Automotive OEM Restructuring for Data Monetization and Innovation - Part 3

Automotive OEM Restructuring for Data Monetization and Innovation - Part 3

In Part 1 of this series, we explored how automakers globally — from Volkswagen and Mercedes-Benz to Tata Motors and Mahindra — spent the past decade reorganizing themselves into software-first, data-driven mobility companies. This shift redefined vehicles as upgradable platforms, positioning software and data at the core of future monetization.

In Part 2, we peeked into the execution: how OEMs decide what software and data capabilities to build internally versus source externally. We brokw down each OEM’s evolving architecture — from cloud stacks and simulation environments to digital platforms like MB.OS, Ultifi, and Arene. We examined how these strategic choices impact traditional suppliers, niche vendors, and big tech players, and we surface the new organizational designs, sourcing models, and innovation cultures taking root inside legacy auto giants.

Here we examine the evolving monetization models.

New Monetization Models: Data as a Product and Subscription Services

A driving force behind internalizing software and data is the pursuit of new revenue streams. Historically, automakers’ business model ended at the vehicle sale (plus after-sales parts/service). Now, with software-defined vehicles, OEMs plan to continuously monetize the vehicle’s lifespan. Key monetization models emerging include:

Subscriptions & Feature-on-Demand: Virtually all OEMs are introducing subscription features. These range from infotainment services (e.g. premium connectivity, streaming apps) to functional upgrades. General Motors’ Super Cruise is offered as a subscription after any included trial. BMW launched subscriptions for options like adaptive cruise or even heated seats (controversial, but it shows the intent to turn one-time hardware features into recurring revenue). Mercedes plans subscription packages for advanced Drive Pilot automated driving and other performance boosts (they already charge an annual fee to unlock extra rear-wheel steering angle on the EQS). Hyundai explicitly mentioned offering FoD software upgrades via its new platforms by 2025. Importantly, by owning the software platform, OEMs can implement these paywalled features securely. The projected revenue is huge: GM expects $20–25B/year from subscriptions by 2030, which includes services like OnStar, entertainment, and feature unlocks. This is a high-margin revenue source that justifies the upfront investment in software development.

Data-Driven Services & Marketplaces: Car data itself can be monetized in aggregated form. For example, vehicle usage data for insurance – GM and Toyota now have their branded insurance leveraging driving behavior data (turning data into insurance premiums). Traffic and mapping data – many OEMs anonymize and sell traffic flow data to mapping services or municipalities (HERE, co-owned by OEMs, is partly a vehicle to monetize aggregated sensor data from millions of cars). Predictive maintenance and ads – OEMs can use data to alert a customer of needed service or even direct them to dealers (some may take a cut or use it to boost parts sales). By internalizing data platforms, OEMs treat these datasets as a product they can sell or leverage in partnerships. For instance, BMW CarData (launched 2017) enabled customers to share telemetry with third parties – e.g., usage-based insurers – with BMW acting as the intermediary to ensure privacy and get a slice. Similarly, Stellantis’ PSA division had a program selling aggregated car data to smart city planners and parking app developers. Now with unified cloud platforms, automakers are formalizing these data businesses.

App Stores and Developer Ecosystems: Several OEMs are launching their own in-car app stores (MB launched one in 2023, Stellantis and Renault announced ones for 2024). This means third-party developers can sell apps (gaming, entertainment, even productivity) to car owners, with the OEM taking a revenue share – exactly the smartphone app store model. To attract developers, OEMs had to build modern software platforms and offer SDKs – which they have now started to do (Ultifi will have an SDK for developers; MB.OS announced it’s “open for partners” and we saw them bring TikTok, Zoom, etc., into their vehicles via partnerships). In the future, a popular app or service in a car (say, a new parking-finder or a vehicle personalization app) could generate significant commission revenue for the OEM hosting the ecosystem. This approach only works if the OEM controls the infotainment stack (hence the move away from Apple/Google phone projection).

Personalization and Upgrades: Data allows the product itself to evolve and for OEMs to charge for personalized experiences. For example, Tesla (not an OEM in our list, but a pioneer) charges for acceleration boosts via software unlock. Now legacy OEMs follow: Mercedes talked about charging $1,200/year for an acceleration increase on certain EV models via software – effectively monetizing performance that’s enabled by software tweaks. Personalization data (knowing a driver’s preferences) could also feed into cross-sell opportunities – e.g., recommending accessories or partner services at the right time. If the car knows you often drive to ski resorts, maybe the OEM’s app store suggests a paid app for real-time snow chain recommendations. These are speculative but plausible uses of data as product.

Mobility Services and Platforms: Some OEMs have tried to monetize beyond the car altogether by using their software/data expertise. Toyota’s Woven City (if realized) would produce data that could lead to urban solutions Toyota might monetize. VW has a related project with its Moia rideshare (capturing mobility data to possibly sell optimization algorithms). While many early mobility service bets (car sharing, ride-hail alliances) didn’t yield big profits, the strategic value was in learning to handle software and user data – which fed back into vehicle development. Now, with SDV capabilities, an OEM could deploy, say, a fleet management platform for corporate customers (monetizing data and software know-how as a service).

Advertising and E-Commerce: With big infotainment screens and direct driver interaction, some OEMs are considering a slice of the advertising and e-commerce pie. GM’s CEO has hinted at leveraging their in-vehicle UI for revenue beyond just selling features – possibly contextual offers (e.g., car knows fuel is low, suggests a fuel station with a partnered discount – GM could take a referral fee). In China, some EV startups already do in-car ads or sponsored content. Traditional OEMs tread carefully (to avoid upsetting customers), but data-driven targeting in cars could become a significant business (imagine Amazon or Google paying the OEM for access to the car’s voice assistant platform for certain promotions – which is only negotiable now that OEMs have their own platforms).

Overall, treating data as a product required building trust and frameworks. OEMs emphasize data privacy and security as a selling point of doing it in-house (Mercedes touts data privacy as a reason for MB.OS being proprietary, and BMW often mentions that CarData shares data only with user consent). By controlling data, they ensure compliance while extracting value. They are effectively turning into software subscription companies on top of manufacturing. The investor community has been told to evaluate OEMs partly like tech companies, with software margins (which can be very high once the upfront development is done) and recurring revenue. This is a fundamental shift from the one-time sale model of the past. Evidence of early returns: By 2025, we see concrete results: GM reported millions of OnStar subscribers and significant YoY growth in software/services revenue (even if still single-digit billions). BMW in its financial reports started breaking out “upgrades and services” revenue. Analysts project that by late 2020s, these could account for 20–30% of automakers’ profits. This validates why OEMs made the costly pivot to internal software development – it wasn’t just about beating Silicon Valley at a tech game, but about unlocking new business models to bolster their future profitability.

Conclusion

Between 2015 and 2025, the auto industry underwent a profound transformation: major OEMs reorganized and retooled themselves to become software-centric, data-driven enterprises. They built internal software platforms (CARIAD, MB.OS, Ultifi, etc.) as foundations for the next generation of software-defined vehicles (SDVs), while nurturing portfolios of nearer-term innovations through agile methods and partnerships. This dual approach – simultaneously managing incremental digital improvements and moonshot projects – has been enabled by new organizational designs, significant investments in talent, and a shift in culture and mindset. By internalizing software, data infrastructure, and AI, automakers aim to own the “intelligence” of the car and the customer relationship, which in turn lets them treat vehicle data and functionality as monetizable assets. We now see cars that improve over time via updates, and owners offered a stream of new features and services (often at a price) long after purchase. This not only creates new revenue for OEMs, but also fosters customer loyalty (as their car stays up-to-date and personalized). The competitive landscape is being redefined: it’s no longer enough to deliver the best mechanical engineering – OEMs compete on user experience, connectivity, and the richness of their software ecosystems. The ripple effect on the supply chain and partners is significant. Traditional suppliers are evolving or consolidating, while tech companies have become collaborators rather than outright disruptors in most cases. The buy-vs-build calculus now leans much more toward build (or at least tightly co-develop), especially for anything that can differentiate or generate data-driven value. We’ve entered an era where an automaker’s codebase and cloud platforms are as strategic as its factories – and where organizational agility in innovation may determine who leads in the age of electric, autonomous, and connected vehicles. Looking forward, the 2015–2025 groundwork sets up the late 2020s as a period of harvest: we can expect faster innovation cycles, richer customer experiences (with AI and personalization playing a growing role), and robust new profit streams for those OEMs who executed well. Challenges remain – from software project delays to ensuring quality and security – but automakers have largely accepted that the vehicle is now a software platform on wheels, and they are structuring themselves to excel in that reality. The ultimate winners will be those who strike the right balance between internal development and external collaboration, capitalizing on data and software without losing the efficiencies and expertise that a century of automotive engineering has built. The past decade’s changes were only the beginning, but they were crucial for the industry’s next chapter of innovation and growth, driven as much by lines of code as by horsepower.