Tesla Boost and Automobile subscriptions

After years of buzz, it looks like Tesla’s long-awaited self-driving car pack is set to hit the market, as the electric car maker rolls out its latest subscription offering for owners.

Since the You’re here latest app update, consumers have the option to purchase the company’s full self-driving package which adds several features for self-driving cars, including autopilot navigation and auto parking , as well as a fully self-contained computer and traffic light and stop control.

The monthly cost of the upgrade will be $ 199 per month for new drivers, $ 99 per month for those who previously purchased the now discontinued Enhanced Autopilot package.

The offer isn’t exactly new, as consumers could previously purchase it in full for a single payment of $ 10,000 – but the addition to the Tesla subscription package, while widely expected, is a change. According to Tesla, the subscription offer is based on a ‘try before you buy’ offering to give consumers the opportunity to experience the enhanced autonomous driving features that Tesla can now offer without having to shell out a huge upfront cost. .

Currently, the new subscription option is attached to the Full Self-Driving v9 version – a product that has been delayed several times since it was first announced in 2019, although a beta version of the program was released in early June. And while the new autonomous driving subscription upgrade adds more self-driving features, Tesla was quick to note in the latest announcement that it won’t make cars fully self-sufficient just yet. An email sent by the company specifies that the services “require active supervision of the driver and do not make the vehicle autonomous”.

Winding journey of vehicle subscriptions

Tesla is not alone in the auto industry to enter the subscription world. In recent years, companies like Toyota, Mercedes, Volvo, Tesla, and BMW have all announced their own auto subscription memberships. Unlike Tesla, which sells the cars and centers its subscription service on its autonomous driving capabilities, however, most other automakers offer subscriptions to the cars themselves, giving users the ability to trade in and out. continually exchange their cars.

And these programs, in particular, have a fairly inconsistent success rate with consumers. In 2018, for example, Audi and BMW announced their new subscription programs with great fanfare, to change course and close them earlier this year, due to lack of consumer demand.

“Faced with growing competition from Cars-as-a-Service companies like Zipcar and ride-sharing services based on apps like Uber and Lyft, automakers have experimented with new ways of doing business, ”Kelley said. “Subscription services, it seems, may not be a viable answer. Still, dropping subscriptions by BMW and Audi doesn’t mean the model is a failure.

And in fact, the car subscription model also has the notable success story of the Volvo Cares program, which it tweaked to expand last year based on consumer enthusiasm. the The reigning auto subscription champion announced the latest upgrade to its automotive lineup and digital sales journey earlier this year. The company has revealed plans to launch a whole new line of electric cars, including its second battery-only model, the C40 Recharge. And in a new move that separates the company from many automakers entering the field of electric vehicles, Volvo has also announced that its electric vehicles will only be for sale online.

“The future of Volvo Cars is defined by three pillars: electric, online and growth,” said Lex kerssemakers, responsible for global business operations. “We want to provide our customers with peace of mind and a carefree way of owning a Volvo, removing the complexity of getting and driving the car. Simplification and convenience are key to everything we do.

And like sticky.io CEO Brian Bogosian Karen Webster said in a conversation earlier this year, car subscription models can work just fine – the problem with the BMW and Audi programs was that they just didn’t work for the affluent consumers their products are normally intended for. .

Ultimately, he said, the success of any subscription package depends on balancing a highly attractive package with prices that customers can afford. Audi and BMW are two luxury brands that operate in an upper market segment, Bogosian noted. At a few thousand dollars a month, the subscription offer was not aimed at this customer segment and showed that the more rarefied level of luxury may not be the ideal starting point for this type of product. .

“I think people will see significant adoption of auto subscriptions, and I think some brands will have a lot of success with this type of model,” Bogosian said. “For a mainstream car that covers a lot of the total market opportunity, I think there will be a tremendous opportunity for a three to five year subscription term, offering subscriptions at different price points. I think it depends on what you provide to consumers, and whether it’s convincing or not.

Move the market

According to Bogosian, the market will evolve when the right innovative player creates the right package that will actually drive a change in the way consumers own cars – and more importantly, how they want to own cars. The field for who he will be, he said, is still wide open – it could be an established player like GM, or a newcomer like Tesla, pioneering a unique approach to the subscription. It could even be an actor who is not yet present on the market, such as a entering Apple.

“Once you see a great player come into this segment and deliver something compelling, I think that will change,” Bogosian said.

Tesla is bidding this week to be the big player with the movement that is moving this market. Whether that works remains to be seen.



About the study: UK consumers see local purchases as essential for both supporting the economy and preserving the environment, but many local High Street businesses are struggling to get them in. In the new Making Loyalty Work For Small Businesses study, PYMNTS surveys 1,115 UK consumers to find out how offering personalized loyalty programs can help engage new High Street shoppers.

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