Software-defined vehicles (SDVs) – literally, cars that run and add new features primarily through software updates – are quickly changing the automotive landscape, unlocking possibilities that were unthinkable a decade ago. Pushing software updates to vehicles over the air (OTA), a technology pioneered by Tesla, is becoming mainstream now as electric vehicles – which enable the highest integration with software-defined tech – are gaining ground.
Audi, for example, is reportedly looking to expand the range of features available "on demand" in its next-generation vehicles, Audi's technical development chief Oliver Hoffmann told Autocar.
"With our next generation of electronic architecture, we will bring more offers to 'function on demand' and you will see year by year we will bring new functions in the cars," Hoffmann said.
This announcement is hardly surprising. After all, besides adding new functions to cars like autonomy upgrades and better battery management, OTA software updates also mean that carmakers can offer subscription-based features that provide recurrent revenue; a holy grail for any business. While consumers don't seem to be big fans of this practice – BMW recently dropped plans to charge $18 a month for heated seats in Germany after customer blowback – automakers are still pushing for it.
But Hoffmann claimed that Audi's decision comes in response to customer demand (!) and is not driven by the desire to significantly increase profit margins.
"This is a [big] step. I think there is a demand from the customer to bring new functions in the car, and this is a profit pool for us – but we don't see these revenue pools with this kind of functionality," Hoffmann added. He did not say which on-demand features Audi plans to introduce, but he noted that this sort of thing will be "quite normal in the future."
It's certainly true that customers want new functions, but we are highly skeptical that they want to pay monthly fees for them. In fact, surveys consistently show that the idea isn't popular with customers, perhaps because household budgets are already squeezed by just about everything else. Even streaming TV costs are on the rise. Automakers will have a long way to go to prove that monthly car features will be worth the cost.
Currently, only the Audi e-tron and e-tron Sportback models – recently renamed Q8 e-tron and Q8 e-tron Sportback for their mid-cycle facelift – offer on-demand features, but other models will get them in the future as well.
Subscription-based features available in Audi's two electric SUVs include light animations played by the headlights and taillights when locking and unlocking the vehicle, an auto high-beam function, and automated parking.
Customers can add these features simply by using the myAudi app. Since the vehicles have the features built-in – they're just locked – there's no need for additional hardware or a visit to the local dealer.
Downloadable features are expected to generate major revenues for automakers in the coming years. Stellantis has said it expects software features to bring in $22.5 billion in income by 2030, for example. And Hyundai has said it wants these to make up some 30% of future profits.
It will be interesting to see how consumers are going to react seeing as few people are actually willing to pay extra for a capability that is already built into a vehicle, such as heated seats or the acceleration increase Mercedes-Benz is offering for the EQE and EQS sedans and SUVs in the United States.
Some customers have jailbroken their cars and unlocked the features for free, though that's entering a grey area that may put the safety of a vehicle at risk, not to mention the manufacturer warranty.
What's your take on carmakers' plans to introduce an increasing number of on-demand features to their cars? Drop us a comment below.
Hat tip to The Drive
