DLC for leases

[MrFusion]

I wonder if Tesla will come up with a plan so us lessees can take advantage of DLC without getting screwed. For instance, I would consider the FSD and Boost options if Tesla adjusted the price accordingly based on my remaining lease months. This seems like a trivial software feature that would just automatically adjust the price based on when you buy it compared to when your lease ends. Then when the lease is up they could just remove the features from the VIN.

The other option, that I’ve mentioned before, would be some kind of “profile” where if I pay for FSD or the boost it just adds it to my personal account and then those software options are enabled on any future car I tie to my profile as well.

If I might even have the option to purchase the car at the end of the lease then it might be okay to charge full price, but since I can’t buy the car and I can’t “uninstall” the options and take them with me (as I would be able to on other leased cars that I added things to) then it’s not worth paying full price.

 

[ewoodrick]

No.
There are disadvantages of driving a car that you don't own

 

[MrFusion]

No.
There are disadvantages of driving a car that you don't own

Only for Tesla it seems. With the move to DLC I expect some type of profile thing eventually. If I buy a bunch of games and performance add ons for one car they should transfer to the next car. Otherwise you’ll have all these strange combinations of used cars like “includes the arcade bonus pack, 3 performance upgrades, and Adobe Acrobat”. It would make sense to treat it like Apple, Microsoft, etc. and when you get new hardware all your digital purchases transfer.

 

[SergeyUser]

Only for Tesla it seems. With the move to DLC I expect some type of profile thing eventually. If I buy a bunch of games and performance add ons for one car they should transfer to the next car. Otherwise you’ll have all these strange combinations of used cars like “includes the arcade bonus pack, 3 performance upgrades, and Adobe Acrobat”. It would make sense to treat it like Apple, Microsoft, etc. and when you get new hardware all your digital purchases transfer.

Tesla would like you to pay for software features for each new car. It is like Windows OEM-license, linked to particular hardware. Economics will not work otherwise - Tesla gives you the latest FSD/AP, not the one available at the time you paid for it.

I can only imagine Tesla will translate this to a subscription linked to a person instead of a car, paid monthly.

 

[jjrandorin]

Only for Tesla it seems. With the move to DLC I expect some type of profile thing eventually. If I buy a bunch of games and performance add ons for one car they should transfer to the next car. Otherwise you’ll have all these strange combinations of used cars like “includes the arcade bonus pack, 3 performance upgrades, and Adobe Acrobat”. It would make sense to treat it like Apple, Microsoft, etc. and when you get new hardware all your digital purchases transfer.

Makes sense to YOU, but doesnt make sense for tesla. If it did, they wouldnt be removing options from cars traded into them so they could re sell the same options again.

You want "one purchase for my life of tesla ownership" which makes no sense for their revenue stream. You could have gotten a discount on it had you added it to your lease... you would have only paid for the depreciation portion of the the option, instead of the full price. After purchase, it will be (and should be) full price, as long as they are not selling access to the options monthly, which its my opinion that telsa should never do with FSD options.

Not because it wouldnt be great for people, it would be horrible for tesla... because people would do things like pay for a month of FSD for december, instead of buying the whole thing, which tesla needs people to do because they include all the hardware in the car.

This is going to be one of the downsides of leasing these cars and not paying for the options. In a regular car, to get new features you typically have to buy a new car (new tech features). In tesla's case, the option may get better (or worse) but one has to make a decision and jump on it then.

 

[MrFusion]

Makes sense to YOU, but doesnt make sense for tesla. If it did, they wouldnt be removing options from cars traded into them so they could re sell the same options again.

You want "one purchase for my life of tesla ownership" which makes no sense for their revenue stream. You could have gotten a discount on it had you added it to your lease... you would have only paid for the depreciation portion of the the option, instead of the full price. After purchase, it will be (and should be) full price, as long as they are not selling access to the options monthly, which its my opinion that telsa should never do with FSD options.

Not because it wouldnt be great for people, it would be horrible for tesla... because people would do things like pay for a month of FSD for december, instead of buying the whole thing, which tesla needs people to do because they include all the hardware in the car.

This is going to be one of the downsides of leasing these cars and not paying for the options. In a regular car, to get new features you typically have to buy a new car (new tech features). In tesla's case, the option may get better (or worse) but one has to make a decision and jump on it then.

I think over time we’ll see them come up with something. On a “regular” car you can easily buy the factory options yourself afterwards and then remove them and sell them when you turn in the lease. If I buy the “boost” option for $2000 (which as far as I know you can’t add into the lease at the beginning, at least not yet) then I should be able to “remove” that option when I turn in the lease as otherwise I am basically giving Tesla my property for free (since I paid full price for the add-on, therefore I own it and it isn’t part of the lease rental property).

 

[jjrandorin]

I think over time we’ll see them come up with something. On a “regular” car you can easily buy the factory options yourself afterwards and then remove them and sell them when you turn in the lease. If I buy the “boost” option for $2000 (which as far as I know you can’t add into the lease at the beginning, at least not yet) then I should be able to “remove” that option when I turn in the lease as otherwise I am basically giving Tesla my property for free (since I paid full price for the add-on, therefore I own it and it isn’t part of the lease rental property).

You could have "added the boost option into the lease at the beginning".. actually a much faster one than they are selling now, by Leasing the stealth performance model, for the same 2k upcharge they are charging now.

 

[MrFusion]

You could have "added the boost option into the lease at the beginning".. actually a much faster one than they are selling now, by Leasing the stealth performance model, for the same 2k upcharge they are charging now.

Sure, but not the actual add on that they are selling. That’s what I’m getting at. If they start selling tons of add-one after you buy or lease the car then there should be a way for you to either sell the add-on back or take it with you.

 

[MP3Mike]

then there should be a way for you to either sell the add-on back or take it with you.

Sell it back? Why would they pay you anything for it? It has no value to them.

Not to mention I'm sure part of the $2k upgrade cost is earmarked for warranty reserves from the extra wear and tear on the car as a result of the upgrade. So if you moved that from one car to the next that would be putting wear on multiple cars with only one warranty reserve.

 

[MrFusion]

Sell it back? Why would they pay you anything for it? It has no value to them.

Not to mention I'm sure part of the $2k upgrade cost is earmarked for warranty reserves from the extra wear and tear on the car as a result of the upgrade. So if you moved that from one car to the next that would be putting wear on multiple cars with only one warranty reserve.

That’s what I’m saying. Which is why they should just sell it at a reduced cost if you add it. It’s simple for them to just compute it to the same price as it would have been at the beginning of the lease and sell it to you during the lease as options become available. This could be for any options, not just the boost.

Look at it this way, a very high percentage of Model 3 deliveries are for leases (my advisor said at least 50% of his deliveries have been leases). Hardly anybody, if any, will pay full price for an option during the lease. So Tesla is losing out on selling the add-ons to all of those people. If they priced it to be inline with what it would have cost at lease inception then tons of people would add things on as they become available. As it is all of those people will just wait until they lease their next car and add it on then, so Tesla is losing add-on revenue from a good percentage of customers. Residualized revenue is better than no revenue. Win win for everybody.

 

[ZappCatt]

I would not be surprised if Tesla figures out a way to get "DLC" revenue from Lessee's.

I can not imagine anyone paying $7k for a 3 year lease to have the minor features currently available, or even with the rosiest outlook of where FSD is right now and where it will be in the middle/near the end of a 3 year lease.

Those lessee's are a captive audience with very little to no ability to add to Tesla's cash stream/FSD development prepayment. Having a pro-rated FSD or other DLC option could be their entry into the subscription model, since they will be setting a monthly/yearly price and offering it in that manner. If it is easy and they see the ROI, they could roll it out to buyers instead of just lessee's.

If they do come out with a Speed Boost for the SR+, I would be interested in purchasing it as a lessee if the cost was reasonable for my remaining term(thus more money for Tesla) but there is no way that I could see the full price would be reasonable on a 3 year lease.

 

[jjrandorin]

I would not be surprised if Tesla figures out a way to get "DLC" revenue from Lessee's.

I can not imagine anyone paying $7k for a 3 year lease to have the minor features currently available, or even with the rosiest outlook of where FSD is right now and where it will be in the middle/near the end of a 3 year lease.

Those lessee's are a captive audience with very little to no ability to add to Tesla's cash stream/FSD development prepayment. Having a pro-rated FSD or other DLC option could be their entry into the subscription model, since they will be setting a monthly/yearly price and offering it in that manner. If it is easy and they see the ROI, they could roll it out to buyers instead of just lessee's.

If they do come out with a Speed Boost for the SR+, I would be interested in purchasing it as a lessee if the cost was reasonable for my remaining term(thus more money for Tesla) but there is no way that I could see the full price would be reasonable on a 3 year lease.

I hear this point, but what I am saying is, with the way most leases work, if you add an item onto the monroney sticker (as in the car comes with the option), it can be residualized, thus you will only pay for the portion of the option that you consume during the lease. So, if someone adds FSD at whatever cost it is on a 3 year (36 month) lease, if the RV on the lease is 60%, the cost to the person leasing the car will be 60% of the cost of the option, split amongst their monthly payments.

With Every other car lease, any options added after the fact can in fact not be residualized, and have to be purchased outright. Of course, tesla does things differently, but this would take them down the slope of monthly charges for FSD instead of purchased up front, and its my opinion that would be MUCH MUCH worse for tesla, unless the cost is such that the entire cost of FSD is paid for in a 3 year term or so.

When people are talking about paying for this monthly, are they really asking to pay $200 a month for it? I dont think so, but could be wrong.

 

[OCR1]

I don’t see Tesla offering prorated upgrades for lease holders. It’s just not worth their time and they have bigger things to worry about. Look how long it took them to implement the premium subscription services. They could have captured almost a year of revenue from SR+ owners who wanted the upgrades but they just got around to it this month.

Post delivery upgrades simply don’t make financial sense to lease holders. And Tesla leases in general have not been very competitive. Add in the fact that you can’t buy the car at the end of the lease and it makes them even less desirable.

 

[Knightshade]

Tesla has been leasing the S for a long time.

Including selling them DLC like autopilot/FSD.

They don't cut the price. they don't make it transferable. No reason to think that'll change anytime soon.

In fact, when they get the car back, they have the option to remove the software and sell it again to the next guy! (or keep it on the car- or add it a return that doesn't have it- and increase the selling price on the used car)

 

[ZappCatt]

I hear this point, but what I am saying is, with the way most leases work, if you add an item onto the monroney sticker (as in the car comes with the option), it can be residualized, thus you will only pay for the portion of the option that you consume during the lease. So, if someone adds FSD at whatever cost it is on a 3 year (36 month) lease, if the RV on the lease is 60%, the cost to the person leasing the car will be 60% of the cost of the option, split amongst their monthly payments.

With Every other car lease, any options added after the fact can in fact not be residualized, and have to be purchased outright. Of course, tesla does things differently, but this would take them down the slope of monthly charges for FSD instead of purchased up front, and its my opinion that would be MUCH MUCH worse for tesla, unless the cost is such that the entire cost of FSD is paid for in a 3 year term or so.

When people are talking about paying for this monthly, are they really asking to pay $200 a month for it? I dont think so, but could be wrong.

I am not saying a straight monthly cost, but starting with a lease, so either 3 year term, 2 year term or 1 year term. I used the Acceleration boost as an example since it was added after my lease was finalized.

Would I pay $2k for 30 months of acceleration. NOPE. Would I consider it at lower price...of course.

What is the "expected lifetime" to amortize the $2k? 10 years? 8 years(to match the power-train warranty)? Then offer this on a "pro-rated" bases to the lessee base.

I am just saying that as of now, there is 0% chance that Tesla will get more cash from me for this specific car. If they dangled DLC at a 'Pro-rate" basis for the rest of my lease term, there is a chance that they would get more money from me, which is a win-win for Tesla and I.

As competition finally enters the market, this could be another differentiator to the "Tesla Way".

Some owners would of course complain that Tesla is screwing them, but Tesla's main goal needs to be profitable and stay afloat to keep their mission going.

 

[ZappCatt]

I don’t see Tesla offering prorated upgrades for lease holders. It’s just not worth their time and they have bigger things to worry about. Look how long it took them to implement the premium subscription services. They could have captured almost a year of revenue from SR+ owners who wanted the upgrades but they just got around to it this month.
....

Hmmm so up to now, they had no way to do a monthly subscription to a service. Now, they launched their "Premium Subscription service", thus they have a team who was able to plan and implement it, and then within weeks, they add a new "Acceleration boost" upgrade, and upgrade the App so these are more discover-able in the app.

It sounds like maybe they are realizing that putting the infrastructure for add-on software and subscriptions is worth their time.

Just because they have a team focusing on software upgrades/subscription does not mean they are going to miss out on the "bigger things to worry about".

 

[OCR1]

Hmmm so up to now, they had no way to do a monthly subscription to a service. Now, they launched their "Premium Subscription service", thus they have a team who was able to plan and implement it, and then within weeks, they add a new "Acceleration boost" upgrade, and upgrade the App so these are more discover-able in the app.

It sounds like maybe they are realizing that putting the infrastructure for add-on software and subscriptions is worth their time.

Just because they have a team focusing on software upgrades/subscription does not mean they are going to miss out on the "bigger things to worry about".

Both of those items represent added revenue that previously wasn’t being captured. What the OP is asking for is a discount on FSD because they will only be keeping the car 3 years. I guess anything is possible but I’ve never seen Tesla do it before and the general idea of being able to “rent” upgraded features has never been embraced by them.

 

[Knightshade]

I am not saying a straight monthly cost, but starting with a lease, so either 3 year term, 2 year term or 1 year term. I used the Acceleration boost as an example since it was added after my lease was finalized.

Would I pay $2k for 30 months of acceleration. NOPE. Would I consider it at lower price...of course.

What is the "expected lifetime" to amortize the $2k? 10 years? 8 years(to match the power-train warranty)? Then offer this on a "pro-rated" bases to the lessee base.

I am just saying that as of now, there is 0% chance that Tesla will get more cash from me for this specific car. If they dangled DLC at a 'Pro-rate" basis for the rest of my lease term, there is a chance that they would get more money from me, which is a win-win for Tesla and I.

Tesla sold FSD to 3 year model S lease folks in October/November 2016. At full price.

Those leases have now expired- and they delivered 0 features or content to those owners for the money.

Now they get to take those back (assuming lease return) and either resell them with it as is and get money AGAIN for the software- or remove it and sell it again at full price to the next guy.

That, for Tesla, is a win-win.

 

[MrFusion]

Both of those items represent added revenue that previously wasn’t being captured. What the OP is asking for is a discount on FSD because they will only be keeping the car 3 years. I guess anything is possible but I’ve never seen Tesla do it before and the general idea of being able to “rent” upgraded features has never been embraced by them.

I’m asking for the add-on feature to be priced monthly proportionate to the cost it would have been if it came with the car at the start of the lease. Just like how I’m getting a discount on the whole car because I’m only keeping it a few years.

Regarding the whole typical situation with add-one that aren’t from the factory... that’s the old way of doing things where the dealer or manufacturer was actually having to give you a physical part that they paid full cost for. With DLC it’s simple for them to just consider it a subscription item rather than a capital cost of the lease.

Also, in the old way if I paid full price for an add-on, such as a dealer installed CD player or floor mats, those items were mine to keep at the end of the lease. I would always remove them from the car when I turned it in and then resell them in a forum or on eBay.

I think ultimately Tesla will face some legal challenges to these practices. Especially if they are actually removing the options from the cars and then selling them again to the next owner while at the same time not allowing the first owner to either keep the option or transfer it to somebody else.

 

[jjrandorin]

I’m asking for the add-on feature to be priced monthly proportionate to the cost it would have been if it came with the car at the start of the lease. Just like how I’m getting a discount on the whole car because I’m only keeping it a few years.

Regarding the whole typical situation with add-one that aren’t from the factory... that’s the old way of doing things where the dealer or manufacturer was actually having to give you a physical part that they paid full cost for. With DLC it’s simple for them to just consider it a subscription item rather than a capital cost of the lease.

Also, in the old way if I paid full price for an add-on, such as a dealer installed CD player or floor mats, those items were mine to keep at the end of the lease. I would always remove them from the car when I turned it in and then resell them in a forum or on eBay.

I think ultimately Tesla will face some legal challenges to these practices. Especially if they are actually removing the options from the cars and then selling them again to the next owner while at the same time not allowing the first owner to either keep the option or transfer it to somebody else.

I doubt it on the legal challenges (well this is a sue happy country so someone may challenge it but likely lose). Once someone owns a car they can do with it pretty much what they want, right?

Well, if you, as a FSD owner, sell the car back to tesla, you no longer own it. Tesla does. No different than if you had a ICE car with some sort of aftermarket exhaust on it, that you traded in. The dealer could remove that, and sell the car without it (and one of the techs could take it home, etc). Once you sell the car, you no longer own that item. The owner does, and they can do with it what they want.

If you sell the car private party, the car, and included / installed items go with the car, not you. The exhaust you could remove, but something like the larger motor (boost) could not.

This is why (in my opinion) tesla is very careful to state stuff like "If you sell your car with lifetime premium connectivity private party, it stays with the vehicle. If you sell your car with lifetime premium connectivity to us, we will remove it before sale".

As the owner, they can remove it (and re sell it again), just like if I bought a car with an aftermarket exhaust on it that was not removed, I could remove it and sell it if I wanted. I dont see any legal issue here that would force them to allow people to keep stuff like FSD "lifetime".