Weekly analysis, news and randomness from the future of transportation.
What if you could pay for your car like you pay for your phone? One monthly fee that covers hardware, operating costs and insurance, and after two years, you could trade it in for the latest and greatest model?
Volvo is offering just that with the introduction of the XC40 compact crossover and will eventually roll it out to other vehicles in its lineup. Former TrueCar CEO Scott Painter's startup, Fair, offers a similar model of flexible ownership, but for used cars.
The auto industry is betting that this type of straightforward, commitment-free ownership will be incredibly appealing to younger customers. And it could be a huge boon for dealers, too, because it will bring customers in and out of showrooms more frequently and will pave the way toward fully self-driving cars.
As connected and automated-driving technologies improve, customers will have more opportunities to try the latest innovations, taking gradual steps toward what will eventually be a completely new type of vehicle.
For example, if drivers buy a vehicle today, they would still be in control of most driving capabilities. Their next car, five years later, might handle most driving functions. That's a pretty significant change.
But, if they were on a two-year payment plan and could upgrade in the middle of that cycle, it's likely they would interact with semiautonomous cars, making a jump to more advanced automation much less daunting.
How consumers pay for cars is becoming a key piece in the future mobility puzzle, especially in terms of future revenue for automakers. However, it could also be looked at as a way to experiment with consumer acceptance and demand and to teach drivers how to handle new technologies. A flexible ownership model takes a big step in that direction.
— Katie Burke