Tesla Self Driving Is Getting So Good It Will Cost More

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Elon Musk had two positive tweets for weary Tesla investors to digest on Friday. For starters, new versions of the company’s driver assistance software are coming soon. The special thing is that the price of Tesla’s Driver Assistance feature is also increasing.

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Tesla (ticker: TSLA) calls its driver assistance features Full Self Driving, or FSD. The system is designed like a door-to-door driving service, improving safety and convenience. A driver still needs to be engaged at all times, but most of the time the car will do most of the work.

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Tesla began rolling out high-functioning versions of the software in 2021, starting with its safest drivers. (Tesla may generate a safety score based on driving behavior.) New versions are coming out again and again. Now Musk teased version 11 Friday, which he says has “several architectural upgrades.”

Musk’s ultimate goal is to build a system that’s so good it doesn’t require drivers to pay attention at all. He also indicated in interviews late last year that Tesla could reach that level of functionality by the end of 2022. This isn’t the first time Musk has given an aspirational goal that would be difficult to meet.

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Even though truly self-driving Teslas aren’t on the roads until December 31, 2022, the system makes driving easier. FSD currently retails for a subscription price of $10,000 or $100 or $200 per month, depending on vehicle configuration.

However the price is increasing. From $10,000 to $12,000. Musk says the subscription price will increase when new versions of the software become widely available.

Higher prices may reflect higher confidence in the FSD system. It’s a positive that investors can get away with Friday’s tweet. On the other hand, higher pricing may affect demand for FSDs, but selling FSDs hasn’t really been driving the stock up lately.

Vehicles have been delivered. Tesla delivered more than 308,000 vehicles in the fourth quarter, a record and far better than Wall Street estimates. The stock jumped 13% in response to the news, but then came tough days as investors began to worry about higher interest rates hurting growth stocks more than others.

Tesla stock dropped 3.5% on Friday amid an ongoing selloff in largely valued growth stocks. Despite the stellar distribution numbers, shares are now down about 3% year over year.

The Nasdaq Composite Index dropped 1% on Friday. The S&P 500 dropped 0.4%. On Friday, the Dow Jones Industrial Average fell less than 5 points to close at 36,232.

Write to Al Root at [email protected]

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