Tesla is raising the price of the top tier “Full Self-Driving” version of its Autopilot driver assistance package by around $1,000 on July 1st, CEO Elon Musk announced on Twitter this week. The company has done this before — a few times. It will probably do it again.
The “Full Self-Driving” package, to be clear, does not yet make Teslas capable of driving without human intervention. Right now, it gives customers access to a series of incremental improvements to Autopilot. But Musk believes the value of the feature, which currently costs $7,000, is higher. Much higher, in fact, once the work on the software is complete.
“[The] price will continue to rise as the software gets closer to full self-driving capability with regulatory approval. It that point, the value of FSD is probably somewhere in excess of $100,000,” he tweeted Monday.
That may seem like a lot because Tesla’s cars — again — aren’t currently capable of actual “full self-driving.” Autopilot can center a Tesla in a lane, even around curves, and adjust the car’s speed based on the vehicle ahead. The “Navigate on Autopilot” feature can suggest — and perform — lane changes to get around slower vehicles, and steer a Tesla toward highway interchanges and exits. Another feature can slow a Tesla to a stop at traffic lights and stop signs.
Autopilot can’t perform some of these tasks if a road’s lane markers are faded or missing, and it can’t make turns. The driver must have a hand on the wheel at all times, too, or else Autopilot will flash a series of warnings before ultimately disengaging entirely.
But when those features work in concert, it can feel like the car is driving itself, making it easier to understand why Musk believes the price should keep going up.
There’s another reason Musk thinks the ultimate value of Autopilot is so high. He has promised that once Tesla’s cars are able to drive themselves, the company will leverage that capability into a “robotaxi fleet.” The goal is to make it so that each Tesla customer’s car can double as an autonomous vehicle that other people can hail while the owner isn’t using it.
Not only would operating a robotaxi service generate more revenue for Tesla, but Musk has said this would allow owners to make as much as $30,000 a year as well. In fact, Musk believes the value of this idea is so high that he’s talked about raising the sticker price of Tesla’s cars, not just the cost of the Full Self-Driving package.
“[C]onsumers will still be able to buy a Tesla, but the clearing price will rise significantly, as a fully autonomous car that can function as a robotaxi is several times more valuable than a non-autonomous car,” he said last year.
Turning Tesla’s products into money-making machines is a recurring theme. For instance, Musk has likened the company’s solar panel leasing option to putting a “money printer on your roof.”
Musk is also expected to present a cheaper, longer-lasting battery co-developed by Tesla at an upcoming “battery day” event for investors. People who follow Tesla closely expect that he may also talk about using that new battery’s extra capacity and resilience to sell energy back to the electricity grid, creating another potential revenue stream for owners and, possibly, the company. This is something the company already does this with its home battery storage products.
This is what tech companies have done for years: create streams of recurring revenue by selling customers on services, not just hardware. Giants like Apple make tens of billions of dollars a year on services like iCloud and Apple Music alone. Tesla’s going a step further: its customers can also get in on the action.
There is a compelling financial reason for Tesla to keep increasing the price of the Full Self-Driving option as well. When a customer pays $7,000 for the Full Self-Driving option at the time they buy their vehicle, Tesla only counts about half of it as revenue. The other half becomes “deferred revenue,” which is basically a pile of money that Tesla can recognize on its balance sheet at a later date.
When the company rolls out a new feature, like Navigate on Autopilot, or Traffic Light and Stop Sign Control, it can count some of that deferred revenue as actual revenue during that financial quarter. It’s unclear how exactly Tesla calculates the value of each new feature, but the company finished the first quarter of 2020 with $1.2 billion in deferred revenue. For a company that constantly lives on the edge of profitability, the ability to pull from stores of cash like this can mean the difference between whether it finished a particular quarter in the red or the black. (The company does something similar with the money it makes selling regulatory credits to other automakers.)
Musk boasts often about how Tesla has changed the way people buy cars, and for good reason. Tesla customers buy vehicles directly from the company — something that’s still illegal in a number of states — and can even do so in just a few seconds through a web portal that’s so simple it makes going to a dealer feel prehistoric.
But each time Musk raises the price of features like the Full Self-Driving package while dangling promises like revenue-generating robotaxis, it becomes more clear that Musk is changing the car-buying experience in an arguably far more interesting way: he’s turning his company’s customers into speculators, too. If Tesla delivers on the promises it’s making, it could stand to make a lot more money than it does now. But even if it doesn’t, or it takes longer than expected, Tesla has found a way to fill the piggy bank in the meantime.
Elon Musk holds a ‘bake-off’ for a new factory
Meltdown May is continuing apace, as Elon Musk and his newest baby’s grandmother engage in online beef. But we’ll get to that in a minute.
First, I would like to turn my opera glasses to one of my favorite types of content: billionaire-on-billionaire rivalry. I am thinking of Musk’s rivalry with Jeff Bezos, the other billionaire who resists shelter-in-place orders and owns a private space company. Remember how Bezos got bounced out of NYC? It was part of a Musk-inspired effort to get the corporate version of The Bachelor going, with the idea that the winning contestant would get a factory instead of a marriage. Much like The Bachelor, the entertainment value for us plebs is just watching a bunch of thirsty cities embarrass themselves. Business types call this sort of thing a “bake-off,” but having actually participated in bake-offs, I can tell you they tend to be less desperate and more fun.
What does it take to make Bezos envious? Government subsidies, baby. Musk got $1.3 billion out of Nevada, $750 million out of New York, and a comparatively piddling $15.6 million out of California. Anyway, when Bezos was pursuing HQ2, pressuring municipalities into “bake-offs” of perks, it was Musk he had in mind.
I mention this because Musk has a new bake-off going, for a Cybertruck factory. Right now, the finalists are, reportedly, Austin, Texas and Tulsa, Oklahoma. (Nashville, Tennessee may also be in contention; then again, maybe not.) Musk has been very clear that incentives will play a role in which city he chooses — though other considerations he’s cited include logistics costs and the type of workforce that can be supplied.
Now, Texas, Oklahoma, and Tennessee (I guess) all do have some things in common. Texas’ governor, state House of Representatives, and state Senate are Republican. The same is true of Oklahoma. Also Tennessee. Now, you may recall that Musk donates across the political aisle — an absolutely classic tactic for entrenched interests and industrialists to secure power — in California, to Democratic Senator Dianne Feinstein and Republican Representative Kevin McCarthy, for instance. Also among the direct recipients of his donations: Senator Jim Inhofe of Oklahoma, Senator Ted Cruz of Texas, Representative John Carter of Texas, and Representative Lamar Smith of Texas. Texas is already important for SpaceX; it’s building its Starship in Boca Chica and a rocket testing spot in McGregor.
Musk’s donations give him a toehold in these states. He’s got connections to powerful political figures who may be able to persuade ambitious local politicians to take him seriously. This isn’t a guarantee of course; Amazon donated heavily in New York, but managed to insult local officials by cutting them out of the loop. Politics is about kissing babies and kissing asses. So of course slighting the local politicians led to a rebellion among those politicians, who blew up the attempt at a New York HQ2 in spectacular, embarrassing fashion.
Already, the Austin Statesman is asking “Will Tesla moving to Texas cost more than it’s worth?” The Tulsa World, on the other hand, is telling its readers that “Like Tesla, Tulsa is ready to grow and innovate.”
Seriously, Tulsa is looking a little desperate:
Although it’s not just Tulsa looking desperate, in fairness:
Well, Amazon also got a bunch of thirsty shit from cities, too. It’s possible Musk will also have a gnarly surprise when he closes on a location — gnarly surprises are always possible in politics — since there is, you may recall, a pandemic on. It is possible some people will be upset about taxpayer money supporting a large corporation rather than, you know, taxpayers. But it’s also possible that the massive spike in unemployment makes luring good jobs to your hometown much more popular. When the pandemic is on, all bets are off.
Which, I guess, brings us back to Musk’s Twitter account. Like most everything else in America, the coronavirus response has taken on a partisan divide. Trust in scientists has grown during the pandemic — but along partisan lines, with Democrats accounting for most of the change, Pew found. Just 27 percent of Republicans trust scientists, according to that poll — a number that hasn’t budged since last year. Some 69 percent (nice!) of Democrats believe social distancing measures are helping to reduce coronavirus spread a lot, compared to just 49 percent of Republicans. (A majority of both groups will allow that social distancing helps at least a little.)
And so it’s maybe worth noticing that Sandy Garossino, mother of Grimes and grandmother of X Æ A-12 Musk, is upset about a bit of politics that’s designed to appeal to the right. I don’t know whether that’s because Musk deeply believes the stuff he tweets, he’s trolling, he’s trying to keep federal Republicans happy, or he’s trying to play ball with two Republican states to get himself some subsidies. In some sense, it doesn’t really matter. What does matter is the amount of subsidies Oklahoma and Texas will offer — and whether Musk will, once again, be the subject of Jeff Bezos’ envy.
It’s funny, in a way. Bezos doesn’t make stupid tweets that will cost him millions of dollars. (He does make an absolutely wild amount of money.) He bought himself The Washington Post in lieu of engaging in press criticism. Bezos is so confident that when AMI contacted him about leaking his nudes, he wrote a blog post in response that essentially said, “Go ahead, leak them.” This guy’s the fucking Death Star. And he’s envious of Elon Musk.
Jaguar’s I-Pace racing series will end because of COVID-19
The Jaguar I-Pace racing series, which launched in 2018, will come to an end this year after just two seasons due to the economic fallout of the COVID-19 pandemic. Jaguar I-Pace eTrophy, as it’s officially called, will finish out whatever races it can this year alongside electric racing series Formula E and then fold up shop at the end of the season, despite being contracted to put on at least one more.
Announced in 2017, Jaguar I-Pace eTrophy is run as a support class for all-electric racing series Formula E. It pits race-modified versions of the British automaker’s first electric car against each other on the same temporary street circuits built for Formula E. This gave the Jaguar racing series a leg up over other upstart motorsports since it could leverage much of the infrastructure, personnel, and logistics of the more mature series, which is now in its sixth season. (Jaguar Land Rover has competed in Formula E since its third season, and it will maintain its presence in the series, team boss James Barclay told Motorsport.com.)
Despite that built-in help and the fact that the teams all ran the same cars, costs were still high as Hazel Southwell points out over at Inside Electric:
The series never reached a full grid, despite interest from teams and drivers, possibly because its status as Formula E’s support category – and consequent logistical requirements, as well as Jaguar’s engineering support – made the costs fairly eye-watering for comparatively short races.
Numbers have varied from the initially-announced fees but a season could set you back in the region of £750,000
It’s unclear exactly how much it cost Jaguar Land Rover to put on Jaguar I-Pace eTrophy. The series was run out of Jaguar Land Rover’s “special operations” division, the financial performance of which the company did not specifically disclose in its most recent annual filing to the United Kingdom’s Companies House registry. Formula E posted a multimillion-dollar loss last year, as The Verge first reported, though it was closer to break-even than ever.
Jaguar Land Rover has struggled financially; most recently, it posted a £3.6 billion (more than $4 billion) loss in its 2018–2019 fiscal year. All that said, Jaguar Racing Limited — the company’s subsidiary that runs its Formula E team — turned a £400,000 (nearly $500,000) profit on £10.2 million (roughly $12.5 million) of revenue during that same fiscal year. Jaguar has promoted its involvement in both I-Pace eTrophy and Formula E as having brought real-world gains to the range and thermal management of the road version of the I-Pace.
As for the racing product, Jaguar I-Pace eTrophy never really found its footing. Because the series competed on the tight Formula E street circuits, there was very little room for passing — a problem that was made worse by the cars largely being equal. That meant the beginning of each race was often total chaos (which, to be fair, can be its own kind of entertainment) as drivers fought to gain whatever positions they could.
But as Southwell points out, Jaguar I-Pace eTrophy was a more diverse motorsport than most. This past season alone, Katherine Legge became the first woman to win a professional all-electric race, Reema Juffali was the first Saudi Arabian woman to compete in an international motorsport series in her own country, and Takuma Aoki was the first driver with disabilities to compete in a global EV racing series.
Elon Musk’s battle to reopen Tesla’s Fremont plant may shape his legacy
Elon Musk intends to make himself immortal by inserting himself into history books as best he can: electric cars will do, but so will a private mission to Mars. At times, it seems that he is the last subscriber to the “Great Man” theory of history.
The problem is that history tends to be written by the survivors — a heel turn late in life, for instance, will obliterate any contemporary admiration. In Los Angeles, this is most clearly borne out by William Mullholland. Mulholland — an obsessed engineer whose dream was to supply Los Angeles with enough water for generations of growth — performed an examination on the St. Francis Dam hours before it collapsed, killing hundreds in one of the worst disasters in California’s history. Brilliant and witty as Mullholland was, he is now known primarily for that disaster and his abysmal behavior in the Owens Valley water conflict, which inspired the movie Chinatown.
Well, none of us have control over our own obituaries, assuming we are lucky enough to get an obituary at all. But it is certainly curious to see a man with such an obvious interest in his legacy make moves that may destroy it. This brings us to the reopening of the Tesla Fremont plant in apparent violation of an Alameda County health order prohibiting the factory from operating.
Last week, California Governor Gavin Newsom announced that some manufacturing in the state would be allowed to resume on May 8; but if the state and the county disagree, the more restrictive order is the one that matters. And although some counties may go slower than the state in reopening business, no one may go faster, according to Sonia Angell, the head of the state’s department of public health.
The immediate action began with tweets: Musk railed against the Alameda County order to continue sheltering in place and threatened to leave California. He also filed suit against Alameda County. Tesla began making cars again at its Fremont, California factory last weekend, The Verge’s Sean O’Kane reported. Workers who had been placed on furlough were called back. On Monday, Musk tweeted confirmation of that reporting and said, “If anyone is arrested, I ask that it only be me.” Shortly after that, Nevada Gigafactory workers received an email calling them back to work as well, O’Kane reported.
California should let Tesla & @elonmusk open the plant, NOW. It can be done Fast & Safely!
— Donald J. Trump (@realDonaldTrump) May 12, 2020
On Tuesday, US President Donald Trump tweeted his support for Musk: “California should let Tesla & @elonmusk open the plant, NOW. It can be done Fast & Safely!” Later that evening, Alameda County announced it had received Tesla’s safety plan for Fremont and that “Tesla can begin to augment their minimum business operations this week in preparation for possible reopening as soon as next week.” On Wednesday, an internal email sent from Tesla said that the company is ramping up its production this week to get to full capacity, Bloomberg News reported.
Fremont is located in one of the six counties that make up the San Francisco Bay Area, which was the first in the country to issue shelter-in-place orders and close non-essential businesses — a move that Musk resisted at the time, causing a county health official to remark Musk had created a public health risk. But the Bay Area’s quick action — along with a little bit of luck — ensured that the cities in it were spared the full horror of the outbreak, at least so far. Though the first community-transmission cases were detected here, only about 350 deaths from COVID-19 had been confirmed as of the beginning of May; University of California San Francisco epidemiologist George Rutherford estimated that the Bay Area’s action had saved more than 1,000 lives.
“California has been progressive and forward-thinking in how they’ve handled COVID-19, and that shows in their numbers,” John Brownstein, who leads the Computational Epidemiology Lab at Boston Children’s Hospital, tells The Verge.
Meanwhile, elsewhere in the country, major outbreaks have occurred at meat packing plants. One report from a Chinese restaurant showed that a single person’s breathing infected 10 people from three families, two of which were sitting at separate tables, over the course of an hour and a half. Another report, of an outbreak in a South Korean call center, showed that one infected employee in the call center resulted in 94 cases — though how much of that is attributable to touching shared objects and how much was airflow remains unknown. A choir rehearsal with a single sick person resulted in 45 cases. At one Staten Island Amazon warehouse, there have been at least 35 cases; across 125 Amazon warehouse facilities, workers have recorded at least 606 cases. At least one Amazon warehouse worker has died of COVID-19.
There are still things we don’t know about how the virus spreads, but we do have some clues from these reports: closed environments where people spend a lot of time in proximity seem to be risks, says Brownstein, who is also a professor at Harvard Medical School. Brownstein thinks there are ways to mitigate risk from these environments, but those decisions will vary by location and should be made by local and state governments.
“The biggest thing that offended me about what’s being proposed here is the civil disobedience aspect,” says Mark Cullen, director of the Center for Population Health Sciences at Stanford, in an interview. “Any time you take what turns out to be brilliant planning on the part of our six counties — and to snub the value of that very publicly, make this ‘fuck you’ libertarian statement, and say ‘if you don’t do what I want, I’ll move to another state’ — highlights what’s wrong with public health thinking and policy. It’s outrageous.”
There’s another unknown: what happens if businesses that are reopening must shut down again, says Liliana Tenney, a senior instructor at the Colorado School of Public Health. Until there’s legislation to protect these workers, we should respect local, state, and federal restrictions — and err on the side of caution, Tenney says. That protects all citizens, but particularly workers who face the choice of either working at places like Tesla or unemployment.
“What we’ve seen through our experience is that most employers are very nervous about this return to work and the return to operations,” Tenney tells The Verge. “And they are doing everything in their power to enact safety measures but also to pause and take it slowly.”
All of the experts I spoke to agreed there are ways to make workplaces like Tesla safer. One is to group workers into cohorts, so if one person in the group gets sick, the number of people who are exposed is smaller. Screening people for coronavirus on a daily or weekly basis will also make it less likely a disastrous outbreak will occur, particularly if it’s paired with contact tracing. Personal protective equipment, such as masks and gloves, may make workers safer, too. Managing the facility — spacing people out, increasing ventilation, and disinfecting surfaces more frequently — will also lower risks to the workforce.
A “return to work” playbook from Tesla incorporates these ideas, which the company says were inspired by measures implemented at the Chinese Gigafactory. Measures include increased cleaning, providing hand sanitizer, enforcing social distancing, temperature checks at the entry of the factory, adjusting work shifts, reducing the number of people allowed on company shuttles, and providing personal protective equipment. One of the assembly lines is, famously, a tent in a parking lot, which may also provide better ventilation than indoor lines.
Production lines are moving more slowly than usual, according to internal Tesla correspondence seen by CNBC. Three Fremont employees told the outlet that their temperatures were taken at the factory entrance, dispensers for hand sanitizer had been placed, and they’d been given surgical masks. Scheduled break times were meant to reduce contact in bathrooms and dining areas.
Still, several employees feel they are being pressured to return to work, NBC News reported. One worker said that her supervisor told her that if she didn’t return to work as directed, she was in danger of being fired. Internal Tesla emails viewed by NBC said that employees who didn’t return to work would no longer receive unemployment insurance, and would have to take unpaid leave. A worker told NBC that staying away from people in the plant was difficult. “It’s hard to stay six feet from people,” the anonymous employee told the outlet. “It’s a production line. There’s a lot of people.” Another worker told The New York Times that the production line hadn’t changed much, making it difficult to avoid other workers.
That was echoed in comments to Joseph Geha, a reporter for the Bay Area News Group: “The work that we do requires us to constantly be in close proximity to people,” the worker said. (The negative views are not uniformly held: a worker told Geha that they were fine with the factory reopening.) Another worker told The San Jose Mercury News that tools used on the production line are shared and aren’t being cleaned or sanitized between uses.
On one level, the kerfuffle is bewildering. Musk has spent years presenting himself as an enthusiastic acolyte of science. What’s more, in an interview with The New York Times on May 9th, an Alameda county official said that the county and Tesla had been close to an agreement to reopen the plant on May 18.
“We were working on a lot of policies and procedures to help operate that plant and quite frankly, I think Tesla did a pretty good job, and that’s why I had it to the point where on May 18, Tesla would have opened,” said Scott Haggerty, the county supervisor for the district where the Fremont plant operates, according to The New York Times. “I know Elon knew that. But he wanted it this week.”
The May 18 restart would have put Tesla squarely in line with other automakers’ efforts to reopen their plants. Mercedes-Benz fired up its Alabama facility on April 27. BMW’s South Carolina plant started up on May 4; GM began production on May 11, as did Honda, Subaru, and Volvo. Toyota planned to restart its US production this week. Fiat Chrysler will resume on May 18, as will Ford. Volkswagen has postponed starting up its plants indefinitely.
What’s more, car sales cratered in March. In April, though, they seemed to slightly recover, though sales were still down 50 percent compared with April 2019. So why start the fight with Alameda at all?
Just before the coronavirus-related health orders closed plants, Tesla was launching its Model Y SUV. SUVs, along with pickup trucks, were among the few bright spots in the market these last few months, says Jessica Caldwell, an analyst for Edmunds. Dealers have also been offering remarkable incentives, such as zero percent interest loans for as long as seven years. Different areas in the world are recovering at different speeds, Caldwell points out. So Musk might want his factories up and running for when markets — in the US or elsewhere — recover. And Tesla makes cars at just two places: Shanghai and Fremont.
“If they’re not producing at either factory they have no global production,” Caldwell says. “And as the world comes back online, Tesla will be competing against other automakers who are literally throwing out all the stops.”
The Model Y is particularly important, says Karl Brauer, the executive publisher at Autotrader and Kelly Blue Book. “He’s got enough demand in the US and globally that he can probably sell most — if not every — Model Y about as fast as he can build them.”
There’s another factor, and it’s political. Before starting his standoff with Alameda County, Musk was already agitating to open Fremont on a private call with President Donald Trump and some other CEOs. Musk told Trump that he did not view returning to work as a significant risk, and the president agreed, The Washington Post reported. SpaceX, Musk’s commercial space company, is heavily reliant on government contracts; if Musk were trying to curry favor with Trump, it wouldn’t be the first time.
There’s also Musk’s image to consider, says Brauer. “Elon rightfully feels that taking a non-conventional approach has served him relatively well for the last 15 years that he’s been at Tesla,” Brauer says. “So if it’s unconventional to break a government mandate if he doesn’t think it’s a necessary level of caution, it plays into his image and his customer base, which likes his unconventional approach.”
But the question may be if Musk loses more than he gains by aligning himself with Trump and others who have persistently tried to convince Americans that stay-home orders aren’t necessary, Brauer says. He might gain new customers — people who ordinarily might not care about electric vehicles but want to support Musk for pushing back against government overreach. Longtime Tesla customers, though, might feel alienated, particularly those who are more collectively-minded.
Cullen, the epidemiologist, is among that group. “I drive a fucking Tesla,” Cullen tells The Verge. “When the cheap ones came out, I bought one. I love the car. I don’t love Musk.”
If Musk reopens Tesla successfully, and without sickening his workers, we should all expect an “I told you so!” tweetstorm. But if Fremont workers get sick and bring COVID-19 with them into the places where they live, seeding outbreaks like we’ve seen with meatpacking plants and other close-quarters facilities, Musk stands to lose a tremendous amount of confidence the public has placed in him. Historically, Musk has been a connoisseur of risk — but now he’s gambling with his legacy.
If Alameda County’s COVID-19 case counts spike two or three weeks from now, Musk’s role in seeding an epidemic will likely be the first line in his obituary. Under the Great Man theory of history, the man in question takes all the blame.
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