Car makers like BMW and Tesla are requiring subscriptions to access features in cars. But a New Jersey bill would prohibit this from happening on certain features.
Car features subscriptions are arguably one of the most shocking moneymaking trends in the auto industry. But it seems to be spreading among some of the world’s leading vehicle manufacturers. Tesla recently announced that people will have pay to a monthly fee of $9.99 to access navigation, maps, and voice commands once their cars reach a certain age. And in 2019, BMW made headlines by making Apple CarPlay a subscription feature before backtracking.
However, a bill under consideration in New Jersey would prohibit car makers from requiring subscriptions to access features that use hardware already installed on a vehicle at the time of purchase. The only instance in which a fee would be acceptable is if it creates an ongoing expense to the dealer, manufacturer, or a third party. If passed, the motion made by Assemblymen Paul Moriarty and Joe Danielsen would effectively end the business practice that primarily exists to increase corporate profits.
Along with access to a car’s software and hardware, the bill also exempts third-party features like satellite radio and Wi-Fi from requiring a subscription. It will also introduce penalties of up to $10,000 for a first offense and $20,000 for subsequent violations, ARS Technica reports. But for now, the bill is just an idea and there’s no guarantee it will be passed into New Jersey law.
Additionally, the “ongoing expense” clause may be easily satisfied if an original equipment manufacturer has to pay to maintain a server or connectivity. This would be the case with navigation systems or driving features that use data from the cloud. Meanwhile, car companies assert that a subscription-based business model provides consumers with more choices by allowing them to buy the features they want, rather than paying for everything at the point of sale.
Automakers are selling cars with built-in hardware features that must be activated with a subscription. In markets like Korea and the United Kingdom, vehicle owners pay BMW to access their heated seats function. And Tesla ships every car with the hardware required for its Full Self Driving feature. But the company charges a fee, which recently increased from $12,000 to $15,000, to activate it.
Interestingly, Forbes previously predicted that car feature subscriptions would prove too shiny a revenue stream for brands to ignore, aided by the widespread use of over-the-air updates. Moreover, Stellantis and General Motors said they’ll earn between $23 and $25 billion in revenue per year by 2030 from subscription and software services. That’s a large amount of money at a time when automakers are facing massive costs owing to the rapid transition to all-electric vehicles.
But vehicle connectivity and telematics software expert VNC Automotive suggests that consumer resistance to car features that can only be accessed with a subscription might be overstated. The tech company said people are not strangers to the subscription model, voluntarily paying extra for services like Netflix, Amazon Prime, and Spotify, and subscribing to grocery deliveries. “This familiarity may smooth the transition for manufacturers as they look to recreate that model inside their vehicles,” the company explained in a press release.