General Motors has been pulling a Tim Cook and boosting its software and subscription business.
During the automaker’s Tuesday earnings call, CEO Mary Barra highlighted the rapid growth of GM’s in-vehicle software and subscription business.
In the past nine months, GM’s software generated $2 billion, and customers have already signed up for about $5 billion in future subscriptions.
The company said it now has 11 million subscribers for its OnStar safety system, up 34% from a year earlier. Another half a million customers are also paying for Super Cruise, its hands-free driver-assistance system.
Now, that’s still just a fraction of its total revenue, which was $45.29 billion in the last quarter alone. But the margins on those services are also higher than on cars sales.
GM says its software business keeps roughly 70 cents of every dollar it brings in. That’s a rare level of profitability in the auto industry, as many car sales generate just four to 10 cents per sales dollar.
“We are also executing plans to grow software and services like OnStar and Super Cruise to generate even greater revenue during and after each vehicle sale,” Barra said on the call. “We think there’s a growth opportunity there with very attractive margins.”
GM
“Software and services are becoming increasingly important to how customers experience GM vehicles and how we deliver value beyond the initial purchase,” a spokesperson told Business Insider.
The company also said it will keep adding features and services to vehicles over time, rather than relying on hardware upgrades.
“As vehicles become more software-defined, we can introduce new digital experiences through updates and optional services rather than hardware changes,” the spokesperson added.
The subscriptions push comes as automakers look for new ways to make money after cars leave the dealership lot — especially as Detroit automakers roll out new electric vehicles.
EVs typically need less maintenance than gas-powered cars, cutting into the repair and service work that has long been a reliable profit engine for dealerships and manufacturers alike.
GM has structured its subscriptions to ease customers in. OnStar Basics is included with 2025 and newer GM vehicles at no extra cost, bundling safety features, navigation, and audio apps for up to eight years.
Paid subscriptions come later. GM charges $19.99 a month for Connect Plus, which provides in-car internet access, and $39.99 a month for Super Cruise, its hands-free, eyes-on system. Driver assistance is free for the first three years.
GM isn’t the only automaker leaning into its subscriptions business.
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This month, Tesla said it would discontinue the $8,000 option to buy its self-driving software, called Full Self-Driving (Supervised), outright. After February 14, owners must pay $99 a month for the service — a price point Elon Musk said will increase as the technology gets better.
Ford’s highway-assist feature — called BlueCruise — costs $49.99 a month, $495 for a year, or $2,495 for the car’s lifetime.
Mercedes-Benz and BMW also offer self-driving upgrades on some of their new vehicles.
But for GM, America’s best-selling car company, profits from the new subscriptions could be a boon. Wall Street was pleased with the automaker’s earnings report, sending the company’s stock up 8.8% in the hours after the earnings call.
“This is playing out as a software story GM first told us about in 2021,” David Whiston, an analyst at Morningstar, told Business Insider. “If they can do other software as a fee, plus data to local governments on traffic and accident risk, there’s real potential for revenue streams at margins impossible to reach via just selling a car.”
