by Morton E. . Sep 27, 2023
Image Credit: Whole Mars Catalog/X
A story shared by a Tesla owner about Full Self-Driving (FSD) has earned praise from CEO Elon Musk. The Tesla owner's story showed how FSD's real-world performance won over two critics within 24 hours.
Why it matters: Tesla's FSD is the company's most advanced driver-assist suite, and it includes several key functions. These include Navigate on Autopilot, Auto Lane Change, Autopark, Summon, Smart Summon, Traffic Light and Stop Sign Control, and most importantly, Autosteer in City Streets.
But while Tesla's FSD is impressive, it also has a high barrier of entry. At $199 a month or $12,000 outright, it's quite pricey. Together with the fact that it's not perfect yet, it is unsurprising that the take rate for FSD is reportedly low. According to an InsideEVs report, estimates from late last year hinted that the take rate for FSD is only about 15-20%.
What's happening: According to Tesla owner Matt Smith, FSD recently managed to win over his wife and mother-in-law after they used the system personally. This was impressive as his wife previously had reservations about using FSD. His mother-in-law, on the other hand, has expressed love towards Teslas, but she preferred to drive them manually.
Despite these reservations, Smith stated that it was their personal experiences with FSD that truly won over his wife and mother-in-law. These personal experiences, Smith said, did more to convince them of FSD's benefits than his positive comments about the system over the years. Elon Musk praised the story, stating in a reply that the tale was great.
Great story— Elon Musk (@elonmusk) September 25, 2023
What's the story: Here's Matt Smith's FSD tale.
FSD Wins Two New Converts in 24 Hours
I've shared many stories recently about how FSD hasn't yet passed the wife test. That abruptly and unexpectedly changed this weekend.
We had a 40 minute drive on Saturday morning and my wife wanted to drive the Tesla. She did and I suggested she try FSD on the highway.
In her past experience with FSD, she was the passenger and therefore only saw/felt the mistakes and the occasional jerky behavior (therefore her perception only picked up on the negative aspects). But now as the driver, she was able to experience firsthand the stress-reducing abilities of FSD, especially on the highway. She turned it on in heavy traffic, and was extremely on edge the first time the car had to brake moderately to avoid rear-ending the car in front of us. But once she saw how the car perfectly handled that situation, she quickly overcame that initial bout of uneasiness, and was instead able to trust the system and enjoy our conversation.
My wife generally does not enjoy driving, especially on the highway, so this was a lightbulb moment for her about the way this technology could make her life a lot easier. If only there was a Tesla that could seat 8 (our whole family) she'd have the order in already!
She was so enthused by the experience that she told her mom about it, and that she should consider borrowing my car for an upcoming trip to Chicago. My mother-in-law is in *love* with my car, but primarily for its performance characteristics. I've suggested many times that she try self-driving, but she couldn't understand why someone wouldn't want to drive this car! Can't really blame her.
But with a long road trip to an unfamiliar area, she could see the benefits of the car driving itself and managing the navigation, lane-keeping, etc. So I showed her the features yesterday, took her to a supercharger so she'd know what to expect, and she was absolutely amazed by how easy everything was and also how well it handled a variety of situations.
FSD has preemptively alleviated a lot of her stress for this upcoming trip, and she's now looking forward to enjoying the comfortable ride and the great sound system, while having the car handle the more tedious and stressful tasks.
These two experiences are a great case study on how FSD adoption will work in the general public. These women aren't early adopters or tech enthusiasts by any means. But once they were able to experience the benefit for themselves, they were immediately sold.
But the barriers to trying this were relatively high and they resisted trying the tech themselves for a while even though I talk about it endlessly! Without having me guide them through the experience and reassuring them through the initial uneasiness of trusting the system, I seriously doubt they would have overcome the initial fears of trying FSD.
I think these two anecdotes are informative for a few reasons. First, the education hurdle is very real. We've seen take rate fall significantly in the last few years, as Tesla's customer base widened from early adopters to mass market. Enticing the mass market to both overcome their uncertainty about whether or not the car will kill them and also forking over $12K for that privilege is no small task. Free trials will absolutely help, but having an experienced driver to shepherd tentative users through the process would help immensely. Second, once you've overcome that hurdle, the value proposition and the sale are immediately obvious. I've explained these benefits orally ad nauseam to both my wife and my mother-in-law, but once it clicked as a user it really clicked.
It seems extremely likely to me that there will come some sort of tipping point where the word-of-mouth benefit spreads like wildfire and people feel compelled to show their friends how amazing the driving experience is. I suspect this tipping point won't happen until after City Street driving is just as compelling as highway. Which likely won't be long at this point.
The financial implications to $TSLA of a change in take rate are absolutely massive. If take rate increased by 20% across sales of 2M units, that's $4.8B in nearly pure-margin revenue. If it hits 50% when the company is selling 10M units, that's a staggering $60B per year.
If robotaxis ever become realized, I think take rate will trend towards 100% simply due to the compelling economic benefits. But the nice thing about investing in $TSLA is that we have increased take rate as a very real possibility just on the back of FSD being an amazing ADAS system today, with the potential for an even more crazy outcome if they can launch a robotaxi platform. I'm incredibly bullish.
What we have: Teslas are great driver's cars, but they are also really relaxing vehicles. With FSD, you can take long trips without being tired since the car will do most of the driving for you. During your charging stops and breaks, it is best if your Model Y is equipped with an accessory like our Tesla Model Y Refrigerator 35L App Control Trunk Fridge, which should help keep you and your passengers hydrated during long journeys. Check it out in our shop!
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