Written by Hyunju Jin and Jyoti Narayan

(Reuters) – Electric car maker Tesla is giving U.S. customers a one-month trial of its Fully Self-Driving (FSD) driver-assistance technology as slowing demand and price wars weigh on the company's sales and profit margins. It will offer a free trial, CEO Elon Musk said Monday.

Mr. Musk has long touted his $12,000 driver-assistance software as a potential profit-maker for the company, but Tesla's plans for fully self-driving cars come amid regulatory and legal scrutiny of its safety and marketing. Promises have remained unfulfilled for many years.

“All US cars that are FSD-enabled will be enabled this week for a one-month trial,” Musk said in a post on social media platform X.

He also directed Tesla staff to demonstrate FSD to new buyers and owners of refurbished vehicles, according to two emails reviewed by sources who requested anonymity.

“Very few people actually understand how well (monitored) FSD actually works,” Musk wrote in one of two emails to Tesla employees. ” he said.

Researcher Troy Teslaik says that “FSD utilization” is declining in North America, with about 14% of Tesla customers purchasing the package in Q3 2022, compared to a record high in Q3 2019. He said this was down from 53%.

Tesla's margins have been hurt by a price war with rivals that began more than a year ago. The company also warned in January that shipment growth would be “significantly slower” this year as it focuses on producing next-generation EVs.

“The combination of significant vehicle price cuts and a significant decline in FSD rates has significantly reduced Tesla's margins,” said Sam Abuelsamid, an analyst at Guidehouse Insights.

“Today's requirement to demonstrate FSD is just the latest in a long line of Mr. Musk's quarter-end stunts aimed at increasing deliveries and revenue.”

Tesla says its vehicles are not self-driving and require active driver monitoring, but the FSD software is also available as a $199 monthly subscription.

(Reporting by Hyun-joo Jin in San Francisco and Jyoti Narayan in Bangalore; Editing by Jerry Doyle and Clarence Fernandez)

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