Tesla says 1.7 million people now pay for Full Self-Driving, and it hopes monthly software fees can earn more than selling cars. Here is what that means for drivers.
Tesla is leaning harder on a monthly software fee. Its Full Self-Driving add-on costs $99 a month in the US, and the company now counts 1.7 million active subscriptions worldwide, up 67 percent from a year ago. Tesla hopes this kind of recurring income can bring in more profit than car sales alone.
Tesla lost its spot as the world's largest electric vehicle maker to BYD last year. Chinese rivals are also spending heavily on software and AI. So Tesla is pushing the part of its business where profits are higher. Analyst Dan Ives called software the "golden goose" for automakers because the margins are so high.
Tesla has not said how much money Full Self-Driving brings in. Pricing also differs by market. Ives says it is already the company's highest-margin business.
Despite the name, the system Tesla sells today still needs a person in the driver's seat paying full attention. Tesla has not won approval anywhere for a fully autonomous version. In North America, more than 75 percent of new Teslas are sold with the supervised version.
Cars still make up 75 percent of Tesla's revenue. Tesla's goal of selling 20 million vehicles a year by 2030 has been cut to 5 million. It delivered 1.6 million last year. Ives argues that if Full Self-Driving grew from roughly 10 to 15 percent of customers to about 50 percent, it would add more to the business than 50,000 to 100,000 extra car sales a year.
The supervised version is approved in the Netherlands and several other European countries. A vote on wider EU approval has been delayed until December. Xpeng, a Chinese rival backed by Volkswagen, is also seeking EU approval once new rules are expected early next year.
Musk has also said Tesla and SpaceX are exploring a merger. One analyst said it could give him 50 percent or more control of the combined company. Critics warn that trouble in one business could spread to the other.
Full Self-Driving is a $99 monthly add-on in the US, and it still requires you to pay full attention at all times.
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