Tesla shares experienced a significant rise, climbing by roughly 4% on Tuesday, after Elon Musk, the CEO, unveiled plans for a one-month complimentary trial of its Full Self-Driving (FSD) feature for U.S. clients. 

FSD has been touted by Musk as a potential major revenue stream for Tesla, though the realization of fully autonomous vehicles is still on the horizon, hindered by regulatory and safety concerns.

Musk made the announcement on Tuesday, stating that the free trial would be available to all eligible U.S. Tesla vehicles within the week. This led to a rise in Tesla shares by as much as 6.7%, which later settled at a 3.7% increase, pricing the stock at $178.98.

Strategic Timing Amid Anticipated Sales Report

This move comes at a crucial time, ahead of Tesla’s expected first-quarter delivery report, which may show a decrease due to lesser impacts from price cuts, softer demand, and growing competition.

Moreover, Musk has directed Tesla staff to provide FSD demos to potential new buyers and current owners coming in for service. Ken Mahoney, CEO of Mahoney Asset Management, views the free trials as a step towards wider acceptance of the technology, potentially leading drivers to purchase the complete FSD package, currently priced at $12,000.

Despite offering FSD via a subscription model at $199 per month, the program has faced criticism for its cost relative to its capabilities, given it still requires driver supervision. Insights from researcher Troy Teslike and investor Gene Muster suggest only a small fraction of Tesla customers choose FSD, with Muster forecasting a jump in adoption to 20% by 2026, which could significantly enhance Tesla’s profits.

Safety Under Scrutiny

In December, Tesla initiated a recall of over 2 million U.S. vehicles for Autopilot safety feature updates, following concerns from the National Highway Traffic Safety Administration (NHTSA) after several Teslas collided with stationary emergency vehicles. The recall and NHTSA’s ongoing probe into Autopilot-related accidents since August 2021 highlight the safety challenges Tesla faces in its quest for autonomous driving capabilities.

In conclusion, Tesla’s bold move to offer a free trial of its Full Self-Driving software underlines the company’s commitment to advancing autonomous driving technology. With Tesla shares bouncing back amid this strategic push, Tesla continues to demonstrate its potential to lead and innovate in the rapidly evolving EV landscape. 

 

Image Source: NASDAQ