Will Drivers Pay Extra For Software Upgrades, New Features? Sure, If Automakers Choose Wisely

Automakers have high hopes for making what some auto industry experts call the “smartphonization” of automobiles into a significant profit center — that is, profiting from the sale of new features and upgrades via over-the-air software updates.

That business model has some risks, but it’s an inevitable concept, says Moshe Shlisel, CEO of Israeli auto tech company GuardKnox, a specialist in cybersecurity.

Automobiles are following the same evolution as personal computers, laptops and smartphones, he says in a recent phone interview. People have come to expect all their electronic devices to be quick and easy to update and upgrade, and that’s coming to include their cars and trucks.

“The zero-time new generation has no time for waiting, or for reading. They need for everything to be right now, and that changes the way customers look at their vehicles,” Shlisel says. “The reason for that is, we stopped moving at speed of the Model T. Everything is broad-band.”

Having said that, “smartphonization” also includes some execution risks for automakers and suppliers, depending on how they apply the concept.

It can be a hard sell to charge for upgrades or apply a subscription-based business model, to features customers are already familiar with, like heated seats, Shlisel says.

Some automakers have talked about wiring all cars for heated seats, for instance, but only turning them on when customers pay for it. The appeal is supposed to be, you only pay for heated seats when you are likely to use them, for a few winter months each year, instead of paying for them when you buy the car, and only using them part time.

“Certain features, we got used to having them in vehicles,” Shlisel says. “Seat heaters, we’ve had since forever. Why take something from me, and ask me to pay for it? I don’t think that’s going to work. But the ability to update, to customize,” that’s a different story, he says.

People would be more willing to pay for software updates that provide “breakthrough” features as they become available, like greater performance or more range for electric vehicles, or for greater customization, Shlisel says.

“Say I decide I want magenta interior lights inside my car now. I don’t want to go to a shop, I don’t want to wait. Why? Because I want it,” he says. “And tomorrow, I’m going to use a different color.”