Autonomy, a Santa Monica car supplier startup that only introduced its app in January, has taken a big step that will allow it to go nationwide in a hurry.
The company earlier this month placed orders worth $1.2 billion to buy 23,000 electric cars that will be sold through AutoNation, the nation’s largest auto retailer. Autonomy had been operating regionally with about 1,000 cars made by Tesla that it offers on a subscription basis.
“For us it’s really about selecting and scaling and managing our business responsibly,” Scott Painter, chief executive of Autonomy, said of the deal. “For AutoNation, it’s about leveraging its infrastructure, understanding the modern consumer and being digital.”
Autonomy will provide the cars by subscription through its app rather than renting or selling them. AutoNation will manage Autonomy’s vehicle inventory at its locations and service and repair them. Under the subscription model, customers do not pay to service their cars.
AutoNation, based in Fort Lauderdale, Florida, has more than 300 dealerships in the United States.
Autonomia’s colossal electric vehicle order also necessitated the need for a physical partner to handle the logistics of landing, receiving and testing its vehicles in the United States.
“With the acquisition of 23,000 cars, we’ll begin national rollout in partnership with AutoNation, so you can get a car anywhere in all 50 states,” said Painter, a serial entrepreneur who founded CarsDirect.com and TrueCar. Inc., a vehicle listing services company.
“In all of those markets, they’re going to help us land the cars when they come from the manufacturer,” Painter continued. “What this does for us as a young company is it gives us the ability to scale without having to invest in infrastructure.”
The huge order includes electric cars from BMW, Fisker, Ford, General Motors, Hyundai, Lucid Group, Mercedes-Benz, Rivian, Toyota, Volkswagen and several others. Autonomy has so far only dealt with Tesla’s Model 3 and Model Y electric vehicles, though it will also buy additional cars from Tesla.
Autonomy, which has been around for about two and a half years, is now considered one of the largest electric vehicle subscription services in the country.
The company had been operating in stealth mode until its official launch in January, when it introduced its Autonomy app to the Apple and Android stores. Through the app, customers can order a complete car with insurance through partners Autonomy, Digisure and Liberty Mutual.
With Autonomy’s subscription system, customers pay a $100 booking fee and a $500 deposit, which are refundable if the customer defaults on the deal. Then there’s a flexible upfront fee and a monthly charge; the higher the initial fee, the lower the subsequent monthly payments.
For subscribers looking for the lowest monthly payment for Tesla’s Model 3 compact sedan, which Painter calls the “Prius of this generation,” they pay an initial fee of $5,900 and pay $490 a month for the vehicle, which retails for at $46,990.
Subscribers looking for lower upfront costs can pay a $1,000 upfront fee for the Model 3 and pay $1,000 a month. Subscribers can cap their monthly payments and down payment between 10 different options.
Consumer websites say that renting a car is generally less expensive, but a membership can be cheaper for those who need a car occasionally or seasonally. After the minimum 3-month term of an Autonomy subscription, customers switch to a month-to-month agreement. If a customer surrenders a car for, say, a month, the customer will not pay for that month.
Ryan Robinson, global automotive industry research leader for Deloitte LLP’s Consumer Industry Center, has seen a growing appeal of the subscription-based model: vehicles as a service.
“Within the 35-50 age range of consumers responding to our survey, approximately half of these consumers are interested in a vehicle subscription service and this represents a 20% year-over-year increase” , Robinson said. . “It can connect to the issue of accessibility. If personal vehicle ownership is increasingly prohibitive for consumers, vehicles and mobility as a subscription or vehicles as a service may make sense.”
Autonomy is not only betting on the subscription model, but is taking advantage of the conversion to electric vehicles.
“By doing this, we’ll be able to open up access to an electric car for less than $250 a month,” Painter said. “That’s powerful. We’re excited to be the place people go when they think about wanting to experience or even try an electric vehicle.”
With the new vehicles, subscribers are expected to get access to the Chevy Bolt for $250 a month. But even those who want high-end models, like the Hummer EV, which retails for between $110,000 and $120,000, can do so without the big upfront price of buying one.
“Subscribers are not forced to pay a premium for their car at a time when debt will be very expensive,” Painter continued. “Inflation, interest rates, supply chain issues with building new cars, semiconductor shortages. There are a lot of reasons to go electric.”
“From a manufacturing and investment standpoint, we’ve passed that point of no return, so to speak, with electric vehicles,” Deloitte’s Robinson said.
Numerous factors are involved in the rise of electric vehicles, such as President Biden’s goal that by the year 2030 half of all new vehicle sales must be emission-free, in addition to the numerous investments by the its administration in the sector, in addition to bonuses and tax breaks, according to a report. from McKinsey & Co. titled “A Turning Point for US Auto Dealers: The Unstoppable Electric Car.”
Painter believes the electric vehicle has reached two tipping points.
“One is clearly that consumers believe they will be able to drive electric. And the other side of that is the industry,” he said.
“All the big automakers have said they’re ‘all in’ with electrics, not just making one or two electric cars. Ford has said they’ll get out of the internal combustion engine business by 2026. Everyone’s going to be electric, from consumers and industry. And that’s what I mean by tipping point.”