• Toyota pushes back electric vehicle production plans in America (Detroit Free Press, October 7, 2024)

  Toyota has long been cautious about the widespread adoption of electric vehicles, and the current EV market slowdown seems to validate its skepticism. However, despite the slump, the global auto industry continues to shift toward electrification, and all manufacturers, including Toyota, will ultimately need to adjust – albeit at a slower pace than originally anticipated.

  Though there were reports of Toyota’s three-row EV SUV launching by the end of 2025, production has been delayed until at least 2026. Meanwhile, Lexus has canceled its plans for a new electric vehicle as EV sales continue to decline in the U.S. Despite the downturn, Toyota remains committed to producing 1.5 million EVs annually by the end of 2026, with plans to introduce seven new EV models to the U.S. market.

• Google’s Waymo Chooses Hyundai Ioniq 5 for Autonomous Driving Fleet (MSN, October 6, 2024)

  Hyundai and Waymo partner to integrate autonomous driving technology into Hyundai vehicles, starting with the sixth generation Waymo Driver in the Hyundai Ioniq 5. Vehicles will be produced at Hyundai’s Georgia factory with autonomous pre-installation, ensuring they are ready for self-driving technology. Waymo plans to add the Ioniq 5 to its Waymo One fleet by 2025, expanding its operations in select U. S. regions. This collaboration allows Hyundai to enter the autonomous vehicle sector while growing Waymo’s fleet, previously supplied by Chrysler and Jaguar. The latest Waymo Driver features advanced hardware and software for enhanced detection capabilities in various conditions.

•  Autonomous vehicles could render personal auto insurance obsolete by 2044, new report finds (CBT News, October 4, 2024)

  A new Morningstar report suggests that self-driving cars might significantly diminish the need for personal auto insurance within 20 years. By 2044, if AVs are widely adopted, liability could shift from drivers to manufacturers, transitioning insurance to product liability. Full adoption of Level 4 or 5 autonomy, where cars drive without human intervention, could make personal insurance obsolete by 2060. Currently, most vehicles have Level 2 automation requiring driver assistance. Companies like Waymo and Cruise are pioneering Level 4 capabilities with region-specific robotaxis. Morningstar projects that AVs could reach 80% market penetration within 7 to 18 years, depending on adoption speed. Insurance may remain unaffected until Level 4 autonomy prevails, but a 10% AV penetration rate by 2035 could begin reshaping the industry, potentially eliminating some insurers by 2043 as AV penetration grows.

• Tesla in Seattle-area crash that killed motorcyclist was using self-driving system, authorities say (AP, July 30, 2024)

  Investigators in Washington state have determined that an April crash in which a Tesla Model S hit and killed a motorcyclist about 15 miles north of Seattle was engaged in Tesla’s Full Self-Driving system at the time of the incident, according to EDR data from the vehicle. The Tesla driver told a state trooper that he was looking at his phone while Autopilot was engaged, and “the next thing he knew there was a bang and the vehicle lurched forward as it accelerated and collided with the motorcycle in front of him.”

  The death of the motorcyclist, Jeffrey Nilsen, is the second fatality in the United States involving Full Self-Driving according to investigation documents from NHTSA. The investigation is ongoing, and it currently is unclear if FSD is at fault in the fatality.

  Tesla has not commented on this recent development in the investigation, but this news comes only a week after Elon Musk stated that he expects FSD to run without human supervision by the end of 2024.

• Volkswagen And Rivian Are Teaming Up On Software In $5 Billion Deal (Inside EVs, July 29, 2024)

  On Tuesday, automakers Rivian and Volkswagen announced they are partnering to create software for their future electric vehicles.  Volkswagen has a long history of producing cars and making a profit, however they have struggled with their software.  Rivian is widely regarded for its software and user experience but lacks funding.  The money VW plans to invest does come with some strings attached.  Rivian will need to meet certain financial and technological milestones.  Volkswagen will invest an initial $1 billion with plans to invest another $4 billion in the future.  

  Rivian CEO R.J. Scaringe said during a conference call on Tuesday. “Each company will continue to separately operate their respective vehicle businesses.”

• Automakers Sold Driver Data To Insurance Companies For Next To Nothing (Jalopnik, July 26, 2024)

  Two U.S. Senators, Ron Wyden and Edward J. Markey, are urging the Federal Trade Commission (FTC) to investigate how automakers are collecting and selling driver data to insurance companies at low prices. This follows a report by The New York Times indicating General Motors, Hyundai, and Honda are involved in selling data such as acceleration patterns, braking habits, and speeding frequencies to insurance companies to assess driver risk. Highlights from the investigation revealed automakers made minimal profits from these sales, with Honda receiving 26 cents per car from Verisk, and Hyundai earning 61 cents per car. GM declined to specify exact figures, but sources confirm low millions of dollars for data on eight million cars. The senators criticize the vague and often deceptive ways drivers are informed about data collection, with some automakers still sharing location data without clear consent. This marks the third congressional appeal to the FTC to scrutinize such data practices.

As recently reported by the New York Times and other media outlets, Kenn Dahl, a 65-year-old owner of a software company near Seattle, saw his car insurance premiums skyrocket by 21 percent in 2022. When he questioned his insurance agent about the sudden increase, he was told that his “LexisNexis report” may have played a significant role in this hike.

LexisNexis, a global data broker headquartered in New York, has a division named “Risk Solutions” that caters specifically to the auto insurance industry. Traditionally, it has tracked car accidents and traffic tickets. However, upon Dahl’s request, LexisNexis sent him a consumer disclosure report, as mandated by the Fair Credit Reporting Act. What Dahl found inside was over 130 pages documenting the specifics of every trip he or his wife made in their vehicle over the previous six months. This data included 640 trips with details of dates, start and end times, distances driven, and incidents of speeding, hard braking, or sharp accelerations.

The report revealed that General Motors (GM), the manufacturer of his Chevy Bolt, provided these trip details. LexisNexis had analyzed this driving data to create a risk score, which it intentionally marketed to insurers for the purpose of providing more personalized insurance coverage. According to industry watchdogs, the case of Kenn Dahl underscores the need for transparency and consumer understanding regarding data collection and its impact on insurance rates.

GM is not alone in sharing driving behavior data. Numerous automakers contribute to LexisNexis’s “Telematics Exchange,” which pools consumer-approved connected car data for subsequent sale. Despite some companies asserting they share only limited data, the interconnectedness of modern vehicles means that more comprehensive data sharing is feasible.

The New Face of Insurance Monitoring

In recent years, insurance companies have introduced incentives for drivers to install monitoring devices in their cars or download smartphone apps to track driving behavior—such as driving distance, cornering speed, braking intensity, and adherence to speed limits. However, a patent application by Ford Motor revealed that drivers are often hesitant to join these programs. Accordingly, it appears that car manufacturers have stepped in to fill this void collecting data directly from internet-connected vehicles, frequently without the driver’s explicit consent or even knowledge.

Among the various automakers, Kia, Mitsubishi, and Hyundai have “Driving Score,” Honda and Acura have “Driver Feedback,” and GM has “OnStar Smart Driver,” all of which, until recently, collected and shared data to third parties. While some drivers may choose to activate these features, others might unknowingly agree to data sharing through complex privacy policies and fine print that are seldom fully read or understood. Omri Ben-Shahar, a law professor at the University of Chicago, supports usage-based insurance for its potential to improve driving safety. However, he criticized the “stealth enrollment” in data collection programs, stressing that drivers were unfairly surprised by the scope of subsequent data collection.

Many drivers, especially those with GM vehicles equipped with OnStar Smart Driver, often unknowingly enroll in data sharing services at the dealership, where salespeople can receive bonuses for enrolling customers in the services.

Automakers argue that the main purpose of these driver feedback programs is to promote safer driving habits. However, Mozilla researcher Jen Caltrider reviewed privacy policies for over 25 car brands last year and labeled cars as “a privacy nightmare.” She highlighted that drivers have little understanding of what they consent to regarding data collection, as privacy policies are often filled with incomprehensible legalese.

Addressing Privacy Concerns

In December, the Alliance for Automotive Innovation issued a statement emphasizing that cars are not spying on drivers but are instead focused on safety. Yet, the statement did not tackle the sale of data. It suggested that manufacturers are complying with privacy principles enforceable by the Federal Trade Commission (FTC) and called for a unified federal standard to address privacy concerns.

As automakers continue to build connected cars, concerns about data privacy and the ethical use of driving data will persist. Ensuring that consumers are fully aware of and consent to data collection and sharing practices is crucial in navigating the increasingly data-driven landscape of modern automobiles. Some automakers are trying to get ahead of this potential public relations headwind. In fact, GM recently discontinued its data collection service in response to multiple class action lawsuits and vociferous criticism from privacy advocates.

A GM spokeswoman, Malorie Lucich, reiterated that the OnStar Smart Driver service is optional and offered benefits such as insights into safe driving behavior and vehicle performance, which drivers could use to obtain insurance quotes. Customers could unenroll from the service at any time. However, the reality is far from straightforward. For example, Frank Pasquale, a law professor at Cornell University, was taken aback when he realized there was no prominent disclosure about third-party access to his driving data during the enrollment process for Smart Driver. “Because it’s not within the reasonable expectation of the average consumer, it should certainly be an industry practice to prominently disclose that is happening,” he noted.

The Role of Policymakers

This issue has also caught the attention of policymakers. California’s privacy regulator is currently investigating automakers’ data collection practices. Additionally, Senator Edward Markey of Massachusetts has urged the FTC to investigate potential violations of federal laws prohibiting unfair and deceptive business practices. “The ‘internet of things’ is really intruding into the lives of all Americans,” he remarked, citing the potential downside of providing vehicle data to third parties without explicit driver consent.

The Future of Vehicle Data Collection

The integration of connectivity and data collection in modern vehicles offers both opportunities and challenges, particularly in the realm of auto insurance. While existing data collecting and sharing technologies aim to promote safer driving habits, they also introduce legitimate privacy concerns. Policymakers and regulators must balance innovation with consumer rights, ensuring that data privacy standards keep pace with technological advancements. Ultimately, fostering trust through clear disclosures and fair practices will be essential as the automotive and insurance industries continue to navigate the digital age.

Copyright Nelson Law LLC

The opinions expressed in this blog are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This blog post is for general information purposes and is not intended to be and should not be taken as legal advice.

Copyright Nelson Law LLC

The opinions expressed in this blog are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This blog post is for general information purposes and is not intended to be and should not be taken as legal advice.

• Self-Driving Carmakers to See Increased Liability for Crashes, Report (IOT World Today, November 15, 2023)

  Fully self-driving cars are still years away from mainstream use, despite the increasing advances in AV technology. A new MarketWatch report states that the United States is “at least a decade away from fully self-driving cars.” There are two main problems facing the AV industry: innovation outpacing regulation and increasing costs of repairs.

  Federal and state governments are unsure how to update legislation around autonomous vehicle use and development, especially with ongoing issues such as those with Cruise and Tesla. The report predicts a shift in liability from driver to the automaker as liability regulation becomes more of a necessity. “If a driverless car hits another vehicle or pedestrian, determining who’s at fault gets complicated,” the report states. “The traditional model of car insurance will likely need to be adjusted to hold manufacturers or software developers liable for collisions caused by autonomous vehicles.”

  The other main issue is the increasing cost of repairs. Currently, there are not enough certified or skilled mechanics who are able to work on repairing autonomous vehicles, since “AVs have complex components that require automotive specialists to repair.” While the number of certified mechanics is expected to increase over the upcoming years, there are currently not enough, driving up the costs of repairs.

• Tesla will sue for $50,000 if you try to resell your Cybertruck (News 5 Cleveland, November 13, 2023)

  According to a new update to Tesla’s terms and conditions in its Purchasing Agreement, Tesla will sue you if you attempt to resell your Tesla Cybertruck within the first year after purchase. Tesla added a section to its buyer’s agreement titled “For Cybertruck Only,” in which the company states: “You agree that you will not sell or otherwise attempt to sell the Vehicle within the first year following your Vehicle’s delivery date.” It further states that “Tesla may seek injunctive relief to prevent the transfer of title of the Vehicle or demand liquidated damages from you in the amount of $50,000 or the value received as consideration for the sale or transfer, whichever is greater. Tesla may also refuse to sell you any future vehicles.”

  If a customer should have reasonable cause to return the vehicle, Tesla may agree to buy it back, minus “$0.25/mile driven, reasonable wear and tear, and the cost to repair the Vehicle to Tesla’s Used Vehicle Cosmetic and Mechanical Standards,” or Tesla may agree to allow the customer to sell the vehicle.

  The long-awaited Cybertruck is expected to be released on November 30.

• Tesla Owner Wins $10k Settlement Over Tesla’s FSD Claims (Not a Tesla App, November 8, 2023)

  In what could be harbinger of things to come, at least on the European front, a UK Tesla owner recently obtained a significant settlement from Tesla over his claim that the automaker’s FSD feature failed to deliver as promised. This outcome highlights the UK’s consumer-centric approach to resolving disputes with automakers, the backbone of which is the UK Consumer Rights Act 2015 that requires goods to match their advertised description.

  On this side of the pond however, a California federal judge’s ruling last month led to a much different outcome in similarly pled allegations. There the court held that any consumer disputes between Tesla and its vehicle owners must be resolved through individual arbitration rather than in court, pursuant to the term and conditions of the purchase contract.  In addition to avoiding class action lawsuits, binding arbitration allows Tesla to mitigate legal risks by individually defending each claim outside the public court system and without concerns of creating adverse legal precedent. 

  These divergent avenues of recourse highlight the complexities of the evolving international landscape of autonomous vehicles and the nuanced approaches different countries are taking to balancing this emerging technology with consumer rights.     

• Dan O’Dowd Pays For Super Bowl Ad Directed Against Tesla’s FSD Beta (Inside EVs, February 14, 2023)

  The Dawn Project and its founder, anti-Tesla activist Dan O’Dowd, made headlines last year by running ad campaigns questioning the safety of Tesla’s technology, including one campaign purporting to show a Tesla in FSD mode failing to stop for a child-sized mannequin. That particular ad prompted a cease-and-desist demand from Tesla and various copycat experiments by Tesla fans and critics alike.

  On Sunday, O’Dowd took his efforts up a notch by bringing his message to one of the most coveted and expensive platforms in American advertising: a Super Bowl Ad. The ad “shows video clips of Tesla vehicles making errors such as running over a mannequin meant to represent a child crossing the street, hitting a child in a stroller, failing to stop for a school bus with flashing lights, entering a closed street, swerve into oncoming traffic, and more.” O’Dowd has vowed not to stop with the Super Bowl, promising “a series of television and print ads calling for urgent action over the deployment of Tesla’s dangerous Full Self-Driving software on public roads.”

  * * *

  O’Dowd’s may be one of the more controversial ads to run during the Super Bowl, but it certainly wasn’t the only one to feature automotive technology. For a more complete roundup of this year’s Super Bowl car commercials, see here and here.

• The Truth About Insurance Requirements For Autonomous Vehicles in America (Hot Cars, February 11, 2023)

  Is insurance a barrier to the adoption of self-driving technology? The author here believes the answer is “yes,” writing that “the main issue preventing mass adoption isn’t the cost to design and produce [AVs] but rather the laws pertaining to insurance and liability in the case of an accident.” Why? His reasons include:

  • While a strong argument could be made for manufacturer liability in the event of an accident, “insurance companies will be hesitant to adopt this position until there is a sufficient amount of case law and claim data involving autonomous vehicles.”

  • Although AVs should eventually lead to fewer accidents and fewer claims, “technological growing pains” could actually increase accidents and claims in the interim “as self-driving vehicles learn to share the road with regular cars and drivers.” Combined with increased repair costs, these factors are likely to raise insurance premiums for AVs, at least for the time being.

  • Current levels of automation make it difficult to allocate fault to the manufacturer; as levels progress to full self-driving, it may be “easier for insurance companies to determine if the owner of the vehicle or the car manufacturer is at fault in a collision.”

  • Gaps in technology lead to reliability concerns, and hesitancy to adopt.

• Tesla’s important Full Self-Driving Beta v11 update is delayed again (Electrek, February 12, 2023)

  UPDATE: As noted in last week’s reading, since Tesla opened Full Self Driving Beta to approximately 400,000 Tesla owners in North America late last year, Elon Musk has repeatedly announced and then delayed the release of a major update to Tesla’s software dubbed FSD Beta v11.  The long-anticipated release of v11 will purportedly finally allow a Tesla vehicle to autonomously drive itself from one destination to another regardless of the ODD by integrating Tesla’s FSD, which operates on city streets and smaller roads, with Autopilot, which is for highway navigation, into a single stack system designed for use in most driving conditions. Although Musk recently tweeted that v11 would be released last week, the deadline came and went without the update.  Most recently, Musk tweeted that v11.3 will roll out this week, although in a limited beta format for use only as a Level 2 system that still requires the driver to remain attentive and ready to take control of the vehicle at all times. Additionally, it is believed that the update, when and if it finally is released, will only be pushed to a select few early beta testers.

  In response to criticism over the repeated release delays, Musk acknowledged that working out the bugs in the update was much more difficult than he or his team anticipated. That being said, Musk has repeatedly beaten the odds and overcome seemingly impossible hurdles in his frontier electrification and automation quests.  We’ll stay tuned.

• An EV-plosion awaits in 2023, and it’ll be packed with tech (TechCrunch, December 27, 2022)

  Following years of government policy initiatives and billions of dollars in OEM investment, EVs appear poised to explode into the commercial mainstream during 2023. TechCrunch predicts that EV sales will take off in the first quarter of the year due in large measure to The Inflation Reduction Act passed last August. Under the bill, eligible EVs built in North America with sourced critical battery materials from the U.S. or free-trade agreement countries could qualify for a $7,500 federal tax credit. Although the rules were set to go into effect January 1, the Treasury Department has delayed guidance on the critical materials rule until March. As such, North American-built cars from Tesla, General Motors, Ford, Nissan, Rivian, and Volkswagen, to name a few, could now be eligible for the full tax credit, at least for the first three months of the year, driving sales. And, if McKinsey is correct, consumers will have more options than ever, with legacy automakers and EV startups expected to produce up to 400 new EV models this year.

  TechCrunch also predicts that 2023 will see virtually every automaker moving from concept to actual delivery of “software-defined vehicles.” These vehicles (predominantly EVs) will be equipped with end-to-end vehicle software platforms allowing for OTA software updates, cloud connectivity, and vehicle-to-everything communication giving drivers access to purchase apps, subscription-based services, and personalized in-car payment features. Automakers will likely start to migrate these software-defined vehicles into the metaverse by designing digital versions of popular models and production facilities. These vehicles also will be equipped with more sophisticated ADAS, as OEMs continue to shift resources from developing Level 4 and 5 autonomous technology to more sophisticated Level 2+ systems.

  As more EVs hit the roads in 2023, TechCrunch predicts that investment—from government, utility, and private firms—into charging infrastructure, energy storage, and energy transmission will continue to grow at a record pace. A separate J.D. Power study found that availability of public charging remains an obstacle, but finding a working charger can be equally challenging. Accordingly, TechCrunch predicts significant advancements in charger maintenance technology, either from upstarts or existing EV charge players, that helps manage maintenance, servicing, and upgrades for chargers. 

  Finally, TechCrunch predicts that fleet operators will ramp up purchases of EVs, as commercial EV makers get their production lines up and running.

• California law bans Tesla from advertising its electric cars as ‘full self-driving’ (yahoo!news, December 28, 2022)

  Last year, we noted the passage of a California bill, sponsored by outspoken state senator and Tesla critic Lena Gonzalez, that would curtail Tesla and other OEMs’ advertising of their vehicles’ autonomous capabilities. That bill was signed by Governor Newsom in September, and became effective as of January 1.

  The law specifically provides that “a manufacturer or dealer shall not name any partial driving automation feature, or describe any partial driving automation feature in marketing materials, using language that implies or would otherwise lead a reasonable person to believe, that the feature allows the vehicle to function as an autonomous vehicle [as defined in the Vehicle Code] or otherwise has functionality not actually included in the feature.” Any violation of the law is considered automatically to be a misleading advertisement under the State’s Vehicle Code Advertising Laws.  

  Read more in the bill’s fact sheet published by Senator Gonzalez’s office.

• Washington Requires Autonomous Test Cars To Have 200 Times More Liability Insurance Than Real Drivers (CarScoops, December 29, 2022)

  Also going into effect this month is a new Washington State law that requires companies testing self-driving technology in the State to carry insurance with “a minimum of $5 million in liability,” and to self-certify compliance.

  As of the date of this article, only three companies had self-certified: NVIDIA, Waymo (Google), and Zoox (Amazon). Of these, only Zoox currently tests its self-driving vehicles in Washington, reportedly having chosen Seattle specifically for testing due to “its difficult, often rainy conditions.”

• Tesla CEO Elon Musk kicks off first Semi truck deliveries (CNBC, December 1, 2022)

  Tesla has finally started deliveries of its electric Semi truck, five years after first revealing its design. CEO Elon Musk made the announcement last week at Tesla’s Nevada production facility after apologizing “for the delay.” A representative of PepsiCo Frito Lay, the first recipient of the production Semi, also spoke at the event. Tesla did not specify how many units will be delivered to Pepsi, or to any other company (other high-profile customers reportedly waiting to receive delivery include Anheuser-Busch, Walmart, and UPS).

  Tesla’s Semi design is unique in that it has a central steering wheel and driver’s seat flanked by touch screens. The truck also is expected to have a faster charging system and greater range than competitors.

  As noted in this article as well as Electrek’s coverage of last week’s announcement (more below), no mention was made of “driverless” features on the Semi, despite Musk’s prior commitment to “a driverless trucking future.” Instead, in his remarks, Musk focused on the positive environmental impact of electric long-haul vehicles, as contrasted with traditional semis that “represent a large portion of harmful vehicle emissions because of their size, weight, and the fact they are driven around the clock.”

• Tesla didn’t say a word about Tesla Semi being equipped with Autopilot/Self-Driving (Electrek, December 3, 2022)

  When the Tesla Semi concept was announced in 2017, Tesla claimed its long-haul EV would be equipped with Autopilot and would be able to operate in an “autonomous convoy mode” to follow other semis on the highway. Yet discussion of the Semi’s autonomous capabilities was conspicuously absent from the fanfare around last week’s delivery announcement, even though pictures of the production vehicle clearly show cameras consistent with Tesla’s Autopilot/FSD hardware suite.

  According to this take from Electrek’s Editor-in-Chief (and Tesla expert) Fred Lambert, Tesla may be trying to downplay the Semi’s autonomous capabilities given the scrutiny the automaker’s Autopilot and FSD technology is facing from lawmakers, regulators, and litigants. But Tesla’s approach to the Semi roll-out also may simply reflect a smart business decision. Lambert posits that Tesla may be trying to avoid the fate of global shipping company Maersk, which encountered significant backlash from thousands of angry dockworkers in the Port of Los Angeles after announcing it would introduce driverless cargo carriers—a move that could potentially put those dockworkers out of a job. Concerns around the impact of automation on U.S. workers remains a hot button topic, and the trucking industry may be acutely sensitive to this looming threat as automation promises to reform the industry. For the Tesla Semi to commercially succeed in the short term, Lambert says, Tesla needs truck drivers to embrace the vehicle. “That might be more difficult to achieve if you talk about eventually replacing them with features already existing inside the electric truck.”

• Sirius XM flaw could’ve let hackers remotely unlock and start cars (The Verge, December 3, 2022)

More car hacking!

Earlier this year, we were able to remotely unlock, start, locate, flash, and honk any remotely connected Honda, Nissan, Infiniti, and Acura vehicles, completely unauthorized, knowing only the VIN number of the car.

Here's how we found it, and how it works: pic.twitter.com/ul3A4sT47k

— Sam Curry (@samwcyo) November 30, 2022

As vehicle connectivity becomes more prevalent, OEMs are increasingly migrating to a business model where consumers may own the wheels, engine, and seats in their new cars, but not the critical software that operates them.  Because software “ownership” is directly related to profitability and control of key vehicle features, it is no surprise that an ownership battleground of sorts has emerged between OEMs and their customers. 

Although Tesla has garnered most of the headlines over the add-on costs associated with utilizing its vehicle software, other OEMs are dipping their toes into this relatively new revenue stream.  For example, BMW recently offered customers in South Korea the option of activating their seat heaters, heated steering wheel, and other comfort features via a subscription service model apparently premised on the concept that BMW “owns” the software needed to activate and operate these features.  According to a recent Jalopnik article, these are the features and the prices BMW charges to use them in South Korea:

• Heated seats – $18 a month, $176 for a year, $283 for 3 years, or $406 for permanent access.

• Heated steering wheel – $10 a month, $161 for three years, or $222 for permanent access.

• Automatic high beams – $8 a month, $84 for a year, $122 for three years or $183 for unlimited use.

• Apple CarPlay – permanent access will cost $304.

• Engine sounds played through the stereo – $137 for unlimited use.

BMW has not yet attempted to roll out such subscription services to U.S. customers, but the Jalpnik article cautioned that the South Korean model may be “a preview of the slow march into a money-grab dystopia of having your car’s features locked behind software you have to pay to activate.”  In fact, Stellantis, the world’s fourth largest OEM, recently told investors it plans to rake in $22.5 billion in incremental annual revenue from software services and subscriptions by 2030.  This prognostication is in line with what other OEMs are expecting as well.

Due to its frontier connectivity technology, Tesla appears to be the current industry leader in maximizing profits through recurrent software charges, particularly when one of its cars is traded in or changes ownership.  For example, some Tesla batteries are software-limited and upgrades that unlock greater capacity can be removed by Tesla once the car is sold.   Additionally, Tesla has expressly announced that its vaunted Full Self Driving (FSD) suite, which currently costs $15,000, is non-transferable and will only work for as long as you own the car.  The legal argument is that only the software license was purchased, which pursuant to its terms and conditions expires when the buyer transfers ownership of the car.  Simply put, vehicle software—just like your copy of Microsoft Office—it is merely “licensed” to the driver on a temporary basis and on terms dictated by the OEM. A Tesla owner doesn’t actually buy FSD, only the right to use it.

While the script is still being written, it is clear that the traditional concept of vehicle ownership and its accompanying accoutrements may become iconoclastic in a relatively short time.  New vehicle owners will increasingly be able to operate the components of the vehicle they own only through the utilization of licensed software, so long as they pay subscription or license fees to the OEM and don’t violate any of the terms and conditions of their non-transferable license agreements.   

In addition to turning notions of vehicle ownership and consumer expectations upside down, the development of “hybrid” or shared vehicle ownership between OEMs and vehicle purchasers is fraught with potentially challenging legal issues.  For example, who has an insurable interest in these costly software activated features?  How should vehicle owners be compensated by insurers for costly software activated features in the event of a total loss?  Should the value of costly software activated features be factored into the threshold value insurers use to determine whether a vehicle should be deemed a total loss?  At present, all of these questions and the legal issues surrounding them are in flux.  We will continue to monitor this evolving area of the law and will provide updates as to any new developments as they unfold. 

Copyright Nelson Niehaus LLC

The opinions expressed in this blog are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This blog post is for general information purposes and is not intended to be and should not be taken as legal advice.

September 21, 2022