Sure, but that doesn't mean a subscription is the consumer-friendly way to manage those costs.

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.

In some ways, they do have costs - the on-going extra wear / load on everything in the vehicle, which presumably is covered by the warranty if you pay for this. That's not free, nor zero.

Sure, but that should be baked into the one-time fee.

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).

Wouldn’t the additional wear and tear accumulate over time? The effect of added acceleration doesn’t apply all at once. Mercedes probably does know the rate, and the fee may well cover that.

I'm sorry — I wasn't aware vehicle manufacturers were obliged to pay for my servicing costs for regular, let alone undue, wear and tear?

It depends what wore out.

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.

I'm sure when the warranty is up they offer it to everyone for free right?

If you bothered to click on the article before commenting, you would know that Mercedes gives customers the option to buy it outright or pay a subscription.

I did read it, so get fucked.

> the option to buy it outright

Does the next owner of the car also get it? No? Then it is not "bought outright", it isn't a purchase at all.

That's absolutely false. You are painting the picture as if the car maker will sell you a high performance model (with all the necessary parts for performance) at a lower cost. No they will sell you that model with all their profit margin and then charge you extra monthly for the performance.

this is untrue in a competitive market

And yet here we are. If they won’t compete with each other, regulation would seem the answer to this crap (as the original poster proposed).

This is often raised as a caveat when a business does something anti-consumer.

Maybe it's worth accepting that businesses will not behave as you expect.

Markets which require billions of dollars to compete in are not truly competitive. They may be competitive in a regulatory sense, but not in a practical one. And these markets have huge amounts of regulation as well that limits competition on top of the financial limitations on competition.

The slim margins in the automotive sector would like to have a word with this argument.

The 14.8B € profits in 2022 would also like to have a word with your "slim margins".

Slim margins say nothing about competitiveness. You can lose money in uncompetitive or competitive markets. You can have huge margins in competitive ones.

Also I don't think the 10.5% profit margin of Mercedes is low - the average for the S&P 500 is 11%.

Frictionless competition in an economic vacuum does not exist. Price discrimination makes this "affordable", until the base price is just raised back to where it was originally except now you have a gazillion fees you have to pay so that companies can extract more money from people less sensitive to price changes.

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.

I believe that the statement "the car will be cheaper because there is a subscription add-on enhancing the amount of horsepower available" is false

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

* * *

Someone has to cover the cost of hundreds of thousands of cars that have this unused feature. That's the rub.

Does the same apply to medical care?

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.

You think you're paying less? You sweet summer child. You're paying for that hardware, they just charge the other folks twice for it.

is it ok to unlock this in your car without paying?

Always and everywhere. Bomb anyone who uses government power to enforce a decision of "no"

not sure if the current airline industry is a great model for all other industries.

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.

Unbundling is also what made air travel a shitty experience for everybody. Same thing with cable TV.

As opposed to a great experience for the privileged few, yes :)

If you don't care about the acceleration, then you can simply not accelerate. Don't press down on the pedal so much. Why the hell do you need to "unbundle" the car's acceleration? It's not even "unbundled", the engine is perfectly capable of doing it but it's refusing to obey your command. How is it even possible that people are justifying this insanity? What's next, paying extra to unlock geofenced destinations? Car shuts down in the middle of the road unless you pay for the premium destination package?

The problem with this line of thinking is that the price reduction for the "affordable" option compared with the old all-in pricing is $5. The price premium for the new deluxe (with additional features compared to the old all-in price) is $20. [Note that the $5 and $20 are meant to be relative to each other, not to the base price]

People then say, "customers must prefer dogshit because their spending habits tell the story"