Two New Jersey state lawmakers have introduced a bill that would ban automakers from charging subscription fees for components of a car.
We rarely report on bills that have merely been proposed. But this one is likely to herald a legal and public relations battle that will help shape the future of how we all drive, not to mention pay our monthly bills. So, let’s explore the controversy.
Cars Used to be Goods. Now, Some are Services.
Since the first cars were sold, they’ve been a product you could purchase and take home. Automakers had no more access to your car after you drove it off the lot than bookstores have to the books you buy.
But today’s cars are increasingly internet-connected computers on wheels. Technologies like navigation systems and over-the-air updates require cars to have a constant wireless connection. Automakers now stay in electronic touch with many new cars long after you drive them off the sales lot.
That creates a new business opportunity.
Automakers have begun telling investors they plan to charge subscription fees for car features. Some have even experimented with it. Several already charge monthly fees for connected features like remote-start apps or telemetric services.
BMW has charged monthly fees for access to heated seats in some markets. Audi has given buyers in Germany temporary access to improved headlights, then required a monthly fee to keep them.
General Motors told investors last winter that it might offer 50 different subscription services by 2026.
Our own surveys show that the idea is deeply unpopular with car shoppers.
Plans for Everything from Seat Fees to Rented Horsepower
These experiments are small, but the opportunity is much bigger. Volkswagen has even released a concept car that would let owners rent additional horsepower by the mile when they want more performance from their car.
The idea doesn’t just allow automakers to make more money. It could ultimately save them money as well. Today, car companies incur expenses to build cars in many different configurations because different buyers will want different packages of options.
Could Change the Way Cars Are Built, But You’ll Pay Forever
It might be cheaper for automakers to build every car with every option and allow owners to switch them on and off for a fee.
Today, for instance, an automaker might build some midsize SUVs with a modest 6-speaker audio system, others with a 12-speaker premium unit, and a small number with a high-end 20-speaker audiophile system.
In the future, they could avoid the expense of building three different stereos and build every car with 20 speakers. They could then charge owners three different monthly fees to use the number of speakers they were willing to pay for.
It’s a great future for automakers. It’s not as pleasant for drivers. It could mean never-ending car payments, end the idea of ever paying off a car, and leave even used-car buyers with permanent monthly bills.
Just a Proposal for Now
New Jersey Assembly members Paul Moriarty (D-Camden and Gloucester) and Joe Danielson (D-Middlesex and Somerset) have proposed a bill to ban the practice.
The bill, A 4519, would make it illegal for automakers to “offer a subscription service” that “utilizes components and hardware already installed on the motor vehicle at the time of purchase or lease by the consumer.”
It excludes services that involve “ongoing expense to the dealer, manufacturer, or any third-party service provider.”
That would permit navigation services, satellite radio subscriptions, and other features that involve constant data exchange with the car. But it might serve to ban things like BMW’s monthly seat fee.
The bill is just a proposal. Most proposed bills fail.
But it’s the first sign we’ve seen of any organized resistance to automakers’ plans for by-the-month or by-the-mile fees, so we’ll be tracking its progress for you.
