Could automotive subscription services boost electric-car use?
As automakers commit to more electric and electrified cars in the near future, many hurdles remain that can make owning an electric car more difficult than a conventional vehicle.
Meanwhile, as electrified cars become more common, automakers and brands will also continue to introduce new models for vehicle ownership, many of them subscription services.
But it may be possible these two evolutions could converge and reinforce each another, which would boost electric-car adoption.
Consumers who may be leery of committing to the purchase or lease of a plug-in or battery-electric car might be lured to a subscription that lets them test out a vehicle with less long-term commitment.
The first subscription-based ownership models from Cadillac and Porsche provide on-demand service, and subscribers can swap out vehicles simply by scheduling a change.
Navigant Research believes this could sway more consumers to choose an electric car since, realistically, they're not making much of a commitment to a particular car.
Some other subscription services, including Care by Volvo, require the subscriber to hold onto the car for only a year, less than the usual three-year commitment for an affordable lease rate.
The subscription model remains far from perfect. The high monthly payment is better suited to more premium brands, which lets a carmaker bake in service, insurance, white-glove delivery, and even regular detailing services.
For example, the least expensive tier of Porsche's Passport subscription service is $2,000 per month—hardly affordable for the average car buyer.
Subscription services offer a few key benefits for automakers as well.
A steady revenue stream adds predictability to the business, though the idea of a perpetual monthly payment may still dissuade some consumers altogether.
Despite the challenges for the subscription-based model, some automotive executives believe it's the future (or at least a bigger part of the future than it is now).
Volvo CEO Håkan Samuelsson believes one in five of his band's new-car sales will come via subscription by 2023.
At first, the executive said, the service will not be profitable, but the Swedish make strongly believes the future is car-sharing via a subscription service.
In fact, Volvo is working on an ecosystem in which subscribers could share their car with designated friends and family, too.
Even if batteries and associated electric-car technology remain more expensive than traditional internal-combustion engines, a flat subscription fee could be what the market needs for more consumers to embrace electrification.
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