Tesla North America Vehicles, One Month Free FSD Usage
Mandatory Trial Drive Upon Vehicle Delivery to Customers
Likely Aimed at Expanding FSD Sales and Alleviating Safety Concerns
Elon Musk, CEO of Tesla, has started to push the sales of the Full Self-Driving (FSD) software, which he has proudly regarded as a core technology. He is offering a one-month free trial for vehicles sold in the North American region and has instructed that a demonstration drive in FSD mode must be conducted before delivering the vehicle to customers. Attention is focused on whether Tesla, struggling with the low-price offensive from Chinese electric vehicle manufacturers, can seek a turnaround by expanding the use of FSD.
'Level 2' FSD, capable of lane changes and parking... "Few people know how to operate it properly"
According to Bloomberg and Business Insider on the 29th (local time), Musk announced on his social media platform X (formerly Twitter) on the 26th that "all US vehicles equipped with FSD will be eligible for a one-month free trial within this week." A day before posting this, he sent an email to employees in the US instructing them to make it mandatory to install and operate the FSD software on vehicles and conduct demonstration drives.
FSD is Tesla's full autonomous driving technology promoted by Musk. Although the name FSD sounds like the vehicle is capable of 100% full autonomous driving, Tesla's FSD beta is a Level 2 driver assistance system, far from the highest level 5 full autonomy. It is currently regarded as an advanced version of the Autopilot autonomous driving software that helps vehicles automatically steer, accelerate, and brake within lanes across all models.
According to foreign media, Tesla's FSD beta allows vehicles to automatically change lanes, park, and enter or exit highways. It can also recognize stop signs and traffic lights. However, drivers must keep their hands on the steering wheel and be ready to take control at all times. FSD may not function properly on narrow, winding roads or in construction zones.
In the email ordering the demonstration drives, Musk said, "Very few people truly understand how FSD actually works," and added, "I know this will slow down the delivery process, but it is a policy that must be followed." He also instructed that demonstration drives be conducted not only when delivering vehicles to customers for the first time but also when returning vehicles to customers after servicing at service centers, emphasizing, "This is very important."
Bloomberg evaluated Musk's directive as showing how tightly Tesla is controlling a technology that is both a core revenue source and a source of controversy.
Expectations for increased profitability by overcoming Chinese EV low-price offensive
Musk, who prioritizes shortening all production and delivery processes, is believed to have ordered the demonstration drives to increase sales of the FSD technology package and to ensure proper usage of this feature. Tesla currently sells the FSD package for $12,000 (approximately 16.08 million KRW) or a monthly subscription fee of $200 (approximately 268,000 KRW).
Especially, this move is seen as Tesla pulling out a card to reverse the situation amid the low-price offensive from Chinese electric vehicle manufacturers. The Wall Street Journal (WSJ) mentioned Tesla's autonomous driving technology when explaining why Tesla's market capitalization is more than six times that of BYD, despite BYD surpassing Tesla in electric vehicle deliveries in the fourth quarter of last year.
Musk initially set a goal to secure 100,000 FSD users. However, since its launch in 2013, the number of users secured by February last year was only about 400,000. According to industry data, as of the third quarter of 2022, only 14% of Tesla customers purchased the FSD package, a significant decrease from 53% three years earlier in 2019.
Business Insider noted, "An increase in FSD subscriptions could significantly boost the company's profits," and added, "At the same time, collecting user data allows the software to learn in real time, which is advantageous."
Wall Street also expects the expanded use of FSD software to positively impact Tesla's performance. Ken Mahoney, CEO of Mahoney Asset Management, said, "(The free trial) could be a proper step to guide users trying the technology (FSD software) for the first time," and added, "To some extent, it could incentivize drivers to purchase FSD for $12,000."
Growing concerns over FSD technology risks... Could it backfire?
At the same time, this can be interpreted as a strategy to ease public concerns about the risks of Tesla's FSD technology. Tesla has heavily promoted this software as a potential revenue source, but sales of FSD plummeted as authorities in the US launched investigations related to safety issues. In December last year, Tesla recalled 2 million vehicles to fix Autopilot defects, which caused a significant drop in its stock price.
Last month, The Washington Post (WP) reported that a traffic accident involving Tesla employee Hans von Ohain in Evergreen, Colorado, in 2022 appeared to have been caused by Tesla Model 3's FSD function. Eric Rossiter, a friend who was in the car at the time, explained that the Tesla vehicle with FSD settings failed to properly recognize the winding mountain road and eventually crashed into a tree, resulting in von Ohain's death. Rossiter said that von Ohain was definitely using FSD, and if the accident occurred under such circumstances, it would be the first fatal incident involving Tesla's cutting-edge technology.
Immediately after the report, Musk posted a denial on his X (formerly Twitter). Musk stated, "He (von Ohain) did not have FSD installed," and added, "Unfortunately, he never downloaded the software. If he had FSD installed, such an incident would not have happened, which is regrettable."
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