Tesla (TSLA) has launched a subscription plan to its Full Self-Driving (FSD) software for $199 per month, according to a Reuters report. The software offers advanced driver assistance features. Before Tesla introduced the subscription plan, FSD features cost $10,000 upfront.
The FSD subscription is initially rolling out in the U.S. to eligible vehicles. Some vehicles may require a hardware upgrade at the cost of $1,500 to access the FSD subscription service.
Tesla reminds drivers that FSD does not make their vehicles autonomous. Therefore, drivers will still need to be fully attentive and have their hands on the wheel.
Tesla hopes the FSD subscription service will enable it to generate recurring revenue. It also expects the subscription plan to entice more customers to purchase its pricy features such as parking assistance and lane changing on highways. (See Tesla stock charts on TipRanks).
“If … you look at the number of customers who did not purchase FSD upfront or on a lease and maybe want to experiment with FSD, this is a great option for them,” Reuters quoted Tesla CFO Zachary Kirkhorn as saying during the company’s April earnings call.
On July 13, Goldman Sachs analyst Mark Delaney reaffirmed a Buy rating on Tesla stock with a price target of $860. Delaney’s price target suggests 33.49% upside potential. The analyst cited Model Y and its potential to drive higher vehicle unit sales in maintaining the bullish view on Tesla stock.
“Tesla has released a new lower-cost version of the Model Y in China, made Model Y available in Europe out of the China factory…These positive changes are partly offset by a lower estimate of revenue from regulatory credits,” commented Delaney.
Consensus among analysts is a Hold based on 10 Buys, 6 Holds, and 7 Sells. The average Tesla price target of $614.10 implies 4.68% downside potential to current levels.
TSLA scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.
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