Is an Electric Vehicle Subscription Service a Viable Business Model?

A USA Today survey taken last June revealed that 67% of gym memberships go unused. A Finder survey last May revealed that 6.1 million Americans flushed $397 million (387 million euros) down the drain in 2020 on unused gym memberships. In addition, about 82.7 million adults spent roughly $8.2 billion (8 million euros) on gym memberships that year and 7.4% visited the gym less than once a month.

I was married to a woman in the early 2000s who had multiple magazine subscriptions. When I say multiple, I mean magazines would outnumber lettered mail several days a week. She was too busy to ever read them so, they just accumulated about the house.

We were going on an extended vacation one year to the Cook Islands. As I was loading the car with luggage for our trip to the airport, I could not help but notice an unusually heavy bag. Lugging this bag from the house to the car, the car to the terminal, then upon arrival 20 hours later to the hotel, was a pain in the backside, to say the least. I would later learn the bag was filled with magazines like modern photography and Time magazines... from the 80s! The year was 2002!

The bottom line is Americans have some sort of affliction with memberships and subscriptions. They must serve as some sort of validation that is beyond me.

The conclusion of the monologue brings me to Autonomy.com. The California-based company launched this past January, provides a subscription service for electric vehicles. Now I know subscribing to a vehicle service may not compare to that of a gym, but the question is, does a vehicle subscription make any sense at all?

Here is how it works. Of course!, there is an android app to download. After downloading the app, all that is required is a valid driver's license (operations are currently limited to California) and a digital payment form. You can then go ahead and reserve a car by activating a subscription with a $100 (97.43 euros) refundable deposit plus taxes and a $500 (487 euros) refundable security deposit.

Currently, the company only offers the Tesla Model 3 and Model Y electric vehicles to choose from. So, now that the required deposits have been made, let's see how much a Tesla Model 3 subscription will cost.

A new Tesla Model 3 with a $1,000 (974 euros) start fee (down payment) will cost $1,000 per month. A $4,500 (4,384 euros) start fee will cost $610 (594 euros), also per month.

The monthly payment does not include taxes, and there is a 3-month minimum subscription. The subscription includes roadside assistance, regular service, and tires are covered, however, the website says with limitations, but does not clearly detail the limitations.

Much like a conventional lease, there is a mileage limitation of 1,000 miles (1,609 km) with .25 for each additional mile, but calculated monthly.

Now, let's take a look at a conventional auto loan for the same 2022 Tesla Model 3. The current sticker price starts at $48,490 (47,245 euros), but let's use $52,000 as a price for this example.

With excellent credit, a 72-month loan with a $1,000 down payment will set you back $806 (785 euros) per month. That same 72-month loan with a $4,500 (4,384 euros) down payment will cost $751.00 (731 euros).

Whether you go the subscription or the loan route, minimum insurance coverage is required at an additional cost. The critical things to consider include the mileage limitation and zero equity ownership with a subscription and the total interest cost over the term of the loan. Additionally, the start fee for the subscription covers the maintenance offered and is not refunded regardless of the length of the subscription.

The Autonomy model is a compelling option, especially for those with questionable credit. It appears the company thinks so as well; they recently announced the purchase of 23,000 electric vehicles from 17 different manufacturers.

California is the test market but, I see the company expanding on operations in the very near future if EV production ramps up to expand their fleet further.

However, on the flip-side, I also know the one thing that U.S. consumers love to waste money on more than gym memberships......car loans!