Auto makers expect to make billions from subscription services

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Automakers are banking on subscription services, seeing them as an important way to increase their profits.

The market could turn out to be so important that General Motors believes it can generate up to $ 25 billion in revenue a year by 2030 just from software and subscription services. Stellantis also plans to generate $ 23 billion annually from subscription services by 2030.

“We intend to deepen the emotional bond between our customers and the brands they love” Mamatha chamarthi, head of Stellantis’ software business, recently said Automotive News. “If the past was to increase margins by moving customers north in terms of hardware and trim levels, our future is to provide customers with software-based services. “

To achieve this, the CEO of Stellantis Carlos tavares said the automaker will have to find a way to make its vehicles cheaper, most likely by lowering manufacturing costs.

“It all depends a lot on the affordability of what we do,” Tavares said. “Something needs to be improved in the cost structure of this fantastic mobility device called the automobile… to ensure that this technology is not going to create mobility for the elite. “

Stellantis believes the software and subscription services will allow it to dramatically increase its operating margins, closer to those of big tech companies.

However, not everyone is convinced that it is possible.

“I’m skeptical that any of these automakers will get anything close to the multiples they are talking about from the services,” said Mike ramsey, Automotive and Intelligent Mobility Analyst at Gartner. “If they try to shake people up for heated seats, like Bmw considering, this is probably not going to go very well.

Many of the services that Stellantis plans to offer will be …

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