Tesla shifts from “selling cars” to “software SAAS”? Musk: FSD will suspend the

# Source: Wall Street Insights

## By Bao Yilong

Elon Musk announced that Tesla will discontinue the one-time payment model for its Full Self-Driving (FSD) system after February 14. Currently, Tesla offers the FSD system in the U.S. either as a one-time purchase priced at $8,000 or a monthly subscription costing $99. As of the end of 2025, approximately 12% of Tesla vehicles had subscribed to the FSD service. Tesla's share price fell 1.8% on Wednesday.

Tesla CEO Elon Musk announced that the company will stop selling the Full Self-Driving (FSD) system via one-time payment, shifting to a monthly subscription-only model instead.

In a post on a social media platform on January 14, Musk stated that Tesla will cease offering the one-time purchase option for the FSD system after February 14, retaining only the monthly subscription plan.

He did not elaborate on the reasons behind this decision. Analysts at Barclays believe that this strategic adjustment reflects Tesla's transition from primarily selling electric vehicles to focusing on autonomous driving and robotics businesses, while also seeking to expand high-margin subscription revenue. Tesla's share price dropped 1.8% on Wednesday.

Tesla's vehicle sales declined 9% in 2025, with Q4 sales falling 16% year-on-year. At present, electric vehicle sales still account for three-quarters of Tesla's total revenue. As of the end of 2025, around 12% of Tesla vehicles had either a monthly or lifetime subscription to FSD.

### Subscription Model Replaces One-Time Purchase

Currently, Tesla provides U.S. consumers with two options to access the FSD system: a one-time payment of $8,000 or a monthly subscription fee of $99.

This technology can assist drivers with easier lane changes and navigation around other vehicles and objects, but it is not equivalent to fully autonomous driving, and drivers are still required to remain attentive at all times.

Musk has long emphasized that the FSD system has the potential to eventually turn every Tesla into a fully autonomous vehicle. Early adopters of FSD paid as much as $15,000, expecting to achieve this goal through software updates.

Nevertheless, despite Tesla making some progress in autonomous driving, the commercial version of FSD remains in the semi-autonomous driving phase, requiring drivers to be ready to take over control at any moment.

### Strategy of Transitioning to Subscription Model

Strategically, Tesla's full shift to a subscription-only model for FSD can not only boost profit margins but also help Tesla reduce its reliance on fluctuations in the traditional electric vehicle market, further strengthening its layout in the autonomous driving and robotics technology sectors.

In its latest research report, the Dan Levy research team at Barclays stated that with the increase in FSD subscription penetration, Tesla can secure a more stable revenue stream that is no longer entirely dependent on vehicle sales volume.

In the U.S. market, FSD subscribers already account for more than 20% of Tesla vehicle owners, while globally, 12% of Tesla vehicles utilize this service. Barclays analysts commented:

>The FSD subscription model is likely to help Tesla generate higher-margin revenue in the future, especially after the launch of the new Cybertruck and the rollout of more autonomous driving features to the market.

The research report further pointed out:

>The penetration rate of FSD in Tesla's electric vehicles will continue to rise, and there is potential for price increases in the future, particularly after the launch of the Robotaxi network.

### Early Users Facing Hardware Limitations

Tesla owners with older vehicle models are unable to use the latest version of the software, as their cars are equipped with outdated hardware.

Tesla has acknowledged the need to address these customers' concerns by offering hardware upgrades, but has not specified the exact timeline or approach.

Chief Financial Officer Vaibhav Taneja stated during the October investor call:

>We do want to solve the autonomous driving problem first, and then come back to find ways to take care of these customers. These customers are extremely important; they are our early supporters.

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