Tesla Ditches FSD Buyout Option, Speeding Up Smart Tech Shift and Deepening Automakers' Dilemma

Tesla has eliminated the one-time purchase option for its Full Self-Driving (FSD) capability as of February 14, offering it exclusively through a $99-per-month subscription. This move stems from two key factors: first, FSD is nearing commercialization, and the subscription model yields higher recurring revenue; second, the new FSD version demands significantly more computing power, exceeding the capabilities of the AI3 chip in older vehicle models. Providing free hardware upgrades for these legacy vehicles would impose a substantial financial burden. Tesla is currently exploring new software techniques to enable FSD V14 on AI3-equipped vehicles by 2026, though performance and power consumption will be compromised. The rapid pace of intelligent vehicle iteration—now compressed to roughly two years—stands in stark contrast to the traditional seven-year automotive product cycle, creating a noticeable experience gap for owners of older models. Chinese automakers face similar challenges: Huawei’s Qiankun system uses a hybrid buyout-plus-subscription model, Li Auto includes advanced driver-assistance features as standard at no extra cost, while XPeng plans to make its smart driving functions standard starting in 2025. With the commercial rollout of Level 3 autonomous driving approaching in 2026, automakers now grapple with a critical dilemma—whether to pre-install costly, potentially redundant hardware systems—a decision that will profoundly impact their ability to balance costs against competitive positioning.