- Car companies want to make more recurring revenue by offering subscription services, but consumers have pushed back on pay-per-month features.
- BMW pushed things too far when it offered a subscription to heated seats, using hardware that was already installed in the car.
- Volvo recognizes that consumers are more willing to subscribe to functions that require ongoing costs and provide ongoing benefits.
Volvo knows that consumers hate endless subscription services. That's why the company doesn't think automakers can rely on obnoxious amounts of subscription revenue, Chief Technology Officer Anders Bell said during a media roundtable.
InsideEVs was present at the roundtable, but The Drive first reported his comments on subscriptions, specifically.
"Business models, we can always discuss and debate... [but] we should not have some dream of selling software [with] massive income, I don't think," Bell said. "There are good subscription models out there. There are terrible ones. So they're not all the same."
Bell said that while consumers have consistently proven willing to subscribe to, say, live traffic data for their navigation systems, there's a clear limit to subscription revenue. Since live traffic data requires an ongoing cost for the automaker, consumers are more willing to pay off. After all, your data plan on your phone isn't free. But BMW, Tesla and Rivian have drawn fire for software-locking hardware that's already in the car. Bell doesn't think that'll ever work.
"I would have a hard time paying to unlock hardware that I know is in the car," he told Reporters.
This is a key problem that's splitting automakers. Tesla has at times offered battery "upgrades" via software, selling the same physical pack with different software-enabled capacities, and charging consumers to unlock it later in a one-time fee. It also offers Full Self-Driving—which always requires human supervision, and cannot legally drive despite the misleading name—as a subscription or a one-time payment.
Rivian offers a software-locked battery, too, and recently moved Spotify and Tidal streaming—previously free as long as you had the service itself—behind a paywall. Apple Music is behind the paywall, too, which means that if you want to use anything beyond bluetooth audio for streaming, you have to subscribe to Rivian Connect+. That costs $14.99 a month in addition to the subscription for your music service of choice, though it also includes data for the car, an in-car hotspot, satellite images in the navigation and casting to the center screen. General Motors requires owners to subscribe to continue using in-vehicle apps after a multi-year trial period. The brand requires a $25 per month subscription to use its Super Cruise hands-off highway driving assistant after a three-year trial period, despite costing over $2,000 up front, too.
All of those examples at least involve a recurring cost to the automaker. Super Cruise needs updated maps. In-vehicle apps require data plans. But it was BMW that pushed consumers too far, and sparked the anti-subscription backlash that automakers are fighting today. The company attempted to get its customers to subscribe to access their heated seats. It was a doomed moved from the start, one BMW had to cancel after a lot of outrage and few sales. The brand also wanted to get consumers to subscribe to CarPlay. BMW ended up walking that back, too.
Volvo watched as other companies made those mistakes. Now, it can avoid the pitfalls while still profiting off of the successes. Because while automakers are used to high-margin options, there's a limit to how much nonsense consumers will put up with.
InsideEVs' Suvrat Kothari contributed reporting.
