Car manufacturers no longer make (only) cars: they are software developers. In 2020 BMW showed this by announcing the new Operating System 7, which will arrive in 2021 and which, among other things, will include new subscription options. Most surprising and controversial, the $18 monthly subscription will allow you to enjoy heated seats. That ended up bringing (a lot of) queues.
Bad subscriptions?. This business model has been a success for the Netflix and Spotify of the world, and that has made many want to take advantage of it for their own parts. Car manufacturers are doing it: Mercedes applies it to its driveable rear axle, Kia proposes a streaming service and Stellantis warns how its revenue will grow to 20 billion euros thanks to subscriptions .
BMW reverse gear. This manufacturer abandoned its plans to continue the $18 subscription for heated seats. Customers can’t stop complaining about a proposal that forces them to pay more to unlock additional functions in their cars.
Experiments, better with soda. This was demonstrated by Pieter Nota, a BMW manager who, during the IAA Mobility conference in Munich, explained that this project is part of the manufacturer’s efforts to experiment with microtransactions, although in this case the attempt is a failure. “People have the feeling that they are paying double, which is not true, but the perception is the truth, as I always say. That is the reason we stopped (this project),” said Nota.
Extras, preferably one at a time. Vehicle options such as heated seats or steerable axles will continue to cost more, but they will be offered as an alternative to the payment that will be offered at the time of purchase of the vehicle and will be paid immediately to always use it. Other extras such as advanced driver assistance systems, for example, continue to be offered depending on which countries the subscriptions are.
This is not BMW’s first failure. In the past the manufacturer had to face criticism from its customers for the same reasons. The company tried to charge users $300 a year to use CarPlay, but later dropped that option to $80 a year. Most manufacturers offer CarPlay and Android Auto for free.
What matters is the software. Alliances between manufacturers and growing conglomerates make almost all cars look the same. To differentiate them, the software of these vehicles is now starting to be more important, and these platforms can make extras paid for by subscription. Tesla, for example, offers its driver assistance system—what they dangerously and incorrectly call Full Self-Driving, or FSD—both as a perpetual optional package for a one-time payment of $12,000, and as a subscription for $199. in a month.
