July 12, 2024


Unlimited Technology

Why Tesla Stock Is Hopping Today

What happened

Shares of electric car superstar Tesla (NASDAQ:TSLA) stock had popped 2.5% as of 12:10 p.m. EDT Monday after Tesla announced over the weekend that it has activated the “request” button on its cars.  

By clicking on said button, a Tesla owner can apply to join the beta test of the company’s Full Self-Driving software program.

Two icons that say

Image source: Getty Images.

So what

Not all who call will be chosen, however. As Tesla advises, it will limit FSD beta functionality to drivers who have a sufficiently high proprietary Tesla Safety Score, through which Tesla calculates “the likelihood that your driving could result in a future collision” by aggregating data collected by the company on a driver’s history of driving habits including:  

  • Forward collision warnings per 1,000 miles.
  • Hard braking.
  • Aggressive turning.
  • Unsafe Following.
  • Events of forced autopilot disengagement.

Now what

And all of that makes sense. After all, FSD is in part a public relations program — the better the software performs once activated (i.e., the fewer the crashes that result after it is activated), the more kindly regulators are likely to look upon FSD. Also, despite the name, FSD doesn’t actually make a car fully autonomous, and the car needs to have a driver in control at all times — the better the drivers, the better Tesla will look.

FSD is also in a sense a marketing program, because the safer the software appears in the real world, the more likely Tesla owners will be to ante up $10,000 apiece (or $199 a month) to get it activated. If adopted by all persons who currently own Teslas, that works out to a potential $14 billion bonanza for the company, with billions more to follow as Tesla sells even more cars in the future.

In short, there’s a lot riding on the success of this program — and today, Tesla took a step toward making it all happen.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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