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It's not impossible that Rivian designed around the non-enhanced power levels. Then decided to try to pull more power out of the motors at a risk of increased warranty costs, and the increase in cost is relative to that.Once upon a time, you can’t buy a house with a basement and the builder locking you out of the basement because he wants more money for that basement.
People may or may not realize, but even ICE engines can be upgraded with a computer chip/software program, though this is done aftermarket by a third party. So it only makes sense for the manufacturer to capture that market, as you explained well.It's price discrimination, which sounds like a bad thing, but I think economists generally agree isn't? If you're Rivian, and can only afford to design and build one motor, you have a few options. Make the powerful one, spend a bunch of development money doing so, and then charge a high price that wont sell as many units (so you don't make as much money). Or, you build the less powerful one (which probably cost you the same development effort), sell it for less, but sell more of them because you have a larger market. In both cases though, you haven't addressed the whole market. You're either selling to the cost-conscious crowd or the speed-craving crowd. You're leaving part of the market untapped. So instead, you could design the powerful motor (which again, we assume doesn't actually cost anything different in development costs, and probably has minimal material/manufacturing cost differences), and sell it as two different versions (defined only by SW) for two different prices. The added material/manufacturing cost that you incur by giving everyone "the better hardware" is probably canceled out by the fact that you are only running one manufacturing line for both, have less inventory to manage, less build configuration that needs to be tracked on the manufacturing line, etc.
On the whole, it allows Rivian to be able to sell more units for the same development cost. This in turn means that Rivian is more efficient in getting products to market, and means that in the end the customers win too because overall costs for Rivian are lower. If Rivian has lower costs, they can offer lower average prices, sell more, get more leverage with vendors for lower prices, and the circle goes on.
It feels wrong to know you have hardware that was engineered to be more capable than what you paid for and have in your driveway/hands/whatever, but it's super common. Computer CPUs are basically the same thing. For one chip layout that Intel designs, they sell probably a dozen SKUs. Some are sold as lower-end SKUs because they didn't pass tests to perform at the higher level (ie: they were binned). But sometimes they just sell them as lower end SKUs because that's where the demand is. Computer overclocking exists partially because of this (though binning can be a lot more complicated than just clock speed). Do people feel crappy when they buy a lower-end computer, and know they have a CPU die that was engineered to be faster? Maybe? I bet most people don't even realize it. But one thing is for sure, if every SKU that was sold was a unique engineering effort and design, all of the SKUs would cost more money. You'd lose the economies of scale.
Subscriptions though? Yeah, fuck that.
That's a fair point. I think specifics matter a lot with the subscription thing. Can I continue to choose to buy the option ("a perpetual licence") at a reasonable market price? Or am I forced into licencing it now, at a cost that doesn't actually make sense.It depends on how they are structured, but if month to month, I think a lot of people up north would find a lot of value in paying for it only between May and September, because they wouldn't use it in winter. That could push out the breakeven timing between paying for it upfront in lump sum vs. via subscription by double (perhaps 10-12 years vs. 5-6). That's just one example. Another example is someone that can't decide upfront, and wants to try it out. They then realize it's not worth it, and instead of spending $3,000 and realizing that, they only spent $100 testing it. Or you're 35 to start and need the speed, and after a few years and starting a family, you realize you no longer do. So yes, you will pay more over a long horizon with a subscription vs. all at once, but there's two sides to that bell curve.
*cough* Tesla Plaid *cough, cough*Usually this trick is employed by taking the highest tier (that no one wants to buy) and offering an Ultra tier above it with silly upgrades like a better color, prettier body, or more x, where x is something easy to add more of which doesn’t make much difference. With this Ultra tier priced 30% higher people feel good about buying the next lower version.
Similar to Tesla’s FSD subscription.People may or may not realize, but even ICE engines can be upgraded with a computer chip/software program, though this is done aftermarket by a third party. So it only makes sense for the manufacturer to capture that market, as you explained well.
It depends on how they are structured, but if month to month, I think a lot of people up north would find a lot of value in paying for it only between May and September, because they wouldn't use it in winter. That could push out the breakeven timing between paying for it upfront in lump sum vs. via subscription by double (perhaps 10-12 years vs. 5-6). That's just one example. Another example is someone that can't decide upfront, and wants to try it out. They then realize it's not worth it, and instead of spending $3,000 and realizing that, they only spent $100 testing it. Or you're 35 to start and need the speed, and after a few years and starting a family, you realize you no longer do. So yes, you will pay more over a long horizon with a subscription vs. all at once, but there's two sides to that bell curve.