Tesla Continues to Face Delivery Struggles in Q1 of 2024, But Hope Lies in FSD Trial and Subscription Options

Sunday - April 14 2024, 19:42 UTC - 9 months ago

Despite facing delivery struggles in Q1 of 2024, Tesla remains hopeful with the launch of a FSD trial and subscription option. With the potential for increased sales and profits, Tesla is banking on its innovative FSD feature to turn things around. If 5% of Tesla owners take advantage of these options, it could result in 90,000 new sales and potentially increase margins by 4%, while a 15% adoption rate in the US and China could result in 20% increased margins.

As Tesla continues to face delivery struggles in the first quarter of 2024, the company is looking towards its Full Self-Driving (FSD) feature as a potential solution. The much-anticipated FSD trial and subscription options have the potential to not only boost sales, but also increase margins and profits for the company.

However, the road to this point has not been easy for Tesla. The company reported lower delivery numbers than expected, which was attributed to various setbacks. In Berlin, fires caused by ecoterrorists caused interruptions in production. Meanwhile, delays in the supply chain due to Persian Gulf Houthis also affected the company's delivery capabilities.

On top of these setbacks, the highly anticipated refresh of the Model 3 Highland faced delays in production in Tesla's Fremont factory. This further hindered the company's ability to meet delivery targets and impacted profits.

In an effort to turn things around, Tesla has launched a new trial and subscription option for its FSD feature. This allows 1.8 million Tesla owners the ability to try out the feature for one month, with the option to buy or subscribe afterwards. If just 5% of owners choose to take advantage of this option, it could result in 90,000 new sales for Tesla.

The potential profits from these sales are significant. While the profit from a car sale is just over $8,000, a full sale of FSD would bring in $12,000. Even a one-year subscription for FSD would result in a profit of $2,400. And assuming a mix of one full sale and two subscriptions for the 90,000 FSD sales, it could generate the same profit as 45,000 car sales.

Looking even further ahead, if 15% of Tesla owners in North America and China choose to buy and subscribe to FSD, it could result in profit for 4 million possible cars. This would mean 600,000 FSD sales, with 200,000 full sales and 400,000 subscriptions. The potential profit from 300,000 cars would be immediate, with an additional 130,000 car profits each year while the subscriptions last.

In terms of margin and profitability, 21,000 FSD sales would result in a one percent increase. If the 5% sale scenario plays out, it could lead to a 4% increase in margin. And for the 15% scenario in the US and China, it could result in a 20% increase in margin. This just goes to show the potential impact that FSD can have for Tesla in terms of sales, profits, and margins.

While the delivery struggles in Q1 of 2024 may have been a setback for Tesla, the company's FSD trial and subscription options present a promising opportunity for the company to bounce back and continue to grow. With the potential for increased sales and profits, Tesla is looking towards a bright future with its innovative FSD feature.