[milfot]

btilly mentioned the effect incentives have on the dealership model, I was trying to suggest if the car manufacturing business had a vested (client based) interest in the full lifetime of the car they may design for longevity and upgradeability rather than simply sales and parts.

so.. not leasing.

[btilly]

It is very hard to get downstream incentives to match the incentives on making the thing. Here are some made up numbers. Suppose that a car costs $25k new. Then manufacture might cost $15k, amortized R&D might be $5k, and profit $5k. After 3 years the car might be worth $15k and the projected lifetime value of being able to try to resell that used, fix, etc might be $5k. Using these made up numbers, profits and lifetime value are about balanced. Unfortunately for the car owner, resource allocation decisions are entirely based on marginal costs. R&D is not a marginal cost - it is a sunk one. Thus selling a new car adds 2x as much to the bottom line as the lifetime value of maintaining it longer. Guess what gets discarded?

Remember, this is the industry which inspired the term "built-in obsolescence". It is also the industry which found it profitable to buy regional transit companies, and run them to the ground to encourage people to buy new cars instead. There is a certain level of distrust backed by history here.

[milfot]

Yeah, all good points. I don't think this should stop tesla trying, or rather, it would be a shame if they were prevented from trying.

i believe it is a matter of restructuring both risks and incentives to make the downstream match the upstream, as you say.. for example, with the saas approach, for say 5k a year, your 5k profit over 5 years per user (add 5k for R&D and 5k for a facelift) turns into 20k profit over 10 years.. and the user gets a guaranteed service - the user and manuf. interests align..

The bigger issue I think, in terms of turning around the current approach, is actually a cultural one in which a car is a personal 'fetish' object rather than the cumulative efforts of a supply chain bundled into a personal transport service.

[fragmede]

All you said was SAAS-for-cars.

What you're suggesting here is a mandatory car disposal/recycling fee that must be paid for by the car manufacturer along with an additional parts tax/fee to incentivize improving longevity of the original parts.

[milfot]

I did say saas for cars, i wasn't totally clear, hence the extra note.. not trying to be antagonistic. a couple of big reasons saas took off so quickly..

1.major cost of delivering a big product with little or no involvement / feedback from customer. 2.customer gets to pay for only the useful life of the service

That is.. saas is a method for sharing risk and aligning usage goals. i am quite definitely not talking about any mandatory structure.

[fragmede]

SAAS has grown quickly, but is simply the age old concept of renting applied to software, with businesses simply trying to make more money, and that's it.

Any incentives due to this 'new' pricing model are incidental.

> I was trying to suggest if the car manufacturing business had a vested (client based) interest in the full lifetime of the car they may design for longevity and upgradeability rather than simply sales and parts.

Structure it how you will, manufacturer's need a financial incentive before optimizing for longer rather than shorter lifetimes. They sell more if cars have shorter lifetimes - 'planned obsolescence' as noted by btilly.

Charging companies directly and creating the financial incentives is one way of causing businesses to have a vested interest in the long-term viability of a product. It may not be what you intended when you wrote it, but a mandatory fee structure is absolutely one way to aligning usage goals.

If there's a pragmatic way to incentivize increasing car and parts duration that doesn't involve some mandatory fee structure and somehow mimics SAAS, for cars, I haven't come up with it.

Culturally, the fetishization of cars is simply a larger symptom of excessive consumerism which isn't something likely to change any time soon (nor will it be easy to change).

Thanks for the response - it's clear we have a difference of opinion on the implications of SAAS, among other things, though I think we can both agree that Tesla shaking up the industry is a good thing. :)

[milfot]

appreciate your points, software is a very different beast and it is probably true that the incentive structure is incidental to saas..

i just happen to think this is the reason for its success

also for a while i used, and loved, zipcar in london and i guess i saw the possibilities..