The future of cars is a subscription nightmare

Photo by Roberto Baldwin for The Verge

As cars get more expensive to make and profit margins get smaller, automakers are trying to squeeze more money out of their customers. Subscription-based access to vehicle features are the latest attempt to charge people for things their car already came with. Will customers lay down and take it?

Some media outlets noticed that BMW was selling heated seats for $18 a month in a number of countries. The company tried and failed to get customers to pay for access to features that are free in other cars. After BMW reversed its decision to force people to pay for things that used to be free, it was obvious that it wouldn't stop there.

Cars are more full of computers and software than ever before, which makes it possible for automakers to add new features or patches on the fly with over-the-air software updates. New ways of making money have been presented by this. BMW is not the only company with subscription models for certain features, such as driver assist features or voice recognition. Considering how many people hate it, it is a troubling trend.

A survey done by Cox automotive found that 217 people intend to buy a new car over the next two years. Only 25 percent of people would be willing to pay a monthly or yearly fee to have their feature unlocked. The majority of people said to piss off.

Safety features like lane-keeping assist or automatic emergency braking were the features that the 25 percent of people who don't mind subscription would be willing to pay for.

"For automakers to achieve their revenue ambitions by charging consumers extra for features and services, they have work to do."

It makes sense that most of the subscription plans are from luxury cars since their customers are rich and can easily absorb an annual or monthly fee. According to analysts, subscriptions are coming to mass-market vehicles as mainstream automakers look for new revenue streams to help fund their plans to build vehicles that are electric, connected, and autonomously.

The company expects to make $25 billion in in-car subscription service revenue by the end of the decade. It would put GM in the same league as other internet companies.

Amelia Holowaty Krales / The Verge

About 25% of GM's 16 million vehicles in the US are features for which customers are paying a subscription. The VP of innovation and growth at GM said during a presentation at the company's investor event that customers are willing to spend $135 per month on average for products and services.

This would change the way vehicles are marketed. Even if the car is 10 years old or has been sold two or three times, the factory-equipped options are always permanent.

Thanks to the popularity ofTesla and the advent of over-the-air software updates, that has changed recently. After purchase, the company sells access to a variety of features. It used to allow owners to pay a fee to unlocked the full capacity of their cars if they had battery packs that had their range limited by software. According to some experts, this could encourage automakers to give more software updates for their vehicles. The idea of keeping their worst impulses in check seems foolish.

It was thought that the car would become a subscription. People could be charged a monthly fee to access a variety of different models if they chose to do so. Ford, BMW, Cadillac, and Mercedes-Benz have stopped offering vehicle subscription services because people weren't interested. The ideal price point is elusive for other companies.

Photo by James Bareham / The Verge

It is not a guarantee that car companies will sell cars. Customers are paying companies to remove a software block on a function that already exists, in the case of heated seats or range-limited battery packs. Some customers may be asked to pay an extra fee for something that requires constant software updates. The heated steering wheels, for example, look like an attempt by the auto industry to charge their customers more for something they should only have to pay for once.

Sam Abuelsamid, principal analyst at Guidehouse Insights, said that he was skeptical that this would work.

The average price of a car is $48,000 for the first time this month. With the industry shifting to producing more electric vehicles, the average cost is expected to go up even more. People are already feeling squeezed by dealers, so it is not likely that they will be willing to pay more for access to certain comfort features.

Customers aren't likely to afford all the nickel and diming unless the purchase price of a new vehicle is lowered. He thinks that the auto industry will have to back down on either pricing or how many things they want to turn into subscriptions.