The idea of usership over ownership is proliferating across many industries such as food, health, entertainment and more with the rise of brands such as HelloFresh, Netflix and Spotify, and the automotive industry is the latest to undergo a transformation away from traditional models to more flexible ownership alternatives.
The general idea of a subscription model is that it allows you to compound your value by accessing goods or services through smaller recurring payments rather than wearing the upfront cost to purchase those equivalent goods or services outright.
In the simplest terms, compare the monthly cost of a Netflix subscription which offers unrestricted access to a catalog of thousands of film and TV titles, to the cost it would take to purchase these titles individually on more traditional (and now defunct) formats like DVD or digital rental.
The automotive industry is the latest to undergo significant transformation as a result of the usership economy, where consumers would prefer to pay for flexible access over direct ownership.
Often described as "Netflix for cars", car subscription provides consumers with exclusive access to a vehicle for a recurring payment without any long-term commitment through an all-inclusive package that incorporates registration, insurance, servicing, maintenance and more.
It means consumers can drive for as long as they need without the significant upfront costs typically associated with car ownership. They are also welcome to swap to a new vehicle or pause their car subscription altogether as their needs change.
The minimum committed cost and duration of car subscription is significantly less compared to traditional car ownership options like purchase, leasing or finance.
In the simplest terms, subscribers want to be able to drive a car they would otherwise own but with the flexibility of a rental.
An in-car subscription typically refers to providing consumers with access to various in-car features for a recurring payment. These features are typically software-based and have become more prevalent as vehicle technology becomes more sophisticated - and more expensive.
The most well-known example of in-car subscription is the Tesla Full Self-Driving Capability Subscription (also known as FSD or Autopilot) which allows Tesla owners to activate FSD on their vehicle from US$99 per month.
This represents a significant saving for consumers as the upfront cost of Autopilot, which enables features like changing lanes on highways and automatic car parking, is otherwise a US$10,000 option from factory.
Some simple math reveals that it would take 101 months - or just over eight years - before the upfront cost for Tesla's Autopilot becomes financially viable, which is realistically far longer than most Tesla owners would keep their vehicle.
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