Tesla’s Full Self-Driving (FSD) software, an advanced driver assistance add-on to Tesla cars, costs $15,000. But it’s likely worth little if you try to resell it with the car, says Jim Chanos, a prominent Tesla short seller. And real-world experiences of Tesla owners appear to support his theory.
“The current value of the Tesla ‘Full Self-Driving’ package is probably close to zero in the retail market,” Chanos tweeted on Sunday (July 9) with the hashtag “RealityCheck.”
“Remember that Musk has said that owning an FSD package will increase the value of your [Tesla] vehicle by multiples of the FSD package cost itself. Yet ascribes almost no value to it upon repurchase. In fact, over time it depreciates faster than the vehicle itself,” Chanos added in a follow-up tweet on Sunday.
Chanos, the founder and president of New York-based hedge fund Kynikos Associates, is known for calling out fraud and financial shortcomings at publicly traded companies and profiting from his short positions in them. His famous wins include bets on Enron, Wirecard and Hertz.
Chanos is a vocal critic of Tesla and has held a short position against the Elon Musk-led company for at least eight years. In January, Chanos said his short position in Tesla was somewhere between 0.5 percent and 5 percent of his portfolio. He also held short bets on Coinbase, AMC and roughly 40 other companies. Chanos’s firm manages more than half a billion dollar worth of assets.
Chanos’s his bets on Tesla have yet to pay off. The EV maker’s share price has shot up 148 percent this year so far and is up more than ten folds in the past five years. His claim about the value of Tesla FSD, however, might be right.
FSD depreciates faster than Tesla cars
FSD is currently installed in more than 400,000 Tesla cars in the U.S. and Canada. The software is still in its Beta stage, and users are given regular updates over the air with more driving capabilities. Musk has repeatedly touted that FSD will achieve level 5 autonomous driving soon and the software’s actual value is over $100,000.
The Society of Automotive Engineers (SAE), which develops self-driving standards adopted by the U.S. Department of Transportation, defines six levels of driving automation ranging from level 0 (fully manual) to level 5 (fully autonomous). Despite what its branding might suggest, FSD is classified as a level 2 autonomous driving system, which requires a driver to stay alert at all times during the car’s movement.
And Tesla owners who have tried to sell their FSD-equipped cars find it nearly impossible to recoup what they paid for the software.
A Tesla owner going by the name “Alex” (@kuthedk) on Twitter recently considered trading in his 2020 Model Y Performance. His advisor suggested the car’s FSD package would be worth only $3,900, according to a screenshot of their text message conversation he tweeted on Sunday. The advisor didn’t assign a specific value to Alex’s FSD, but inferred the amount by giving him estimates for a Tesla with FSD and one without. Alex’s 2020 Model Y was valued at $37,700, about 48 percent lower than the cost of a brand-new car with the same add-ons. His FSD, in comparison, has depreciated 74 percent.
In May, another Tesla owner shared on Twitter that he was told by a used Tesla advisor in April that FSD “adds zero value” to his car at trade-in. FSD was first released in July 2020 with a price tag of $8,000. Since then, its price has nearly doubled after three increases.
