By Richard Ward, Executive Director, American Vehicle Owners Alliance
It used to be that when you bought a car, driving it off the lot was where the transaction between you and the automaker ended. Beyond occasional repairs, car manufacturers counted on the one-time customer transaction for revenue until it came time to buy another one. However, today’s software-driven vehicles have since shifted that dynamic, as automakers invest heavily in marketing subscriptions, software, and connected services.
The Business Model is Changing
A recent Autoblog article illustrates the changing economics of the industry. General Motors says its software and connected-services business retains roughly 70 cents of every dollar it earns, compared with just 4 to 10 cents from traditional vehicle sales. In an earnings call earlier this year, the automaker described its subscription business as driving “exponential growth” in its business.
And it’s not the only one. Other automakers have introduced subscription-based features or software upgrades that drivers can activate after purchasing their vehicles. The practice provides a profitable source of revenue for manufacturers, but raises questions about who owns that data being sold back to the vehicle owner.
Paying for a Service Is Different From Paying for Your Data
There is an important distinction between charging customers for a new service and controlling access to information generated by a vehicle they already own.
Automakers invest billions of dollars developing software, connected technologies, and new vehicle features, and they should be able to sell those products to consumers who want them. But the underlying data generated when someone operates a vehicle is different. Location, mileage, battery health, diagnostic information, driving behavior, maintenance needs, and other vehicle-generated information come from the use of an asset the owner purchased.
As connected services become more important to automakers’ bottom lines, control over that underlying data becomes more valuable, too. If manufacturers maintain exclusive control over vehicle-generated data, they are not simply competing to offer the best-connected service. They can also control access to the information that other companies need to compete with them in ways that benefit vehicle owners.
Ownership Should Mean Choice
The consequences extend beyond whether a driver subscribes to a particular feature.
A vehicle owner may want to share diagnostic information with an independent repair shop. An EV owner may want to use a third-party app to monitor charging costs. A fleet operator may want another company to analyze vehicle performance and reduce downtime. As new services emerge, there will be uses for vehicle data that neither automakers nor policymakers have anticipated yet.
Buying a connected vehicle should not mean purchasing the physical car while leaving control of an increasingly valuable part of that vehicle with the manufacturer. Legislation like the DRIVER Act would restore data ownership to vehicle owners.
Congress should make sure vehicle owners control the data they generate, and innovators can compete to serve them.