New Jersey lawmakers want to ban automakers from charging subscription fees for built-in car features — just months after BMW’s move to charge a monthly fee for heated seats sparked outrage, according to a draft of a proposed bill.
The potential crackdown comes as car manufacturers increasingly look to build recurring revenue by nickel-and-diming customers for features that previously were previously included in cars, industry analysts say.
In one of the most most egregious examples, BMW recently began charging car owners in the UK, Germany and several other countries $18 per month to turn on their heated seats — a move that was pilloried online.
Toyota and General Motors are also making similar moves, with GM telling investors it aims to generate more than ten times as much subscription revenue in 2030 as it did in 2021.
Now, New Jersey Democratic assemblymen Paul Moriatry and Joe Danielsen have proposed banning the practice through a draft bill that would bar vehicle manufacturers and dealers from charging subscription fees for features that have already been installed in cars.
“Car companies are increasingly seeking to charge consumers a subscription fee to access certain features on their vehicles, such as heated seats, even though the components necessary for the feature to function are already installed on the vehicle at the time of sale,” the Garden State politicians wrote. “During this time of rising consumer prices, it is important to guard against business practices that primarily serve to increase corporate profits.”
If the bill were enacted, companies’ first violation would be slapped with a fine of up to $10,000 for their first violation, followed by fines of up to $20,000 for subsequent offenses.
Notably, the bill would only bar automakers from charging for features that “would function after activation without ongoing expense to the dealer, manufacturer, or any third-party service provider.” That appears to mean automakers could still charge for features like satellite radio, in-car wifi and maps with updated traffic data.
The bill would also likely exempt many subscriptions sold by Tesla, which charges thousands for its “Full Self-Driving” feature that receives regular updates and support from the automaker.
Still, the bill would represent a blow to an industry that analysts say is increasingly trying to mimic the subscription-driven business models of companies like Netflix.
“Most automakers in the last couple of years have started talking about generating huge increases in revenue over the next decade, primarily off the backs of software and other subscription services,” Guidehouse Insights e-mobility analyst Sam Abuelsamid told The Post in August.
Even before New Jersey lawmakers floated a potential subscription ban, Abuelsamid predicted that automakers will inevitably run into customers’ “subscription fatigue” — and said car companies are “fooling themselves” with plans for massive subscription businesses.
Only 25% of US car buyers would be willing to pay extra for subscription car features, according to a Cox Automotive survey from April.
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