Tesla To Hike Controversial Full Self-Driving Package To $12K Beginning January 17: Elon Musk Confirms

Tesla Inc TSLA will soon increase its full self-driving software price in the U.S., CEO Elon Musk confirmed through a series of tweet.

What Happened: Tesla's FSD package will cost $12,000 in the U.S., beginning on Jan. 17, an increase from the previous communicated price of $10,000.

The EV maker's FSD software suite is still in beta testing. The company began testing FSD in beta to a select group of customers in Oct. 2020, and originally announced a price of $8,000. Within the week, the price was increased to $10,000.

Tesla expanded beta testing to more drivers via a request button on the dashboard screens of its vehicles in Sept. 2021. This option, however, was available only to drivers having a good safety score, which is based on five criteria outlined by the company.

A wider release of the FSD package has long been delayed.

Musk also said Beta 10.9 should be ready in about a week and that Beta 11, with a single city/highway software stack and many other architectural upgrades, may come next month.

In response to a query on whether the monthly subscription price will stay the same, the Tesla chief said the price will rise when FSD is more widely released. Currently, the monthly subscription is priced at $199.

Related Link: Why This Analyst Thinks Tesla Is a $2,500 Stock And When It May Reach That Price Target

Why It's Important: A wider release of the FSD suite will help Tesla earn recurring software revenue.

"If software can become a large proportion of Tesla's revenues and profit (we estimate ~50% of gross profitability in a "blue sky" scenario) we believe investors will be willing to pay a higher multiple for Tesla's shares," Morgan Stanley analyst Adam Jonas said in a May 2020 note.

That being said, there's a raging controversy over Tesla's FSD package. Critics say that the software in its current version doesn't make cars fully self-driving. Consumer Reports, a non-profit consumer organization, has panned the FSD software for falling short of its name and has found that it performs inconsistently in its testing.

Tesla shares closed Friday's session down 3.54% at $1,026.96.

Related Link: Tesla Q4 Deliveries Beat Consensus By A Mile, Pushing Annual Sales To Nearly 1M