Contrary to the widespread perception that Tesla represents the North Star in mobility-related subscription offerings (also known as Car Subscription 2.0), primarily due to its charismatic leader, its early entry in subscriptions, the vast popularity of the brand’s innovativeness, and its widespread appeal to technology enthusiasts and environmentally conscious commuters, the company’s record in launching impactful subscription-based offerings has been underwhelming.
While revolutionizing mobility as a whole, the only subscription-based service Tesla offered in its first 15 years in business was Premium Connectivity for $9.99/month. The package included music and video streaming, internet browsing, live traffic visualization and satellite view maps. In July of 2021, Tesla made news by offering its Full Self-Driving (FSD) capability as a subscription for $199 per month, or $99 for those who have previously bought the now discontinued Enhanced Autopilot offering. Until then, the package that included capabilities such as summoning, autopark, auto lane assist, and traffic light stop sign control, could be purchased for an up-front lump sum of $10,000. Its worldwide take rate stood at just 11% and trending lower, possibly prompting Tesla to try offering it as a subscription. Although we credit Tesla for taking the first step toward subscriptions, the strategy did not, and still doesn’t, abide by leading practices of the Subscription Economy.
First, flexibility sits at the core of subscription models, delivered primarily via packages tailored to subscriber needs, such as pay-as-you-go or functional bundles. An industry-leading subscription model would allow drivers to subscribe to parking assistance capabilities and/or driving assistance capabilities as they saw fit instead of locking every Tesla owner in to every available capability. Such a solution would also “check the box” of another subscription imperative; affordability. By bundling capabilities based on driver needs, Tesla, and for that matter, any automaker, would lower the cost of subscribing to specific features, thus making them more widely affordable. Instead of committing$199/month for everything, one driver could commit $39/month for parking assistance only, while another could pay $69/month for driving assistance only, and so on.