Upcoming subscription pricing for features your car already has
- Automakers want to rake in billions by asking customers to subscribe to vehicle features.
- Today, automakers offer subscriptions for automatic high beams, remote start, and other features.
- Consumers don’t seem as excited about the trend as automakers.
How about paying $5 a month to be able to lock and unlock your car remotely via an app? What about the $25 per month charge for advanced cruise control or $10 to access heated seats? What if these charges continued long after your car was reimbursed?
As vehicles become more internet-connected, automakers aim to rake in billions by asking customers to pay monthly or yearly subscriptions to access certain features. Unhappy with the relatively low-margin business of building and selling cars, automakers are eager to dent Silicon Valley profits. But unlike
you won’t be able to use your ex-girlfriend’s uncle’s login in your new BMW.
For car manufacturers, the advantage of this model is clear. Not only do they get a recurring revenue stream for years after an initial purchase, but they can expect to maintain a longer-term relationship with the customer and build brand loyalty, said JD Power analyst Kristin Kolodge.
The approach can also allow automakers to streamline manufacturing by building cars to more uniform specifications, Mark Wakefield, who leads the automotive and industrial practice at consulting firm AlixPartners, told Insider. Ultimately, owners can add whatever features they want to the map.
All of this is made possible by the advent of over-the-air software updates, pioneered by Tesla a decade ago and now entering the mainstream. Today’s vehicles are more internet-connected and computerized than ever before, which means automakers can access deep inside a vehicle to add new features and change things remotely.
Brands such as Lexus, Toyota and Subaru are asking owners to pay to be able to lock or start their car remotely via an app. In some BMWs, you can pay to unlock the automatic high beams, which dim for oncoming traffic. In 2020, BMW launched the idea of à la carte heated seats and steering wheels. General Motors and Ford both offer subscription plans for their highway hands-free driving systems.
Some people may appreciate the ability to only pay for the features they actually want, rather than a big bundle of add-ons. But automakers still haven’t figured out exactly what customers are willing to pay and what looks like a diversion.
In 2019, BMW scrapped an $80-per-year billing plan for Apple CarPlay after widespread pushback. In December, Toyota announced it would review a subscription plan that unintentionally blocked the use of the key fob for remote start.
“I think we’re going to see some interesting ebbs and flows of what really sticks,” Kolodge told Insider. A JD Power survey released in January found that 58% of people who use a car manufacturer’s smartphone app would not be willing to pay for it.
Automakers run the risk of making customers feel like they’re paying twice — once to have a feature built into a vehicle and again to activate it, Kolodge said. They may have better luck asking people to subscribe to new services rather than familiar features, she added.
Still, automakers are seeing dollar signs. Stellantis (formerly Fiat Chrysler), Ford and GM each aim to generate at least $20 billion in annual revenue from software services by 2030.
Over-the-air capabilities open up huge opportunities for automakers to introduce new subscription or pay-as-you-go features over time, said Wakefield, of AlixPartners. One day you may be able to shell out more to make your car more efficient, sportier or, in an electric vehicle, unlock extra range for road trips.