Tesla Bear Says New FSD Subscription Model Proves The Tech Is Not An Asset: Retail Echoes Concerns

Elon Musk on Wednesday announced that the EV giant would stop selling its full self-driving driver assistance technology for a one-time charge and instead will make it available solely on a subscription basis.

• GLJ Research analyst Gordon Johnson and renowned Tesla bear said that the automaker moving its full self-driving to a subscription model ends the "FSD is an appreciating asset" thesis. 
• Ross Gerber, President and CEO at Gerber Kawasaki Wealth & Investment Management, said that the pricing decision is the “first step to Tesla giving away the software as it becomes standard on vehicles over the next five years.”
• In October, the company said that the total paid FSD customer base is still small, at around 12% of its fleet.

Tesla Inc (TSLA) CEO Elon Musk on Wednesday announced that the EV giant would stop selling its full self-driving driver assistance technology for a one-time charge and will make it available solely on a subscription basis instead. The move has raised concerns among Wall Street analysts and fund managers.  

Musk announced in a post on X that the change will kickstart on Feb. 14. Currently, Tesla allows its EV owners to purchase FSD (Supervised) for a one-time payment of $8,000 or a subscription of $99 per month in the U.S.

Experts Weigh In

GLJ Research analyst Gordon Johnson and renowned Tesla bear said that the automaker moving its full self-driving to a subscription model ends the "FSD is an appreciating asset" thesis.

Tesla CEO Elon Musk in 2019 floated the idea that paying $8,000 for FSD would soon be something worth north of $100,000 once the car became a robotaxi, but that "story now looks retired," the analyst told investors in a research note, as per TheFly.

GLJ says the subscription-only FSD is an admission that the service is not an asset, despite "many on Wall Street assigning it hundreds of billions of dollars of value as if it were proprietary intellectual property with terminal economics." The firm has a ‘Sell’ rating on Tesla.

Ross Gerber, President and CEO at Gerber Kawasaki Wealth & Investment Management, said that the pricing decision is the “first step to tesla giving away the software as it becomes standard on vehicles over the next five years.”

“Sadly the technology edge tesla used to have is fading as shown by these pricing decisions,” Gerber said in a post on X.

Musk’s Wednesday announcement comes amidst low takers for the technology. In October, the company said that the total paid FSD customer base is still small at around 12% of its fleet.

TSLA shares traded 3% lower at the time of writing.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around TSLA stock stayed within the ‘bearish’ territory over the past 24 hours, while message volume stayed at ‘normal’ levels.

A Stocktwits user opined that the company now needs to cut FSD subscription costs down to $50/month to increase takers.

Another highlighted that the technology doesn’t allow for fully autonomous driving yet.

TSLA stock has gained 10% over the past 12 months. 

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