In a world where Netflix is cracking down on those who share passwords outside of their families, subscriptions have come under increased scrutiny for how they’ve been used, or rather misused, by consumers, leading to a loss of potential revenue for these large corporations. While many streaming users were maddened by Netflix’s decision, the choice makes sense for a company that receives 90% of its revenue from subscriptions. However, now imagine that you tried to turn on the heated seats in your BMW on a chilly winter morning, only to be informed that this feature was disabled because of a lack of a subscription. Would you have expected that from a company that earns 76% of its revenues from cars alone, with the remainder earned from motorcycles and financial services?
Now, in BMW’s defense, automotive subscriptions aren’t a new concept. GM’s OnStar was founded in 1996 to provide telecommunication services, such as roadside assistance, and has since expanded to include multiple subscription plans, the lowest of which starts at $15/month. From June 2022, the Basic plan was free for 5 years with the purchase of one of its Buick, Cadillac, and GMC vehicles, provided you paid GM’s mandatory fee, a whopping $1500. That amounts to $25/month, by the way. So much for a free service with voluntary commitment. Toyota started charging $8/month or $80/year for its Remote Connect, in 2021, and defended itself with claims that it’s link to a new infotainment system setup required them to group it in with other functions. The list goes on and on, but subscriptions have existed for a while with little backlash, simply because they made sense on the given features.
The world is an everchanging place, and naturally so is in-car technology. Over the past decade, we’ve seen the automotive industry change from a transportation business to a technology services industry that just so happens to be inside of a car. To understand car subscriptions, we first have to examine that shift in attitude. Cars, especially electrics ones, are becoming increasingly more expensive to make. Throw in the COVID-19 pandemic, and its ripple effect across global supply chains, questions over whether there’s enough lithium for EVs, if those EVs are even profitable, and suddenly it’s not hard to see why automakers are starting to worry about their futures. On top of that, software giants like Apple and Google noticed how cars were untapped market, and put their own spin on in-car infotainment systems, mounting additional pressure on the shoulders of legacy automakers. They’ve continued to advance their systems, with some siding with Google by entirely using its Android Automotive in place of their own, while some automakers have been put through the wringer for their software gaffes.
So what do these poor, undeserving money printers choose to do? Try to make money off something that the vast majority hate: in-car subscriptions. AutoPacific, an automotive-orientated research firm recently published a study on how consumers view such features and the results weren’t surprising. Notice how the highest percentage is 37%? And that for an internet connection that allows for a Wi-Fi hotspot, a feature that has been available for over 10 years now. I’m no statistician, but 37% is certainly nowhere close to majority. To little surprise, intended PHEV and EV owners were more willing to try out these new connected services, with PHEV purchasers more likely to pay for streaming content from their car’s infotainment, hazard notifications, and remotely control one’s house via voice commands, while EV buyers were more open to browsing the internet directly on their car, engaging in video conferences through means of the infotainment system, and purchase products directly from the in-car displays.
