You’ve just spent, $40K, $50K, $60K (and more) for a new car. After paying your first month’s installment to the bank an email appears in your inbox informing you that you can add heated seats to your car for a mere $18 per month. Fiction?
Over the summer BMW announced that some of their customers would have to fork over $18 USD per month to have their heated seat functions activated as part of a new microtransaction subscription fee.
Website The Verge reported, “BMW has slowly been putting features behind subscriptions since 2020, and heated seats subs are now available in BMW’s digital stores in countries including the UK, Germany, New Zealand, and South Africa. It doesn’t, however, seem to be an option in the US — yet.”
Other features available via BMW subscriptions include automatic high beams and adaptive cruise control. If you would like your heated steering wheel to operate that will cost you $12 a month, an option to record video footage from your car’s built-in cameras will cost you $235 unlimited use, and if you want to play engine sounds through your BMW’s speakers the “IconicSounds Sport package,” will set you back a one-time fee of $117 USD.
BMW’s announcement was met with understandable outrage from their customers. So much so that BMW of North America issued a statement spinning BMW ConnectedDrive Upgrades (also known as Functions on Demand) not so much as a way for Bavarian Engine Works Company to reach deeper into their customers lederhosen long after the point of sale; but rather as a way to “try before you buy.”
BMW is not alone. Mercedes will now charge owners of its electric EQ models a $1,200 USD annual subscription to unlock quicker acceleration.
Microtransactions, whether a one-time upsell of add-ons or in the form of monthly/yearly subscriptions are facilitated by manufacturers now including OTA (over the air) update capabilities with their vehicles. The OTA equipped vehicle has the ability to connect wirelessly to the manufacturer and the manufacturer has the ability to connect, update and make changes to the car, all without visiting a dealer.
In theory OTA connectivity could be used for many useful and helpful things, like vehicle diagnosis or updating navigation maps without the car owner downloading files to an SD card and spending forty-five minutes manually installing new software. However with OTA capability also comes a host of privacy and consumer rights concerns.
Not unlike phone manufacturers and cellular companies, will automobile manufacturers be able to track your whereabouts, your speed or driving habits? And who will that data be shared with?
The upselling and unlocking of premium features has long been a mainstay of computer productivity software and electronic gaming developers and in those markets it makes a reasonable amount of sense. By offering less popular software features as an optional add-ons you can lower the financial barrier-to-entry for users who do not require the premium features. Similarly, gamers can start off and try a game and then decide at a later date whether they want to purchase upgraded skins, characters or features.
The software & gaming model is beneficial to both the developer and the software customer because there is little to no hard cost inherent in delivering the premium feature to the customer. Either the premium feature can already exist dormant in the original software installation, albeit “locked” awaiting a software key to enable the feature’s use; or the premium feature may require a subsequent software download. Either way, the premium feature operates using the existing physical hardware platform.
The same is not necessarily true for automobile manufacturers. To offer heated steering wheels or seats, automatic high beams or adaptive cruise control, video DVR or acceleration boost capabilities as a subscription or one-time unlock fee, all of the additional hardware required for those features must already exist in the car as it leaves the factory. If the car manufacturer is equipping every car, even lower trim models with heated steering wheels, heated seats, automatic high beams, adaptive cruise control, DVR; and more capable motors, suspension and tires required of “acceleration boost” without failure, there is tangible equipment cost either to be absorbed by the manufacturer or passed on in some way to the consumer.
Do you think a car manufacturer will just eat the cost of all those add-ons, awaiting and hoping a customer will opt-in for a subsequent purchase or subscription? Or is it more likely those costs will be passed on to every consumer, including those who may want the feature in the future and those who don’t?
It’s interesting to note that the very same statement from BMW of North America they admit 90% of their U.S. customers already purchase vehicles with heated seats. If BMW is installing the capacity for heated seats in 100% of their vehicles in the hope that some percentage of the remaining 10% will later opt to software-unlock the capability, the hardware cost of another (10% of 346,000) seat heaters in the United States will need to be accounted for somewhere. Then consider a similar equation for adaptive cruise control, automatic high beams, heated steering wheel, etc., etc.
The underlying question becomes, are car manufacturers going to be charging a subscription fee on a feature the consumer has already paid for, baked into the cost of the car?
All Hyundai, Genesis, and Kia Models will support OTA updates and “Features on Demand” by 2025. Some models, including the Kia EV6 Hyundai Ioniq 5 support over the air (OTA) updates now.