The new year started off with a solid rally on Monday, led by Tesla (TSLA), Advanced Micro Devices (AMD), Nvidia (NVDA) and Apple (AAPL). But the rest of the week was an expectation breaker, with the major indexes selling off and leaders such as Tesla stock reversing hard.
Surging Treasury yields were the driving force, as a surprisingly hawkish Fed jobs report on Friday spurred selling in bonds. That slammed growth stock names and buoyed financials. Rising crude oil prices lifted energy stocks.
Tesla CEO Elon Musk said his company would raise the price of Full Self-Driving in the U.S. by $2,000, to $12,000, on Jan. 17. He also said FSD Beta 10.9 will be released soon.
Hmmm. 
Can’t say I’m surprised. I wonder how this will affect the public’s perception of the product though. $2,000 is definitely not a small amount. 
This is how I think this is going to go when we reach “escape velocity” in adoption of driverless cars and the 5G techology is ubiquitous, at least in the USA, then EU, then UK.
Recognising that cars on Tesla autopilot are already ten times safer than human-driven cars, I expect that the insurance premiums for self driven cars will be (at least) ten times cheaper than cars driven by humans. That is not to say premiums will reduce - no, premiums for human drive cars will increase, first by a small amount so as not to be too noticeable but eventually to such a level that (a) the licence fees for FSD will look cheap and (b) it will become so expensive to drive your own car that only really rich people will afford that luxury. At that stage the quantity of vehicles on the road will gradually reduce by 75% from their “peak usage” just like “peak oil”, and suddenly all the highway bandwidth that has decimated the green earth will be returned to green field. What a wonderful clean planet we will have by the 2050s, and Elon Musk was the only guy who was able to make that happen. One guy out of seven billion people. A genius from another planet (my conspiracy theory only) 
1 Like
Thats a decent increase for no aded service or benefit. Interesting move with so many leading car manufacturers hot on his heels
Early in my career I worked for a company that virtually had a monopoly of services outside the lower 48 states. In fact their dominance was 97% when I joined them and 96% four years later when I left.
We had lots of formal training as engineers, they were expanding rapidly and needed many young managers. One of the question was:
You are running a district that is growing rapidly and your gross margin target is 50% before regional and global overhead. Your last quarter is showing that you are off target and are likely to finish the year with a 40% gross margin. What do you do?
After stock answers based on our perception of “normal business models” in the 1970s, the answer was “you put your prices up”. When we objected to this answer the regional manager told us "look, we expand and contract with our customers’ market opportunities. We are just a passenger on our customers’ journey. And if they need to grow so fast it is because the demand for their product (oil) is insatiable. They have no other choice. We are the only company in the world that provides this service outside of North America.
And I see Musk’s Tesla business as a near “mirror image” of that monopoly back in 1978. As long as his order books continue to exceed his capacity to deliver, he can put his prices up especially for a product that has no equivalent anywhere on this planet.
1 Like