Tesla’s FSD Milestone: 1.74 Million Counted Under Pay Package Rules

Tesla has announced that its Full Self-Driving (FSD) software now has 1.74 million active users, marking a 67% increase compared to the same period last year. However, a detailed look at the company’s third-quarter 2026 shareholder letter reveals that this number is calculated using a specific definition tied to CEO Elon Musk’s 2025 performance award. The metric includes both customers who pay a monthly fee and those who purchased the software outright, a distinction that significantly impacts how investors interpret the growth trajectory of Tesla’s most prominent software service.

The counting method stems from a footnote in the shareholder letter, which states that the metric follows the terms of the CEO’s performance award and encompasses both upfront payments and monthly subscriptions. This approach means that owners who bought FSD years ago, often at prices reaching $15,000, are still counted as active subscribers as long as their vehicles are in operation. Tesla ceased selling FSD as a one-time purchase on February 14, 2026. Since that date, new customers in the United States have only been able to access the feature through a $99 monthly subscription. The only customers excluded from the 1.74 million figure are those on free trials, though Tesla has not yet disclosed how many of the total actually pay a monthly fee.

This specific definition is critical because reaching 10 million active FSD subscriptions is one of the operational milestones Musk must achieve to receive his full compensation package. The same methodology appears in other parts of the report, where Tesla’s cumulative delivery figure of 10.2 million includes unsupervised robotaxis placed into commercial operation, aligning with the pay package’s 20 million vehicle target. Additionally, Tesla claims that more than 75% of new deliveries in North America included FSD subscriptions in the third quarter, representing a nearly 20 percentage point sequential increase. While the company suggests this indicates strong demand, it has not clarified whether this attach rate accounts for introductory offers or long-term retention beyond the initial purchase period.

Reactions to the metrics have focused on the gap between the reported numbers and the underlying business reality. Critics note that while counting one-time buyers is not inherently incorrect, labeling them as 'subscribers' to demonstrate momentum may be misleading for investors. The definition was crafted to satisfy compensation requirements rather than to provide a clear picture of recurring revenue. Furthermore, hundreds of thousands of these users were originally sold the promise of unsupervised self-driving, a capability Tesla has not yet fully delivered. The board has written the definition, Musk’s pay depends on it, and the company remains opaque about how many customers are actually paying the monthly fee.

Looking ahead, the path to the 10 million milestone remains lengthy. Tesla added 260,000 net FSD subscriptions in the third quarter, its best performance yet. If the company maintains this quarterly pace, it would take approximately eight years to reach the target. If it relies on the average growth rate of the last 12 months, which was roughly 700,000 per year, the timeline extends to nearly 12 years. The compensation award is valid until 2035, providing a long runway for Tesla to close the gap between its current 1.74 million active users and the required 10 million threshold.

The next focus for analysts will be on retention rates. If the 75% attach rate holds up over time, it would signify a robust business model for a $99 monthly product. Investors are now waiting for data on how many North American buyers who started subscriptions in previous quarters are still paying today, a key indicator of whether the software is driving sustained demand or just initial interest.