Los Angeles — Jason Luu’s 2020 Volvo XC90 comes with advanced remote features, allowing him to control the engine, unlock/lock the car from a smartphone app. However, to continue using these features after the trial period, he has to pay $200 a year. Luu finds this disappointing.
The auto industry is embracing subscription services. For certain Toyota vehicles, the remote start feature costs $8 per month after a free trial, while BMW charges $20 a month for enhanced cruise control on specific vehicles. Ford offers the “BlueCruise” hands-free driving feature for some vehicles, including the all-electric F-150 Lightning, for $75 per month.
Alistair Weaver, editor-in-chief at Edmunds, explains that automakers see this new revenue stream as a way to fund the costly shift to electric cars. General Motors expects subscription fees to generate up to $25 billion a year by 2030. This revenue projection is significantly lower than Netflix’s entire revenue for the fiscal year 2023, which was $32.74 billion.
According to a study by Alix Partners, more than 60% of consumers are open to subscribing for enhanced safety and convenience features, as long as they don’t feel like they are being charged for something they already paid for. Mark Wakefield, CEO of Alix Partners, notes that the auto industry is looking at Apple’s subscription model as an inspiration. He suggests that cars should become more affordable, with the option of subscribing for additional features. Weaver also presents an alternative for car owners – subscribing to the system for road trips and then unsubscribing to avoid paying for unused features.
