With Full Self Driving Evolution, Elon Musk Believes Your Tesla’s Value Will Appreciate — Interview Video

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In a must-watch interview with MIT artificial intelligence researcher, Lex Fridman, Elon Musk has revealed that he believes the move towards Full Self Driving functionality will cause the asset value of current Tesla vehicles to appreciate, rather than depreciate. This is a game-changing contrast with traditional vehicles, which typically lose around half of their value over the initial 3 years of ownership.

Elon Musk’s conversation with Lex Fridman/Youtube

The basis of the claim is Tesla’s plan that — when ready — the built-in Full Self Driving (FSD) capability of Tesla EVs will allow the vehicles to generate substantial revenue for their owners via mobility services in the Tesla Network. Even for owners who have not yet bought the FSD option, it will be available as an upgrade, and simply involve a swap-out of the processing unit, and over-the-air software updates.

To understand the contrast between Tesla vehicles’ ability to appreciate as assets and the steep depreciation issues suffered by traditional vehicles, take a look at some of our recent articles on the topic. Depreciation is often the single greatest aspect of the total cost of ownership of a vehicle, shaving 50% off the value of most vehicles after just 3 years, according to industry experts, Black Book.

Image by Tesla

Of the three key areas of technology for FSD — data gathering, processing hardware, and software algorithms — Musk believes that the data gathering challenge is a major advantage for Tesla, as he has stated in other recent interviews. The large and growing fleet of vehicles gives Tesla perhaps a 100 fold data advantage over all other players in the fully autonomous vehicle space, he stated. Relatively soon, Tesla will soon have 500,000 data-gathering vehicles on the roads. In Musk’s view, the total combined fleet of data-gathering vehicles run by other players in the space may amount to something on the order of 5,000 vehicles.

The onboard processing hardware part of the puzzle is also well in hand, based on Tesla’s design and testing of the current FSD computer. The chip is able to be installed on any hardware 2.0 or later Tesla, and has plenty of headroom to process data from all the vehicle sensors, as well as full redundancy. Current Tesla vehicles ordered with the FSD option are already shipping with this chip installed.

Image by Tesla

The neural network software algorithms will continually be refined, along with the vehicle control software, to improve the performance of vehicle autonomy and iron out more potential edge cases. All software iterations can be provided to Tesla vehicles via over-the-air updates. Whilst there will never be a 100% perfect FSD system, the relevant challenge is to get vehicle autonomy to a level at which it is significantly safer and more reliable than human drivers, and then to demonstrate that greater safety to regulators. Tesla’s Autopilot data show that its own vehicles are already significantly safer than typical vehicles when autopilot is in use.

Whilst software algorithms are continuously improving, the data-gathering capabilities and processing capabilities for FSD are already in place, Musk states in the interview. As a consequence of this, he claims that:

“Essentially, buying a car today, is an investment in the future … the most profound thing is that — if you buy a Tesla today — I believe you are buying an appreciating asset, not a depreciating asset.”

I’d strongly recommend anyone interested in vehicle autonomy to spend 30 minutes to view the interview:

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Dr. Maximilian Holland

Max is an anthropologist, social theorist and international political economist, trying to ask questions and encourage critical thinking. He has lived and worked in Europe and Asia, and is currently based in Barcelona. Find Max's book on social theory, follow Max on twitter @Dr_Maximilian and at MaximilianHolland.com, or contact him via LinkedIn.

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