James Douma on Tesla's FSD Pricing

We ask James Douma @jimmy_d for his take on Tesla's FSD pricing. He explains that when Tesla originally determined the pricing, they did so under the assumption that a fully realized self-driving would arrive sooner than it has.

James is an engineer with a physics background. He has been working on neural nets and artificial intelligence since 2007 and has been featured on a number of Tesla and AI related podcasts.


This is a clip from Tesla Motors Club Podcast #37. The full podcast video is available here:

 

[Mr_Joe]

Thank you for sharing, Danny.

 

[DanCar]

What is the TLDR?

 

[Mr_Joe]

What is the TLDR?

its a 2 minute clip...

 

[danny]

What is the TLDR?

That's why we put out clips, to act as TLDR's for the full 1:48:46 podcast

 

[DanCar]

Summary:
You're paying for the promise of something in the future.
I think they did expect to deliver this functionality a lot sooner and that.
when they did it was this expectation that they were going to have this in people's hands in a couple of years and it's just taken a lot longer than than
They were going to get there a long time ago

Anybody who's actually done the Apples to Apples comparison knows you know you're not getting fifteen thousand dollars for your FSD or whatever when
you turn around and sell your used car.

They want to steer people into the subscription model because it gives a more Dynamic pricing.

 

[starise]

Haven't we heard the new lower priced Tesla will have FSD as standard? Maybe I have bad info on this, so not sure. I have heard this but maybe it isn't true.

If it is true, then does it indicate a different direction in terms of billing and payment for current FSD users in the future?

I'm sure Tesla knows they have some decent competition now. By all accounts Ford's most recent updated self driving feature is really very good. I understand the average Tesla driver probably isn't scoping Fords, still it's worth considering the implications for buyers who value these self driving features, what they offer, how they compare in price and so forth.

I suspectTesla drivers who don't have FSD would love to have it but honestly it's too expensive. I would gladly cough 3-5K for it, but I can't justify 15K. They say things like, " I didn't really need it" or something similar but if you told them it was going to be reduced in price they would be on it like white on rice, and personally I think it does a disservice to the majority of your customers if you dangle a carrot only maybe 10% can reach for a product you sell to everyone.

For those of us on longer commutes who would see these features as minimizing fatigue after a long day at the office and would place such features very high in value when buying a car, I suggest Tesla rethink their approach to be more accomidating to all. I undertand the subscription was probably intended to be a move in that direction, however it isn't quite hitting that lower end tesla buyer sweet spot.

 

[Melli]

It's also worth considering that FSD in Europe (and EAP) cost half of what they cost in the US.

 

[EVNow]

It's also worth considering that FSD in Europe (and EAP) cost half of what they cost in the US.

That will go up once FSDb is available there.

 

[EVNow]

Haven't we heard the new lower priced Tesla will have FSD as standard?

Not sure where you "heard" it - no doubt absolutely wrong.

 

[Melli]

That will go up once FSDb is available there.

Yeah but that indicates that you'd be paying for FSDb and not just a promise of that software in the future.

 

[starise]

It's also worth considering that FSD in Europe (and EAP) cost half of what they cost in the US.

Is it only half as good then? . I am somewhat jesting, while also wondering why it's only half as much there. One obvious thing is maybe less mapping than North America.

Not sure where you "heard" it - no doubt absolutely wrong.

Here is one SOURCE quoting Elon.

Some confusion surrounds what the next Tesla will be. If it's a self driving taxi, then this probably goes without saying, however other indicators pointed towards the next Tesla being a smaller Tesla coming from the to be constructed Mexico factory. It might however, be a van like creation instead.

While offering FSD as a part of a new lower priced Tesla would be a slam dunk so far as adding to the lure of an already desireable EV in that range, as in over the top selling like hot cakes lure, the rest of it doesn't make sense and would alienate another long list of customers who paid plenty to have the ability to use the software.

The ball is in their court.How they play it will determine how many people will buy FSD beta. Price too high and you won't move it. Price lower and I guarantee it will move much better. Simple economics.
If a competitor offers their SD packages at better entry points, some will no doubt be looking to cross over to them instead if they like the cars.

 

[EVNow]

Here is one SOURCE quoting Elon.

You are conflating two different things.

The next gen Tesla vehicle will be cheaper.

Elon also thinks they will have FSD "done" ... and produce vehicles that operate autonomously. That doesn't mean the cheaper Tesla will have FSD. Anyway we are talking many years in the future .... 5 to 10 years.

If and when Tesla gets FSD done, it will likely be a costly monthly subscription.

 

[gtg465x]

If and when Tesla gets FSD done, it will likely be a costly monthly subscription.

It's already a costly monthly subscription, so mission already accomplished there.

 

[starise]

Yes, maybe we need to define what costly is?

Questions posed-
How much would you be willing to spend for FSDb or FSD complete?
How much CAN you comfortably spend on FSD?
Would you be willing to jump car brands for a similar car with well equipped self driving assist. For instance if Ford's subscription is only 49.00 a month or 3K to get in permenantly, would you jump Tesla for Ford?
Would you consider another brand if that brand allowed you to carry your self driving ownership to another car of the same brand?

Tesla seems to be notorious for gradually closing doors to owners rather than opening them. Take the initial offer for free supercharging. Tesla was attempting to incentivize owners of those cars recently to update their cars at a discount but they would loose free SC. Whenever Tesla doesn't want to continue a thing they don't discontinue it, they price it into the stratosphere unless they are contractually obligated.

FSDb was at one time only 6K or less. Why has Tesla continued to increase the price of this feature? Some have suggested it was because they briefly wanted to limit the user base due to ongoing updates which might have affected more users.

Maybe another more simple explanation is because people are buying FSD at this price. Those buying it see themselves as helping in the development of it, or maybe they are just wealthy people that 15K is really nothing to just throw around. Pretty soon though all of those people will have pretty much bought it. As we can see by sales numbers of S and X as compared to MY and M3, That crowd probably isn't going to be Tesla's future bread and butter.
I think Tesla needs to get out of the elite business honestly, or at least allow the additional features to be reachable for all Tesla drivers. 15K clearly isn't moving in that direction, ESPECIALLY when there is now some competition.

In my case, I just spent some time drilling into my monthy budget. I managed to shave off a tidy sum. My motive was to spend less money, but I noticed I had made a potential "slot" for it if I wanted it, but do I really want to add all of the fat I just worked so hard to trim away back for something with zero appreciation? I would much rather see a number that better reflects those of us with less to throw around.

 

[gtg465x]

Yes, maybe we need to define what costly is?

Questions posed-
How much would you be willing to spend for FSDb or FSD complete?
How much CAN you comfortably spend on FSD?
Would you be willing to jump car brands for a similar car with well equipped self driving assist. For instance if Ford's subscription is only 49.00 a month or 3K to get in permenantly, would you jump Tesla for Ford?
Would you consider another brand if that brand allowed you to carry your self driving ownership to another car of the same brand?

Tesla seems to be notorious for gradually closing doors to owners rather than opening them. Take the initial offer for free supercharging. Tesla was attempting to incentivize owners of those cars recently to update their cars at a discount but they would loose free SC. Whenever Tesla doesn't want to continue a thing they don't discontinue it, they price it into the stratosphere unless they are contractually obligated.

FSDb was at one time only 6K or less. Why has Tesla continued to increase the price of this feature? Some have suggested it was because they briefly wanted to limit the user base due to ongoing updates which might have affected more users.

Maybe another more simple explanation is because people are buying FSD at this price. Those buying it see themselves as helping in the development of it, or maybe they are just wealthy people that 15K is really nothing to just throw around. Pretty soon though all of those people will have pretty much bought it. As we can see by sales numbers of S and X as compared to MY and M3, That crowd probably isn't going to be Tesla's future bread and butter.
I think Tesla needs to get out of the elite business honestly, or at least allow the additional features to be reachable for all Tesla drivers. 15K clearly isn't moving in that direction, ESPECIALLY when there is now some competition.

In my case, I just spent some time drilling into my monthy budget. I managed to shave off a tidy sum. My motive was to spend less money, but I noticed I had made a potential "slot" for it if I wanted it, but do I really want to add all of the fat I just worked so hard to trim away back for something with zero appreciation? I would much rather see a number that better reflects those of us with less to throw around.

I did buy EAP for $6k (even though it's overpriced as well IMO), but have not paid the additional $9k for FSD. I subscribed for a couple months at $99 / month just to try the beta for a while. It was cool, but in its current state, I don't think it's worth anywhere close to $9k additional, or $15k total. I keep hoping Tesla will reduce the price. In its current state, I would drop maybe $3-5k additional for it (over the EAP price), but for $9k I really feel like it needs to have near perfect level 2, hands on driving. As long as it's just level 2 and requires me to keep my hands on the steering wheel, it's hard to justify paying a lot for it unless it's near perfect. Now, if they started allowing hands off level 2 or level 3 driving, then I might start to feel like it's actually worth the current price, but I don't have much confidence it will get there any time soon. The other thing that would change the math for me is if they allowed FSD to be transferred between cars... then I could probably justify the current price.

 

[starise]

I did buy EAP for $6k (even though it's overpriced as well IMO), but have not paid the additional $9k for FSD. I subscribed for a couple months at $99 / month just to try the beta for a while. It was cool, but in its current state, I don't think it's worth anywhere close to $9k additional, or $15k total. I keep hoping Tesla will reduce the price. In its current state, I would drop maybe $3-5k additional for it (over the EAP price), but for $9k I really feel like it needs to have near perfect level 2, hands on driving. As long as it's just level 2 and requires me to keep my hands on the steering wheel, it's hard to justify paying a lot for it unless it's near perfect. Now, if they started allowing hands off level 2 or level 3 driving, then I might start to feel like it's actually worth the current price, but I don't have much confidence it will get there any time soon. The other thing that would change the math for me is if they allowed FSD to be transferred between cars... then I could probably justify the current price.

I believe I would be ok with a system for mainly highway driving that changes lanes and avoids problems. I don't necessarily need a city driving feature. Outer suburbs yes, but in the thick of a city I would rather drive the car.

The change fro HW3 to HW4 has caused more than a little expectation this next system will be better. Why else would they add additional cameras,radar and upgraded electronics ? It all has the appearance of them painting themselves into a corner with those who have a car even one year older since it will be HW3.

No one ever really knows what Tesla is doing in any great detail, and that's probably by design, but if systems in other competition get even better it may not matter as much any more because I suspect we will have those who go to them instead.

I'm really trying to prevent what I see as an an inevitability by suggesting alternatives to the present structure.

Are you happy with EAP? What do you use if for most often?

 

[gtg465x]

I believe I would be ok with a system for mainly highway driving that changes lanes and avoids problems. I don't necessarily need a city driving feature. Outer suburbs yes, but in the thick of a city I would rather drive the car.

The change fro HW3 to HW4 has caused more than a little expectation this next system will be better. Why else would they add additional cameras,radar and upgraded electronics ? It all has the appearance of them painting themselves into a corner with those who have a car even one year older since it will be HW3.

No one ever really knows what Tesla is doing in any great detail, and that's probably by design, but if systems in other competition get even better it may not matter as much any more because I suspect we will have those who go to them instead.

I'm really trying to prevent what I see as an an inevitability by suggesting alternatives to the present structure.

Are you happy with EAP? What do you use if for most often?

I think EAP is overpriced and should really cost around $3k, but apart from feeling somewhat ripped off, I'm happy with it.

The feature I like most is the auto lane changes to automatically go around traffic going slower than my set speed. I have it set to change lanes without confirmation, and that has worked well in the 4 months I've been using it. It would annoy me if I had to disengage and re-engage Autopilot all the time to pass people. One of the most stressful parts of long roadtrips for me is having to constantly think about changing lanes to go around slow pokes, and even if the car isn't perfect, it seems to do well enough for me to just let the car handle it and take some mental stress off of myself.

I'm also looking forward to the summon feature that isn't enable for my car yet, because I have a tight garage, and no one can get into my passenger side until I back out of the garage. It would be nice if I could use summon to back the car out, so my passengers could go ahead and get in (or I could strap my daughter in her car seat) without me having to get in and back it out first.

 

[starise]

I think EAP is overpriced and should really cost around $3k, but apart from feeling somewhat ripped off, I'm happy with it.

The feature I like most is the auto lane changes to automatically go around traffic going slower than my set speed. I have it set to change lanes without confirmation, and that has worked well in the 4 months I've been using it. It would annoy me if I had to disengage and re-engage Autopilot all the time to pass people. One of the most stressful parts of long roadtrips for me is having to constantly think about changing lanes to go around slow pokes, and even if the car isn't perfect, it seems to do well enough for me to just let the car handle it and take some mental stress off of myself.

I'm also looking forward to the summon feature that isn't enable for my car yet, because I have a tight garage, and no one can get into my passenger side until I back out of the garage. It would be nice if I could use summon to back the car out, so my passengers could go ahead and get in (or I could strap my daughter in her car seat) without me having to get in and back it out first.

Ditto on the price.

I like the lane change capability in EAP. I'm still not quite there though on paying that much for it.

This is probably what makes the reduced FSD feature a nice inbetween solution for many.