Cars are bought, but features are rented: Legal issues in car subscription services

The automotive industry is witnessing a significant shift from traditional ownership models to subscription-based services, particularly for advanced technological features. Carmakers like Tesla, BMW, Mercedes-Benz, and Kia are now offering functions such as autonomous driving aids, heated seats, and performance enhancements on a monthly or subscription basis, even when the necessary hardware is already physically present in the vehicle.

This trend raises complex legal and consumer rights issues. While consumers purchase the car itself, the activation and use of certain features are increasingly controlled by the manufacturer's servers, creating a scenario where the car is owned, but its functionalities are licensed. This has led to debates about "double-billing," especially when hardware is pre-installed but locked behind a subscription paywall. Legal experts note that while such sales models may not be inherently illegal, deceptive advertising or unfair contract terms could violate consumer protection laws.

A major point of contention is the concept of "property rights" when it comes to car features. While the physical car and its components are legally the owner's property, software functionalities are often treated as licenses granted by the manufacturer. If a subscription ends or a feature is deactivated remotely, it is generally considered a contractual consequence. However, if a feature was advertised as permanent or fully paid for upfront and is later revoked, it could lead to claims of breach of contract or fraudulent advertising.

The complexities extend to the used car market. The transferability of software-based features is not standardized. For instance, a Tesla's Full Self-Driving (FSD) feature might transfer if purchased outright but disappear if it was on a monthly subscription for the previous owner. This ambiguity can lead to disputes, as vehicle inspection reports typically only cover mechanical conditions, not the permanence of software features. Buyers are strongly advised to verify feature activation directly and include specific terms regarding feature transferability in their purchase contracts.

Furthermore, the potential for safety-related features to be deactivated unexpectedly due to subscription lapses, payment failures, or technical glitches raises concerns. While current driver-assistance systems generally require driver supervision, manufacturers could face liability if they fail to provide adequate warnings or if features are abruptly disabled without reasonable cause. The revised Automobile Management Act in South Korea aims to regulate software updates and prohibit unauthorized modifications, making "grey" coding to unlock features risky and potentially voiding warranties or complicating insurance claims.