Tesla has officially removed Basic Autopilot as a standard feature for new Model 3 and Model Y orders in North America, effective immediately. The move forces buyers to subscribe to the $99/month Full Self-Driving (Supervised) package to access lane-keeping capabilities that were previously free.
It appears to be a somewhat desperate move amid demand and profit headwinds.
This is a bad move for consumers and a confusing one for the brand.
For a company that has consistently argued that Tesla owners are safer when using Autopilot and FSD, making the feature more accessible should be the priority. Lane-keeping is widely considered a safety feature, not a luxury convenience. It reduces driver fatigue and prevents drift-related accidents.
Tesla is now in the awkward position of offering less standard safety tech than economy cars costing half as much.
Most buyers of the Model 3 and Model Y are budget-conscious, often aiming for monthly payments in the $500–$600 range. Adding a mandatory $100 monthly fee just to get features that are standard on a Honda Civic destroys the value proposition.
Tesla lowered the price of the Model 3 and Y starting in October by about $5,500. It’s possible that was to offset the expiring tax credit. However, it could be it was in anticipation of removing features to lower the price that the customer could add back in through the subscription model.
The other consideration is that Musk is always trying to simplify the process, like with the decision to go camera only vs lidar. It could be the Basic Auto pilot functions poorly or is more complex to run if they have to wall off aspects of FSD. Lastly, Tesla needs and wants to continue to accumulate FSD data. It could be they view it as worth the loss in customers to have more that remain activating FSD and the driving data that goes with it.
The thing about Tesla is it acts like a startup. They are going to try things, break things, keep what works and change what doesn’t.
Until we know the full reasons, impact, and tradeoffs, it’s difficult to say whether it is a smart move.
No, it’s really not. It’s a dumb move. People who bought the car with that feature expect to have that feature. Taking it away is as stupid as a TV set manufacturer deciding to eliminate Channel 4 from sets already in people’s living rooms.
I expect a lot of complaints, and this bone headed move to be rescinded.
(PS: Own a Tesla? What other features that you think you bought would you like to see eliminated without any choice on your part?)
To use your analogy, nobody that bought a television is getting channel 4 eliminated. It only applies to new purchases. Are you under the impression that an existing Tesla owner will have to subscribe to continue to use driver assist?
Consumer behavior will dictate whether it was the wrong move. I don’t know if the economics of it are lost on you. But if it sells fewer cars at low margins but increases profit margin on those that do, it may be a better tradeoff. You’d have to know how the math plays out. Does it drive up add on subscriptions at a greater margin rate than it drives down overall vehicle sales at lower margins?
This is the danger of having a really unique, and weird, set of CEO incentives. Because since the CEO’s enormous incentive package has an incentive only requires about 1.2 million car sales per year for the next decade, but requires about 10 million FSD subs to be in place in ten years….well, for him it’s worth doing this even if it’s a worse tradeoff.
The pay package is outrageously lavish if he can meet all the metrics. If he does, the shareholders win as well. Space X by some estimates has a public valuation of $1.5 trillion putting his stake worth $750 Billion. Do you really think he is that motivated by money? Here’s another thing to consider. In addition, the number of purchasers choosing FSD is about 15% or so of annual new car sales. He needs a much bigger boost to the rate of subscriber growth that what is likely to occur by this move alone.
Another thing to consider is the greater the adoption of FSD, the more likelihood the future subscription price can come down, feeding accelerated adoption of the FSD service.
There are too many questions yet to know how this plays out. I don’t think money is the primary reasoning.
I think he’s motivated to meet those incentive packages - whether for the money or the voting stake, he fought hard to get them, and definitely wanted to be granted a much larger stake in the company.
Of course he needs more than this - but it’s just an illustration of how using incentives to drive CEO behavior may lead them to take actions that meet the incentives. If the incentives aren’t exactly aligned to things that benefit the company, you might get some weird outcomes.
For example, the obvious way he could meet that subscription requirement is through doing nothing more than making FSD subs standard as part of the car purchase. Lower the nominal price of the car by $4K (or whatever), bundle it with a four year FSD subscription that has to be accepted, and - bam! The take rate on new cars is up to 100%, the consumer sees (roughly) the same price for the car, and Musk hits his target regardless of whether FSD remains a good ADAS feature or ever becomes something materially more.
Yes, but you are making a leap that the decision was one based on his own financial motivations. There is no evidence of to support that claim. Even if it is the motivation, there is no way of knowing yet whether it also has a positive or negative impact on consumer behavior and net margins. it could be both entire self serving and also the right thing for shareholders. It’s a guess and if you feel one way about Tesla and Musk you tend to assume something nefarious. If you feel the other way, you may lean towards positive reasons.
As I’ve said, I’m perfectly comfortable with the pay package and alignment with shareholder interests. Others, if they are not, lots of other choices out there.
I’m not assuming anything nefarious. People respond to incentives. The whole idea of having incentives in CEO compensation packages is based on that fact. You have incentives in the pay package in order to align what the CEO does with what the Board and/or shareholders want him to do. By structuring the package that way, you are counting on the executive responding to incentives.
His pay package provides incentives for him to maximize FSD adoption. Moving features of the car behind the FSD paywall is a way to drive FSD adoption. The logical end point of that is to move “everything” into the FSD subscription - making it a required part of the purchase of the car, so he’s guaranteed to hit his milestone no matter what FSD is like.
That’s nothing nefarious on Musk’s part - though it does show some shoddy work on the part of the Board in drafting these milestones. Should have required “bots” to be “autonomous humanoid robots,” also - he could have Tesla meet that milestone by the end of the year by just having them buy Roomba and package one of their vacuums in with the sale of each car.
You described the CEO’s incentives as really unique and weird and a danger. A danger that it would cause the CEO to take actions that inure to his benefit but not necessarily the company. Maybe not Nefarious in the sense that its criminal. I’ll rephrase and frame it as, he’s not making decisions in the best interest of shareholders and perhaps motivated by personal greed.
My position would remain the same. Absent evidence, it’s just speculation and just because it may help him obtain one of the many goals required to release his Options package, you are assuming causation where there may only be correlation. But, we’ll know soon enough. He’ll either provide an explanation sufficient to address the decision and or the results will speak for themselves.
I can say this about the latest developments of FSD. Almost everyone I talk to now that has interest in buying a Tesla, it seems centered less on owning an EV but rather owning a vehicle with potentially autonomous capabilities. I realize that’s anecdotal, but it may be they are seeing something in the market that tells them this is the better way approach. Perhaps, FSD is hitting a tipping point where people will pay much more per month for it?
Maybe, but competitors like Rivian are charging less ($50/month) and catching up to Tesla on FSD functionality. See this video for a demo of Rivian’s Autonomy+
If tiny Rivian can catch up to TSLA on FSD, I guarantee the larger automakers can do it. They’re just waiting to see if FSD is actually successful and ever gets a subscription rate higher than 12%.
If FSD becomes commoditized, the most efficient and vertically integrated manufacturer probably wins. I would think that’s Tesla. But, Rivian hasn’t caught up to Tesla and the last mile is turning out to be the most challenging
I live in Tennessee. My next door neighbors to the left have a Rivian. My next door neighbors to the right have a Rivian. I have an Ioniq6.
There are two Tesla’s in the neighborhood, a friend has one of them,. He wishes he never bought it because of Elon’s antics. Don’t know about the other one.
Meanwhile the Tesla showroom at the mall has a huge number of Cybertrucks sitting, waiting. They’d probably cut you a good deal if you want
I was being sarcastic. The Rivian is cool looking. They just can’t seem to reach profitability, range and price point to attract the broader consumer base. The Hyundai lineup is not attractive in my opinion but I’m also not all that wowed by the look of most of the Tesla models. For me, the draw is FSD capabilities more than anything. The CEO’s antics don’t really impact my decision one way or the other, to each his own. My neighbor has a cybertruck wrapped in an awful robin blue color. He loves it but not my thing.
One would think that but the market doesn’t always work that way. Take integrated and native navigation systems. I think it demonstrable that Google Maps (via Android Auto and Apple Play) is a superior option but many cars that had it have now gone back to the less superior (and more expensive) native systems.
If I can have a FSD-like system that is say, 85% as good as the real thing but in the make and model of my choice, I am certainly not going to buy a car I don’t want just for that extra 15% - and the falling Tesla sales certainly don’t support an alternative narrative.
I wouldn’t argue that point. But, I don’t think the difference between Tesla’s FSD option and the rest of the market is 15% better. It’s way better than anything else, at least in the US market. I think driver habits longer term are going to change. They will want full autonomy and the ability to focus on something else entirely while operating the vehicle. Tesla may end up as the leader or the low cost leader for quite some time.
The falling sales, IMO, have nothing to do with FSD at the moment. Sales are falling for several reasons.
Musk’s impact on the brand
The price, range, and charging issues are limiting the appetite for EV’s. Only 7-16% of new car buyer are seriously considering an EV by some estimates. Every EV manufacturer not making a sub $35k vehicle is experiencing sales decline.
It tells me that the current offerings either are too expensive for the average buyer or aren’t long enough on range and charging convenience to suit the driving habits of most US consumers. These are more fundamental issues that need to be solved, regardless of vehicle autonomy. It is possible that consumers will pay up or may accept the range and charging inconvenience, if Tesla solves something close to Full autonomy.
Respectfully, I don’t think the Google Maps vs native system applies. FSD opens up a much greater world of convenience, particularly if one can summon or send the vehicle without an occupant. It’s going to be incredibly costly to reach and maintain. Tesla’s almost maniacal commitment to vertical integration is a key advantage in keeping down costs. I think It’s the only pure EV player in the US that is even profitable.
If it becomes commoditized, then by definition it is no longer way better. Maybe it is 25% better instead of 15% but the very definition of a commoditized product is one that has lost its uniqueness and customers shop more on price than features.
Again you think you missed the point. You stated:
Then clearly from your own experience, the desire for FSD over simply having an EV is not enough to improve sales - and that is while it is still quite unique in capabilities.
Again, your implied that people you know are buying for FSD, not for EVs - and clearly the desire for FSD is not enough to improve sales.
At the risk of repeating myself, if autonomous driving becomes “commoditized” then FSD will no longer be unique. It may and will probably be better but simply being better will not be enough.
Well, there are only three, right? Rivian, Tesla and Lucid.
Here is a consideration out of left field, what if FSD-lite solutions start being applied to ICE vehicles? What if one day we can buy a RAV4 with a version of FSD that is 70% as good. Do you think people will still opt for a more expensive EV just for a marginally better FSD? I honestly don’t know but in a world where other FSD options exist, I am doubtful.
I think it highly likely that the more successful FSD is, the more likely it becomes commoditized, not only due to customer demand but due to government influence - like the seat belt, air bags, and Adaptive Cruise Control.
