The future of cars will be a subscription nightmare

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As car production becomes more expensive and profits shrink, automakers are constantly coming up with creative ways to make more money. Subscriber-based access to vehicle features like Heated seatsOder Remote-start key fobsThey are the latest attempt at charging people for items their car already comes with. The real question is whether customers will actually pay and take it.

Some media outlets noticed earlier this week that BMW was being sold. Subscriptions starting at $18 per monthYou can get heated seats in many countries, including South Korea. The German automaker had previously tried and failed to get customers to pay $80 a month for access to Apple CarPlay and Android Auto — features that are otherwise free in other companies’ vehicles. But even after BMW reversed its decision to force people to pay for something that used to be free, it was clear that it wouldn’t stop there.

Automakers can now add new features to their cars or fix problems quickly with software updates. Automakers also have new revenue streams. BMW isn’t alone — Volkswagen, Toyota, Audi, Cadillac, Porsche, and Tesla have all dabbled in subscription models for certain options, such as driver-assist features or voice recognition. It’s a troubling trend, considering how much people freaking hate it.

This year, it was earlier. Cox Automotive conducted a studyThere are 217 people who plan to purchase a car in the next two-years. Only 25 percent said they’d be willing to pay a monthly or annual fee to unlock a feature in their vehicle. The remaining 75% thought it was a waste of money.

Of those 25 percent that don’t mind subscription, the features they’d be willing to pay an annual or monthly fee generally fell into three buckets: safety features like lane-keep assist or automatic emergency braking (although automakers have agreed to make the latter standard in new vehicles starting this year); vehicle performance features, like extra torque or horsepower; and creature comforts, like heated or cooling seats or steering wheels.

“For automakers to achieve their revenue aspirations by charging consumers extra for features and services, they have work to do,” Cox’s Michelle Krebs said.

The majority of subscription plans appear to come mainly from luxury carmakers. This makes sense, as their customers tend to be more wealthy and can afford a monthly or annual fee. Industry analysts disagree.As mainstream automakers search for new revenue streams, subscriptions are being offered to mass-market vehicles in order to fund their expensive plans to develop electric, connected, autonomous vehicles.

Last year, General Motors saidThe company earned more than $2B in subscription revenue from in-car cars, which it expects to increase to $25B by the end of this decade. This would put GM in the same category as Netflix, Spotify, Peloton, and Spotify.

Amelia Holowaty Krales/The Verge

GM currently has 16 million vehicles in the US. About a quarter of these vehicles include subscription-based features. “Our research indicates that with the right mix of compelling offerings, customers are willing to spend $135 per month on average for products and services,” Alan Wexler, SVP of innovation and growth at GM, said during a presentation at the company’s investor event in December 2021.

This would mark a significant shift in how cars are advertised and sold. Typically, a car’s factory-equipped options are permanent, regardless of whether it’s 10 years old or whether it’s been sold two or three times over.

That’s changed in recent years, thanks in some part to the popularity of Tesla and the advent of over-the-air software updates. Elon Musk’s company pioneeredMicrotransactions allow for the sale of access to many features, including access to them after purchase. It was even possible to Ship cars with battery packsOwners could pay a fee to unlock all the potential of their vehicles, which had a limited range due to software. Experts predict that this will encourage automakers to offer more software updates to allow vehicles to evolve after purchase. However, it seems unrealistic to assume that automakers will not indulge their worst impulses.

The car seemed to be a subscription for a time. Many automakers thought that they could charge a monthly fee for access to different models in addition to vehicle leases or ownership. Turns out that people weren’t into it: Ford, BMW, CadillacMercedes-Benz,, and Mercedes-Benz all have pulled the plug from their subscription services for vehicles. Others companies are still working hard, but the ideal price point is not yet available. remains elusive.

Photo by James Bareham/The Verge

This may all seem preordained, but it’s not a guarantee, especially if car companies flub the sales pitch. Customers are paying companies to remove software blocks on functionality they already have, such as heated seats and range-limited battery packs. Some customers may be persuaded that they have to pay an additional fee for something that requires regular software updates like automated traffic alerts. Some other stuff, such as heated steering wheels and Apple CarPlay, is just another example of automakers trying to scam customers for something they shouldn’t have to pay once.

“Automakers sure want customers to get used to this, but frankly, I’m skeptical this will fly,” said Sam Abuelsamid, principal analyst at Guidehouse Insights, an industry consulting firm.

Abuelsamid stated that cars have become more expensive than ever before, with the average car cost reaching $48,000 for the first month in a row. The average price of an electric vehicle is expected to increase as the industry shifts to making more. People are already feeling squeezed by dealers, so it’s not likely they will embrace the idea of paying even more money on a recurring basis for access to certain comfort features.

Unless automakers lower the purchase price of new vehicles to offset the subscriptions, customers aren’t likely to afford all the nickel and diming, Abuelsamid said. “I think automakers will have to back down on either pricing or how many things they want to turn into subscriptions,” he said.

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