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Monday, February 1, 2021

How Tesla's Policies Discourage Owners From Buying A Newer Tesla Vehicle


There's no question that Tesla is an innovative company. Every year they have new features and new products. Many of these new features are via over-the-air (OTA) software updates. This is one of the great things about owning a Tesla. These upgrades keep ownership fresh and exciting. 

From the title, you might have assumed that this post would advocate for Tesla to end OTA updates. That's not the case, far from it. Rather, this post focuses on other policies that might make people think twice about trading in their current Tesla vehicle for a new one. 

Over the years, Tesla has had many offerings that are no longer available such as free Supercharging for life and free premium connectivity. If you have a car that has one of these features, you cannot buy a new car with the same benefits. If this is a feature that you use and like, you might think twice about buying a new Tesla without it.

Similarly, if you have paid for Full Self Driving (FSD) on your current vehicle, this does not carry forward to your next Tesla. You'd have to pay for it again if you wanted to upgrade to a newer Tesla vehicle and the price of FSD may have increased. The current $10,000 price tag makes this a non-trivial payment.

The last two to consider are the performance boost and range boost. In some of Tesla's vehicles, you can pay to reduce you zero to 60 time or increase your range. These two are a little more complicated in that they are not universally supported, so they may not be offered on a new vehicle that you are considering.

On the plus side, all of these items (free Supercharging for life, free premium connectivity, FSD, speed boost, range boost) should help increase the resale/trade-in value of your old car, but that's only a small consolation. It's really nice to take a road trip and know that you won't have a 'fuel' bill waiting for you when you get home. It's nice to stream Netflix and get live traffic information without a monthly connectivity bill. 

Let's look at the two examples in our garage. First, a 2016 Model X. This is an AP1 car with free lifetime Supercharging. I admit that I don't Supercharge all that often. Most days, charging happens overnight in our garage, but we have taken several summertime family road trips and the Supercharger network makes that pretty easy to do up and down the west coast. Carefree traveling on the Supercharger network is priceless.

Next, is our 2018 Model 3. This car has FSD and free premium connectivity. 

We are considering buying a Model Y, but with the current policies, we would not be able to get free Supercharging, free premium connectivity, or FSD (without paying for it again). This makes some aspects of buying a new Tesla feel like a downgrade. I understand why Tesla changed these policies; 'free' can incentivize the wrong behavior. It can create a 'tragedy of the commons,' some people become irrational about it and would even avoid the convenience of charging up in their own garage just to use the free Supercharging... So maybe there's a compromise. 


Possible Solutions

When you trade-in a vehicle with free lifetime Supercharging or lifetime premium data, Tesla could offer 2 or 3 years of the feature for free in your new vehicle. This is not exactly, the same, but it would ease the transition and perhaps I would not cling so hard to our older vehicles that have something that we cannot include in a new purchase. 

Another option is a transfer option (for a reasonable fee). If you want to keep a given feature, you'd be able to transfer it to your next Tesla. This would be a nice way to acknowledge the support that early adopters showed to Tesla, while still allowing them to upgrade without losing a feature to which they've grown accustomed. Tesla is able to collect data about how much these features are being used and could price the transfer accordingly. 

As for FSD, it would be really nice if you could transfer this from an old vehicle to a new vehicle. I understand that Tesla makes more money if they sell it with every car, but I'm not sure this helps them overall if I and others avoid buying a new car from Tesla because the price of FSD has gone up and I don't want to pay for it a second or third time. 

Elon Musk was asked about the ability to transfer FSD in the 2020 Financial Results call. He clearly stated that they have No Plans to allow transfers. Instead, they will offer a subscription option for FSD. The FSD subscription details will be coming out soon, so (as I write this) we don't know how much it will cost. Depending on the price, this may work out for people purchasing new vehicles, but what about the hundreds of thousands of cars that are currently on the road? They would continue to have a policy that dissuades some people (like me) from buying a new Tesla. 

I hope Musk and Tesla reconsider and take some action to remove these hindrances to new vehicle purchase upgrades. The new Model X is very tempting. Stalks are so 2020 ☺

⚡🚗

Disclosure: I'm long Tesla stock
http://ts.la/patrick7819

6 comments:

  1. I think it would be reasonable to depreciate the value of the FSD over time, maybe $1000/yr from the current $10k price tag. Thus, it couldn't be passed down indefinitely to new vehicles without some additional cost to the buyer.

    But otherwise, I totally agree.

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    1. I don't know about depreciating it since if you buy in fully on Musk statements it should be going up constantly, but I'd be fine with a 1k or 2k transfer fee.

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  2. I think paying the difference between what you paid for FSD on the current car and the price of FSD on the new one would be acceptable. That way Tesla still gets the current going rate for FSD and the early purchases still get something for paying in advance for features that still have not been released.

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    1. This would be fair too, expensive but serviceable, then they get to keep their double-dip and not spook us from upgrading

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  3. So tempted to take this bait Pat "Stalks are so 2020" as it is in clear violation of K.I.S.S. I won't even get into steering ratios and why race cars have "yoke" steering wheels and "cars for the masses" don't... *takes a deep breath*.

    Good write up though, with some interesting points. One of the questions I have had about the "This car will support FSD in the future" is that this FSD goalpost has been moved a couple of times and it strikes me that one might need to redefine what it means to be FSD in order for the statement to hold true. I guess we will find out when they ship it!

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    Replies
    1. Yes, the FSD date has slipped several times. I look at it as a probability distribution curve. I think it becomes more likely than not to exist by August of 2027. Of course, it could still happen sooner or later. By 2040 my model has a 95% chance that it exists. So at least when I'm in a retirement home, I'll have a Johnny Cab to drive me around :)

      I should do a write up of all the times that Musk has said it will be here soon... Look for it next month.

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