How Effective Are Automotive Industry’s Experiments with Subscription Services?

The subscription model allows you to lease, rent or buy vehicles using digital rights management (DRM) technology.
Carmakers have attempted to incorporate DRM into their products but haven’t received encouraging results.
There is a growing trend towards putting premium features such as heated seats, autonomous driving tools and more horsepower behind a paywall.

February 14, 2023 | Automotives

There is a gradual shift happening in the automotive industry with car subscription services replacing car ownership. This new model allows you to lease, rent or buy vehicles on a short-term basis using digital rights management (DRM) technology.

Rise of DRM in Automobiles

Automobile manufacturers have attempted to incorporate DRM into their products before, with not-so-encouraging results.

Renault Zoe, an electric vehicle, was built in 2013 with a rental battery pack that owners were unable to replace without going through an authorized seller. Additionally, DRM prevented the batteries from charging, effectively turning it into an expensive paperweight.

Even as electric vehicles and plug-in hybrids revolutionize the automotive industry, consumers still lack faith in the notion that a manufacturer could obliterate your car with the touch of a button.

With the remote start feature in models made after 2018, Toyota attempted to do something similar. A free, three-year subscription to Toyota's connected services was provided along with the purchase of a new car. The remote-start feature ended when the subscription did unless owners wanted to pay an additional subscription fee.

The provider claimed that the feature needed cellular connectivity, which came at a monthly cost.

Unfortunately, early versions of the technology were dependent on the 3G telecom network, which was to be phased out in 2022. Toyota changed those cars so the feature wouldn't require a subscription.

These are just two examples of how automakers have moved closer to subscription models to increase profits in response to consumers keeping their vehicles for longer periods.

Everything could end up being restricted behind paywalls or reliant on subscription services — from heated seats and steering wheels to autonomous driving tools, more horsepower or rear-wheel steering.

Also Read: Factors Impacting Manufacturing of Electric Vehicles

How the Automotive Industry is Becoming a Service

Every few months, someone will try to increase the price of something we've grown accustomed to or change our perception of it by adding the phrase "as a service" to it. Making something into a service has as its goal charging for something we already use. BMW changed an amenity into "comfort as a service" in the European market by placing its heated seats behind a paywall. Numerous extras offered by carmakers such as BMW, GM and Hyundai are becoming obligatory subscriptions.

GM recently announced that its OnStar service, which was previously an option, would become the default in newer models. The cost of a three-year subscription, which ranges between $1,500 and $1,675, must be paid in full upfront and is the only other option available to new customers who don't want to pay for a subscription they might never use.

How are Consumer Reacting to These Services

Consumers have been unable to stop the proliferation of DRM in automobiles. Stopping automakers from incorporating DRM into their vehicles or converting to the automotive-as-a-service business model will require a concerted industry-wide effort and may even call for legislative action. It's not sufficient to simply advise someone to decline the new car.

Globally, legislation that would ban the sale of new internal combustion vehicles between 2025 and 2040 is being drafted. Holding onto older vehicles when the infrastructure required to support and power them is no longer available will put buyers at a severe disadvantage and force them to purchase a new vehicle with all the subscription services a manufacturer could think of. The simplest way to combat DRM in cars is to start now before the technology takes even more of an industrial hold.

Outlook

The promise of self-driving cars and the rising popularity of EVs are creating an environment that is favorable for the implementation of DRM in automobiles. But automotive-as-a-service could leave people with idle vehicles in their garages if they can't afford the monthly subscription fees.

Author: Piyush Mehta

Also Read: Computing Power Vs Horsepower: The Battle For The Future Of Automotive Industry