Tesla finally rolled out its Premium Connectivity Package, which has been in the works since 2013. The all-electric company released information about how Premium Connectivity could affect its cars moving forward. With this new subscription-based service, Tesla could be distinguishing itself further as a leading automaker in next-gen vehicles and as a functioning tech company as well.
Tesla’s Premium Connectivity Package will cost US$9.99 a month or US$120 a year. Now, the all-electric automaker offers two connectivity packages, namely Standard and Premium.
In the Standard Package, Tesla owners will have access to the company’s Navigation system. Tesla’s Premium Connectivity Package gives owners access to several more useful features, as seen in the table below.
It must be noted that Autopilot and over-the-air updates will not be affected by Tesla’s connectivity plans. Owners can still update their vehicles via Wi-Fi. More importantly, Tesla’s safety updates will be available to both Standard and Premium Connectivity subscribers over cellular connection at all times.
A few lucky Tesla owners qualify for free access to Premium Connectivity for a lifetime—if they have the right models. According to Tesla’s official website, vehicles ordered on or before June 30, 2018, will not have to pay for Premium connectivity for the life span of the car or until the owner decides to end the subscription.
Tesla owners whose vehicles qualify for the free lifetime subscription can choose to cancel Premium Connectivity if they decide to sell their cars. The lifetime subscription will also be canceled if they decide to trade-in their used Tesla.
Credit: Tesla Support
Tesla initially referenced its Connectivity Package in its Q4 2013 Shareholder letter. At the time, Tesla only had the original Roadster and Model S in its fleet. For perspective, the company only sold around 22,000 Model S vehicles globally in 2013, stated Automotive News.
By Q4 2013, Tesla released a statement saying that it would offer free data connectivity for Model S owners for four years, starting January 1, 2014. In July 2018, about six months later than Tesla's estimate, the company announced that it would make Premium Connectivity services--for all vehicles capable of the feature--for one year, effectively extending its four-year free-service promise in 2013.
Nearly a year and six months later, Tesla’s free Premium Connectivity service is poised to end. It must be noted that Tesla vehicles' cellular connectivity comes from local internet service providers, which the all-electric automaker has been paying for. Now that Tesla's fleet had grown significantly, charging for Premium Connectivity seems like the best move--from a business standpoint.
With its Premium Connectivity Package, the all-electric car maker is treading on waters that have yet to be fully explored in the auto industry. So far, only a few automakers are playing with the idea of OTA updates, like Tesla.
However, no other car manufacturer has reached as far as Tesla on this frontier. Last year, Tesla’s OTA updates impressed Consumer Reports when the organization didn’t recommend the Model 3 due to its braking distance. Tesla was able to fix the issue across all its Model 3 vehicles—including the one Consumer Reports tested—through an OTA software update. Usually, cars would have to go to the nearest service center to get such an issue fixed. The Model 3 received a “Recommend" rating from Consumer Reports shortly after.
For comparison, Jaguar announced a software update for its all-electric I-Pace, which would extend the car’s range by 8 percent, reported Electrive. To get the update, however, I-Pace owners had to physically go to their respective dealers to get the update manually installed.
With the Premium Connectivity package, Tesla is once again leading the auto industry as an all-electric automaker and tech company. Tesla’s vehicles with connectivity reveal that the company understands its consumers' needs.
Recently, Morgan Stanely reaffirmed its stance on Tesla’s long-term future and shared its US$250 price target for TSLA shares. The investment firm reasoned that Tesla would entrench itself as a regular automaker with Gigafactory 4 and move further away from being a high-growth tech firm. However, Tesla’s Premium Connectivity Package may refute this idea.
As mentioned before, cellular connectivity in the auto industry is relatively new, and a subscription internet service has never been explored before by an automaker. Tesla’s Premium Connectivity Package reveals that the all-electric car maker is still as much a tech firm as it is an auto company.