General Motors said it expects its in-car subscription services to generate nearly $2 billion in revenue this year and will reach as high as $25 billion by the end of the decade, an amount the company said Wednesday will put it in the same league as Netflix, Peloton and Spotify.
The automaker has 16 million vehicles on the road in the U.S. and Canada. About a quarter of those vehicles — 4.2 million — have owners that pay for subscriptions services today, Alan Wexler, SVP of innovation and growth at GM, said during a presentation at the company's investor event Wednesday.
GM expects that number to grow, especially as it gears up to launch its Ultifi end-to-end software platform in 2023 that will enable an enhanced subscriptions platform and over-the-air software updates.
GM's current subscription platform supports services like OnStar, a subsidiary of the company that provides in-vehicle security, emergency services and navigation.
The company said its customers' average willingness to select multiple services is high. GM conducted a study with several thousand customers, offering them 45 different feature and service options. On average, customers chose a bundle of 25 different products and services.
"Our research indicates that with the right mix of compelling offerings, customers are willing to spend $135 per month on average for products and services," said Wexler.
By 2030, GM predicts 30 million of its vehicles in the U.S. will have connected car technology, leaving it with a serviceable addressable market of $80 billion. Wexler said GM aims to generate additional incremental revenue of $20 billion to $25 billion, $6 billion of which will be from insurance and the rest from one-time purchases and subscriptions.
Other GM Investor Day news:
Aside from OnStar, GM intends to target customers interested in Maps+, an in-vehicle, app-based navigation solution that was rolled out in April and can be activated with Alexa voice control. GM also sees a big opportunity to earn revenue off of its commercial customers, specifically with its existing service, OnStar Vehicle Insights, that can help both GM and non-GM mixed fleets with fleet management.
"Just this service alone meets the needs of a massive market," said Wexler. "Hundreds of thousands of connected fleet vehicles with data from millions of trips, and hundreds of millions of miles, all of that data provides huge monetization opportunities. We stand apart for the scale of data that we have to work with, and we plan to leverage it."
Wexler teased more details and early KPIs on GM's subscriptions services, which he said would be "the bedrock for a growth opportunity and recurring revenue," for the company, with more news coming as soon as tomorrow.