Why Stellantis expects big profits from subscription services

GM CEO Mary Barra said in August that she believed the company would make as much revenue from its software as it did from vehicle sales ten years from now. Today, Stellantis CEO Carlos Tavares didn’t go that far, but said Stellantis intends to generate more than $ 22 billion in annual revenue from software by 2030. Tavares speaks revenue from subscription services that you would use, for example, in your Ram 1500. The business would earn money from services like navigation, real-time tracking, and on-demand features.

Tavares was speaking at Stellantis Software Day, where he presented his future plans for connectivity, electric vehicles and the promotion of autonomous vehicles. Stellantis is investing approximately $ 34 billion to accelerate its software development and electrification through 2025. Stellantis intends to have 34 million vehicles on the road by 2030 that are connected and capable of receiving power. over-the-air updates. This connectivity is essential in order to be able to monetize subscription services.

New partnerships to accelerate growth

Stellantis also announced new partnerships with companies such as BMW, Foxconn and Waymo. The alliances will help the company accelerate its progress towards autonomous vehicles and connectivity, while helping to ensure the availability of microchips. The company is also investing in three new AI-powered platforms that it will use from 2024. Platforms called STLA Brain, STLA SmartCockpit and STLA AutoDrive are expected to transform the way drivers and passengers connect to their vehicles.

“Our electrification and software strategies will support the change to become a sustainable mobility technology company to lead the pack, leveraging the business growth associated with live features and services and delivering the best experience to our customers. customers, ”said Carlos Tavares, CEO of Stellantis. “With the three all new AI-powered technology platforms arriving in 2024, deployed across all four STLA vehicle platforms, we will leverage the speed and agility associated with decoupling the hardware and software cycles. . “

Stellantis’ software strategy is programmed to coincide with the company’s vehicle electrification plans. The company says more than 40% of vehicle sales in the United States will be low-emission vehicles (LEVs) by 2030. Each of the company’s 14 brands are committed to providing fully electrified solutions.

Stellantis sees enormous potential for growth and profit in:

  • Services and subscriptions
  • Features on demand
  • Data as a service and fleet services
  • Vehicle price and resale value
  • Conquests, service retention and cross-selling

Stellantis will also launch its own insurance program based on the use of the vehicle by the driver. Call me cynical, but I bet this is also based on the data the company collects on speeding tickets and the detection of any accidents.

Faster update and lower maintenance costs

Live updates save the business and the customer time and money. Being able to update the software, especially if there are software issues, without bringing the customer back to the dealership is a win for the customer and the automaker. The new platforms will make AI-powered applications, such as navigation, voice assistance, e-commerce marketplace, and payment services, easier and more manageable. Imagine live updates that can deliver upgrades like more horsepower or better fuel mileage without having to go back to after-sales service.

The increase in connectivity will be huge when it comes to the entertainment offerings available. Parents will pay dearly to entertain their children on long journeys. Having access to the latest movies and entertainment on demand could be a huge revenue generator. Likewise, navigation services will be essential for people who use their Ram 1500 as an office. Companies that own truck fleets will find fuel tracking and fleet maintenance invaluable.

Stellantis is recruiting software engineers

To achieve the rapid growth it wants in software, Stellantis has announced plans to have 4,500 software engineers worldwide by 2024. Stellantis plans to retrain 1,000 engineers who already work for the company. . In addition, it will develop a Software Academy to continuously update the training. Engineers will operate from hubs, but the company is not saying where they will be located.

It makes sense that all automakers are turning to software solutions rather than relying on in-vehicle hardware. All of the major automakers have been burnt by the rapid development of technology. There are older versions of Sync and Uconnect which cannot be easily updated, older radios which cannot be updated with Sirius. It doesn’t take long for the equipment to be as obsolete as tapes and CDs. Streaming services like Apple TV, Netflix, Hulu, and Paramount + have dramatically changed television and made huge profits. Likewise, subscription services are poised to radically change vehicle ownership.

Photo by Stellantis

Follow Mary Conway at @maryconwaymedia and send him automotive news tips for future stories.

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