Musk Says Lowering Price Was a Mistake, Tesla to Also Increase Autopilot Cost

The latest in a series of pricing adjustment flip-flops.

Tesla

Tesla has been doing a bit of backpedaling as of late. First, the automaker rescinds its decision to close the majority of its retail stores, then it announces a rollback of its recent fleet-wide price reduction (sans-$35,000 Model 3), and most recently, CEO Elon Musk admits breaking out Autopilot into cheaper, complicated menus was a mistake.

In a surprise tweet, Musk announced that Tesla would be raising the price of its Autopilot software back to its original cost. Prior to recent changes, "Enhanced Autopilot" (which presently doesn't exist as a software package) was a $5,000 add-on for vehicles who wanted to have the latest-and-greatest Advanced Driver Assistance System (ADAS) that money could buy.

Upon fleet-wide vehicle price reduction, Tesla also changed the way it planned to sell Autopilot. A reduced $3,000 package was available and only included auto-steering and adaptive cruise control. The bulk of Autopilot's more advanced features were removed from the base package and rolled into Tesla's controversial "Full Self-Driving" option which could be purchased for an additional $5,000.

Those who had already purchased Tesla vehicles became upset with the price drop. Some felt "hoodwinked" that Tesla would offer a cheaper price after succumbing to the fear-of-missing-out sales tactic used when given the option to bundle Autopilot into the cost of the vehicle at a discounted rate while making the initial purchase.

Thus, a complicated and convoluted pricing model flooded Tesla buyers and drivers in a very short period of time. Complex and quickly outdated flowcharts were made to explain the changes and new pricing models.

It's also not clear if Tesla will roll back its packages to break out Enhanced Autopilot and Full Self-Driving features to the state they were pre-discount. Should Tesla raise the cost of Autopilot to $5,000 and it only include the new feature set of auto-steering and adaptive cruise control, new buyers will be losing out the most, creating a new barrier of entry. Getting confusing yet? 

If the Full Self-Driving features are rolled back into an Enhanced Autopilot package as they were previously, buyers will return to baseline. To add on to the complexity, it's also not clear at this time where city driving or advanced summon features fit into Tesla's blueprint. Tesla's newest package broke both of those features out into future offerings only available to customers who purchased the Full Self-Driving package.

In the myriad of tweets, Musk also noted that Tesla will continue to slim down its stores. Specifically, about half of the ones which were planned to close initially. While news broke over the weekend that Tesla would continue to evaluate stores to close, it was not clear just how many more were destined for the chopping block. Tesla seems to have met in the middle with half, a move which would allow it to still keep half of its six percent vehicle discount.

Investors have been sitting on the sideline, heavily criticizing Tesla's recent see-saw decisions while owners have been deep in the trenches looking for some sort of stability. Hopefully, with the latest rounds of cost adjustments, all parties find some common ground which helps to establish baseline pricing.