Some long TSLA investors predict that Tesla’s Full Self-Driving (FSD) suite could contribute to the company’s profits significantly as it gains more functionality. HyperChange host Gali Russell forecasted that FSD could be priced at US$20,000+ or even more in the future.
“My theory is in the next one to two years we could see the price [of FSD] increase dramatically well over US$10,000 hitting US$20,000 plus inevitably in the long term if they hit regulatory approval for Full Self-Driving,” said Russell in his latest HyperChange video.
Elon Musk seems to agree with Russell. Back in May, he announced that Tesla would raise FSD’s price by US$1,000 on July 1st. True to his word, Tesla increased the price of FSD to US$8,000 as soon as June ended.
Following his announcement in May, Musk said that FSD’s price would continue to rise as it gets closer to full functionality and gets regulatory approval. He estimated that the value of FSD once it reached full functionality and received regulatory approval would be upwards of US$100,000.
The FSD price will continue to rise as the software gets closer to full self-driving capability with regulatory approval. It that point, the value of FSD is probably somewhere in excess of $100,000.— Elon Musk (@elonmusk) May 18, 2020
Since the beginning of the year, Tesla has steadily improved its Autopilot and Full Self-Driving software. The improved functionality of Autopilot and FSD has become glaringly apparent to users, yet some analysts and auto experts still fail to recognize their potential for Tesla.
HyperChange’s Gali Russell crunched the numbers and did the research on FSD. In his recent video, he explained how Tesla’s profitability could grow as Full Self-Driving improves.
To drive his point, Russell took the Model Y and calculated Tesla’s potential profit and gross margin per car sold with and without FSD. With FSD priced at US$8,000, Tesla’s profit and gross margin double per Model Y sold. Take note, however, that Russell's calculations use the Model Y Long Range’s price before Tesla reduced the price by US$3,000, resulting in its current price of US$49,990.
Regardless of the price reduction, Russell’s point still stands. Tesla has the potential to increase its profit and gross margin per car with FSD. As Tesla improves FSD and raises its price, so will Tesla's profit and gross margin.
Full Self-Driving take rate is improving. Based on 688 delivery reports so far in my Model Y survey, it's,— TroyTeslike (@TroyTeslike) June 27, 2020
• 49.6% for deliveries in Mar+Apr+May
• 52.9% for del in June
Stats page currently shows 51.7% overall FSD take rate for deliveries (not orders)https://t.co/qpCQE9Noww
Russell also showed that there might be a growing demand for FSD. He referenced @TroyTeslike’s research which showed that FSD’s take rate increased since the first quarter and early second quarter. According to @TroyTeslike, over 50% of customers who took Model Y deliveries chose to purchase FSD as well.
FSD’s full potential will probably be realized after Tesla establishes its ride-hailing service with its Robotaxi fleet. Russell ends his video discussing how important Tesla’s Robotaxi fleet could be for FSD and its contribution to the company’s bottom line.
“As Tesla inches closer to the true Robotaxi vision, every single step along the way, they’re gonna be able to raise that FSD price, charge more money on it, capture that profit on the way to Full Self-Driving,” he said.
Russell concludes his video saying: “By the time we get to the Robotaxi, by the time Tesla fully achieves regulatory approval for a Robotaxi without a human driver in it, you know, the game will be over. They will have already achieved or recognized massive software revenue, massive profitability from the years of development, and incremental improvements.”Follow @PurplePanda88