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The Auto Industry Sees Subscription Fees as a Potential Multi-Billion-Dollar Source of Income

Los Angeles — Jason Luu’s 2020 Volvo XC90 comes with advanced remote features, allowing him to control the engine and access the car through a smartphone app. However, maintaining access to these features after the free trial will cost $200 per year. Luu expressed disappointment, stating, “It’s a little disheartening,” in an interview with CBS News.

Subscription fees are becoming increasingly prevalent in the auto industry. After the expiration of a free trial, certain Toyota vehicles charge $8 per month for the remote start option, while BMW offers enhanced cruise control for $20 a month on specific vehicles. Meanwhile, Ford is considering a $75 per month fee for the hands-free driving “BlueCruise” assisted cruise control option, available on certain vehicles like the all-electric F-150 Lightning.

Alistair Weaver, editor-in-chief at Edmunds, believes that automakers are relying on this new revenue stream to fund the costly transition to electric cars. “So if your car payment is 600 bucks a month, it’s now $675,” he explained to CBS News. General Motors anticipates that subscription fees could generate up to $25 billion annually by 2030, a figure that is comparable to Netflix’s total revenue for the fiscal year 2023, which stood at $32.74 billion. “Part of me says, ‘Well, you’ve already bought the hardware…so just let me use it,” Weaver expressed his thoughts on the matter.

According to a study by Alix Partners, a global consulting firm, more than 60% of consumers are open to subscribing for enhanced safety and convenience features if they don’t feel like they are being charged for something they’ve already paid for. “The car has to be cheaper, plus this option of subscribing,” noted Mark Wakefield, Alix Partners CEO. Weaver proposed an alternative solution for car owners: “Subscribe to the system, 75 bucks. Do your road trip, unsubscribe, and then you’re no longer paying for something that you’re not really going to use.”

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