Automakers are struggling to make electric vehicle production profitable, as electric vehicles do not generate significant profits compared to gasoline-powered cars. Faced with this situation, automakers could resort to selling more products and services to EV buyers to compensate for the lack of profits. Some of the options that could be offered are subscriptions and additional features or upgrades after the initial sale of the vehicle.
However, consumers may not respond well to these new offerings. For example, BMW received criticism for offering a subscription to have heated seats, while Mercedes offered a subscription-based “acceleration boost.”
Subscriptions and services after the initial transactions are some of the reasons automakers are interested in leasing their electric cars. If consumers commit to leasing an electric vehicle for a monthly fee, automakers could leverage this to sell them more features over the course of the lease.
According to a report by Deloitte, the automotive industry could lose 50% to 60% of future profits if companies continue as they are. Therefore, big changes are on the horizon as automakers navigate changing consumer behavior, industry challenges, and increasingly fierce competition.
The transition to electric vehicles also threatens the traditional dealer model and could negatively affect automakers’ bottom lines. For this reason, some are considering direct-to-consumer sales like Tesla’s model, which would allow them to make more profit from each electric vehicle.