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$5000 Auto Pilot Enhancement and $3000 Full Self Driving Compared with Model 3 35k Options Is Too Expensive

$5000 Auto Pilot Enhancement and $3000 Full Self Driving Compared with Model 3 35k Options Is Too Expensive

Tesla has the vision to make all new Tesla cars with the capabilities to be autonomous cars whenever the software will be ready to use. How can the vision of all Tesla cars to be autonomous if some customers as me will not be willing to pay $8k option to unlock the software? Since Tesla cars already included the full self driving hardware, why don't Tesla allows all new Tesla owners to have access the software whenever it readys to use by just charging a reasonable price to maximize profits and to maintain all customers to use the autonomous cars with the extra cost of the software into the base model. What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?

Classic car manufacturers give options not to buy Navigation and WiFi LTE, so not all cars have theses features. Tesla is changing car manufacturers to offer base model with Navigation and WiFi LTE, and updates software over the air when is available. Full self driving should do the same as those features. Nowadays anyone needs navigation and internet with the car. Later on, people will need autonomous car feature as well. These features are the most important selling point for buyers. Customers will not look only to buy a car, but also these features as well. I will compare autonomous feature the same as Window or Mac OS. Both OS used to charge costumers to upgrade. Apple decided to offer all mac computers to have free upgrade for the life of mac computers. Later windows is followed. new upgraded software allows customers to experience new features, improved security from hackers, and easy for developers to make their app to target both old and new customers.

Talking about full self driving hardware is costed money to make, and I know that Tesla already figures it out to charge customers for the cost of hardware with the car. It can be charged through premium or battery upgrades or else options. There is no free. Regarding to the software, it is only cost one time to make it, but the software can do unlimited copies. Having one customer or millions customers to use it. The cost of making the software is still same. Tesla will make more profits and sell even more cars for long term by increasing the price of base model to have all cars fully autonomous when the software is ready; instead of that 50% or 70% fully autonomous cars are needed to pay for unlocking. This strategy will make competitors very hard to compete because no body can make or own the Tesla autonomous software the same way as Window or Apple. Competitors can order the same hardware from Tesla suppliers, but not the software. To full fill the vision, Tesla must include with base model with reasonable prices.

Shock | August 3, 2017

"What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?"

Lose money.

The way I view autonomous is that in 10-15 years it will be standard in all new cars. It won't even cost money, like ABS today or traction control. But until then, anybody getting it is an early adopter, and the money tesla is charging is going to be used to fund the development of it.

You need to remember that Tesla's current autonomy is the most advanced on the market, so even the EAP option for $5k is not a huge price to pay for that, even though many of us are disappointed it's an extra cost above the car. I think it's still worth it. I bet the margin on it is higher than on the car, and Tesla remains unprofitable, so it's not like they are pulling in money hand over fist and throwing yachts at all the executives.

Most people are saying not to pay for FSD now because it doesn't do anything. Odds are high that by the time it is released Tesla will have the only FSD car you can buy, and at that point even $4k to pay for what amounts to a 24/7 chauffeur who doesn't judge you for farting is a bargain. I know we wanted $35k to cover the entire thing and no software cost but unfortunately it doesn't.

Get the car, drive down the road, and when a guy in a $80k BMW passes you with his hands on the steering wheel the $5k you spend now for EAP won't seem so bad.

Octagondd | August 3, 2017

"What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?"

Lose money.

Not exactly. They will harvest all the camera and sensor data and apply it to their AI to advance FSD. This is data that is valuable to the company and worth installing the hardware in order to get.

rpad.tv | August 3, 2017

"Regarding to the software, it is only cost one time to make it"

That's not true at all.

sbeggs | August 3, 2017

Tesla is amortizing the enormous development costs of reinventing the Autopilot software from scratch, after having made the decision to not proceed with AP1 Mobileye hardware and software. Therefore, it must make a calculation on what percentage of its car buyers will opt to buy it. It should not drop the option price until the system is down the learning curve, requiring fewer hardware changes or constant updates. After that, as the hardware resides on every car to enable safety features, late adopters can enable or turn on the Autopilot features at a more acceptable cost to them.
As our Classic Model S has no Autopilot, we look forward to having these features on the Model 3.

sbeggs | August 3, 2017

I should say, Full Self Driving scares the heck out of me, and I won't be getting it!

Shock | August 3, 2017

"Not exactly. They will harvest all the camera and sensor data and apply it to their AI to advance FSD. This is data that is valuable to the company and worth installing the hardware in order to get."

Forgot about that. I didn't realize they would mine this data even if you are not paying for one of the packages, though. Are you sure they do?

ReD eXiLe ms us | August 3, 2017

Hmmm... 'too expensive' compared to... what?

akgolf | August 3, 2017

Compared to the Bolt?

That's a brand new state of the art EV, surely GM included the hardware for full autonomy and are giving away the software to enable it? GM wouldn't make the current Bolt owners buy an updated car just for that feature would they?

ReD eXiLe ms us | August 3, 2017

Shock: Tesla has said so, proudly, from the very outset. Every car on the road that Tesla has built since about mid-September 2014, has been passively 'learning' its environment, driving patterns, and improving the data that they glean from sensors. Not some, not half, but all of them. The Model 3 will give them a much larger fleet of vehicles to continue gathering information from streets in villages, towns, & cities all over the world, along with refining data regarding the freeways and highways that connect them. They will not 'lose money' on this, because even if Consumers of the vehicles do not purchase the Full Self Driving experience, Tesla intends to offer Transportation as a Service using their own fleet of autonomous vehicles anyway. For that to happen, they must make sure it works in as many situations as possible.

https://www.tesla.com/blog/all-tesla-cars-being-produced-now-have-full-s...

ReD eXiLe ms us | August 3, 2017

A bit of easy reading:

2014-10-10 -- Dual Motor Model S and Autopilot
https://www.tesla.com/blog/dual-motor-model-s-and-autopilot

2015-10-14 -- Your Autopilot Has Arrived
https://www.tesla.com/blog/your-autopilot-has-arrived

2016-09-11 -- Upgrading Autopilot: Seeing the World in Radar
https://www.tesla.com/blog/upgrading-autopilot-seeing-world-radar

2016-10-19 -- All Tesla Cars Being Produced Now Have Full Self-Driving Hardware
https://www.tesla.com/blog/all-tesla-cars-being-produced-now-have-full-s...

songvirak_2003 | August 3, 2017

I am not going to disagree or agree with you. Some customers don't mind to pay. It is advance technology and not cheap at earliest stage. It should be deserved to be expensive. We pay what we get. All what you say is not right or wrong. The money that customers pay for FDS will be used to develop the software. I get that.

My main point is that Tesla will need to do the math to see how much should be charged to gain maximum fund for software development and maintain all customers to use it. Ex: if Tesla makes 100 cars, only 50 owners are willing to pay $80k to unlock. Tesla has $4000k to fun the development; however, if Tesla charge $50k for all 100 customers, Tesla can has $5000k to fun the development. The more customers to use it, the less preices to be charged. Tesla need to figure it out what is the minimum charge to all customers and gains maximum to fund the development while all customers can still enjoy the advance technology ahead of competitors. This is my key point. Do Tesla gain the maximum profits from current asking prices $80k option to use the software, or not? If the asking prices $80k is the maximum fund that Tesla can collect from customers, I will have no word to say. If it is not, it I better to lower the software to maximum the profits for developing software.

ddrmadness | August 3, 2017

@Red

+1 for compared to what. Many news outlets have referred to teslas autopilot system, riddled with problems as it may be, the best a consumer can purchase right now.

As has already been said in this post, Tesla still gains value from cars equipped with the hardware even if the customer does not purchase the software. Speaking as someone who makes his living off of software, it ain't cheap because while it may have few material costs, it has astronomical people cost. Tesla is charging a price it deems reasonable to recoup these people costs, and if you think it's not then don't buy it.

dsvick | August 3, 2017

There are so many things wrong with the OP I'm not sure where to even begin ...

"why don't Tesla allows all new Tesla owners to have access the software whenever it readys to use by just charging a reasonable price..."
--Just because it seems expensive to you doesn't mean that the cost isn't reasonable compared to the cost of everything that went into developing it and the hardware to implement it.

"What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?"
-- The hardware is also used for many of the standard safety features that all drivers get for free.

"I will compare autonomous feature the same as Window or Mac OS."
--There's your first mistake, the OS is required to run the computer, AP is not required to operate the car.

"Both OS used to charge costumers to upgrade. Apple decided to offer all mac computers to have free upgrade for the life ...windows is followed. new upgraded software allows customers to experience new features..."
-- Tesla already offers free OTA upgrades, the same as Apple and MS. This improves the car, gives drivers a better experience, and makes the cars safer.

"Regarding to the software, it is only cost one time to make it, but the software can do unlimited copies. Having one customer or millions customers to use it. The cost of making the software is still same."
-- Yes, the initial cost is pretty fixed, but it is a huge cost. Then there is the continuous improvement, bug fixes, changes, add-ons, monitoring, and analyzing that has to be done daily. To use your own example, why would Apple and MS continue to provide upgrades if the software weren't constantly changing.

kzodz | August 3, 2017

I welcome all those who know how to run a business better than Elon Musk to build your own EV and offer 220 miles of range and autonomous driving for $35k.

ReD eXiLe ms us | August 3, 2017

ddrmadness: Precisely.

dsvick: Excellent reasoning, as usual. Thank you.

kzodz WINS the MATCH!

Due to the fact I am getting 'old' by the minute, I can't stand most music (if you wanna call it that) that is enjoyed by today's youngsters. But something tells me this thread would be an appropriate place to play a tune that seems to have no actual lyrics beyond 'TURN IT DOWN FOR WHAT?!?'

songvirak_2003 | August 3, 2017

Virak--"why don't Tesla allows all new Tesla owners to have access the software whenever it is ready to use by just charging a reasonable price..."
dsvick --Just because it seems expensive to you doesn't mean that the cost isn't reasonable compared to the cost of everything that went into developing it and the hardware to implement it.
Virak-- Many people still do not understand between $8k and reasonable price.
shall Tesla charge a reasonable price and still maximize money from selling the software to fund the development?
Most people see that charge $8k is to fund for development the software? do not asking reasonable use to fund the software development. Should Tesla ask only a small group of people for $8k to fund for software development or ask large number of people at lower cost to fund software development? what is the different? the more people contributes to fund the software at low cost is better or less people asking $8k to fund is better. This the key point.

Virak--"What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?"
dsvick-- The hardware is also used for many of the standard safety features that all drivers get for free.
Virak-- If Tesla answers the same as you, the stock will drop. It is lose money; however, one of the main reason is that Tesla is using the hardware install in all cars to collect all data from driver for learning fleets, AI, as some people comments above. I know that it is very hard to put all though together. It is a win win for Tesla without paying every driver cent per miles to drive everything single street to collect data as some other companies are doing it. What data is collect? new road/street/highway/freeway, new sign, driving land that most people driving on it the same spot everyday. these together is known as HD Map. Even through Current Tesla Hardware included in the car, it is still not able to be autonomous and need to have HD Map. HD Map is the key to make the car autonomous. Even though collect data is one of the reason to include hardware into the car. Do not Tesla try to collect additional fund from buyer to help the cost of the hardware? all news report that Tesla will burn more money to fund development in next quarter. is it wrong to lower the cost a reasonable price so that many people are willing to put in to reduce the cost of hardware? or only $8k is good enough for small group to help reduce the cost of hardware and software? Tesla can collect more money from more people and better than small group of people with $8k if asking lesser.

Virak--"I will compare autonomous feature the same as Window or Mac OS."
dsvick--There's your first mistake, the OS is required to run the computer, AP is not required to operate the car.
Virak--autonomous feature (including hardware and software). Window has surface and window OS, App has Mac and Mac OS; however, I refer to software as the most import baby of Tesla. Competitors can build the same hardware as Tesla by ordering from the same Tesla suppliers; however, no one can copy Tesla software. I am not compare OS. I am comparing the software. Microsoft owned Window OS and Apple owned Mac OS, while Tesla owned the software of autonomous car. All are software.

Virak--"Both OS used to charge costumers to upgrade. Apple decided to offer all mac computers to have free upgrade for the life ...windows is followed. new upgraded software allows customers to experience new features..."
dsvick-- Tesla already offers free OTA upgrades, the same as Apple and MS. This improves the car, gives drivers a better experience, and makes the cars safer.
Virak--You have to separate the different between the autonomous software and the other software with the car. I am talking about the autonomous software. Of cause Tesla do offer free update for all software features with the car, but not all customers will be able to use all software features unless they pay for it, the autonomous software. currently only auto pilot enhancement can be used. People who pay can use it. it is fact. Window used to divide basic, edition and pro OS. Now are all include and free update. Before customers need to buy at least basic. if need edition, need to pay more. Next years new software. If need it, pay for upgrade. It is not come all in one package and all update free except now. This is because of Apple. I am trying to compare to the idea of divide software features with the car. Standard model has auto break collision awareness and side awareness, but not auto pilot awareness and full self driving feature. all are software features. Since it is very new for car industry, the software cost money to develop and keep improving to be better and better. Tesla need to charge customers to make fund for developing software. Again, it is better to collect more fund from more customer at lesser price or $8k at high price from less customer. The more people use it, the better feed back to improve the software. or do people think that it is better to have less people use it is better to improve the software?

Virak--"Regarding to the software, it is only cost one time to make it, but the software can do unlimited copies. Having one customer or millions customers to use it. The cost of making the software is still same."
dsvick-- Yes, the initial cost is pretty fixed, but it is a huge cost. Then there is the continuous improvement, bug fixes, changes, add-ons, monitoring, and analyzing that has to be done daily. To use your own example, why would Apple and MS continue to provide upgrades if the software weren't constantly changing.
Virak-- software is cost only one copy to make it. May be it sound better and clearer for people as you. Microsoft has only one Window OS, Apple has only one Mac OS. Each has only one copy of OS. They can make unlimited copy OS to all computers. Each customer buys Tesla car. They only need to activate the software. It does not cost money to make another software. Tesla software can make unlimited copy to all cars. No cost additional money put into the car, but hardware do cost money to put into each car. Of cause, Software do need to keep improve it better and better. Never stop improve it. Still Software only costs one copy to keep making and improving it. It is not the same as hardware that costs money to make each of it.

Respond to other comments. $8k is too expensive comparing to $35k car model. $8k is not too expensive comparing to $69.6k car model. the update option radio between two car is make no sense for the cost of update software; even though, I know that both car has the same software feature and shall pay the same price. common. I get that. my main key point is that better to ask more buyers to help pay the cost of software developing and asking lesser price. Let more people enjoy all features at Tesla have.

songvirak_2003 | August 3, 2017

Virak--"why don't Tesla allows all new Tesla owners to have access the software whenever it is ready to use by just charging a reasonable price..."
dsvick --Just because it seems expensive to you doesn't mean that the cost isn't reasonable compared to the cost of everything that went into developing it and the hardware to implement it.
Virak-- Many people still do not understand between $8k and reasonable price.
shall Tesla charge a reasonable price and still maximize money from selling the software to fund the development?
Most people see that charge $8k is to fund for development the software? do not asking reasonable use to fund the software development. Should Tesla ask only a small group of people for $8k to fund for software development or ask large number of people at lower cost to fund software development? what is the different? the more people contributes to fund the software at low cost is better or less people asking $8k to fund is better. This the key point.

Virak--"What is Tesla going to do with the cost of hardware, included with the car that some customers will not buy to unlocking software?"
dsvick-- The hardware is also used for many of the standard safety features that all drivers get for free.
Virak-- If Tesla answers the same as you, the stock will drop. It is lose money; however, one of the main reason is that Tesla is using the hardware install in all cars to collect all data from driver for learning fleets, AI, as some people comments above. I know that it is very hard to put all though together. It is a win win for Tesla without paying every driver cent per miles to drive everything single street to collect data as some other companies are doing it. What data is collect? new road/street/highway/freeway, new sign, driving land that most people driving on it the same spot everyday. these together is known as HD Map. Even through Current Tesla Hardware included in the car, it is still not able to be autonomous and need to have HD Map. HD Map is the key to make the car autonomous. Even though collect data is one of the reason to include hardware into the car. Do not Tesla try to collect additional fund from buyer to help the cost of the hardware? all news report that Tesla will burn more money to fund development in next quarter. is it wrong to lower the cost a reasonable price so that many people are willing to put in to reduce the cost of hardware? or only $8k is good enough for small group to help reduce the cost of hardware and software? Tesla can collect more money from more people and better than small group of people with $8k if asking lesser.

Virak--"I will compare autonomous feature the same as Window or Mac OS."
dsvick--There's your first mistake, the OS is required to run the computer, AP is not required to operate the car.
Virak--autonomous feature (including hardware and software). Window has surface and window OS, App has Mac and Mac OS; however, I refer to software as the most import baby of Tesla. Competitors can build the same hardware as Tesla by ordering from the same Tesla suppliers; however, no one can copy Tesla software. I am not compare OS. I am comparing the software. Microsoft owned Window OS and Apple owned Mac OS, while Tesla owned the software of autonomous car. All are software.

Virak--"Both OS used to charge costumers to upgrade. Apple decided to offer all mac computers to have free upgrade for the life ...windows is followed. new upgraded software allows customers to experience new features..."
dsvick-- Tesla already offers free OTA upgrades, the same as Apple and MS. This improves the car, gives drivers a better experience, and makes the cars safer.
Virak--You have to separate the different between the autonomous software and the other software with the car. I am talking about the autonomous software. Of cause Tesla do offer free update for all software features with the car, but not all customers will be able to use all software features unless they pay for it, the autonomous software. currently only auto pilot enhancement can be used. People who pay can use it. it is fact. Window used to divide basic, edition and pro OS. Now are all include and free update. Before customers need to buy at least basic. if need edition, need to pay more. Next years new software. If need it, pay for upgrade. It is not come all in one package and all update free except now. This is because of Apple. I am trying to compare to the idea of divide software features with the car. Standard model has auto break collision awareness and side awareness, but not auto pilot awareness and full self driving feature. all are software features. Since it is very new for car industry, the software cost money to develop and keep improving to be better and better. Tesla need to charge customers to make fund for developing software. Again, it is better to collect more fund from more customer at lesser price or $8k at high price from less customer. The more people use it, the better feed back to improve the software. or do people think that it is better to have less people use it is better to improve the software?

Virak--"Regarding to the software, it is only cost one time to make it, but the software can do unlimited copies. Having one customer or millions customers to use it. The cost of making the software is still same."
dsvick-- Yes, the initial cost is pretty fixed, but it is a huge cost. Then there is the continuous improvement, bug fixes, changes, add-ons, monitoring, and analyzing that has to be done daily. To use your own example, why would Apple and MS continue to provide upgrades if the software weren't constantly changing.
Virak-- software is cost only one copy to make it. May be it sound better and clearer for people as you. Microsoft has only one Window OS, Apple has only one Mac OS. Each has only one copy of OS. They can make unlimited copy OS to all computers. Each customer buys Tesla car. They only need to activate the software. It does not cost money to make another software. Tesla software can make unlimited copy to all cars. No cost additional money put into the car, but hardware do cost money to put into each car. Of cause, Software do need to keep improve it better and better. Never stop improve it. Still Software only costs one copy to keep making and improving it. It is not the same as hardware that costs money to make each of it.

Respond to other comments. $8k is too expensive comparing to $35k car model. $8k is not too expensive comparing to $69.6k car model. the update option radio between two car is make no sense for the cost of update software; even though, I know that both car has the same software feature and shall pay the same price. common. I get that. my main key point is that better to ask more buyers to help pay the cost of software developing and asking lesser price. Let more people enjoy all features at Tesla have.

burdogg | August 3, 2017

Here is what I wish Tesla had done - but I don't run the company so don't know the numbers. I posted this awhile ago before anything was known about the model 3 and what is going on now proves some of my point :) (again, disclaimer, I do NOT run Tesla or know anything, so my idea here may not have been at all feasible)

When they first came out with AP - it was $2500. Then when Tesla came out with AP 2.0 - it went up to $5,000 for EAP and then another $3,000 for FSD.

I wish they would have done the opposite in pricing. There are a lot of people that want FSD, so would pay $8,000 regardless.

So if they would have charged $3,000 for EAP from the start and $5,000 for FSD on the Model S and X - it would have set them up to charge the exact same for the Model 3 - $3,000 for EAP and $5,000 for FSD. This is a price I think most would be able to swallow. With the 3 more on the affordable side - or trying to be more affordable, it is easier for the masses to swallow $3,000 for EAP. I could be wrong but just felt from the start (and if you search the forums on the 3 side, you will find I stated this) that if they would have done this, most would have been happy :)

But alas, they have their reasons which I am not privy to and probably know what is best for the company on how this needs to be paid for. Then again, even at $5,000 the system is better than anything else out there. Is it worth $5,000? I say yes, as I paid for it on my X, have the original AP on my S and love, LOVE them both. Would not go Without it! So it is worth it to me, just wish they would have reduced the EAP price (Note, I paid on my X for FSD, so it really doesn't matter to me how they did their pricing, but just could see this coming with the Model 3 and the complaints that would follow)

Frank99 | August 3, 2017

+1 burdogg

akgolf | August 3, 2017

That is a better idea.

Rutrow | August 3, 2017

It would be a tough sell to charge more for a feature that may come to fruition in the future than one buyers can take advantage of during a test drive and on day 1 of ownership.

burdogg | August 3, 2017

Very true Rutrow - I do think though if you want FSD, you want it, you don't have to sell it to those that want it. EAP, also don't necessarily have to sell it, but people have to feel they can afford it. EAP is what most want right now too, so business wise, yeah, get the more money now. But is it going to push it up way too high for the masses? That is what is yet to be determined - time will tell - as I said, it is worth it to me though.

The pricing for those getting into a model X or S, just at that point say, ah, I will find a way for that $5,000 option. My school teacher dad is already pushing it on the $35,000 car, to then try to push another $5,000 on that is tough.

Again, there are many reasons behind why Tesla did the pricing the way they did. I don't know all the underlying issues they face etc... and costs they are incurring constantly to get this up and going. The reverse pricing was just the thought that hit me when it first came out and again could see this coming for the model 3 :)

minervo.florida | August 4, 2017

32,000 employees, you need profit to pay them and the cost of research, super chargers, service shops, service centers, sales people, etc.

Too much for you? Like Elon said about the stock, if you do not like the way we do business then don't buy it.

Model 3 is underpriced for what you get, why do you think there were 500k pre orders?

dsvick | August 4, 2017

@songvirak_2003

I'm not going address all of your comments but your main argument is that $5,000 for EAP is too much. You may think that that is true but you also have no idea what it cost Tesla to develop it and what they are paying to maintain it. Once you know all of those figures then you argue the point, right now it is just your opinion that it is too expensive. Yes, you're correct that if they charged less for it they may get more people to buy into it, again though, you have no idea what all the factors are that went into the $5K price. They may have started at $10K then factored in more buyers for a lower price and gotten to the $5K price. It wasn't some arbitrary decision they made, it was probably pretty thoroughly researched and calculated.

You're also still conflating the OS with optional software. Tesla cars all have an OS, like Apple and MS, that OS comes with the car and is updated for free. Bringing the customer new features, added security, and other items. Then there is optional software, things that are not needed to operate the car or computer. For Tesla that is EAP, for MS it could be Office. Do you want the home version of Office 365? It will cost you money. If you think it is worth it you'll buy it, if not you'll use something else or get by without it. Want EAP as an option for you car? It will cost you money. If you think it is worth it you'll buy it.

Lastly, yes, they can copy the software that they've already developed relatively inexpensively (as compared to the first copy). They still need to recoup the expense though so either they try to split it up between everyone that uses it or they make the first person pay for it all and then everyone else gets it for free. But someone still has to pay for that first copy. Should it have been the first person that bought it? They should have paid millions of dollars so everyone else gets it for free? That certainly doesn't sound reasonable.

"If Tesla answers the same as you, the stock will drop"
They've already said that and the stock certainly hasn't dropped. Also, the cost of the hardware probably isn't as high as you seem to think that it is, and it's also figured into the $35K base price.

Mike83 | August 4, 2017

Who pays for the extra cameras, radar and high speed AI computer. People always want something for nothing.

Rocky_H | August 4, 2017

If you think it's too expensive, you are welcome to not spend that and not get it.

Hmm, there must be more to it than that. It can't be that simple, can it?

weluvm3 | August 4, 2017

Yes, it is too expensive compared to the cost of the car.

But Tesla will charge what the market will bear, depending on where on the demand curve their marketing department has determined that we are. Here is a link to help you understand what you should expect (remove the space):

http://www. priceintelligently.com/blog/bid/183669/Ride-the-Demand-Curve-Price-Skimming-and-Your-Pricing-Strategy

If Tesla, and Musk, was trying to "change the world" or something preciously cute and idealistic like that, then, they might price it more affordably. But I think we should all disabuse ourselves of that notion and face the cold, hard reality of what Tesla is really all about. Profits, first and foremost, just like any other capitalistic endeavor. Regardless of what you may have been led to believe, there is nothing special about Tesla, and Musk is NOT the Steve Jobs of his time.

donmactesla | August 4, 2017

Previously I had suggested in this thread: https://forums.tesla.com/forum/forums/autopilotsteer-service that Tesla offer AutoPilot as a service. It is just software and it can be switched on and off. It could easily be an in-app, on the road purchase.

I tend to agree that purchasing the 'right' to use AP at any time is excessive for the Model 3 relative to expense of the car, but even more so when there is little to no purpose for it in inner city driving. Turning it on for the occasional roadtrip would be great. Then if desired, it could be procured for always available.

More exposure to the driving world, more likely impulse to buy in the long term. I think this mode would actually increase sales to Tesla of AP.

Rocky_H | August 4, 2017

Profits, while being somewhere on the list, are certainly not "first and foremost", or else they would have some.

socaldave | August 4, 2017

kzodz absolutely does NOT win the match - there is no car available on this planet that gives you 220 miles of range and full autonomous driving at the low, low price of $35,000. That particular car certainly does exist, but it's $43,000. It may be nit-picking, but it's a nit that shouldn't be forgotten about.

sbeggs | August 4, 2017

What @Rocky said, and also, Tesla must allocate a portion of their sunk investments in gigafactory, software and hardware development, etc., to the price of each new car. This is not about a venal greed for profits, but rather a recognition that they must first recover their huge investment.

dsvick | August 4, 2017

For all of the people complaining about how expensive it is or that it obviously means that Tesla is only out for profit ... unless you know what the development costs were and what the costs for continuing development and maintenance are you really have no basis to say whether it is reasonable priced or not. For all you, or anyone else, knows they may be just breaking even on it.

It's easy to complain and to assume they are gouging people or that they shouldn't be making a profit, but if there is no profit then, eventually, there is no company.

Mr.Tesla | August 4, 2017

Tesla can't do ANYthing, if they don't stay in business. No saving the world, no profit, no nuffin'.

songvirak_2003 | August 4, 2017

dsvick: I am not going to repeat your word and you still do not understand my main point. You are Tesla fan, am I. You support everything Tesla doing is correct. It is wrong. No one is perfect. Will always have a mistake. People learn from mistake to avoid it later. You hare happy to buy for the price and just buy it. I know that you are going to buy it. I will not.

News media compare Tesla to the first release of iPhone that change the whole phone industry. At that time, you were going to defend Apple as well for the same of your reason as Tesla. It is new technology, cost money to do research and development etc. Did you know what happen to Apple first release? Apple predicted that they would sell more Iphone and beat competitors because of only Apple leading ahead of many competitor for the technology of smart phone. Then what happen, you know it. When first new iPhone released 10 years ago, Apple has offer too high price for the phone. They said that people love IPod. They know how many iPod selling. They add the IPod price and Nokia smart phone price as the price of their IPhone. Apple predicted that IPhone would sell even more Iphone than selling Ipod. Within three months, Apple decided to refund $300 to all buyers of their first release iPhone because of declining selling iPhone and not reaching selling target as they first predicted. At that time, people who bought iPhone had to do 2 years contract only with AT&T. With subsidize, the phone still costed $700 per base model for two years contract. The cost of the phone at that time before subsidize was round $1000 or more. It was crazy for the price.

The option of AP2 and FSD has released less than a year ago when only Model S and X in the market. Tesla decided to charge AP2 $5k and FSD 3K base on number of both model selling in average a year to maximize their profit from early stage technology. With the new Model 3 on the market now, Tesla should do a new evaluated option for AP2 5K and FSD 3K in term of total number of selling all Model 3, S and X. Model 3 will help boot the increase number of selling Tesla cars over S and X. The current AP2 5k and FSD 3k price option is too high for many Model 3 buyers. With this current asking price options, many model 3 will chose not to active the software in term of the radio price option of Model 3 and AP2 5k + FSD 3k unless Tesla lower the price. If we compare Model S and X with the radio price option of AP2 5k +FSD 3k, it not too much, but not Model 3. Why should Model 3 deserved to pay less for the software? it is not Model 3 deserve to pay less for the software. All Tesla Model should deserve to pay less now because the increase number of selling model 3, which many Tesla can now sell more cars than before and will sell more than S and X because Model 3 costs less and many people can afford to buy it. Because of increasing number of selling Model 3, there are more chance that many buyers Model 3 to active the software if the cost of activation AP2 and FSD will be lessor and still keep Tesla to maximize profit from selling the feature when Tesla Market engineer to figure it out the best offer in term of number selling for all models. Here is the way of figure it out how to maximize the profit: https://www.khanacademy.org/economics-finance-domain/microeconomics/elas...
as my example.

Many Tesla, who do not mind to pay for AP2 5k and FSD 3k, they say that it is new technology. Tesla need money to recoup for the cost of inventing the technology, hardware (senor and camera) , and service, software, and research development etc. All costs money to make it. I get that.

Will see. How long Tesla will continuous to offer AP2 5k and FSD 3k when many model 3 chose to opt out. Asking 8k, it does not mean that Tesla can collect more money than offer lessor. I believe that the increase number of selling more Model 3 over S and X, Tesla will collect more profit for the feature when offers lessor.

ReD eXiLe ms us | August 4, 2017

burdogg: That was very well said. Looks good to me. But...

Rutrow wrote, "It would be a tough sell to charge more for a feature that may come to fruition in the future than one buyers can take advantage of during a test drive and on day 1 of ownership."

Let's see...

220 miles of range -- $35,000 (standard)
_90 miles of range -- _$9,000 (optional)

Hey! Waitasec...

See how that works?

Imagine what would happen if Tesla did it the other way around?

220 miles of range -- _$9,000 (standard)
_90 miles of range -- $35,000 (optional)

I'm sure there would be some big, big headliines, and no less than 3,000,000 Reservations in place. :-D

burdogg | August 4, 2017

That was good Red :) I am ask got that change!

ReD eXiLe ms us | August 4, 2017

burdogg: Yeah, that was the sort of pricing that SONY would employ, I think... Along with Roland, Korg, Yamaha... Upgrades cost MONEY from those guys.

2015P90DI | August 4, 2017

I agree, $3,000 would be far more attractive to more people than $5,000 for what is mostly the same as AP1.

Considering EAP does less than what FSD will do, it makes sense that it should cost less.

Also, $5,000 is a big chunk relative to the Model 3 pricing. At $3,000, as already stated, would be easier to swallow and they'd probably sell it twice as much. $5,000 x 1 is $5,000. $3,000 times 2 is $6,000, thus Tesla comes out ahead on the deal.

Unfortunately, there will be a lot of people that still have to stretch just to pay $35,000 for a car and will not be able to afford another $5,000. Thus, those cars, as Elon states, will be less safe on the road since those drivers will be driving themselves 100% of the time.

Unfortunately, the ONLY way Tesla will change is if the customers stand up and say NO, by NOT BUYING IT. Sadly, that will never happen. Although it did work when Tesla tried to charge $5,000 for the auto truck hatch on the Model S. People raised hell and Tesla dropped the package to $3,000 a few days later.

So it's all up to you. For all the Tesla lovers that praise everything Tesla, no matter if they're right or wrong, if we ALL stood together, EVERYONE, including TESLA would benefit. For Tesla, the software is designed, the hardware is already included, so the expense is already spent. Why not get it into as many cars as possible and at prices more people can afford. But that requires the rich Tesla owners standing up for the little guy. Kind of what Trump said he was gonna do. But we still have a chance to actually do it.

songvirak_2003 | August 5, 2017

2015P90DI : All what you said are the same as I am. My best favorite part of your view is the last paragraph. Another way of my opinion is that Tesla already makes the software. There is nothing to lose between having only 50% of selling Tesla cars to access the software through buying the option to unlock or all cars to access it. It does not cost additional money for Tesla to add the software on the car because the software is on the car already. Conversely, it will be a good selling point and even more benefit for Tesla to attack even more buyers to wait inline to buy Tesla car. It is not the same as INTERNAL COMBUSTION ENGINE car using gasoline. Every components such as adoptive cruise control or others, are hardware. Each car adding additional hardware to have the feature, adoptive cruise control, adds more cost, so the car companies will need to charge more for every options for the feature while Tesla does not. We all agree that it costs money to make the software for AP2 and FSD. Since Tesla decided to include all AP2 and FSD hardware into all cars on the base price model, how much shall Tesla will charge additional price to recoup the cost of making the software and the profit of selling the software to have all buyers to able able to access the AP2 and FSD. Someone may say Tesla includes the hardware for AP2 and FSD on the base model, and the profit from selling the software will recover the cost of the hardware as well. I think it is not the good answer. No one will decide to lose money up front and hope earning back from giving optional not to pay additional cost for the software.

KP in NPT | August 5, 2017

When you can have your car making money for you on the Tesla network, 3K for FSD will be a bargain.

JayInJapan | August 5, 2017

tl;dr

dd.micsol | August 5, 2017

KP-I will never ever let someone use my car and spill beer/soda/vomit/take a razor blade to it.
This is what will happen.

dd.micsol | August 5, 2017

Personally, I think AP is only worth 1/2 of what they are asking. Lower the price and sell more of them=more AP data for Tesla.

RS (ride sharing) is a complete waste of money. I would need to be in the car to ride share. Watch your car be destroyed because you let strangers who were drugged/drunk/drug dealers/involved in a murder into you car.

FSD-Is of interest in 10 yrs but I won't be buying it anytime soon.

KP in NPT | August 5, 2017

dd, supposedly you will have the option of approving riders for your car on the Tesla network. So all your doom and gloom is BS and only an issue if you allow it to be.

Rutrow | August 5, 2017

So much of pricing is psychology. You've got to get your balance sheet to balance by fudging the things you can fudge. Materials and labor are largely fixed costs, profit, entirely flexible. The revenue generated from base price and options follow a bell curve, but the peak of the curve is an ever fluctuating target reliant on the mood of the consumer.

The hyperbolic example of this is when "Free" becomes the price with the greatest profit potential. The old adage "There's no free lunch" explains this because you always end up paying in the end. If you've ever been suckered into a free vacation from a time-share business you'll realize that even if you didn't sign any contract in the end, you're still paid a huge cost in the hassle of being forced to sit through a high pressure, time consuming, terribly frustrating sales pitch. The reason you don't fall for that again is because even at "free", the cost exceeded the benefit.

The development of the EAP/FSD software is a sunk cost, with maybe some royalty/bonus potential from the future. The dance is how best to get your customers to pay those costs. If development was $10M, you can break even by convincing 10 billionaires to pay $1M each, or by convincing a million people to pay $10 each. The most attractive option to the manufacturer is the 10, $1M customers because they only needed to produce, test, and deliver 10 units to recoup their investment, and each additional customer generates as much profit as 100,000 customers at the lower price.

That's why Tesla is targeting the highest price that they can think they can get a ROI from. I'm willing to bet that they've done quite a bit of market research to find that peak of the bell curve. $5000 is the kind of round number you get from surveys, so ROI with the fewest units. $5000 appears to be the figure on the bubble between "reasonable" and "too expensive" in the $40-$50,000 price of a car. Look at all the option packages that are nice round numbers. Price your Premium package at $5000 then add features until a critical mass of customers think it's worth it. $1000 for paint? That's not what the paint costs it's just that about 5-6% is the level that is seems insignificant on a big dollar purchase.

At $5000 I guess that EAP should about pay for software development, liability cost, and some profit. For FSD I bet that $3000 is too low. (FSD should really be thought of as costing $8000 today) There's still lots of programming to be done, liability will be much greater, but since it isn't ready for service, there's no way to get enough people to pay for the true cost in advance. The early adopters are the venture capitalists in FSD's future. If it comes to fruition they'll be like the people who bought TSLA when it was under $100. Much of the $10-$15,000+ cost will probably be hidden in the price of the car soon.

songvirak_2003 | August 5, 2017

KP in NPT: I know that you will have your car making money for you when FSD is ready. Also you will do share ride with people as well. 5k and 3k is worth the money. When the car driving back to you after earning for you, you find smell of cigarettes, beer, food, damage from razor blade, broken some interiors, sketched paint exterior, dented body of your car and dirty exterior on car wheel and body every times. Sometimes you have to wait the arrival of car; even though, you set your schedule 1 or 2h to return early. The car is still late to come back because of unexpected traffic jame or accidents on freeways or streets. Sometimes freeway or streets is closed temporarily due to repairs.

Some people will say, they will pre approves or monitor riders while the people on the car because technology is capable of doing so. What can you stop when the rider do not follow your policy? You will charge them additional fee or ban them from riding your car. What if the damage of your car cost more to fix? Will the rider pay all the costs? What if they have not enough money to pay for the cost of damage? Some riders may pay, but will pay monthly for 12 moths doh to the cost of damage too highly. When your car damage and need to fix due to riders, how are you going to bring yourself to work without car? Rent a car or shares ride with others Tesla. You also lose additional money because your car is not in service due to fixing. Are you going to deal with this everyday. Who is going to pay everything from damage your car to lose money from driving services? It is lucky enough if riders are pay for fixing your car, but not losing money from service.

dd.micsol | August 5, 2017

KP key word-supposedly. Time will tell.

Alvin27 | August 5, 2017

I assure you that if GM, Ford, or Chrysler were in Tesla's position leading the pack with autonomous driving it would only be available on their top of the line vehicle at twice the price and a hefty fee for each software upgrade that would only be available through your local dealership.

Be happy. Buy your $35k M3 and upgrade to FSD down the road. I believe Tesla will insure this car stays relevant with software upgrades for a long time. I plan to keep mine over ten years. Be thankful you are able to get an FSD upgrade without buying another vehicle.
If you do not want FSD, the vehicle can still be upgraded by the next owner. That will surely add to the resale value.

2015P90DI | August 6, 2017

@Alvin27, appears your assumption is mostly correct.

Cadillac has announced a "hands free" highway driving assistant. Actually said "hands free". However, it will apparently have a camera inside the car to track your head movement to make sure your head is facing forward to make the assumption that you are paying attention to the road. It will not bug you every 60 seconds to put your hands on the wheel.

From their description, it sounds pretty close to AP1, will hold a lane, has adaptive speed. Says you have to take control to pass a faster car, but it will automatically put you back in the land after you've done that. It has auto parking, but probably not quite the extent that Tesla's "summon" feature is today.

They've announced it will only be available on their top Sedan, the CT6. Didn't say how much it will be, but is due for the 2018 model just around the corner. Will be interesting to see what they charge for it, how well it works and so forth. Could be the best thing to happen to Tesla customers. If, let's say, it's close in performance to AP1 or EAP and Cadillac only charges $2,000 or $3,000 for the option, then Tesla has its first competitor that can deliver a similar feature. All speculation at this point, well not all, but the cost is speculation and how the reviews of it come in is speculation. I personally hope it's an amazing system that people love and say how great it is. And I hope that GM offers it for $2,000. With the CT6 now having a plug-in hybrid, GM is stepping closer to Tesla Model S territory than anyone has thus far. Still no comparison, but it's getting there.

Bighorn | August 6, 2017

I wonder if Hertz, Avis and all the rest are losing money because of all the beer and razor blades? Tesla has a cabin facing camera, financial information on their riders plus a vetting process. Seems some fake owners are going off the rails on the Tesla Network's viability. Uber wanting to buy all the Model 3s that Elon could make is probably just some oversight.

Met a pair of young entrepreneurs who can't get Model Xs fast enough to supply their new car rental business in the Twin Cities. Their stripped down Model Ses fetch $195/day while the Xs were over 300!

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