It's a win-win for all involved.
Toyota Japan will offer a cheaper lease rate for customers who agree to over-the-air updates on a brand-new Prius. In doing so, Toyota is following the same standard set by Tesla, which significantly impacts used car values.
Customers who go for the over-the-air (OTA) safety update service will save 10% on their monthly lease rates. Toyota's leases in Japan are handled by a third party called Kinto. The new Prius isn't on there yet, but the Crown is the nearest car to a Prius we could find. A Crown costs roughly $350 per month, and a 10% saving would bring that down to $315.
It's not a huge saving, but customers might also be persuaded to go for the deal, considering the benefits of OTA updates.
In an interview with Reuters, Shinya Kotera, president of Kinto, explained the thinking behind the price cut. "Tesla's customers are, to put it simply, high-income earners, and many of them are willing to pay for new and good things, so that's why their products are a hit with that market segment," said Kotera.
According to Kotera, Toyota customers are not like that. "They are not someone who would pay extra for a new technology. They are looking for something good, reliable, and inexpensive."
Kotera also said this would be the first time Toyota will update safety features via OTA updates. Toyota's previous OTA updates were limited to the car's infotainment system.
The new Prius is a prime candidate for extensive OTA updates. It's equipped with updated sensors, allowing Toyota to update most of the driver assistance features included in Toyota Safety Sense 3.0 suite. The entire suite includes a pre-collision system with pedestrian detection, lane departure alert with steering assist, full-speed range dynamic radar cruise control, lane tracing assist, road sign assist, automatic high beams, and the new proactive driving assist.
These systems can theoretically be updated to recognize more hazards, and Toyota might even go as far as including new features.
The Prius also has a new electronic on-demand AWD system, which can also be updated with unknown parameters. Changes can be made to the driving mode to provide more driving range for the Prius Prime, which comes as standard with a 13.6-kWh battery.
These updated features will also increase the used value of a Prius, as a three-year-old Prius could effectively be equipped with the same features as a new model.
It will also give Toyota more control over its used fleet, which means more pricing power. This is another one of Tesla's greatest hits. Customers can no longer buy leased vehicles from Tesla. Every leased car is returned, updated with the latest software, and sold at a relatively high price. Now that there's a massive supply and demand issue, used Teslas are worth more than a new model.
Over-the-air updates have been in the news a lot lately. Mercedes-Benz is facing legal action because it wants to charge customers $100 per month for a faster car. Polestar will give your 2 sedan a power bump, but only for a one-time fee.
Toyota seems to be on to a winning recipe here because it's not getting involved in controversial subscription services while securing the value of its fleet further down the line.
According to Kotera, the service could be expanded to other Toyota models and may eventually find its way into global markets.