Will You Have to Start Paying Subscription Services for Your Car?

Automobile manufacturers may soon charge a monthly fee for extras

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Rick DeBruhl,

AARP

En español

Published September 16, 2022

Imagine you’re shopping for a new car and you’re exhausted after haggling over the price. Then the salesperson hits you with something new: How much are you willing to pay per month to keep the options on your auto active?

Welcome to the brave new world of subscription services — for your car. Want to keep your heated seats toasty through the winter? How about that lane assist feature or remote start? Automakers are starting to indicate that car owners, especially those going for luxury models, may have to pay fees for extras like these. For example, BMW recently announced a plan in several countries outside the U.S. to charge for heated seats.

“I view it as inevitable,” says Tyson Jominy, vice president of data and analytics at J.D. Power. “It’s a profit stream. An ongoing revenue for the automaker.”

Cars are more connected than they’ve ever been, says Keith Barry, a writer and editor at Consumer Reports. Most cars these days have built-in modems that allow them to connect directly to automakers, he says. Those automakers can use that path into a car’s brain to flip a virtual switch to power features on or off. For a price, of course.

“Car manufacturers are working to figure out how to make money after a new car is sold,” Barry says. “They’re trying to figure out how to make money over the years.”

A recycled idea is born

This is not really a new practice. If you purchased a new car in the last 20 years, there’s a good chance it came with satellite radio, a service that was free for a trial period and then you had the option to pay to keep it activated. Some people gladly fork over the monthly fee while others are just as happy to forgo the extra cost.

But when BMW revealed its plan in some countries outside the U.S. to charge monthly for extras, the internet exploded. The response was so loud that the company was forced to issue a clarification for U.S. buyers.

It read in part: “It is important to note that BMW ConnectedDrive Upgrade is intended primarily as a digital aftersales solution and will not affect options that were ordered at the time of the vehicle purchase.”

In other words, if you paid for heated seats when you bought the car, you get to keep them. And if you want to add them later, you can do that as well — if you’re willing to pay an extra fee.

Right now most U.S. car buyers don’t want to pay an additional amount after they’ve bought their car, says Vanessa Ton, senior industry intelligence manager for Cox Automotive. In a survey conducted this year, Cox found that 75 percent of buyers expected features to be included in the purchase price. Only 25 percent were willing to pay extra later on.

“We do think that OEMs [original equipment manufacturers] have an uphill battle to figure out what people are willing to pay for,” Ton says. The Cox survey found that 92 percent of people said they were not willing to pay monthly fees for heated or cooling seats and 89 percent said a remote start option should be included in the price of the car.

On the other hand, there are certain areas where car owners would consider extra fees reasonable. “Our survey found some buyers are willing to pay up to $25 per month for upgraded horsepower and torque,” Ton says. “They’re also willing to pay for stolen vehicle tracking.”

Some advantages for car owners

While automakers are looking at features on demand as a new revenue stream, it’s also a way to streamline how they run cars down the assembly line.

“It’s automotive efficiency,” Jominy says. “If you can build every car the same way, it’s easier. It’s a lot easier to have simplified manufacturing processes. Every car will have everything and then the consumer will decide whether to turn it on or off.”

It can also keep the initial price of a vehicle down. Instead of paying for all the features up front, you can wait until you have more money. You can also decide to toggle some features on and off as you need them. Don’t want heated seats in summer? Simply turn them off.

Electric vehicles are especially fertile ground for functions on demand. “You can have an update where the EV gets additional range,” Jominy says. “You’re going on a trip, you can pay for additional range.”

Barry says the electric Porsche Taycan takes it a step further: “If you’re going on a road trip, you can pay extra for a map that optimizes the car’s navigation to show locations where you can recharge and to keep track of how much range is left. You won’t need it on a regular basis, but it’s handy to have for a trip.” Porsche calls this service the Intelligent Range Minder and charges $12 per month or $474 for life (which is transferable to the next owner of the car).

And then there are various packages that allow drivers to stay connected to the latest information. Tesla, for example, charges $9.99 per month for premium connectivity that includes live traffic visualization, satellite-view maps and more.

It’s easy to assume that these subscription services are just a way to squeeze more money from consumers, but they also offer distinct advantages for car owners. “A lot of these cars have new technology that needs to be updated,” Barry says. “There is a benefit to updating software in cars. Now you don’t have to update by bringing a car into the dealership. They can just beam it out to you.”

In some cases, it’s fixing glitches in the software that came with the car; in others, it’s rolling out a new feature that makes the car better.

“As cars learn more about their environment, they report that back to their manufacturers,” Jominy says. “Things like adaptive cruise will get smarter over time. It’s very costly work, and some of that makes sense. If you want to have the latest in adaptive controls, it’s going to cost more.”

Tesla already charges to bump up its Autopilot features. Every new Tesla comes equipped with the basic Autopilot package, but you can pay more for Enhanced Autopilot or, for an additional $199 per month, you can sign up for what the company calls Full Self-Driving Capability.

A used car opportunity

The feature subscriptions might be even more significant in the used car market than with new cars. “I definitely see it as giving consumers more options post-purchase. When you think about it, cars have a long life [and] the second owner is stuck with the car the original owner bought,” Jominy says. “This allows the second and third owners to have a car that is more to their liking. And it allows automakers to make money over the life of the car.”

There is the potential concern, however, should carmakers begin charging for more than truly optional add-ons but rather necessary safety features. “We absolutely hope that doesn’t happen,” Barry says. “That there are safety issues missing from vehicles — I certainly hope that automakers wouldn’t do that. Where it gets tricky are the convenience features. Things like adaptive cruise control and lane centering. They aren’t necessary safety features, but they do make a drive less stressful and more comfortable.”

And don’t be surprised to see people finding a way around the fees. There are already stories about vehicle hackers who are working on ways to unlock features the carmakers want consumers to buy.

Will consumers accept fees for automotive features? There was a time not long ago when the idea of paying to watch television seemed ridiculous. Then along came basic cable, followed by premium services like HBO. Now nearly every household pays for some form of streaming content.

And just as the TV landscape evolved, Barry has no doubt the automotive world will see a shift as well. “The power of the subscription model has been proven in so many different industries,” he says. “In some form or another, we’re going to be paying for our cars differently than we were five years ago or 10 years ago.”

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