Motorists are increasingly being forced to pay tacked-on fees and even sign up for pricey subscriptions to get basic features on their cars — and auto giants are telling investors this is only the beginning.
BMW’s recent move to charge car owners in several countries $18 per month to turn on the heated seats in their own vehicles sparked a public outcry, with some would-be buyers calling the move a “dealbreaker.”
But it’s not just BMW: industry watchers and consumer advocates warn that the nickel-and-diming threatens to become standard as automakers chase a recurring revenue model pioneered by Elon Musk’s Tesla.
General Motors recently started requiring buyers of Buick, GMC, and Cadillac Escalade vehicles to pay $1,500 for the mandatory “option” of buying three years of OnStar service, which includes features like voice control and the ability to unlock vehicles from a mobile app. OnStar had previously been optional since GM introduced it in 1996.
Toyota, meanwhile, started charging $8 a month to remotely start vehicles using a key fob — a feature that had previously been free. Volkswagen, Porsche and Audi recently have explored similar subscriptions.
It’s just the beginning, industry experts say, as manufacturers look to transform cars from simple goods for sale into bases for recurring revenue that could fill coffers for years or decades.
General Motors has told 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 shooting for $23 billion by 2030.
“Most automakers in the last couple of years have started talking about generating huge increases in revenue over the next decade, primarily off the backs of software and other subscription services,” Guidehouse Insights’ e-mobility analyst Sam Abuelsamid told The Post.
“The approach that these companies are taking so far is certainly not customer friendly,” he added, singling out GM’s mandatory OnStar as effectively a “bogus” and a “hidden price hike.”
The subscription push was pioneered by Tesla. Elon Musk’s electric automaker charges $9.99 per month to access music streaming, satellite maps and other features. It also asks a whopping $200 per month or a $12,000 one-time payment to access its experimental “Full Self-Driving” option.
On Sunday, Musk announced on Twitter his company will hike the price of the FSD option by 25%, to $15,000, starting Sept. 5.
Abuelsamid said that other automakers are “fooling themselves” with their plans to juice revenue through subscription plans — and predicted they will run into consumers’ “subscription fatigue,” a trend recently evidenced by Netflix bleeding about 1.2 million subscribers in the first half of 2022 .
Just 25% of American car buyers say they would potentially be willing to pay extra for subscription car features, according to a Cox Automotive survey from April.
BMW’s moves toward a subscription model, which Abuelsamid called “particularly aggressive,” have especially annoyed fans and would-be customers.
After news reports circulated in July about BMW’s $18-a-month heated seats charge in the United Kingdom, Germany, South Korea and other markets, the luxury automaker was roundly roasted online.
One TikTok video with more than 24,000 likes showed a BMW locking basic features like the speedometer and radio, demanding cash for the renewal of a “premium membership.”
Another video with more than 160,000 likes showed a BMW careening off a cliff with the caption, “POV: new BMW owners after they forget to pay their monthly steering subscription.”
Safety concerns aren’t entirely a joke, according to Consumer Reports’ associate director of safety policy Will Wallace. BMW currently requires car owners in some countries to pay roughly $12 per month to access a safety feature called “High Beam Assistant,” which automatically turns off a car’s high beam lights when it senses another car to avoid blinding other drivers at night.
“Safety should come standard,” Wallace said of adaptive headlights. “Some automakers might think that those are simply a convenience feature, but there’s a demonstrated safety benefit.”
Both Wallace and Abuelsamid said the National Highway Traffic Safety Administration should require automakers to put adaptive headlights in every car, just like airbags and seatbelts.
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 will definitely work its way down market,” Rheingold said of subscriptions. “There’s no way that this is not coming to your basic car.”
He compared the change to how airlines have increasingly hit consumers with fees for services that were previously free, such as carry-on baggage and seat selection.
“Drip by drip, people become more accepting of it,” Rheingold said.
BMW, Toyota and GM did not respond to requests for comment.
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