A new age with futuristic tech is on its way, and it looks grim, y’all. Automotive News recently reported that Stellantis, General Motors (GM), Ford, and more automakers have plans to go all-in on subscription-style software upgrades to hardware, but for cars. Sigh.
Welcome to Headlight. This is a daily news feature that lights up one current event in the car world and breaks it down by three simple subheadings: What Happened, Why It Matters, and What To Look For Next. Look for it in the morning (Eastern time) every weekday.
What Happened
A report from Automotive News says Stellantis is planning a push to monetize subscription-style software upgrades that could tangibly increase vehicle performance. The goal is to generate more than $23 billion in revenue from software upgrades by 2030. General Motors has a similar push, and it aims to bring in $25 billion in revenue, also by 2030.
Taking a page out of the Tesla book, a Stellantis executive is quoted as saying “If the past was about increasing margins by moving customers north in hardware and trim levels, our future is about offering customers software-based services.” Ford, VW, and other manufacturers have plans, or have already implemented subscription-style software upgrades and have folded these plans into future revenue.
Why It Matters
Last week, The Drive reported on Toyota’s integration of remote start into a pay-to-play subscription service. It seems like it is a sign of things to come, as automakers have it in their plans to extract money from the customer for as long as they can, given the advent of electric vehicles and their low maintenance costs. There seems to be little in the way of legislation or any real push to stop manufacturers from running amok. We’ve joked that there will be a future where automakers make you subscribe to power locks and heated seats, but VW’s already doing that for headlights.
In another sense, this is a threat to dealers, who typically make their money from packages, add-ons, and other services sold at the point of sale. True, some may feel the dealership model is outdated, but is paying the manufacturer directly to access abilities your vehicle technically can already do from its build date really a positive here? Where is the line? Will we see jailbroken cars in the near future, as we watch automakers learn the lessons that Apple did in 2010? We don’t know yet.
What To Expect Next
Expect this new-found market to boom. This monetization and microtransaction drive might start small, with add-ons like streaming audio, but nearly all manufacturers have plans to add in more substantial additions to functionality, all accessible by a monthly fee. Will the average person stand for that?
In a small sample size, Tesla owners have purchased new software features without much issue or pause, but those are also premium cars for a certain class of people. How this could affect cheaper vehicles and their customers is to be determined.
At the very least, cars that are incapable of OTA upgrades will likely drive on into the sunset, as the potential for earning is a lot lower than one that can. The age of the always-connected car is here.
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