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Automakers look to cash in on software updates delivered remotely

Cruise control, faster acceleration and added range can be as easy as an upload for drivers who are willing to pay.
Tesla can update its software remotely to tweak your car's information system or boost its acceleration.
Tesla can update its software remotely to tweak your car's information system or boost its acceleration.Carlos Osorio / AP file

When Matt Twork bought a Tesla Model 3 in June, he was drawn to the sedan’s range and low energy costs. Nearly a year in, he says he’s happy with his new car but admits “I would like some additional performance.”

Twork, a biomedical worker who lives in Detroit, could easily bump up his Model 3’s response rate without even leaving his driveway. He could buy the Acceleration Boost on his Tesla app, and the software would be uploaded remotely. The price: $2,000.  

For years, automobiles have been slowly morphing into computers on wheels, which now have dozens of onboard microprocessors operating powertrain controls to entertainment and information systems. The software controlling the technology can be updated or replaced remotely using smartphone-style over-the-air updates, allowing automakers to fix bugs and add significantly more advanced capabilities and entirely new features that might not have been available when vehicles were introduced. 

For manufacturers, the ability to resolve problems and improve functionality remotely could end one of their biggest headaches: balky electronic systems, such as voice control, navigation and infotainment systems, that don’t work properly — and annoy customers. Those types of problems accounted for “well over half” the problems in J.D. Power’s 2021 Initial Quality Study, said David Sargent, Power’s auto research chief, “maybe three-quarters.”  

But the bigger payoff could come in automakers’ ability to turn their products into rolling ATMs that spit out money for updates and enhancements for the life of a vehicle. Carlos Tavares, the CEO of Stellantis, estimates his company — formed last year by the merger of Fiat Chrysler Automobiles and the PSA Group — will pull in $22 billion in annual revenue from software and related services by 2030.

Speaking at an investor conference last month, General Motors CEO Mary Barra said internal company research showed that motorists are willing to spend $135 a month on average for onboard software, subscriptions and services and the necessary hardware. She, too, believes GM could eventually generate billions in annual revenue.

Ford's BlueCruise hands-free technology requires a three-year, $600 subscription.
Ford's BlueCruise hands-free technology requires a three-year, $600 subscription.Eric Perry / Ford

Many features and updates will be free or cost around the same as a typical smartphone app. But others will carry hefty fees. 

At $2,000, the Acceleration Boost that Twork was considering for his Model 3 is one of Tesla’s least expensive performance upgrades. He decided to pass on it for now. “Too pricey for me,” he said. Tesla has also remotely delivered $9,000 upgrades to extend a car’s range and $3,000 packages of Autopilot features.

Drivers who want to use Ford’s new Blue Cruise technology, which will be available this year, will have to pay $600 for a three-year subscription. The new feature will allow motorists to operate completely hands-free on up to 100,000 miles of U.S. roads.

GM is charging $25 a month for its similar Super Cruise technology, now rolling out on dozens of models. 

The new Mercedes-Benz EQS features several “soundscapes” designed to enhance the feeling of acceleration in the otherwise silent electric vehicle. Mercedes plans to offer additional soundscapes owners can purchase.

Image: Mercedes-Benz All-Electric EQS Sedan
The Mercedes-Benz EQS Sedan comes equipped with soundscapes designed to make an electric vehicle sound like a gas-powered one.Dimitrios Kambouris / Getty Images for Mercedes-Benz file

Stephanie Brinley, a principal auto analyst with IHS Markit, predicts interest in streaming services and other software will increase as more autos do more of the driving themselves. And, she said, automakers won’t need everyone to subscribe, anyway — “the profit margins are still high enough that you just need to have a good percentage of them sign up and [automakers] will still make a lot of money.”

But even a “good percentage” could be hard to come by. According to new research by Cox Automotive, just 1 in 4 motorists say they’d sign up for in-vehicle subscriptions and services. However, 4 in 10 would pay for a software upgrade boosting the range of an EV.

“Automakers either have to change customer behavior — which we know isn’t easy — or they’re going to have to come up with features with a lot more value,” said Michelle Krebs, an analyst for Cox.

The pushback has already begun. BMW found its customers unwilling to pay a proposed monthly fee to use vehicle seat heaters and abandoned the idea. Toyota walked away from a plan to charge customers $8 a month or $80 a year to use its remote vehicle start feature after it drew widespread public criticism.

Consumers are also raising concerns about data privacy and security. The technology behind over-the-air updates can be used both to download software and to access personal information, which could put people’s personal data at risk, as well as their automobiles, said Benoit Joly, the chief commercialization officer for Wejo, a British-based auto data platform. 

In January, a 19-year-old security researcher from Germany published a blog post claiming to have remotely hacked into the software on 25 Teslas. He said he wasn’t able to take over key vehicle functions, such as steering or braking. Joly said the question going forward is whether automakers will be able to prevent that from happening as they add more over-the-air technology.

Despite such concerns, industry analysts see the market for onboard software and services growing rapidly — and not just in consumer vehicles. There will be a substantial market working with fleet operators who want to track the locations of their vehicles, as well as monitor their conditions so they can schedule service before there’s a breakdown. 

“More and more,” Joly said, “you’ll see business-to-business opportunities to monetize the data from your car.”