Automakers’ Subscription Services: A Growing Controversy
In today’s automotive market, buyers are carefully comparing the features that come standard with different vehicles. A concerning trend is emerging, with some of the most sought-after features in desirable cars locked behind paywalls or subscription services.
A survey found that most drivers aren’t opting into automakers’ connected car services subscriptions.
Tesla’s Leadership in Subscription Services
Tesla (TSLA) is perhaps the most prominent automaker employing this subscription model. While its Full Self-Driving feature requires a monthly fee of $99, the company also locks features like music and video streaming, in-car karaoke, Sentry Mode, and Dog Mode behind a “Premium Connectivity” subscription costing $9.99 per month or $99 per year.
Consumer Resistance to Additional Fees
However, a recent survey conducted by Smartcar, a connected car software developer, indicates that most drivers are reluctant to subscribe to automakers’ connected car services. The survey, which included over 1,000 drivers in the U.S. and Europe, revealed that 76% of drivers have not opted in for these services, like HondaLink or FordPass. Among those who do subscribe, only 49% pay for additional premium features. The majority of subscribers utilize the free services.
Only 11% of those surveyed stated that they had no interest in subscription services, while 50% said they would consider them if the cost were lower.
Mazda’s Feature Paywalls: A Source of Frustration
Mazda is making owners pay for popular features.
Some automakers have faced criticism for removing features that were once free and moving them behind subscription paywalls. In August 2024, Mazda owners voiced their disapproval after the automaker moved remote start functionality from key fobs to its Mazda Connected Services smartphone app, which requires a monthly subscription fee.
What Drivers Value in Subscriptions
Even for those who pay for subscriptions, Smartcar’s data shows that 74% are satisfied with the cost. However, 61% want more features included for the price they pay, while 67% are willing to pay more if “more valuable features” are offered. Smartcar’s research indicates that drivers place the highest value on: emergency assistance, maintenance reminders, navigation and traffic alerts, vehicle diagnostics, and remote features such as remote start and door lock functionality.
Automakers Rethink the Subscription Model
Some automakers have begun to recognize that this subscription model may be unpopular with customers. BMW made headlines in the summer of 2022 when the company began selling monthly subscriptions for factory-installed features such as heated seats, automatic high beams, and adaptive cruise control in select markets. Due to negative reception and low subscription numbers, BMW discontinued the program in September 2023.
In February 2024, Mercedes-Benz Chief Software Officer Magnus Östberg criticized BMW’s approach, noting that his company’s approach is different. “Our philosophy at Mercedes is that [subscriptions] are going to be a luxury experience. That means we’re not ‘nickeling and diming’ our customers. It’s more of a holistic experience,” Östberg told Top Gear.
Ultimately, the future of subscriptions in the automotive industry is uncertain, but the trend is drawing scrutiny from consumers and some in the industry.
