Illustration by Dominic BugattoCar and Driver
From the October 2021 issue of Car and Driver.
In 2019, BMW announced that it would begin charging owners of its vehicles $80 per year for the privilege of using Apple CarPlay, which mirrors an iPhone’s screen and functionality on the infotainment display. It’s not only standard in a $14,595 Chevrolet Spark, the least expensive car available in the U.S., but is also a feature that Apple does not make BMW pay for. Consumers mutinied, and the Bavarians retreated. But not for long. BMW next decided that it would return to a subscription model for features such as a smartphone-based virtual key, remote start, and even heated seats.
Porsche offers a range-optimization feature and lane-keeping assist on its Taycan electric models for a monthly charge. Cadillac does the same with its hands-free Super Cruise driver assistance, and Audi with its immersive Wi-Fi-enabled navigation system. Of course, Tesla now asks customers to plunk down $200 per month for its always-a-day-away misnomered Full Self-Driving. Welcome to the digital automotive buffet, where you can pick and choose what you want—then pay for it every month.
“It’s worked great for Adobe, which went from selling copies of Photoshop for $700 to offering only a subscription license,” says Sam Abuelsamid, principal analyst at Guidehouse Insights, where he oversees vehicle tech research. Now graphic designers pay $21 a month, forever.
Representatives from BMW, Audi, and Porsche all point to benefits for consumers. “U.S. customers mostly select vehicles from dealer inventory,” says Jay Hanson, a BMW tech spokesperson. “Function on demand has the potential to streamline the process of the customer finding the car they want.” Hmm, so would including the good stuff as standard.
In reality, the concept streamlines the process of manufacturing, saving automakers money. Instead of building cars with many different option packages to spec, companies can produce one fully equipped model and charge consumers to turn on the features they want. “You’re going to have increased complexity in the car but less complexity in manufacturing,” Abuelsamid says. “There may be enough economies of scale in reducing manufacturing cost to save the cost of adding hardware.”
Automakers could also see residual value bounce back to them. Consumers who purchase their vehicle but lease their options won’t build equity in desirable features, so when it’s time to unload their car, years of paying for advanced navigation or remote start won’t bring them a higher resale price. Rather, that becomes a component the manufacturer can continue to rent to the next customer.
Automakers “talk about flexibility,” Abuelsamid says. “You don’t need heated seats in the summer. So if you can turn those subscriptions on easily, you can pay for them only when you want to use them. Of course, you also have the responsibility to turn off the subscription when you’re not using it. And people in the subscription business count on the idea that if the price is low enough, customers will forget to unsubscribe. Once you’ve got it, you’re getting just enough benefit from it to not unsubscribe. Think about all your streaming services.”
We’d rather not.
This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io
