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The US has guaranteed this will become the norm with increased auto tariffs. An auto manufacturer can produce a car with significantly lower value for import to
by Hilift 1y ago
The US has guaranteed this will become the norm with increased auto tariffs. An auto manufacturer can produce a car with significantly lower value for import to another country, and "features and services" can be enabled later for a fee.
- slt2021 1y agoThis is called transfer pricing. VW can make cars in the US, but barely make any profit, thus minimizing taxes paid to the US. The subscription payments however can flow freely to the Switzerland directly, where royalty payments are taxed at the lowest possible rate. This is how pharma works: pharma entities in the US dont make any profit, because they send royalty to the IP holder entity in Switzerland, where these royalty payments are taxes at the lowest rate possible and profits are sheltered that way from the US and EU taxation https://www.investigate-europe.eu/posts/deadly-prices-pharma-firms-stash-profits-in-europes-tax-havens-as-patients-struggle-with-drug-prices https://www.investigate-europe.eu/posts/deadly-prices-pharma...
- m_mueller 1y agoWhy would it flow to Switzerland? I believe VW headquarters are still in Germany.
- ExoticPearTree 1y agoHypotethetically speaking, there could be a design office in Switzerland for these features that charges a crazy amount in IP rights for every car sold by VW anywhere in the world.
- simonh 1y agoThis is also how US companies operate in Europe, e.g. Starbucks in Europe paying enormous royalty fees to the US for the name.
- ciupicri 1y agoThough Starbucks is a francise, so it's expected.
- simonh 1y agoThis isn't the profits of the franchisees, it's the profits of Starbucks.
- slt2021 1y agoUS companies (big tech and others) use Ireland[1], Netherlands[2], and other tax havens[3] for that 1. https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement 2. https://en.wikipedia.org/wiki/Dutch_Sandwich https://en.wikipedia.org/wiki/Dutch_Sandwich 3. https://en.wikipedia.org/wiki/Bermuda_Black_Hole https://en.wikipedia.org/wiki/Bermuda_Black_Hole
- rkomorn 1y agoI don't buy this much at all (without making any kind of opinion statement on tariffs). They're going to do the same thing in Europe (where the US tariffs don't apply). Subscription-based features that are already built into the car and only activated by software have been talked about since at least 2020. Car companies have been leaning on (BS, IMO) software revenue since the days of the $100+ GPS data update sticks, at the latest. I don't think this is the future any consumer wants, but it's the one we're gonna get from every industry where money can be turned on with the flip of a Boolean.
- mcv 1y agoAnother possibility is that without the subscription, the car runs efficiently and meets all sorts of emission standards. But with the subscription, all that goes out the window, because it's got to deliver more power now. It might be a new loophole to get around emission standards.