Los Angeles — Jason Luu’s 2020 Volvo XC90 has advanced remote features that allow him to control the engine, and lock and unlock the car from his smartphone app. However, continuing to use these features after the free trial will cost $200 a year. Luu expressed his disappointment with this cost to CBS News.
Subscription services are becoming increasingly prominent in the auto industry. For select Toyota vehicles, the remote start option comes with a monthly fee of $8 after the free trial period, while BMW charges $20 a month for enhanced cruise control on specific models. On the other hand, Ford offers its hands-free driving “BlueCruise” assisted cruise control option for certain vehicles like the all-electric F-150 Lightning, but is asking drivers to pay $75 per month for it.
Alistair Weaver, the editor-in-chief at Edmunds, indicated that automakers are relying on this new revenue stream to fund the costly shift to electric cars. He highlighted that the addition of subscription fees to car payments could increase the overall cost for consumers. General Motors estimates that subscription fees could generate up to $25 billion annually by 2030 – for perspective, Netflix’s total revenue for fiscal year 2023 was $32.74 billion.
Reacting to this, Weaver expressed his view, “Part of me says, ‘Well, you’ve already bought the hardware…so just let me use it.'”
Alix Partners, a global consulting firm, discovered that over 60% of consumers are open to subscribing to enhanced safety and convenience features as long as they don’t feel like they are being charged for something they already paid for. Mark Wakefield, CEO of Alix Partners, highlighted the influence of Apple’s subscription model in the auto industry, emphasizing the need to balance lower vehicle costs with subscription options. Weaver suggested an alternative approach for car owners, proposing, “Subscribe to the system for $75, do your road trip, unsubscribe, and then you’re no longer paying for something that you’re not really going to use.”
