Tesla reports 1.74 million FSD users, but the math helps Elon Musk get paid

Tesla has announced that its Full Self-Driving software now has 1.74 million active subscriptions, marking a 67% increase from the same period last year. This figure serves as a key performance indicator for the company's software division. However, the way Tesla calculates this number is closely tied to the financial incentives set up for its chief executive. A footnote in the company's recent shareholder letter clarifies that the count follows the rules of the 2025 CEO Performance Award. This means the total includes both customers who pay a monthly fee and those who paid a lump sum upfront for the feature.

The distinction matters because reaching 10 million active subscriptions is a specific milestone required for Elon Musk to earn a portion of his 2025 pay package. By counting one-time buyers as subscribers, Tesla moves closer to that target. This is significant because many of these upfront buyers were promised unsupervised self-driving capabilities, a level of autonomy that the company has not yet fully delivered. The metric effectively treats a permanent license the same as a recurring monthly service for the purpose of executive compensation.

The shift in how the software is sold began earlier this year. Tesla stopped offering Full Self-Driving as a one-time purchase on February 14, 2026. New customers in the United States can now only access the feature through a monthly subscription plan priced at $99. However, the millions of owners who bought the software before that date, some paying as much as $15,000, remain in the active count as long as their vehicles are on the road. The only group excluded from this total is those using free trials.

In April, Tesla reported 1.28 million users under this same definition. Six months later, the number has grown, but the company has not yet broken down how many of the 1.74 million are actually paying the monthly fee versus how many are legacy upfront buyers. This lack of detail makes it difficult for investors to understand the true recurring revenue potential of the software. The company has been consistent in its methodology, though, applying a similar logic to its vehicle delivery figures to match other pay package targets.

Tesla also highlighted a 75% attach rate for Full Self-Driving on new deliveries in North America during the third quarter. The company stated this represents a nearly 20 percentage point increase from the previous quarter and believes the software is driving demand in markets where it is available. However, the letter does not define exactly how this rate is calculated. It is unclear if this includes customers who signed up for introductory offers at delivery or if it tracks long-term retention. Unlike the active subscription metric, there is no stated exclusion for free trials in this calculation.

The path to the 10 million milestone is long. Musk’s 2025 award consists of 12 tranches, each requiring specific market capitalization and operational goals. These include delivering 20 million vehicles, reaching 1 million Optimus robots, and achieving 1 million robotaxis in commercial operation. As of June 30, Tesla considered only the 20 million delivery target to be probable. The company added 260,000 net subscriptions in the third quarter, its best performance yet.

Looking ahead, the pace of growth will determine if the 10 million goal is reachable within the award's window, which runs until 2035. If Tesla continues to add subscriptions at the rate seen in the last quarter, it would take about eight years to hit the target. If it maintains the average growth rate of the last 12 months, which is roughly 700,000 per year, the timeline extends to about 12 years. The board has defined the metrics, the CEO’s compensation depends on them, and the company currently holds the data on how many of these users are paying monthly.

The next step for investors and analysts will be to monitor retention rates. If the high attach rate translates into sustained monthly payments, it could represent a significant new revenue stream. Until then, the headline number remains a mix of recurring customers and legacy buyers, all counted together to track progress toward a specific executive compensation milestone.