I am creating this thread to continue the current discussion on FSD payment by subscription. People may also want to discuss the model being used for non FSD payments.
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Subscription model (FSD etc.)
- Thread starter Buckminster
- Start date
I have posted about half below:
There are probably factors I'm missing as an outsider, but when the FSD software is safer than a human and enables robotaxis, $1B immediately is much more useful than $2B over 5 or 10 years. To understand why, one needs to appreciate the economics of a robotaxi:
These numbers are on the conservative side. Even $1 per mile would significantly undercut competition.
- Let's assume $30-35k up front costs (should be lower long term, but base M3/Y and base Cybertruck cost about this much to manufacture).
- Say a cost to operate of $0.20 per mile (Elon quoted $0.18 in his presentation, could be much less long term).
- Assume $0.70 price per mile compared to the $2-3 that other ride hailing services charge.
- At 50% useful miles, that'd be $0.35 revenue per mile.
- This means $0.15 profit per mile.
- Assume a robotaxi operates 100 hours per week (should be 24/7 minus charging and maintenance time initially when there's limited supply, but could still be far more than 100 hours long term, if taxis transport cargo during off-peak hours).
- If the robotaxi travels at ~25 mph (similar to Uber), that'd be 2,500 miles per week.
- That means a robotaxi would earn $375 per week, and ~$20,000 per year.
Nonetheless, the initial $30-35k investment pays for itself within 2 years, and then could generate as much as a 50% or more ROI per year.
This is why from my perspective I think it makes sense for Tesla to prioritize up-front cash, so that it can buy as many of its own vehicles as possible once FSD is safer than a human. However, there could be other variables that favor the subscription model, that as an outsider i am simply not aware of.
Operating one's own fleet of robotaxis is the mother of all recurring revenue
Once FSD is safer than a human, FSD attach rate should be 100%*, and it'll make sense for Tesla to get this cash up front to invest in its own fleet of robotaxis.
*People or investors will line up to buy a $40k EV + $20k or $30k FSD option. $60k or $70k for a robotaxi that can make you $200k or more over a 10 year period is a pretty damn good investment.
Tesla is working on pay-as-you-go subscription to its self-driving package - Electrek
Electrek talk about $20 to $40 per month. Someone here mentioned $107 per month ($7k spread over 60 months). $40 would be bad for Tesla. Not many will stomach $100 on a sustainable basis. I favour cash in hand as per Frank's post.
Increasingly, people will be leasing from Tesla, Insurance included where they will no doubt offer as subscription.
There is a lot of money in the world. People are looking to invest. They (taxi companies) will pay $100k upfront eventually - Tesla should accept nothing less:
Electrek talk about $20 to $40 per month. Someone here mentioned $107 per month ($7k spread over 60 months). $40 would be bad for Tesla. Not many will stomach $100 on a sustainable basis. I favour cash in hand as per Frank's post.
Increasingly, people will be leasing from Tesla, Insurance included where they will no doubt offer as subscription.
There is a lot of money in the world. People are looking to invest. They (taxi companies) will pay $100k upfront eventually - Tesla should accept nothing less:
- Good for Tesla's bank balance - allows them to get into Ships and aircraft etc.
- Robotaxi is the best for the environment - max miles per car to rid this planet from ICE
adiggs
Well-Known Member
As a current Tesla owner (Model X) that has paid for FSD, an impediment that's been reasonably prominent in our thinking about whether to upgrade or not is the need to pay for FSD again. (Losing free supercharger access also plays into our thinking; we realize the actual financial value on free supercharging is low; it's the mental freedom to just go and not worry about it that's valuable).
A subscription or lifetime purchase for FSD, where the subscription / purchase is attached to an individual who can then attach it to 1 vehicle (and move it to a new vehicle as needed), would be awesome. I personally would probably prefer a 1 time expense, or a financed purchase, over a subscription that never ends.
The primary impediment to our upgrading right now is that the upgrade isn't as big as we'd like. But a bigger battery pack (range) plus Model 3 scale charging speed, and I think we'd be ordering, and then the FSD repurchase would probably be the #1 consideration between wait or proceed. Our 90D is on the lower end of acceptable for long driving days - less charging time and/or fewer charging stops.
Of course that's anecdote, but Tesla's always done really well at converting first time Tesla owners into 2nd / 3rd / 4th / ... owners. And that seems like both a significant source of new sales, as well as good business to further reinforce customer loyalty.
A subscription or lifetime purchase for FSD, where the subscription / purchase is attached to an individual who can then attach it to 1 vehicle (and move it to a new vehicle as needed), would be awesome. I personally would probably prefer a 1 time expense, or a financed purchase, over a subscription that never ends.
The primary impediment to our upgrading right now is that the upgrade isn't as big as we'd like. But a bigger battery pack (range) plus Model 3 scale charging speed, and I think we'd be ordering, and then the FSD repurchase would probably be the #1 consideration between wait or proceed. Our 90D is on the lower end of acceptable for long driving days - less charging time and/or fewer charging stops.
Of course that's anecdote, but Tesla's always done really well at converting first time Tesla owners into 2nd / 3rd / 4th / ... owners. And that seems like both a significant source of new sales, as well as good business to further reinforce customer loyalty.
TheTalkingMule
Distributed Energy Enthusiast
Firstly, I believe the idea of FSD subscription is a wonderful idea, but before we talk about the good - lets discuss a few of the challenges that face Tesla for an FSD subscription model:
A. Existing install base of users that have paid large fees for FSD or EAP - how does Tesla create value or compensation in a subscription model?
B. Tesla’s unclear position on how large FSD fees create a transferable value for the vehicle and/or owner (recent disabling of FSD in resale suggests there is no transferable value)
C. The current value/function of FSD vs the future state
So what’s the problem?
1. Original FSD install base needs compensation - I suggest that Tesla create a decision that you can either own FSD or decide to make it a permanent part of the car (thus create transferability - either for a future vehicle or the current model)
2. FSD, even with new functionality, is simply not FSD (yes, its getting better - but I remember the forward looking statements that Elon made re: FSD….. and we’re still not there. Thus for many people, FSD is simply vaporware or an unproven asset.
3. Considering #1 and #2, Tesla may be up against an FSD adoption limiter due to the price point. The M3, and now MY, have opened doors for middle and upper middle class markets - great news for Tesla and EVs! However, this is likely a much more price sensitive market segment and thus $7k for FSD is a lot of money. For continuing adoption of FSD Tesla needs these customers to commit… hmm how could they do that? (Ah… subscription). FYI - this segment is also highly likely to be interested in capitalizing on the robotaxi idea… but seeing is believing.
So what’s the solution?
- Tesla! Answer the FSD transfer value problem (make the early adopters whole) - if you’re a subscriber then you have no transferable asset.
- Not unlike Premium Connectivity subscription (which people said would not happen) - make the subscription fee fair (I signed up immediately for Premium Connectivity) …. But create rules of use that favor the early adopters, i.e. if you want to robotaxi your car, then buy FSD
- Make the subscription fee low enough that will drive maximum participation so that you can train the neural net faster…. And get your fleet owners ready and committed for robotaxi (hey… I’ll borrow more money and buy 2 more teslas!)
Stretch idea…..
- Use this subscription as a way to create a new way for a Tesla owner to make money - create UBER-like business model NOW…. Use these drivers to commit to use the FSD to drive neural net training in real life taxi situations.
Hey, I hope this makes sense to all of you…. Mostly I hope that Tesla listens… they did when it came to premium connectivity - this is really no different.
A. Existing install base of users that have paid large fees for FSD or EAP - how does Tesla create value or compensation in a subscription model?
B. Tesla’s unclear position on how large FSD fees create a transferable value for the vehicle and/or owner (recent disabling of FSD in resale suggests there is no transferable value)
C. The current value/function of FSD vs the future state
So what’s the problem?
1. Original FSD install base needs compensation - I suggest that Tesla create a decision that you can either own FSD or decide to make it a permanent part of the car (thus create transferability - either for a future vehicle or the current model)
2. FSD, even with new functionality, is simply not FSD (yes, its getting better - but I remember the forward looking statements that Elon made re: FSD….. and we’re still not there. Thus for many people, FSD is simply vaporware or an unproven asset.
3. Considering #1 and #2, Tesla may be up against an FSD adoption limiter due to the price point. The M3, and now MY, have opened doors for middle and upper middle class markets - great news for Tesla and EVs! However, this is likely a much more price sensitive market segment and thus $7k for FSD is a lot of money. For continuing adoption of FSD Tesla needs these customers to commit… hmm how could they do that? (Ah… subscription). FYI - this segment is also highly likely to be interested in capitalizing on the robotaxi idea… but seeing is believing.
So what’s the solution?
- Tesla! Answer the FSD transfer value problem (make the early adopters whole) - if you’re a subscriber then you have no transferable asset.
- Not unlike Premium Connectivity subscription (which people said would not happen) - make the subscription fee fair (I signed up immediately for Premium Connectivity) …. But create rules of use that favor the early adopters, i.e. if you want to robotaxi your car, then buy FSD
- Make the subscription fee low enough that will drive maximum participation so that you can train the neural net faster…. And get your fleet owners ready and committed for robotaxi (hey… I’ll borrow more money and buy 2 more teslas!)
Stretch idea…..
- Use this subscription as a way to create a new way for a Tesla owner to make money - create UBER-like business model NOW…. Use these drivers to commit to use the FSD to drive neural net training in real life taxi situations.
Hey, I hope this makes sense to all of you…. Mostly I hope that Tesla listens… they did when it came to premium connectivity - this is really no different.
I think $100 per month is fine, that is $1,200 per year.
Say FSD costs $8,000 - 6.7 years is the break even port, so subscription works for those who upgrade cars frequently... Tesla can always provide attractive lease options...
Purchase works for those keeping the car longer than 6 years, or adds to resale value...
I think subscription happens when FSD is working, and RoboTaxis are possible.
Tesla wants more customer cars opting to be RoboTaxis, they may also take a cut of each fare, say 10%-20%....
In that case someone with a car who hasn't purchased FSD can put it to work in the Tesla network, and easily clear $100 per month, again that unlocks additional income for Tesla.
I'll be surprised if we see subscription much before FSD is working, and I don't think it will be much cheaper than $100 per month.
Some customers may wait until there i regulatory approval for RoboTaxis, that isn't a problem, they are not buying FSD anyway before that time.
Tesla may also offer a rent-to-buy scheme were customers subscribe to FSD for 6-12 months and have an option to buy it $600-$1,200 below the current price after that time. Again that is a good way of locking in a price for FSD when you can't afford it now.
Say FSD costs $8,000 - 6.7 years is the break even port, so subscription works for those who upgrade cars frequently... Tesla can always provide attractive lease options...
Purchase works for those keeping the car longer than 6 years, or adds to resale value...
I think subscription happens when FSD is working, and RoboTaxis are possible.
Tesla wants more customer cars opting to be RoboTaxis, they may also take a cut of each fare, say 10%-20%....
In that case someone with a car who hasn't purchased FSD can put it to work in the Tesla network, and easily clear $100 per month, again that unlocks additional income for Tesla.
I'll be surprised if we see subscription much before FSD is working, and I don't think it will be much cheaper than $100 per month.
Some customers may wait until there i regulatory approval for RoboTaxis, that isn't a problem, they are not buying FSD anyway before that time.
Tesla may also offer a rent-to-buy scheme were customers subscribe to FSD for 6-12 months and have an option to buy it $600-$1,200 below the current price after that time. Again that is a good way of locking in a price for FSD when you can't afford it now.
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