Tesla Motors Inc (TSLA) Jacks Autopilot Price for no Good Reason

Tesla Inc (TSLA)

Tesla Motors Inc has hiked the price of its Autopilot system by 20%, but hasn’t made any addition to its sensors or features. In October last year, the firm originally released Autopilot, part of a $2,500 package. Now, it will cost $3,000 at the time of purchase, notes a report from Mashable. Current owners of the Model S and Model X, who opt to get the system activated after purchase, will also be paying $3500.

Tesla hikes price for no good reason

This hike from Tesla (albeit quietly), corresponds with Tesla’s announcement of a new, higher priced 100kWh battery pack option for the Model S and Model X vehicles. The sad part is, the price jump is not accompanied with an improvement in the sensors or functionality.

Tesla Motors Inc (NASDAQ:TSLA) Autopilot
Source: Tesla Motors Inc

Speaking to Electrek, a Tesla Motors Inc rep. said the firm raised the price by $500 to better reflect the value of the product. This appears an absurd reasoning. It won’t be wrong to say that the firm is doing this, to make more money.

Earlier, it was believed that the hike could be a part of the upcoming Autopilot 2.0 system. People speculated that the new version will necessitate some major hardware changes, and hence, increasing the cost made sense. But, that’s not the case now. Many might find the price hike unjustified, but a comparable system in Mercedes-Benz costs much more, but it has more features to offer than Tesla’s Autopilot system, notes Autoblog.

Is the price hike justified?

Tesla Motors Inc has the starting price of the new Model S P100D at $134,500, and for this reason, the buyers will barely notice the additional Autopilot cost, and even if they do, they won’t complain, probably. Since, it would have been difficult for the electric carmaker to explain the higher price for the very same product, therefore, it waited till something else caught people’s attention.

If we look at the cost difference, it is minimal in the long-run, and comes to just $51/month for the base Model S 60 and 60D while for all other models it is just $48/month. Also, the amount is insignificant, if we consider the price of vehicles that start at $66,000, notes Autoblog.

Autopilot hardware has been there in all Tesla’s built since October 2014. The associated cost was just to install the software. There can be strong arguments against the merits that a $3,000 software install can offer, but it is business. What matters in the end is, it won’t matter to the people who want it

On Thursday, Tesla shares closed down 0.75% at $220.96. Year to date, the stock is down over 7% while in the last one-year, it is down over 4%.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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