EAP and FSD pricing give hints to likely release readiness

[JeffK]

The level of hardware isn't required for the saftey features. They could apportion the bill between base and autopilot buyers.

They can't use MobilEye so that's out. It's probably easiest to have the same safety features in every car work with the same software running on the same hardware, otherwise it's added cost of maintaining two different software paths and zero potential for someone to upgrade to EAP or FSD. DrivePX is therefore required until they get their own ASICs at minimum. The front camera(s) plus radar are needed for AEB. The rear camera soon required by law. The ultrasonics are required for parking assist and blind spot detection. The only thing you could possibly do without are the side cameras but something tells me in the future this might be part of blind spot detection if they are smart, because ultrasonics are not foolproof.

You can't be a manufacturer of the safest cars if the base models don't have the same standard of safety as the other models.

 

[TIppy]

They can't use MobilEye so that's out. It's probably easiest to have the same safety features in every car work with the same software running on the same hardware, otherwise it's added cost of maintaining two different software paths and zero potential for someone to upgrade to EAP or FSD. DrivePX is therefore required until they get their own ASICs at minimum. The front camera(s) plus radar are needed for AEB. The rear camera soon required by law. The ultrasonics are required for parking assist and blind spot detection. The only thing you could possibly do without are the side cameras but something tells me in the future this might be part of blind spot detection if they are smart, because ultrasonics are not foolproof.

You can't be a manufacturer of the safest cars if the base models don't have the same standard of safety as the other models.

I paid $2500 for ap1 in June of 2016. When the new hardware was added shortly thereafter, the cost jumped to $5000. I don't think you'll find too many people who will argue that EAP software is worth twice as much as ap1. So the increased cost was most likely to cover the cost of the new hardware.

 

[JeffK]

I paid $2500 for ap1 in June of 2016. When the new hardware was added shortly thereafter, the cost jumped to $5000. I don't think you'll find too many people who will argue that EAP software is worth twice as much as ap1. So the increased cost was most likely to cover the cost of the new hardware.

Like I said, I'm positive cost is covered in the base price of the vehicle. The price they are charging customers has to do with market value.

 

[TIppy]

Like I said, I'm positive cost is covered in the base price of the vehicle. The price they are charging customers has to do with market value.

How can you be positive? How did the market value of an unkown, undelivered EAP jump $2500 overnight? It makes more sense that they were covering the increased cost of the hardware which did jump overnight.

 

[JeffK]

How can you be positive? How did the market value of an unkown, undelivered EAP jump $2500 overnight? It makes more sense that they were covering the increased cost of the hardware which did jump overnight.

When people want something more you can charge them more regardless of cost. Note the base price of the car jumped $2000 as well around that time, in addition to the EAP price increase.

 

[TIppy]

When people want something more you can charge them more regardless of cost. Note the base price of the car jumped $2000 as well around that time, in addition to the EAP price increase.

It didn't double, though. Wasn't that about the time of the report of the autopilot death, too?

 

[JeffK]

It didn't double, though. Wasn't that about the time of the autopilot death, too?

Death was in May reported June or July I forget. AP2 announcement was in Oct and the base price increase happened in Dec/Jan if I remember correctly.

This was also near the time the P100D was just coming out and the 75s were being software locked to 60 and a bunch of other shakes ups in the product line.

 

[TIppy]

Death was in May reported June or July I forget. AP2 announcement was in Oct and the base price increase happened in Dec/Jan if I remember correctly.

This was also near the time the P100D was just coming out and the 75s were being software locked to 60 and a bunch of other shakes ups in the product line.

Doesn't seem like an auspicious time to double price.

 

[JeffK]

Doesn't seem like an auspicious time to double price.

It provides over twice the value in the long run.

 

[calisnow]

You are really naive if you think all FSD is is basic object recognition and rudimental path planning.

What is the purpose in calling someone an insulting descriptor - belittling their intelligence/level of knowledge etc. - like you so frequently do to so many people? Do you have an emotional control problem that you have trouble containing? You could have chosen to say "Your description of problem X is an oversimplification" etc. - but you didn't. You chose to say that the object of your comment is naive. You must know that this weakness in your dialogue style pushes people away, distracts them from your point - and doesn't achieve your own stated goals of helping people understand. Psychologically it's rather fascinating - you have some technical knowledge but you seem unable to stop yourself from devolving into a style of dialogue more common in 12-14 year old children vs adults. In all seriousness - do you have some kind of diagnosed personality disorder we should know about? It would make it easier to for many of us to tolerate you if we understood the root cause of your psychological problems. There's no stigma in it - this is 2017 not 1964. People are accepting if you are honest and give them a chance.

 

[TIppy]

It provides over twice the value in the long run.

There's that time value of money again. If you aren't going to realize the gain until some time in the future, but they want the money now it's even more than twice as much.

I paid that base price increase in June before the new ap hardware was released. Even if it had been to help cover ap hardware, it could have been $1000 for base and an additonal $2500 if you wanted to use the hardware for advanced features.

 

[JeffK]

If you aren't going to realize the gain until some time in the future, but they want the money now it's even more than twice as much.

Exactly, but consumers did not and do not care as evidenced by everyone who purchased AP2 cars after finding out about the future potential but before anything was enabled and those who continue to purchase FSD even though it's not enabled in any fashion at the moment. This is the same thing that happens to the Tesla stock price.

People want this change so much and they have a strong belief that this company is going to be the one that changes everything.

Right now people are paying cost of hardware + price to enable EAP + price to enable FSD
the prices of EAP and FSD help pay for software development, data center hardware, etc. It's unlikely that the $8000 total is paying for the hardware itself in any way otherwise they'd be losing money on every sale.

 

[TIppy]

Exactly, but consumers did not and do not care as evidenced by everyone who purchased AP2 cars after finding out about the future potential but before anything was enabled and those who continue to purchase FSD even though it's not enabled in any fashion at the moment. This is the same thing that happens to the Tesla stock price.

People want this change so much and they have a strong belief that this company is going to be the one that changes everything.

Right now people are paying cost of hardware + price to enable EAP + price to enable FSD
the prices of EAP and FSD help pay for software development, data center hardware, etc. It's unlikely that the $8000 total is paying for the hardware itself in any way otherwise they'd be losing money on every sale.

I'm not sure I follow. I didn't say that it all goes to hardware. I said $3500 for hardware, $1500 to EAP software and $3000 to FSD software.

 

[JeffK]

I'm not sure I follow. I didn't say that it all goes to hardware. I said $3500 for hardware, $1500 to EAP software and $3000 to FSD software.
Are you saying that not even $8000 is enough to cover the hardware?

I'm saying the $8000 doesn't go to hardware at all. I'm saying the hardware is built into the price of the car. This way they are covered if someone doesn't purchase EAP or FSD.

 

[TIppy]

I'm saying the $8000 doesn't go to hardware at all. I'm saying the hardware is built into the price of the car. This way they are covered if someone doesn't purchase EAP or FSD.

They know how many people will buy autopilot.

 

[JeffK]

They know how many people will buy autopilot.

True, but at the end of the day the marginal price of the car is lower than the sale price of the car.

 

[TIppy]

True, but at the end of the day the marginal price of the car is lower than the sale price of the car.

And as the OP said, it doesn't make sense that the parlor tricks of EAP are $5000 dollars, and the much more difficult FSD is only $3000 more. I only offered speculation as to why the pricing didn't add up. I think what I've offered is plausible. Of course, I have no idea whats really going on, but you, somehow, are positive.

 

[JeffK]

And as the OP said, it doesn't make sense that the parlor tricks of EAP are $5000 dollars, and the much more difficult FSD is only $3000 more. I only offered speculation as to why the pricing didn't add up. I think what I've offered is plausible. Of course, I have no idea whats really going on, but you, somehow, are positive.

Yes, absolutely positive. We know they make positive gross margins on every car sold even the base model meaning that the hardware itself is included.

Now what may be included in that $8000 price is a buffer in case Tesla needs to install new hardware after the fact if their 10 trillion operations per second Nvidia hardware ends up being inadequate. As far as current value to end customers, the EAP is useful now, whereas FSD is at an undetermined moment in the future. This agrees with the OP's point about readiness.

I still think in the future they may find a way to phase out EAP entirely when FSD is more mature.

 

[TIppy]

Yes, absolutely positive. We know they make positive gross margins on every car sold even the base model meaning that the hardware itself is included.

Now what may be included in that $8000 price is a buffer in case Tesla needs to install new hardware after the fact if their 10 trillion operations per second Nvidia hardware ends up being inadequate. As far as current value to end customers, the EAP is useful now, whereas FSD is at an undetermined moment in the future. This agrees with the OP's point about readiness.

I still think in the future they may find a way to phase out EAP entirely when FSD is more mature.

I don't see how positive gross margin guarantees that the full price of the hardware is included in the base price. It could just lower the margin.

You changed your argument. When EAP came out it wasn't useful, and you said it was the future potential that people were willing to pay twice as much for. The future potential of FSD far outstrips EAP, but people are not willing to pay even as much more for it as EAP.

 

[JeffK]

I don't see how positive gross margin guarantees that the full price of the hardware is included in the base price. It could just lower the margin.

You changed your argument. When EAP came out it wasn't useful, and you said it was the future potential that people were willing to pay twice as much for. The future potential of FSD far outstrips EAP, but people are not willing to pay even as much more for it as EAP.

A lower margin is still positive cash flow... meaning costs were paid in full and the purchase price for the car is higher than the costs to build it (hardware and all).

At the time EAP was promised to reach parity with AP1 in December... we know now that it did not happen. As far as FSD there's no date. It's the difference between a short term bet and a long term.