Drivers are increasingly being forced to pay attached fees and even sign up for pricey subscriptions to get basic features for their cars — and auto giants are telling investors this is just the start.
BMW’s latest move to charge car owners in several countries $18 per month to turn on the heated seats in their own vehicles caused a public outcry, with some potential buyers calling the move a “deal breaker”.
But it’s not just BMW: industry watchers and consumer advocates are warning that nickel-and-diming threatens to become the norm as automakers chase after a recurring revenue model pioneered by Elon Musk’s Tesla.
General Motors recently required buyers of Buick, GMC and Cadillac Escalade vehicles to charge $1,500 for the mandatory “option” to purchase three years of OnStar service, which includes features like voice control and the ability to override vehicles unlock a mobile app. OnStar was previously optional since GM introduced it in 1996.
Toyota, meanwhile, began charging $8 a month to remotely start vehicles with a key fob — a feature that was previously free. Volkswagen, Porsche and Audi recently investigated similar subscriptions.
According to industry experts, this is just the beginning as manufacturers look to transform cars from simple sellables into bases of recurring revenue that could keep the coffers for years or decades.
General Motors has said investors It aims to generate up to $25 billion in software and services subscription revenue annually by 2030 – up from an estimated $2 billion in 2021. Stellantis, formerly known as Fiat Chrysler, is targeting $23 billion by 2030 .
“Most automakers in recent years have started talking about generating huge revenue increases over the next decade, mostly through software and other subscription services,” Sam Abuelsamid, e-mobility analyst at Guidehouse Insights, told The Post.
“The approach these companies have taken so far is certainly not customer-friendly,” he added, calling GM’s mandatory OnStar effectively a “hoax” and a “hidden price increase.”
The subscription push was developed by Tesla. Elon Musk’s electric car maker is suing $9.99 per month to access music streaming, satellite maps and other features. It also charges a whopping $200 per month or a one-time payment of $12,000 to access it experimental “Full Self-Driving” option..
On Sunday, Musk announced on Twitter that his company will increase the price of the FSD option by 25% to $15,000 starting in September. 5.
Abuelsamid said other automakers are “deceiving themselves” with their plans to monetize subscription plans – and predicted they will encounter consumer “subscription fatigue,” a trend recently proven by Netflix bleeds about 1.2 million subscribers in the first half of 2022.
According to a, only 25% of American car buyers say they might be willing to pay a premium for subscription car features Cox Automotive Survey from April.
BMW’s move towards a subscription model, which Abuelsamid described as “particularly aggressive”, has particularly angered fans and potential customers.
After reports circulated in July about BMW’s $18 monthly fee for heated seats in the UK, Germany, South Korea and other markets, the luxury automaker has been roasted online.
A TikTok video with more than 24,000 likes showed a BMW banning basic functions like the speedometer and radio, and demanding cash to renew a “premium membership”.
Another video with more than 160,000 likes showed a BMW hurtling off a cliff, with the caption: “POV: new BMW owners after forgetting to pay for their monthly steering subscription.”
Safety concerns are no joke, according to Will Wallace, associate director of safety policy at Consumer Reports. BMW currently requires car owners in some countries to pay about $12 a month to access a safety feature called “High Beam Assist,” which automatically turns off a car’s high beams when it detects another car to avoid other drivers at night to blind.
“Safety should be standard,” Wallace said of adaptive headlights. “Some automakers may think this is just a convenience feature, but there is a proven safety benefit.”
Both Wallace and Abuelsamid said the National Highway Traffic Safety Administration should require automakers to put adaptive headlights in every car, along with airbags and seat belts.
While luxury auto brands are taking the most flak for subscription features, mass-market automakers will increasingly embrace the strategy in the coming years, predicts National Association of Consumer Advocates executive director Ira Rheingold.
“It’s definitely going to make its way through the market,” Rheingold said of subscriptions. “There’s no way this isn’t coming to your base car.”
He compared the change to how airlines are increasingly charging consumers for previously free services like carry-on luggage and seat selection.
“Drop by drop, people are becoming more accepting of it,” said Rheingold.
BMW, Toyota and GM did not respond to requests for comment.