In automotive industry circles, there has been a great deal of chatter and buzz about over-the-air updates, and the features and functionalities these updates can enable. The “software-defined car” is certainly enabling a greater level of personalization than previously attainable from the static option model that was the standard for the industry until just a few years ago. But approach and context is everything, and over-the-air feature activation has proven to be a sharp double-edged sword, being a strategic advantage for the brands that have managed and executed their strategy shrewdly, and a savage punisher for those that have taken a duplicitous, grasping or misleading approach.
Peripherally related, but not exactly apples-to-apples, was BMW’s initial decision to charge a fee to use Apple CarPlay smartphone projection in its cars, a feature usually included at no extra charge. The blowback on this decision was fierce and decisive, and rightfully so. The issue popped up again recently when news popped up that BMW would be charging a subscription fee for seat heaters in its vehicles in some markets. Although this did not apply to the North American market, BMW heard from American customers in no uncertain terms about their dissatisfaction at such a policy, even hypothetically. BMW went on to issue a statement to North American customers clarifying, “If a vehicle is initially ordered with heated seats, that option will remain fully operational for the life of the vehicle.”
Tesla, the tacitly acknowledged leader in OTA strategy and sophistication, takes a more nuanced and some would argue generous approach with its updates. Most features, which are pushed out on a fairly regular cadence with OTA updates, are included at no extra charge. The only ongoing fee of note is the $9.99 “Premium Connectivity” fee that enables viewing of streaming entertainment at charging stations, or whenever the car is parked.
Tesla indirectly supports many third-party services on its infotainment platform, including Netflix, Hulu, Disney+ and Spotify. To use these in the car, they require a subscription, but Tesla does not charge an extra fee on top of the service subscription beyond the above-mentioned premium connectivity.
In the larger sphere of market economics, I don’t think anyone has a problem willingly paying for a service they derive value or pleasure from. What irks people is nickel-and-diming for features heretofore assumed to be included in the purchase price. Even the inference of charging for a feature that the vehicle has built-in from the factory smacks of opportunism and “gotcha” capitalism. Case-in-point, my 2019 Tesla Model 3 has the heating elements built into the back seat to enable rear seat heaters. Living in Central-Coast California, with a year-round median temperature of about 65°F (18°C), never mind the fact that I rarely have passengers in the back seat, I have willingly passed on the one-time $300 fee to activate the feature. However, Tesla’s approach is not duplicitous, bait-and-switch, or in any way misleading, simply giving customers the option to activate it or not.
Whether this will apply to the future owner of my car, I don’t know. Tesla is known to de-activate features for subsequent owners on used cars, a fact highlighted by the recent news story of a used Model S owner having his overall range software-limited, and offered the “opportunity” to unlock it for an additional $4,500, before an irate social media hive mind shamed Tesla into unlocking the available range.
OEMs need to carefully consider their FOTA strategy, with a focus on a perception of fairness and value, not simply as a perpetual cash cow, customer satisfaction be damned. Guess what…If that strategy is approached and pursued ham-handedly enough, those companies will soon lose customers to competitors that aren’t as opportunistic and avaricious with their over-the-air features policy.