BMW today announced they have walked back a controversial subscription service that charged owners monthly fees to use heated seats in their vehicles. This reversal comes as automakers continue to experiment with new monetization models in the connected car era.
BMW's heated seats misstep is unsurprising, perhaps even inevitable—likely serving as a simple litmus test by BMW to gauge appetite for subscriptions. The swift retreat shows consumer tolerance remains limited.
Automakers are tantalized by the recurring revenue potential of in-car subscriptions delivered over-the-air. But this must be balanced with customer expectations. When core features like heated seats suddenly incur ongoing fees, frustration ensues.
This is a natural learning curve as the industry evolves. Software creates new possibilities, but integration must be thoughtful. As we've seen with heated seats, restrictive subscriptions engender resentment. Automakers should be wary of leaving owners feeling nickeled-and-dimed in their own driver's seat.
Rather, in-car subscriptions should take a page from Netflix's playbook which offers an entire library of media for the price of a single film per month. The goal should be to create compounding value creation through expanded access, not revenue extraction via restricted features.
But it's still early days. Over-the-air updates allow for creative subscription bundles that meaningfully augment the driving experience. This is the promise to lean into.
Success will require balancing innovation with sensitivity. Don't make owners pay twice for basics like heated seats. Do delight them with capabilities not previously feasible.
As vehicles become increasingly technology-centric, the opportunity for value-creating subscriptions will grow. Continuous software improvements can enable new in-car features and greater overall functionality.
Many motorists already pay for in-car apps like Spotify. The issue is these don't contribute to automaker revenue. Done right, it's a value proposition for all.
For now restraint is prudent. Gradual adoption on the back of demonstrated value and choice will win trust. But subscriptions allowing continuous feature expansion provide massive long-term potential.
The future is compelling if automakers stay grounded. BMW's misstep underscores growing pains. But done right, subscriptions can deliver compounding in-car improvements that captivate consumers.
This evolution will take time and learning. BMW's heated seats provide an instructive example. The industry is charting a new course that balances ambition with wisdom. Patience and prudence will unlock those rewards.