Tesla’s Strategy Behind Offering Free Trials for Full Self-Driving Software

Tesla has recently implemented several strategies aimed at promoting its Full Self-Driving (FSD) software, with the goal of boosting adoption rates and enhancing the software’s capabilities over time.

Elon Musk, the CEO of Tesla, made an announcement on Monday regarding the launch of a complimentary trial of the company’s driver-assist software for its customers in the United States.

Musk stated, “All US vehicles equipped with FSD capability will receive a one-month trial this week,” in a message shared on X.

Additionally, Musk sent an internal email to Tesla employees on Monday morning, instructing them to provide customers with a brief demonstration of the carmaker’s latest FSD software during vehicle deliveries and service visits. This information was obtained from two emails reviewed by Business Insider.

In the email, Musk expressed, “Few people truly appreciate the effectiveness of (supervised) FSD,” highlighting the potential of the software.

While all current Tesla models include the Autopilot driver-assist feature, customers have the option to purchase Tesla’s FSD beta feature either as a one-time payment of $12,000 or as a $199 monthly subscription.

The FSD beta feature allows vehicles to perform tasks such as automatic lane changes, self-parking, highway entry and exit maneuvers, and recognition of traffic signals and stop signs. However, it still requires constant monitoring by a licensed driver.

The increase in FSD subscriptions, which can be activated via an over-the-air update at minimal cost to Tesla, could substantially boost the company’s profit margins. Moreover, the software continuously learns from driver data, so a larger user base using FSD will expedite the system’s improvement. Musk initially aimed for one million FSD users and as of February 2023, Tesla reported approximately 400,000 FSD users.

Brett Winton, the director of research at ARK Invest, pointed out the financial and strategic benefits of promoting FSD demos during deliveries. He mentioned in a post on X that Musk agreed with, stating, “There is a financial incentive to require FSD demos at delivery,” emphasizing the positive impact of satisfied FSD users on Tesla’s brand advocacy.

Tesla has previously made efforts to make FSD more appealing to its customers, such as reducing its price by $3,000 last fall and allowing software transfers between vehicles for a limited time.

Musk has consistently stressed the significance of Tesla’s autonomous driving ambitions. In an earnings call in 2023, he mentioned the potential for Tesla to sell cars at break-even prices due to autonomous technology.

“We are the only ones capable of selling cars at break-even for now, with substantial future benefits from autonomy,” Musk said on April 19, 2023, underscoring the strategic importance of autonomy for Tesla’s future growth. XQ XQ XQ XQ XQ XQ XQ XQ

Despite Musk’s enthusiasm about the latest FSD version, which started rolling out recently, Tesla’s beta software remains at level 2 autonomy, necessitating human oversight.

Moreover, regulatory scrutiny around Tesla’s software has increased, as seen in the recall issued last year via an over-the-air update to address safety concerns flagged by the National Highway Traffic Safety Administration regarding FSD’s behavior at intersections.