[ph03n!x]

Some excerpts from an article that popped up in my Twitter -

This week saw BMW announceseveral features of its all-new Operating System 7, which will arrive in the new 2021 5-Series this month, before rolling out more widely via an over-the-air update.

...features like advanced driver assistance systems, augmented sports exhaust sounds, adaptive M suspension and, yes, heated seats, could be offered on a subscription basis, with periods mentioned ranging from one month to three years.

Source

What is your take?

This might be a good idea if implemented right - buy lower variant of the car, and "unlock" only the features in higher variants that you need. Or only unlock features when needed (like heated seats or heated ORVM during winter).

But then will a manufacturer not "load" the cost of making a one-build-for-all model across the entire spectrum, making the lower variants pricier than they should be?

Let's see what Team-BHP thinks - poll added!

[Turbanator]

BMW tried previously with Apple car play and failed. I don’t know what’s the cost of the hardware they intend to put on the cars and what percentage of people are going to pay ultimately for these features.

It’s little different than what Tesla does where you can pay the difference and get some of the features activated but with them it’s a one time cost and mostly software except for few things like rear heat seats, hardware for which is there but not activated. It’s not same as having an M suspension or a Bowers Audio with 6 speakers instead of 20 when paid.

Perhaps, Tesla can earn better than BMW on monthly fees. My Kid will happily pay $50 to Tesla for self driving feature or $10 for the rear heat seating or better sound from the Audio.

I don’t think it will be successful with BMW though.

[warrioraks]

Originally Posted by ph03n!x

What is your take?

This might be a good idea if implemented right - buy lower variant of the car, and "unlock" only the features in higher variants that you need. Or only unlock features when needed (like heated seats or heated ORVM during winter).

The biggest question is pricing. Will customers get any upfront Capex benefits to offset these subscription costs.

One way this can play out - All customers get the same variant with ability to enable/add features at will:
1. Features which can be software controlled (example - cruise control) are sold in the form of subscriptions
2. Features which are not software controlled (better quality seats, steering upholstery, etc) are sold in the form of accessories
3. Some features would be non-configurable. Example - Safety features like airbags, ABS

If BMW is trending towards this direction, it is a radical change in the ownership model. I like the idea on paper - pay what you use. But I think it is a tough one to implement. It changes the economics of how cars are sold and owned.
Also gives rise to questions which are difficult to answer now. For example - if the heating components of the seat goes kaput, then who pays for repairing the hardware? BMW or customer? The customer just bought a subscription (and not the hardware) so ideally the responsibility should reside with the company. This will also become a hassle during service visits. For every part replaced/repaired, the customer will have to track whether it’s a subscription part or owned part.

Specifically in the Indian context, things like cruise control and heated seats are features very sparsely used. Sure there are other features which people might pay for but I will be curious to see the value (for BMW) to provide the sparsely used features as a subscription.

To sum up - I find it too complex in the first go, so will wait for BMW to provide more clarity on how this new model will work. Till that time, my vote is for the third option - Subscription for hardware/ feature my car already has? WTF?!

[2000rpm]

An experiment worth trying in my view. Will be great to see the response in different markets.

Would be very useful addition in hired cabs. My wife would live the heated seats in the winter and I would love the ventilated seats in the summer. Sunroof usage can also be pay-per-use in cabs.

[mayankk]

For a manufacturer, isn't the real cost the installation of the hardware rather than running it? If it's already in the car, what's the point of restricting usage? Will they be selling a non-optioned car with everything disabled if bought at the base price? Idiotic.
Or they will raise the prices of base models slightly, and then attempt this milking exercise. Either way, this just sounds stupid and improbable.

[Jeroen]

Originally Posted by mayankk

For a manufacturer, isn't the real cost the installation of the hardware rather than running it? If it's already in the car, what's the point of restricting usage? Will they be selling a non-optioned car with everything disabled if bought at the base price? Idiotic.
Or they will raise the prices of base models slightly, and then attempt this milking exercise. Either way, this just sounds stupid and improbable.

They are already doing this, in fact have been doing so for many years. Different engine options are often nothing else then a change in the ECU settings. Same is true for some options and features on your dashboard.

Jeroen

[TokyoDrifter]

The more I think of it, seems like the “freemium” model in the app world. You get to download the app for free, but need to pay fee to use more premium features. Might actually be a good idea to find out the price elasticity. Of course, this would mean there has to be a way to
A. Control the activation/deactivation of features (time based/usage based)
B. Measure the usage (no of mins the heated seat option is activated, no of times sun roof is opened/closed etc etc.)

Might lure lot more customers towards using these features. And eventually, might lead to saturation towards top-end models only. Worth trying, especially given the tough/low-demand times.

[avira_tk]

Bmw will add these features to the car and disable them, once the lease ends, activate the features and sell as a higher spec model in the used section. This will work, as tesla has done the same with battery capacity, I don't mean to say customers will be OK with this approach if they know the features are unusable.

[drmohitg]

I am quite open to this idea. It is worth trying. There are features that I like or want and others that I don't. We always complaint that western countries get so many options like kits etc to configure the car they want. I have been browsing the various car makers in the UK and configurators that they provide on their websites. While they are definitely better than India, still you come across things that are packed together in packages where I am forced to pay for some features that I do not want. This subscription based method may address that. Also you may try features that otherwise you wouldn't have opted for. I am all for it on a trial basis atleast.

[AbhiJ]

Bmw already kind of does this.

I have gotten someone to actually code and enable features my car never had!

[Jeroen]

Originally Posted by AbhiJ

I have gotten someone to actually code and enable features my car never had!

Could you elaborate? What car, make model
Year. And what features?

Jeroen

[AbhiJ]

Originally Posted by Jeroen

Could you elaborate? What car, make model
Year. And what features?

Jeroen

There is a thread for that.

https://www.team-bhp.com/forum/techn...-features.html (BMW - Coding & enabling hidden features)

[HR 16]

There was/is(?) a similar option available for Tesla owners, where the all the versions of a particluar car model had the same battery but the lower versions had the battery capacity limited to 80 percent through software. They were given the option to upgrade to full capacity by paying some amount.
This was highlighted when Tesla upgraded all lower variants during Hurricane Irma in Florida to help them evacuate easily (link).
If I remember correctly, they faced backlash from many owners who did not know of this and were furious that they were not able to use the car's hardware to 100 percent.

[AbhiJ]

Originally Posted by HR 16

There was/is(?) a similar option available for Tesla owners, where the all the versions of a particluar car model had the same battery but the lower versions had the battery capacity limited to 80 percent through software. They were given the option to upgrade to full capacity by paying some amount.
This was highlighted when Tesla upgraded all lower variants during Hurricane Irma in Florida to help them evacuate easily (link).
If I remember correctly, they faced backlash from many owners who did not know of this and were furious that they were not able to use the car's hardware to 100 percent.

And more recently...

https://electrek.co/2020/06/10/tesla...eration-boost/

"For a few years now, Tesla started selling vehicles with upgradable software-locked capabilities, like 75 kWh battery pack software-locked at 60 kWh or higher power outputs enabled through software updates.

The most recent example is offering a $2,000 ‘Acceleration Boost’ for the Model 3 Dual Motor.

It unlocks roughly 50 hp in the Model 3 powertrain and shortens the 0 to 60 mph acceleration to 3.9 seconds."

[landcruiser123]

If BMW doesn't charge me for the hardware upfront, has feature upgrades, and free replacement if things break, why not?

No point in making a subscription-based model for features you can't continuously update.

Originally Posted by mayankk

For a manufacturer, isn't the real cost the installation of the hardware rather than running it?

In some cases, it becomes easier and/or cheaper to manufacture one product and do differentiation by disabling certain features. Computer memory is sometimes manufactured this way- they target high capacity and burn off excess capacity to sell the lower-end models.