Chinese electric vehicle maker Nio Inc.’s NIO co-founder Qin Lihong said that the low adoption rate of rival Tesla Inc.’s TSLA full self-driving software indicated a subscription model would work better for the feature, cnEVpost reported Tuesday.
What Happened: Lihong said in an interview with Chinese media that a subscription system would be better for Tesla’s FSD as users will be discouraged by the high price of a one-time buyout for the feature, as per the report. He added that the low adoption rate of Tesla’s FSD indicated a lot of investment is wasted.
Further, the Nio executive reportedly noted that while cars with L3 and L4 autonomous driving are unlikely to be on the road in a year or two, only a subscription system will be feasible due to the high hardware and software costs of these features.
Lihong also said that without a battery subscription service, Nio would find it difficult to survive in the future.
See Also: Tesla China Registrations Tripled YoY In March, Doubled Sequentially: CAIN Data
Why It Matters: Nio is relying on service offerings to make an impact on customers in China and has introduced two subscription services – for battery and Nio Autonomous Driving (NAD). The company has pioneered the concept of battery-as-a-service that would allow users to rent a battery instead of purchasing one, helping to trim the cost for EV owners.
Nio also offers autonomous driving as a service, allowing the subscription of full functions of NAD on a monthly basis. The NAD has 19 safety and driving-assisted features that can be offered under Autonomous Driving-as-a-Service, or ADaaS.
Meanwhile, Tesla's FSD is an advanced driver assistance system, while autopilot is part of all its vehicles. The Elon Musk-led company has rolled out a “beta” version of FSD software to a small set of customers.
See also: How to Buy Nio Stock
The feature costs $10,000 and will be available through a subscription model by June. However, Musk has said purchasing FSD will still be a better long-term deal than a subscription.
Tesla FSD Beta is defined as a Level 2 system, meaning the driver is fully responsible at all times.
Price Action: Nio shares closed 0.4% higher on Tuesday at $36.93, while Tesla shares closed 0.6% higher at $718.99.
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