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The ownership illusion: a definitive review of cars that rent you your own features

Have you ever purchased a product only to find you don’t fully own it? This perplexing reality is the new frontier for car buyers. The traditional concept of purchasing a vehicle and owning all its physical components is rapidly fading, replaced by a contentious model where manufacturers ask you to subscribe to features already installed in the car you supposedly own. This ‘ownership illusion’ has sparked outrage and debate across the automotive world, most notably with recent news about major brands gating everything from heated seats to enhanced performance behind a monthly paywall. It represents a fundamental shift in the relationship between consumer and manufacturer, turning a one-time purchase into a source of recurring revenue. This article will explore the rise of this trend, examining which automakers are leading the charge, the financial motivations behind it, the fierce consumer backlash, and the long-term implications for what it means to truly own a vehicle in the age of the software-defined car.

What is the new subscription model in cars

The burgeoning subscription model in the automotive industry is often referred to as ‘Functions on Demand’ or FoD. Unlike traditional subscriptions for services like satellite radio or live traffic updates which require continuous data and external support, FoD involves activating hardware that is already physically built into the vehicle at the time of manufacture. Imagine your car rolling off the assembly line with heated seats, a high-end adaptive suspension, or advanced lighting systems fully installed. However, to use them, you must pay a recurring fee through the car’s infotainment system or a companion app. The activation is managed through over-the-air (OTA) software updates, allowing the automaker to switch features on or off remotely. This practice is akin to video game microtransactions, where a player pays extra to unlock content already on the game disc. Automakers argue this approach simplifies manufacturing; they can produce fully-loaded vehicles and differentiate them later via software, reducing the number of unique hardware configurations. They also claim it offers consumers flexibility, such as paying for heated seats only during winter months. However, for many buyers, this model feels fundamentally unfair, as they are being asked to rent hardware they believe they have already paid for as part of the car’s total purchase price. This creates a disconnect and challenges the very definition of ownership.

The pioneers of pay-to-play features

While Tesla has long set a precedent with its paid software unlocks for features like Autopilot and its ‘Full Self-Driving’ package, it was BMW that ignited a global firestorm. The company’s trial in several countries to charge a monthly fee of around eighteen dollars for heated front seats became the poster child for automotive microtransactions. The public outcry was swift and severe, as consumers balked at the idea of renting such a basic hardware feature. Mercedes-Benz followed a similar path, introducing an ‘Acceleration Increase’ subscription for its EQ electric models. This paid service unlocks extra horsepower and torque that the vehicle’s motors are already capable of producing, offering a faster 0-60 mph time for an annual fee. General Motors has also waded into these waters, with plans to make its OnStar connected services package mandatory on new Buick, GMC, and Cadillac models, bundling features that were once optional into a non-negotiable multi-year subscription. Even brands like Volkswagen, Audi, and Toyota are exploring or have implemented subscriptions for functionalities ranging from advanced navigation to remote start capabilities via a key fob. These pioneers are testing the limits of consumer tolerance, betting that the convenience and allure of on-demand features will eventually outweigh the initial resistance to this new and controversial business model.

Why automakers are embracing microtransactions

The automotive industry’s pivot towards subscription models is driven by a powerful financial incentive the pursuit of stable, high-margin, recurring revenue. The traditional business of selling cars is cyclical and has relatively thin profit margins. By contrast, software and services offer a continuous stream of income long after the initial sale. Industry analysts project that the market for automotive software and services could be worth hundreds of billions of dollars annually within the next decade. Automakers see this as a crucial financial cushion and a way to fund the immense research and development costs associated with electric vehicles (EVs) and autonomous driving technology. They also present it as a value proposition for the consumer. From their perspective, it lowers the initial purchase price by unbundling features and allows a second or third owner to customize the car to their liking by activating features the original owner did not want. Furthermore, it allows for the introduction of new capabilities over the life of the vehicle through OTA updates, theoretically keeping the car modern and exciting for longer.

‘Functions on demand will provide customers with the flexibility they are used to from other sectors’, a statement often echoed by automotive executives, suggests they see this as a natural evolution in line with how people consume digital media and software today.

They are betting that this future revenue will be essential for their long-term survival and innovation in a rapidly changing industry.

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The consumer backlash and the erosion of ownership

The push for in-car subscriptions has been met with widespread and vocal consumer backlash. The core of the frustration lies in the perceived greed and unfairness of the practice, especially when it applies to hardware. Drivers argue that if they have paid for a car that includes the physical components for a feature like heated seats or an adaptive suspension, they should not have to pay an additional fee to use it. This sentiment has been amplified across social media platforms, automotive forums, and in the press, with many labeling it a ‘scam’ or ‘double-dipping’ by manufacturers. The practice fundamentally alters the psychology of ownership. A car has traditionally been a symbol of freedom and one of the most significant purchases a person makes. The subscription model chips away at this, fostering a feeling that one is merely a long-term renter of a product, not its true owner. This feeling is exacerbated when features that were once standard or part of a one-time trim package are moved behind a paywall. Critics also point out the absurdity of needing a subscription for a feature that requires no ongoing data or service from the manufacturer to function, unlike GPS traffic updates. This erosion of trust could have long-term consequences for brand loyalty, pushing consumers towards automakers that still adhere to a more traditional ownership model.

The impact on the used car market

The rise of Functions on Demand introduces a significant layer of complexity and uncertainty into the used car market. Traditionally, a used car’s value is determined by its age, mileage, condition, and the features it was built with. A top-trim model with all the options has always commanded a higher price than a base model. However, with subscription-based features, this clarity vanishes. A pre-owned vehicle might physically contain the hardware for premium audio, advanced driver-assistance, and heated everything, but none of it might be active. This creates a confusing situation for both sellers and buyers. How does a seller accurately list the car’s features? Do they advertise its potential or only what is currently active? For a buyer, determining the true value of a vehicle becomes much more difficult. They might have to factor in the additional cost of subscribing to the features they want, turning a seemingly good deal into a more expensive proposition over time. There are also unanswered questions about the transferability of subscriptions. If a seller has a lifetime unlock for a feature, will it pass to the new owner? The lack of standardization across brands means the rules could be different for a used BMW versus a used Mercedes, creating a minefield for consumers and potentially depressing the resale value of cars heavily reliant on subscribed features.

The future of the software-defined vehicle

The trend of in-car subscriptions is not a fleeting experiment; it is a core component of the industry’s vision for the ‘software-defined vehicle’ or SDV. In this future, a car is seen less as a mechanical object and more as a hardware platform for software, much like a smartphone. Its capabilities, performance, and user experience will be primarily dictated by its code, which can be updated, upgraded, or monetized throughout its lifespan. While consumer resistance is currently strong, especially in North America and Europe, automakers are playing a long game. They believe that as younger, digitally native generations become the primary car buyers, the subscription model will become normalized, just as it has for music, movies, and software. However, the pushback is not just from consumers. Lawmakers are beginning to take notice. For instance, a bill was introduced in New Jersey to prohibit automakers from charging subscription fees for features that utilize components already installed on a vehicle at the time of purchase. The outcome of such legislative efforts could set a critical precedent. The future will likely involve a compromise, with consumers accepting subscriptions for genuine services and connectivity while automakers are forced, either by market pressure or regulation, to abandon the most egregious attempts to rent out a car’s own hardware to its owner.

In conclusion, the automotive landscape is undergoing a seismic shift, moving away from the simple act of selling a product to the complex business of managing a service. The ‘ownership illusion’, where car buyers are asked to subscribe to hardware already in their possession, represents the frontline of this transformation. Automakers, driven by the promise of massive recurring revenue streams to fund their electric and software-heavy futures, see this as a logical and necessary evolution. However, they have severely underestimated the emotional and psychological attachment people have to the concept of ownership. The intense consumer backlash, coupled with potential regulatory scrutiny, has created a significant roadblock. The current model, exemplified by charging for heated seats, feels exploitative and has damaged brand trust. The future of the car is undoubtedly as a connected, software-defined device. But the path forward requires a more balanced approach. Manufacturers must distinguish between valuable, ongoing digital services and the fundamental hardware a customer has already purchased. If they fail to find this balance, they risk alienating the very customers they depend on, proving that while you can sell someone a car, you can’t always sell them on the idea of renting it from you piece by piece.

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