Volkswagen Plans to Implement Pay-Per-Use Car Technology
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Volkswagen is considering implementing pay-per-use car technology, which could impact the way that automakers price their cars. Subscription-based pricing, or paying a certain amount for a service over a set period of time, in the auto industry has largely been used for car insurance, radio, and navigational features.
But some automakers in the industry, like VW, see these usages as just the tip of the iceberg. VW plans to implement subscription-based autonomous driving features. Subscription-based services are popular in a lot of other industries | Twenty20
Volkswagen’s vision for subscription-based autonomous driving
As reported by Top Gear, VW’s head of sales and marketing, Klaus Zellmer, said the future of auto manufacturing will include different ways to customize a new car.
Currently, automakers’ websites allow buyers to purchase different trims and models of a car to change the performance or add more safety features. But you might not know if you want an autonomous driving mode for sure. VW wants to give you the option to only pay if you want to keep it on—like a rental service.
VW plans to charge around 7 euros, or around $8 per hour for Level 4 autonomous driving. Zellmer says this business model is the most cost-effective for equipment that is expensive to install, which not every driver will use. The autonomous driving mode can be switched on or off using a simple, wireless software update.
What are the benefits of pay-per-use autonomous driving?
VW can save money in production costs by using this subscription-fee model for their car features. Instead of tailoring each car to the specs that the consumer wants, VWs plan to have everything built-in. You can get a feature turned off if you don’t want it.
This service can also potentially increase adoption of autonomous vehicles. Maybe you don’t think you want an autonomous driving mode, but you love it after trying it. This might also affect the used-car market, since switching on a function can increase a car’s value.
For the consumer, an $8 subscription fee per hour probably costs less than it does for a train ticket. Being able to test out autonomous driving can make it easier for drivers to feel comfortable with self-driving vehicles on the road.
Other potential impacts of subscription-based pricing
Moving towards a subscription-based model for optional auto features can be beneficial and increase adoption of new car technology. However, whether or not it works might depend on whether consumers can be convinced to move from the traditional way of customizing their cars.
You might have other questions about this potential change. Since switching features on or off relies on over-the-air updates, is it easy to request a change? Can a bad software update cause car issues? Answers to these questions will impact the success of the new business model.
This will also impact other areas of the industry that might have to change the way they work as well. If driver safety features can be switched off, insurance companies would need a way of ensuring that any safety discounts only apply for drivers who have it on. The value of your car can frequently fluctuate depending on which features are turned on.
While this approach is still in the early stages, it could have a major influence on the auto industry. However, for now, if you want to save money on car costs, you can find competitive car insurance rates by signing up for Jerry. This free app can collect quotes from up to 45 top insurance companies in seconds!