Tesla gave up the EV crown. Now it wants to win the autonomy race.
At its recent “flying Roadster” event, Elon Musk announced that Tesla is exploring a merger with SpaceX, positioning the combined entity to accelerate autonomous‑driving research and secure critical components such as chips. The move coincides with Tesla’s push to turn FSD into a high‑margin subscription business: 1.7 million active FSD users worldwide, a 67 percent year‑over‑year increase, and roughly three‑quarters of new North‑American deliveries now equipped with the supervised version. Priced at $99 per month in the United States, FSD already eclipses the profit contribution of a typical car sale, and analysts estimate that expanding the subscription base to half of Tesla’s global fleet could generate more earnings than selling an additional 50,000–100,000 vehicles annually.
The strategy reflects a broader industry shift. After BYD eclipsed Tesla as the world’s largest EV maker, Chinese firms such as Xpeng are investing heavily in their own advanced driver‑assistance suites (XNGP) and courting EU regulators for full‑autonomy clearance. Traditional OEMs—from Volkswagen‑backed Xpeng to Hyundai, Toyota, GM, and Ford—are likewise building software and robotics divisions to capture recurring revenue. Tesla’s reliance on vehicle sales has already shrunk from a 20 million‑unit target for 2030 to a more modest 5 million‑unit goal, underscoring the urgency of a software‑first model. The pending EU vote on advanced‑driver‑assistance regulations, delayed until December, will be a decisive test for both Tesla’s supervised FSD and Xpeng’s competing system.
The merger prospect adds a layer of risk. While a combined Tesla‑SpaceX could leverage rocket‑grade AI hardware and supply‑chain synergies, it would also tie the automotive business to SpaceX’s capital‑intensive launch schedule and speculative AI bets. Shareholder analysis suggests Musk could command a controlling stake of 50 percent or more in the merged firm, potentially consolidating decision‑making but also exposing Tesla to any regulatory setbacks on FSD approvals. Watch for the EU’s final stance on autonomous‑driving standards, the evolution of FSD pricing (especially outside the U.S.), and whether the subscription uptake can scale to the 50 percent threshold analysts deem financially transformative.
Key Takeaways
Tesla’s FSD subscriptions now cover 75 percent of new U.S. deliveries and are growing at 67 percent year over year, signaling a shift toward software‑driven margins.
A potential Tesla‑SpaceX merger could give the carmaker access to aerospace AI and chip resources, but also ties its fortunes to SpaceX’s high‑risk projects.
Chinese rivals, especially Xpeng, are accelerating toward EU autonomous‑driving approval, directly challenging Tesla’s lead in the region.
The next regulatory hurdle is the EU’s pending vote on advanced driver‑assistance rules; approval—or denial—will heavily influence Tesla’s global FSD rollout and subscription growth.
About the Source
This analysis is based on reporting by Ars Technica. Here is a short excerpt for context:
Tesla hopes autonomy subscriptions can deliver the margins car sales cannot.Read the original at Ars Technica
