Car companies will make billions of dollars by charging you for add-on features

Would you pay $8 per month to remotely start your car?
Ameya Paleja

Automotive makers are keen to adopt the Silicon Valley business model of selling subscriptions for the apps that you would use in their cars, Business Insider reported

As more internet-enabled cars are manufactured today and they move away from being mechanical devices to electric ones, the way one interacts with the car is also changing. Apart from providing entertainment to the passengers in the car, a massive screen on the dashboard of the car is also a way to communicate with it and get details such as the state of charge of the battery or an issue with an engine. 

Currently, many car manufacturers provide this information through a series of apps that come bundled with the car when you buy it. However, carmakers are keen on selling you add-on services through these apps that could generate monthly revenues for them, even long after they have sold the car. 

According to the Business Insider report, carmakers such as Toyota, Subaru, and Lexus already charge car owners to lock their cars remotely through a proprietary app. BMW, on the other hand, offers an add-on of automatic high-beam headlights that dim when a vehicle approaches from the opposite direction and goes back to high beam without any intervention from the driver.

General Motors and Ford offer features such as hands-free driving for those car owners who choose to subscribe. Each of the two companies along with Stellantis (formerly Fiat Chrysler), aim to generate revenues of $20 billion every year from these services before this decade ends. However, the route to the moolah is still far away. 

A survey conducted by J.D. Power, a consumer insights and data analytics company, found that 58 percent of car owners who are currently using apps from carmakers are unwilling to pay a subscription fee for them. The survey included 32 carmakers, one of them being Tesla, which was considered a benchmark for automotive apps, the surveyor said in its report.

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Among the reasons listed for unwillingness include the lack of value delivered by these apps. The number of users of these apps might be on the rise with new shipments from carmakers, however, car owners are not satisfied with the speed of the apps. While users are keen on using the apps to control their car remotely, assist in navigation and seek real-time information about their vehicle, currently no app in the market offers these features together. The survey pointed out that the setting-up process for the apps is also rather cumbersome, and many car owners need assistance from dealerships before they can begin using them.

The survey recommends that car makers dedicate resources to further developing their apps and increasing the number of users who use them if they are hopeful of generating revenue through them.