Will you buy FSD before the $1,000 increase on July 1st?

[dmurphy]

Not going to wade into the BS above, but I think FSD would be a good deal at ~$150/Mo or less.

$8,000 over 5 years = $133.33/mo.

If you hold the car for 5 years or less, you win. More than that, Tesla wins.

Honestly, the inability to transfer FSD between cars is a big barrier for me in upgrading from 3 to Y. Subscription pricing would solve for that.

 

[Dan203]

...

That’s your response? Dan, you’re financially illiterate. Period. Thanks for posting though.

For everyone else with at least moderate critical thinking ability, this post can be used as an example of why a “low“ subscription service isn’t possible without destroying Tesla financially.

I’m done with that convo.

So I show you a scenario in which the low subscription price is viable and you call me financially illiterate. Ok, good come back. What exactly is wrong with it?Do you think my 85% is too high? Well you get the same numbers if you use 65% at $40/mo. How about that? How about 50% at $50/mo? Same numbers. Both of those are still lower than just taking the current price and dividing it up over 7 years, and long term would result in Tesla making more money. How is that financially illiterate? Or are you just one of those people who can't even fathom that you could possibly be wrong?

The model I laid out is EXACTLY what Adobe did when they went from selling Photoshop for $900/copy to charging $20/mo. Or MS did when they went from selling Office for $400/copy to $10/mo. Both saw an increase in users and profits. The same would likely happen with Tesla as well.

Whatever take your ball and go home. We'll see who's right and who's wrong when this is actually released.

 

[Dan203]

Not going to wade into the BS above, but I think FSD would be a good deal at ~$150/Mo or less.

$8,000 over 5 years = $133.33/mo.

If that's all you want then buy it upfront and roll it into your loan/lease. You only pay the $133/mo plus a few bucks in interest. Why pay a separate subscription fee that's more?

 

[Dan203]

Unless all 85 are required to remain subscribed for significantly LONGER than the break-even ~83 months your math makes 0 sense for Tesla as a company.

Because otherwise some significant # of those customers (arguably most of em) will only pay for it 1 or 2 months a year when taking a road trip or something.

Meaning Tesla likely never even break even.

That's definitely a possibility. I never said it wasn’t without risk. But it's a risk a LOT of other software companies have taken and it's worked out for them. But if you really wanted to hedge against that you could charge yearly, or require a year long contract on the monthly fee.

Also this same possibility applies even if you're charging $150 mo. If the subscription is $150/mo and someone only pays 1-2 months out of the year then Tesla would still lose money compared to the upfront price. So why risk offering the monthly subscription at all? In fact I'd argue that at a higher price people would be more likely to do this.

 

[dmurphy]

If that's all you want then buy it upfront and roll it into your loan/lease. You only pay the $133/mo plus a few bucks in interest. Why pay a separate subscription fee that's more?

Because as I mentioned, if you hold the vehicle less than 5 years - for whatever reason - upgrade, totaled, etc - those dollars are lost. And you’d have to do it again.

For example - if I traded my Model 3 now on a Y, not only would I lose the $5k I paid for FSD, but I’d have to lay out another $8k for it again. FSD is worthless on a trade - it offers no value to the vehicle.

If FSD were a subscription, that’d be a much easier decision.

 

[DrtyJrze]

Not going to wade into the BS above, but I think FSD would be a good deal at ~$150/Mo or less.

$8,000 over 5 years = $133.33/mo.

If you hold the car for 5 years or less, you win. More than that, Tesla wins.

Honestly, the inability to transfer FSD between cars is a big barrier for me in upgrading from 3 to Y. Subscription pricing would solve for that.

Please don’t wade in, let that foolishness die...

$150 is a good starting point. But even that isn’t high enough. You’re assuming that the “subscription“ would be paid the entire 5 years (60 months). If someone were to do that, it is no different than rolling the cost into the loan and it would be wiser to just buy FSD upfront.

Assuming most people would turn on the subscription for the summer travel months and turn it off the rest of the year (or during a pandemic) the monthly price would have to be around $550/month for that to work for Tesla.

$550 x 3 Months= $1,650/yr
$1,650 x 5 years= $8,250

That’s not even breaking even for Tesla. I think we can agree that 3 months a year is generous, and psychologically not many people are used to having subscriptions that cost $500+/month.

To be clear, I personally do not care what Tesla does with subscription. I’m only discussing the options available mathematically. I already paid for FSD. I fully expect at some point in the future it could be $30/month. I won’t cry about that just like I don’t cry about the 37” LCD TV I paid $2,500 for about 15 yrs ago. That’s life.

 

[Dan203]

Because as I mentioned, if you hold the vehicle less than 5 years - for whatever reason - upgrade, totaled, etc - those dollars are lost. And you’d have to do it again.

For example - if I traded my Model 3 now on a Y, not only would I lose the $5k I paid for FSD, but I’d have to lay out another $8k for it again. FSD is worthless on a trade - it offers no value to the vehicle.

If FSD were a subscription, that’d be a much easier decision.

Since FSD is attached to the car, and not the driver, it seems to increase the resale value of the car. So you'd likely recoup that money. On Tesla’s used car site cars with FSD sell for about $5k more than those without.

 

[dmurphy]

Since FSD is attached to the car, and not the driver, it seems to increase the resale value of the car. So you'd likely recoup that money. On Tesla’s used car site cars with FSD sell for about $5k more than those without.

Incorrect. The trade in really doesn’t take FSD into account at all. What Tesla resells for, that’s wholly separate. They’re not giving me an extra $5k because my AWD has FSD, that’s for damn sure.

To be clear, I personally do not care what Tesla does with subscription. I’m only discussing the options available mathematically. I already paid for FSD. I fully expect at some point in the future it could be $30/month. I won’t cry about that just like I don’t cry about the 37” LCD TV I paid $2,500 for about 15 yrs ago. That’s life.

Same here. I’m just number running; I’m not going to whine or complain if someone else gets a better deal than me. Nature of the beast. That said - I ran the numbers on upgrading from a 3 to Y. Tesla offered me $42k for my 2019 AWD. It’d be a no brainer if I could pay, say, a $500 fee to transfer my FSD across. Otherwise its a hefty penalty - losing the $5k on the 3’s FSD and then paying another $8k on the Y.

 

[Knightshade]

Incorrect. The trade in really doesn’t take FSD into account at all. What Tesla resells for, that’s wholly separate. They’re not giving me an extra $5k because my AWD has FSD, that’s for damn sure.
.

If trading in TO Tesla that's likely true- since they're gonna maybe remove it so they can re-sell FSD to the next guy anyway.

Trading in to anybody else (or private sale) the FSD should absolutely increase your sale price.

 

[dmurphy]

If trading in TO Tesla that's likely true- since they're gonna maybe remove it so they can re-sell FSD to the next guy anyway.

Trading in to anybody else (or private sale) the FSD should absolutely increase your sale price.

right, I’m referring to a direct Tesla tradein.

private sale, yes it should increase the sale price.
Anywhere else (3rd party dealer etc) - I’d say that’s a mixed bag. They just don’t know how to price it. It’s treated more like a sunroof or upgraded audio package on a traditional car - which, as we all know, adds almost no value at resale. They just don’t know what FSD is, let alone how to price it.

 

[Stickboy46]

I guess trillion dollar companies like Amazon and Microsoft are Financially illiterate. Don't they know they shouldn't be selling software/hardware as a subscription service. They should be forcing everyone to pay for it all up front. They really should be looking at this forum before they make stupid moves like that.

 

[Dan203]

Incorrect. The trade in really doesn’t take FSD into account at all. What Tesla resells for, that’s wholly separate. They’re not giving me an extra $5k because my AWD has FSD, that’s for damn sure.

Then you're getting a bad deal and should look at selling it privately instead. Every dealer tries to lowball the trade, that's industry standard. You're almost always better off selling privately if you've got the time to do so. If you don’t then at the very least you should take it to Carmax and run it through Vroom and see what they offer. Vroom gave me more for my BMW then either Carmax or Tesla offered.

 

[hlin07]

A reasonable person would not by chairs unless he/she has money to burn. You can easily sit on the floor, or perhaps a cushion if you have tile/wood floor, instead. Really unless you have money to burn just live in a tent, the earthen base under the floor will be a lot softer than if you have a tile/wood floor.

Ok, I think everyone can clearly tell that you're a FANBOY. Nothing wrong with that, but keep in mind that your goal is to further Tesla's mission, NOT defend EVERYTHING Tesla does. Explain the benefits of owning a Tesla, NOT trying to justify everything Tesla does. Try some arguments such as Tesla's hiring on FSD development have been getting more aggressive, timeline, etc.

 

[Dan203]

Ok, I think everyone can clearly tell that you're a FANBOY. Nothing wrong with that, but keep in mind that your goal is to further Tesla's mission, NOT defend EVERYTHING Tesla does. Explain the benefits of owning a Tesla, NOT trying to justify everything Tesla does. Try some arguments such as Tesla's hiring on FSD development have been getting more aggressive, timeline, etc.

Me? I'm far from a fanboy. I didn't even buy FSD and tell people all the time that while my Tesla is more fun to drive, my BMW 340i was the nicer car. It was more luxurious and WAY quieter. (I HATE how loud the Model 3 is!) I've actually likened the Model 3 to a Subaru STI, it's expensive because it's fast not because it's luxurious. I do like the technology though and don’t think I'd ever go back to an ICE car. But I can’t guarantee my next car will be a Tesla. (depends if other manufacturers come through on their EV strategies)

 

[dmurphy]

Then you're getting a bad deal and should look at selling it privately instead. Every dealer tries to lowball the trade, that's industry standard. You're almost always better off selling privately if you've got the time to do so. If you don’t then at the very least you should take it to Carmax and run it through Vroom and see what they offer. Vroom gave me more for my BMW then either Carmax or Tesla offered.

In this economy?! Private sales ain’t happening.

 

[Dan203]

In this economy?! Private sales ain’t happening.

Yeah I didn’t consider that. Probably not wise to be having a bunch of strangers driving your car right. Should still check with Carmax, Vroom and Carvana though.

 

[SammichLover]

If that's all you want

That’s what this all boils down to, right? You’re arguing to get what you want to happen. To help you get what you desire, cheaper & with less commitment.

All this arguing that it is in Telsa’s best interest is hogwash. Your wishes and dreams....

 

[SammichLover]

Ok, I think everyone can clearly tell that you're a FANBOY.

Bwhaha

You’re new around here.

 

[GZDongles]

In my Opinion if I have my car park itself pick me up and drive itself to and from work and to all other repeated locations I would be satisfied and I feel like the money I have spent has been well worth it. This would include long trips that would exit highway and park at a supercharger by itself.

When did you buy FSD? For most people who bought FSD (after early 2019), Tesla never promised that the car would do any of this. I think the marketing definition of "Full Self Driving" are at best misleading since Tesla isn't actually selling anything approaching a Level 4 or 5 autonomous driving system. They are selling a Level 2 or 3 driver assistance feature. I see all of these threads speculating when the Model 3 will get to Level 5, but it's worth keeping in mind that Tesla isn't even advertising this or indicating that it's in the future plans when you buy your car. For pre 2019 drivers, it's a different story, but I imagine that they'll reach a settlement for partial refund or bonus like additional free supercharging or extended warranties or something for those drivers that want them.

 

[GZDongles]

No, it all makes sense. It's pretty basic to how accounting works.

So profit and income aren't the same thing. That's your first problem since you're using the terms interchangably and they're VERY different.

Income is all the $ you have coming in.

Profit is the $ you have left over after you deliver what was bought and you deduct your costs. (and when you can recognize it has its own rules)


If I give you $100 for a widget you just got $100 in income. But let's say you have no widgets- and won't for months....so you have $0 in PROFIT right now.

Because to balance that $100 income, you have to put a $100 liability on your books- to show you still OWE ME something I paid $100 for.


So when Tesla sells FSD, they get $7000 in income but not revenue.

The undelivered part shows up as a liability on their books- because it's something they still owe to customers but already took the money for.


How much of that $7000 they CAN or CAN NOT recognize is a much more complex topic- the relevant part is it's not all of it until they fully deliver what was promised for that 7k

Thank you! I appreciate seeing some financial literacy in this thread. I think an important distinction that some people may not realize is that just because Tesla can't recognize the full $7K as revenue does not mean they can't spend the full $7K in cash. It's not like part of the $7K is going into an escrow account somewhere. So from a cashflow perspective, it's clearly in their best interests to get the cash in the door as fast as possible regardless of any liabilities on the books.