Editorial Notes

Dear Reader,

to stay competitive with Tesla, incumbent carmakers are spending tens of billions of euros to develop vehicles that are electric and software defined. The spending is welcome, but it is long overdue. In an attempt to rationalize those belated investments, a number of carmakers have been promoting to investors the expectation that much of that spending will be returned by annually selling tens of billions of euros' worth of software-enabled features and subscriptions to customers throughout the vehicle's life.

For example, Stellantis says it will have 34 million "monetizable connected cars" on the road globally by 2030 that will generate 20 billion euros in annual revenue. That's 588 euros per car, per year for services, subscriptions and features on demand, post-sale.

New cars are already unaffordable for many. According to Kelly Blue Book, the average price for a new car in the U.S. in December 2021 was 47,077 U.S. dollars (41,549 euros). The average price has risen by 11,321 U.S. dollars (9,991 euros) since 2018, largely due to Covid and the resulting chip shortages and supply-chain issues. Once Covid is behind us, prices are likely to decline. Still, it is very unlikely that many consumers will want to spend hundreds of dollars (or euros) each year on top of their already expensive new car purchase.

Sincerely, Yours

figure 1

Paul Hansen

Editor