$50/mo is not enough. You get to sleep/work an extra hour every day. You get to send your car to your spouse/kids/parents to take them places when you are at work. You get to start a trip at the end of the day and wake up somewhere 500 miles away. If you are old you get mobility, if you are a drunk you get to keep your car. That is even before you get to RT.Has anyone tried to figure out what it could mean financially for Tesla if they went from selling FSD to not selling it and instead using a subscription model?
Almost every software company in the world has or is trying to switch to a subscription service. Adobe probably being the most prominent (financial) success. Those that still haven't almost all make you pay again every time there is a version with significant upgrades which I think Tesla want to avoid. But they also don't want to give free upgrades for maybe 20 years.
Even when robotaxi fleets exist I believe Tesla would sell/subscribe you FSD for private use for something similar to the current price. If you want to have it join the fleet the price will be much higher.
I can see a number of cases where owners might actually prefer to subscribe while it would also be more profitable for Tesla. $7k is a lot of money to pay at once even if you can afford a $40k car. Even if you take out a loan it will increase your downpayment and might get you a higher rate or even being denied a loan if the total is deemed to high for you income/credit score.
If you are selling to get a new car you'll have to worry about being able to find a buyer that will get you a significant part of those $7k back. If you are buying a used car without FSD you would probably not want to pay $7k if your car is already say 10 years old. For Tesla I think it means they won't sell FSD to hardly any car that is over 5 years old or so. Assuming a 20 year lifespan you would only get 15 years of value compared to 20 when bought new. Older cars even less.
There is also the insurance issue. I've already seen articles about insurance companies not wanting to reimburse FSD in certain situations.
Here's my take on the numbers.
If you let owners subscribe to FSD when it's fully available so that you can sit and read or watch video while in the driver seat I think almost everyone would subscribe if the cost was $50 a month. Even those that will eventually drive a 20 year old Tesla worth maybe $5k then would pay that in most cases.
So for a 20 year lifespan Tesla would get 240 months x $50 = 12k
They could obviously also have different levels with some higher levels getting extra perks and if Elon is looking to expand the life of Teslas, for environmental reasons for example, they could have a slightly higher price for new cars and a little lower for old ones. Also a little less per month the longer you signed op for.
With the correct price point, which I think would be around $50/month, they might get a 90% take. So 10.8k average per car.
I don't think we really know what percentage has paid and obviously have even less idea about how many will pay once it's available but I'm thinking something like 50% at best at a one time $7k fee.
With those numbers Tesla would make something like 3.5k per car on average compared to 10.8k
Lets say Tesla gets to 3 million cars sold per year in the not to distance future. That's only 6 gigafactories. That would mean a difference of 8.5k x 3 million = $21.9 BILLION extra in almost pure profit every year compared to selling it outright. Even if the $7k price got the same 90% take which I think is impossible a $50 dollar/month model would still pull in an extra $11.4 billion.
Granted, it's better to get payment today than spread out over 20 years average but that's a big difference. And just like leasing contracts Tesla could sell those off if they needed the money sooner. Plenty of pension funds that would buy those against just a few interest points.
Either my 3 am math is way off or Tesla will obviously already have figured this out. In that case FSD could be much more valuable than I think almost anyone have figured.
Anyone have any factual numbers or ideas that would change my estimates?