September 25, 2023

Tesla’s $15,000 fully self-driving option is worth just $3,900 at trade-in

Tesla's $15,000 fully self-driving option is only worth $3,900 in a trade-in photo

Tesla’s $15,000 fully self-driving option is only worth $3,900 in a trade-in photo

Elon Musk has more than once called Tesla’s vehicles “prized assets” because of the automaker’s fully self-driving software. Musk has even said he believes the true value of FSD is “over $100,000.” So you’d think electric vehicles with the suite of features would get a trade-in value, right? Apparently not.

A Tesla owner looking to trade in his 2020 Tesla Model Y Performance found out the hard way that FSD did not, in fact, greatly increase the value of their vehicle. Alex, the owner of the Model Y, recently posted his complaint about the value of FSD on Twitter, tagging both Tesla and Elon Musk in an effort to vent and possibly address the issue as well.

According to the advisor Alex spoke to via text message, their 2020 Model Y Performance was valued at $37,700 as a trade-in. That price includes premium add-ons such as the car’s red paint (a $2,000 option today), a white interior (a $1,000 upgrade), and Tesla’s Full Self-Driving software — the price for this is a bit more complicated, so we’ll talk about that later, but keep in mind that the software costs a whopping $15,000 on top of the vehicle price if you were to buy it today.

Base cost of the Model Y Performance ran between $59,990 and $61,000 from 2019 to 2020, plus add-ons like paint, interior, and FSD. If you bought the same car with FSD today, it would cost about $72,880. Without knowing the mileage or other issues, Alex’s trade-in value is about 48% lower than the cost of a new build with identical add-ons. But that’s not the core of Alex’s problem.

The problem is specifically how much value FSD added – or did not add. Alex pressed on how Tesla values ​​FSD in its trade-in offer, which is fair given that Elon Musk did say that would be the only reason vehicles increase in value, and the cost of FSD has risen significantly since 2020. As it turns out, Tesla only thinks FSD is worth only $3,900 in transactions. It’s unclear if that’s a fixed value or if it’s based on vehicle age or mileage, but that’s the number Alex got.

That might be one of the higher valuations in the used car industry. It’s reportedly higher than Tesla has been offering owners in the past, as others have claimed trade advisors told them FSD doesn’t add value to their trade-in.

The automaker has been aware of this pain point for several years. In fact, in 2021, Elon Musk said that FSD “should be considered reasonably valuable” when trading in. It seems that Tesla is now taking value into account, but it may not be exactly what owners consider to be reasonably valuable.

In April 2019, Tesla’s FSD software cost $5,000 before rising to $6,000 in May and then again to $7,000 in August. In July 2020, it rose again to $8,000 and continued to rise until reaching its current price of $15,000 in September 2022.

Backing up Alex’s situation: Given the vehicle year, Alex would have bought FSD when it cost between $5,000 and $8,000. Tesla’s own team values ​​FSD for this particular transaction at $3,900 per SMS exchanged as part of the trading process. In fact, despite Musk’s claim that vehicles are a valuable asset, particularly because of FSD, the value of the software itself fell by as much as $4,100 with Tesla’s trade-in offer.

Keep in mind that the cost of selling the software increased by as much as $10,000 during that same period. I’m not an accountant, but that doesn’t seem like a valuable asset to me.

Non-Tesla resellers don’t seem to find that much value in the software. Owners on Reddit looking to sell their vehicles have reported that some retail chains like CarMax offered absolutely nothing extra when FSD comes with potential trade-ins.

“[The] Carmax rep showed me their options screen, and there’s no box there that they can select to give the car the extra value,” said one posted on Reddit. “So if you’re the type of person who changes car every few years switches, don’t get an FSD because you don’t get any value for it.”

To make matters worse for owners, new and existing Tesla buyers don’t actually have to shell out $15,000 for FSD. Tesla is now allowing owners to purchase a subscription to the feature for $200 a month, meaning it would take 75 months (or just over six years) to match the $15,000 price of buying outright from FSD.

If an owner plans to buy a new vehicle before that six-year period is up, there’s no point buying FSD outright unless they’re concerned that Tesla will raise the price again. And since Tesla doesn’t allow owners to transfer FSD to other vehicles without buying it all over again, it puts the software’s valuation entirely on the vehicle, from cradle to grave.

These reasons are
, in part, why some investors believe that FSD is “worthless” in the resale market. Whether that will prove true remains to be seen, but it seems that at least some car dealers are being cautious and not compensating owners for FSD in vehicle trade-ins, or at least significantly undervaluing it relative to what Tesla is. currently charging.

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