Tesla recently lowered the FSD outright purchase price to $8,000 from $12,000. This begs the question, should you buy FSD outright, or should you stick to the $99/month subscription.
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FSD Price Lowered
Tesla recently lowered both the monthly and outright purchase price of FSD from $199 to $99 per month and from $12,000 to $8,000 for the outright purchase price. This brings up an important question - should you buy FSD outright, or should you stick to the monthly subscription for your Tesla vehicle? We've got everything you need to know and think about.
First off, it's important to note that the monthly purchase price was lowered by 50% and the outright purchase price was lowered by 33%. When you look at the numbers, the monthly price is more attractive - in the shorter term because it was given more of a discount.
However, there's more to think about, including:
- How much the monthly/outright price will increase
- If Tesla does a per mile pricing model in the future
- How soon Tesla will reach level 3 to level 5 autonomy
- How much FSD will increase the value of your Tesla vehicle
- How long your Tesla vehicle will last
- Whether you want to run your Tesla as a robotaxi or not
These 6 criteria will determine which option you should choose for your Tesla vehicle.
How much the monthly/outright price will increase
Elon Musk has said that as Tesla FSD improves, the value of it will also increase and eventually take it to a price of $100,000. However, as FSD has improved, the price has only come down, which tells me that Tesla is looking for a wider adoption from the market in order to gather more data.
Right now, Tesla FSD is at version 12.3.5, with releases happening about every 10 to 14 days. I'm on version 12.3.3 for my Tesla, and I am looking forward to getting the new updates to see what changes.
As FSD improves and fixes the areas where intervention and disengagement is required, interventions and disengagements are going to decrease. For reference, an intervention is something like using the accelerator pedal to make the car go faster, such as a slow left turn, and a disengagement is completely taking over to manually drive, such as when the car makes a critical mistake.
These two things improving are the signal that the price of FSD may increase because it means driverless autonomy is closer. At the point nobody is posting disengagements or interventions anymore, you can be assured that Tesla will increase both the monthly and outright price of FSD.
It's important to also note, that if bought enhanced autopilot for $6,000, the price of FSD is only $2,000 to have it on the car forever. That makes it a clear winner to just buy it outright for $2,000.
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If Tesla does a per mile pricing model in the future
If Tesla also provides an FSD use case of cost per mile, such as $1.00 per mile for FSD, this will be an important factor in what you decide to do. This option is ATTRACTIVE if you aren't using FSD very much and have occasional use cases where you need your car to drive someone autonomously, such as a teenager, someone disabled, or elderly.
If you aren't needing to use this option for more than $99 per month, then it would also be useful for you because you end up paying less than $99 per month. It's also important to note that the cost per mile is likely to go DOWN in the future, perhaps to as low as $0.15 per mile, making it so that 660 miles need to be driven to equal a $99 per month cost. However, I don't see this happening anytime soon, but eventually as the market becomes saturated with self-driving cars.
The risk of waiting for that in the future is that the cost per mile never comes down due to things like inflation, and that would end up making the outright purchase price a better option.
In the short-term, there will be a California Gold Rush like event for self-driving Tesla vehicles in the initial phase of autonomous vehicles.
The cost per mile option becomes quite UNATTRACTIVE if you are utilizing FSD frequently on your Tesla.
In the case where you are using this option - if Tesla every provides it - a few times a month for less than the monthly payment of FSD, this becomes attractive because it's cheaper than either option, and you don't have to pay $8,000 upfront.
However, waiting for this scenario may never play out because there is no current option to pay a cost per mile for FSD.
How soon Tesla will reach level 3 to level 5 autonomy
The biggest debate around FSD is when Tesla will reach level 3 to level 5 autonomy. These key milestones and how soon Tesla reaches them will determine which of the options available becomes the best for FSD.
For reference, here are the levels of autonomy and what they mean:
- Level 0: No driving automation
- Level 1: Driver assistance, such as steering or braking assistance
- Level 2: Partial driving automation, such as steering or braking assistance, or self-parking
- Level 3: Conditional driving automation, such as the car can control safety-critical functions, but the driver must intervene if requested
- Level 4: High driving automation, such as fully autonomous in controlled areas
- Level 5: Full driving automation, such as the car can drive anywhere in road traffic, without conditions, and with no human intervention
When it is stated that Tesla has reached level 3 autonomy, without any prices increase, I believe the $8,000 option instantly becomes the most attractive, because you can bet that prices increases are coming for the monthly and outright purchase price.
I see level 4 and level 5 not too far behind once Tesla is stated to be at level 3 because it means that Tesla is confident in the driver not having to pay attention in some cases.
Of course, Tesla may never claim level 3 - or regulators may not claim this either, and one day, Tesla will simply leap frog to level 4/5 and that is something to think about.
Personally, I think that what we'll see is a gradual decrease in the data Tesla is capturing, in interventions and disengagements. It's obvious what the current problems are, such as getting to a parking lot and not parking. In this case, if the Tesla simply finds a parking spot, there will be no disengagement to park. Once Tesla resolves all of these with video training data, then any intervention will be few and far between.
I expect that in the next couple of years, we'll see driverless Tesla vehicles happening. For you, you have to decide if you believe this, or if you think it's going to happen much later. If you think much later, it may be more attractive to wait and not pay the $8,000 upfront cost.
How much FSD will increase the value of your Tesla vehicle
How much will FSD increase the value of your Tesla vehicle? The way I look at this is the end goal of autonomy: To have a Tesla vehicle that can drive itself around, driver other people around, and make you money.
The range of money to be made seems to be between $10,000 and $20,000 per year from what I've seen. It could be more or less than this, but let's assume $15,000 per year in profit after all expenses for the car.
If the life of your Tesla vehicle is 10 years driving other people around, then you have $150,000 in profit from your car.
Let's take a Model 3 RWD with FSD outright purchased: $38,990 + $8,000 = $46,990. Add on taxes and fees, and let's call it $50,000 even.
If you could invest $50,000 into something that tripled your income over 10 years, that's a pretty good investment.
For those who think autonomy will be an incredible moneymaker in the first 3 years, up to $50,000 per year, then the value becomes even more. At this point, Tesla vehicles become an investment, something very rate to see in a car. Only classic cars and specialized vehicles appreciate in value, and Tesla vehicles would join that list. Having FSD OUTRIGHT will greatly increase the value of your car.
In addition to that, the value of your Tesla vehicle is likely to increase when autonomy is reached. If I buy the FSD package for $8,000, my total investment in my Tesla will be $58,000 after all taxes and fees. If I can make $150,000 in the first three to five years of the "California Gold Rush" into autonomy, and then the profits start to decline after that, I have just about tripled my investment in a short time.
Of course, there will be time required to maintain my Tesla vehicle and I will become my own fleet operator - cleaning the car, taking it to get its tires rotated, and more, but that is worth it to me and not difficult work to do.
And, you can simply sell your Tesla if the cars appreciate in value much more than what you paid for it. If someone offers you $70,000 for your Model 3 you bought for $40,000, that's a nice $30,000 right there. It's like flipping houses, but for cars.
For Further Reading: Did Tesla FSD Really Take Someone Through The Chick-Fil-A Drive Through?
How long your Tesla vehicle will last
A Model S owner has been able to drive his Tesla well over 1 million miles. This is a much older version of a Tesla vehicle, but it shows that the frame and structure of a Tesla vehicle is very sound. He's replaced multiple batteries, motors, tires, and more, but the initial car is still there.
I think the life of a Tesla vehicle is going to be well over 1 million miles for those who want to keep the car going as long as they can. Yes, you will replace the battery and electric motors, but with the profit to be made from an autonomous vehicle, this is worth it, in my opinion.
If you believe the life of a Tesla vehicle is going to be well over 1 million miles, then the $8,000 outright cost of FSD is a superior option over any monthly or per mile cost. Unless your Tesla vehicle is driving hundreds of thousands of miles per year, of course, which I'm not sure many will do. That would make the monthly cost more attractive for sure.
If you plan to keep your Tesla until it basically dies, then the outright cost is a more attractive option. If you won't keep it very long, go for the monthly subscription.
I also don't see Tesla allowing you to transfer FSD permanently to another Tesla vehicle you buy after selling your existing Tesla, except in special sales that don't last more than a month or so...
Whether you want to run your Tesla as a robotaxi or not
If you don't plan on using your Tesla vehicle as a robotaxi and don't plan to engage FSD that option, then you may want to go for the monthly price, or wait for Tesla to offer a per mile cost.
For those who plan on using FSD a lot through, and see autonomy reaching level 3 to 5 in the near future, than it makes no sense to wait to buy FSD outright. You should buy FSD outright if you see autonomy happening in the next few years. If not, stick to the monthly price.
It is also worth mentioning that if you think Tesla is going to keep the price of FSD low forever in order to increase adoption, then it may be worth sticking to the monthly subscription as well.
These are the things to think about. It's a big decision to pay $8,000 for something, but I think that option is most attractive if you plan on keeping your car for a long time or utilize FSD often. It's also the right option if you believe the monthly and outright cost is going to go up.
If you don't believe any of that, try the monthly option when you need it.
Tesla also should offer a transfer of FSD one-time, for those who bought FSD in the past for more than $8,000 - or even those that invested in FSD in the very beginning, whether it was for $8,000 or not. This would be a sign of good faith in Tesla for those who supported the mission with the software in the beginning stages.
Now, what do you think about these options? Do they fit with what you are thinking? Or are there things beyond any of this that matter, such as regulators possibly never approving FSD?
Share this article with friends and family and on social media - or leave a comment below. You can view my most recent articles here for further reading. I am also on X/Twitter where I post more than just articles daily, as well as LinkedIn! Thank you so much for your support!
Hi! I'm Jeremy Noel Johnson, and I am a Tesla investor and supporter and own a 2022 Model 3 RWD EV and I don't have range anxiety :). I enjoy bringing you breaking Tesla news as well as anything about Tesla or other EV companies I can find, like Aptera. Other interests of mine are AI, Tesla Energy and the Tesla Bot! You can follow me on X.COM or LinkedIn to stay in touch and follow my Tesla and EV news coverage.
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