
With new features released over the last few months, I think Tesla is now recognizing more than half the revenue from the FSD package.
The known upcoming price increase has likely increased the take rate of both new buyers and existing owners. Even if it was just increased from 20% to 30%, that 10% difference could represent several hundreds of millions of dollars on the entire fleet and make a giant difference for Tesla in a difficult quarter.
As we reported earlier this week, Musk indicated that it would be possible for Tesla to break even, despite the current global pandemic.
That could have made the difference, but we won’t know until Tesla’s next earnings likely later this month.
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