Tesla’s $15K Full Self-Driving Option Is Only Worth $3,900 on a Trade-In
So much for an appreciating asset.
Elon Musk has called Tesla's vehicles "appreciating assets" more than once because of the automaker's Full Self-Driving software. In fact, Musk has said that he believes FSD's actual value to be "in excess of $100,000." You'd think, then, that electric vehicles with the suite of features would get a trade-in valuation bump, right? Apparently not.
One Tesla owner looking to trade in their 2020 Tesla Model Y Performance found out the hard way that FSD did not, in fact, raise the value of their vehicle tremendously. Alex, the owner of the Model Y, recently posted his complaint of FSD's value to Twitter and tagged Tesla as well as Elon Musk in an attempt to vent and potentially have the issue addressed as well.
According to the advisor that Alex spoke with over text message, their 2020 Model Y Performance was valued at $37,700 as a trade-in. That price includes premium add-ons, like the car's red paint (a $2,000 option today), white interior (a $1,000 upgrade), and Tesla's Full Self-Driving software—the pricing on this is a bit more complicated so we'll talk about it 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.
The 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. Today, if you were to purchase the same car with FSD, it would cost around $72,880. Without knowing the mileage or if there are any other issues, Alex's trade-in value is roughly 48% lower than the cost of a new build with identical add-ons. But that's not the meat of Alex's issue.
The issue is specifically how much value FSD added—or didn't add. Alex pressed about how Tesla values FSD in its trade-in offer, which is reasonable considering that Elon Musk did say that it would be the sole reason behind vehicles appreciating in value, and the cost of FSD has increased considerably since 2020. As it turns out, Tesla only thinks FSD is worth a mere $3,900 on trades. It's unclear if that's a flat value or if it's based on vehicle age or mileage, but that's the figure Alex was given.
That may be one of the higher valuations across the used auto industry. It's reportedly higher than Tesla offered owners in the past, as others have claimed that trade advisors told them that FSD adds no 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 "viewed as reasonably valuable" when performing a trade-in. It would appear that Tesla is now taking the 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. By July 2020, it rose again to $8,000 and continued to climb until it reached its current price of $15,000 in September 2022.
Backing up to Alex's situation: Given the vehicle year, Alex would have purchased FSD when it cost between $5,000 and $8,000. Tesla's own team values FSD on this particular trade at $3,900 per the text messages exchanged as part of the trade process. Despite Musk's claim of vehicles being an appreciating asset specifically because of FSD, the value of the software itself actually decreased by as much as $4,100 with Tesla's trade-in offer.
Keep in mind that the retail cost of the software increased as much as $10,000 in that same period of time. I'm no accountant, but that doesn't appear to be an appreciating asset.
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 such as CarMax offered absolutely nothing extra when FSD is equipped on potential trade-ins.
"[The] Carmax rep showed me their options screen, and there’s no box there which 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 cars every couple of years, do not get FSD as you will get no value for it."
To make matters worse for owners, new and existing Tesla buyers don't actually need to spend $15,000 for FSD. Tesla now allows owners to purchase a subscription to the feature for $200 per month, meaning that it would take 75 months (or just over six years) to match the $15,000 price point of outright purchasing FSD.
If an owner plans to get a new vehicle before that six-year period is up, it doesn't make sense to purchase FSD outright unless they're worried about Tesla raising the price again. And since Tesla does not allow owners to transfer FSD to other vehicles without re-purchasing it completely, it places the valuation of the software completely with the vehicle, cradle to grave.
These reasons are partly why some investors believe that FSD is "worthless" in the resale market. Whether or not that will prove true is still to be seen, but it looks like at least some auto dealerships are erring on the side of caution and not compensating owners for FSD when trading in vehicles, or at least significantly undervaluing it versus what Tesla is presently charging.
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