Elon Musk's Tesla is encountering some hurdles with the adoption of its Full Self-Driving (FSD) technology. Despite offering a free trial, only 2% of users have opted to subscribe, raising questions about the future viability of this technology.
What Gary Black Says About Low Subscription Rate of Tesla FSD Service
(Photo : Austin Ramsey from Unsplash)
It appears that a free 30-day trial for Tesla's full self-driving subscription is not enough to convince buyers to jump into the service, according to new data.
Gary Black of Future Fund recently voiced his concerns on social media platform X regarding the disappointing subscription rates for Tesla's FSD service.
Citing data from credit card data provider Yipit, Black noted that a mere 2% of Tesla owners who received a 30-day free trial of the FSD service decided to subscribe once the trial ended. This figure starkly contrasts with the 6% subscription rate Black had initially assumed in his financial models for Tesla.
Yipit credit card data showed that just 2% of $TSLA owners with free FSD 30-day trials actually subscribed to it after the 30-day trial expired. My assumption in my $TSLA model was that 6% of trial users would subscribe. If just 2% subscribed after a month, that would be…
— Gary Black (@garyblack00) May 13, 2024
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Potential Bias in Sample Size
As per Benzinga, Black pointed out that the data sample size was relatively small, involving only 3,500 users out of the 1.8 million trials conducted. This sample might not accurately represent the entire population of Tesla owners. He emphasized the need for the American automaker to determine whether the low subscription rate is due to the perceived low value added by the FSD service or the $99 per month subscription fee.
Electrek's journalist Fred Lambert also shared his insights regarding the low number of subscribers of Tesla's FSD service.
According to him, 3,500 owners is considered a limited dataset. However, it is better than nothing, and 2% sounds about right to him.
Escalating Doubts About Latest FSD Version
Further amplifying Black's concerns, a community feedback forum hosted by Moomoo Technology questioned the market expectations for Tesla's FSD service in light of the low subscription rates. The forum highlighted growing doubts about whether the latest version, FSD v12.3, could meet consumer expectations and justify its cost.
Importance of FSD to Tesla's Future
The low adoption rate of Tesla's FSD subscription service poses as a business obstacle for the company, especially given the high expectations surrounding its latest version.
The lukewarm reception reported by YipitData spits some questions about the market's confidence in Tesla's autonomous driving technology. This issue comes just days after Musk claimed that Tesla's FSD technology is "half a decade ahead or more" of competitors like Mercedes, despite ongoing debates over its effectiveness and safety.
Impact on Tesla's Strategic Decisions
These concerns emerge as Tesla has decided to delay the deployment of its FSD driver assistance software on Cybertruck vehicles, suggesting potential acceptance issues among consumers.
Black's observations indicate that the EV giant needs to address these hurdles to enhance the appeal and perceived value of its FSD service.
The low uptake of Tesla's Full Self-Driving subscription service is a pressing issue for the company. Despite the high expectations and Musk's bold claims about the technology's superiority, the actual subscription rates tell a different story.
Tesla must investigate and address the reasons behind the low adoption rates to ensure the future success and acceptance of its FSD technology.
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