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Why Tesla Raised the Full-Self Driving Package Price

It has been rumored for weeks now that a new price hike was coming for Tesla’s Full Self-Driving Package, and it looks like the day has finally come: a peek at their website today shows that the package has increased from $5,000 to $6,000.  So why is Tesla raising the price on self-driving cars for a feature that is not yet completely functional, and has no guarantee that it will deliver on its promises?

It all comes down to the potential conversion of the Model 3 from merely a privately owned vehicle to a possible revenue-generating asset.

Tesla Raising Price on Self-Driving Cars

It all started on April 13th when Tesla CEO Elon Musk tweeted that he expected the Full Self-Driving Package to eventually jump substantially in price.  He did not offer any figures of his own, but did admit that it could be “something like” $3,000.  Since today’s increase only came to $1,000, it seems reasonable to assume that the full price increase will come in increments as technology is improved. 

Now, it is hard to truly pin down the relationship between price changes and the ultimate car value, since Tesla prices have been fluctuating quite a bit since the start of the year, plus the standard features and hardware have also changed over time.  Even the price of the Full Self-Driving Package itself has dropped and then risen again.  Some of the features of the Autopilot package have also been transferred to the Full Self-Driving Package.  But it ultimately seems as though Tesla is attempting to push up the value of the vehicles to compensate for better technology. 

Musk’s Future Plans for the Model 3

That brings us to Musk’s insistence that the Tesla 3 will become an “appreciating asset”.  How so?  One possibility is that Musk expects the eventual software upgrades will increase the value of the electric vehicles more than the amount Tesla is currently charging for the Full Self-Driving Package.  I think, however, that this would require a substantial price increase to actually accomplish, and one that is not reasonable.

Another possibility is Musk’s planned robotaxi network.  The Tesla CEO wants to create an autonomous ride-sharing system consisting of both participating owners as well as dedicated fleets of robotaxis, hopefully by 2020.  While the idea is not for everyone, those who would like to participate could potentially receive income from their cars when they are not in use by their owners.  That could make their electric car a revenue-generating asset, which obviously would have an effect on its value.


It is hard to tell what to expect in the coming months in regards to this update.  How much higher will the price of the Full Self-Driving Package go?  Are robotaxis the transportation method of the future?  Will Elon Musk’s predictions about the Tesla 3 becoming an appreciating asset actually come true?  Only time will tell if we will see the answers to these questions.

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