Automakers Shift to Monthly Subscription Fees for Advanced Features, Targets to Gain Revenue

Dec 02, 2023 05:23 AM EST

WOMAN HOLDING SMARTPHONE — (Photo : PEXELS/picjumbo.com)

In the ever-evolving landscape of the automotive industry, a significant shift is occurring - automakers are now setting their sights on a novel source of revenue: Monthly Subscription Fees for Advanced Features. This transformational trend is changing how drivers use cutting-edge vehicle systems. Subscriptions are shifting into overdrive as automakers like Toyota and BMW introduce monthly subscription fees for a range of advanced features.

Monthly Fees for Advanced Features

Toyota owners can activate the remote start option for a mere per month after an initial free trial, while BMW enthusiasts can enhance their driving experience with a monthly fee for advanced cruise control features.

Based on CBS News report, the allure of this new revenue stream isn't confined to luxury vehicle owners; it spans across various automotive brands. General Motors, among the Detroit Three, is leading the charge with ambitious plans to extract an average of 5 per month from its drivers. Automakers need to finance their costly transition to electric vehicles, which has been gathering steam in recent years, prompting this ambitious step.

CBS also reported that Alistair Weaver, editor-in-chief at Edmunds, suggests that automakers view these monthly subscription fees as a lifeline for funding their ambitious electric car initiatives. However, problems and doubts occur. Are drivers willing to shell out per month for Ford's hands-free driving feature, known as "BlueCruise"?

What strategies will automakers employ to meet their monthly subscription fee quotas? General Motors, for instance, has already begun removing popular features like Apple CarPlay and Android Auto, pushing drivers towards their proprietary software offerings.

As one delves deeper into this emerging trend, it becomes clear that the auto industry is undergoing a significant transformation. Monthly subscription fees for advanced features are not a fad; they will change the driving experience and how automakers make money.

GM Motor's Vision: Billion Dollar Revenue Business

General Motors is making bold predictions as it anticipates a significant boost in revenue from its in-car subscription services. TechCrunch reported about this.

The company expects these services to generate approximately billion in revenue this year and billion by the end of the decade. This amazing prediction puts General Motors in the same class as Netflix, Peloton, and Spotify.GM has 16 million automobiles on US and Canadian roadways. Impressively, approximately a quarter of these vehicles, totaling 4.2 million, are already equipped with subscription services.

GM Senior Vice President of Innovation and Growth Alan Wexler presented this information at a recent investor event. General Motors anticipates a larger subscriber base.

One pivotal factor driving this growth is the imminent launch of its Ultifi end-to-end software platform. This innovative platform promises over-the-air software updates and improved functionality to alter subscriptions.With monthly subscription fees for advanced features, General Motors may make a lot of money from these services.

Looking ahead to 2030, General Motors has set ambitious goals for its connected car technology.The business expects 30 million US vehicles to have this cutting-edge technology, creating a billion-dollar market. GM wants billions in incremental income to capitalize on this potential possibility.

Approximately billion of this money is estimated to come from insurance, while the rest will come from one-time purchases and recurring subscriptions, strengthening GM's position as a major participant in the shifting automotive market.