Subscription Based Car and Product Features

Edit: New readers to the topic can join at July 2023 with LG joining the fray.

Tesla started it and BMW seems ready to enthusiastically join in.

One can only presume the hardware features will be in each vehicle and the customer thus pays, but if the customer wants to use the features they pay again?

4 Likes

It is cheaper in some respects to make all vehicles with the same gear rather than have an options sheet (whether hard copy or in software) travelling down the chain line with them and add the correct extra bits at the right time according to the sheet.

As well the option to get people in to a subscription model is also attractive as you can potentially get more money over time payment than the one-off purchase and you may suck in some who would balk at the up front price.

2 Likes

More broadly would paying a single lower cost up front and a subscription by the mile/km for rego, insurance, fuel, pro-rata maintenance costs in advance become also a norm.

Tesla and BMW’s business models demonstrate the ability of the manufacturer to maintain a level of connectivity to each and every vehicle. That same ability presents an opportunity to expand the business model to all other aspects of car ownership.

Those with corporate arranged novated leases will have some understanding of how it might work out. For everyday consumers is there a benefit in paying only as you go. In addition seeing the true full cost of use might encourage future change towards the better options for our environment.

P.S.
The idea of offering a low upfront purchase price or building it into an ongoing contract is well established in for the mobile phone market. It seems to know few bounds with the latest models able to reach the $2000 price point. Not quite the same cost as a car just yet? :joy:

2 Likes

A counterpoint is whether the subscription model is better, eg which side of the equation benefits more. Putting all the options in all the vehicles comes at a cost the consumer invariably pays regardless that it might be a bit less (and non-functional) than priced and installed as a discrete special functional option.

More companies seem to be finding more unbundled ways to charge and thus improve their bottom lines as compared to making better products even if with better margins. The aggregated unbundled charges can easily exceed the previously bundled ones that reflect the same product that was charged differently.

Are online activated/deactivated/subscription features better for the consumer? I’ll vote no. You buy your vehicle with cruise control for example. A useful feature for many. You lose or reduce your income and all of a sudden it could become a choice of cruise or food. Another variation on hunger games? Sell the car and the new buyer would reasonably discount the value of subscription features and the manufacturer would be able to arbitrarily raise the prices to encourage upgrading the vehicle every few years, and so on.

4 Likes

Our legal system is different as are our consumer protections, but at the end of the day our multinationals try to bring their home policies to us like it or not. Could they try ‘fees for no service’ if an Australian consumer did not want the service? I suspect we will find out in the next few years, maybe sooner than later.

2 Likes

Ref

Tesla is setting a new standard. Buying the ‘Best Electric Vehicle for Your Needs’ is beginning to take on more aspects than many may have realised at purchase time.

One could defend this practice how? But I expect someone may give it a go.

3 Likes

New Jersey is attempting to limit this practice: New Jersey legislators propose subscription ban for in-car features | CarExpert

Two New Jersey assemblymen have proposed banning automakers from offering subscriptions for features that are already installed in a car at the time of sale or lease.

… it seeks to make illegal ongoing fees for features that “[utilise] components and hardware already installed on the motor vehicle at the time of purchase or lease” and for which there is no “ongoing expense to the dealer, manufacturer, or any third-party service provider”.

This seems like a reasonable separation between what is a legitimate service and what is a money grab. Many features require the car to be connected, which includes a SIM and data, the cost of which is borne by the manufacturer.

However it will prevent, for example, BMW charging a monthly fee for heated seats.

3 Likes

I would be asking for a refund. The vehicle(s) isn’t fit for purpose under the Australian Consumer Law, if Tesla isn’t allowing owners to use the vehicle for towing - noting that Telsa currently doesn’t have a tow pack available in Australia for Australian consumers to purchase and use.

Any reasonable consumer would expect a car to be able to tow something, especially if there are aftermarket products available to allow such to occur.

2 Likes

The new world order continues to plod forward.

How long until a hacker collective offers to unlock all your car’s features for a small fee? You can bet this would invalidate the warranty, according to the maker, but some will do it anyway.

I am awaiting Grand Theft Auto as a reality show.

The possibilities with an autonomous vehicle are boundless.

Behind on your monthly car loan, have unpaid parking or traffic fines, bad guys down the road using a clone of your vehicle and rego? Who knows where it might have gone when it’s no longer there. The one place it may not be if it’s a Tesla is on it’s way to Mars.

1 Like

The concept has caught on with ads on smart TVs, obviously some auto manufacturers, and now LG is out of the ranks across their whole product line. The topic title has been updated.