Tesla Sets Price for Self-Driving Feature, Lays Groundwork for Ride-Hailing Service

By Tim Higgins 

Tesla Motors Inc. set its retail price for the option that would allow a car to drive fully autonomously at $8,000, and hinted that those who paid it would be able to offset the cost through a ride-hailing network that would compete with Uber Technologies Inc. and Lyft Inc.

The price and mention of the ride-hailing Tesla Network appeared on the company's website on Wednesday shortly after an announcement that, effective immediately, all new Tesla vehicles will include the hardware necessary to drive themselves. The $8,000 price covers the software to enable that hardware, an option called Full Self-Driving Capability, which will cost $10,000 if purchased separately from the vehicle.

The price for autonomous driving for the first time sets a benchmark for car manufacturers that aim to market self-driving cars including Alphabet Inc.'s Google, BMW AG, and Ford Motor Co.

"This is the first time somebody has put a price -- a consumer price -- toward what that feature set might cost," Stephanie Brinley, an industry analyst with IHS Markit, said. "It sets a level of expectations....It draws a line in the sand."

The website's description of Full Self-Driving Capability included the first concrete sign that Tesla is considering a ride-sharing business. The description included a terse statement that "using a self-driving Tesla for car sharing or ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year."

Mr. Musk in July laid out his vision of self-driving cars forming the basis of a ride-hailing network as part of the company's long-term plan in July. He envisioned a world in which Tesla owners could put their vehicles to work generating income.

"Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not," Mr. Musk wrote in July.

Several companies are racing to develop fully self-driving cars including Alphabet Inc.'s Google, BMW AG, and Ford Motor Co. General Motors Co. and Uber, in particular, are betting that ride-hailing services will be the first commercial use of autonomous vehicles. Uber is testing self-driving taxis in Pittsburgh, Penn., and GM has partnered with Uber-competitor Lyft with plans to test self-driving Chevrolet Bolt electric cars.

(END) Dow Jones Newswires

October 20, 2016 16:12 ET (20:12 GMT)

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