Tesla struggles to get drivers to pay for FSD

Elon Musk is betting Tesla’s future on autonomy. So far, his customers aren’t buying it entirely.

Vaibhav Taneja, Tesla’s chief financial officer, said during Wednesday’s earnings conference call that while the company has made “decent progress” in adopting its fully self-driving (FSD) software, only a fraction of Tesla drivers are paying for the service.

“The total base of paying FSD customers is still small, around 12% of our current fleet,” Taneja told investors.

Tesla too reported that Full Self-Driving’s third-quarter revenue declined compared to the same period last year, when the company raked in $326 million. For its entire business, Tesla reported record revenue of $28.1 billion for the quarter.

The electric vehicle giant said the “unique FSD revenue recognition” was due to Tesla releasing additional features last year, such as Actually Smart Summon (ASS) and a Cybertruck-specific version.

Fully autonomous driving, marketed as a driving assistance system which requires owners to monitor it, costs $8,000 outright or $99 per month via subscription.

Tesla did not immediately respond to a request for comment.

Why fully autonomous driving matters

Getting more drivers to pay for FSD is critical for Tesla.

The Cybertruck manufacturer is banking on the widespread use of autonomous vehicles. Musk, Tesla’s CEO, said during Wednesday’s earnings conference call that FSD would significantly increase vehicle sales and help make it the most valuable company in the world.

Generating FSD subscriptions is also important to Musk personally. One of the goals of the billionaire’s proposed $1 trillion compensation plan – which shareholders will vote on next month – is to reach 10 million FSD subscriptions by 2035.

Tesla has not disclosed the total number of customers paying for FSD, which allows vehicles to navigate, change lanes and park autonomously.

The company recently rolled out version 14 of the software and added a “Mad Max” mode which Tesla says adds “higher speeds and more frequent lane changes.”

One of the main obstacles to the company’s deployment of FSD is that the technology is not fully available in many of Tesla’s largest markets.

Regulatory hurdles have blocked attempts to deploy FSD in Europe and China, with Tesla telling investors on Wednesday that it still plans to introduce the assisted driving technology in both markets “pending regulatory approval.”

The software also put Tesla in a difficult situation in the United States. Earlier this month, the US auto regulator launched a federal investigation into FSD after reports surfaced that Tesla vehicles with the technology enabled had run red lights and were steering into traffic.

Tesla has also faced numerous lawsuits over FSD, as well as Autopilot, an earlier version of the company’s assisted driving technology.

In August, a Florida judge ruled that Tesla must pay $242.5 million in damages over a fatal 2019 crash involving a car with Autopilot enabled. Tesla filed a motion challenging the verdict.

Those setbacks didn’t deter Musk from expressing enthusiasm about Tesla’s autonomous driving ambitions during Wednesday’s earnings conference call. The billionaire said the company’s plans to deploy “unsupervised” FSD and expand its robotaxi service would fundamentally change the nature of transportation.

“I think people just don’t appreciate how much this is going to take off. Honestly, it’s going to be like a shockwave,” Musk said.