Since the free model has become the mainstream of the Internet economy, it seems that the Internet has to "ups and downs" all the way to pay, and the appearance is becoming more and more ugly.

Some time ago, "Menghualu" opened its finale on the 26th. It was suspected that the on-demand video was revived, and Tencent's video was involved in a whirlpool of public opinion. Not long ago, Youku was also scolded by users as a hot search because if you want to cast a screen, you have to upgrade Youku VIP to Cool Meow VIP to throw the screen for free. In recent years, long video platform ingenious, "fancy" charges, has caused more and more dissatisfaction with users, can be scolded again, still do not change.

Of course, not only long videos, Bilibili Inc. open video payment, online music midway into advertising, automatic renewal is difficult to cancel … Internet content and service platforms began to try their best to "harvest" regular users after the traffic dividend disappeared. Now, however, traditional car companies, which have always made money on vehicle sales, have also learned this trick.

Recently, a number of car companies have launched a paid subscription function, which has aroused heated discussion among netizens. For example, if you want to have a larger steering angle of the wheel, the seat can be heated automatically, and the vehicle can be started remotely. These are functions that come with the vehicle and may not be available at no extra cost now. Take Mercedes-Benz as an example. In the latest upgrade service launched by Mercedes-Benz in July this year, the rear wheel steering angle of the EQS 450 + avant-garde version can be increased from 4.5 °to 10 °, and car owners have to pay a subscription fee of 4998 yuan per year to use this system service.

Pay-for-car subscriptions are also varied.

The software is too broken, the hardware "carries the banner"

The atmosphere of paid subscriptions by car companies comes from new energy vehicles. The most typical is Tesla, Inc., Tesla, Inc. 's FSD (fully autopilot system) has experienced several versions of the upgrade, now can provide automatic parking, automatic navigation assistance driving, intelligent summoning and other advanced autopilot functions. With more features, the price of FSD has naturally gone up, rising to $10, 000 per set in 2020, which is still a "one-time purchase, lifetime use" model, while from July 2021, FSD has been changed to $199 a month and is no longer used for life.

Among the new forces of domestic car building, NIO Inc., XPeng Inc. and other car companies have also launched paid subscription services early. For example, NIO Inc. 's NAD service adopts a "monthly opening, monthly payment" subscription model, and is expected to gradually launch subscriptions in different regions in the fourth quarter of this year.

In addition to power, the biggest feature of new energy vehicles is intelligence, and intelligence depends on software services, so it can be said that software payment is understandable and acceptable to consumers. A survey by Deloitte, a management consultancy, shows that more than 90 per cent of Chinese consumers are willing to pay for online cars, with 25 to 30 per cent of them willing to pay more than 5000 yuan.

However, the traditional fuel vehicles implement paid subscription service, but mostly take the hardware upgrade as a gimmick.

For example, in the BMW European market, car owners charge 15 euros per month for seat heating and 10 pounds per month for steering wheel heating. the function of the traffic enforcement camera costs 15 pounds a month. And Mercedes-Benz 4998 yuan to enjoy a year of "rear wheel steering 10 degrees" function, only for Mercedes-Benz EQS entry model 450 + avant-garde version, in fact, other EQS models are standard with this function.

The problem is, first, these paid hardware upgrade services often need additional hardware to implement, and consumers may have already paid for these extra hardware costs when they buy a car. why do you have to pay extra to use these features now?

Second, the paid subscription services currently provided by car companies such as Mercedes-Benz and BMW have not brought substantial and differentiated functional improvements, such as seat heating and steering wheel heating, which are already basic functions in many cars. Mercedes-Benz and BMW luxury cars also use it as a subscription payment function, consumers will only feel that it is not worth it.

In addition, there are a lot of tricks for car companies to promote subscription payment, and the disgust of consumers may make the market education of car paid subscription more difficult.

There is a flaw in traditional car companies' implementation of paid subscription services: consumers are willing to pay extra for software, but fuel car companies have always been very chicken in software development and upgrades. Last month, the release of new all-electric models from several brands of Volkswagen Group was expected to be delayed due to delays in the development of Cariad, the software development unit. For example, after the delivery of polar krypton and polar krypton 001, the car system is often delayed, unable to operate or even black screen, and face recognition often appears bug, which directly exposes Geely's serious shortcomings in the software.

If we do not make up for the shortcomings of the software, let alone make money from software services, the biggest danger is that it hinders the pace of traditional car companies in the electrification wave.

Without autopilot, how can we talk about paid subscription?

In the European market, car owners seem to like car subscription services. After the epidemic in 2020, paid car subscriptions became more and more popular in the European market, especially in Germany, where paid subscriptions became the fastest-growing business model in the German travel service industry. According to BCG, car subscriptions in Europe and the US will reach 5 million to 6 million by 2030, accounting for 15 per cent of new car sales.

Car subscription service does not start from new energy vehicles, but it really moves forward with the advent of the electrified era.

We can see that the current car subscription service mainly focuses on three aspects: vehicle network entertainment function, vehicle performance improvement and self-driving function. At present, the car subscription services implemented by traditional car companies are mainly concentrated on the first two. For example, General Motors Co has about 16 million cars on the road in the United States, of which about 1x4 owners have entertainment paid subscriptions. However, when relying on performance improvement to attract car owners to subscribe, because Mercedes-Benz and BMW eat too ugly, consumers are not willing to pay for it.

And compared with the car network entertainment and vehicle performance improvement, autopilot can bring more profit space, and build a technical moat to achieve the transformation of traditional cars. In other words, new energy car companies, which run faster on the self-driving track, clearly have an advantage over traditional car companies to promote the penetration of the car subscription model at the consumer level.

However, autopilot or assisted driving is the easiest way to achieve paid subscription, but it is also the most difficult area to overcome technical difficulties.

According to Tesla, Inc. 's financial report, although FSD has brought a large return to Tesla, Inc., the payable rate is not high. By the end of Q2 in 2022, the number of users participating in the FSD test exceeded 100000, while Tesla, Inc. produced nearly 3 million cars. Moreover, last year, Tesla, Inc. said that only 1% of Chinese car owners and 2% of them chose to buy FSD.

Among the newly built cars in China, the carrying rate and payment rate of the auxiliary driving system are also not high. Few people are interested in polar krypton's ZAD intelligent driving assistance system, while the polar fox alpha S, which runs on Huawei's HI version, sells very little. XPeng Inc. 's autopilot system, XPILOT, has the highest payment rate, which officials say reached about 25% in March. However, this year XPeng Inc. just announced that he would abolish the charge for the XPILOT 3.0intelligent driving assistance system.

The low willingness of users to carry directly illustrates a core problem of paid subscription for cars. The current self-driving or auxiliary driving functions simply can not meet the requirements or expectations of consumers for this technology. The scenario in which car owners can use the assisted driving system is also relatively limited. As a result, most people are now reluctant to pay for a wide variety of driver-assisted driving systems.

Traditional car companies are more passive on this issue. on the one hand, they lack the ability to develop software to keep up with the trend of intelligent vehicles, and on the other hand, they worry that relying on external technology suppliers such as Baidu, Inc. and Huawei will be controlled by others.

In a dilemma, it is highly unlikely that traditional car companies want to make money for paid subscriptions from software.

Learn the "deviated" Internet thinking

Car electrification is a reform of fuel vehicles. Under the background of the accelerated arrival of this era, traditional car companies are "dismissive" of immature new energy vehicles, but they are actually "honestly" learning to build cars with Internet thinking.

In the past two years, from the newly listed models, we can see that the on-board display screen is not only getting bigger and bigger, but also multi-screen has become a trend, this is mainly because new energy vehicles are using larger and more screens as the support point for building their own intelligent cockpit, while adding entertainment, games, parent-child and other scenes to add points for intelligence. Now, there are more traditional car companies in the big-screen "team", such as the 1.41m Dalian screen in the Mercedes-Benz EQS and a 31-inch "big color TV" in the back row of the 7-series.

The business model of traditional car companies paying for subscription and rising from software to hardware can also be said to be "inspired" by Internet thinking, such as seat heating, steering wheel heating and other functions, which are basically played by new energy vehicles. Of course, from buyout to subscription, in fact, it is more in line with the needs of users, allowing users to buy as they like, and cancel it if they don't need it. For example, heating, the time to use this function is usually two or three months in winter, and it is not cost-effective to buy out at a high price.

However, traditional car companies learn Internet thinking, more stay in "follow the gourd", which makes the so-called "innovation" is often not in line with the actual situation of car companies, the result is self-defeating, or the loss outweighs the gain.

Just like paid subscription, under the background that the in-car system software is the mainstream of payment, it is unreasonable to charge extra for hardware, while traditional car companies have to push hard and even do not tell consumers that some functions are charged when they buy a car. wait until the end of a few months, a text message to renew. As a result, consumers are naturally reluctant to pay the bill.

Traditional car companies learn Internet thinking, not just in product innovation and business models. In the past two years, the myth of creating wealth has appeared frequently in the automobile circle. in the name of "myth", new energy vehicles retain and poach people on the one hand, while traditional car companies with slow transformation and serious brain drain have also opened equity incentives one after another.

In July last year, Great Wall Motor planned to grant 397 million stock options to 8784 incentive targets and 43.184 million restricted shares to no more than 586 incentive targets. In August, the board of directors of Geely Automobile Company approved a share incentive scheme with a total amount of no more than 350 million shares, and the first batch of plans to grant about 167 million shares to 10884 incentive targets.

In addition, SAIC, Guangzhou Automobile, Changan and other companies have implemented equity incentives, and the coverage is getting larger and larger.

However, the implementation effect of equity incentive is obviously not up to expectations. A Great Wall employee who enjoys equity incentives said that "equity incentives are likely to exist in name only", because the exercise price of stock options granted by Great Wall Motor's equity incentive plan is 33.56 yuan per share for the first time. When the equity incentive plan was announced last year, the closing price of A shares was 54.95 yuan, but since October 2021, the share price of Great Wall has fluctuated all the way down from its peak, even falling to 22 yuan per share this year.

Equity incentives do not seem to allow traditional car companies to retain talent, and the loss of personnel is still serious. An employee of a traditional car company said, "everyone wants to change jobs, they all want to build new cars, and the difference is whether they want it or not." "

Under the wave of new energy vehicles, the new forces have moved the so-called "Internet thinking" to the automobile industry and the concept of corporate governance, which has produced great commercial value. Traditional enterprises are eager to make up lessons and want to use Internet thinking to promote industrial transformation, but whether it can have a positive effect, it seems that it has not been seen.

Paid subscriptions, for example, backfire.