My biggest issue with this kind of thing is resale. This kills resale value, because the company is going to be leeching a lot of that value with every transfer. They're not going to make the unlocks transferrable.
Are you sure? I personally don’t like the subscription model for car features, but look at it this way: it means there will be more cars in the second-hand market that are capable of faster acceleration or seat-heating or whatever else is pay-walled. It means that people can pay for a lower model car, and then someone else can buy it and “upgrade” to the higher model. I don’t know or have evidence that this will help resale value, but it seems at least logically plausible that it could help resale by giving downstream purchasers more options than they might have otherwise. You’re right, it’s still true that the auto-maker is leeching some of the value with every transfer, and that unlocks won’t transfer, but I’m not sure that will hurt resale.
All of that can be accomplished with one-time purchases. What’s the value-add of a subscription?
It’s great that future buyers can upgrade, I think that’s cool. But now sellers can’t recoup any of the money they spend on these features, and over the life of the car they are likely to cost many times more. It’s brutal for lower-income people relying on decent cars to eventually reach a price point they can afford, because they’ll need to effectively pay for every option like they are buying new.
> All of that can be accomplished with one-time purchases. What’s the value-add of a subscription?
True, and some of these new car subscription features are indeed being offered as one-time purchases, BMW’s heated seats, for example. The value-add of a subscription is a lower up-front cost in exchange for rent instead of ownership. You don’t have to pay for the whole thing, and you can decide to stop paying for it before you’ve covered the product’s full cost.
> now sellers can’t recoup any of the money they spend
True, and people should (and some will) consider this before buying a new electric Mercedes, right? I hope so. Their FAQ states that the service must be disabled before resale. I’m pretty sure I won’t be buying one of these new. But for people who go in eyes wide open, there’s a decent chance they’ll still sell them eventually. Hey, who knows, maybe they’ll be force to sell for less than the car’s worth because of everyone’s subscription fears.
> It’s brutal for lower-income people
We’ve suddenly skipped a few steps here. We’re commenting on a Mercedes car with an optional feature to increase acceleration to 60 MPH by 1 second. This isn’t a brand that lower-income people are buying, by and large, and isn’t a feature lower-income people will be subscribing to. Cars for the lower-income brackets are already sold with zero luxury features, so I don’t see how this option feature aimed at rich people hurts poorer people at all, and I don’t see the slippery slope clearly in this case either.
This will kill the resale value as soon as the possibility to upgrade expires. Why would Mercedes let you buy heated seats for a ten year old car when they could upsell you to lease a new one? Also, does 30$/month subscription make as much sense on a 10k$ car as it did on a 80k$ one?
And yes, this will happen. Just look at how many games are broken already because the servers were shut down and how many cars don't get original parts anymore. I have no confidence that car manufacturers will be better with subscription servers and that's assuming they stay in business, which is not a given (see, for example, Scion and Saab).
Pretty sure. As this continues, more and more things will be behind paywalls. The companies have every incentive to do this. Then more and more percentage of the value of the car is _not_ transferrable and will need to be paid (again) to the company by any new owner.
You paid X thousand for "upgrades"? Great, that is completely lost money when you sell it.
You can see this in the games market with DLC-heavy games. The physical copies of those aren't worth much because it doesn't even include most of the content.
The effect you explain does exist I think, but to me seems to be obviously overpowered by the other(s) in the other direction.
Yes the companies are incentivized, and yes they will extract money on resales, and yes your upgrades aren’t transferable. All good reasons to be careful when subscribing to features of this car. It might hurt first sale more than it hurts resale, if people actually care, which could be a good thing.
But I’m not sure the analogy to DLC games works here, you’re talking about DLC value that you purchased above and beyond the initial price of the game. The game itself doesn’t lose resale value, it’s the value of your DLC that doesn’t transfer.
If you want a new electric Mercedes, your choices will be either buy a new one at the new-car price and subscribe to upgrades, or buy a used one at the cheaper used-car price and subscribe to any upgrades you want. Cheaper and upgradeable is still going to be attractive to buyers than more expensive up-front. Part of the deal here is (presumably) that the car was cheaper in the first place than it would have been if the upgrade features were built in and permanent.
> It might hurt first sale more than it hurts resale, if people actually care, which could be a good thing.
If consumers were rational, that's how it'd work. They pretty rarely are though.
> But I’m not sure the analogy to DLC games works here, you’re talking about DLC value that you purchased above and beyond the initial price of the game. The game itself doesn’t lose resale value, it’s the value of your DLC that doesn’t transfer.
It's barely even an analogy it's so exact. You could just call acceleration upgrades and heated seats and whatever DLC, it's the same thing.
I’m not that worried. Monthly subscriptions work mainly because they’re impulse buys.
The mental impact of paying three-four figures a year for a subscription is different from a 3.99 app store payment.
This will benefit some folks. I imagine that most people will simply pass, the same way they’ve been passing on all of the other non-Tesla car subscription/remote upgrade offers.
