Tesla is preparing to make one of the biggest changes to Full Self-Driving (FSD) since the software was first introduced, shifting the entire program away from one-time purchases and toward a subscription-only model.
Late Tuesday night, CEO Elon Musk confirmed that Tesla will stop selling FSD as a one-time purchase after February 14. From that point forward, anyone who wants access to FSD will only be able to get it through a monthly subscription.
For years, Tesla framed Full Self-Driving as a long-term investment. Early buyers paid as little as US$5,000, while the price eventually climbed as high as C$19,500/US$15,000 in 2022, with Musk repeatedly claiming that the software would become more capable and therefore more valuable over time.
However, despite that claim, Tesla cut FSD prices, eventually dropping the one-time purchase to C$11,000/US$8,000, where it currently sits since April 2024, and offering it as a subscription for $99 per month in both Canada and the U.S. At that price point, the financial case for buying FSD outright became thin. In the U.S. it takes roughly 80 months — nearly seven years — of subscribing to reach $8,000. It is even longer in Canada – 111 months.
By eliminating the purchase option entirely, Tesla is now shifting all of that long-term risk onto the customer. Subscription-only FSD lowers the upfront barrier and makes it easier for owners to try the software, but long-term users may end up paying far more over the life of the vehicle, especially if Tesla raises monthly rates (although this is unlikely, given Musk’s new pay package – more on that below).
The change also creates huge uncertainty for people who already paid for FSD. These owners have already sunk up to C$19,500/US$11,000 into the software, yet if they buy another Tesla, there may no longer be the ability to transfer FSD to a new vehicle.
Hardware 3 (HW3/AI3) owners are watching especially closely. As Tesla’s FSD becomes more compute-hungry and more dependent on newer cameras and processors, subscription-only pricing gives Tesla a way to continue supporting older vehicles without promising them every future breakthrough.
There is also a large incentive for Elon Musk for Tesla to switch to subscription-only FSD. One of the key performance targets in his new $1 trillion pay package shareholders approved in November requires Tesla to reach 10 million active FSD subscriptions. That metric is much more difficult to achieve when FSD is mostly sold as a one-time purchase attached to a vehicle. The only way to hit that milestone is to convert FSD into a mass-market, monthly service that can scale with Tesla’s growing global fleet, not just with new-car buyers willing to spend thousands up front.
That also helps explain why Tesla is willing to sacrifice high upfront payments in favour of lower monthly pricing and wider adoption. To get anywhere near 10 million subscribers, FSD must be priced low enough that millions of owners keep it turned on every month, even if they only use it occasionally. Over time, that likely means continued price pressure, not large price hikes.
What do you think of the change? Will you be buying FSD before February 14, or sticking with the subscription? Let us know in the comments below.
