The Future of Electric Vehicle Ownership Will it be Buying Leasing or Subscription Based

The Future of Car Ownership: Subscription-Based Models

Welcome back to the second edition of Driving The Future - a newsletter to keep you ahead-of-the-curve in the rapidly transforming automotive industry. Whether youre a casual automotive reader or a serious enthusiast, working in the industry, or simply curious, I hope youll enjoy this newsletter and learn from it.

In my last newsletter, I spoke about The Battle for In-Car Connectivity: how tech titans like Apple and Google, manufacturers like BMW, and start-ups like holoride are battling for the attention of passengers and drivers alike as we move toward a future of self-driving cars. In this article, Ill be exploring a topic which is equally disruptive to the industry and is already changing the way people purchase vehicles: through subscription-based models.

The Future of Car Ownership: Subscription-Based Models

For many years, car ownership has been a traditional and necessary part of life. But with the rise of subscription-based models, that is beginning to change. Companies like Volvo, Audi and BMW have already adopted subscription services as an alternative to traditional ownership, and more automakers are expected to follow suit. Dealerships are also getting in on the action. So what does this mean for the future of car ownership? Lets take a look.

What is a Subscription-Based Model?

A subscription-based model is an alternative way for consumers to access goods and services without having to purchase them outright. Instead of buying cars, users can pay a monthly fee in order to use them for a predetermined period of time. This allows customers to enjoy the benefits of owning a car without shouldering the responsibility for itanything from regular maintenance to insurance can be included in the subscription fee. It also means that users can switch cars whenever they want with no long-term commitment.

Subscription-Based Models in The Market Today

Automotive manufacturers and dealerships are both getting in on the subscription action.

Lets start with looking at Care by Volvo. Care by Volvo offers two types of packages. Care by Volvo Fixed provides cars on a three-year term, with no deposit or sign-up fee. Care by Volvo Flexible is based on an open-ended, three-month rolling contract, following an initial risk-free 30-day trial period; after that time, the customer can change their car or end their subscription with three months notice.

Fully launched nationwide in the UK on 2 September 2020, Automotive World reported the following year that Volvo had enjoyed exceptional first-year UK performance, with Volvo claiming subscription-based purchases make up almost 15% of all Volvo retail sales, equivalent to 7% of the brands total UK new car sales. This is comfortably beyond the initial 5% total targeted for the service at the end of its first year. Notably, Care by Volvo is proving a highly effective tool for new business, with 91% of its customers being new to the Volvo brand.

MyCarDirect is one of the UKs leading subscription-based dealerships, offering a range of cars from sleek city runners, to top of the range SUVs, and all the latest electric vehicles. Duncan Chumley, Mycardirect CEO, said: 2022 was an extremely encouraging year for us, and Im very confident that 2023 will build on last years success with record revenues forecasted. Mycardirect is expecting to double its revenues this year as demand for vehicle subscriptions continues to grow.

The Benefits of Subscription Services

Subscription services offer customers numerous benefits over traditional car ownership models. For starters, they are much more cost effective because customers don't have to worry about additional costs such as insurance or repair billsall of these expenses are rolled into one monthly payment. Additionally, since there is no long term commitment required, users are free to switch cars at any point if their needs or wants change over timeunlike traditional car ownership where buyers are stuck with their purchase until they decide it's time for something new (which usually involves selling their current vehicle). Finally, subscription services offer customers peace of mind knowing that if anything were to go wrong with their car, it would be taken care of by the service providersomething that cannot be said for traditional car ownership models where buyers are often left footing the bill for repairs or other issues that may arise over time.

Whats Next?

Its clear that subscription-based models represent an exciting new way forward when it comes to car ownership. As more automakers embrace this new trend, we can expect subscription services to become increasingly popular in the coming years and as an industry, we have to consider what implications that might have on different businesses. For example, vehicle part retailers may have to think about forging partnerships directly with dealerships, given that replacing parts and car maintenance will no longer be the responsibility of the driver.

All in all, this is a development that is gaining speed quickly. Early movers are already seeing explosive growth in interest and revenues. Its only a matter of time before more dealerships and manufacturers embrace this model. Automotive audiences should keep an eye out for whats happening in this space in order to stay ahead of the curve!

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MakeUseOf

If you're thinking about purchasing an electric vehicle, you could consider signing up for an EV subscription service before buying it. An EV subscription service is convenient for testing different EV models to gauge their performance and compatibility with your lifestyle.

However, with so many companies offering EV subscriptions, choosing the best fit for you can be challenging. To help you out, we've compiled a list of the best EV subscriptions available.

What Is an EV Subscription?

An EV subscription is similar to a car lease, but you make monthly payments with more flexibility to swap vehicles when you want. Another advantage of EV subscriptions is that they don't require advance payment. In most cases, the subscription term can range from one month (short-term) to 36 months (long-term).

Additionally, most EV subscriptions include insurance, 24/7 roadside assistance, maintenance, and servicing in the monthly fee.

So, what are the best EV subscription services?

If you live in California and are interested in buying the Tesla Model 3, you may consider the Autonomy EV subscription service. If you're a new customer, you can start with a 3-month minimum commitmentafter that, you can switch to a month-to-month subscription.

Autonomy's monthly payment is between $450 to $1,000. However, you're required to pay a starting fee of between $1,000 to $5,500, depending on your package, and a refundable security deposit.

Autonomy's subscription service is exclusively on its iOS app. To get started, you need to upload your driver's license and sign your contract digitally via its iOS app. You can also cancel or extend your subscription whenever you want, but you can do so with a 28 days notice.

However, the subscription cost doesn't include vehicle insurance.

Location: California, Texas, Washington, and Florida

Restrictions: 1,000miles limit per month, driver must be 18+ years old

Steer is the ideal EV subscription platform for anyone that wants to try out different electric cars, from luxury to entry-level EVs. This means you can try out different EVs and hybrids from brands such as Tesla, Porsche, Audi, BMW, Jaguar, and Toyota.

However, the number of car swaps allowed per month depends on your subscription plan. For instance, if you subscribe to the basic plan, you can only access two cars per month. Then again, Steer EV offers a premium option if you want to access all the vehicles in its lineup.

In addition to that, the subscription cost is inclusive of repairs, insurance, and EV maintenance.

Location: Toronto, Tampa, Washington, Austin & Vancouver.

Restrictions: No mileage limit, driver must be 26+ years old

If you have a poor credit score, you should consider Borrowa Los Angeles-based EV subscription service. However, unlike most EV subscription services, Borrow offers a subscription of between three to nine months.

If you subscribe for nine months, you could pay between $199 to $1,099, depending on your package. At the moment, Borrow has a lineup of 775 EVs in California, including the most popular EV brands in the U.S.

One of the best perks of using Borrow is that the service includes a car wash coupon and a home charger if you've subscribed. However, its subscription costs don't include insurance, and if you cancel your subscription or swap cars before your term is due, you will incur an extra charge.

Location: Los Angeles

Restrictions: 1200 mileage limit per month, driver must be 18+ years old

4. Hertz My Car

Hertz My Car is not an exclusive EV subscription company. However, it offers customers the option to drive a Tesla Model 3, Model Y, or Polestar 2. Better yet, you can subscribe to a package that offers you access to both gasoline and electric vehicles.

Unlike most companies, Hertz My Car covers roadside assistance, insurance, and maintenance when you pay for a subscription. In addition, you can swap your electric vehicle twice a monthbut if you want more options, you need to pay an extra $75.

Another thing, if you would like to share the car, Hertz My Car gives you the option of adding one driver. The best part is that the car subscription insurance will also cover the extra driver you list in your subscription.

The only drawback is that you first need to pay an upfront two-month subscription feebut after that, you can pay the monthly subscription rates. Also, the Hertz my Car subscription is only available to drivers who are 25 years or older.

If you subscribe to an electric vehicle, you're limited to 2,000 miles per month or 24,000 miles per year. However, according to the Federal Highway Administration, the average American drives 13,476 miles per yeara limit of 24,000 miles is more than enough. Then again, you can still exceed the mileage limit, but it will cost you $0.35 per mile.

Location: Nationwide

Restrictions: 2000 mileage limit per month, drivers must be 25+ years old

With a subscription cost of $11 per day to drive a Volkswagen e-Golf, AAA offers one of the cheapest EV subscriptions in North America. Alternatively, you could pay $449 per month. The subscription cost is inclusive of roadside assistance, insurance, and maintenance.

Another advantage of using a AAA EV subscription is that it offers mobile EV charging stations. In other words, if you're a AAA member, you can recharge your electric vehicle using special trucks designed with chargers in various cities across the country for free. In addition to that, you can recharge your electric vehicle at any AAA branch office at a discountthis deal is exclusive to members only. However, you could also consider other affordable EV charging networks.

Location: Sacramento and Davis California

Restrictions: 500-1500 mileage limit per month, drivers must be 23+ years old

An EV Subscription Is More Convenient Than Leasing

At the moment, there are not many companies that offer EV subscriptions in almost all locations in North America. However, things could change over the next few years once the sale of electric vehicles outnumbers gasoline vehicles.

Even so, electric vehicle subscriptions offer a better and cheaper alternative than leasing. It also gives you the option to swap to a different electric car whenever you want.

The Rise of Electric Car Subscriptions: Top Market Players and Their Competitive Advantages

The electric car subscription market is rapidly evolving as more consumers and businesses opt for the flexibility and convenience of subscribing to an electric vehicle (EV) instead of traditional ownership or leasing. Electric car subscription services provide customers with access to a range of EVs for a fixed monthly fee, which often includes maintenance, insurance, and other services. This model enables customers to switch vehicles with ease, while enjoying the benefits of driving an electric car without the long-term commitment of ownership.

What Are Electric Car Subscriptions?

Electric car subscriptions are a flexible, convenient, and cost-effective alternative to traditional car ownership, leasing, or rentals. With a subscription, customers gain access to a wide range of electric vehicles for a fixed monthly fee, which typically includes insurance, maintenance, and roadside assistance. Subscribers can change vehicles as their needs or preferences evolve, offering a hassle-free and adaptable driving experience.

Benefits of Electric Car Subscription for Private Customers

Private customers who choose electric car subscriptions can enjoy several advantages over traditional car ownership or leasing. Here are some of the key benefits they can experience:

1. Cost Savings: With an electric car subscription, private customers can avoid the high upfront costs associated with purchasing a new electric vehicle. The fixed monthly fee covers various expenses, such as insurance and maintenance, making it easier to budget and manage costs.
2. Flexibility: Electric car subscriptions offer the freedom to change vehicles as needed, allowing customers to try different models and find the one that suits their lifestyle best.
3. Minimal Commitment: Subscribers can enjoy the benefits of driving an electric vehicle without the long-term commitment that comes with ownership or leasing.
4. Access to the Latest Technology: Electric car subscription services often update their fleets with the newest models and features, giving customers access to the latest technology and improving their driving experience.

Benefits of Electric Car Subscription for Business Fleets

Businesses with fleets can also capitalize on the advantages of electric car subscriptions, streamlining their operations and improving overall efficiency.Thanks to the flexibility of electric car subscriptions, businesses can understand the feasibility of electric vehicle fleets for their business. Most notably, car subscription can help them answer the following questions:

• Are EVs suitable for my fleet requirements?
• Can my business support the infrastructure requirements of an EV fleet?
• Which EVmodel is right for my business?

Here are some of the main benefits for businesses:

1. Cost Efficiency: Businesses can save on upfront costs and ongoing expenses by opting for electric car subscriptions. The fixed monthly fee simplifies budgeting and financial planning, and the included insurance, maintenance, and roadside assistance reduce the overall cost of fleet management.
2. Scalability: Electric car subscriptions allow businesses to easily scale their fleet size up or down based on their needs, without the hassle of buying, selling, or leasing vehicles.
3. Sustainability: Incorporating electric vehicles into a company fleet demonstrates a commitment to environmental responsibility, improving brand image and potentially attracting eco-conscious customers.
4. Employee Satisfaction: Offering electric car subscriptions as an employee benefit can help attract and retain top talent, as many professionals value environmentally friendly transportation options.

Who Are The MainElectric Car SubscriptionMarket Players?

OEM Automakers

Automakers hold a distinct advantage in the electric car subscription market due to their built-in cost advantage and established brand recognition. By using their own vehicles at cost, automakers can potentially offer lower subscription fees compared to third-party providers. Furthermore, automakers can leverage their brand strength and marketing power to influence promotions and discounts, making their subscription services more attractive to consumers.

Dealerships

Dealerships have a unique advantage in customer-facing operations, such as showrooms and service facilities, which can be utilized to provide a seamless subscription experience. They can also leverage their existing customer base to promote their subscription offerings. Dealerships operating multiple franchises can offer a diverse range of vehicle options, attracting a broader customer base and providing customers with greater choice and flexibility. Additionally, dealerships with established relationships with automakers can benefit from automaker discounts and guaranteed buyback programs, reducing the cost of vehicle procurement and risk associated with inventory management.

Rental Providers

Car rental companies can leverage their existing infrastructure and expertise in vehicle maintenance and management to support car subscription services. Their existing relationships with consumers and corporate customers can be utilized to cross-sell subscription services. By offering subscription services, rental providers can offer a more convenient and cost-effective alternative to traditional car ownership and rental models. However, they will need to adapt their offerings to accommodate the unique aspects of car subscription services, such as a wider range of vehicles, more flexible pricing options, and a higher level of technical expertise in customer management and billing.

EV-only Subscription Providers

Subscribing to a provider that focuses solely on electric cars offers customers a greater range of choice across various electric vehicles from different OEMs. These providers typically have partnerships with charging networks, which can translate to free charging or free installation of home chargers for subscribers.

Energy Providers

Energy providers can create a comprehensive offering for customers by bundling energy and charging products with an electric vehicle subscription. This approach can expand their revenue opportunity and meet the evolving needs of their customers. Unlike automakers, energy providers can offer a multi-brand service, further enhancing the value proposition. By bundling home electricity, charging infrastructure, and electric vehicle subscriptions, energy providers can create a seamless and convenient experience for customers while capturing more value over the entire asset lifecycle of the vehicle.

In conclusion, the electric car subscription market is experiencing significant growth and diversification, with various types of incumbents and disruptors entering the space. Each player brings unique advantages and capabilities, contributing to the development of a competitive and dynamic market that offers consumers a range of options for subscribing to electric vehicles. As the market continues to evolve, it will be interesting to observe how these different players adapt and innovate to meet the changing needs of consumers and capitalize on the opportunities presented by the electric car subscription trend.