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As CEO Elon Musk revealed on Monday, electric carmaker Tesla is facing pressure from softening demand and price competition.
As a result, Tesla is offering a one-month free trial of its Full Self-Driving (FSD) technology for U.S. customers.
Profit Generation Potential of FSD:
Musk has long touted FSD as a potential profit generator for Tesla despite facing challenges in achieving full autonomy amid regulatory scrutiny and legal challenges.
This week, all U.S. Tesla vehicles capable of FSD will receive the trial activation, allowing customers to experience the technology firsthand.
Demonstrations for Potential Buyers:
Tesla staff have been instructed to provide FSD demonstrations to new buyers and owners of serviced vehicles, aiming to showcase the technology’s capabilities.
Research indicates a decline in the adoption rate of FSD, with fewer Tesla customers purchasing the package compared to previous years. This could potentially impact the company’s margins.
Margin Pressure and Price Competition:
Tesla’s margins have been affected by a price war with competitors, compounded by lower FSD take rates and reduced delivery growth projections for the year.
In addition to the one-time purchase option, Tesla offers FSD as a subscription service priced at $199 per month, providing customers with flexibility in accessing the technology.
End-of-Quarter Boost Strategy:
Analysts suggest that Musk’s initiative to promote FSD demonstrations is part of a broader strategy to boost deliveries and revenues, aligning with Tesla’s end-of-quarter efforts.
Tesla reiterates that FSD technology does not render its vehicles fully autonomous and requires active driver supervision, emphasizing safety precautions to customers.
