A great many consumers are working to reduce the number of services they subscribe to in these difficult times. U.K. consumers cancelled around 1.5 million streaming accounts in the first quarter of this year and I doubt their propensity to subscribe has risen in parallel with energy prices since then. Yet media and fintechs aside, there is another sector eager to persuade consumers to take out more subscriptions: automobiles. At least five major manufacturers are rolling out subscription models for options on new models.
In an emergency…
The manufacturers want customers to pay subscriptions to access features that are already built into the vehicles themselves (such as voice recognition). Now, people already pay subscriptions for some services, such as satellite radio. I drive a Jaguar, and I pay an annual subscription to keep the navigation system maps updated—via a complicated web/USB system that seems pointless for a vehicle that has its own SIM and data plan, can access my home wifi when parked on the driveway and could download the updates over the air, but I’m not an expert on navigation subsystem design. I’m not sure the subscription is worth it—I generally use Waze via my iPhone when I’m driving—but it doesn’t particularly bother me. But I think I’d be pretty annoyed about paying a subscription to have my heated seats switched on, which is what BMW is doing.
Seriously. BMW is making heated seats and some other features (such as advanced driver assistance, ADAS) available through paid subscriptions in the U.K., Germany, New Zealand, South Africa and other countries. Apparently the pricing plans in South Korea are heated seats for $18 a month to $415 for “unlimited” access and High Beam Assist for $8 a month to $183 for unlimited use.
Now, the idea of having software control over remote vehicles is not in itself bad, although I imagine that the Russian troops who stole those John Deere tractors from Ukraine might think otherwise (the tractors were bricked remotely), but it must be matched with serious security. Frankly, this concerns me, because as a society we don’t seem to have been very successful at making open networks secure and we have been very unsuccessful at making expensive vehicles secure! Keyless car thefts in London reached an all time high last year and, so far as I can tell, things are getting worse. Only this week Europol arrested 31 people in a crackdown on a theft gang that preyed on motors from two French automakers. The gang were apparently able to manipulate the vehicle software to get in and drive off without needing the wireless key fob.
Around the world, the vehicle manufacturers have built up systems to the point where some models already have tens, even hundreds, of interconnected control units inside them. Securing them may be a greater challenge than securing planes! According to a report from the management consultants McKinsey, typical modern vehicles employ around 150 electronic control units and about 100 million lines of code; by 2030, with the advent of autonomous driving features and vehicle-to-vehicle communication, the number of lines of code may triple. Compare that with a modern passenger jet with a mere 15 million lines of code (every single one of them vigorously inspected and tested), or a mass-market PC operating system with around 40 million lines of code, and the complexities become clear.
While there are a whole bunch of companies working to improve vehicle infrastructure, it does seem to me that any system as complex as a modern family car must be vulnerable.
(Part of the complexity comes from the problem of co-ordination across the supply chain. I remember talking to one of the U.S. auto manufacturers about the issue of vehicle-to-thing, V2X payments, and they pointed me towards the supplier of the entertainment system who in turn pointed me to the supplier of one of the subsystems who in turn pointed me to some other parts manufacturer and so on.)
What this means to me, of course, is that the way forward is standards and—you know what I’m going to say here—your car needs a digital identity just as much as you do, and that your car subsystems should interoperate on the basis of credentials. The cost of a microchip capable of forming and verifying digital signatures is about 25 cents in volume and the cost of adding them to the engine management system, the entertainment system, the climate control system and so on does not really seem that great to me.
When it comes to the next generation digital identity frameworks that are being developed right now, I think it is important, to set out from the beginning, to create frameworks that can support digital identities for people, for organisations, for bots, for… well, things. Once things have an identity then they can take part in transactions, an obvious observation that fuels my suspicion that in the not-too-distant future, the majority of transactions.
When it comes to new business models, by the way, I rather like the idea of turning subscriptions into digital assets. If I were BMW I’d consider turning those subscription options into nonfungible tokens (NFTs) that could be traded across Web3 so that we can see what the market thinks that they are worth. They would have to make the tokens function properly, of course, so that (for example) if I have a BMW heated seats token, then I’d expect it to work in any BMW I get into, whether it’s mine or a rental car or a friend’s car.
This a rather attractive model, I think. Since the subscriptions would be standard tokens there would be no need for BMW to waste money on building databases to manage the subscriptions and run the subscription management services. Instead of having to deal with this kind of infrastructure, the manufacturers just issue the tokens and let the markets work. When I get into my car and turn on the heated seats, then in the background the car would ask for a heated seats token and my wallet would present one. All in the background and without my getting involved.
PORTO PALO, ITALY – AUGUST 19: British Actor Nicholas Hoult tries the innovative Jaguar ‘Smart … [+]
The Jaguar app on my phone might then become a wallet capable of storing the NFTs from any auto maker. Maybe there would be Bose tokens for getting the better quality sound and so on.
I can imagine a vigorous secondary market developing: if you get fed up with your New York Times