Here’s a new twist on the old proverb about teaching someone to fish: buying a car may feed an automaker for a day, but recurring fees for services and product enhancements could generate a lucrative revenue stream in perpetuity (okay, it’s not the most eloquent aphorism, but you get the point).
|Tesla Model 3 (Source: EVANNEX. Photo by Casey Murphy)|
Transportation is evolving into what the tech world calls a “stack” of hardware, software, and services, and automakers don’t want to end up as mere hardware vendors, providing the least profitable layer of the stack. Sources of recurring revenue that they used to count on, such as yearly maintenance and replacement parts, and the treadmill of buying a new model every couple of years, are widely expected to fade away in the brave new world. However, the electric, connected, autonomous, shareable auto of the future presents other opportunities for ongoing income.
Sasha Lekach, writing in Mashable, looks at some of the schemes that automakers are developing to keep their corporate hands dipping into your pockets on a regular basis.
Tesla, of course, is already playing this game. Since early 2020, customers have had the option to pay $9.99 per month for Premium Connectivity, which includes access to real-time traffic reports, games, music streaming, and other internet-enabled features (standard maps and navigation tools are still free).
Now the company has announced that it will move to a subscription model for its Full Self-Driving (FSD) package. FSD privileges (but not the full suite of promised features) have been available for a one-time fee (currently $10,000) for some time now. A select group of beta testers now have access to the latest and greatest FSD package (and we’re told it’s pretty darn cool), but Elon Musk recently tweeted that it should be available on a subscription basis to all Tesla owners sometime in the next few months. Most Tesla-watchers are expecting it to start at $100 per month.
Where Tesla goeth, the rest of the industry followeth, and several other brands are exploring plans to turn buyers into subscribers.
GM’s Super Cruise, a driver-assistance system that some have compared favorably to Tesla’s Autopilot, has been available on certain Cadillac models since 2018. It will be included with the new Chevy Bolt EUV that’s slated to arrive this summer, and GM is promising a rollout to several more models by 2023. Super Cruise is currently free for the first three years, then it’s $25 a month. GM also offers an unlimited data plan (without Super Cruise) for $25 a month.
Volkswagen’s upcoming ID.4 features a range of connected features, including real-time traffic data, streaming music, and WiFi hotspot capability. Buyers can get a Verizon mobile data plan that’s free for the first month, and $20 after that. Volkswagen’s Car-Net service, which includes emergency assistance, theft alerts, online radio, and an expanded navigation package, is available for annual fees ranging from $8 to $159.
The ID.4 will be one of the first non-Tesla vehicles to offer over-the-air updates. The Porsche Taycan and Ford Mustang Mach-E are also billed as having this capability, but we’ve heard no details. Like Tesla, these brands will surely deliver fixes and minor upgrades for free, but could choose to charge for special goodies.
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