To Subscribe Or Not To Subscribe — Smarter Car Edition

Sam Lin
3 min readAug 2, 2022

“Good artists copy, great artists steal”. Every carmaker dreams to reinvent their business models to add recurring revenue streams. So, any kind subscription seems worth trying. Unfortunately, not every copy is a good one. The question is how to steal better for Smarter Cars.

Thermal Valley, Taipei, Taiwan

Copy & Paste

BMW Is Trying Again With Subscription-Based Access to Luxury Features, This Time in South Korea

Even using SW to lock HW capability is not something new, I still can not shake off a feeling of rip off. For example, Tesla asks for $4,500 to “officially unlock” additional 80 miles for a Model S 60 battery. Tesla may have all the good reasons to “fix” a Model S 60 back to the original configuration because a misconfiguration unlocks additional 80 miles. But, what would you think as the consumer?

Since 2020, BMW ConnectedDrive opens doors for “in-car microtransactions”. BMW continues to create new recurring revenue streams from that. The latest attempt is a $18 per monthly subscription for BMW drivers to keep their butts warmed according to a report from South Korea. My poor brain can not imagine how this might become the mainstream in a such competitive market. Picking a proper business model is more an “art” than a science. There is no silver-bullet, and subscription is definitely not one.

To subscribe what?

Rivian FleetOS

So, what kind of subscription may work better for Smarter Cars? Typical candidates have a low marginal cost & are compatible with time-bonding. Such as adding another users to a SW service does not cost too much. It’s also more nature to pay for computing, storage & updates of code or data. Therefore, Software as a Service can be a good fit for subscription. For connected cars currently, 2 good candidates are:

  1. Self-Driving as a service such as Tesla’s.
  2. Rivian’s fleet OS, providing the fleet management service for businesses.

How about the usual suspect: content providers, such as movies or TV series The joint venture of Sony & Honda plans to ship EVs by 2025, and they may become the content platform for entreatment according to The Wall Street Journal. To guess better, a few questions should be considered. Such as: how many cars with the service will hit the road? In 2021, Honda shipped about 4.5M cars globally. And, even all of them are high-end models, how long will it take for them to reach the critical mass to be profitable?

One more trick

Amazon Business Model: Value Propositions

In the US, 164M Amazon Prime members not just enjoy free 2-Day shipping, but also streaming & more services. Even Amazon might “steal” the membership model from Costco or other predecessors, how it betting on free delivery & bundling more services is a great trick. Any one should study that when planning any subscription business. Maybe, there is something worth “stealing”.

“It was never about the 79 dollars. It was really about changing people’s mentality, so they wouldn’t shop anywhere else.” — Vijay Ravindran, ex-Amazon Director, 2013

www.visualcapitalist.com/visualizing-amazons-rising-shipping-costs

Full Disclosure

The opinions stated here are my own, not those of my company. They are mostly extrapolations from public information. I don’t have insider knowledge of those companies, nor a whatever expert. Up to you to take it with a grain of salt or two 😉.

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Sam Lin

A Taiwanese lives in Silicon Valley since 2014 & has random opinions on some stuff. The opinions shared here are my own, not those of companies I work for.