Major car companies are set to charge drivers monthly payments to use basic features that were previously free
Major car companies will soon start charging drivers to use some of their vehicle’s features via monthly payments
Major car companies will soon start charging drivers to use some of their vehicle’s features via monthly payments.
Back in July, BMW announced some customers would have to start paying a monthly fee to use the heated seats feature, and experts believe this is only the start of auto giants’ efforts to rake in cash through similar payments.
The revenue model was pioneered by Tesla CEO Elon Musk, who charges customers of his electric car company $9.99 (£8.49) per month to use features including satellite maps and streaming.
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According to the New York Post, automotive manufacturer General Motors charges owners of Buicks, GMCs, and Cadillac Escalades $1,500 per month for the mandatory ‘option’ of purchasing three years of OnStar, a service that includes features like voice control and remote vehicle unlocking via mobile apps.
Before this, OnStar had been an optional service as far back as its introduction in 1996.
Meanwhile, Toyota now charges customers $8 a month to start their vehicle remotely with a key fob (a previously free feature) and Volkswagen, Porsche and Audi are thought to be exploring similar subscriptions.
The Post also reports that General Motors has promised investors that an annual sum of up to $25 billion could be generated in software and services subscriptions by 2030.
Explaining automakers' new approach, Guidehouse Insights’ e-mobility analyst Sam Abuelsamid told the outlet: “Most automakers in the last couple of years have started talking about generating huge increases in revenue over the next decade, primarily off the backs of software and other subscription services.”
Abuelsamid added: “The approach that these companies are taking so far is certainly not customer friendly.”
UNILAD has approached General Motors for comment.
Earlier this year, Business Insider predicted that car companies could make billions by charging monthly for add-on features, with brands including Lexus, Toyota, and Subaru all offering features that allow owners to lock their car remotely via an app if they’re willing to pay for the convenience.
However, a study carried out in January found that 58 percent of people who have their car linked to a smartphone app wouldn’t be willing to pay for it.
Kristin Kolodge, vice president at research company J.D. Power - which carried out the study - said: “I think we're going to see some interesting ebbs and flows of what really sticks.”
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Topics: Cars
Aisha Nozari