Imagine: you buy a new car, 0 kilometers on the clock, still full of that fresh new-car smell. The friendly car salesman offers you a ‘soft price’, good for years of carefree driving pleasure.
That used to be the case, but there is a good chance that you will get another question in the coming years: do you want a subscription with that? For example for your seat heating? That will cost you only 19 euros per month.
Subscription for everything
Ridiculous? No, because car salesman BMW is already doing this in the Netherlands. And not just with heated seats. There is also steering wheel heating (11 euros per month), real time traffic information (62 euros per year), BMW drive recorder (15 euros per month), driving assistant plus (39 euros per month), speed camera alert (6 euros per month). ), and the high beam assistant (9 euros per month). And we haven’t mentioned everything yet. Sometimes you can buy it off indefinitely, but often you can’t.
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BMW is not alone in this. Many major car brands are trying out these types of subscription models. For example, Toyota tested an extra function for the wireless key, and brands such as Cadillac, Volkswagen, Porsche, Audi and Tesla are also experimenting.
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Potential gold mine
In most cases this concerns small amounts per month, but for the manufacturers it is a potential cash cow. General Motors, the group behind brands such as Hummer and Saab, earned almost 2 billion euros last year on these types of subscriptions, and expected that by 2030 this will have grown to about 24.5 billion euros per year. General Motors had a total turnover of EUR 124.7 billion.
Expectations are just as high with other car manufacturers. So said the big boss of Ford earlier this year that he thinks that in 2030 Ford will earn no less than 19.7 billion euros per year from subscriptions.
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Consumers don’t always go along
Nevertheless, it is still a matter of finding where the balance lies for car brands. For example, BMW had to do a mea culpa last year and cancel an introduced subscription. The German car brand introduced a subscription in 2020 to be able to use Apple CarPlay in the car. In addition to the installation costs, the company wanted 78 euros per month from the buyer to be able to use the feature.
There was huge criticism, reinforced by the fact that Apple CarPlay is available for free in many other, cheaper car models.
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Necessity for manufacturers
These new sources of income are needed for car manufacturers because it is expected that we will need a new car less quickly in the future. From 2030, new petrol cars may no longer be sold, and an electric car will last much longer.
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“If cars are depreciated less quickly, the manufacturer sells fewer new cars,” said ING economist Rico Luman. The income that is lost as a result must be recouped somewhere. At the moment there are still plenty of electric cars being sold, because we are at the beginning of the transition. But that period will come to an end when a large part of the vehicle fleet is electric.
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How long does an electric car last?
According to Rico Luman, electric cars last longer than cars with a combustion engine. “An electric car has fewer rotating parts than a regular petrol engine, so less can break down.” In addition, the batteries of electric cars deteriorate less quickly than was thought. According to Luman, no hard figures are available yet, partly because the first Teslas are only ten years old. “But that electric cars last longer, that’s for sure.”
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More features behind paywall
Tesla in particular sees good business in the subscription model. The electric car manufacturer has already accustomed consumers to a car that receives constant updates. And the company is slowly massaging the consumer the idea that they also have to pay money for this.
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For example, the first batch of Teslas was still connected to the internet free of charge. But in 2018, most features for new Teslas, such as internet access and music streaming, were put behind a paywall of 10 euros per month. Only things such as the FM radio and navigation remained available for free for an unlimited period of time.
Until the beginning of this week: Tesla made familiar that this previously unlimited package will now be valid for eight years. In other words: after eight years you have to transfer 10 euros per month to Elon Musk, otherwise you may no longer be able to listen to the radio in the car. Are you buying a used Tesla that is seven years old (and that was delivered after July 20, 2022)? Then it could just be that you can use the radio for free for a year; Then it’s time for a subscription.
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Will the consumer accept this?
Economist Luman does not dare to say whether the consumer will take it all. “What I do know: if you buy a car that does have a certain functionality built in, but you can’t use it, then that is annoying. So as a consumer you are forced to pay for it, otherwise you will miss that functionality. That is a strong starting position from the manufacturer’s point of view.”
He also notes that people who opt for these new, advanced models are often lease drivers or people with a large budget. It is not the people with a smaller purse. Only when there is a lively market for used electric cars will the majority of people be confronted with this.
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