Tesla FSD Subscription Plan Angers Drivers: Why New Pricing May Require a Hardware Upgrade (UPDATE)

Last Updated on July 19, 2021

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The new Tesla subscription plan for its Full Self-Driving hardware sounds inexpensive, but it is exciting some outrage on social media, with some Tesla drivers threatening a class action lawsuit

The company is offering a $199-a-month subscription for its FSD package. That price is for those whose vehicles now have Basic Autopilot. Those who have the Enhanced Autopilot already can have it upgraded to FSD for just $99 a month, and subscriptions can be canceled at any time. If a subscription is canceled, the FSD features will remain active until the end of that billing period. 

More Than Meets the Eye

The subscription plan price seems quite reasonable, but there is a catch: the new subscription price may require a hardware upgrade including a new more powerful chip.

The new chip has only been available since mid 2019. Consumers who bought Tesla’s between late 2016 and mid 2019 were assured that they had the FSD hardware built in, and they would not need any additional hardware upgrades. Now they will, and the upgrade will be a one-time but significant cost: $1,500.   

Tesla (NYSE:TSLA) closed Friday at $644.22. That evening, Elektric posted a story on the new subscription price. TSLA opened down Monday morning, at $629.89. If that price decline was a consequence of the FSD, though, it did not constitute lasting damage. TSLA spent the day moving slowly gaining that ground back.

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As Rob Maurer observed in TheStreet.com Friday, the Tesla subscription plan is a likely topic of discussion during the second quarter earnings call planned for July 26. But no one on that call will have any actual data on the bottom line impact. That will have to wait for the third quarter earnings call in October.       

By coincidence, this comes exactly a year after a court in Munich found that Tesla Germany can no longer include phrases such as “autopilot inclusive” in its advertising. Although that ruling had no causal tie to the FSD subscription/upgrade plan, it was natural for some of the social media commentary linked the two events. 

One person on Twitter, calling himself “Tales from the Future” (TFTF) said: “Europe gets it. Tesla’s FD is an ongoing vaporware scam.”  

Another, Richard D. Porter, replied to TFTF’s tweet, asking with a sense of hope, “Are the legal storm clouds finally gathering over Tesla?” 

With what may prove unfortunate timing, Tesla dissolved its media relations team last year. The Tesla subscription plan may face Porter’s metaphorical storm clouds, at least in the court of public opinion, without an apparatus for effective response. 

The Company Gets Creative … And Ups The Price

The subscription offer is part of a broader pattern in which Tesla continuously develops driver-assist features with more and more functionality, both increasing the price and becoming more creative about financing as it does. 

The company has introduced this subscription service because the up-front software purchase encountered market resistance. The purchase was tied to the vehicle., not the driver. So if a Tesla customer bought it for her car, then traded in that car for a new one, she could not transfer the already purchased software to the new car, but would have to buy it separately.

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What about trade-in value? If a customer bought a Tesla with the FSD hardware and then sold it, would the resale value reflect the value of this software? 

According to TheStreet.com the answer is no. “While having the option does help resale value, options generally don’t recover their full cost on the used market.” This situation has made subscription attractive.   

A Reminder

As a reminder: both the standard AutoPilot and the Teslas with FSD require monitoring by a human being at all times. The systems remain imperfect, and as a matter of law the person behind the wheel is responsible.