Could AP ever become a subscription, and not one-time in nature

[Booga]

As I think about the improvements that have been occurring with AP (and the big reveal expected later this year), one thought that came to my mind is whether this will remain a one-time cost or become a subscription. I say this, because there are a lot of improvements made to it over time and that will have to continue even if you have a 20 year old Model 3 in the 2030's.

Doing this would allow them to match cash flow/expenses together in a more timely manner and also lower the initial cost (like paying for supercharger use over time instead of up front) of all of their cars, though you still need to charge enough for the hardware placed into the car.

Just a thought.

 

[Kimo]

It is an interesting thought. There are generally two cost related parts to AP, the hardware and the software. The hardware cost is built into the price of the vehicle at this point, so it wouldn't be surprising if the cost of the vehicle increases, or there are additional options available for purchase that increase the AP functionality if desired. As for the software aspect, I suspect there will be an end date when it comes to providing additional updates for older hardware technology. There would come a point when it just would be too cost prohibitive to have various versions of the software, esp. when there are a few different generations of the AP hardware on the road.

One way I could see a subscription service being deployed is if there is a 3rd party service created that enhances AP functionality, such as a company deploying sensors on roads that can provide data to the AP. (what these sensors would do I have no idea, just throwing things out there.) I guess another subscriptions service could be to pay for yearly AP software updates like we do with GPS maps.

 

[WileyTheMan]

Well, they kinda already do a general subscription-type program in a form of a lease. But overall I agree that they could certainly expound on that idea.

 

[dsvick]

They certainly could, but that would reduce the immediate cash infusion from an up front purchase. Meaning they would not have as much money as quickly in order to make improvements. Also, "subscription" implies you ca cancel and resubscribe at will. Maybe I only want autopilot when I take a long trip so I only subscribe once a year, get all the updates, then unsubscribe. This would also reduce the amount of cash on hand Tesla would have for future upgrades.

 

[erthquake]

I think the subscription model makes sense only when the technology has matured and the pace of innovation has leveled off (see Adobe CS and Microsoft Office). Right now, AP is changing so fast that new hardware/capabilities can help drive new car purchases. Once the hardware and software become effectively commoditized, the only way to make money on the feature is to offer access via subscription.

 

[Red Sage]

No.

 

[Booga]

I think the subscription model makes sense only when the technology has matured and the pace of innovation has leveled off (see Adobe CS and Microsoft Office). Right now, AP is changing so fast that new hardware/capabilities can help drive new car purchases. Once the hardware and software become effectively commoditized, the only way to make money on the feature is to offer access via subscription.

Actually, wouldn't the time that it changes a lot be the better time for them to make it a subscription?

Subscription could be the wrong word, but the idea is exactly what you're saying - the pace of innovation hasn't leveled off yet, and so expenses are likely higher than they will be in 40 years (inflation adjusted) when this is much more matured. Given the amount of scale that Tesla will gain with the Model 3, the AP costs to them on a per vehicle basis will nearly certainly drop substantially.

If you pay a "yearly access charge," they can vary the cost based on what they think their expenses will be. It goes both ways - up and down.

 

[dsvick]

I can see the first article now .... "Tesla is making drivers pay more to keep thier families safer"

Regardless ofthe reasoning or the logic behind it, there will be people who will spin it in the most negative light.

As far as the pace of innovation, if it is being advanced quickly you will see a lot of people waiting to subscribe with the opinion of why pay for something that will be "old" in a few months. Why not just wait a year or so and get the best version. Then there will be no money for future development.

 

[BluestarE3]

I can picture it now: Someone tries Autopilot for a while, but lets the subscription lapse. Driver later gets into an accident and blames Tesla for disabling the feature and not making it clear enough that the car can no longer stay in the lane or brake by itself. Or that the driver had become so accustomed to the feature that he forgot he had to steer/brake for himself (again, Tesla's fault; in this case, for lulling the driver into complacency).

 

[andrewket]

Yes, I could see this happening.

 

[Trips]

I see it becoming a standard option before it becomes a subscription.

The only subscription I could see is if they bundled it with Tesla's Insurance product. Something along the lines of "If you have Tesla's insurance you can bundle it with monthly AP for and extra $15" or basically the reverse "If you have AP you get a $15/month discount (No subscription but encourages you to get it)"

I do see the cell service going to subscription when their next contract runs out.

 

[Mkorpal]

Eventually, autopilot will become mandatory on all vehicles and will be just a standard feature like seatbelts.

 

[Trips]

I can picture it now: Someone tries Autopilot for a while, but lets the subscription lapse. Driver later gets into an accident and blames Tesla for disabling the feature and not making it clear enough that the car can no longer stay in the lane or brake by itself. Or that the driver had become so accustomed to the feature that he forgot he had to steer/brake for himself (again, Tesla's fault; in this case, for lulling the driver into complacency).

Tesla has already done this. They give free trials of AP for a month.

 

[hmmm]

I can see the first article now .... "Tesla is making drivers pay more to keep thier families safer"

Well, since AP is optional already...

 

[dsvick]

Well, since AP is optional already...

True, but right now you pay once and get it, you don't have to keep paying. But, I agree with your point, however, the media, naysayers, shorts, and haters will all take it in as negative a light as they can.

 

[diamond.g]

I would think that if it was something that could easily be subscription based, the other automotive makers would have done so already (look at what they offer for subscription services).

If the .gov calls AP a required safety feature I don't think Telsa could charge a subscription fee for it. Though maybe they could charge an annual fee for updates, like navigation. Though that isn't exactly the same thing.

 

[Cyclone]

I think the subscription model makes sense only when the technology has matured and the pace of innovation has leveled off (see Adobe CS and Microsoft Office). Right now, AP is changing so fast that new hardware/capabilities can help drive new car purchases. Once the hardware and software become effectively commoditized, the only way to make money on the feature is to offer access via subscription.

Actually, wouldn't the time that it changes a lot be the better time for them to make it a subscription?

Subscription could be the wrong word, but the idea is exactly what you're saying - the pace of innovation hasn't leveled off yet, and so expenses are likely higher than they will be in 40 years (inflation adjusted) when this is much more matured. Given the amount of scale that Tesla will gain with the Model 3, the AP costs to them on a per vehicle basis will nearly certainly drop substantially.

If you pay a "yearly access charge," they can vary the cost based on what they think their expenses will be. It goes both ways - up and down.

Personally, I don't see it becoming a subscription feature versus become part of base instead of today'a optional function.

That said, if they do go to subscription, they will grandfather all those who bought already, especially since the 2014 AutoPilot cars still don't have all their promised features yet (close, but not complete from what Elon said).

 

[msanborn08]

Here is my issue with software defined cars (or anything else controlled by auto updated software). When you buy your car today, it can be completely different then what it might be a few months down the road. Most of the time this is a good thing with new features, improvements and other bug type related fixes getting pushed down the wire from the mother ship. However, whats stopping Tesla or lets say future "policy's" around autopilot from removing that feature or improvement. So for example, today you buy a M3 because it has AP and is a sporty car. But two years from now Tesla forces a auto update to remove AP or forces your car to only accelerate from 0-60 in 8 seconds vs 2.5 because it was deemed reckless to have access to something like that.

I think you get the point. If stuff starts turning into a subscription model or gets removed that will increase the demand for 3rd party providers to turn it into what you wanted just like tuners do on ICE.. A computer can be replaced and manipulated given enough time / money and research. Hardware is hardware unless of course is has a poison pill'ed flash-able ROM controlling it

 

[Cyclone]

However, whats stopping Tesla or lets say future "policy's" around autopilot from removing that feature or improvement. So for example, today you buy a M3 because it has AP and is a sporty car. But two years from now Tesla forces a auto update to remove AP or forces your car to only accelerate from 0-60 in 8 seconds vs 2.5 because it was deemed reckless to have access to something like that.

Bad PR and lawsuits, that's what! But I get the point you are making.

 

[Red Sage]

Much more likely that Autopilot will eventually become standard and included someday on all Tesla Motors products.

Automakers agree to standard AEB by 2022