Should FSD have been standard?

[Ruffles]

There is so much debate and criticism about FSD and if the present performance and feature set are worth the price. I wonder if Tesla would have been better off to have included it standard on every vehicle and just increased the base price? If no one was evaluating its value in isolation and the cars were $5-8k more, do you think enough people would have thought the price was too high and not purchased?

Full disclosure, I had enhanced AP on my 2016 Model X and have FSD on my Model Y. I think its worth it but the real reason I bought was to "lock in" the ability so that if it turns out I need a hardware upgrade, it will be provided free. For those of you who didn't purchase, if it had just been part of the car from the beginning and your car cost a bit more, what would you have done? It seems to me that most people that have a Tesla REALLY wanted a Tesla and if the entry price was higher, they most likely would have still paid.

 

[kgvickers]

FSD is an easy money maker for Tesla and they need all they can get right now.

If you check you'll see that most of the used cars sold by Tesla have FSD. I suspect Tesla is turning that on, essentially free for them to do, so that their used cars are a better value than the competition. This of course is assuming the necessary hardware has already been installed, which it is past a certain point.

 

[Tam]

...increased the base price?...

Lower base price is Tesla's public relations and incentive eligibility in some localities.

There's a price war for lowest price in Model S and lowest price for Lucid Air.

There's also a promise of $25,000 Tesla car.

Including FSD would likely declare Tesla losing to the price war!

But without the public relations, price war, and other factors..., I agree with you that FSD should be included.

 

[RTPEV]

No, definitely not. I already spent way more (maybe even 2X) on my Model 3 than any other car I've ever bought. Not that it was a stretch for me at this point in my life, but it's just hard for me to reconcile spending that kind of sum on a car.

Granted, I did get EAP when I bought the car (I justified that by the fact that the car did have the hardware to do lane keeping and TACC and that functionality existed and was solid at the time). And I did take advantage of the FSD upgrade fire sale at $2K. But it was hard enough for me to justify the additional $5K for EAP to myself. Another $4K on top of that and I would probably have had serious thoughts about rethinking my purchase.

 

[Brando]

Very smart to include FSD hardware [fsd board/radar/sonar]
Software & continuous updates - makes sense to charge extra.,

BMW used to charge for apple car play - now it is included. others? have examples?

 

[Ruffles]

But couldn't you think about it like AWD? For the Y, X, and S, they are all wheel drive. There is no option for 2wd. The extra cost for the motors etc. is built into the base price and people just pay it. I don't think Tesla is losing very many sales because the AWD makes it too expensive.

I think FSD would have been the same way. It's just there, with no option of not paying for it. Either you can afford the car or you can't. Maybe it would have put the cost out of some peoples reach but I don't think it would have been very many. I don't think there are very many people that are literally counting pennies to see if they have enough to afford the Tesla. There are, however, LOTS of people looking at what functionality it provides and making a decision to buy or not. I think the money to be made from charging more for each car would be greater than the money from lost sales.

 

[DriveMe]

It was smart to make the Autopilot standard. For many owners that’s good enough, at least for now.

 

[drtimhill]

BMW used to charge for apple car play - now it is included. others? have examples?

Which they stopped doing after a lot of very negative feedback. Nevertheless BMW are on a path where they are more or less a car rental company (they are already talking almost all features are going to be monthly fee based), my understanding is the majority of BMWs are now leased.

 

[DMC-Orangeville]

Nope. I don't have it, would never use it. It's an added expense that could drive others to Lucid, Audi, Polestar, Volvo etc.
Next year I'm going to sell my 2015 S, and might (should) stay with Tesla (an X or Y). If they tacked on FSD as included (and added the extra $10,600 ($CDN)), I'll probably switch.

There's lots of others, like me, that love Tesla's performance and aesthetics, but don't really care about FSD.

 

[Brando]

IF demand for Tesla vehicles needs some help - lowering the price often works.

- offering 2wd would be easy cost/price lowering move
- most/many robotaxis would NOT need AWD
- another idea, perhaps, smaller front motor 2wd version
(is the front motor already smaller than rear ??)

Lucid, Audi, Volvo ... etc. - you should always double check the competition
- they may or may not be less expensive
- value? you must decide

 

[drtimhill]

IF demand for Tesla vehicles needs some help - lowering the price often works.

- offering 2wd would be easy cost/price lowering move
- most/many robotaxis would NOT need AWD
- another idea, perhaps, smaller front motor 2wd version
(is the front motor already smaller than rear ??)

Lucid, Audi, Volvo ... etc. - you should always double check the competition
- they may or may not be less expensive
- value? you must decide

At some point in the next 5 years Tesla will need to decide if they are a mass-market EV maker or a luxury brand (both is possible but tricky to pull off). As they drive the cost of the drive train down the question will be if they pass on that reduction to consumers or invest it in making the cars more up-market.

 

[RTPEV]

But couldn't you think about it like AWD? For the Y, X, and S, they are all wheel drive. There is no option for 2wd. The extra cost for the motors etc. is built into the base price and people just pay it. I don't think Tesla is losing very many sales because the AWD makes it too expensive.

Good point, but as an argument AGAINST FSD being standard!

When I bought my Model 3, it was RWD. That was the only option at the time. Which was fine by me. There is absolutely ZERO need for AWD where I live (I owned a RWD vehicle when I lived in Vermont, long before electronic traction control, and I managed just fine--here in NC RWD is completely adequate). And with the Model 3 at least, the RWD option has the highest range anyway, something that is more important to me than AWD. I will say that the price differential between RWD and AWD is actually very reasonable. But let's assume that at the time that option was not available to me and that FSD was included.

So now you're taking a $49,000 car ($50,000 with the paint color I wanted--hey, maybe they should just bundle premium paint colors in anyway, they can't seem to decide what color is "base" anyway!) and deciding that they should just bundle EAP + FSD ($9K at the time) AND AWD ($3K when it was first released, IIRC), raising the base from $49K to $61K. Sorry, that's practically Model S territory.

And even if we go with today's costs/configurations, for a $37,900 SR+, tacking on FSD is going to add an additional 21% to the cost. If it were still possible to get a RWD-only SR+, perhaps the cost could come down by the $3000 and we would hypothetically have a $34,900 RWD SR+ vehicle, whereas the full bundled price would be $46,900. That's a 34% bump! That is a SERIOUS amount of change for people. Yes, I realize that Tesla can afford to have higher priced variants at current production levels because there are certainly enough wealthy people that are willing to spend that kind of money. So good for Tesla that they can sell their high profit margin vehicles. But to FORCE this option on people that really have no use or want for it, not to mention it may or may not exist for several years seems excessive.

AWD ended up being bundled supposedly because it simplified the manufacturing process to only have the one option.

That's not really the case with FSD though. Enabling FSD (or not) is a software switch. There is no cost benefit to Tesla to force FSD upon buyers. AND, it gives them a revenue lever they can pull later on. AND it avoids upset customers who were sold a vehicle years ago with FSD but their car still only does auto-lane changes, TACC and a few party tricks. At least by keeping it separate they can sell it as a future capability and let the buyer decide how soon they see those features coming.

 

[Ruffles]

Great discussion and thanks for everyone's thoughts. I wonder what the process looks like for coming up with base prices. Surely you cover your cost of goods but then how do they value other options. Looking back at cars that have shipped and imagining them more expensive will never be a popular idea. I get that.

Let's look at the Cybertruck for example. I was amazed at how low the starting price is. Given how different it is than anything else on the market, how much of its sales will be based solely on price? What if instead of starting at 39k, it started at 45k? I think it would still be as popular. But even in this example, we are not totally unbiased. If Tesla were to say FSD were standard, we would all know its possible to remove it and would complain about not having the option. What if it was something we've never known was an option?

 

[RTPEV]

Great discussion and thanks for everyone's thoughts. I wonder what the process looks like for coming up with base prices. Surely you cover your cost of goods but then how do they value other options.

You didn't quite go that far, but I think you were most of the way down the path of making an excellent point.

The FSD sales model and pricing is oriented towards using early sales to fund development, as if early buyers were investing in the technology, and the price going up as more functionality (and thus value) is added (which also gives the early investors a payback (discount) for being early investors). To that end, my point is that Tesla had to pick a price point that they believed would attract enough investors to pay for the estimated cost of the system they envisioned (which, like most moon shot projects, undoubtedly will wind up costing far more than they estimated!)

So let's say that they envisioned charging $8000 for FSD with a 10% take rate on 500K vehicles. (I'm just making most of these numbers up as an example--bear with me). That would "raise" $400 million to fund development of the system.

So let's suppose they went with an alternate strategy to raise the same $400 million over the same 500K vehicles, but instead of pricing it as an $8000 option, they INCLUDED it all vehicles and just added $800 to the cost of each vehicle.

If this is where you were going in your thinking, then okay, I could be convinced that $800 is a reasonable price adder.

On the other hand, while that gives Tesla an enormous competitive advantage to be able to claim that every car comes included with FSD, it does potentially take away their ability to eventually charge enormous sums of money for FSD once it is feature complete. In 10 years if/when I'm ready to trade up to a new Tesla, I'll be quite disappointed if I have to pay an extra $20,000 to get what I have in my current Tesla!

 

[Ruffles]

You didn't quite go that far, but I think you were most of the way down the path of making an excellent point.

The FSD sales model and pricing is oriented towards using early sales to fund development, as if early buyers were investing in the technology, and the price going up as more functionality (and thus value) is added (which also gives the early investors a payback (discount) for being early investors). To that end, my point is that Tesla had to pick a price point that they believed would attract enough investors to pay for the estimated cost of the system they envisioned (which, like most moon shot projects, undoubtedly will wind up costing far more than they estimated!)

So let's say that they envisioned charging $8000 for FSD with a 10% take rate on 500K vehicles. (I'm just making most of these numbers up as an example--bear with me). That would "raise" $400 million to fund development of the system.

So let's suppose they went with an alternate strategy to raise the same $400 million over the same 500K vehicles, but instead of pricing it as an $8000 option, they INCLUDED it all vehicles and just added $800 to the cost of each vehicle.

If this is where you were going in your thinking, then okay, I could be convinced that $800 is a reasonable price adder.

On the other hand, while that gives Tesla an enormous competitive advantage to be able to claim that every car comes included with FSD, it does potentially take away their ability to eventually charge enormous sums of money for FSD once it is feature complete. In 10 years if/when I'm ready to trade up to a new Tesla, I'll be quite disappointed if I have to pay an extra $20,000 to get what I have in my current Tesla!

Yes! You summarized it much better than me . I think they could have generated the funds needed for development without creating the opportunity to scrutinize the functionality of the feature.

 

[bdub85]

My biggest problem with charging for FSD is having it tied to a specific car instead of being a license tied to your Tesla account. You could have every intention in the world of keeping your car for the next 5+ years until some a-hole runs a redlight and totals your car. Also, if you ever want to upgrade and get a different/newer Tesla, you have to go and pay for FSD again.

I have no problem with them charging for FSD, they just have to make it so you only have to pay for it once. This is not a couple hundred dollar or even a thousand dollar option. 8K is a significant amount of money. I know this will be solved somewhat with the subscription model, but I'd still like to see an option to purchase a license that is able to transfer.

 

[jordanair45]

Autopilot with lane change should be included.

Then, Tesla made lane change a FSD only feature, which, I understand.

Truthfully, I would have never bought FSD if auto pilot + lane change was standard.

 

[bdub85]

Autopilot with lane change should be included.

Then, Tesla made lane change a FSD only feature, which, I understand.

Truthfully, I would have never bought FSD if auto pilot + lane change was standard.

I had FSD on my last car, and I honestly only miss auto lane change at least at the current FSD state. Definitely not worth 8k to me especially when it sticks to the car. I learned that lesson the hard way. At least it was only 6k when I got it.

 

[Ruffles]

I had FSD on my last car, and I honestly only miss auto lane change at least at the current FSD state. Definitely not worth 8k to me especially when it sticks to the car. I learned that lesson the hard way. At least it was only 6k when I got it.

Your making my point. Since it has always been an option, people evaluate it in isolation and decide if they think it is worth 8k. It's fine that you think it's not. If it had NEVER been and option and all cars had always been ~1k more (made up number, see RTPEV post above), I think far more people would have continued to buy instead of saying nope, I'm out, its too expensive or not worth it. Tesla would have been able to spread the cost of development across a greater number of cars and possibly increased the amount of data they are able to gather (I'm not sure about this one, maybe they cars gather the same amount of data from customers who didn't purchase).

 

[Brando]

FSD hardware in all vehicle - ALL collect data - "FSD option" pays for extra end user software.

Electronics continuously improve in general,
and improved electronic parts (usually cheaper too) are naturally added to Tesla vehicles.
Tesla adds "continuous improvement" as soon as feasible to all Tesla parts - not just electronics.

Some day, perhaps, Tesla will only build for Robotaxi use, making more income and not sell individual vehicles. Just saying this is always an option for Tesla to consider. Prediction are hard, particularly about the future.

Would seem reasonable that the actual FSD computer board might improve every 3-4-5 years until no added features needed/noticed, no power savings needed.

Especially software, prices can easily be adjusted up or down.