RTCPODS - China English Podcast Hub

Discussion keeps the world turning. This is Roundtable. Heated seats, adaptive cruise, your car has it all. But only if you keep paying. Welcome to the age of smart cars with not-so-smart pricing. Today we're diving into the rise of software-based vehicle features where convenience comes at a cost and drivers are starting to feel more ripped off than rewarded. Coming to you live from Beijing, this is Roundtable. I'm Hei Yang. For today's program, I'm joined by Steve Hatherly and Yuxian in the studio. First on today's show. From remote start to seat warmers, modern cars can do more than ever. But here's the catch. Many of these features are locked behind paywalls even if the hardware is already in your car. With automakers pushing subscription models, is this innovative business or just a new way to squeeze drivers dry? Let's talk about what's fair, what's shady, and what it means for the future of car ownership. Yuxian, tell us why are paid subscriptions in cars back in the crosshairs of drivers and automakers? Well, you're absolutely right. Giving the statement earlier, Hei Yang, it's not really a new practice anymore. It's been a while for a long time and it's been seen as more or less a common practice that car makers they're seeking for additional revenues after the car is sold. But what's hitting the news lately is that car owners here in China, they're feeling trapped and complaining for being required to pay in order to get full services and updates in their car, particularly in the new energy vehicle, the NEV industry, well in China recently and this controversial practice of paid subscription models is highlighted as a potential consumer trap and what they do is that they set all of these features like heated steering wheels or autopiloting system or access to premium functions in the car. They set all of these fancy say functions and services behind paid walls so that you have to pay extra to get these services or updates installed in your car even though all the equipment is already like kind of included in the product itself upon purchase so that's what's going on. Unlocking things in your car that already exist in your car but you can't use it and that's the problem, right? I mean consumers they were previously frustrated by unexpected charges or tiered subscription models in smart television ads and video streaming services. I don't know if you saw the latest season of Black Mirror but that was the concept behind one of the shows is that you pay for a certain subscription and then all of a sudden oh if you update or upgrade then you can get a better version and okay well I upgraded yeah but now if you upgrade again then you can get an even better version. People are tired of that consumers are tired of that model but yeah as Yushan said it's now entered the the NEV market and we're talking about things like heated steering wheels or access to premium functions you got to pay for it so the heated steering wheel option what this means is it's available in the car meaning the car has the ability to have a heated steering wheel but if you don't get a subscription through an app or otherwise then you can't use it and consumers are very frustrated by this. And there are a few things going on here there are the types that you guys mentioned basically the hardware is already in the car and then you just cannot unlock it without paying. Also there's the over-the-air updates or the OTA updates or basically ongoing charges and when you think about your car oh I remember a while ago when Tesla was still you know sort of the king in EVs but now it's kind of struggling to maintain that title but anyhow back then I remember one of the sales slogan they had was you're not driving a car you're driving a computer and then so also we are talking about the newer connected or smart vehicles here but yeah just like your smartphone it needs constant updates and then you have to pay for the updates which is ever never ending. There was a you mentioned Tesla there was a 2024 straight arrow news report and they pointed out that brands like BMW and Tesla they've gotten backlash from their customers overcharging extra fees for things like heated seats again available in the car just not available to the person who purchased the car if they didn't pay extra for it or extended battery range that too again customers not happy about that and there was backlash for those companies and then not only those two companies by the way other brands as well experience backlash from their from their customers. Yeah such as Mazda which is something that I read and I got a bit confused so the brand Mazda is setting its remote start feature as part of a paid package that they call connected service that charges 120 US dollars per year so for those of you who understand what a remote start feature is I would assume it should be part of the basic function of your car but now that they're packaging it as part of a bigger service they start to charge you and they seem to have a good reason to since it's renamed and yeah it's all fancy come along with other service types and these are including both what you said Huyang the hard hard factors like the seat the steering wheels but also there are software updates as well because nowadays more car makers especially in the NEV sector here in China they're offering to install software and digital updates on your car so after you pay the subscription and they can just say remotely update your car system and this has become a common practice among automakers here so basically I would say this is a shifting in business in a way that EV is navigating to become this subscribable products in general also just a quick question you guys mentioned that the consumer feels mess led mm-hmm and it's not like this is particularly a new concept we're talking about here but given it's only been around for maybe I think become more mainstream well-known in the last maybe three years or so but people feel how are they misled because they feel like they've already paid for it right I mean you've already paid for the steering wheel you've already paid for the seats the steering wheel in the seat can be heated what isn't did I not pay for this already so that's why that's why there's this feeling of I guess a lack of trust or being misled as you put it and it's new I think I mean brand new this year no but still in the auto industry this is relatively new and this is one of the most controversial trends in the auto industry right now and manufacturers they're looking for different additional revenue streams right profit margins on cars can be quite low and this is a way for the car makers to have a consistent and perhaps reliable revenue stream from their customers hoping that their customers will be long-term loyal customers with the company see saying that their profit level is low is something that me as a regular consumer might just think what I mean if you pay those high-level executives or make their packages a little bit thinner then everybody will be happier but the people in high-power positions I suppose but yes let's take a look at you know what these features are what are these software updates that fall into the category of over-the-air which is a key part of what you need to pay for the subscription over-the-air sounds like a podcast yeah I know right the name is so I don't poetic in some way but and over-the-air or OTA update is actually the wireless delivery of new software firmware or other data to mobile devices such as this system mobile system in your car and OTA update management is the process of remotely updating the entire root file system and it doesn't need a technician to come approach your car or whatever mobile devices you have and insert things like installing things on the computer but remotely it's done without physical contact so OTA updates in cars according to Guam in online cover a wide range of areas including power about battery management intelligent driving assistant functions and smart in-car systems so these updates can even optimize potential software vulnerabilities in vehicles and also here in China there is a huge market for say OTA updates being used in car and that's the data from the state administration for market regulation that in 2022 China conducted 17 remote upgrade recalls involving 800 and 887 thousand vehicles so we can say that remote update have increasingly become an important method for a lot of car makers to improve their vehicle safety without having to call back your car and yeah have you wait for a month without being used which on its own is amazing yeah I mean that's amazing right you can get your car taken care of without taking it to a shop making an appointment going to wait leaving your car there for two or three days if it takes that long then you got to make arrangements you got to take a taxi here and there I mean all of that is just eliminated so on its own that is an amazing thing that I don't think we can complain about yeah one example here would be and this is according to industry insider that Mercedes-Benz USA they recalled forty one thousand eight hundred and thirty eight of its SUVs in the North American market in early 2021 due to a software era in this electronic stability program that's something that could be adjusted remotely but they still recalled all of their cars so if OTA car updates had been applied back then it could have solved all the above problems by just eliminating the need for software related recalls so yeah in a way it's greatly saving the time and manpower in fixing cars or just in face of small bugs like that so it's kind of like back to that idea of driving a computer so a lot of the stuff can be fixed remotely what about the top complaints from car owners regarding paid subscription and cars and particularly now new energy vehicles and yeah what are the critiques of the practice I mean just like how we mentioned earlier this there are smart TV ads and also the video streaming platforms that's you know charging their users by different tiers of paywalls but those got well eventually we're faced with regulations nowadays because as smart TV booths as were eventually curved by regulators and also the video streaming platforms have already faced growing resistance from consumers nowadays we see this happening to the NEV manufacturing business but still there are a lot of gap that that's hard to meet both for the consumers and for the manufacturers themselves because right now there are still issues with the consumer right protection and also like Steve mentioned earlier the consumer trust if I paid this time are you going to use more rabbit holes of such to attract me to jump in in the future am I the Chinese chai waiting to be cut for you as long as I grow there's there's more chai to become I don't get that reference but I can see you're unhappy about yes hi Chinese a fun reference because that the chives they always grow and you can grow easily and fast and they can be harvested easily understood there's also you know every time we talk about anything that's kind of wireless we talk about the security concerns the ethical concerns these these over-the-air updates they are wireless right so you know malware attacks exposure of personal information but if you use secure encrypted connections that can help kind of mitigate those threats if you will and also I guess you could say too that not all users understand how to perform updates or why these updates are important and that can lead to missed updates and increased vulnerability for your vehicle if you think about someone who's not tech savvy it does take a little bit of understanding right to to be able to know what's going on so there could be issues I thought that it's a choice it's not a necessity that you don't have to update all the time right but also here I think we're I'm so sorry please hold that thought but you know I think here we're getting on to really the nail of the head of the issue that is you know what constitutes consumer rights what is the gold standard here because we're kind of still in the Midwest of trying to establish rules because I don't think everybody agrees on first of all are these updates necessary is it a complete ripoff by these dealerships and well not dealerships the automakers and do I have to do this or is it you know if I feel like it I do it if I have some extra bucks that want to throw around I can or maybe you know I can yeah what about the good old days of driving a regular vehicle you know I didn't need to update anything and it was fine so what's the rule here question mark I was just I was just about the top on that oh yeah because I deeply agree with you on that as well because nowadays we're seeing this unbalanced kind of like a market marketing mechanism here that the transparency is only on the one side is only on the manufacturer's side not on the consumer's side they don't know what's being done to their car you said it's an update but where and which exactly people don't know and like Steve mentioned earlier not everyone not all car users they're tax-savvy enough to know exactly those details as being put into their car well some of them are really tech savvy that Mazda situation that you mentioned before some Mazda owners decided to kind of take matters into their own hands because they were really frustrated by this so they used a workaround created by a software developer to hack their own vehicle and that workaround allowed them to use numerous connected features that would have otherwise been hidden behind a paywall and that included the remote start that you were talking about also downloading owner's manuals and updating service information and monitoring health the vehicle's health and making service appointments now Mazda of course knew about that situation then they weren't happy about that at all they issued a takedown notice but that PR damage had already been done and the customers weren't happy and then the company had to explain the reasoning behind its decision to charge $120 a year I think you said for the features that were already built into the vehicle so the the non tech savvy customers maybe not so happy even the tech-savvy customers tried to can you imagine trying to hack your own vehicle that you paid so much money for in the first place this reminds me of the term jailbreak and yeah like if I think for a lot of not always tech tech savvy consumers which smart consumers in China I think we were kind of used to the idea of workarounds but it's really interesting what you mentioned just now it kind of to me is connected to a movement over the last few years called the right to repair you know because this is also for an average user or driver you feel like this is kind of out of my hands unless maybe you have a smart engineer who knows how to work with computers I guess otherwise you don't know how to fix this thing you don't know whether the update is really all that helpful like what you should mentioned so yeah in a way it'd be nice to sort of reclaim some of that control or whatnot well I think the problem part of the problem and this is in the list of recommendations for what companies can do is focus on the software updates rat or upgrades rather than the hardware upgrades instead of saying you can pay a subscription to have your steering wheel warm then just just don't even have a subscription for that it was BMW I think it was in 2023 or 2024 they had their heated seat subscription and they decided to to cancel it so the question of whether customers should be upset about this or not is kind of a moot point because the fact is customers are complaining about this they don't like it they don't like it whether it's fair or not it doesn't matter they don't like it and if they don't like it and and it's gonna create problems for the company in the future it's better is it not better to not have these at all well that's a very good question but a kind of it does it depend on who has a bigger say or bargaining power and all of this do you think this is just a blatant ripoff cuz what you said is like yeah should you just not have it at all maybe because it is a ripoff or maybe you should keep it but see like when with our smartphones we don't pay for the over-the-air updates I was just about to say that my smartphone just automatically updated itself the system just automatically updated itself and just let me know in the morning that oh we did this for you so that's what smartphones and a lot of other portable devices do these days and they're not charging us in my personal perspective is that it's not the products targeting area for collecting profits from their consumers they say for safe phones they just focus on innovation and technology and focus on developing new model types but for cars it seems like after the car is sold there are very little room for them to collect back those revenues that's built within the car because it's a one-time purchase right that's the traditional model of car sales is that you negotiate a price with the customer you agree on the features that the car has and then they pay and then that's it right and then you go home and the car immediately loses value the minute you drive away exactly but this is different and should you know again back to the point should customers be unhappy about this my answer is not really and the reason I say that is if you go to a car dealership and you want the base model right now no bells and whistles no nothing fancy at all then the price is going to be lower if you want to negotiate the price of having navigation installed into your vehicle well then the car is going to be more expensive if you want heated seats again that's gonna be an extra cost so that's one argument you could argue against that by saying yeah but on a subscription base you're gonna end up paying more over a period of time right if you have to pay ten dollars a month for your heated steering wheel I've never talked so much about heated steering wheels in one day if you want to pay ten dollars a month for that then think about how much that is a year that's a hundred and twenty dollars a year right so that's gonna add up okay fine but there's a counterpoint to that and that is you're only gonna use the heated steering wheel in the wintertime right give me 50% off no so no so only get a subscription for when the weather is cold you can cancel these subscriptions whenever you want to right well it might not be for every situation but it certainly applies to some right what do you think well I think in general we're still at a transitioning phase for this whole industry I would say in the future this whole paid wall or paid subscription thing is going to wind down a little since now they're still you know marginalizing some services and call it you know paid service but here this is not from me it's from Jensen Hwang the founder of AI computing company Nvidia he once said in a 2023 statement that by 2025 it is expected that many mainstream automakers in the market may sell vehicles at prices close to cost and primarily provide value to consumers through software this will fundamentally change the business model of automotive companies in general so we're looking at this trend and we're only perhaps at the beginning of it where automakers they're seeking extra say short time short vision to profit earning so making quick money out of these subscriptions yeah yeah I was gonna say I don't think they see it as short-term at all no I think they see it as a stream of recurring revenue right for years yes that's where they're banking yeah yeah because their hope again back to the point I made before they're hoping for a long-term relationship right with their customers so the idea makes sense for automakers and also there's another advantage for automakers because it allows them to streamline their manufacturing they can build cars to more uniform specifications Mark Wakefield he runs the automotive and industrial practice at the consulting firm called Alex partners and he said exactly that down the line owners can add features on the car almost like a la carte at a restaurant if you will you just add what you want so you go you go to the dealership they have their base models you get that and then you just add on whatever you want it's a new it's a new concept and it makes from a car manufacturers point of view it makes sense it allows them to totally streamline their production right they don't have to make all these different models with all these different options the customers can choose to add what they want from a business point of view that's what they have in mind right I would like to know what is the baseline price to just get the skeleton of the car that's what I'm paying for I don't want any bells or whistles I don't know how to use them I will not use them anyway every car motorists out there owner out there just think about how many fancy features you actually use none yeah you just drive the car and want it to be safe give me the frame of a Ferrari I don't need the doors the windows I need one seat no windshield I don't need the windshield I like the wind I mean sure if you want to go so well I do agree with you guys I think with the hardware that's already in the car oh the audacity that these car makers make me pay for that excuse me there's like saliva flying out of my mouth excuse me for that I am mad about that but with the smart updates I can sort of understand but my rear end is firmly planted in this consumer seat so it makes you feel really bad and also when you look at all the other subscription models of video stream well that's a bad example okay back to the smartphone and your computer updates you don't need to pay a dime for that so I think it still takes a lot of persuasion for people to constantly to want to pay for your monthly or yearly subscriptions I think the car companies forgot perhaps this is just my personal opinion the human emotional response to the situation that you just described if it's cold on a December morning and you're sitting in your car seat and your butt is freezing and you know your seat has the ability to be warm but it can't because you refuse to give extra money to the car company that's gonna make people really mad in that moment and I think that's what the automakers didn't take into consideration but also if the automakers are all talking to each other and they're like hey Steve you know our industry new standard is that we don't give those people the freebies you know let's all you know it's like a cahoot yeah that's called collusion and I'm pretty sure that's illegal and you shouldn't be saying this on national radio so basically I think we're still at a point where well what are the new standards gonna be like and we are voicing our concern in that sense and there's a new concept that is related to this that's being floated in the US auto industry full car subscription model yeah this is full car yeah this is really this is really interesting this is a study that was published from extreme terrain that explored the idea of just subscribing to a car the same way you would subscribe to a streaming service like Netflix or what have you or a news website service say they say that there are many advantages to this decades ago you know renting a car on a monthly basis without the hopes of ever owning it would seem kind of ridiculous but that's exactly what we're talking about here taking the ownership out of owning a car now if you're in your 40s or your 50s or your 60s the idea of a car subscription might seem very alien right but this is what they said from the report for younger drivers many of whom perhaps have never owned a car in the first place the idea of subscribing to a vehicle they are less resistant to that idea so they did a poll and and here's what they found almost half of the respondents said that they would be willing to subscribe to a car again this is in the United States only so to be taken with a grain of salt 10% said that they might subscribe to a car if the insurance and maintenance costs were included no surprise insurance costs are rising as well 46% of respondents said that they would be willing to subscribe to a car specifically if tariffs drive up prices any further take that into consideration one in five Americans said they would be willing to pay $600 a month or more for a car subscription and that number jumps to around one in three for Gen Z one-third of Americans would be willing to subscribe if it meant that they could swap cars every six months those survey results are proof that this is not such a crazy idea perhaps the concept of only getting a car subscription and not owning it at all I'm not sure if I followed this part did you mention whether is this any different from leasing or renting a car well it's not it yeah it does sound similar on the surface right but it's not leasing because there's no commitment if you lease a car you're gonna do that for a period of time right like a month a year well it's usually like a year and then there's lease to own options but yeah let's say a year or two years I think is common too right but this is a monthly contract perhaps it's a subscription just like you sign up to a TV streaming service for a month after a month you can cancel that if you want to keep it and continue going you can more results 58% said that they would love to swap vehicles based on their need rather than say committing to I don't know let's say you need a full size truck because you have to move house well you could just subscribe to that truck for a month and then that's it then you don't own that truck anymore it's kind of a cool idea yeah and it totally reflects the younger generations need for a car because nowadays we don't necessarily have to buy one it's just when we have the need there is such service provided that we can pay say a reasonable amount of money I would assume and and get a monthly subscription of a car and be able to use it when I need it and then decide afterwards if I still need it yeah that's that's the other attractive point and you don't need to maintain it and you know take care of yeah 73% said they were attracted to the idea of driving a car with no long-term financial commitments understand well understood I reckon with that yeah that's more like access often access often trumps position possession in for young people yeah and also I think the the real issue here is ownership versus access and are we heading into a subscription society when well look at all the possessions of ours increasingly in today's world do we still own the things or are we simply leasing access to them like we don't own the CDs or vinyls of music anymore we can only listen to certain songs when we pay for them on your streaming platform and we're kind of used to that idea but when it comes to your car that is parked in the driveway or your parking lot it's a solid expensive item there and you don't necessarily own it and you're only leasing access to it I wonder how people are gonna feel about this and well in China it seems like people have some serious concerns about it for the time being but when Gen Z become the main consumers of cars that's that's something that might change totally change yeah yeah