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Illustration: Sarah Grillo/Axios

Carmakers typically make their money when they sell a car. Now, they're eyeing monthly service subscriptions as a way to turbocharge growth.

Why it matters: The auto industry is aiming to be more like the tech and telecom industries, hooking customers with services and downloadable features that improve over time and — most important — generate recurring revenues.

What's happening: Stellantis is the latest automaker to set huge growth targets from software-related services.

  • The European parent of brands like Jeep, Chrysler and Dodge said it plans to take in 20 billion euros ($22.5 billion) in annual revenue from entertainment, navigation and other subscription services by 2030.
  • General Motors plans to double its annual revenues to about $280 billion over the next decade, in large part from software and new services, as it shifts to electric, connected and autonomous vehicles.
  • Ford recently hired a former Apple and Tesla executive, Doug Field, to lead its software strategy and is looking for similar growth from connected vehicle services.

Driving the news: Stellantis, formed earlier this year by the merger of Fiat Chrysler and Peugeot SA, said it would spend 30 billion euros ($34 billion) through 2025 in a push toward software-based electric vehicles.

  • It plans to have 4,500 software engineers on staff by 2024, including 1,000 current employees who will be retrained.
  • Stellantis has 12 million connected cars on the road worldwide today, generating about $450 million in software-related revenue.
  • By 2030, it expects to have 34 million connected vehicles.

Details: Stellantis' current subscription revenue comes from services such as satellite radio and connected navigation services.

  • But the company sees other big revenue opportunities from such options as usage-based insurance or fleet-management services for businesses.
  • It can also charge for software upgrades that add extra horsepower, for example, or on-demand features to customize the in-car experience.

The bottom line: Some analysts project in-car software could be a $225 billion market by 2030.

Go deeper

Ben Geman, author of Generate
Jan 11, 2022 - Energy & Environment

Global race intensifies for EV raw materials

Illustration: Aïda Amer/Axios

A bunch of new developments highlights a wider trend: intensifying efforts by governments and corporations to secure key minerals needed for electric cars and other clean energy tech.

Driving the news: Tesla and Talon Metals announced a deal on Monday to supply the electric automaker with at least 75,000 metric tons of nickel concentrates from Talon's planned mine in Minnesota. The Star Tribune has details.

Supreme Court agrees to hear challenge to affirmative action at Harvard, UNC

Photo: Al Drago/Getty Images

The Supreme Court on Monday agreed to hear a pair of cases challenging the consideration of race in the college admissions processes.

Why it matters: The conservative high court's ruling could determine the future of affirmative action in higher education.

Europe's energy reliance on Russia is a crucial shield for Putin

Photo: Pavel Bednyakov/Sputnik/AFP via Getty Images

Cracks in the NATO alliance regarding sanctions for Russia should President Vladimir Putin order troops into Ukraine are in large part based on energy supply concerns.

Why it matters: Russia holds tremendous leverage over some European countries because it provides roughly 40% of Europe's natural gas supply. In Germany, this figure is greater than 50%.