It’s time to rethink the Software-driven mobility value proposition from the customer’s perspective

As I prepare for IAA Mobility 2025, I’m reflecting on a growing tension in the automotive world: With the move to SDM, OEMs are expecting a big share of their revenues to come from services in the near future – but realizing their predictions looks challenging right now.

Automakers haven’t been reticent about announcing their multi-billion-dollar revenue ambitions for subscription services. According to one projection, per-vehicle revenue could amount to $1,600 annually by 2035. Another projection suggests that the global market for connected car solutions will total almost $150bn as soon as 2030.

Some of the individual company estimates that go to make up these projections look a tad optimistic to me. Don’t get me wrong – I agree that software-enabled subscription services are going to represent a major slice of OEMs’ future business. But I also believe that the industry urgently needs to adjust its approach if it is to realize the full potential here.

The mounting cost of vehicle ownership

The fact is that the cost of car ownership has become a nightmare for many drivers, who face monthly payments, EV charging surcharges, subscription-based features, maintenance costs, and more.

The rise of “subscription fatigue”

With all these costs stacking up, the vehicle that was once a symbol of freedom can now feel more like a bundle of recurring fees. As a result, customers are likely to be very selective about the in-car services they will pay for. A recent S&P study suggests that willingness to pay for connected car services has declined from 86% to 68% since 2024. Here’s some anecdotal evidence of this trend from me. I’ve recently unsubscribed from a self-driving service for one of my cars. The cost of the subscription just doesn’t seem worthwhile for the amount I use the service. On the other hand, I might have been willing to buy this service for individual journeys, or to subscribe if I could take it with me from one vehicle to another – but the vendor just doesn’t offer that flexibility.

So “subscription fatigue” is a thing – and not only in the context of driving, incidentally. Someone has even come up with a service for getting rid of unneeded (and, in my experience, often forgotten) subscription services.

What this means is that revenues from in-vehicle services can’t be taken for granted. True, some digital natives are already making money in this area, but probably not as much as they expected. That’s true even of those companies that prohibit the use of third-party apps in their cars, something which most OEMs don’t intend to do.

Let’s rethink the proposition from the customer’s perspective

For OEMs hoping to make money from subscription services, the message here is that customers are only likely to be willing to pay for services that they think are going to save them money, or that they will value for some other reason.

So what do OEMs need to do to unlock the service revenues they are relying on? In my view, SDM has to be approached from a customer-centric perspective, not a vehicle- or product-centric one.

Specifically, carmakers need to offer services that genuinely alleviate customer pain points, coupled with service delivery models that are flexible enough to suit every customer. Fortunately, software-defined vehicle (SDV) architecture is ideal for providing that type of flexibility.

OEMs just need to have the will to do it, which means taking on board that services must be delivered to benefit the customer as well as to generate revenue. Who knows – OEMs could even help customers with their subscription fatigue, instead of contributing to it.

Let’s look at what’s involved in practice. It’s helpful to think about this in terms of three strategic initiatives: Reimagine the value proposition around the customer, work with the delivery ecosystem, and optimize the quality of software and the human-machine interface (HMI).

1.    Reimagine the value proposition around the customer

Too often, SDV initiatives focus narrowly on pushing over-the-air (OTA) updates to cars. While OTA is a powerful enabler, it’s not the purpose of SDVs – it’s a tool, and we need to think carefully about the real reasons for using it.

In my opinion, SDVs should:

• Serve the customer’s immediate needs with flexible, personalized experiences

• Future-proof the vehicle, enabling it to evolve in line with technology and lifestyle
• Reduce total cost of ownership, not inflate it through endless monetization

The current model – hefty upfront cost plus recurring subscriptions – should be replaced by new models. For example, customers could pay a lower base price and a subscription for premium features. Or, even better, there could be a standard base price and then pay-as-you-use microservices.

With those models, customers could pay for vehicle features only when they’re being used, rather than for having them available all the time.

This approach shifts the focus from monetization to value creation, making mobility more customer-centric and affordable.

2.    Work with the delivery ecosystem

OEMs can’t achieve this shift of perspective on their own. They’ll need to share the task of delivering customer-centric and affordable services with their ecosystem of suppliers and other partners.

That could happen through smarter partnerships across tech, insurance, and infrastructure, balanced risk-sharing models, and the use of open platforms and APIs to enable innovation at scale.

3.    Optimize software and HMI quality

Trust is essential to securing customer buy-in for SDM, and that kind of trust is heavily dependent on the quality of software and of the HMI. People may forgive a glitchy mobile phone app, but they’re not going to accept glitchy in-vehicle software.

So the quality of software and SMI is now a customer experience imperative. It demands:

• Intuitive, responsive HMIs that adapt to user preferences
• Consistent performance across updates and environments
• Rigorous testing and validation to ensure reliability and safety
• Security and privacy baked into every layer of the software stack

Summing up

I hope I’ve convinced you that SDM needs to be reframed in terms of serving customers, not just increasing company revenues. Services need to be so valuable to customers that they’re seen as a welcome necessity, rather than a luxury. And the delivery model needs a rethink so that customers feel they’re getting value for money.

For those that get this trick right, the rewards will be substantial. The connected car market is predicted to be worth more than $500bn by 2033. If it reaches even a fraction of that, OEMs will be pleased they made the effort to serve, not just monetize, customers.

Join me at IAA Mobility to explore in-vehicle service quality optimization

Are you headed for IAA Mobility 2025? Along with our collaborator Profilence, I’ll be hosting a lunchtime session that’s very relevant to the quality angle on customer-centric SDM. We’ll be demonstrating how AI-powered data analysis can add stability and responsiveness to in-car services – an approach we’ve implemented across 17 infotainment programs.