Subscription models for software are no longer a rarity these days. But now a well-known e-car manufacturer has also entered the subscription business. We’re talking about Tesla – Elon Musk’s tech company will be offering its Autopilot functions on a subscription basis in the future.
Subscription model for Tesla cars
Adobe is doing it, Microsoft is doing it – and now Tesla is doing it, too: The e-car pioneer is converting its software offering for the Autopilot functions into a subscription model. Until now, buyers could only purchase the function for semi-autonomous driving.
But there was often criticism here. It was not only the high price that scared users away. It was also not possible to take the package with them when they switched to another model – and they had to buy it again. The cost was a whopping 10,000 U.S. dollars.
The subscription model of $199 per month seems humane in comparison. Another plus point is that customers can cancel the package at any time.
The industry portal Electrek first reported on the new subscription model. In his article, Fred Lambert reports on an e-mail to Tesla customers in which the subscription model was announced.
Upgrade your Model 3 for $199 per month (not including taxes) to experience features like navigating with Autopilot, automatic lane change, automatic parking, summoning, and traffic light and stop sign enforcement.
New subscription model: cash grab for Tesla?
Tesla is literally killing two birds with one stone. The subscription model is likely to bring in significantly more money for the company. And satisfied customers are on top of that.
For customers, however, the model could quickly become a cost trap. Sure, it’s initially cheaper and perhaps more appealing for a test phase. But it only takes a little more than four years (50 months) for the cost of a subscription to exceed that of a purchase.
Tesla with record profit of $1.1 billion
But even without the subscription model, things were already going splendidly for Tesla in the second quarter, at least economically. The e-car maker was able to generate a record profit of 1.1 billion US dollars – ten times as much as in 2020.
According to the company, it produced more than 200,000 cars in the second quarter – more than ever before in the company’s history. This is also reflected in sales: they were just under twelve billion U.S. dollars, significantly exceeding analysts’ estimates.
Tesla opens Supercharger network for all e-cars
In mid-July 2021, Tesla also announced its intention to open up its Supercharger network to other electric cars. In Germany, the company currently operates more than 1,000 fast-charging stations, which can only be used by Tesla drivers.
But that is set to change this year, as Tesla CEO Elon Musk has announced. This, in turn, could give the company a further boost in terms of revenue.
Additional costs for non-Tesla drivers
Currently, of course, there is a lot of speculation about how exactly Tesla could make money by opening the Superchargers. The investment bank Goldman Sachs has created a sample calculation for this.
The analysts assumed that Tesla could charge an increased price per kilowatt hour for third-party chargers. The calculation includes additional costs of 30 cents per kilowatt hour.
Tesla currently operates around 25,000 Superchargers worldwide. According to the Goldman Sachs calculation, just five charges at the increased price of 35 kilowatt hours per column per day would bring Tesla revenues of $500 million a year.
If the company were to increase its Supercharger network to 500,000 locations, annual sales at 15 charged electric cars per day would be a whopping $28.7 billion.