By Akash Sriram and Hyunjoo Jin
(Reuters) -Shares of Tesla rose about 4% on Tuesday after CEO Elon Musk said the electric carmaker will offer U.S. customers a free trial of its driver-assist technology for a month.
Musk has long touted the Full Self-Driving (FSD) technology as a potential cash cow for the company, but has failed to keep his promise of a fully autonomous driving experience, amid stiff regulatory and legal scrutiny of Tesla’s safety and marketing.
“All U.S. cars that are capable of FSD will be enabled for a one-month trial this week,” Musk said in a post on social media platform X.
Tesla shares rose as much as 6.7% before trimming gains to trade up 3.7% at $178.98.
His announcement came before the automaker next week may report disappointing delivery numbers for the first three months of this year, a sign that the effects of its aggressive price cuts are waning, and also weighed down by softening demand and rising competition.
According to two emails, Musk has also told employees to offer new buyers and owners of serviced vehicles demonstrations of FSD.
“(Free trials) could be a step in the right direction for people beginning to adopt the technology. Maybe this will entice drivers to purchase full self-driving for $12,000 at some point,” said Ken Mahoney, CEO of Mahoney Asset Management.
The FSD software, which Tesla says does not make its vehicles autonomous and requires active driver supervision, has also been offered at a subscription of $199 a month.
Researcher Troy Teslike said, “$199 per month seems too high for a driver-assist system that drivers have to monitor constantly and be ready to take over at any moment.
Tesla investor Gene Muster estimated that only about 5% of new Tesla buyers either purchase or subscribe to the FSD software, adding that if the number rises to 20% in 2026, nearly $1 billion of net income will be added.
In December, Tesla recalled over 2 million vehicles in the U.S. to install new safeguards in its Autopilot advanced driver-assistance system, after a federal safety regulator cited safety concerns. The National Highway Traffic Safety Administration (NHTSA) also opened its August 2021 probe of Autopilot after identifying more than a dozen crashes in which Tesla vehicles hit stationary emergency vehicles.
(Reporting by Akash Sriram in Bengaluru and by Hyunjoo Jin in San Frnacisco; Editing by Shinjini Ganguli)