If you’re going to launch a new car company, why bother with old-fashioned dealerships?
Fisker and Canoo are the latest in a long line of electric-car startups looking to emulate the success of Tesla. Both recently unveiled their first production models, and both plan to offer those cars through subscription services.
In contrast to traditional buying and leasing, subscription services bundle the cost of using the car itself with related expenses like insurance and maintenance into one monthly payment, without a long-term commitment. Some established automakers – such as Volvo – have launched subscription services for their existing models, but Fisker and Canoo are the first to launch new cars through subscription services.
While Fisker and Canoo are both taking reservations, you can’t put either car in your driveway just yet. Deliveries of the Fisker Ocean electric SUV aren’t scheduled to begin until 2022, while Canoo is targeting 2021 for its self-named electric car. In the meantime, here’s how these two electric-car subscription services compare.
Like Netflix, car subscriptions turn a product into a service to make it more convenient. Just as streaming services give access to a collection of movies and television shows instead of having you buy the titles individually, car-subscription services give access to transportation without the hassles of the traditional car-buying process.
Instead of having to buy or lease car, then deal with running costs separately, subscriptions aim to include everything in one monthly fee. Fisker’s plan will include maintenance costs, while Canoo’s will bundle both maintenance and insurance.
Customers won’t be stuck with cars, either. Canoo will have customers pay on a month-to-month basis, with no set start or end date. Fisker will let customers return a car after one month, eight months, 22 months, or longer. (The company will also let customers buy cars outright.)
Subscriptions will let Fisker and Canoo customers bypass car dealerships. Customers will sign up for and manage their subscriptions through dedicated apps.
These services could make electric cars easier to own. Traditional dealerships are bad at selling electric cars. In a 2019 survey, the Sierra Club found that 74 percent of U.S. dealerships don’t sell electric cars. Those that do sell them often don’t have cars available for test drives and lack knowledgeable salespeople.
Once they’ve taken the plunge, most buyers want to stick with electric cars.
Driving an electric car, but having the option to return it after one month, may win more converts, Canoo boss Ulrich Kranz previously told Digital Trends. Concerns such as range anxiety and availability of charging stations have a lot of people on the fence, Kranz said.
But once people start driving electric cars, those concerns tend to dissipate, as a recent AAA survey found. Once they’ve taken the plunge, most buyers want to stick with electric cars, according to the survey.
Still, even die-hard electric car fans may be skeptical of Fisker and Canoo. Both companies have a backstory that shows how tough the car business can be.
Fisker is the second automaker launched by Henrik Fisker, a car designer whose résumé includes sports cars like the BMW Z8 and Aston Martin DB9. His first company – Fisker Automotive – launched the Karma plug-in hybrid luxury sedan in 2012.
At first, the Karma looked like it could be a rival for the Tesla Model S (which launched around the same time), but the car was plagued by issues and production ended after roughly 2,000 were built. Henrik Fisker left, and the company later declared bankruptcy. The remains were later reconstituted as Karma Automotive, and a modified version of the Fisker Karma is now back in production as the Karma Revero.
Henrik Fisker launched Fisker Inc. in 2016, this time focusing on all-electric cars. In addition to the Ocean, the company plans to launch a more luxurious model called the EMotion. That car will use solid-state batteries, instead of the lithium-ion batteries used by the Ocean and every other current electric car. That will give the EMotion a range of up to 400 miles, according to Fisker.
Canoo was founded by Kranz and Stefan Krause in 2017. The two executives (Krause has since stepped down) are veterans of the traditional auto industry, having worked for BMW. They started Canoo after holding high-ranking positions at another electric car startup, Faraday Future. Faraday stole CES 2016 with a 1,050-horsepower electric SUV called the FF91, but the company has struggled to get the vehicle into production.
Assuming Fisker and Canoo are able to deliver their first cars on time, will you want to drive them?
The Fisker Ocean is the more conventional of the two. It’s a small electric SUV, comparable in size to the upcoming Tesla Model Y and Volvo XC40 Recharge. The Ocean will have standard all-wheel drive and a range of 250 miles to 300 miles, according to Fisker. The SUV’s interior uses recycled materials, including carpets made from old fishing nets, and upholstery made from waste clothing, plastics, and rubber. Fisker will also offer a solar roof that can add up to 1,000 miles of driving per year, according to the company.
Canoo’s electric car is all about maximizing interior space at the expense of style. The vehicle offers seating for seven with the footprint of a conventional compact car, according to Canoo. Range is estimated at 250 miles, and the minimalist interior does not include an embedded infotainment system. Instead, Canoo expects customers to plug their own phones or tablets into the dashboard.
Fisker is currently taking $250 reservations for the Ocean. Customers who opt for the subscription will also have to put $2,999 down and pay a monthly fee of $379. That includes an allowance of 30,000 miles a year, with Fisker covering maintenance costs for as long as you have the car.
Fisker will offer some complimentary charging through Electrify America, but won’t reveal further details until later in 2020. Insurance is not included, but Fisker has said it will let customers get quotes through its app. Alternatively, Fisker will offer a full-purchase option, with a base price of $37,499.
Canoo hasn’t revealed pricing for its subscription service, but says the rate will include vehicle cost, insurance, maintenance, and charging. The company has a wait list but, instead of putting money down to hold a spot, customers can move up the list by referring other people to Canoo.
You can put down a $250 reservation for the Fisker Ocean or join Canoo’s waiting list through the companies’ respective websites. However, Canoo’s subscription service will only be available in Los Angeles at launch. The company then plans to expand to San Francisco, followed by other West Coast cities and then East Coast markets.
Signing up with Fisker and Canoo is far from a sure thing. Neither company has delivered a single car to a customer and, as the tribulations of Henrik Fisker’s first company and Faraday Future show, getting to that point is not easy. Tesla is the only new automaker in recent times to build electric cars in significant volumes, and it’s missed every launch deadline so far.
Both Tesla and Volvo have encountered resistance to their plans to sidestep dealers. Tesla, which operates company-owned showrooms and sells online, still can’t sell cars in every state. Fisker and Canoo may have similar problems as they try to roll out their subscription services.
While Fisker and Canoo are unique in turning car ownership into a service, they’re quite different from each other. Fisker’s approach is more like leasing, while Canoo’s approach is a true product-as-service offering. The cars themselves also diverge. Fisker’s is much like existing small SUVs, while Canoo’s is far more futuristic.
It’s hard to say which is better, or even if either will succeed, but your tastes should clearly decide your preference. Fisker looks great for people who want an electric car with less commitment and hassle, while Canoo is aiming for tech enthusiasts and early adopters seeking a completely new take on transportation.
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