- Automakers are poised to become “landlords of mobile real estate” by offering subscription products to drivers.
- $1 per month in subscription revenue could net GM $1 billion, Morgan Stanley says.
- Follow General Motors’ stock price in real-tme here.
Amazon delivering packages to customers’ cars is only the beginning in what could be a massive evolution of automakers as we know them.
As cars become more connected and autonomous, Morgan Stanley has some ideas for how manufacturers can unlock their value as mobile real estate, much like Amazon did by partnering with GM to deliver packages directly into customer’s cars wherever they are parked last week.
“We believe that investors do not fully grasp the potential for auto companies to monetize their position as “landlords” of mobile real estate and the primary owners of vehicle and passenger data,” analyst Adam Jonas told clients Wednesday morning.
General Motors, for example, could theoretically add $1 billion to its EBITDA and 20% to its share price for every $1 of monthly subscription revenue per vehicle that it brings in, Morgan Stanley estimates.
To get to that point, however, automakers are going to need to start thinking more like tech companies than manufacturers.
“Our view of the end state of the connected car business model is that car companies are highly incentivized to keep as many cars switched “on” as possible,” said Jonas. “We believe that vehicle owners and passengers will likely need to “opt out” of connected car services from an OEM as opposed to “opting in.”
Here’s some of the services Morgan Stanley says automakers could offer as subscription products:
- Over-the-air software updates, much like Tesla already does for its cars
- Traffic optimization/route planning, similar to Waze’s crowdsourced navigation
- Insurance analytics (hello, Big Brother)
- In-car entertainment content
- Paid search, the same business model that drives Google’s advertising business
- Energy storage
It’s all very theoretical at this point, but GM’s partnership with Amazonast week shows the possibility is quickly becoming more feasible.
“We see numerous areas for GM to collaborate with firms such as Amazon, including in-vehicle storage/micro warehousing collaboration, final-mile delivery fulfillment,edge computing, digital content,and other customer engagement opportunities,” said Jonas.
Shares of GM have fallen 13% since the beginning of 2018 as the automaker struggles to regain its footing in a contracting US car market.
