- Charging for access to heated seats did not go well
- BMW admits it was a mistake but continues to explore subscription models
- More businesses are turning to microtransactions to boost profits
BMW sparked controversy in 2022 when it floated the idea of a new “Features on Demand” program, which would charge owners for access to pre-installed hardware. In particular, the idea that owners would have to pay a monthly fee to access heated seats has raised many eyebrows.
The German brand was quick to clarify at the time that, if a customer requested heated seats, they “would remain fully operational for the entire life of the vehicle”. But the company said additional features, such as using existing camera hardware as a dash cam, would still be offered as a premium software subscription.
More recently, Alexandra Landers, head of product communications at BMW, 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”.
However, Landers also defended the model, saying “you use the cloud, and it’s a 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 might 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 as the Tesla FSD-rival Driving Assistant Pro package, which offers advanced cruise control with automatic lane changing and more.
“Through these established digital offers, we offer our customers even more comfort and flexibility based on their individual wishes after purchasing a vehicle,” a BMW spokesperson told The Drive when asked to clarify its position on the matter.
But BMW is not the only manufacturer to be criticized for offering additional features as a subscription service.
Tesla recently removed the ability to pay a one-time fee for its fully autonomous self-driving system, while General Motors has charged fees for its OnStar emergency services for decades.
Additionally, any “constantly connected” car eventually requires paying for a data plan, otherwise owners must be within Wi-Fi range to perform even the simplest software updates.
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While many consumers are happy to pay a subscription for digital services, which are becoming increasingly common in today’s software-defined vehicles, the real outrage came when BMW suggested that owners would have to pay for hardware already installed in a vehicle.
The German brand reversed this decision, but continues to charge recurring fees if the owner wants to operate its heated seats and steering wheel remotely. The company argues that there are costs associated with cellular data and cloud storage to cover, but some buyers aren’t convinced.
However, as vehicles – particularly electric vehicles – become increasingly digitalized, automakers are looking for ways to tap into the potential revenue stream associated with subscription plans.
After all, it’s more lucrative to charge an entire group of owners a small monthly fee for a service, rather than offering it as a one-off purchase when the vehicle is first configured.
This also goes hand in hand with the fact that the car ownership model is rapidly evolving, with more and more buyers leasing or leasing their vehicles in one way or another.
Buying a car is no longer a massive, one-time investment meant to last for years, but rather is lumped into the growing list of monthly expenses consumers face.
What was right for the initial buyer of a vehicle might not be right for the second person who owns it just two years into its lifecycle, which is where a features-as-a-service model has its benefits.
More than that, if BMW can streamline its manufacturing process by essentially building a single configuration of a model and then charging customers for access to convenience features, such as a heated steering wheel, it will succeed.
The automotive market is experiencing one of the biggest transformations it has ever known, while competition is fiercer than ever. These micro-transactions are seen as a way to smooth cash flow and, therefore, are clearly not going away any time soon.
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