by Mike Gulett –
It is inevitable that the internal combustion engine will soon be replaced with electric motors powered by batteries or maybe some vehicles will use hydrogen fuel cells depending on the application.
In addition to this big change in automobiles there is another big change coming along with the conversion to electric power. The automobile will become a mobile communication and computing device similar to our smart phones and personal computers combined with entertainment thrown in. Our cars will be constantly on-line as we drive them or when we are not driving them, or always as long as the power is on.
This change in the automobile allows and facilitates companies like Apple, Google and Sony becoming automobile manufacturers. These new auto companies along with Tesla do not think like the traditional auto manufactures that we all know so well. They will look for other revenue opportunities in addition to selling cars. They will sell us software updates and subscriptions for features we normally think of as built into the purchase price of the auto. These features will be software enabled such as Tesla’s self-driving capability but it could also be other features we normally take for granted like the use of automatic keyless access and free power charging at certain charging locations.
Feature Subscriptions
Auto companies will download software updates even if the owners do not know they are doing so. These subscription features will be very profitable for the auto companies because the hardware capability will be installed and the added feature will be enabled by software – all over the air.
We are accustomed to factory options being bought up front and a permanent part of the automobile. The old style options are an integral part of the car and get passed along to the next owner when we sell our car. In this new future this is not the case. The options sold through a subscription may not be available forever such as if the owner were to stop paying for the subscription or when the car is sold the new owner may need to sign up for the subscription in addition to paying for the car from the previous owner.
The buyer could test drive and inspect a car that has features that he does not get without the added expense of a subscription. The buyer may also have access to new features bought by subscription from the manufacturer that were not used by the previous owner. You can see this could create confusion for the buyer and maybe the seller of used cars.
There could be new features added after the auto has been sold that were not available when it was new. This will mean the manufacturer will be contacting their customers attempting to sell them new features and auto makers will have their own app stores to make a little extra money like smart phone and computer companies do now.
Content From Auto Companies
Auto manufacturers may also attempt to bundle in desirable content that they own to help sell cars and get paid an extra subscription for that content. That could be, for example, Sony offering their music and movie catalogs to their car customers to entice them to buy their car and of course pay for the content.
It has been reported that BMW will sell subscriptions to real-time traffic alerts, navigation map updates, and live concierge service from its ConnectedDrive Store. And they are planning features such as heated seats as a subscription product in Europe.
Porsche’s subscription service called Function on Demand is available on the 2021 Taycan. The customer can buy the option outright or pay for it month-to-month. As of now the only available subscription option is Porsche Intelligent Range Manager, which optimizes the navigation system to maximize the range and minimize charging stops. Owners will pay $474 to purchase the feature or $12 per month after a three-month trial period expires.
Problems
There will be lots of problems with this new business model in the early days or years like warranty issues for options not bought by the first owner but added later by a subsequent owner. Was the software updated while owned by someone who is not using that feature? If yes, what if that software update causes problems with the owner who is not using that feature?
Will auto sales people understand the complexities of these optional features and what is paid for with the purchase and what is paid for with an additional monthly fee? If they do not understand this clearly the customer likely will not either. It will be easy to call your car accident lawyer if needed because the car will remember their name and will send the location and other details of the accident to them.
Some of these optional features require hardware to work and some of this hardware will be installed on the car even if the subscription option is not chosen meaning the cost of the auto is higher and either the manufacturer or the customer will pay for this.
Obsolesce
What happens when the computers on existing cars become obsolete and cannot handle new features or the auto manufacturer stops supporting some existing features? I suspect it will be just like when the same thing happens in the smart phone or computer markets; the customer loses and needs to buy a new product or pay a lot of money for a hardware upgrade.
What happens to the resale value of an auto where many of the features are not supported, or have been canceled, and at some inevitable point when the operating system for that model and year is obsolete and no longer supported by the manufacturer? Well, you can imagine that scenario, our dumps are filled with obsolete phones and personal computers.
Conclusion
In addition to the change in the power source the automobile becoming a mobile communication and computing device similar to our smart phones and personal computers creates the opportunity for increased benefits to auto owners but also creates chances for cost increases, problems in the sales channel, maintenance issues and resale complications. Only time will tell if these changes are beneficial.
Let’s see what happens.
Let us know what you think in the Comments.
From The Matrix – Animal Logic/Warner Bros.
I can see it now with non stop ads popping up on the screen selling you what ever you are talking about( your car is listing). Police will be monitoring our speed & if you are wearing your seat belt( a ticket will come in the mail, if you don’t pay the cops can maneuver your car & drive it to the jail), be careful what you are saying in the car to other passengers, it might be hate speech & your boss will have to fire you. Cant wait for my electric car. Help
This is absolutely prescient and accurate, as far as it goes. And there’s even more. Simple charging stations are already non-standard and incompatible between brands. Software advances will evolve into a massive nightmare for NHTSA and its counterparts in other countries. And there’s the whole “autonomous cars” kerfuffle. It’s going to be lotsa FUN!