With Subscriptions, The Automakers Mimics the Netflix Playbook

In 2021, credit the card statements are filled with the usual monthly fee: Netflix for the video, Spotify for music, XBox Game Pass for play, Peloton for health – etc., with food kits, wine boxes, and high-protein, low-carb cereal. The financial services company UBS estimates that the “subscription economy,” driven by pandemic-induced changes in purchasing habits, will grow 18 percent annually over the next four years, hitting $ 1.5 trillion by 2025.

Now automakers want to join the party.

The idea is simple: We’ll sell you a car with a dash cam, or that can be done without hands, or we can coach you in telematics data to become a super -efficient driver. But if you really want to uSE any of the new toys, will have to pay extra. Credit Tesla which promoted the idea that cars could be updated using the software even if they had already been evicted from the lot.

General Motors told investors this month that subscription services could bring in an additional $ 20 billion to $ 25 billion annually by 2030. The company says 4.2 million customers are already paying for the services. security on OnStar, which comes with an app that costs $ 15 a month. Start the electric car Rivian recently submitted finances that could bring it an additional $ 15,500 to the life of each car with software-powered services, including a featured car driving and subscriptions for infotainment, internet connection, and diagnostics. BMW last summer created buzz — and shock — with plans to charge, through a subscription fee, for features like hot seats. In the US, the automaker offers subscriptions for an onboard dash cam and a remote car starter.

Over the past few years, auto companies have put in place plans to change from “becoming an industry that sells products to an industry that sells services and products,” said Brian Irwin, who leads in auto practice and acting consulting with Accenture. Cars now have multiple computer chips, cameras, and sensors-and thus, the thrilling opportunity to use detailed data in both the manufacture and sale of new products.

The move of the industry towards electricity may make the idea even more appealing. “Consumers see EV as a new technology that powers new things,” said Alan Wexler, who oversees service connections and data insights at General Motors. That means they are willing to think about paying for cars in a new way as well. In fact, car makers want it when you start to think of your wheels as a “platform,” a smartphone -like device that will require multiple in -app purchases to fit your lifestyle.

In 2019, BMW reinstated plans to charge drivers an annual fee to use Apple CarPlay, pictured above.

Photo: BMW

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