The article in the url below makes the argument that, due to subsidies being offered by the U.S. government, finding an EV to buy is challenging, at present:
"The landmark US climate bill passed [over the summer] … includes a $7,500 point-of-sale tax credit for any purchase of a qualifying new EV, and $4,000 off the purchase of a used one. But the bill doesn't solve for one of the biggest challenges facing interested buyers: inventory. It's terribly difficult to get a new electric car these days. In a recent survey of thousands of EV owners for Bloomberg Green's Electric Car Ratings, respondents said they waited almost seven months, on average, for their battery-powered vehicle."
This constrained market is presenting opportunities for innovation. In particular, companies are beginning to explore the market potential for car subscriptions (rather than purchases):
"What if you could simply subscribe to a car like a 5,000-pound magazine? That's the future being sold by Autonomy, a California-based startup that since January has been targeting a narrow niche on the EV ownership spectrum, somewhere between the Hertz rental counter and a three-year lease. 'We exist to expand the adoption of electric vehicles," reads Autonomy's pitch, 'and we don't think you should be forced to accept expensive, long-term debt to drive one.' Autonomy is now stocking up on EVs from pretty much every company that makes them: This week, it announced plans to order nearly 23,000 cars from 17 automakers, including Ford, Polestar and Tesla. There are even 200 vehicles reserved from Canoo and Fisker, two companies on the not-quite-there side of actually making a drivable electric car."
One argument to suggest there is a market for this business model is that consumers increasingly think of cars as IT goods (where software and hardware updates are more frequent), rather than manufactured machines:
"The subscription model has some logic for consumers. In part because of fast-evolving technology, EVs have traditionally shed value much quicker than gas-powered cars. On a depreciation scale, consumers typically lump them in with cell phones. And while Autonomy's offering sure looks like a lease — costs include a $5,900 'start fee,' then $490 to $690 a month for up to 1,000 miles of driving — customers can end the subscription any time after three months, and don't have to pay maintenance, registration fees or interest."
The key difference from the leasing schemes that already exist, therefore, is the payment periods – much smaller amounts on a more frequent basis. And, presumably, the company thinks it can make sufficient money on the initial start fee that would offset any rapid turnover. Perhaps it is more similar to a Costco business model, where the products are sold at cost and the annual membership is the margin. But, make no mistake, this is an experiment with no guarantees:
"A contemporary car is nothing if not a dense stack of software, which means subscriptions on wheels are not entirely bonkers. But a car is also an appliance, and consumers aren't accustomed to renting a refrigerator, let alone paying a monthly fee to use the ice-maker. Luckily for Autonomy, the simplest pitch may be the best one. If it can bigfoot individual EV orders by jumping to the head of the queue, the startup could find scads of subscribers — simply because it will have available cars."
Take care
David
David Chandler
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A California Startup Is Selling Electric Vehicle 'Subscriptions'
By Kyle Stock
August 13, 2022
Bloomberg Green
