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This strategy can lower costs for the manufacturer because there are fewer variants of the product to make. I support this in the hope that cost savings are pas

This strategy can lower costs for the manufacturer because there are fewer variants of the product to make. I support this in the hope that cost savings are passed on to consumers.

gambiting 7y ago
And I don't support this at all. These cars cost an absolute fortune(Model 3 is worth like 4 years of average salary where I'm from) and the thought that it could be delivered with some hardware that isn't functional purely because you haven't paid extra for the switch is mindboggling. You could make the same argument about houses - imagine how much cheaper it would be if every house was built out of prefabricates, but you just had to pay extra to get the additional rooms! What arrives from the house factory has 2 bathrooms, but one is sealed shut unless you pay the fee! But that's all fine, as long as the customer can save some money? We can already see what happens with this approach taken to the extreme - look at BMW and CarPlay. Instead of selling it as an add-on from factory for say $300, you can pay yearly to have it - about $50. And BMW says "this is great, it's saving the customers money! Average car owner has the car for 3-4 years, so they will pay less in the yearly subscription than they would have done in a one-off fee! Isn't that great for everyone?". That's nuts. Absolutely positively nuts. To extend that to heated seats - I can easily imagine some company making those things available as a pay-pass, where you pay say $0.99 to have the seats available for a day. Again, someone will say "that's fantastic! It's cheaper than paying for those seats as an option from factory, if you don't need them you don't actually pay anything!". It's absolute madness and we're encouraging this.
- deleted 7y ago
  [deleted]
- Ambele 7y ago
  Although it's true that cars switch owners, cars usually stay on the road for 10-15 years so consumers with the annual fee will pay out more in the long run. After working with Toyota in their multimedia and head unit design facility, I can see why car companies would switch from a set price of $300 to a yearly fee. It used to be that you just included a FM radio and a CD player and the driver was good to go. Now, these head units need updates every month. These updates mostly include compatibility with the latest IOS/Android, latest phone hardware, newer versions of Pandora/Spotify/iHeartRadio because people wanted to "thumbs up" their songs, newer versions of the HU OS because these new music app versions broke the old OS, newer maps and less embarrassingly-bad voice recognition. Behind these map updates, there's some tester with an H1B Visa getting paid a salary to drive around in a Sienna to take photos of discrepancies between the map and the actual road. Once you see this, it's easy to understand the switch to an annual fee. However, the largest cost comes from trying to connect to the latest phones to use their 3G/4G. If Tesla wasn't hemorrhaging out money, I'd also wish Tesla had a cheaper car. But Tesla unsustainably lost $702 million last quarter and they need to make enough of a profit to pay back all of their debt and invest in building our future; otherwise they'll go bankrupt. The list of successful car company startups is short. As of 2016, the number of American car companies that haven't gone bankrupt is a grand total of two: Ford and Tesla. Starting a car company is idiotic and an electric car company is idiocy squared. Tesla's end goal is to make an affordable sports car, just as the Ford Model T was an affordable car for the masses that brought Ford from 9% market share to 61% market share. They just can't bring the costs down yet while they are hemorrhaging so much money. Further reading: 1) https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me https://www.tesla.com/blog/secret-tesla-motors-master-plan-j... 2) https://www.tesla.com/blog/master-plan-part-deux https://www.tesla.com/blog/master-plan-part-deux

This strategy can lower costs for the manufacturer because there are fewer variants of the product to make. I support this in the hope that cost savings are passed on to consumers.

gambiting 7y ago

And I don't support this at all. These cars cost an absolute fortune(Model 3 is worth like 4 years of average salary where I'm from) and the thought that it could be delivered with some hardware that isn't functional purely because you haven't paid extra for the switch is mindboggling. You could make the same argument about houses - imagine how much cheaper it would be if every house was built out of prefabricates, but you just had to pay extra to get the additional rooms! What arrives from the house factory has 2 bathrooms, but one is sealed shut unless you pay the fee! But that's all fine, as long as the customer can save some money? We can already see what happens with this approach taken to the extreme - look at BMW and CarPlay. Instead of selling it as an add-on from factory for say $300, you can pay yearly to have it - about $50. And BMW says "this is great, it's saving the customers money! Average car owner has the car for 3-4 years, so they will pay less in the yearly subscription than they would have done in a one-off fee! Isn't that great for everyone?". That's nuts. Absolutely positively nuts. To extend that to heated seats - I can easily imagine some company making those things available as a pay-pass, where you pay say $0.99 to have the seats available for a day. Again, someone will say "that's fantastic! It's cheaper than paying for those seats as an option from factory, if you don't need them you don't actually pay anything!". It's absolute madness and we're encouraging this.

deleted 7y ago
[deleted]
Ambele 7y ago
Although it's true that cars switch owners, cars usually stay on the road for 10-15 years so consumers with the annual fee will pay out more in the long run. After working with Toyota in their multimedia and head unit design facility, I can see why car companies would switch from a set price of $300 to a yearly fee. It used to be that you just included a FM radio and a CD player and the driver was good to go. Now, these head units need updates every month. These updates mostly include compatibility with the latest IOS/Android, latest phone hardware, newer versions of Pandora/Spotify/iHeartRadio because people wanted to "thumbs up" their songs, newer versions of the HU OS because these new music app versions broke the old OS, newer maps and less embarrassingly-bad voice recognition. Behind these map updates, there's some tester with an H1B Visa getting paid a salary to drive around in a Sienna to take photos of discrepancies between the map and the actual road. Once you see this, it's easy to understand the switch to an annual fee. However, the largest cost comes from trying to connect to the latest phones to use their 3G/4G. If Tesla wasn't hemorrhaging out money, I'd also wish Tesla had a cheaper car. But Tesla unsustainably lost $702 million last quarter and they need to make enough of a profit to pay back all of their debt and invest in building our future; otherwise they'll go bankrupt. The list of successful car company startups is short. As of 2016, the number of American car companies that haven't gone bankrupt is a grand total of two: Ford and Tesla. Starting a car company is idiotic and an electric car company is idiocy squared. Tesla's end goal is to make an affordable sports car, just as the Ford Model T was an affordable car for the masses that brought Ford from 9% market share to 61% market share. They just can't bring the costs down yet while they are hemorrhaging so much money. Further reading: 1) https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me https://www.tesla.com/blog/secret-tesla-motors-master-plan-j... 2) https://www.tesla.com/blog/master-plan-part-deux https://www.tesla.com/blog/master-plan-part-deux