Some investors asking why I am so against further $TSLA EV price cuts but am such an advocate of FSD subscription price cuts. It’s math. Every $1,000 price cut on Model Y - which is already very cheap in the US starting at $37,500 after the $7,500 EV credit - costs $TSLA $1.2B in lost revenue. Assuming no volume impact - which is a decent assumption after last year’s experience - that’s a -$.30/share hit to Adj EPS (~11%). In our view cutting the FSD price from $199/month to $99/month is likely to double the FSD take rate from its current 10-15%, so there is no significant financial impact. Let’s assume the worst case: If there was no increase in FSD take rate by cutting the subscription price to $99/month, the approx EPS impact is ~$.05/share, assuming 1/2 current FSD users are on subscription. In the current 30-day free trial among 2.0M TSLA owners, every 10pp increase in take rate is worth $.11/share to EPS. Also, growing the FSD fleet from its 400K to 1M or more users will significantly increase data that brings FSD closer to 99.99% accuracy, which would further increase the take rate and could accelerate robotaxi development. Finally, we believe rapid FSD adoption will help sell more Teslas, given its uniqueness and technological superiority to other ADAS systems.
@garyblack00 Thank you Gary! Not sure why you get so much push back as you tell it like it is. Some people don’t want to hear truth.