First, the CEO of Stellantis (the holding company for Chrysler, Dodge and Jeep, among many other familiar vehicle brand names) had some painful words about costs.
Stellantis CEO Carlos Tavares has made his stance on electric vehicles known from the start. Chief among his concerns has always been how expensive they are to build, and he reiterated that during an earnings call just last week … Tavares made it clear that he believes not just OEMs but suppliers to them will be sharing the increased cost burden. “In this transformation of the industry, it’s not only about the OEMs, it’s also about the supplier base and, as you know, there is significant competition in the supplier base and that is going to be also a very nice Darwinian transition period for our suppliers as much as it is for the OEMs. It means that we are in the same boat, we are in the same transformation.”
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Tavares went on to say that EVs are 50 percent more expensive to produce than internal combustion cars, calling the increased cost the “big gorilla in the room.”
There’s more at the link.
I guess Stellantis’ supplier base (the people who supply materials and components to make its vehicles) won’t be real happy to hear that – but neither should we as consumers, because guess who’s going to be paying for those more expensive EV’s?
Unfortunately, even over and above much higher vehicle prices, Stellantis (like many other manufacturers) is trying to claw every dollar it can out of consumers’ pockets by means of subscription fees for features that until now, drivers have taken for granted.
Stellantis is joining what seems like every other automaker in targeting revenue from software updates and subscription services—in this specific case, the auto group is expecting $22.5 billion by 2030. In-car purchases are key here, and they often make the hardware that’s already in place even more capable. It’s good for business, but depending on who you ask, it’s not always viewed as good business … [they] add up to more money being spent on features after a vehicle is purchased, a relatively new concept not all new car buyers are on board with.
Stellantis Software VP Mamatha Chamarthi explained these sorts of upgrades won’t be limited to satellite radio or GPS maps for off-roading. She indicated that customers will be able to wirelessly purchase updates that increase the horsepower of vehicles in the Dodge lineup and improve the towing performance of Ram trucks, among other brand-related upgrades … So when it comes to Stellantis, the “pay as you play” business model might be inescapable.
Again, more at the link.
Miss D. and I ran into the “pay-as-you-drive” thing last month, when we purchased her new car. The manufacturer tries to use weasel words about how convenient it is to subscribe only to the features you want, but it nevertheless amounts to paying every month for features that until now drivers had taken for granted. We opted out of the issue by buying a base-model vehicle with no such bells and whistles, but I was angry that it was even an issue.
Further research shows that every car manufacturer appears to be jumping on the same bandwagon. It’s as if consumers were cows to be milked, and they want increased milk production – or else!
As vehicles become increasingly connected to the internet, car companies aim to rake in billions by having customers pay monthly or annual subscriptions to access certain features. Not content with the relatively low-margin business of building and selling cars, automakers are eager to pull down Silicon Valley-style profits … For automakers, the advantage of this model is clear. Not only do they get a stream of recurring revenue for years after an initial purchase … This approach can also allow carmakers to streamline manufacturing by building cars to more uniform specifications … Down the line, owners can add on the features they want à la carte.
It’s all made possible by the advent of over-the-air software updates, which were pioneered by Tesla around a decade ago and are now entering the mainstream. Today’s vehicles are more internet-connected and computerized than ever before, meaning car companies can reach deep inside a vehicle to add new capabilities and tweak things from a distance.
Brands including Lexus, Toyota, and Subaru invite owners to pay for the convenience of being able to lock or start their cars remotely through an app. In some BMWs, you can pay to unlock automatic high-beam headlights, which dim for oncoming traffic. In 2020, BMW floated the idea of pay-as-you-go heated seats and steering wheels. General Motors and Ford both offer subscription plans for their hands-free highway driving systems … automakers see dollar signs. Stellantis (formerly Fiat Chrysler), Ford, and GM each aim to generate at least $20 billion in annual revenue from software services by 2030.
So, by 2030, the various car manufacturers are together expecting to make upwards of $100 billion every year by charging us for things that until now have been bought once (at vehicle purchase) and never paid for again. Would someone please explain to me how that’s good for my consumer wallet, or helps me cope with EV’s that are likely to be 50% more expensive than their internal combustion predecessors?
Looks like we’re stuck with it, one way or another, just like farmers who buy John Deere machines are stuck with “licensing” their software (and being prevented from maintaining their own farm hardware) rather than buying it outright and having ownership rights over it. One way or another, we all end up screwed.
If a vehicle manufacturer were to offer their cars without any subscription plans, on an old-fashioned “one-price-buys-everything-forever” basis, I reckon they might make a fortune from angry consumers. Also, I reckon smart electronics techs who can write software, or program new computer chips, that override the manufacturers’ locks and provide access to all vehicle features, are about to make a fortune.