[Carplaytion Era] New Market vs. Sales Tactics... Contrasting Views on Option Subscription

A technician is monitoring a self-driving taxi developed by China's Baidu.

[Asia Economy Reporter Choi Dae-yeol] As vehicles become increasingly 'electrified,' various software services are gaining attention as products. In the past, cars were treated as machines where hardware specifications were paramount, but now they are recognized as rolling electronic devices, making performance improvements through software possible.

Especially after future automotive technologies like autonomous driving and connected cars become widespread, the industry expects a market where continuous revenue can be generated from a vehicle even after a one-time sale by combining subscription services. Conversely, from the buyer's perspective, this means ongoing expenses, unlike in the past. Consumers inevitably feel that the cost of owning a car is increasing.

According to the industry on the 1st, to use Tesla's autonomous driving technology, Autopilot, customers in Korea must pay an additional approximately 4.5 million KRW when ordering a new car. Adding extra features can push this over 9 million KRW. In the U.S., this service is also available via a subscription model costing $99 to $199 per month. This option's price has even increased this year.

Subscription services have recently become a trend across the entire finished vehicle industry. Hyundai, Genesis, and Kia are applying connected services that allow simple vehicle control to new cars. Users can check vehicle status or control basic functions like ignition and air conditioning through an application. These services are free for five years after purchasing a new car, but thereafter, continuous payments are required.

Tesla Model 3

General Motors has settled on offering its semi-autonomous driving system, 'Ultra Cruise,' currently under development for release next year, as a subscription service. U.S. electric vehicle startup Rivian anticipates additional revenue of about $15,000 per vehicle from software services including autonomous driving, infotainment, and diagnostic functions. There are also cases where such features are combined with vehicle hardware. Mercedes-Benz introduced a service for some regions where, for an additional subscription fee, the rear-wheel steering angle is increased on new electric vehicles.

This trend has become possible because not only simple convenience devices but also overall vehicle functions such as driving can now be operated and controlled via software. As the manufacturing method of automobiles changes from the past, a new market has emerged. For automakers, it used to be limited to adding some specifications when selling cars, but now they have a solid 'channel' to continuously sell products even after the sale.

The industry expects the market size to grow significantly in the future. According to recent analysis by the Korea Automotive Technology Institute, if about 30% of vehicles subscribe to autonomous driving, connectivity, or gaming services, it is estimated to generate revenue of $118 billion (approximately 153 trillion KRW).

This exceeds the combined annual operating profits of 12 global automakers, including Tesla, which total $109 billion (approximately 141 trillion KRW). This figure includes only some of the currently used subscription services and does not account for the value of user data obtained based on these services. This is why automakers emphasize software competitiveness.

Consumer reactions are mixed. Some see it as an opportunity to choose customized options according to personal preferences or to use services flexibly as needed. On the other hand, some believe it is inappropriate to bear additional costs after already paying a high price for parts necessary to implement advanced features.