- Charging for access to heated seats didn’t go down well
- BMW admits it was a mistake but continues to explore subscription models
- More companies are turning towards micro-transactions to boost profits
BMW sparked controversy in 2022 when it floated the idea of a new ‘Functions on Demand’ program, which would charge owners to gain access to preinstalled hardware. In particular, the idea that owners would have to pay a monthly fee to access heated seats raised more than a few eyebrows.
The German marque was quick to clarify at the time that, should a customer specify heated seats, they would “remain fully operational for the life of the vehicle”. But the company said that additional features, such as using existing camera hardware as a dash cam, would still be offered as a premium software subscription.
More recently, BMW head of product communications Alexandra Landers told drive.com.au that introducing the ‘on-demand’ service with a heated seat and steering wheel subscription model was “probably not the best way to start with it”.
However, Landers also defended the model, stating “you have cloud use, and that is cost” and added that “if you use it, we have to pay for it”. She also confirmed that the company is still exploring the idea that customers may want to unlock additional features for a fee in the future.
The upcoming iX3, for example, will be available with a subscription to the 360-degree camera, as well the company’s Tesla FSD-rivaling Driving Assistant Pro package, which offers advanced cruise control with automatic lane changing and more.
“With these established digital offerings, we offer our customers even more comfort and flexibility in line with their individual wishes after they purchase a vehicle,” a BMW spokesperson told The Drive when asked to clarify its standing on the matter.
But BMW is not the only manufacturer to come under fire for offering additional capability as a subscription service.
Tesla recently removed the ability to pay a one-off fee for its Full Self-Driving autonomous driving system, while General Motors has been charging a fee for its OnStar emergency services for decades.
What’s more, any ‘constantly-connected’ car requires payment for a data package eventually, otherwise owners have to be within reach of Wi-Fi to make the simplest software updates.
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While many consumers are happy to pay a subscription fee for digital services, which are becoming an increasingly common sight in today’s Software Defined Vehicles, the real outrage came when BMW suggested that owners would have to pay for hardware that is already installed in a vehicle.
The German marque did backtrack on that decision, but it continues to demand a recurring fee should the owner want to operate their heated seats and steering wheel remotely. The company argues that there are associated costs with cellular data and Cloud storage to cover, but some buyers remain unconvinced.
However, as vehicles – particularly EVs – become increasingly digitized, automotive manufacturers are looking at ways of exploiting the potential revenue stream that is associated with subscription packages.
After all, it is more lucrative to charge an entire string of owners a small monthly fee for a service, than it is to offer it as a one-time purchase when the vehicle is first configured.
This also goes hand-in-hand with the fact that the car ownership model is rapidly changing, with more buyers leasing or hiring their vehicles in one way or another than ever.
Buying a car is no longer the massive, one-time investment that is supposed to last for years, but is instead lumped in with the growling list of monthly outgoings that consumers have to contend with.
What was right for the original buyer of a vehicle might not be right for the second person to own it just two years into its life-cycle, which is where a Features-as-a-Service model has its benefits.
More than this, if BMW can streamline its manufacturing process by essentially building just one configuration of a model and then charging customers to unlock convenience features, such as a heated steering wheel, it is going to do so.
The automotive market is going through one of the biggest transformations it has ever witnessed, while competition is hotter than ever. These micro-transactions are seen as a way to smooth cashflow and as a result, and clearly aren’t going away soon.
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