Elon Musk has announced a major change in how Tesla sells its Full Self-Driving technology. The company will stop offering the software as a one-time purchase. Instead, customers will only be able to access it through a monthly subscription.
Tesla's New FSD Policy Takes Effect Soon
Tesla CEO Elon Musk revealed the policy shift on social media platform X. The change will officially begin after February 14, 2026. This means Tesla will completely eliminate the option to buy FSD outright for $8,000.
Currently, the subscription costs $99 per month. Musk did not explain the reasoning behind this decision. He also did not indicate whether Tesla plans to adjust the subscription price in the future.
Why Tesla Changed Its FSD Sales Strategy
This move represents a significant shift in Tesla's business approach. The company faces ongoing challenges with vehicle sales. Last year, Tesla lost its position as the world's top electric vehicle manufacturer to Chinese company BYD.
Recent sales data shows Tesla's struggles continue. According to Cox Automotive, Tesla's fourth quarter sales in the United States dropped by 15%. This marks the second straight year of declining volume. The decrease happened even after Tesla introduced lower-priced versions of its Model 3 and Model Y vehicles.
Tesla appears to be protecting its massive $1.5 trillion valuation. The company increasingly focuses on high-margin, recurring revenue streams. These come from artificial intelligence and software rather than one-time hardware sales.
Back in 2020, Musk predicted FSD would become an appreciating asset worth over $100,000. By moving to a subscription-only model, Tesla now treats the software as a service. This approach differs significantly from treating it as a permanent vehicle upgrade.
Increasing subscription numbers could help Musk achieve important product goals. These goals are part of his new $1 trillion incentive plan. Tesla has directed him to reach 10 million active FSD subscriptions before late 2035.
Growing Competition in Autonomous Driving
Tesla's timing coincides with new pressure from technology competitors. AI chip giant Nvidia recently made waves at the Consumer Electronics Show in Las Vegas. The company unveiled an open-source AI model called Alpamayo designed for autonomous vehicle development.
Nvidia packages Alpamayo with its existing DRIVE platform. This provides rival automakers with a ready-made system for advanced driver assistance. Mercedes-Benz Group AG plans to deploy this technology in the United States as early as this quarter.
This development presents a direct challenge to Tesla's software dominance. The Nvidia system offers lower upfront capital requirements for manufacturers. This could make advanced driver assistance technology more accessible to Tesla's competitors.
Tesla's stock showed modest gains following the announcement. On Thursday at 11:58 a.m. EST, Tesla shares traded at $442.67. This represented an increase of $3.32, or 0.75%.
