As car technology continues to advance, car companies are now offering additional features and functions as part of a subscription-based model. BMW, Mercedes, and other car manufacturers have decided to lock some desirable features, such as heated seats, high beam assist, and heated steering wheels, behind a paywall to earn additional revenue.
While some consumers are willing to pay for optional features, many are unhappy about paying more for features already present in the vehicle at the time of purchase.
Mercedes, for instance, is asking for an annual subscription of $1,200 to unlock the “full performance” of its EQ electric vehicles through a software update. Despite the hefty price tag, the demand from Mercedes customers for the “Acceleration Increase” feature has been low, leading the company to revise its pricing strategy.
Mercedes has now launched a new pricing model for the AWD EQE 350 sedan and SUV, offering an additional 60 horsepower for $60 per month or $600 per year. For the pricier AWD EQS 450 car and SUV, an additional 80 horsepower costs $90 per month or $900 per year.
In addition, Mercedes is also offering the option to pay a one-time fee of $1,950 for EQE owners and $2,950 for EQS owners to unlock the feature permanently.
Despite manufacturers viewing this as a way to boost their bottom line, consumer surveys reveal that most people are unwilling to pay for subscription-based features. While some individuals may pay for reasonably-priced performance features, such as the ability to cool or heat their seats, most respondents believe these features should be included in the car’s purchase price.
In the face of this, car companies such as Ford, General Motors, and Stellantis still believe that subscription-based features and software can generate over $20 billion in revenue annually by 2030.
However, as more people find ways to hack their way around subscription-based features, it is uncertain whether this revenue model will remain sustainable.