STOCKHOLM: BMW veered into a public-relations mess this year when it started charging car owners monthly subscription fees to warm their behinds. Volvo Car won’t be making similar moves.
“If you are to charge for software updates, it must be a step change in consumer benefit,” Volvo’s chief operating officer Björn Annwall said in an interview this month.
“We will not ask people who have bought a car for 1 million kronor (US$96,500) to pay another 10 kronor to get extra heat in the seat.”
While BMW will no doubt have other manufacturers follow in its footsteps – Mercedes-Benz recently started asking buyers of its EQ electric vehicles to fork over US$1,200 a year to unlock quicker acceleration, for example – the auto world has started to second-guess just how much money there is to be made from the rise of software within their hardware-intensive business.
In a 91-page deep dive into the topic last month, analysts at UBS pegged the total addressable market at US$700 billion by 2030. That’s no pittance, but pales in comparison to the US$2 trillion opportunity they anticipated previously.
Annwall sees Volvo generating little additional revenue from software until mid-decade. Only if major upgrades become available – a self-driving mode, for example – would Volvo charge extra.
“You don’t have to hold the steering wheel – now that’s a step change in user benefit.”
Annwall was speaking at the opening of Volvo’s new tech hub here, where the manufacturer builds software for selling and marketing cars online.
The company, which last month unveiled a battery-powered sport utility vehicle to succeed its gasoline-era flagship, intends to cease making combustion cars by the end of the decade.
It’s going to be an uphill push: EVs made up just under a fifth of the company’s shipments last month.