Mercedes locks faster acceleration behind a yearly $1,200 subscription - The Verge

[Jhenson29]

Thanks for the clarification, and that makes sense - but only for products which are fixed/frozen/stateless (and since words fail me, the example would be the ubiquitous seat heating:

I made the distinction in my first comment about what was and was not acceptable by considering on-going cost being okay where you are paying for services.

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[WasserGKuehlt]

I made the distinction in my first comment about what was and was not acceptable by considering on-going cost being okay where you are paying for services.

And I upvoted your post . However, my interpretation was that you limited the acceptable behavior to _just_ services (including here a quote from your post: "However, features like heated steering wheels or motor performance do not and I agree this is disgusting.") I'm not as understanding of the former, but could see the case for the latter (ie warranty costs may be higher).

I was trying to say that the deviation aspect may even make sense for hardware; if I'm to take BMW's example, you could argue that it would be cheaper to make a standard wire harness, seat cushion and the sw control that make up "seat heating", and then charge to unlock it. Users that don't are costing the company, but as long as sufficiently many opt in the net is positive.

 

[Mr. 2021 Taycan]

Selling built in capabilities as "extra" will only stop if we tell the company we will never buy it. It is absurd to pay extra for a couple lines of computer code that enable features already built into the original purchase price.

 

[Jhenson29]

I'm not as understanding of the former, but could see the case for the latter (ie warranty costs may be higher).

I’m not understanding of either. You don’t pay an ongoing cost for the initial warranty so it’s hard to argue that it’s necessary and can’t be rolled in to the “purchase” price of the feature.

 

[Midlifecrisis]

I'm not aware of any 'inert' systems (shipped with the car but locked).

There are some. How else does FOD work? Keyless entry, lane keeping, Innodrive. These all require certain hardware that is locked but can be activated.

 

[TXAG]

Add me to the list of groaners. It's like my bank account is a loaf of bread surrounded by hungry pigeons. And if I ever end up paying for a subscription, I expect to pay NOTHING for its repair.

 

[WasserGKuehlt]

There are some. How else does FOD work? Keyless entry, lane keeping, Innodrive. These all require certain hardware that is locked but can be activated.

As I was saying earlier, FoD requires the basic hardware - which is not standard. With that optional purchase, you do get some basic functionality for free. FoD is extra.
And for things like PIRM, it's a service.

 

[WasserGKuehlt]

Selling built in capabilities as "extra" will only stop if we tell the company we will never buy it. It is absurd to pay extra for a couple lines of computer code that enable features already built into the original purchase price.

Clearly not only my words fail me, but my examples aren't landing today. Let's try again.

I, as the producer, can design, develop, ship and maintain/service 2 different assemblies (whatever they may be - engines, seat heaters, software), each aimed at a different price point/consumer category. Say that A costs me x, and B costs me y; profit margin is the same, 10%. So long as x is much smaller than y, this is fine (the engine case) - you'd pay double for a turbo than for a base model, and I sell enough to recoup both the fixed/one-time cost of _each_, and the actual production costs per unit sold.

When x ~ y, though, the fixed cost of the cheaper option is wasted money - you wouldn't pay enough for heated seats (I'm abusing the heck out of this example) for me to possibly make it worthwhile to design, develop, produce and maintain a non-heating assembly. So i'm investing in an all-capable one - I reduced my cost, but it's still higher than what the non-capable system would have cost me. My choices now are to either a) "build it in" and charge everyone that 10% over my cost, or b) give it away for all, and charge 30% for those that want the feature. (I figure enough will want the capability, and so overall I'd make my profit target with minimal investment.) So then, again, which would you prefer - paying more for something you don't need/use ('a'), or knowing you have to pay extra to unlock it ('b')? From my perspective as a producer, 'a' rarely leads to good PR as everyone in between the tropics would feel fleeced.

This is where it gets "tricky"; 'b' as a one-time cost vs a recurring one. The subscription-based revenue model is great for producers (predictability etc.) and also for some consumers: why pay $500 for heat seating upfront, if I only need it 1 month/year? If it's $20/month I'll take that option, but if I need it 8 months/year then my calculation changes. So I, as the consumer, have the flexibility to take the path that suits my needs. The only problem is that _I know_ it's there, and somehow make the logical fallacy of saying/thinking "I paid for it". No, I may have paid for the car, but I don't know enough to say that I'm getting the seat heaters at cost/loss or indeed I'm being fleeced.

I’m not understanding of either. You don’t pay an ongoing cost for the initial warranty so it’s hard to argue that it’s necessary and can’t be rolled in to the “purchase” price of the feature.

I'm grasping here, but consider this scenario: I rate my motor for this capability (discharge/power output), which is well within tolerance. I'm confident I won't see failures that I have to service in warranty. I'm less confident in opening up the motor's output closer to tolerances (I mean of the entire system - maybe I can't cool it, or "dents" the battery harder). I could sell you a derestricted motor for a higher price, as a form of insurance against the more-likely warranty claims.

 

[PetroK]

Selling built in capabilities as "extra" will only stop if we tell the company we will never buy it. It is absurd to pay extra for a couple lines of computer code that enable features already built into the original purchase price.

That's where common misconception and overall negative attitude to this subscriptions lie.
Nobody asking you to pay extra for features included in purchase price. They are extras which are really flexible. You can pay for example for Innodrive feature upfront when ordering car and nobody is taking that from you, but I for example didn't order it, but have opportunity to try it on monthly basis and if I like it, purchase it. What is bad with such flexibility?
Or another example, I may not pay full price for heating package for example and pay only let's say 10-15 bucks per month during cold month and you can pay fully during order.

 

[Mr. 2021 Taycan]

There seems to be a misunderstanding. The manufacturer is certainly free to charge an annual fee for features that are enabled by uploading a bit of software code.

My point is that paying such for such "subscription" features is unwise on the part of the buyer. When we all agree not to buy such "subscriptions" the manufacturers will only sell the features for a one time fee (whether up front of after delivery). We want to force them to sell all featureson a non-subscription basis.

If the manufacturers are successful with this Mercedes strategy we as customers lose big time.

 

[whitex]

I'm not aware of any 'inert' systems (shipped with the car but locked).

AFAIK GTS is same drivetrain as Turbo, but software locked. The only legal way to unlock it is to pay $20K at order time (by upgrading your car to a Turbo trim), which coincidentally is is way more expensive than $1,200 per year subscription like the Mercedes option. Now imagine Porsche unveiling a $1,200 a year GTS performance upgrade subscription, people with GTS would be screaming it's a ripp-off, and people with Turbos would be screaming they want $20K back and pay $1,200 a year instead (which with current interest rates would take more than 20 years to break even).

Most people are not logical. One one hand, they get all upset about a software feature locked away in a car, and yet they don't scream that when they buy a PS5 or an Xbox, that every single game for it should be included, since the hardware is already capable of playing all of them. And while multi-player games do have ongoing server and maintenance costs and such, there are definitely games out there which don't require maintenance. So why do people not feel ripped off that all these games are locked by software even though their hardware is already capable of playing them?

I watches people throwing these kinds of fits with Tesla software locked batteries, and software locked motors. The end results was actually a loss for people, since Tesla just stopped doing it, started shipping actual 60KWh battery instead of a 75KWh locked to 60KWh (which owners could for example charge to 100% every day as it was not actual 100%, but instead they prefer to get an actually limited 60KWh battery so they don't feel ripped off ). Same happened with motors, where initially for a while all M3's came with performance motors, which also upset everyone, so Tesla designed crappier motors which would burn if you fed them performance level power, somehow making people happier this way.

 

[whitex]

Here is a question to those who loathe the Mercedes performance subscription model. Imagine at the time of order you could choose:

1. car with weaker motors and battery which cannot be upgraded via software
2. car with more powerful motors and battery at the same price as #1 but with the $1,200 a year performance subscription option available (people who pay for the subscription subsidize hardware for those who do not)
3. Car with lifetime performance subscription for $50,000

Would you really pick option 1 over option 2? Would option 3 upset you? If yes to the latter, do you really think a Turbo S CT costs double to produce than a CT4? Why is there no similar outrage about Turbo S prices?

 

[Jhenson29]

Here is a question to those who loathe the Mercedes performance subscription model. Imagine at the time of order you could choose:

1. car with weaker motors and battery which cannot be upgraded via software
2. car with more powerful motors and battery at the same price as #1 but with the $1,200 a year performance subscription option available (people who pay for the subscription subsidize hardware for those who do not)
3. Car with lifetime performance subscription for $50,000

Doesn’t seem like an apples to apples comparison to me.

The article is saying $1200 for a 20-24% increase in output (I assume power) and a reduction of 0.8-0.9 sec in 0-60.

This is about the difference between a CT4 and CT4S which carries an MSRP difference If around $15k. That may include other additional or different standard options also (I don’t know as I have no interest in the CT and don’t feel like comparing them item by item).

Additionally, buying the option comes with value that can be sold later.

Smaller/newer companies will also have a harder time with this subscription model, at least from my view. What happens if they don’t make it? What happens to the option on the car then? Maybe less of an issue for established brands like BMW or Mercedes, but maybe a concern for ones like Rivian, Lucid, or Karma.

 

[Jhenson29]

I watches people throwing these kinds of fits with Tesla software locked batteries,

Locked batteries are probably one of the few “locked” features I would complain about because now you’re carrying extra weight with no benefit. I’d just prefer a smaller battery vs a bigger battery that’s locked.

 

[DerekS]

Inevitable for Porsche?

Exists today. Features on Demand.

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