Car companies are increasingly offering services tied to the hardware already built into their vehicles, which is sparking controversy. Rather than introducing new services or enhanced experiences that can be unlocked with an additional payment or subscription, these companies are making features that were originally part of the car inaccessible unless an extra fee is paid. This trend is becoming more common in the automotive industry.
The most recent example is Tesla, which is now selling upgrades to car buyers that do not physically add anything to the car but simply unlock “additional range” from the battery that was previously restricted through software. Tesla Model Y owners can purchase these upgrades for between $1,500 and $2,000, adding anywhere from 30 to 50 miles of range to the vehicle without physically modifying the battery.
Following the Trend
Tesla is not the only company adopting this approach. BMW faced backlash for initially locking heated seats behind a paywall and attempting to charge customers for features like Apple CarPlay and Android Auto. Mercedes-Benz also charged customers for a subscription to unlock additional performance in their vehicles. However, unlike BMW, Mercedes-Benz quickly scrapped this subscription model due to customer opposition.
This practice of locking hardware features behind additional fees is viewed as questionable and unethical. Automakers should explore alternative revenue streams that do not involve withholding features that were included in the original purchase of the vehicle.
Exploring Alternatives
Automakers can add value to vehicles post-purchase by offering services like cellular subscriptions for internet connectivity, access to satellite radio services, or software upgrades that enhance the driving experience. While some opportunities exist for hardware subscriptions, such as Volvo’s all-inclusive subscription model, the focus should be on delivering added value to customers without restricting access to basic features.
As the automotive industry evolves, car subscription services are likely to become more prevalent. Manufacturers must find ways to monetize their products without compromising the customer experience. By prioritizing customer satisfaction and innovation, automakers can successfully implement subscription-based services without holding essential hardware hostage.
