Cars, Powered By Software
Virtue, or Not?
I have always loved cars. My high school, Willowbrook in Villa Park, Illinois, had one of the best high school auto mechanic programs in the US. They used to win contests all over the country on troubleshooting.
My first job out of college was with the 3M Auto Trades division selling adhesives, coatings, sealers, and sandpaper! It was fun to go into all kinds of shops. I had some custom shops on my route and it was cool to see what they were doing.
But, the car business is fundamentally changing.
The other day BMW said it would start charging monthly for features like heated seats in your car. They can use software to turn on or turn off the feature depending on whether you pay.
I recall a lot of advocates for fully electric cars talking about how they loved driving around a “piece of software”. Engineers could work on the code of the vehicle and simply upload it via satellite to everyone’s car. That seems really cool.
But, in an era where privacy is becoming more and more important, having a centralized system to know exactly where your car is on the grid might not be a benefit. If the federal government instituted social credit scores, they might even be able to disable your car.
If you look at things from BMWs perspective though, your opinion might not change but you might not be as outraged.
The car business has a few profit centers. The first is when they sell you the car. They make a nice profit, but they really increase their margins when you bring your car to their dealership for service.
With a fully electronic car fleet which some manufacturers are projecting in the near future, you don’t need to go to the dealer for service.
Cut out a profit center, companies need to find a way to make it up. It’s hard to increase the price of the car by too much, so instituting a monthly charge and trying to turn some of their income streams into a SaaS model makes sense to them.
For consumers, it is a radical change.
I have two cars now. One is diesel-powered, and the other is gas-powered. I admit, having an electric car for an in-town vehicle is super enticing. Especially given gas prices versus electrical costs where I live.
There are certainly benefits to electric cars, and there are benefits to fossil fuel-powered vehicles too. It isn’t this vs that. You have to look at it from 80,000 feet overhead. The entire macro view is a lot different, especially when you look at costs/opportunity costs of the entire timeline of production for each.
The more software that is centrally controlled and built into cars, the less control that owners have over them. Cars used to mean “freedom”. When you got your license, it was one small step to independence.
The best outcome is that there is a lot of freedom of choice for consumers rather than government edicts. Let consumers decide what is right for the way they want to structure their lives. Let the free market decide the price of all the things that go into building and operating a vehicle.
You can imagine a day when freedom-loving people keep Cuban bodymen and mechanics employed as they tool around in their software-free cars. In that dark scenario, the price of gasoline/diesel-powered older models will be higher than newer 100% software-powered cars if people value their freedom and privacy.