The freemium business model has made its way into the automotive industry. More and more features in new vehicles are now available on a subscription basis. Do you want to warm up your ass in winter? – Buy a subscription to heated seats. Are your hands cold from the cold steering wheel? – This is another service for an additional fee. Do you want autopilot? – Pay. Want more horsepower under the hood? – Any whim for your money.
This is exactly what car manufacturers like BMW, Tesla, Mercedes, Toyota and others do. In fact, hardware is already installed in your cars, but manufacturers have “screwed on a toggle switch” that can turn on or off this or that option. It turns out that you have already paid for the presence of seat heating in your car or the presence of a DVR camera and so on, but why not monetize the already built-in hardware in the second round? We will not be naive to believe that automakers installed all this hardware at their own expense, reduced their earnings and did not include it in the cost of a car when it was sold at a car dealership, would we?
Freemium on Premium Auto
More and more often, car manufacturers are aggressively monetizing built-in options. For example, a monthly subscription to heated front seats in a BMW costs $18 per month, or $180 per year. Access to this option for three years costs $300, while BMW sells full access forever for just $415. Similarly, BMW offers to rent a heated steering wheel button for $10 per month, $92 per year, $161 for three year or $222 forever. It costs $235 to activate permanent recording from the built-in cameras of the DVR, and to have permanent access to the Apple CarPlay system is offered for $305.
Toyota also introduced a subscription to a remote ignition service from a key fob. The company’s customers were not happy with such an innovation and do not understand what else they have to pay for if everyone already has this option from the factory.
Tesla also thought why give their users something for free when you can monetize a lot. Last year, when reselling the Model S, Tesla remotely disabled the autopilot because the new owner did not pay for it. And after updating the infotainment system of electric vehicles, Tesla offers to return access to a regular radio (!) for only $500. Elon Musk seemed to enjoy charging for the same option twice, so he didn’t hesitate to do the same on Twitter, taking away the blue check from verified users and announcing a monthly fee of $7 per month for it, under the guise of high-flown notions like freedom, the struggle for the truth and so on.
But if you can somehow live without a radio in Tesla or blue check on Twitter, then the next subscription may already cost someone their health or even life. For example, Klim motorcycle airbag vest will not work unless you pay for a subscription.
Aftermath of Growth in the Number of Subscriptions
Is it possible that such kind of monetisation may have negative consequences in the long run?
The fact is that the number of subscription services increases every year and puts more and more pressure on the monthly budget of an ordinary person. We mean that the average user already pays for music, data storage, streaming services and so on. Moreover, in the video streaming segment alone, a growing percentage of subscribers indicate that they are already spending more than they would like, and a Deloitte survey last fall found that 44 percent of people canceled at least one paid service in the last six months. Deloitte also found that 59 percent of users were happy to watch multiple ads an hour in exchange for a cheaper or even free subscription.
Such an overload of subscription services that people pay for will inevitably lead to the fact that users will increasingly seek help from craftsmen in third-party services to technically activate closed options for a reasonable price. This is fraught with the fact that the warranty on the car from the manufacturer can fly off in the event of a request for a breakdown of the unit, and even lead to additional misunderstandings during maintenance or while driving.
