Connected Cars Transform Ownership Into Subscription
4.663 trillion dollars. That’s the size the global software-defined vehicle market will reach in 2035, compared to 278 billion today. This multiplication by 17 in ten years reflects far more than the rise of a technology: it consecrates a legal revolution that redefines what it means to own an object.
Buying a car no longer guarantees access to all its functions. Embedded software now conditions the use of hardware you have nonetheless paid for in full. This shift transforms physical ownership into a revocable usage license, according to an economic model spreading rapidly across the entire automotive industry.
The Essentials
- The software-defined vehicle market jumps from 278 billion dollars in 2025 to 4.663 trillion in 2035, a compound annual growth rate of 32.56%
- BMW, Tesla and Mercedes already charge for activation of functions physically present in their vehicles
- The European Union is preparing legislation on the “right to repair” that would include access to automotive source code
- China is developing its own connected vehicle standards to avoid dependence on Western technology
BMW Monetizes Seat Heating You Already Paid For
The Bavarian automaker now charges 18 dollars per month to activate seat heating in its new vehicles. The physical equipment is installed at the factory on all models, but its operation depends on a software subscription. This practice, generalized since 2022, is progressively extending to adaptive headlights, parking assistance, and even engine performance.
Tesla pushes this logic even further. The American automaker sells “limited” versions of its vehicles, then offers paid upgrades to unlock full power or maximum battery range. Owners of Model S can purchase an “acceleration boost” for 2,000 dollars, which merely activates via software components already present.
Mercedes-Benz has been testing since 2023 a subscription system costing 1,200 dollars per year to improve acceleration of its EQS and EQE electric vehicles. The additional power comes from the same electric motor, simply “unlocked” by a software update. This practice divides the industry: Stellantis announced it would not follow suit, arguing that “customers who buy the hardware must be able to use it in full.”
Automakers Transform Their Cars Into Permanent Profit Centers
This evolution responds to a pressing economic necessity. Margins on traditional internal combustion vehicles are eroding: they reach an average of 7% among European automakers versus 15% ten years ago, according to McKinsey data. Electrification further squeezes this pressure, with battery costs representing 30 to 40% of the final price of electric vehicles.
Software services offer incomparably higher margins. Ford estimates that each connected vehicle can generate up to 20,000 dollars in additional revenue over its lifetime, primarily through subscriptions and on-demand services. General Motors aims for 25 billion dollars in annual revenue from software by 2030, equivalent to selling 1.5 million vehicles.
This financial mutation accompanies a profound industrial restructuring. The global industry facing a hemorrhage of expert know-how shows how automakers are massively recruiting software engineers at the expense of traditional mechanical trades. Volkswagen now employs more than 10,000 internal developers, as many as some major European technology companies.
China Develops Its Own Standards to Avoid Dependence
Beijing refuses to let Western standards dominate this strategic market. The Chinese government launched in 2024 the “Smart Vehicle OS” program aimed at creating a 100% Chinese automotive operating system by 2028. BYD, Geely and SAIC are collectively investing 15 billion dollars in this initiative, supported by Alibaba and Tencent for cloud components.
This strategy of technological autonomy is already bearing fruit. Chinese vehicles integrate Mandarin-speaking voice assistants developed by Baidu, native WeChat Pay mobile payment systems, and Baidu Maps optimizations designed for autonomous driving. NIO even offers an automated battery swap service in 3 minutes, transforming energy autonomy into on-demand service.
Europe is attempting to fight back with the “European Cloud for Automotive” project endowed with 8 billion euros, but it starts with considerable lag. European automakers already depend heavily on Google (Android Automotive), Amazon (Alexa Auto) or Microsoft (Azure) solutions for their connected services. This dependence worries Brussels, which is preparing regulations on automotive digital sovereignty for 2026.
The European Union Prepares an Expanded “Right to Repair” Including Software
The European Parliament is currently examining an extension of the right to repair that would include access to vehicle source code. This legislation, championed by French Member of Parliament Chrysoula Zacharopoulou, aims to prevent automakers from rendering their vehicles “non-repairable” through software lockouts.
The directive proposes that vehicle owners be able to access diagnostics through standardized interfaces, without going through official manufacturer networks. It would also require that critical safety functions remain activated even in case of non-payment of ancillary subscriptions. BMW and Mercedes firmly oppose this project, arguing that opening source code would compromise security and intellectual property.
European consumer associations broadly support this initiative. The Test Achats organization calculated that a BMW owner could pay up to 4,800 euros extra over ten years to access all functions already installed in their vehicle. This “software tax” sometimes represents 15% of the vehicle’s initial purchase price.
The legal battle will be decisive for the future of the automotive economic model. If Europe imposes its standards, it could force global automakers to reconsider their subscription practices, as it did with GDPR for personal data protection.
Tech Giants Capture the Value of Connected Automobiles
Google, Apple and Amazon position their systems as unavoidable software layers between automakers and their customers. Android Automotive already equips more than 40 million vehicles worldwide, collecting driving data that Google monetizes through its advertising network. Apple CarPlay generates revenue through its automotive App Store, taking 30% on every transaction made from the vehicle.
This value capture reproduces the economic model of smartphones. When three percent of paying users support a trillion dollars in spending shows how a minority of users finances an entire digital ecosystem. In automobiles, this logic transforms drivers into a source of recurring revenue far beyond the initial vehicle purchase.
Amazon is developing Alexa Auto to transform trips into commercial opportunities. Its voice assistant can order products, book restaurants or schedule home deliveries, taking a commission on each transaction. This commercial integration redefines the vehicle as a mobile point of sale rather than simply a means of transport.
The Model Extends Beyond Automobiles
This transformation of physical ownership into usage license spreads across the entire industry. John Deere now charges subscriptions for the use of certain functions on its tractors. Apple makes certain iPhone repairs impossible without software validation by its services. Tesla remotely controls the battery range of its used vehicles.
This evolution accelerates with the rise of the Internet of Things. McKinsey estimates that 75 billion connected objects will be in circulation by 2030, each potentially subject to evolving software usage conditions. Samsung refrigerators can already restrict certain functions in case of non-payment for their connected services.
The boundary between ownership and rental gradually blurs. Owning a physical object no longer guarantees control over its use. This shift raises unprecedented legal questions about consumer rights over goods they have purchased but no longer control the functioning of.
Connected automobiles are merely the laboratory for this broader transformation. Its commercial success will determine whether our industrial civilization shifts toward a model where ownership becomes subsidiary to subscription.