ElectrekIt is predicted that Tesla, the global leader in the electric vehicle market, will make more sales with software than hardware (HW). Of course, it doesn't mean it will happen right away, but it will happen in the long run.
How can that be.
Electrek introduced Morgan Stanley's outlook and why on Tuesday. This prospect, which also mentions Tesla's recent SW update, provides something to think about about future self-driving electric vehicles including Tesla at least once.
In summary, Tesla will make more sales than hardware (HW) sales by selling SW for various vehicle services to users (subscribed customers) who subscribe to SW monthly contracts.
Interestingly, Tesla has shown a tendency to provide vehicle SW for a fee, which is not to some extent unconvinced.
Tesla, for example, is now charging buyers of its vehicles $10 a month for the basic 'premium connectivity' feature. (Since July 31, last year, Korea has been receiving 7,900 won per month. Tesla Korea said about Connectivity, "It plays an important role in improving the driving experience by providing data-available functions in Tesla vehicles such as music and media streaming and real-time traffic information. All vehicles are provided with standard connectivity, providing access to some connectivity features with Wi-Fi connectivity and music streaming via basic maps and navigation and Bluetooth connections. In addition to Wi-Fi, Premium Connectivity offers the most intuitive and special ownership experience available through cellular data. Premium Connectivity is available for a monthly subscription fee of 7,7,900 and is available at any time from your Tesla account. "If you order Model S, Model X, Model Y, and Model 3, you will get a premium connectivity trial.")
▲ SW costs will be added to riding Tesla's self-driving car. It's not easy. (Photo = Tesla)
Tesla also began selling SW features as a package through its mobile app.
In addition, Tesla recently sold its Full Self-Driving SW with a monthly subscription agreement of 199 dollars per month, raising its self-driving car service to a whole new level.
Some stock market analysts are trying to value the company's future by placing this aspect of Tesla's
One of the leading analysts of this trend is Adam Jonas of Morgan Stanley, who has already tried to incorporate this fact into his analytical model with investor notes since last year.
He recently released a new investor note that added value to Tesla's software-as-a-service business when Tesla started FSD SW subscriber service.
According to Jonas, Tesla's $199/month price for FSD SW was higher than he actually expected.
"The monthly SW upgrade cost of $199 is much higher than we expected. The FSD's pre-determined fee (temporary payment) of $10,000 (approximately 11.55 million won) means that it will pay $56 (approximately 60,000 won) per month for 15 years (180 months), the vehicle's availability period. We assumed that Tesla would generate an average monthly sales of $100 (about 115,000 won) for 60% of its registered vehicles by 2026 or 2027. "This estimate includes autonomy, connectivity, performance improvement, charging, maintenance and other services."
Morgan Stanley expects the number of Tesla-registered vehicles to increase from about 1.5 million by 2030 to 35 million to 40 million by 2030.
And Jonas believes Tesla's automotive SW business could be bigger than the HW business, including vehicles, at that very moment.
▲ Four features of Tesla's reinforced autopilot are 99 dollars, and the FSD price, which includes 'Traffic Light and Stop Sign Control' function, is set at 199 dollars. Customers tend to tilt their heads. (Photo = Tesla)
"We believe that there is a possibility that the value of SW revenue that occurs repeatedly to Tesla will exceed the value of the HW said in the report. "We believe that the launch of extensive services to Tesla vehicle users over time will increase the company's finances and help re-rating shares over time." However, Morgan Stanley did not renew his $900-a-share target for Tesla shares after the announcement.
Tesla's "SaaS as a Service" trend must be kept in check.
This is because not everyone easily agrees with the price of FSD right now.
Aside from its recent $199 subscription to the FSD service, Tesla is offering its owners a $99 Enhanced Autopilot, which has puzzled Tesla customers.
What's wrong with that?
Tesla's enhanced autopilot includes four functions: Navigate on Autopilot, Auto Lane Change, Auto Park and Summon.
However, the FSD costs 199 dollars with these four items and additional functions called Traffic Light and Stop Sign Control.
As one function is added to the reinforced autopilot function (four) and provided as FSD, the added function is priced at 99 dollars are 99 dollars.
▲ Frederick Lambert tweeted, "Tesla-enhanced autopilot owners were offered $99 for FSD subscription, but is it right to understand that Tesla has valued $99 per month for 'signal and stop signal control' functions?" (Photo = Twitter)
What would customers think of this?
"Tesla enhanced autopilot owners were offered $99 for FSD subscription. Is it right to understand that Tesla valued $99 a month for 'signal and stop signal control?'" tweeted Twitterian Frederic Lambert.
Only when Tesla can persuade customers of the SW price policy will Morgan Stanley's outlook in investor notes be met.
Tesla's vehicle price (based on basic model) is 54.79 million won for Model 3, 69.99 million won for Model Y, 115 million won for Model S, and 125 million won for Model X.
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