The subscription models and services offered are probably only at the beginning.
The subscription models and services offered are probably only at the beginning.
( Source: gemeinfrei / Unsplash)

Connected cars The future of 'everything as a service' for connected cars

Author / Editor: Cate Lawrence / Isabell Page

We've entered the era of the car-as-platform capable of connecting to 'everything as a service'. Today's cars leave the showroom equipped with hardware and software that is activated through a subscription that provides greater personalization and choice of added extras.

It's clear that COVID-19 has made people consider their transport options. Car ownership appeals to those who aim to eschew public transport and car-sharing to reduce the risk of virus transmission. Over the last few months, we've seen OEMs expand their personalized subscription-style offerings, an 'everything as a service' model. Car owners have the opportunity to purchase additional car features as part of a subscription. These subscription features enhance the car over time with extra services and functions delivered through over the air (OTA) updates.

Tesla subscription as a service

Tesla is no stranger to the subscription model. It offers a Premium Connectivity service for its newer vehicles, including live traffic visualization, satellite view maps, 'caraoke,' and internet services such as dashboard music and video streaming since 2017.

More recently, it was revealed that Tesla is also working on a pay-as-you-go subscription for its full self-driving package based on some code that leaked in Tesla's in-app purchase system. The full self-driver package offers a range of functions - not all fully operational - that Tesla stresses still require the driver to be fully in charge of the car at present:

  • Navigate on Autopilot (Beta): Actively guides your car from a highway's on-ramp to off-ramp, including suggesting lane changes, navigating interchanges, automatically engaging the turn signal and taking the correct exit
  • Auto Lane Change: Assists in moving to an adjacent lane on the highway when Autosteer is engaged
  • Autopark: Helps automatically parallel or perpendicular park your car, with a single touch
  • Summon: Moves your car in and out of a tight space using the mobile app or key
  • Smart Summon: Your car will navigate more complex environments and parking spaces, maneuvering around objects as necessary to come to find you in a parking lot.
  • Traffic and Stop Sign Control (Beta): Identify stop signs and traffic lights and automatically slow your car to a stop on approach, with your active supervision
  • Upcoming: Autosteer on city streets - This will allow the car to navigate in urban areas actively.

Most of the Full Self-Driving suite of features are present upon the car leaving the factory floor, but cannot be accessed without an additional cost of $7,000 during the point of sale or later via an over the air update.

Despite a high monthly subscription price, Tesla believes that some owners will be interested in a subscription service. During a conference call following in April between CEO Elon Musk and CFO Zachary Kirkhorn, Kirkhorn said: "We do understand that some customers who have an ownership or have leased their vehicles did not purchase that option front. This will enable those customers to spread out the cost of ownership of FSD or subscription over time."

BMW OTA updates via a subscription model

July will bring a comprehensive software upgrade with numerous new services.
July will bring a comprehensive software upgrade with numerous new services.
(Source: BMW Group)

BMW alluded to introducing a subscription model in an announcement earlier this month for its Operating System 7: "BMW already offers its customers digital services and additional vehicle functions in the form of digital after-sales, some of which are deeply embedded in the vehicle's software. In the US, BMW Drive Recorder is offered through a pilot program… Additional functions will be added that can access the vehicle's existing hardware and software, such as certain comfort functions or driver assistance systems," the announcement stated.

A company spokesperson told TechCrunch: "In the near future, we will not only be able to add more functions here, but we will also be able to add even more flexibility for our customers with temporary bookings so booking of options for three years, for one year, or even shorter periods of time, like a few months."

In a current-generation BMW (BMW Operating System 7), the customer can individually manage more than 30 different data services and adjust the settings, depending on the equipment. Customers configure and decide which services and which data are used or sent. BMW drivers can switch off all services besides those deemed essential for health and safety, such as emergency call services.

The real value of OTA subscriptions: choice

What will be most interesting to see how subscription models can be applied - are they based on the customer who purchased the vehicle or only the car itself? If the subscription is tied to the customer, this could offer some interesting capabilities when you consider the trend by some OEMs to offer car subscriptions. An example is Porsche Passport, an app-based subscription service that allows subscribers to drive a Porsche of their choosing on-demand for between $2,000/month and $3,000/month.which mean a driver can traverse between different makes and models according to their needs. The opportunity for a seamless digitally transferrable experience as you traverse from different vehicles -such as your choice of music, interior temperature, seat height, and positioning of the rearview mirror, and other subscription offerings - would appeal to many.

However, it is also yet to be seen how this subscription would work with cars used by several family members who may indeed all have their own individual preferences - do they all need their own subscription? It's also unclear how this would change insurance premiums on cars already purchased. Can the services be transferred to a new owner or another vehicle upon sale?

Along with the option to sign up for subscription service that offers you the capability to change your daily ride, surely there's a place for shorter subscriptions or one-time updates such as adding cruise control during a long country-drive or entertainment for visiting children? With the push towards car hire over outright ownership, it's likely that these subscription models and services on offer are only just beginning and will grow to deliver more exceptional capabilities as OEMs roll out additional features.