Overclocking is still... Get a motherboard that lets you tweak voltage, current, and clock settings, and push the buttons until you get somewhere. Most enthusiast chips are good for a fair bit over what the box says. Electric motors are similar - push more electric power through them and you get more power out at the wheel.

The only difference is that they charge you to flip the bits that the overclocking motherboards use as an up front feature for selling the board.

Sure, but you can overbuild by 20-40% for not much more cost in lots of cases, but wear on things like bearings and other moving components can change in big ways if you push above some level. Imagine a car with a 5 year warranty but it will need an estimated extra $5k of parts and labor if you drive it hard (using the 5 second 0-60 instead of the base 6 second every time you get on the highway) vs keeping it to the lower limit.

And it's very much the same as overclocking (aside from the fact that you don't pay the original manufacturer to do the overclocking). They sell you a part for a price based on the performance they're guaranteeing. In this case they charge you a higher price to guarantee more from the part.

In a world where it's cheaper to manufacture one physical SKU and differentiate in software, you're going to start seeing more of this kind of thing. Not everybody needs the performance that sells for a higher price. I'd bet that at volume production the cost difference between a motor that can only do X and one that can handle more is pretty minimal and some is recouped by not needing to change over any manufacturing to manage the different production schedules. You would definitely lose some segment of the market if you didn't offer a vehicle at the lower price point, though.

It may not be "performance degrading software" - you can maybe think of it like computer overclocking a PC. Though if you go back to mainframes, they've been doing that for decades - the physical hardware is often more CPUs/higher speed than what the company is licensed for and additional capacity can be enabled after the fact (sometimes even temporarily - need extra capacity for quarterly closing reports, you can do that with no downtime). Compute services have almost always been "pay for what you use" and you don't really think about how the vendor makes that happen, but when it becomes too obvious, people kinda freak out.

I don't know what the terms of warranty on Mercedes cars look like, but there would definitely be parts that wear faster when pushed to higher power output so having a "we give you the hardware with parameters tuned to last the lifetime of your warranty for $X and if you want to push past that, we'll let you do it but will charge based on expected additional costs to replace worn parts within warranty".

Some people really want the performance and would be willing to pay for a bigger engine up front, but the electric motors are probably cheaper to maintain one SKU and differentiate in software/pricing to account for the extra component wear - people who aren't pushing those limits don't pay for it.

https://youtu.be/yB5G0QwRhWg

I'd say unless you're applying for a mortgage or car loan in the next couple of months, let it get billed and pay it before the due date, but otherwise it's more convenient and safer to use a credit card for everything.