Tesla Inc TSLA CEO Elon Musk was convinced that $15,000 was a low price for FSD less than a year ago. However, since then, the company has dropped prices of the driver assistance software by about 50%.
What Happened: Over the weekend, Tesla cut the price of its full self-driving (FSD) driver assistance software to $8,000 from $12,000, marking a price cut of about 33%.
However, in July 2023, when FSD was priced at $15,000, Musk said that the price was still “very low.” The value of a vehicle, Musk said, substantially increases with autonomy.
"But I think yes, yes — obviously, if the car is worth several times its original price, $15,000 is actually a low price for FSD,” Musk said at the company’s second-quarter earnings call.
A few weeks after the statement, Tesla reduced the price of the software by 20% from $15,000 to $12,000 and now further down to $8000.
The current price reduction for FSD follows an earlier cut in the monthly subscription fee from $199 to $99. These price cuts on the software are aimed at increasing its take rate. FSD relies on real-time driving data to train, thereby necessitating more vehicles equipped with it on roads.
Why It Matters: As of March 2024, Tesla’s FSD was reportedly deployed on about 2 million vehicles in the U.S. The software is aimed at enabling fully autonomous driving in due time.
It currently requires active driver supervision but is expected to "be really shining bright" by late April or May, Musk stated in March.
Earlier this month, Tesla announced that its cars have driven one billion miles with FSD software, a significant increase from the end of 2023 when FSD-driven miles were below 800 million.
“Won't be long before Tesla exceeds 10B miles of FSD,” Musk had then remarked.
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