If it's not rent seeking, it's drip pricing, it's added-on sales tax, it's $0.99 instead of $1[0], it's the Ultra Digital Deluxe Collector's Edition. I would always advocate: don't give them your business.
I'm sure I'm preaching to the choir here. I know it's a lot easier said than done to avoid such ploys. Still, that is the strongest personal option. Avoid them like the plague and tell your friends and family why. If a business' current practices seem better than you remember, hold on to the memory; make them work to prove any marketed change of heart. (It may be hazardous to my health to hold my breath waiting for the $0.99 shit to stop.)
[0] There was a card shop (games shop, comic book store, that sort of thing) I went to as a kid. They priced stuff like $5 and it was actually $5 when I went to pay. 12-year-old me "didn't even know that was legal".
Everyone seems to love this, or at least, they didn't stop flying. So why would any rational company not try to use this business model? Your AAA game gets to be $59.99 + $0.99 download, and your competitor's game is $60.00. Sort by price ascending makes you the top result, but you actually get $0.99 more money with each copy sold.
You are right that legislation is the only answer to curb this abuse. Consumers fall for it hook/line/sinker. Companies can't resist free money.
You can’t really fly and not take luggage with you, for example.
> Everyone seems to love this, or at least, they didn't stop flying.
Nobody "loves" it. They just have to put up with it because even for people who know what they're doing with flight searches, the only way to dig into all that dark pattern shit is to have fifty browser tabs open comparing the fine details of different flights.
If it was possible to, say, compare all those up-charges up front using flight search tools, I'm sure you'd see a lot more people choosing the slightly more expensive tickets.
Which is also why the hotel where people stay when they're visiting friends has free wifi, and the hotel next to the convention center does not.
To some extent, this is quite rational. You're in pain for like 2 hours because the seat pitch is now 4 inches. But then you get off the flight and never think about it again. The fact that flights include things that people don't need to have just made air travel more accessible, though less fun.
I hate the nickel and diming but it does make things more accessible in general.
This additionally acts as a nice A/B test; you sell the same car and get data on whether or not people would pay $6000 more for it to be faster.
I reflexively hate this, but it seems so rational to me.
Every time a company finds a way to make the product worse but increase profits, they will do it, and all other companies will eventually have to do it in order to remain competitive. It's an inevitable force that is built into the so-called free market. Nearly every product available today is worse and/or more expensive than an otherwise comparable product 10 years ago.
Mark my words, bookmark this comment and come back in 10 years. If these subscriptions turn out to be profitable, then in 2033, every car manufacturer will have functionality locked behind monthly subscriptions. And people will buy them because they have no other choice besides not buying a car. There will be no way to vote with your wallet--you'll just have to abstain with your wallet.
There is a large group of people who only want the cheapest flight possible, then there is a decent sized group who want more than basic economy, but don't want to pay for first class. This is basic customer segmenting.
Perhaps! But a big part of the problem is airlines have near monopolies on domestic routes. I want to fly non-stop to Charlotte, my only choice is American, I want to fly to Atlanta, my only choice is Delta, for the same price as a flight to Europe. Some monopoly enforcement, or laws requiring more airport diversity might fix this without micromanaging prices or services.
“Complains about air pollution, but still breathes the air”, amirite? Or perhaps there’s another explanation for the dynamic. Because I can tell you that my game-buying habits have changed as a result of your parallel example.
You rent seats on planes. Some seats are more desirable than others, so you pay more to rent those. You rent access to their storage space. You rent access to their services. The seat doesn't come with food, so if you want the food they have on the plane, you buy that from them. If you don't, someone on the next flight will.
When you buy a car, ostensibly you own the car. It's your property. A company should not be able to disable features unless you pay them not to, indefinitely, on something you own.
But there are more than 4 car companies. There's enough competition to stop this kind of horseshit, which is a fact Mary Barra seems not to recognize.
Besides, if you want to apply that axe put it against the people making those decisions to conduct business in that fashion. If your first thought is that it doesn't make sense to because then that person will be outcompeted then consider that it makes even less sense to hold people with zero agency in that decision responsible.
Indeed it is a systemic issue and I don’t claim to have a systemic solution. Even the personal solution is pretty shaky, considering the ubiquity of these practices. Oh well, it’s better than giving in.
In the Mercedes case, they ship the car with the more-powerful motor already installed in it. The cost of it has been paid already. They just artificially limit it through software unless you pay extra for it.
At least in this case Mercedes is offering a one-time flat fee, which would at least be somewhat sorta vaguely like paying extra at the time of sale for a more-powerful engine rather than whatever is stock. Still kinda slimy, but at least not absolute highway robbery, like the subscription plan is.
How so? The one-time fee is $1950. Also, this is nothing new: top end Mercedes-AMG cars always had an optional "AMG Driver's Package" [0] for years now, which did nothing but electronically unlock Vmax from 250km/h to 290km/h. No changes in hardware at all. It used to retail for around $2500.
Now you have the possibility to order a performance unlock after buying the car. You can even try it out for a few months to see whether you really need it or not.
You might not like it, but it's actually a better deal than before.
[0] https://www.mercedes-benz.co.uk/passengercars/mercedes-benz-...
So if Apple would ask you for a nice $10/m to use their famous iPhone camera features you would be okay with that, because otherwise you would be fine with 8MP photos or pay additional $10 * 12m * 3y = $360 upfront? Of course, no changes in hardware at all. And the price of iPhone is the same, not $360 cheaper.
There's ton of precedent for products that are artificially locked to a lower version. The difference between a NVidia GeForce and the much more expensive Quadro used to be just a bunch of ID resistors. Processor speeds are locked in a similar way.
Same thing with software. There's many cases where you purchase a piece of software and can later buy a feature or "Pro" unlock. You already downloaded all the bits & bytes to you device. Are you not OK with that?
I'm a bit surprised that the people on Hackernews of all places has such a reaction to this. Subscription models and SaaS have been practically invented here.
With software, the entire model is buying functionality, and then you can use it on the hardware of your choice. And it has to work that way. It's worth keeping in mind but it's not directly comparable to a hardware purchase.
Do you really think what you pay less?
If we talk about software unlocked hardware this is a moot point, the manufacturer still needs to spend money to produce and install the thing in the product, so you are paying for the hardware anyway. BMW heated seats subscription is a good example. And again you are taking the manufacturer words for it, despite they would never show how exactly they manage to drive the price down.[0]
> It's more like buying, and paying for, an iPhone 14 and then having the possibility to upgrade the camera to the iPhone 14 Pro version afterwards.
Which implies the change to the hardware. We are now discussing when there is no change in the HW, only some SW lock on that hardware.
> The difference between a NVidia GeForce and the much more expensive Quadro used to be just a bunch of ID resistors. Processor speeds are locked in a similar way.
Yes, and that forced NVidia to actually implement something useful for CAD (or degrade CAD performance on consumer products, alas). CPUs doesn't fit here, because again, nobody gives you an option to "unlock" more cores or speeds (but Intel tried and IBM did this for ages for their mainframes and POWER systems, but these are not a consumer products).
> Same thing with software. There's many cases where you purchase a piece of software and can later buy a feature or "Pro" unlock. You already downloaded all the bits & bytes to you device. Are you not OK with that?
There is no additional costs, waste and carbon footprint to produce a different software. You, as a vendor, spent money one time on R&D/development, now you support it for a tiny fraction of the cost. You don't spend money and resources on never be used part of software.
For a heated seats you spend the resources to actually manufacture and install it, even if it would be never used.
> I'm a bit surprised that the people on Hackernews of all places has such a reaction to this. Subscription models and SaaS have been practically invented here.
Sorry, but leasing and subsidizing were invented centuries before Internet and HN. And what you mix software with hardware and protecting the poor capitalistic companies are quite telling.
[0] Hint: those who pay for the feature pay not only for themselves, but for the others, who did not pay, too. Even the manufacturer never actually lowered the cost of the product.
PS automotive manufacturers are well known for charging absurd prices for things what costs peanuts. How can you believe them what 'they are reducing the base price' is beyond me.
What is similar in the both cases is what it's a 3rd-party option.
Look at my other comment in this thread, maybe it would be clearer what I mean.
There is a non-trivial amount of engineering that goes into making those features. I suspect that the software that controls the drivetrain requires making non-trivial changes to operate at higher horsepower, too.
Is it worth it? I haven't paid the price for it in my Teslas, but it's certainly worth it for someone to pay for it.
No it doesn't unfortunately (I bought it). Elon tweeted years ago the in-app/in-car purchase for the performance increase would get the drivetrain tuning screen that the Performance models have, but it has never shipped.
The feature, similar in concept to Mercedes here, $2000 (one time) "acceleration boost", adds/unlocks ~50hp and reduces 0-60 time to under 4 seconds on the dual motor non-performance model 3s etc, but you don't get any additional screens.
> https://www.notateslaapp.com/tesla-reference/1040/tesla-acce...
"Although vehicles with Acceleration Boost have better performance than their Long Range counterparts, they do not include Tesla's Track Mode feature."
"track mode" is the extra screens.
That's not rent seeking. Rent seeking is when an entity has control of something that can't be traded in a liquid/efficient way (this part is important!) and tries to leverage this uncompetetive situation into revenue that isn't subject to market forces.
Cars are pretty liquid. Subscription products are very liquid. If people don't want this they won't buy it. If they don't want cars with this subscription model they'll buy a Tesla[1] or VW. That's exactly the opposite of rent seeking.
That's not saying it's good (or bad) for consumers. But it's not rent seeking.
[1] Tesla also sells over-the-air performance upgrades, but it's a fixed price and goes with the vehicle after purchase. They do have subscription fees for data access features, and for FSD though.
Untrue. They aren't monopoly rents but they are rents. Can you get better performance from your Mercedes EV through another provider? No? It's rent.
No, but you can sell it and buy a Tesla. Having more features is just "selling a better product". By that standard any optional feature on a market-leading product is "rent-seeking", and that's silly. Is the App Store rent seeking? Is selling junk on Fortnite rent seeking?
No, that's just "selling products". Rent seeking is a specific form of market distortion, and the concept just doesn't apply to consumer products. It's about stuff like real estate control or regulatory capture. As always Wikipedia has a great page: https://en.wikipedia.org/wiki/Rent-seeking
The feature has already been developed, I have already downloaded the software to my device. It would cost the developer nothing, deny them the use of nothing, require none of their resources for me to use the feature and yet they charge for it.
How is that different?
I think the "it's rent-seeking" position would be weaker for toggling entire features on and off—the specific example of unlocking better acceleration was them adding a worse mode just so they could charge a subscription for the better one.
The intel chip example has already been mentioned in comments. The general idea of "Damaged Goods" (and how this can benefit consumers) appears here (at Preston McAfee's site).
Examples: Smart (spying ad-showing) TVs, non-compete agreements, water heater rentals, not-really-unlimited "unlimited data" cell plans, surveillance economy, only-rentable-not-buyable software and films and TV shows and audiobooks, etc.
In some cases people choose things that are bad for them, for all kinds of reasons. Someone will always sell you a subscription to your own car, if you tell them you want one. The market is the mechanism, the responsibility lies with the consumer. I know that it feels like there's a conspiracy, but it's almost always just people getting what they say they'll pay for.
Good judgement comes from experience. Experience comes from bad judgement.
Guess which phase we're in now.
[0] https://slate.com/business/2023/04/cars-buttons-touch-screen...
The "market" didn't decide to exclude headphone jacks and SD cards on mobile phones. Apple went that direction and other companies followed suit. Customers had no real choice in those matters.
Yes they did, they could vote with their wallet. And they voted for ear buds.
There's still plenty of phones with jacks out there by the way.
For example, there is always going to be a huge barrier to entry for automakers. They need to invest an enormous amount of time and money in design, factories, raw materials, labor, etc before they can deliver an actual car. This barrier protects automakers from feeling the full repercussions of their anti-consumer practices because it is extremely difficult for a new pro-consumer competitor to enter the market.
When we remove that assumption of perfect competition, the whole free market theory starts to fall apart. A well functioning free market requires power to be balanced between all parties, otherwise whoever has the most power can end up corrupting it and using their power advantage to grab even more money and/or power.
But if all else fails, giant corporations are eventually going to get the good ol' pitchforks up their butt.
Drive an old car and maintain it forever, I suppose.
You are unfortunately one of the apologetic quote, "dickfucks", endquote the parent was referring too. When all players eventually do this, where will you got to buy?
There is no more free market left in the auto industry after a century of consolidations. We're at the mercy of a few giant automakers who own the entire market and make the rules in their flavor. The current greed-flation is another nail in the coffin of the "free market competition benefits the consumer" trope.
If we had left everything to the so called "free market" our food would have still contained lead, mercury and arsenic. That's why governments need to step in and regulate some things in flavor of the consumer because we can't expect the corporations to do it themselves through "free market" competition, as it's much easy and profitable for them to form rent-seeking cartels and work against us that compete for us.
It seems all lessons from the past have been forgotten.
Paying extortion to get more speed? That's just a cash cow.
2. design costs with tactile controls maybe a little higher for the first stage of a new design, but its not as if car companies did not have (a) in-house talent for this (b) decades of experience. Contrast with the (amortized) cost of implementing "car OS's" on touchscreens before even getting to "what does the infotainment screen look like".
3. where the screens do potentially save money is in allowing rollouts of new features without requiring new hardware (which in fact would generally be impossible to rely on). Of course, as Tesla found out, this doesn't always go as planned, and the company can incur extra costs because users know the change can be rolled back.
4. as the article you linked to, and dozens of others, makes clear, there is a growing body of both scientific and anecdotal evidence that screens are terrible for safety while driving.
5. whether manufacturers are responding more to consumers' demands for buttons, or the evidence that they are exposing themselves to legal liability for their interface designs is hard to get a handle on at this point, since they notoriously do not speak openly and honestly about such things. Therefore, please do feel free to believe it is an example of corporations responding to consumer demands, while I'll continue to believe that it is corporations covering their collective asses for the design mistakes they've made (preferably before they get sued over a collision on par with the navy vessel one that led to their removal from US navy ships).
Until Cash4Clunkers2.0 comes out and/or they’re regulated out of existence.
It's bizarre to me that in 2023 there are still so many people who think that anarcho-capitalism works.
Sure, all those terms were written into the purchase contract, but with dozens of subscriptions, what sane owner wants to stay on top of all those options, activations, and deactivations?
Will the carmaker let you upgrade your software without buying new hardware? Don't bet on it. Not if there's a chance to suck more money out of your generous wallet.
Screw all that. While I much prefer to own cars with elan, I'll buy a Honda just to avoid being jerked around. And after a couple decades of owning BMWs, that's just what I did. No more hostage-taker carmakers for me.
In fact, that's why Jay Leno doesn't own a Ferrari: jackass sales tactics.
It’s hard to tell on this site, are people really this devoted to corps or are they shills?
Even with what you said there are still so many people defending this behavior. The world is full of weak and/or deceitful people.
Is it not OK for the automotive folks to get to the same level as their FAANG brethren?
Disclaimer: I work for an automotive OEM.
No, I want the company I work for to have similar profit margins as FAANG and thus increase my compensation. Do you also attack those employees because their companies are charging extra for pure software unlocks or subscriptions?
You can complain about any company that wants to continuously make money for nothing in return. Just look at ink printers. Rent seeking sure is attractive, yes.
Nobody owes you anything. There are MANY jobs that deserve such high salaries far more, just try anything related to caring for sick and/or old people. It's just that "deserve" has got nothing to do with anything!
Also, look at all the other countries and companies. That kind of complaint to me sounds more like a multi-millionaire looking at the even grander mansion next door and claiming they deserve at least that much too and that the world is so unfair to them. You picked the very, very few where some people make even more. It's hardly all the tens of thousands of employees of the FAANGs that all make a few hundred thousand, just a small fraction.
Cars also are not nearly as innovative. They are much farther along their product cycle. Oh sure, they did a lot of work, but the car still uses about as much fuel as it always did, and gets you barely any faster than it always did from A to B. But all the entertainment you get now! And all the electronics! Yeah okay. But the end product still doesn't deliver that much more value compared to a 1970s car. Some of them were actually more comfortable, easier to use, and easier to look out of. I do understand that there's been a lot of work on safety too since then, and that deaths went down. But I didn't claim there was zero innovation, did I? Only that you compared yourself with the latest and greatest new tech, such as AI, and in that elevated niche you again picked their highest paid people, and that seriously is your chosen comparison?
Oh and when we are looking at all the innovation in cars, may I point to the discussions - right here on HN too - about software, UIs, and cheating German car makers (I'm German too by the way), and how German car makers are big losers in China, and quality issues in German cars (https://newsingermany.com/german-car-manufacturers-fail-us-s...)?
Why would they do this? They have enough labor working for the money they give already. If their profits doubled, why on earth would their labor costs go up too instead of them just keeping the money?
As long as tech companies do it, I guess it's fine if everybody does it, because profits, and you get a cut of it?
(Tesla is profitable. Uber is not. Who pays their software engineers more?)
Also, if you think that your employer is going to increase your compensation due to anti-features like this... well, hate to break it to you, but they won't. They'll pocket that money and/or distribute it to shareholders. Your salary is, roughly, the smallest number that they can offer you to get you to do the job, and has very little to do with their profit margins.
> Do you also attack those employees because their companies are charging extra for pure software unlocks or subscriptions?
I would attack any company that charges customers extra for nothing.
Not by locking features.
And as a software developer whose income is propped up by adjacency to FAANG: we're paid an inordinate amount compared to our contribution to society. The vast majority of software development makes rich people richer at the expense of everyone else. I've managed to avoid the most egregiously harmful companies my entire career, but the idea that FAANG pay or any pay is meritocratic is just wrong. I'm paid well because my work pays my clients well, not because of anyone involved "deserves" our high salaries.
A key difference here is a car is a product that we buy and own. It doesn't cost Mercedes an ongoing cost every month to support these hardware features they change a monthly fee to unlock, and so the monthly fee doesn't provide additional value. To the extent it does, it's because the manufacturers are artifically limiting their product. Compare this to, say, and Adobe Creative Cloud subscription. With that, you're getting access to cloud services that costs Adobe to keep running, it also gets you access to new features and security updates. Whether or not you like Adobe's business model, this provides a justification for the subscription model that is simply absent in the automotive space.
Going back to the competition point, even if you just look at the monthly fee as cost shifting, it lets the manufacturers advertise a price that's lower than what the consumer is going to pay.
If you put a subscription on something where you have to continuously maintain server capacity and build and distribute new features, then that... seems fair?
Not gonna claim that there's no rent-seeking going on in the software industry, certainly. And they're scummy.
But once I'm sold a car, every bit of hardware in that car should work without artificial limits (well, modulo safety and legal concerns). Sure, it's fair for a car maker to charge for map updates for the navigation, real-time traffic information, remote functionality, etc. -- stuff that requires on-going cost to the manufacturer. But charging a subscription to send a few bits of information to the software in the car to give the motor more power? Robbery.
I ask these questions because often times people work themselves into a frenzy, and then take zero action. Hopefully you aren't one of them.
We can't all afford to devote our lives to activism. But change starts with education and we can be educators when these topics come up. That's not useless.
Nobody's asking you to do anything, except maybe stop with the ad-hominem attacks and participate in the conversation in a rational way.
I think a lot of people defend this because they themselves work for tech companies who's products or services are also profitable due to some for of rent-seeking which ensure great profits and wages that wouldn't be possible otherwise.
It is indeed hypocritical to criticize automakers for doing the same thing beloved tech companies are doing which is what makes them so profitable and nobody bats an eye.
A one-time car purchase costs the car company some capex upfront. They actually incur more cost running whatever DRM servers lock these motors down to prop up this extortionary business model.
We take issue with big techs locking down computers too. No problem with them running whatever they want on their servers but we want to run whatever we want on our computers too without their interference.
I would pay to get software not as a service. Fuck your updates, I don't want bloody updates that end up breaking my stuff and wasting my time. Give me one version, no updates and no support, and I will give you top dollars. If I want an update I'll come back to repeat the process again, giving you top dollars again, several years down the road.
Are big purchases every several years cheaper than a subscription? I don't know and I don't care. Sell me your fucking software as a fucking static product, I am happy to pay the premium for it.
Wait till you hear how many people it took to build Roaler Coaster Tycoon .... in assembly. Spoiler alert: 1; one; uno.
Why do you think it is strange?
As long as those people have morals, what’s wrong with that?
Since it's unavoidable, the best next thing is to design a system which takes greed as an input and outputs productivity. That system is called Capitalism and that is why it always wins.
mercedes isn't selling baby formulas or epipens
plenty of other brands will take your 100 years of 3rd world salary to give you some shiny vehicle
should I cry for some pampered millionaires who just want to drive faster?
The point is that everywhere outside of the powerhouse first world economies runs on second hand cars imported from those economies. I'd know - in my country most cars are ex-german cars. And then once we're done with them, they go to Ukraine(or they used to). Then after that they go to far east or Africa. Your 100k mercedes has 15 lives before it gets scrapped.
But you know what stops that chain early? If everything in the car has subscription and strong encryption to prevent messing with payment options, which "incidentally" will mean those cars can't be worked on by anyone other than the official garage. Wouldn't want anyone to pirate some subscription-only stuff now, would we.
I'm not mourning rich people wanting to drive fast - I'm mourning regular folks who will get these cars at 15-20 years old and find out that the heating seats don't work because Mercedes won't enable them on a "legacy" vehicle. Or it's from the wrong region so they can't do anything for you, sorry.
EV cars are most likely not going to be exported to have a second life.
Well, that's absolutely inevitable given how things are going. It might not be in the next 10 years, but in 30? Almost certainly guaranteed.
What reason do you have to believe that?
Where is this sea of simps? I don't see anyone defending this type of behavior.
Power imbalances mean that some people will use contracts to exploit others. Protecting people from that is valuable.
Certainly a Mercedes purchaser is not quite in the same league there, but it's not like we haven't heard of similar subscription ploys on lower-end cars too.
But somebody designed, implemented and tested (presumably) the feature of remote enabling functionality for money, manages the subscription and payment systems, real time communications to the fleet of cars, etc.... that costs a lot of money and effort, doesn't come for free.
I would wager thats not actually true for Mercedes, they don't last that long before becoming a money pit. If you really want a Mercedes just lease then bail.
This results in a fantastic pool of 3-4 year old cars with low odometers and scrupulous maintenance records, keeping the rest of the used market in check.
Due to the slow downs and supply chain issues of the past few years, I imagine the used market is not going to be as nice the next few years, and the usual off-lease classes will be a lot smaller than usual.
Say the cost for a motor made of x material is $2000 more than a lower spec motor made of z. So here they could make two specs, say charge $5000 more for the better motor, and profit $3,000 when anyone with a kick for adrenaline chooses the better motor.
However, there are hidden costs to inventorying multiple different variations of the main drive train of your car. You are no longer sharing parts, so you now need two lines making that motor, you need to split the warehousing space, you need some sort of analytics / data scientists to tell you how many of each motor you need to order. In this scenario, the cost to this amount of inventorying something as critical as the main drive unit might be a thousand dollars per unit or so (of course decreasing with scale), but it means your margins aren't simply profit - BOM.
Taking these small increments in profit (at the expense of making the logistics of your plant more complex) was all the rage for Ford and GM throughout the 1990s-now with 20 different trim levels for a model, but with EVs specifically the extra trim levels make you feel like you're missing out on the most fun or useful parts of a car, and the automaker really isn't making that much extra money when it's all said and done (and it results in the car feeling cheap after the honeymoon period).
In this case, the $60/month is optional. This means that Mercedes can take the negligible hit on their bill of materials, but this will likely be offset by, and made profitable by, the people who do pay for it every month over the lifespan of the car - there is a lot of FOMO and getting to click a button that says "increase the dopamine I get by punching the throttle this month" might be what people want if they think they shouldn't splurged for a different ev x months ago.
Recurring revenue brought back for a DCF at an interest rate of 5-6% is very different from when an interest rate of 0-1% is used.
Also if the credit crunch gets worse with continued high interest rates, access to the upfront capital from the customer to fund expansion/R&D becomes a lot more interesting compared to when banks are throwing money at you.
But if I buy the car and don’t care for the acceleration, then I can NOT book this feature. And in a competitive market, which the auto market is, this will mean that the MRSP for the car is lower for me than it would otherwise have been.
Unbundling is part of what made air travel affordable. In a competitive market, unbundling lowers base prices and creates consumer choice.
If a buyer wants 500hp instead of 300hp, there should be a 1-time fee assessed at the time that feature is unlocked (traditionally at purchase because it required a whole different engine; now via app/cloud/magic because it's all software).
The only reason a subscription model should be foisted on the consumer is when the vendor has actual recurring costs to provide a service. In this case, they do not - it's a one time software update.
The warranty period is known. The rate of failure is know. Etc.
And by your argument, once the warranty is done, the go-fast software should be free (or nearly so).
Brakes and tires? That's on the consumer.
Higher warranty claim rate due to the higher motor output? That's on Mercedes. But only during the warranty period. And if they have any sense they've modeled out that additional wear and now how much it costs (they need it to correctly price a subscription too).
Chances are they've over-engineered the car so there aren't (many) additional warranty clams. So any argument that you get savings passed to the consumer are likely incorrect. The buyer pays for a chassis/brakes/etc that can handle 500hp even if they only want the 300hp version.
Does the next owner of the car also get it? No? Then it is not "bought outright", it isn't a purchase at all.
Maybe it's worth accepting that businesses will not behave as you expect.
Also I don't think the 10.5% profit margin of Mercedes is low - the average for the S&P 500 is 11%.
A company's dream is to enact price discrimination on every single transaction so that there is no such thing as a consumer surplus. The absolute dream of a company is to make it so everybody pays exactly the largest amount they can bear for everything.
This is why we have tipping everywhere. This is why we have features locked behind paywalls for no reason. This is why we have colleges that are uber-expensive, unless you are poor, in which case they aren't expensive because you actually care about the price.
Price Discrimination and Big Data, when combined, allow for companies to give prices in such a way that no consumer on earth gets a surplus. Legislation to ensure markets with consumer surplus continue to exist is badly needed.
This is a case of creative business modeling. I believe that companies should invest in creating good business models. They also shouldn't over complicate them
Given that, I believe that the subscriptions to unlock seat heaters are a worse example of this and not great for customer satisfaction. Specially since all those cars are already equipped with seat heaters and essentially artificially jailed by software
Should doctors cripple children that are born unless their parents charge extra to allow them to walk?
In both cases the product is initially created with the ability, and it’s a competitive market where the parents who are okay with this can save money on their birth expenses…
Edit: This “service” is waste, and morally reprehensible like burning a perfectly good house down, or shooting a deer and letting it lie to waste. Mercedes does not gain any additional capacity by reducing individual cars ability.
at some point unbundling becomes extreme lack of transparency and customer-hostility if not a downright scam.
there are such things as externalities and transaction costs. they are manufacturing externalities and transaction costs to their benefit.
some companies put out the initial product with high-quality parts and as soon as it gets good reviews and traction they sub out cheaper parts. you could say if they didn't do that they'd have to charge more, they are giving early adopters an incentive or something, people should research which parts they are getting and let the market sort it out. if you value your time and expect reliable information from reviewers it's your problem.
today everything is a SaaS and you are permanently in a hostage situation where your car could get remotely downgraded, they could stop supporting it or discontinue a feature.
a market is a set of legal and social conventions and this is a pretty bad one. if you like markets you should want them to not be hellish, which means reasonable rules and conventions.
People then say, "customers must prefer dogshit because their spending habits tell the story"
I have much stronger feelings about general right-to-repair (which crap like this tends to obstruct, so I'm definitely against it in that sense) and speculative worlds down the slippery slope where actual safety is compromised if you don't pay an additional subscription (just $60/mo to enable your side curtain airbags!). But you won't see me crying over conspicuous wealth-signalers wasting their money on crap—they're going to do that anyway, with or without Mercedes' help. And faster cars are more deadly cars, so locking this functionality behind a paywall may actually save lives (though the real, sane solution would be to regulate excessively fast/massive/etc. personal vehicles off public roadways).
Regardless... based the info in the article, you can bypass this particular monthly cost, and pay upfront. Nothing unusual about charging for options... other than this is an option already built into the car, that you pay extra to enable.
From the article: Buyers can bypass the monthly subscription completely however, and opt for an annual subscription payment or simply pay a one-time flat fee. For instance, a buyer could take an all-wheel-drive Mercedes-Benz EQE 350 sedan from its standard 288 horsepower to 348 permanently for $1,950."
This type of option add is similar to Tesla, who charges $2k (no monthly option) for "performance boost" on their model 3 and Y, and $15k for their FSD (don't get me started on this feature), which has a $200/mo option.
If you pay to have it permanently, you can probably recoup some of the cost when you sell. (Unless Mercedes does something so that the feature is gone once you sell, which I wouldn't put past them)
All of those cars are essentially badge cars - i.e you pay more for the badge that shows that you have money and are able to pay more for the cars. Nobody buys those cars because they are better at commuting than other cars. So subscription services is natural for this type of market.
They like the attention to detail of mercedes and the quietness.
They like the attention to detail of bmw and the performance.
(not sure about audi, don't know anyone well who has one)
But this move sort of pulls back the curtain between the marketers in charge at these companies and their view of the customers. "they are price insensitive and will pay more without worrying".
But really - you don't want to piss off a first-class customer. it's easy to get under their skin if you treat them with disrespect and they remember.
But you should then also be able to opt out of the battery warranty.
Physical goods like cars 'get away with it' for things like fuel; hosting is in some sense similarly 'consumable'.
To be clear, because every time this comes up some dickfucks come in here and start making excuses about how it's better to rent in some cases and that this is just amortizing the whole payment, and there are some people who want this: No.
This is a fucking terrible deal even just using mercedes numbers. It takes a whopping 30 months (2.5 years) for the monthly payment to exceed the upfront cost. The average length of new car ownership in the US is between 8 and 11 years (varies by source and accounting methods).
You will be charged fucking $6000 dollars for a item that is already present in your car, you just don't have the damn key.
RENT FUCKING SEEKING.
Even on cars that cost 100k, Mercedes just gets to pocket an extra 5% of the sale price here at literally no cost or effort.
Piss on these car manufacturers.