Elon Musk requires ‘FSD’ demo for every prospective Tesla buyer in North America

Tesla CEO Elon Musk is now requiring employees to install and show customers how to use the latest version of the company’s premium driver assistance system, which is marketed as “FSD” or Full Self-Driving, before completing a vehicle delivery in North America.

“Going forward, it is mandatory in North America to install and activate FSD V12.3.1 and take customers on a short test ride before handing over the car,” Musk wrote in an email to staffers on Monday. “Almost no one actually realizes how well (supervised) FSD actually works. I know this will slow down the delivery process, but it is nonetheless a hard requirement.”

Bloomberg first reported on Musk’s email, which was also viewed by CNBC.

While all new Tesla vehicles have a standard driver assistance system installed called Autopilot, the company’s FSD option costs $199 per month for most customers in North America.

Tesla’s FSD system does not turn cars into autonomous vehicles. According to the Tesla owners’ manuals, drivers must remain attentive to the road and ready to steer or brake at any time when using FSD or FSD Beta.

Owners with FSD can also get access to the FSD Beta system, which allows them to test and help debug newer driver assistance features on public roads.

Under pressure from the National Highway Traffic Safety Administration, Tesla has implemented voluntary recalls to improve the safety of its Autopilot, FSD and FSD Beta systems in recent years.

Tesla didn’t immediately respond to a request for comment.

In a separate memo distributed to staff at Tesla, the company is asking salaried and hourly workers to sign up for additional shifts to deliver cars to customers in the last days of the first quarter.

“Join us in delighting customers as they take delivery!” the memo said. “While our production capacity allows vehicle deliveries to be distributed more uniformly throughout the quarter, we still need your support to move, prepare and drive vehicles to customers throughout the end of Q1.”

Salaried Tesla employees do not receive extra pay if they work delivery shifts, but hourly employees are eligible for additional compensation, generally billing their hours to a sales and delivery cost center, according to the memo, which CNBC viewed.

Tesla is under pressure to avoid a drop in year-over-year deliveries for the first quarter. At least one independent researcher, who publishes as “Troy Teslike,” predicts Tesla will report just 407,000 deliveries for the quarter, which would mark a decline from 422,875 a year ago.

Tesla shares have declined about 30% year to date, closing on Monday at $172.63.