Gary Zhou 
Key Points
- 💰 Tesla reduced the price of its Full Self-Driving (FSD) suite by $3,000 on August 31, making it $12,000, without an immediate explanation from Elon Musk.
- 🚗 Musk stated that the price drop was intended to make FSD more affordable for a wider range of customers and hinted that the price may increase over time as the value of the feature grows.
- 🤖 Musk believes FSD has the potential to generate income for early adopters when the Robotaxi fleet becomes active, allowing Tesla owners to earn money while their vehicle operates autonomously.
- 📈 Lowering the FSD price attracted more customers to the FSD Beta program, providing Tesla with more data to improve the performance of the suite.
- 📉 However, the price drop came with a $3,000 discount per driver, potentially impacting Tesla’s revenue, though the company did not comment on the change’s effect on customer adoption.
- 📈 Tesla confirmed that the FSD Beta program had amassed 500 million miles of data, indicating progress in its development.
Tesla CEO Elon Musk explained the strategy behind the Full Self-Driving price drop that occurred in late August.
Tesla dropped the price of the Full Self-Driving, or FSD, suite by $3,000 on August 31, making it $12,000. In the past, Musk has defended Tesla’s pricing strategy on FSD, claiming that, despite it being incomplete, the feature would be worth significantly more as it is aimed at being a money maker for early adopters when the Robotaxi fleet becomes active.
Musk has said in the past it could be a way for Tesla owners to make tens of thousands of dollars, all while the owner of the vehicle sleeps comfortably in their bed.
But Tesla pushed prices downward in late August, and Musk did not offer an explanation on X, where most of his communications regarding the electric automaker are shared.
Instead, a retail investor asked on Say, the platform Tesla uses to determine which questions it will answer during the Earnings Call about the pricing change.
“The next question is, why was the price dropped on FSD if it is getting better and robotaxi is expected so soon?” Senior Director for Tesla’s Investor Relations, Martin Viecha, said.
Musk responded, “Well, we just wanted to make it more affordable as more people try it. Yes, I think, over time, the price of FSD will increase proportionate to its value. So, with regard [to] the current price as a kind of a temporary low.”
Tesla and Musk will likely hike the price back up soon. There are advantages and disadvantages for the company by doing this. The advantages are simple: more cars in the FSD Beta fleet means more data to be accumulated and used to strengthen the performance of the suite.
Tesla confirmed last night the Beta program had reached 500 million miles of data.
Disadvantages are equally as straight forward: Tesla flips a switch, and your car has FSD, as long as you pay the $12,000. The company sacrifices $3,000 per driver with the discount.
However, Tesla seemed ready to drop the price to get more people into the FSD Beta program, and although the discount was small, more people likely took advantage of the change. Tesla did not comment on any increase or decrease in take rate due to the FSD suite being discounted.
