Vehicle connectivity may be surging, but consumers are not interested in paying or renewing their subscriptions for these services, according to ABI Research.
They note that over half of new vehicles sold this year and more than 70 per cent in 2028 will include connectivity services. And while OEMs are committed to connectivity due to the many benefits, they have not cracked the code needed to recoup connectivity and airtime costs.
“Due to the prevalence of high traffic phone data plans, end consumers have little motivation to pay for connectivity and rarely renew subscriptions after the free trial period, which carmakers are constantly extending,” said Maite Bezerra, Smart Mobility and Automotive Research Analyst at ABI Research.
He said this is especially true for infotainment services that compete with free phone mirroring. “This reality signals that it will be challenging for carmakers such as Stellantis, Ford, and GM to achieve their recently announced goals to generate US$20 billion in software and services revenues annually by 2030, at least 13 times what they generate today,” said Bezerra.
Nearly all OEMs plan to deploy software-defined vehicle platforms and expect to generate revenues from these services and OTA features, according to Bezerra. But he said doing this requires establishing a revenue-generating consumer touchpoint, where the new services will be purchased or updated.
“However, most subscription revenues presently derive from essential telematics and remote services rather than infotainment,” said Bezerra.
He said companies are extending their connected services subscriptions to drive higher customer engagement, with the average free trial period in the United States increasing from three to six months. In Europe, that increase went from one to three years (think Polestar), and in China, a number of automakers are offering free-for-life connectivity (such as NIO and SAIC-GM).
ABI Research said the downside to this strategy is that the ratio of subscriptions paid by the final consumers will dwindle. They expect more than 70 per cent of active infotainment subscriptions to be offered on a free trial or free-for-life basis this year.
“Nevertheless, EVs could be the panacea for low connected services adoption by final users as they significantly improve ownership convenience,” said Bezerra.
ABI Research pulled its findings from its Connected Car Market Data report.
