Consumers complain about paying for additional features installed on their vehicles.
Despite uncertainty over the bill's passage, consumer opinion and industry business strategies remain influential.

A bill has been introduced in the United States to ban subscription services for hardware installed in automobiles.

According to the Korea Automobile Research Institute (KARI), in September, Paul D., a Democratic member of the House of Representatives from New Jersey, Moriarty and Joe Danielsen have introduced legislation that would ban some subscription services for car features.

This bill allows subscription-based SW services such as connectivity-related services and ADAS that require continuous updates from the manufacturer, but prohibits subscription-based HW functions that do not require continuous investment from the manufacturer.

Automakers are increasingly attempting to introduce subscription services for various vehicle functions.

Automakers are introducing subscription services for various driving and convenience-related functions, taking advantage of the advantage of securing continuous profits even after vehicle sales.

In-vehicle subscription services are broadly divided into SW services related to autonomous driving and connectivity and HW function-related services.

SW services include autonomous driving or ADAS that require continuous updates, real-time traffic information provision and media streaming, and vehicle management through remote control.

Tesla, Volvo, GM, and others are offering or plan to introduce subscription-based autonomous driving-related services.
Tesla provides 'Full Self Driving (FSD)' with Level 2 autonomous driving function, navigation and music media streaming service as SW subscription service, and Hyundai Motor Group also provides Hyundai's 'BlueLink' and Kia's 'UVO' with remote control, streaming, and telematics service.

According to Tesla's website, the Basic Autopilot to FSD capability subscription service costs $199 per month.

Hyundai's BlueLink is free for 5 years upon initial subscription after vehicle purchase, and after the free period ends, it is available only with the customer's consent. It changes to paid.

HW service is a service in which automobile manufacturers control functions that are already installed in the vehicle when it is manufactured, such as heated seats and steering wheels, based on whether or not the consumer subscribes to them.

BMW provides heated seats and steering wheel and high beam assist system as HW subscription services, while Mercedes-Benz provides rear-wheel steering system and a function to increase maximum motor output by 20-24% for electric vehicles in the US.

According to BMW, heated seats and steering wheel features are available for $18 per month, $180 per year, and unlimited use for $415.

The spread of subscription services is not always well-received by consumers.

In its Industry Trends Vol. 92 report published in April, Hanjayeon reported that if functions related to automobile safety, such as ADAS, are introduced in the form of subscription services, there is a possibility that negative perceptions of “selling safety” will spread, regardless of the economic feasibility of the service, and consumer complaints may arise.

Recently, some European automakers have been converting pre-installed hardware functions into subscription services, which has become an issue, and the issue of 'consumer acceptance' can be seen as becoming a reality.

A bill to limit subscription services has been introduced in New Jersey, US, as consumers accustomed to outright car ownership complain about paying extra for features already built into their vehicles.

However, there is an exception for those who sell separately to permanently activate pre-installed HW functions.

The bill targets vehicle manufacturers and dealers and includes fines of up to $10,000 for first-time offenders and up to $20,000 for repeat offenses.

Hanjayeon said that although it is uncertain whether the bill will pass, it is based on consumer opinion and industry business outlook.It was reported that the ripple effect is expected to be significant.

If the bill passes the committee meeting in December, it could influence public opinion both domestically and internationally, and could influence the business direction of the automobile industry, which is pursuing a subscription-based service for hardware.

Because the bill also ties into New Jersey's Consumer Fraud Act, its outcome is expected to clarify collective understanding of whether hardware subscription services are, in principle, consumer fraud.

If the bill passes, negative perceptions of HW subscription services will spread beyond New Jersey, so automakers that have been planning HW subscription services will likely have to change their business direction.

However, as this is currently only a bill proposed within the state of New Jersey, it is necessary to continuously monitor the direction of future discussions.

This case illustrates the industry's struggle to explore the potential of automobiles as a service platform.

Some in the industry have been anticipating the early arrival of the era of fully autonomous driving and anticipating that cars combined with autonomous driving will transform into new service platforms.

Meanwhile, with the timing of the advent of fully autonomous vehicles uncertain, the number of new services being introduced into vehicles by automakers is limited, with the exception of software services that require collaboration with other industries.

Han Ja-yeon said, “As consumers become accustomed to services that connect their smartphones to their cars, such as Android Auto and Apple Carplay, services led by automakers are narrowing down to areas directly related to the cars themselves,” adding, “The New Jersey state bill issue is seen as an example of the auto industry’s struggle to secure a sustainable source of income after vehicle sales.”