Published on September 28th, 2016 | by James Ayre1
Is Tesla’s Autopilot Destined To Become A Subscription Service?
While Tesla’s Autopilot features/services can currently be obtained through a simple one-time purchase, there’s no guarantee that the company continues using that approach indefinitely.
For instance, it could be that the company eventually decides to switch to a subscription service for Autopilot — a potentially lucrative decision, even if one likely to greatly irritate some owners (maybe even to the point of losing customers).
A discussion on that matter was kicked off on the Tesla Motors Club forum recently by “Booga,” who stated: “As I think about the improvements that have been occurring with AP (and the big reveal expected later this year), one thought that came to my mind is whether this will remain a one-time cost or become a subscription. I say this, because there are a lot of improvements made to it over time and that will have to continue even if you have a 20 year old Model 3 in the 2030s.” That’s an interesting point.
Continuing: “Doing this would allow them to match cash flow/expenses together in a more timely manner and also lower the initial cost (like paying for supercharger use over time instead of up front) of all of their cars, though you still need to charge enough for the hardware placed into the car. Just a thought.”
That got some interesting responses, a couple of which are posted below.
“Kimo” stated: “It is an interesting thought. There are generally two cost related parts to AP, the hardware and the software. The hardware cost is built into the price of the vehicle at this point, so it wouldn’t be surprising if the cost of the vehicle increases, or there are additional options available for purchase that increase the AP functionality if desired. As for the software aspect, I suspect there will be an end date when it comes to providing additional updates for older hardware technology. There would come a point when it just would be too cost prohibitive to have various versions of the software, esp. when there are a few different generations of the AP hardware on the road. One way I could see a subscription service being deployed is if there is a 3rd party service created that enhances AP functionality, such as a company deploying sensors on roads that can provide data to the AP. (what these sensors would do I have no idea, just throwing things out there.) I guess another subscriptions service could be to pay for yearly AP software updates like we do with GPS maps.”
“erthquake” noted: “I think the subscription model makes sense only when the technology has matured and the pace of innovation has leveled off (see Adobe CS and Microsoft Office). Right now, AP is changing so fast that new hardware/capabilities can help drive new car purchases. Once the hardware and software become effectively commoditized, the only way to make money on the feature is to offer access via subscription.”
And “Trips” stated: “I see it becoming a standard option before it becomes a subscription. The only subscription I could see is if they bundled it with Tesla’s Insurance product. Something along the lines of ‘If you have Tesla’s insurance you can bundle it with monthly AP for and extra $15’ or basically the reverse ‘If you have AP you get a $15/month discount (No subscription but encourages you to get it).’ I do see the cell service going to subscription when their next contract runs out.”
Personally, I don’t think that it’s likely. I’m more in agreement with “Trips” than with the others — it seems more likely to become a central part of the sales pitch (and thus a standard feature) than it is to become a subscription. Any thoughts?