For more than a century, the car business has revolved around horsepower, styling, fuel economy and the thrill of getting behind the wheel. Tesla CEO Elon Musk believes that formula is beginning to change.
Speaking after the electric-vehicle maker reported second-quarter results, Musk said an increasing number of customers are coming into Tesla stores with one priority: they want Full Self-Driving (FSD). The choice of car, he suggested, comes later. "We're seeing in locations that have FSD approved, we're seeing a very high take rate of FSD," Musk said during Tesla's earnings call. "And in fact, I think for a lot of people, they're actually buying Tesla Full Self-Driving with a car attached, as opposed to a car with FSD. They're coming into our stores in the U.S. and saying they want the Full Self-Driving and with whatever car it comes with essentially."
He added that the technology had become "a significant demand driver" for the company as approvals expand to more countries.
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Software First
For decades, automakers competed over engine size, acceleration, handling and design. Tesla is arguing that advanced driver-assistance software is emerging as a new differentiator.
Musk stopped short of saying the shift applies to the broader auto industry. His comments were based on what Tesla employees are seeing in the company's U.S. stores, where, according to him, customers increasingly ask for Full Self-Driving before discussing the vehicle itself.
The company said adoption has been strongest in markets where FSD has received regulatory approval, and Musk expects demand to rise further as the technology becomes available in more countries.
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Beyond The Car
Tesla executives reinforced that message elsewhere in the earnings call.
Chief Financial Officer Vaibhav Taneja said Full Self-Driving had become one of the biggest reasons customers were considering a Tesla.
"Our sales data suggests one of the main reasons customers are coming and looking at the car is because of FSD," Taneja said.
He added that about 55% of Tesla's North American deliveries in the second quarter had an FSD subscription enabled at the time of delivery, while the company now has nearly 1.5 million paid FSD customers globally through a mix of upfront purchases and subscriptions.
Tesla has also removed the one-time purchase option for FSD in most markets, with the company expecting much of its future software revenue to come from subscriptions.
The comments came as Tesla reported record second-quarter deliveries and outlined plans to expand Full Self-Driving, Robotaxi services and AI-driven products over the coming years. Throughout the call, Musk repeatedly described autonomous driving as one of Tesla's biggest long-term growth drivers, arguing that the technology is increasingly influencing why customers buy the company's vehicles in the first place.
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