Morgan Stanley believes Tesla (TSLA) could end up making more money from selling software subscriptions than selling hardware, like its actual vehicles.

Tesla has been on a trend of offering paid services through software.

Now that Tesla launched the FSD subscription, Morgan Stanley released a new note trying to value Tesla’s software-as-a-service business.

The $199 per month price tag was actually higher than Jonas anticipated:

“The monthly subscription upgrade fee of $199 is substantially higher than we would have expected. The $10k up front price for FSD implies around $56/month over a 15 year useful life of the vehicle (180 months). We have assumed Tesla derives $100/month of average revenue per unit (ARPU) per monthly active user (MAU) by 2026 or 2027 for 60pct of its vehicle parc.

Tesla currently has a fleet of about 1.5 million vehicles, but Morgan Stanley is projecting that it will increase to 35-40 million by the end of the decade.

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Will Tesla Make MORE Profit On Its SOFTWARE And SERVICES Than On Its Vehicles? Morgan Stanley Thinks So. Are They Right?

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