The Netflix generation won’t want to own cars – here’s how the auto industry can adapt

Two women sitting laughing sitting on car
Younger consumers are drawn to the convenience of subscription services and will want the same model for using cars, Dr Andy Palmer argues.

  • Ex-Nissan COO Dr Andy Palmer argues subscription models could be the future of car use.
  • In this op-ed, he says Millenials and Gen Z are already used to such models in other areas of life.
  • They could combine the flexibility of rentals with the benefits of ownership, he writes.
  • See more stories on Insider’s business page.

A quick look at your bank statements will most likely reveal a consistent theme in each month’s transactions: payments to Netflix, Apple Music, or Amazon Prime.

A generation of consumers, and I’m one of them, have become addicted to subscription services.

Simple and no-strings-attached, subscription services seem to exist for every possible product out there. And now cars are joining the subscription surge.

The auto industry has experienced significant upheaval over the past decade.

Auto executives have dedicated most of their time and attention to adapting the physical and technical make-up of the cars they produce, such as shepherding from internal combustion engines to hybrid or electric in response to a more climate conscious market.

However, changing consumer attitudes are fuelling another major shift for the industry to contend with – and automotive executives are slowly waking up to it.

The industry has long been known for its resistance to change and may find this shift in consumer behaviour difficult to navigate. The good news is that it requires is a marketing shift rather than an operational one, which is easier to manage.

Manufacturers that already cater to a younger audience will naturally find this shift in marketing easier.

In September 2020, Volvo became one of the first brands to launch a direct-to-consumer subscription model. Sixt, the international rental service, also launched a subscription service in the same month.

For a monthly fee, Volvo gives motorists access to a car with everything but fuel included in the package. The simplicity of this appeals to younger generations and urban dwellers who see cars with less emotion and romance than those of an earlier vintage.

For the baby boomers, cars represented post-war prosperity. The VW Beetle became a generational icon in the 1960s and 1970s.

For Generation X who entered their economic zenith during Margaret Thatcher’s era of yuppies and flashy excess, cars symbolized status and wealth Millennials were a trickier sell, but were ultimately attracted to cheaper, smaller and urban-friendly vehicles to suit their lifestyles and budgets.

The lifestyles and budgets of Millennials and Gen Z are no doubt behind the reason why they are by far the heaviest users of subscription services.

To many, the beauty of the car subscription model is that it confers the convenience of car travel provided by ride-hailing apps like Uber or Lyft and ride-sharing ones like ZipCar while still giving customers their own car they don’t have to share that they can get to know and become attached to.

There is also an argument that, as zero emission vehicles become more popular, the subscription model is better suited to electric vehicles.

Over time and after excessive use, electric vehicle batteries become less effective. This means that you’ll progressively get less mileage from a single charge.

Rather than replacing the entire vehicle, which would be highly expensive and inefficient, we may see battery leasing become the modus operandi for motorists in the near future.

While Volvo’s entire car subscription package has created buzz, Renault are leading the way when it comes to battery leasing. When purchasing a Renault Zoe, buyers can choose to lease a battery on a subscription basis rather than owning it outright, reducing the price of a new car by nearly $10,000.

With the Netflix model becoming so popular in other industries, it is only logical that consumers will begin to demand this level of flexibility for more high-ticket items as habits continue to shift.

Dr Andy Palmer a former CEO of Aston Martin and COO of Nissan. He holds non-executive positions, including chair of electric bus company Switch Mobility, vice-chair of battery manufacturer InoBat and chair of EV scooter company Hilo.

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VW lays out aggressive strategy to counter Tesla with its own ‘gigafactories’ and investments in charging infrastructure

VW CEO Herbert Diess
Volkswagen also showed off a “wall box” that resembles Tesla’s Powerwall.

  • Volkswagen rolled out a massive battery offensive at Monday’s “Power Day.”
  • The carmaker announced plans to build six cell-production plants in Europe by 2025.
  • It also detailed major investments in charging infrastructure globally.
  • See more stories on Insider’s business page.

Volkswagen hasn’t been shy about its plan to catch up to Tesla and become the world’s biggest manufacturer of electric cars. And on Monday, the German automaker laid out an aggressive strategy to expand its battery production and make major investments in charging infrastructure.

VW announced the plans at its first “Power Day” presentation on Monday, which emulated Tesla’s previous “Battery Day” events. During the live stream, executives said the company plans to build six battery-production plants in Europe by 2030 in order to secure battery supply.

“E-mobility has become core business for us. We are now systematically integrating additional stages in the value chain. We secure a long-term pole position in the race for the best battery and best customer experience in the age of zero-emission mobility,” VW Group CEO Herbert Diess said in a statement.

VW said each plant will have the capacity to produce 40-gigawatt hours per year, for a total of 240-gigawatt hours annually by 2030. Like Tesla, VW is calling the plants “gigafactories.”

At Tesla’s Battery Day last September, CEO Elon Musk said the company would be able to produce 3 terawatt-hours of energy every year.

VW is building the first two plants in Salzgitter, Germany, and Skelleftea, Sweden, with the latter being a joint venture between VW and battery manufacturer Northvolt. On Monday, Northvolt announced a $14 billion battery order from VW over the next decade and said the carmaker has increased its stake in the company.

Through improvements in cell design, production processes, and materials, VW aims to decrease battery costs by up to 50%.

The carmaker also detailed plans to vastly expand access to charging stations, which is a key hurdle to EV adoption globally.

VW plans to invest €400 million, or about $477 million, to quintuple the number of fast-charging points in Europe by 2025. The efforts will be buoyed by partnerships with European energy companies.

Outside of the European market, the carmaker aims to add roughly 3,500 fast-charging points to its Electrify America network in the US and Canada this year, and plans to build 17,000 plugs in China by 2025.

The carmaker has big plans for at-home charging as well. During Power Day, it showed off a “wall box” – similar to Tesla’s Powerwall – that can store energy from a home’s solar panels and feed it to VW cars. The system will be bidirectional, so battery-powered cars can also feed energy back into a home, residential building, or business if needed.

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