Subscription-based features in consumer products like cars often fail to lower prices because manufacturers typically include these features in all units to achieve economies of scale, meaning customers who don't want the feature still pay for it; this model has not actually made products cheaper despite claims, as evidenced by the automotive industry where features like autopilot have become subscription-based while vehicle prices have remained the same or increased.
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What steve lehto got wrong; how car subscriptions make them cheaper 🤡Hinzugefügt:
Hey everybody, how's it going? Hope you're having a lovely day. Sorry I haven't been available recently. I've been busy restructuring and reorganizing my business from scratch. And that has been taking a lot of my time over the past few weeks that I have not had to do a lot of other things. So I wanted to read an email that I got from you all today. And instead of just pile on, I wanted to try and turn this into a conversation because I'm always open to the idea that I am wrong. I do get things wrong from time to time. So, this email says, "Lewis, I'm sending you my comment on Steve Leato's outrage video because I think there is a good chance you will make a video about this as you have made similar in the past. This is about Honda charging for garage door openers by subscription." His email, I think he may be missing a point. Let's take heated seats for example. Right now, chances are if you buy a new car, you get heated seats and pay for them.
Let's say for the sake of argument that heated seats in a new car cost $600. If I live in Texas, for example, that $600 wasted as long as I'm in Texas. Let's say it cost the manufacturer 40 to install the seats in all the cars. Or if they want to do it peacemeal, it will cost 250. Let's say 80% of buyers want heated seats. So if the manufacturer decides to put it in all cars, everyone pays, even those who don't need them at all. It should be pretty easy to see that the cheapest way to put this in the car is to put it in every car. And if there was a way to just give those who wanted the heated seats to pay for all the costs, that would be the way to go.
This is what we are seeing. I don't consider this to be underhanded. It can actually be a win-win for everyone as long as everyone knows that the deal is upfront and there's no going back after the sale and changing the rules. So, I want to find the email that I sent in response to this and read it to you because there's a I want to ask for the audience's input. Firstly, I fact check things before I make videos on them. So, I'm not making a video on that topic because it is false. If I can't write a wiki article on it, I don't have the information to do a video on it. He's referring to a video done by Steve Lato where he was talking about some news story about Mazda having some sort of subscription for garage door openers. I don't remember the exact thing. I researched this last week to figure out that this would have just not been a good topic altogether because it didn't meet the sourcing standards for the Consumer Rights Wiki. And if it doesn't meet the sourcing standards for the Consumer Rights Wiki, it's not something that I feel like doing a video on. This is why I love the discipline of having to make an article before every video.
But the thing that really that I noticed more than anything else about this case and what I commented on Steve Lato's video, the issue, and for me, he got it, you know, he got it wrong and he admitted it in the follow-up video to become I'm not saying that he didn't get it wrong. The issue is not that he got it wrong to me. It's that what was said was plausible that everybody read this and thought, "Oh yeah, go figure.
Another one bites the dust." And that's the point that we're at in our culture now. And that's what I want to try and attack with this email. More importantly, what you've said is, in my opinion, complete because if it were true, cars would not be getting consistently more expensive. They're not making the car cheaper for you by doing this. And if you apply this argument continuously to everything, then you don't really own many of the things that you've technically bought and paid for, even if you have purchased the physical hardware, which I am not okay with, and likely you would not be either. Can you imagine a stove with six burners where only four of them work because most people only need four burners, unless you pay to unlock them? An air conditioner with a high flow button whose high air flow mode only works if you pay more, even though the blower, the air handler, and the compressor was paid for in full. This is a software issue, not a hardware issue that I'm going to use in an example here. So, it's not the best example. And I realize that, but it's the best that comes to mind. Opening my email inbox at 6:30 in the morning. Look at what Tesla did with autopilot recently. Autopilot used to come with the car and you had to pay if you wanted full self-driving. Full self-driving continuously went up in price, even though it's so bad that they repeatedly tell you in the fine print that you must pay full attention to the road. And basic autopilot is no longer available on newer vehicles. It has been rolled into full self-driving, which has gone from its price going up every few years just being a subscription altogether. Did Tesla lower the prices of their cars considerably at the same time that they stopped giving you autopilot along with the vehicle? No, they make more money when you pay for stuff that they used to offer you with the car. And the same is true if you trace it back with all these other features. Name one automotive manufacturer that started offering these things as a subscription that lowered the base price of the vehicle after offering it as a subscription. I don't understand why you choose to go to bat for the automotive company whose primary goal is to figure out how to extract as much money from you as possible without innovating or making better vehicles.
And the point that I'm making here is that if you look throughout history, every time things got better, they just got better and you got the benefits of it. It wasn't that when we went from black and white televisions to color televisions that they sold you a color television but you had to pay to unlock it or it would be stuck in monochrome.
That's not how it worked. Once we figured out how to make color TVs and color TVs were available at an affordable price and they were economically viable to produce.
Everybody got a color TV. There were differing degrees of quality, but there was no you have to pay extra to unlock it because not everybody wants the color. Some people are okay with black and white. And why should you have to pay for those people that want a color television when you're okay with black and white? The phrasing of it almost makes a little bit of sense unless you look at how progress has worked for the last few decades, the last 50 years, the last hundred years, the last several centuries. And what I've noticed time and time again is every time I see this argument used, I don't see this argument used in an industry where the prices are going down. So here's where I'm going to open this up to the audience to tell me that I'm wrong because I'm always open to the idea that perhaps I am wrong. Can you tell me of cases where this has occurred where these things that were used to be included are now locked behind a payw wall of some sort where you have to break a digital lock to get access to what you bought and paid for where you actually do get the device cheaper. Can anybody point to an automotive manufacturer that's done this where it's cheaper? We're like, "Oh, look, the 330i this year has a base price that's $5,000 than last year. The Cadillac CT 5V is $4,000 less this year as a result of this." Has this ever happened? Do you notice this that at the exact same time that you have this trend going on of everything becoming a subscription and everything trying to nickel and dime you inside of your car that it just so happens to be that the cars stay the same price or continuously get more expensive? Cuz that's what I'm noticing. And this argument would hit more to me if there were verifiable examples that you could point to across the automotive spectrum or across the spectrum in general where everything was just getting cheaper and better. But I don't see things getting cheaper and better. I see them getting less reliable, shittier, and costing the same amount of money or more money for what you used to have. All I would ask is that before you go to bat for the company, just do the math on some of these things. And again, the problem for me is not even that Steve Lato got something wrong. I'm not trying to let him off the hook if he got something wrong. It's that the story that he told was completely believable by everybody.
Like 20 or 30 years ago, there may have been a lot of factchecking that went on.
And I I would venture to say that even Steve himself would have done a lot more fact-checking on that story before doing the follow-up video where he realized that he got a couple of the facts wrong.
because 20 or 30 years ago, these were concepts that were just absolutely and utterly ridiculous. And the reason that less fact-checking was likely done during the process of making that story is because so much of it was just believable. And the problem that I have with our modern society is not even that he got it wrong or that people got it wrong. It's that we live in a world where what he talked about was believable. Let me know what you think in the comments down below. Do you see cars getting cheaper as a result of them having more digital locks in them and more of these features than they did 5 or 10 years ago? Or do you notice the price just go one direction up?
Leave it to you. See you in the next video.
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