Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk's surprise announcement to offer the company's Full Self-Driving (FSD) technology as a subscription service only starting next month has raised questions about the motive behind the move and whether it could be tied to tranches outlined in the trillion-dollar pay package approved last November by investors.

The Announcement

Musk shared the announcement via a post on the social media platform X in the wee hours of Wednesday, saying that the company would stop selling FSD after Valentine's Day this year.

Tesla currently offers the FSD service with either a $8,000 one-time payment upfront or as a $99/month subscription. Seeing as the monthly subscription would add up to over $1188/year, the move could drive adoption among customers. However, could there be more than what meets the eye?

Tesla's New Pay Package

The new pay package, which is divided into twelve tranches and would make Musk the first-ever trillionaire, provided he meets various sales and stock growth-related objectives, also includes FSD subscriptions as one of the milestones.

The conditions outline that Musk would need over 10 Million Active FSD Subscriptions to be awarded a tranche of the package. Other milestones include 20 million Tesla vehicle deliveries, as well as 1 million Optimus bots delivered and 1 million Robotaxis operating commercially, which could prove to be a challenge as Tesla failed to meet Musk's end-of-the-year driverless operations goal last year.

Seeing as the FSD take rate hovers at around 15%, according to investor Gary Black of The Future Fund LLC, Tesla would need to rapidly expand its FSD customer base for Musk to reach the 10 million FSD subscription milestone. A $99/month fee would be easier on customers' pockets, which could lead to more FSD signups.

Tesla's Sales Pose Another Challenge

However, Tesla's declining sales continue to pose a challenge for Musk. Despite the Tesla Model Y Crossover SUV, which recently saw a 7-seater layout introduced, emerging as the best-selling EV in the U.S., with over 357,528 units of the vehicle sold in 2025, the company's sales have seen declines in multiple markets across the globe.

The company was also surpassed by Chinese automaker BYD Co. Ltd. (OTC:BYDDY) (OTC:BYDDF) as the world's leading EV maker last year, as sales continued to decline across the board. This comes as, despite an EV rollback in the U.S., there has been an uptick in the adoption of electric vehicles in the global market.

Competitors Emerge

Another challenge in the 10 million FSD goal would be competitors catching up to Tesla. Recently, Nvidia Corp (NASDAQ:NVDA) revealed its Alpamayo technology, which uses a Vision-Language-Action (VLA) approach to self-driving vehicles and was touted as a "ChatGPT moment" for autonomous vehicles by CEO Jensen Huang.

The model is open-source and can help scale automakers' self-driving efforts as they could adapt their technology to Nvidia's models. Rivian Automotive Inc. (NASDAQ:RIVN) also announced its self-driving technology, offering its Autonomy+ service as either a $50/month subscription or with a $2,500 one-time payment. The company has shared that its autonomous technology uses a LiDAR-based approach.

Seeing as the competition is catching up with Tesla, Musk could be feeling the pressure to deliver on his promises. The $99/month FSD subscription could help democratize self-driving and be a pivotal step for Musk to showcase strong results as the company continues to navigate an increasingly competitive market. Will Tesla emerge on top? Only time will tell.

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