Do You Agree with Subscription Business Model for Automotive?

[Carbon82]

Over the past decade, more businesses and service providers are moving towards SaaS (Software as a Service) and subscription model, which claims to provide user with the most up to date products and technologies. While I am not a supporter for such business model (I am still using MS Office 2019 instead of Office 365), I have no issue with it since it is one of the many options for consumers.

But the recent move by Tesla and Mercedes actually have me sit up and wondering if the whole automotive industry is also moving towards this "new" business model, at the expense of consumer's interest?

For those who are not aware, Tesla's full self-driving capability is now available via subscriptions instead of a lump sum cost up front.

Full Self-Driving Capability Subscriptions

Tesla has started offering a monthly subscription for its Full Self Driving package for $199 per month (i.e. $2,388 per annum). Tesla owners who bought the since-discontinued Enhanced Autopilot package can get the FSD subscription for $99 per month, according to Tesla’s support page. Until now the automaker had sold its FSD package for a one-time fee of $10,000, but the monthly subscription lets users test the FSD features without a long-term commitment. Tesla owners can cancel their monthly FSD subscription at any time, according to the terms on the Tesla website.

And shortly after that, Mercedes follow suit with an annual subscription plan for Full Rear-Wheel Steering for its EQS in Germany.

Mercedes-Benz EQS To Offer Rear-Wheel Steering As A Subscription

All Mercedes-Benz EQS models leave the factory with all the hardware necessary to turn their rear wheels by up to 10 degrees, they just need the right software. Auto Motor und Sport reports that German customers can pay €489 ($571) per year to have the feature unlocked or put down €1,169 ($1,376) upfront to have the software for three years. Interestingly, the publication notes that the system also requires the 360-degree camera which itself is a €1,130 ($1,331) option.

In Singapore, where we are literally leasing a car for 10 years, such subscription are simply adding on to the owner's expenses (without taking into consideration the saving in vehicle taxes if the cost were to be paid up front). Going at this rate, what will be next, virtual cockpit, AEB, FCW, etc. to be provided on subscription basis? And what if the owner did not make timely payment, will the important safety features be disabled suddenly, resulting in accident(s)?

Share your view here.

[kobayashiGT]

Personally I think it will works. But not on today context. When the manufacturing cost and all other overheads getting lesser and lean, the subscription model can work. of cuz, need to eliminate the middleman also.

 

But anyway, aren't we already on subscription base liao? I every 10 years will subscribe to my car one time leh. 🤣

[Weez911]

This is a bit different from the watch souscription business. For watch manufacturers, they take in subscriptions via deposits so that they can use these "seed" money to manufacture watches (labour and raw materials). Souscription for watches started way back in late 1790s until fairly recently. 

In today's context for cars, it kind of makes sense because of the frequent technological upgrades. If it keeps everyone safer, it is a good idea.

Edited September 2, 2021 by Weez911

[Stratovarius]

interesting question. i guess it really depends on the type of service for subscription. Good to have or must have? these services are mainly software i guess so it doesn't entice me. Unless the software is to unlock the motor kw by 20% more, that i will bite. lol.

[Beanoyip]

I think whether you agree or not, it's the business model of the future..

Just like NIO, I think their battery capacity/swap is also subscription based.. 

[Jamesc]

I wish I could have got my MIL on subscription.

I would have asked for my money back or at least a less problematic model.

If buying an electric car, I don't mind "renting" the battery.

Because after a few year they have to be replaced or reconditioned anyway.

[Volvobrick]

Waiting for someone to hack the software to unlock all features. Just like chipping up the engine powder! 

Makes sense if the purpose is to lower the OMV and thus the ARF, Custom duties, especially batteries. But the Taxman won't be sitting still staring at massive revenues lost! 

[Lala81]

The only subscription service that makes sense would a full autonomous level V driving package.

I'm generally resistant to any subscription packages.

Probably the only subscription package I've signed up for was a dropbox package for extra storage.

[DOBIEMKZ]

3 hours ago, Carbon82 said:

Over the past decade, more businesses and service providers are moving towards SaaS (Software as a Service) and subscription model, which claims to provide user with the most up to date products and technologies. While I am not a supporter for such business model (I am still using MS Office 2019 instead of Office 365), I have no issue with it since it is one of the many options for consumers.

But the recent move by Tesla and Mercedes actually have me sit up and wondering if the whole automotive industry is also moving towards this "new" business model, at the expense of consumer's interest?

For those who are not aware, Tesla's full self-driving capability is now available via subscriptions instead of a lump sum cost up front.

Full Self-Driving Capability Subscriptions

Tesla has started offering a monthly subscription for its Full Self Driving package for $199 per month (i.e. $2,388 per annum). Tesla owners who bought the since-discontinued Enhanced Autopilot package can get the FSD subscription for $99 per month, according to Tesla’s support page. Until now the automaker had sold its FSD package for a one-time fee of $10,000, but the monthly subscription lets users test the FSD features without a long-term commitment. Tesla owners can cancel their monthly FSD subscription at any time, according to the terms on the Tesla website.

And shortly after that, Mercedes follow suit with an annual subscription plan for Full Rear-Wheel Steering for its EQS in Germany.

Mercedes-Benz EQS To Offer Rear-Wheel Steering As A Subscription

All Mercedes-Benz EQS models leave the factory with all the hardware necessary to turn their rear wheels by up to 10 degrees, they just need the right software. Auto Motor und Sport reports that German customers can pay €489 ($571) per year to have the feature unlocked or put down €1,169 ($1,376) upfront to have the software for three years. Interestingly, the publication notes that the system also requires the 360-degree camera which itself is a €1,130 ($1,331) option.

In Singapore, where we are literally leasing a car for 10 years, such subscription are simply adding on to the owner's expenses (without taking into consideration the saving in vehicle taxes if the cost were to be paid up front). Going at this rate, what will be next, virtual cockpit, AEB, FCW, etc. to be provided on subscription basis? And what if the owner did not make timely payment, will the important safety features be disabled suddenly, resulting in accident(s)?

Share your view here.

Car makers are now trying to squeeze revenue car buyers on subscription services because they know that this will be a recurring stream of revenue. 😔

[DOBIEMKZ]

1 hour ago, Jamesc said:

I wish I could have got my MIL on subscription.

I would have asked for my money back or at least a less problematic model.

If buying an electric car, I don't mind "renting" the battery.

Because after a few year they have to be replaced or reconditioned anyway.

Why not like this: Make yourself be on subscription to your MIL instead.
 

[Ahwhye]

3 hours ago, Carbon82 said:

 And what if the owner did not make timely payment, will the important safety features be disabled suddenly, resulting in accident(s)?

Share your view here.

safety features or anything with safety implication should never ever been on subscription basis; performance features yes, bell and whistle by all means go ahead......

Edited September 2, 2021 by Ahwhye

[Jamesc]

7 minutes ago, DOBIEMKZ said:

Why not like this: Make yourself be on subscription to your MIL instead.

That stingy woman won't pay!

This is what she will say to me.

[Jamesc]

If my MIL car brakes were on subscription.

I will stop paying one day!

[DOBIEMKZ]

16 minutes ago, Jamesc said:

That stingy woman won't pay!

This is what she will say to me.

Then you got excuse not to serve her !😅

[Jamesc]

8 minutes ago, DOBIEMKZ said:

Then you got excuse not to serve her !😅

That's not a valid excuse

according to her.

[Carbon82]

The things is with EV and autonomous driving, more than what we can think of will be eventually be make available via software (and over the air updates). These might indirectly include safety such as auto braking, collision prevention, blind spot monitoring, lane drift warning, etc. (to become part of full autonomous driving package).

Also, software can only work with appropriate hardware in place, and if say the hardware for all the said safety features were already built in (and we are paying for it), why should we pay extra for subscription just to make it work? Will we ended up being held ransom by these auto manufacturers?

I have no qualm with add on services such as navigation suite, traffic monitoring system, personal assistance, etc. (BMW ConnectedDrive, Audi Connect, etc.)  to be on subscription, as these are more of convenience rather than essential features. But to take away something that is already built-in and charge a monthly fee to use it is a big no for me.

@Beanoyip I am generally OK with batteries on subscription base as long as the liability part is properly sorted out. If an EV is totaled due to batteries fire under batter swap program, and it is not the owner's fault (say accident or misuse), the full damages should be born by the the operator of the battery swab program, nothing less.

[Volvobrick]

2 hours ago, Jamesc said:

If my MIL car brakes were on subscription.

I will stop paying one day!

One day? Not day one? Typo? 

Edited September 2, 2021 by Volvobrick

[Watwheels]

I dont think it can work here due to our car import tax structure. All these features and functions have to be added with the car's cost, what we know as OMV. The car tax structure taxed based on OMV etc.

A subscription of a function like that will be seem like a loophole to have a lower OMV and paying less tax. LTA most likely wont allow it. They will tell the car maker either the function is included or it is not.