Subscription economy shifts into overdrive with monthly plans for features, batteries and even tires
Hyundai, Tesla Korea and others are expanding vehicle-related subscriptions in Korea, lowering upfront expenses but raising concerns about long-term ownership costs.
A Tesla driver uses the electric car in hands-free mode in Amsterdam on June 17.REUTERS/YONHAP
Owning a car is starting to look a lot like subscribing to one. As automakers turn batteries, software and even tires into monthly services, consumers are offered more choices and lower upfront costs while automakers create a steady stream of recurring revenue.
Hyundai Motor and the Ministry of Land, Infrastructure and Transport will launch a pilot electric vehicle battery subscription program in October, according to auto industry sources on Monday.
Similarly, Tesla Korea will begin offering its Full Self-Driving (FSD) Supervised driver assistance feature as a monthly subscription starting next month. The moves reflect the industry's broader push toward the Vehicle-as-a-Service model, in which automakers continue generating revenue through software, components and maintenance services long after a vehicle is sold.
Under the EV battery subscription program, consumers would purchase the vehicle and pay a monthly subscription fee to use the battery, which makes up about 40 percent of an EV's price, instead of buying the battery outright.
The new subscription model reduces the financial burden associated with battery costs, performance degradation and lower resale value. It also offers discounts based on driving distance or length of subscription.
Companies that lease out batteries can also maximize their profits by reusing or recycling the returned batteries to recover their residual value. The Land Ministry plans to continue the pilot through 2028 before revising related regulations and rolling out the service commercially.
An electric vehicle is seen charging at an EV charging station at Yongsan Station in Yongsan District, central Seoul, on June 29.NEWS1
Beginning Aug. 10, Tesla Korea will replace the one-time purchase option for FSD Supervised with a monthly subscription of 150,000 won ($100). Previously, drivers had to pay a hefty 9.04 million won fee upfront to access the FSD feature. The new subscription model allows owners to activate FSD only when they need it. The option lowers the initial cost of ownership and eliminates the need to negotiate the value of the option when selling a used vehicle.
The model gives Tesla an ongoing revenue stream from autonomous driving software even after the vehicle is sold, and the flexibility to raise or revise subscription prices as new features are added.
Other automakers have already moved in the same direction. Hyundai Motor and Kia respectively offer Bluelink and Kia Connect, digital vehicle services that offer services such as navigation and remote vehicle management. The services are provided free for the first five years of ownership before switching to paid subscriptions.
A man walks past stacked car tires in Incheon, on May 21.NEWS1
The subscription economy first took hold in Korea's automotive industry through tire makers. Nexen Tire introduced the country's first tire subscription service in 2015, followed by Kumho Tire and Hankook Tire and Technology.
Monthly subscription fees for passenger vehicle tires range from 15,000 won to 39,900 won, with additional discounts available through affiliated credit cards.
While the Vehicle-as-a-Service model could reduce consumers' upfront costs, some industry observers warn that paying separate monthly fees for multiple features could lead to subscription fatigue and higher overall ownership costs.
“The electronic appliances industry, led by companies such as Samsung Electronics and LG Electronics, embraced subscription services before the automotive industry because they allow companies to maintain ongoing relationships with customers while creating opportunities to offer additional products and services,” Lee Eun-hee, professor emeritus of consumer science at Inha University, said. “Monthly subscription fees may not seem burdensome, and the maintenance services can be convenient. But the total cost can ultimately be higher, so consumers should consider a product's expected lifespan and their own ability to maintain it before deciding whether a subscription makes sense.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
