Digital Transactions Authoritative, insightful and timely information for payments professionals
As digital transactions proliferate, technology is enabling automakers to do more than make it easy to pay for parking from a dashboard. Features that have been standard in many cars, such as heated seats, can now be a service fee away. Such software-related revenue is forecasted to grow at a 35% compound annual growth rate by 2034, says market-research firm IDTechEx.
Automaker BMW’s proposal earlier this year to charge a monthly fee for heated seats was ultimately dropped in the face of a consumer backlash. But that doesn’t mean similar fees won’t be assessed for other features.
With many cars equipped with modems, the wireless connectivity to turn them into a four-wheel vending machine is there, United Kingdom-based IDtechEx says in its new report, “Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies.”
“As OEMs seek to monetize software-defined vehicles, a key trend is the increased offering of subscription packages. OEMs are generating revenue from areas such as connectivity, tapping into the cellular data market, or autonomy as a service, often charging tens of dollars per month for ‘self-driving,’” IDTechEx says.
With a 35% growth rate, software-related revenue from cars could be worth more than $700 billion, it says. The average new-car buyer could be paying approximately $70 in monthly fees on software features, the report estimates.
In related news, Origence, a lending-technology company serving credit unions, says it is working with electric-car maker Tesla to offer credit-union financing to Tesla buyers. Financing offers will be available on the Tesla Web site.
Irvine, Calif.-based Origence says it also will employ its FI Connect subsidiary to purchase and place retail contracts with credit unions nationwide.
Tesla, which started producing cars in 2008 with the Tesla Roadster, built 1.37 million autos last year, up 47% from 2021, according to numbers compiled by Tridens Technology, a software-development company whose market includes electric-vehicle charging technology. Production through the third quarter has already nearly equaled that number, according to Tridens’ figures.
