Tesla’s Betting You’ll Pay $9,000 for a Software Upgrade | Hacker News Reader

Tesla’s Betting You’ll Pay $9,000 for a Software Upgrade

bloomberg.com

45 pointstcwc72 comments

Maybe this is just pointless pedantry but...

This isn't a software upgrade. It's an on/off switch.

There's a difference. A software upgrade implies some new code which cost real money to develop is being made available. That's not the case here.

As others mentioned, manufacturers do this already for cost reasons (reducing variation) on other software, but in that case it's legitimately a software upgrade because the new software being turned on cost actual money to develop which they recoup by putting it behind a paywall.

In this case, it probably actually cost Tesla money to implement the software to cap the battery.

What we have here is software being used to implement a paywall on hardware to recoup hardware development costs (presumably developing the 75 battery cost more than developing a 60 would have). It's a software-controlled hardware upgrade which happens to not actually be implemented as an upgrade because of cost control reasons.

I don't know that there is precedent for this precise business model.

Sure there is, nVidia and ATI/AMD have done pretty much exactly this sort of segmentation of many consumer->pro video cards in drivers practically forever.

And IBM has done this for a long time with its mainframes & zSeries. You can pay a fee to switch additional processors on.

You can even do it temporarily, which is neat (year-end reports or data crunching, for instance).

I think that with graphic cards it is a little different: the manufacturing process is simply not perfect, so attempt to produce card with 56 Streaming Processors (Pascal) can result in 40 SP units working fine and 16 being broken. So you disable broken units and sell the piece as lower end card instead.

They also do it on cards that pass the higher-end binning process fine and sell them downmarket anyway when there is more demand there.

Lots of people do this, it's often more expensive to make different versions of things then is it just to software cap something. So they make the same version for multiple price points and have variations of software cap in place.

CPUs for example are clocked at a set speed when they reach the consumer, they can always go higher without any negative impact (infact most are underclocked). It's basically a software switch that turns your 3.2 Ghz CPU into a 3.4 Ghz CPU.

You buy a SAAS product they have multiple levels, it's just a software switch that says you can X package or Y package. This is slightly different because the features may be more resource intensive or something else, but basically it's the same.

Carrier-grade microwave radios are usually sold at a base price for a specific speed (e.g. 100 Mbps). Software licenses can then be purchased to upgrade the capacity (e.g. to 200 Mbps, 500 Mbps, or 1 Gbps). Licenses are also sold to enable features such as encryption and hitless backup radio failover.

That's a little different because those extra features required additional work to implement in software and just happen to run on the same base hardware. This is just hardware being artificially constrained. It's like buying a 6 pack of Coke and actually getting 8 cans but you can only drink 6 of them unless pay an extra $3 to "unlock" the two cans already in the box.

Many SSDs are built with extra, inaccessible, capacity, for wear leveling purposes (of course, I don't know of any SSD manufacturers selling unlock codes for the extra storage). Lithium ion batteries similarly degrade with use. Perhaps an unlocked S60's battery will age better, which would be better for buyers in the long run. Tesla also sells preowned cars, so if extra capacity helps with wear, this would also help on that front (and introduce the possibility of selling the unlock twice?).

So we're going to have jailbroken Teslas that have the full range but can't update their software OTA...

Current cost of Li-ion battery is $145/kWh. It surprises me that they'd chose to give away $2250 worth of battery simply because it costs more to develop a new one. I understand the batteries they use are pretty modular - the cost of adjusting down capacity should be minimal. I'm speculating that they expect a large portion of buyers of the 60 model to upgrade to the more expensive version to recoup the costs. They could make the price of the upgrade a decreasing function of the age of the vehicle because no one would want to update an old car.

I imagine the lower price point still covers the full cost of the battery.

The lower price point plus the upgrade revenue can certainly be expected to cover the costs of the program (because that's how businesses work).

If the cost is $2,250 and they charge $9,000 for the post-purchase upgrade, then they only need 25% of buyers to upgrade the battery later for it to break even, and that's ignoring any cost savings in the manufacturing process.

Soon Tesla will send you a text message as soon as your battery is low, trying to sell you a temporary boost so that you can get to the next charger safely. At least my mobile provider does that as soon as my data volume is almost used up.

I'm curious of the implications of intentionally crippling a critical product with software. For instance, if your life depended on your Tesla having enough battery to drive to the next charger, would Tesla be responsible for your death? After all, they could have saved you at virtually no cost; they intentionally forbade you to fully use a product you fully purchased, resulting in your death. Maybe someone else can articulate this in a better way or knows more about the ethics.

They aren't being obscure about it, they are selling the 208 mile range and that's what the car will inform you of when charged.

I think if you say that Tesla is liable for mistakes you make with one of their vehicles you make it hard to sell kitchen knives.

> fully purchased

Did you? The remaining battery is essentially lent to you.

This is nothing new. Many car manufacturers have premium features already built in to the car but disabled in the software (because its cheaper to build fewer variants). Volkswagen charges a premium for remote window control despite all cars being manufactured to support the feature.

this is very different, the closes comparison i could think of is bmw selling a 320i and 328i which both have basically the same engine running different amounts of turbo pressure, but EVEN THERE the engine internals have the be quite a bit different.

Consider companies that modify the amount of horsepower the engine makes not with components but with different ecu software (tunes if you like).

My understanding is that your claim is no true. Sure, some horse power upgrades are hardware within the model, but some are just bit flips in software.

Do you have a source for your claim?

Even if the engine is the same they could be using the same binning process that is used in many other industries.

If the same engine can run at higher RPM it could mean that it needs better tolerances to achieve it so they bin the better parts for those engines.

Other things might also be slightly different like slightly different fuel injectors, seals etc. that can handle the more demanding workload.

You can tune virtually identical parts to perform differently but that process usually has a cost to it.

No, that would require building the car to spec. The savings here is that the car is already built, and you see the blue car with the extra so-and-so, and they then chip it to what you paid for.

Having a blue car with extra so-and-so in every horse power engine would mean they'd have to stock that much more.

It's exactly the the same engine but there is a tradeoff for the performance. The one with more horse power will generally either have less fuel efficiency or produce more emissions.

Eh, I'd assume different pistons and camshafts, but googling doesn't return any definitive answers. Could be wrong. Maybe I'm giving BMW too much credit.

And every BMW includes the hardware for SiriusXM even though you still have to pay hundreds to have it enabled.

Since MS can't even get me to use Windows 10 for free I doubt it.

reads article

Oh. An anti-feature.

> The only difference is that the software on the lower-end version limits the capacity of the S60’s battery, crippling its range. In fact, owners can instantly transform a lowly S60 into an S75 at any time for a fee of $9,000 ($500 more than if they’d initially bought it that way). They don’t even have to bring the car to a service center. Tesla flips the software switch remotely.

This is the reason for me that closed source software [that does dubious things] is doomed to fail.

As users find out about things like this, and as it starts effecting them more and more, there will be an aura of distrust.

Currently, I'd say programmers or IT-related people are the only ones that care about this. But as soon as the consumer sees they need to pay 9k for something they already have? Closed source software is done for.

Doesn't Apple already use this model? They deliberately disabled Siri on older iPhones to force users to upgrade their hardware.

I can't find any evidence to support your story. Do you have a source?

The third-party Siri, before Apple purchased the company, worked on any iPhone running the version of iOS it targeted. After the purchase it was relaunched as an integrated OS feature for the 4S and no longer available for older iPhones. Jailbroken older phones could reenable the feature.

The 4S did come with noise-cancelling microphones and an extra chip to support this; I believe the official line is that this hardware was required for Siri to work with sufficient reliability.

Edit: here's an article about jailbroken Siri: http://www.cultofmac.com/133196/fully-functional-siri-arrive...

Echoes of the utopian infancy of the Internet. Only the tech community significantly cares about this stuff, most people couldn't be bothered with how the software is made as long as it works. Just like in previous generations of technology and capitalism, there will always be enough people who grumble and pull out their wallets to keep the profits flowing.

When people have to fork over 9k, I'd bet they will start caring.

This might be a great way to avoid high state sales taxes in certain states.

When I had to register my car in a different state the ad valorem taxes and fees were $500 in the first year.

So you buy the 60, after you register the car and get the license plate, you pay $9k and save money on taxes.

Licensing vs ownership of things I buy is getting to be a real grey area. Businesses definitely want to license content to me rather than sell it, at least in a legal sense.

For example, when I buy a DVD, I don't really own it. I own a physical copy of the media with a license to only play it in an approved player.

This has spread a bit for example to gaming. Katamari Damacy for the 360 was actually shipped with DLC on the game disc that you had to pay additional money to unlock, and it wasn't the only one.

If I were rich enough to afford a Tesla, I guess it would probably be against the license to use the hardware I have to the fullest (if I didn't pay for it), because Tesla doesn't want that and I've only licensed their software.

I think there is a difference from the game. The disc for the game costs the same to produce regardless of whether you buy the DLC or not. The larger battery costs more to produce regardless of whether you pay for it or not and (slightly) hurts the performance of cars that don't have the upgrade (it's literal dead weight).

I guess I don't really care, especially if there is good disclosure for expensive physical devices (because I can then not buy them).

It is definitely different which is what makes it interesting. Since you're maybe getting something you didn't pay for. On one hand, it is dead weight if you can't use it, which is even worse (since it degrades performance) but if you can jailbreak it you get it for free. But either way, it definitely has a real physical cost, it's not just code.

It both helps and hurts performance. The added weight will hurt handling and efficiency, but the increased capacity allows for increased power output. This is why the 90D has a lower 0-60 time than the 75D, for example. The new 60 has a quoted 5.5s 0-60, whereas the original 60 (which actually had a 60kWh battery) was 5.9s.

Licensing is old news. The hip new thing in business is the social media model.

Businesses are now trying to give you things for free in exchange for rights to your data. That's the entire social media business model. It is so lucrative at the moment that even microsoft is now employing the social model for their consumer OS ( starting with windows 10 ). You get a "free" OS, but that OS is going to track what you do and sell your data.

Of course this model is much easier for software than hardware because of the low cost of distributing software and an easier way to achieve scale. If hardware decides to try this model, it will be interesting and funny to see what the implications would be. Tesla could offer to lease you a "free" car but they get to monitor you, collect your data and sell your data. Hell, what happens when housing developers try the "social media" model. You get to lease a "free" house but the developer gets to record/monitor everything you and sell your data.

Does Tesla try to justify this practice anywhere? Buying a software for a superior navigation system I understand but hobbling the performance of a car seems pretty shady.

Would you prefer that they not sell the cheaper version at all, or would you prefer that they sell the cheaper version with a physically smaller battery that costs a lot more money to upgrade?

I'd prefer to not have to jailbreak a car.

If this is the future for electric car business models where we have software defined features, I'm going to disengage as an early adopter. I actually think they should not sell the cheaper version because it dilutes the brand and the software upgrade starts to make the brand give off an enterprise subscription stench.

Where does this business model end? Am I going to have to renew my battery algorithm subscription yearly or my car turns into a piece of locked out hardware? Maybe I have to pay regularly to download self-driving updates? Am I going to have to pay to support the infrastructure to receive updates long after my car ends its production run?

That's a slippery slope argument not supported by the facts.

You don't have to jailbreak. You can get the car fully unlocked from the factory. But it costs more.

So again, what would you prefer, not having the lower cost option, or having the lower cost option be hardware limited? Or is there some third option you want?

On the contrary, I think it's a win-win for everybody. Tesla does not have to have two different assembly lines - for a base model and a higher priced model. Consumers can upgrade to the higher priced model through software without invalidating their warranty and adding hardware.

The ultimate DLC. What happens when Tesla's update server goes down, a car is factory reset, and that it's no longer possible apply that $9,000 IAP? (ICP?)

Hm, do the batteries used by Tesla have the same kind of "extended lifespan if rarely fully charged" issues that apply to the kind of cells used in most laptops? If so, then I'd be curious about whether this is implemented as a cap on the battery charge - I might actually prefer the lower capacity if it means my batteries last years longer.

Yes to all. However, unlike most consumer electronics, Teslas allow you to manually set the maximum charge it will take at any given time. I usually keep mine at 90%, for example, and only charge to 100% for long trips.

If you take the 75 option, you could keep the charge limiter set to 80% for normal use and achieve the same effect as keeping a software-limited 60 at 100%, but with the option to bump it up when you need more.

I wonder if they might considering letting you pay for the use of the bigger battery for a short period of time. For example, if you want to take a road trip you could pay $10/day to make use of the full capacity.

I expect that could be very popular.

Even better would be per charge probably. Pay $5 to charge once to 120% (or however much it is).

I don't think this is a software upgrade or newer version of the software. They are simply saying for additional money they can enable additional features that are already part of the cars code base. Like buying an in-app purchase in an iPhone app. Or like on BMW enabling all the connected features.

While I imagine the author hoped to try to put this in a negative light to stir up controversy, this of course is actually a great thing. As with any other car, if you have a car and want much better mileage or a big new feature like self driving, you won't be paying 9K for the feature you will be spending 50-100K+ since your only option is to buy an entirely new car every few years to get the latest features.

Any to get the new features I don't need to pay all the thousands associated with getting a new car, as well as negotiating on a new car, and everything else associated with it. Of course Tesla could just offer all features and build in the 9K in the car, and thus not allowing anyone who can't afford all the features to ever have a tesla. Instead they price it so people who want a tesla but dont necessary need some of those features a chance to buy the car, and then later get those features if they save up. Win win for everyone.

But most likely people complaining will be the same people who complain about the entry level storage on an iPhone. They would rather apple not sell it at all, than let people who can't afford the higher amount be able to buy an iPhone at all.

This actually seems like a really nice option. It allows you to get a loan for a cheaper car, and once that is paid off, you can upgrade it.

That's a very interesting way to look at it.

I don't get the controversy.

You may have a 75 kWh in your car, but you didn't pay for it. You paid for a 60 kWh so that is what you get to use.

Tesla has merely optimized the logistics a the battery upgrade, pre-delivering it and pre-installing it, doing 99% of the work at no charge. When you pay for it, they can make the upgrade as easy as an in-app purchase.

My only complaint would be that the extra weight of the batteries reduces my range to no benefit to me, should I keep my car at the S60 level.

Is there supposed to be a /s at the end?

Isn't the price kind of arbitrary? Would you accept this with any other product? Like buying a cheaper house because some of the rooms are walled off, or a hard drive that has a few GB of unremovable data, until you pay more.

Well, let's say I don't have any children, but I think I might have 2-3 in the next 5-10 years. I would definitely buy a small house with a nice master at a lower price that I can instantly upgrade later, especially if I don't actually see the walled off rooms and the footprint of my house just somehow magically changes in software. It sounds awesome and I would definitely sign up for that.

Yup, I'd do that in an instant. In fact, I wish houses were sold this way. I could by a 500k house for 100k with 1br, 1ba, kitchen, living room probably right out of school. In 5 years when a kid or 3 comes along, pay for the extra bedrooms, another bath, hell, maybe even a basement.

See: https://en.wikipedia.org/wiki/Ultimatum_game

People don't make "rational" decisions in the face of perceived injustice.

Strikes me the correct thing to do - unless you regularly need to drive >200 miles, in which case the decision makes itself - is in fact purchase the 60KWh version and just not buy the upgrade. The battery wear leveling must use the extra capacity, presumably? - otherwise the remote upgrade would be a dicey proposition, surely. So it's not like you're missing out.

9k for forty miles range? Really? They are betting wrong.

Plus I wonder how long before someone hacks these cars for personal use only?

Just like every other car manufacturer?

My understanding is that you choose which car to buy, and then you pay them thousands to flip a bit to enable extra horse power, on the same hardware.

Or you get some shady garage to chip it for you.

this isn't true. you can barely get any additional power out of naturally aspirated engine with software tuning, and sure you can do this for a short while on turbo engines but good luck running it reliably without spending money on various other modifications like cooling, engine internals, etc. manufacturers tune for a combination of gas milage, longevity, and to meet emissions regulations.

this is just market segmentation, which is almost always sensible from the company's standpoint, and shady from an intuitive pov because our intuition works in terms of repaying the company's cost to provide us with value, whereas segmentation works by extracting the maximum amount of money from the overall market.

Wasn't this done with Windows NT and Windows NT Server decades ago? It was just a configuration setting to upgrade.

Isn't this indirect evidence of too little competition? It has happened in the past with Intel for example...

And this is different from the "GPS Navigation" .."upgrade" most other manufactures make you pay $2,000 - $3,000 for...when the GPS is built in by default to almost every new car now.

This is actually a really smart move by Tesla. They are able to offer a lower cost version of the car, without changing anything on the manufacturing side. Thus increase sales through a lower price entry point.

Funny. This company likes to get brownie points for being environmental. We all know that those batteries are not guilt-free when it comes to the environment. They're wasting our earth's precious resources by putting extra capacity which may never be used ;-)

I think the environmental aspect is a key point.

It results in lower depth of discharge which might result in the battery lasting far longer than the higher capacity one.

This is kind of an absurd point because it's not obvious that manufacturing different types of batteries would actually be more environmentally friendly.

More complicated logistics could also be detrimental to the environment.

Well... it's not unusual for companies to ship the same product with different pricing and crippled performance. It's being done all the time. This is just "the next level".

I wonder if you can "hack" it yourself :)

Definitely not worth bricking your entire battery over $9,000.

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