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Understanding The Decline In Tesla’s FSD Take Rate



On August 31st, 2021, “Troy Teslike” tweeted data from his long running survey of thousands of Tesla vehicle buyers, showing a low take rate for FSD, Tesla’s “Full Self Driving” software add-on offered since late 2016. For Q2 2021, that survey shows a worldwide FSD take rate of only 11% across all Tesla models, compared to a high of 46% in Q2 2019. Rather than simply assuming this represents a major loss of confidence in FSD, it is worth examining the data and understanding the factors that led to this decline.






First, let’s look at the Q2 2019 spike in FSD take rate. In the span of two quarters, the take rate for the Model S rose from 33% to 81%, and for the Model 3, it rose from 15% to 46%.This can be explained by changes to Tesla’s self-driving packages and reduced pricing. Before February 28th, 2019 (late Q1 2019), Tesla offered Enhanced Autopilot (EAP) and FSD. EAP contained a less-polished version of all current Autopilot features, namely autosteer and auto cruise control, and some of today’s FSD features, including auto lane changes, Navigate on Autopilot, and Summon. FSD, at the time, offered no additional, working features, only the promise that Tesla would later avail buyers of autonomy features as the software improved. It stands to reason that, with no working features, FSD would have had a low take rate.  Then, on February 28th, 2019, Tesla stopped selling EAP, introduced a more basic Autopilot package priced at $3000, and began requiring buyers to purchase FSD for features formerly in EAP.  FSD, now priced at $5000, became a useful addition to the vehicle.

In the same Tesla announcement on that day, in addition to the FSD package receiving new features, Tesla offered sale prices on Autopilot and FSD for new vehicles. This was great for new car buyers and contributed to the spike in FSD take rates, but it had the potential to instantly decrease the resale value of existing owners’ vehicles. In response to backlash from existing owners, Elon Musk tweeted that Tesla would offer a discount on Autopilot and FSD for existing owners:






A table shown to Tesla’s customers at the time (and shared by Troy Teslike) clarifies the statement Elon made:






This substantial deal was a large motivator for many Tesla owners to purchase Autopilot and FSD at a large discount, and for the portion who had previously ordered and received vehicles with EAP, their vehicles were automatically upgraded to FSD at no additional cost. Given the discounts and package changes, the Q2 2019 spike in FSD purchases is understandable.

On a number of occasions over the years, Elon Musk has put forth FSD timelines that have proven to be overly optimistic. Without Elon’s high level of optimism, Tesla and SpaceX would almost certainly not be where they are today. At the same time, this has created unmet expectations among a number of potential FSD adopters. It is understandable that some pessimism surrounding FSD would have contributed to the decline in take rate following Q2 2019.

However, there are less concerning and more practical reasons as to why the take rate has tanked so much in the past two years. Price has been a key factor. Since Q2 2019, the price for FSD has gradually increased, but ultimately, it appears that the larger price difference between Autopilot and FSD, as well as the decrease in the average selling price of Tesla vehicles have been the primary causes of the take rate decline.

To give perspective on the overall price changes for FSD and Autopilot, a graph is provided below showing the FSD, Autopilot, and Enhanced Autopilot price changes over the past several years, along with a graph from Troy Teslike showing the Model S/X, Model 3, and Model Y FSD take rates in North America:

yGV2FpSATZ6gaYn7eCga1O59IbjYWfkOtmgGJUFNNuyM_M78vqs0T3UmBzuFRynDYckpyH3Up_vcmu_m-uARwgN0zEDnzfIV4VwzTIdYFzmKvvHQeg-jnxh9kjgW7AtmcRqVsMlU=s0


9s5wleoes_jcLVLMvOWxg2koCEBGz5cPVzYJB2y4fVuF4X29K6-XZU5lcKc4JG4Hn5CD4hawcqccbS5dBnrwVhsjhlVpfL1auTF7kWkabX4Db9ZYUeR4uKlBWh7KEi1IkePDBo8V=s0


While the take rates have fluctuated a great deal, the combined price of FSD and Autopilot has surprisingly not fluctuated more than $2,000 in the past five years, aside from the early 2019 discounts. Arguably, the total price of FSD and Autopilot has been less significant than the price difference between FSD and Autopilot.

In Q4 2019, Tesla changed the price of Autopilot to $0, meaning its features (traffic aware cruise control and autosteer) were now included with each vehicle. At the time, FSD was priced at $7,000, and the combined cost of FSD and Autopilot dropped by $2,000.  However, this also changed the cost difference between FSD and EAP or Autopilot from $3,000 to $7,000. For many Tesla owners, Autopilot is quite useful and is considered an essential add-on, so when it had a price tag, it was relatively easy for buyers to justify spending $3,000 or $5,000 on it. Then, an additional $3,000 for FSD was not too hard to justify.

However, once Autopilot became standard on all Tesla vehicles, it became much harder to justify an additional $7,000 add-on for features that were considered less essential.  Since then, the price of FSD has further increased from $7,000 to $10,000, meaning there’s now a cost difference of $10,000 between Autopilot and FSD.  This is likely a key reason as to why the take rates for FSD have fallen so significantly.

In addition, it should be noted that the take rate for FSD with Model S/X vehicles has fallen significantly less compared to the Model 3/Y. This can be attributed to the Model 3/Y targeting a more price sensitive demographic. It is much easier to justify purchasing a $10,000 add-on for an $80,000+ vehicle than it is for a $40,000+ vehicle. Of course, Tesla’s sales growth in recent years has come from the Model 3/Y, thus lowering the average sale price.

Further, the global take rates for FSD have been much lower than for North America, as seen in this graph provided by Troy Teslike:

1A84sSD5WBGRHQ3Fct5T2j03tAwdiAADasGIJXjmo2oo7cwvHSzfgJQDI6Hsin3Uu7rbyB0ZrbiKFStxi1zBhGxjV6Zbh9HFc0eTi1kGRPOZfg0EE4yPjOkzF3WBIoIuUiqbICq1=s0


Troy states that “the FSD take rate is very low in China and APAC and they now represent a larger portion of Tesla’s global deliveries which reduces the global take rate.”  Tesla has been delivering increasing numbers in China and Europe. Unfortunately, Autopilot has been crippled in Europe for regulatory reasons, and FSD development has primarily taken place on U.S. roads. All, or virtually all, of the impressive, recent “FSD Beta” YouTube videos have been on North American roads. It is no wonder that take rates are lower overseas.

One might ask whether Tesla should take any steps to increase FSD uptake.

In fact, Tesla has started offering a reasonably affordable $199 a month subscription plan for FSD, allowing owners to try it out for just one month.  In addition, Tesla’s impressive efforts in 3D vision and labeling, neural networks, and accelerated training, as demonstrated at AI Day recently, have shown that the product will speak for itself once “FSD Beta” is polished enough to be released to the public.

The drop in FSD take rate is not as alarming as it might appear. Considering the early 2019 discounts, the increases in FSD marginal cost versus Autopilot, price sensitivity combined with declines in the average sale price of Tesla vehicles, and Autopilot/FSD performance lacking overseas, the relatively low take rate is understandable. It seems likely to trend upward soon.

 
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whitex

Well-Known Member
Sep 30, 2015
6,824
8,669
Seattle area, WA
It can't do X now <> X can never be done.
Never is a long time. If Tesla extended bumper to bumper warranty until it's done, then sure, they pay to keep the car in drivable condition until it's done so you can extend "never" to however long Tesla is willing to pay to keep the car healthy enough to be able to self drive anywhere without a driver onboard. However, since they are not doing this, if it cannot be done in a typical car lifespan, then for for all intents and purposes it can never be done (for the cars Tesla sold FSD in).
 

EVNow

Well-Known Member
Sep 5, 2009
12,576
33,630
Seattle, WA
In some cases it does. Some things are just a mathematical impossibility. And I've already stated maybe here or elsewhere, that this may be one of them. If the cases are infinite no amount of finite programming can solve it, or at least it can't be proven that it can.
You stating so, doesn't make it so.

Well - I'm stating that your statement is wrong !
 
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t3sl4drvr

Member
Sep 24, 2017
268
363
USA
Seems like 12% of 500,000 cars at $10,000 for software is still a pretty good deal for the company. That's a lot of zeroes.

Did I get the facts correct:
  • 12% of the delivered cars purchase FSD
  • $10,000 per purchase
  • 241,000 vehicles delivered per quarter (2021Q3). With high demand, this is expected to continue growing.
→ FSD sales of $289M / quarter

For simplicity, lets for a moment forget that Tesla should not fully recognize that GAAP revenue due to only partially delivering the feature. We just do not know how much of a new FSD sale they recognize today. With the downplayed language in future FSD delivery promise, they might not need to mark that much of the sales as deferred revenue. With this, treating all new FSD sales as revenue might not be that far from the truth.

Tesla's net income has been skyrocketing from ~ $300M / Q on 2020H2 to $438M on Q1 to mind-blowing $1140M on Q2. For the sake of conversation, lets assume Q3 will repeat the amazing $1140M and again include $354M of that coming from regulatory credit sales. Regulatory credit sales will decline over time and should not represent a significant share of Tesla's future sales.

In this context FSD sales of $289M would represent 25% of earnings or 37% of earnings if we assume regulatory credit sales to decline to 0.

If the above would be true (please doublecheck the numbers), FSD sales is a critically important part of the business already today.

This raises a question on what risks are built into this business:
  • What if FSD delivery keeps being further delayed?
  • What if they are not allowed to continue sales before they are able to deliver?
  • What if a class action suit emerges and ends up being expensive?
 

Xenoilphobe

Active Member
Jan 2, 2014
4,618
4,541
Fairfax County, Virginia
Part of the drop off might be due to COVID and work from home increases, I know several of my neighbors actually got rid of the their daily driver during COVID, we are talking cars like the BMW M5, which netted the seller a savings of over $1K per month, which he invested and made twice a as much day trading in his spare time.
I would rather pay $10K for VIP treatment at the service center, verses the plebeian wait until we get around to you and here is your Uber credit... FSD in our houses stands for F the Service Department, where they are cutting corners..
 

mark95476

Active Member
Jun 21, 2020
2,067
1,589
Bay Area CA
VIP treatment at the stealership? 😆 😂

That's some Stockholm syndrome right there. You get used to the >$1k service bills and come to expect it as a "VIP".

Part of the drop off might be due to COVID and work from home increases, I know several of my neighbors actually got rid of the their daily driver during COVID, we are talking cars like the BMW M5, which netted the seller a savings of over $1K per month, which he invested and made twice a as much day trading in his spare time.
I would rather pay $10K for VIP treatment at the service center, verses the plebeian wait until we get around to you and here is your Uber credit... FSD in our houses stands for F the Service Department, where they are cutting corners..
 

95gator

Member
Dec 27, 2020
65
35
LA
Seems like 12% of 500,000 cars at $10,000 for software is still a pretty good deal for the company. That's a lot of zeroes.
I want to know how it's friggen legal at this point. I can't imagine the people that have been waiting for yearS. I suppose they paid less but I paid $10k and was promised by my SA. I said to myself if this latest release with a score of 99 (something I didn't know I would have to get in order to even get the Beta [and yes I understand what a Beta is]), I have already asked my personal lawyer what grounds I have to suing the company or just asking them for my $10k back. They aren't going to charge more. There are too many companies that are not so far behind that if anything it will go short, not long.


I ABSOLUTELY LOVE my Tesla, probably my favorite car I ever owned but I paid an extra $10 making it the cost of a luxury car and a luxury car it is not. So how do you charge full price for a thing that isn't even out of Beta? I'll happily pay for it when I can get it. In the meantime, I am considering a law suit if for no other reason, to bring attention. I am officially pissed after I didn't get the Beta with a 99, in Los Angeles which is like 299 in Ohio.
 
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KJD

OD 7/27 MYLR Red/Black 19's/ No FSD/ Del 11/20
Supporting Member
Dec 14, 2013
1,421
1,190
SLC, UT
I want to know how it's friggen legal at this point. I can't imagine the people that have been waiting for yearS. I suppose they paid less but I paid $10k and was promised by my SA. I said to myself if this latest release with a score of 99 (something I didn't know I would have to get in order to even get the Beta [and yes I understand what a Beta is]), I have already asked my personal lawyer what grounds I have to suing the company or just asking them for my $10k back. They aren't going to charge more. There are too many companies that are not so far behind that if anything it will go short, not long.


I ABSOLUTELY LOVE my Tesla, probably my favorite car I ever owned but I paid an extra $10 making it the cost of a luxury car and a luxury car it is not. So how do you charge full price for a thing that isn't even out of Beta? I'll happily pay for it when I can get it. In the meantime, I am considering a law suit if for no other reason, to bring attention. I am officially pissed after I didn't get the Beta with a 99, in Los Angeles which is like 299 in Ohio.
I agree with you that FSD is a total ripoff and Tesla should own up to that fact and offer refunds to customers like you and me. However I also believe that it will never happen. EM does not care about his customers, he only cares about making more money.

The reasons why a lawsuit might not work have been discussed at length in this thread below.
 

95gator

Member
Dec 27, 2020
65
35
LA
I agree with you that FSD is a total ripoff and Tesla should own up to that fact and offer refunds to customers like you and me. However I also believe that it will never happen. EM does not care about his customers, he only cares about making more money.

The reasons why a lawsuit might not work have been discussed at length in this thread below.
Well we were strung along bit by bit. They just should have never charged and got the world as they saw fit to build them for free the largest Neural Network in the world. Then he could have asked people to Beta it, done all the same things and not be screwing anyone over but in the meantime, Tesla has been taking money for nothing. They was value in the no money model, not as much, but much more ethical.
 
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David_Cary

Active Member
Dec 17, 2012
1,262
881
Cary, NC
The 60% take rate of the Model S/X buyers most recently really makes me lose respect for my fellow Tesla owners. At least the 3 and Y owners are on average quite a bit smarter.
I paid $2500 for AP1 and I am not entirely sure that was worth it. But it was (and is) something.
I wonder how much damage the lack of progress has done to the brand. Clearly not in current sales but when the alternatives are better....
 

BigNick

Infamous Fat Sweaty Guy
Dec 3, 2017
1,527
1,727
Pennsylvania, USA
The 60% take rate of the Model S/X buyers most recently really makes me lose respect for my fellow Tesla owners. At least the 3 and Y owners are on average quite a bit smarter.
I paid $2500 for AP1 and I am not entirely sure that was worth it. But it was (and is) something.
I wonder how much damage the lack of progress has done to the brand. Clearly not in current sales but when the alternatives are better....
Perhaps the average new S/X buyer has more disposable income than the average 3/Y buyer, and he/she is more willing to “risk” the $10K will eventually yield a finished product?

After owning my new 3 for a few weeks, driving on vision-only TACC vs my wife’s Equinox also with non-radar adaptive cruise, I can say both implementations are flawed, but in different ways.

Based on my experience so far, I wouldn’t pay an extra $10K for Tesla FSD or GM SuperCruise.
 

Zacster

Member
Sep 11, 2017
361
228
NYC
My guess is that the S/X buyer isn't reading the forum and keeping up with all the negatives of the current FSD. But then I myself don't trust the TACC in anything other than wide open driving and then treat it as regular CC. I've tried the autosteer and don't particularly trust that either even though it keeps me centered. I've used both when in bumper to bumper traffic but that is to break the tedium of it, I still watch it like a hawk.
 
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hellocar

Member
Jan 26, 2020
227
167
New Jersey
Perhaps the average new S/X buyer has more disposable income than the average 3/Y buyer, and he/she is more willing to “risk” the $10K will eventually yield a finished product?
Yeah, I think folks with more money are more likely to spend for it, and that's the reason for the difference. I don't see any evidence that those owners are "more ignorant" than those of us with 3 or Y.

What amazes me is that there is even a 10%+ overall take rate with the current state of the offering and the price point. I would expect more like 5% or below.
 
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scoobybri

Member
Aug 25, 2021
223
497
Virginia
I will give Tesla $10k for FSD when the car can fully self drive itself, not before. This isn't a Kickstarter campaign, but it sure feels like it. At least with Kickstarter, you can get your money back when the product isn't delivered by the promised deadline, which in this case is years in the past.

I would give Elon $1000 to add lane changing to AP though.
 

EVNow

Well-Known Member
Sep 5, 2009
12,576
33,630
Seattle, WA
I will give Tesla $10k for FSD when the car can fully self drive itself, not before. This isn't a Kickstarter campaign, but it sure feels like it. At least with Kickstarter, you can get your money back when the product isn't delivered by the promised deadline, which in this case is years in the past.

I would give Elon $1000 to add lane changing to AP though.
A friend of mine didn’t want to buy TSLA when it was <$40 (200 before split). He wanted to wait for a couple of quarters of profits. But then, it was too expensive.
 

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