Automakers have been working on the automation of their vehicles, especially with the connectivity to the internet. For every feature like locking the door, unlocking the door, or simply having heated seats, there would be an annual or monthly subscription fee. Car companies plan to have long-term customers despite having people buy their car, they would continue to make profits with the additional features.
As vehicles become increasingly connected to the internet, car companies aim to rake in billions by having customers pay monthly or annual subscriptions to access certain features. Not content with the relatively low-margin business of building and selling cars, automakers are eager to pull down Silicon Valley-style profits.
For automakers, the advantage of this model is clear. Not only do they get a stream of recurring revenue for years after initial purchase, but they can also hope to maintain a longer-term relationship with the customer and build brand loyalty, said Kristin Kolodge, an analyst at JD Power.
With this approach, automakers can go towards more streamlined manufacturing of vehicles. Adding more features would be possible for customers at an additional cost for which they need to subscribe to. Interestingly it seems like people are getting along. However, it remains unclear if this would work with affordable cheaper vehicles that most of the population is focused on.
Various subscription plans
It’s all not impossible. As it was already made possible by the advent of over-the-air software updates, which were pioneered by Tesla around a decade ago and are now entering the mainstream. Especially as today’s vehicles are more internet-connected and computerized than ever before, meaning car companies can reach deep inside a vehicle to add new capabilities and tweak things from a distance.
Furthermore, other brands including Lexus, Toyota, and Subaru invite owners to pay for the convenience of being able to lock or start their cars remotely through an app. And in some BMWs, you can pay to unlock automatic high-beam headlights, which dim for oncoming traffic. Back in 2020, BMW floated the idea of pay-as-you-go heated seats and steering wheels. General Motors and Ford both offer subscription plans for their hands-free highway driving systems. In 2019, BMW abandoned a plan to charge $80 per year for Apple CarPlay after widespread pushback. In December, Toyota said it would review a subscription plan that unintentionally paywalled the use of the key fob for remote start. While the plan to make billions out of the system may seem possible, it is unclear about how many features this would typically work.