This article was originally featured Drive.
You heard the story: Arv Gordon’s three million mile Volvo; Rachel Vich has changed the oil in her Mercury comet every 3,000 miles since 1964; A 102-year-old man has been driving the same car for 82 years. In the world of cars, we think of these rare owners as moral heroes. Whatever their cause – emotion? Yankee affordable? Obsessive compulsive disorder? ারাThey have given up new innovations for a lasting relationship. They’ve won a marathon and most of us don’t mind running.
I’ve been thinking a lot about long distance car owners because we’re moving towards a technological change that will advance the more than a century old tradition of car ownership. Instead of lovingly maintaining their vehicles for decades, the near future Rachel Vichs and Arv Gordons যদি if any still exist হবে will be forced to do business because they could read science fiction to their car buyers. The past.
In essence, it doesn’t make sense to create a bond with a vehicle that is not really yours and runs on software that someone else controls.
We saw this coming. For more than four decades, modern cars – both internal combustion and electrical variation – have evolved entirely from mechanical animals to wheel computing networks. It’s just the opening round. New, flexible hardware architectures The advancement of autonomous vehicle technology, with software connectivity built on fast connectivity, will strengthen the next step in the automobile industry: the transition from a low-margin manufacturing business to a high-margin software business.
Motivation from automakers to do this shines brightly on the NASDAQ every day. Tesla has a market capitalization of about $ 1 trillion, now more than the next seven or eight top global automakers combined. Tech Juggernaut Apple is probably still (even after a ton of disaster) working on building cars, and probably without a traditional automaking partner. Behind every manufacturer that fails to rebuild itself as highly scalable, tech-forward and disruptive while maintaining the complex, controlled, and high-level “hell” work of car-building will be a CEO of Skid. They, and more importantly, their shareholders, all want that Tesla sky-high rating.
You would call it a megatrend. Apple’s stock has risen in recent years as recurring revenue has risen from zero to a quarter of its revenue, and the company plans to integrate subscription services more broadly into its hardware portfolio. In the auto industry, similar changes to consistent, predictable after-sales revenue from reliance on one-time vehicle sales that will expand in the future will coincide with the advent of the “software-defined vehicle”.
Like smartphones, game consoles and smart appliances, cars are becoming a platform for software and valuable user data collectors, giving automakers a digital pipeline to their customers and allowing them to tap into sources of post-purchase cash. Recently, Honda outlined its recurring revenue strategy as a technology-driven transformation of its business. “Honda will strive to transform its business portfolio,” a press release said, adding that “the focus shifts from non-recurring hardware (product) sales business to recurring business where Honda continues to provide customers with a variety of services and pricing after sales.” And integrates the software. “
“(It’s) the way you might think about your iPhone or Android phone,” Alan Wexler, senior vice president of innovation and growth at General Motors, told participants at an EV investor conference last year. Detroit Free Press“We’re working to build experience and services, using in-vehicle and off-vehicle data.”
Wexler was specifically addressing EVs, but the upcoming internal combustion vehicles would be similarly activated. In an environment where a car is another node of the Internet of Things (IoT), long-term ownership of a car can be difficult (or breach of contract) depending on how the technology develops. You’re trying to use an iPhone 5 you bought in 2014 without Apple’s bug fixes and security patches, which it stopped offering in 2017. Now, instead of a phone, imagine a favorite SUV (which you gave a name to) that suddenly fell off – consent.
Today, there are two thorns in the side of car-ownership longevity. One is the Repair Rights Movement, which aims to attack wealthy car owners (and, more broadly, all kinds of consumer goods) companies that use software to shut down increasingly complex systems from independent mechanics and DIY tinkers. This is a philosophical as well as legal debate, where the right to physical property is protested against the limited rights granted through intellectual property (i.e., software) licenses. Although the self-reliant team has won this round, the industry is not over with them yet. The pressure from automakers to control every aspect of a new, software-centric operating environment will be significant.
Vehicles outside of other fork technology are involved that enable their features. These include the digital obsolescence in general and, more recently, the sunset of 3G cellular networks. Thousands of car owners are now learning a hard lesson about the limitations of end-user licenses, as some features for which they used to pay a premium have literally disappeared, with automakers having no obligation to replace them.
Automaker’s new, software-first strategy is to turn lynchpin features into software upgrades, sell them individually or in packages, and install wirelessly via over-the-air (OTA) updates. GM launched OTA software updates through its OnStar Telematics service in 2009 and is working to expand its offerings around a new hardware infrastructure. In 2012, Tesla introduced extensive OTA integration that was central to the functionality of its EVs, including its full self-driving (FSD) software. Since then more automakers have introduced OTA functions: BMW updates its iDrive system wirelessly, as Volkswagen does with the ID range of its EVs. Ford recently announced its goal of building 33 million vehicles with OTA capabilities by 2028, giving it a huge address market for digital products.
According to McKinsey & Company, 95 percent of vehicles sold by 2030 will have OTA capability. As this surface of connected vehicles grows and consumers adapt to the combined-vehicle economy, the market will grow faster, more apps and services will come online, and more features of a vehicle will be enabled (or disabled) by OTA. However, based on the legal opinion, the court will probably not allow the manufacturers to disable the necessary functions that affect the intended operation of a vehicle – you know, As a carSome other fair play for the pay-as-you-go license may be: infotainment apps, comfort options like a heated steering wheel, or even features that define the model’s dynamic character, such as the horsepower and torque parameters or suspension settings of the sport sedan. .
As market development and software-platform initiatives accelerate, new, short-term or flexible ownership schemes that focus on revenue after stable, predictable purchases. Automakers have already begun experimenting with proprietary decoupling from use. Car-subscription services that challenged traditional ownership hit the skid during the epidemic, but their story is not over. Call it the Netflix model for car features; Even if that company hits a speed bump of its own, the metaphor still works. Why should a customer pay once for a car feature when they are increasingly accustomed to subscribing to things and you can get a recurring source of income from them instead?
For the past 20 years modern-classic car enthusiasts have been accustomed to fighting obsolescence: buying old laptops and gelbroken diagnostic software on eBay, watching YouTube for lessons on replacing faulty capacitors and renewing depleted module chips. Will future owners be motivated to do the same with highly software-dependent, connected vehicles? Will cars become more uniform because automakers seek economies of scale, or even leave production entirely to the world’s Magnus and Foxconn? Will new models of production emerge? At the very least, like devices, what’s next will set hackers apart from the rest of us.
The only question left is how far customers will go to preserve a traditional ownership-and-driving experience, what sacrifices they will accept to keep it, and when will be the tipping point that will begin the massive acceptance of subscriptions, car sharing, fractional ownership. Shared mobility, or other pay-to-drive models?
It does happen, however, that perhaps paying the top dollar for a vintage, air-cooled Porsche 911 or a 1980s Chevrolet C-10 pickup, or hanging on to that carrier for another decade or two is not the worst idea. This can only be the final future-proofing strategy.