Stellantis Looks Beyond Vehicle Manufacturing
Jeep’s Parent Company Chases Software and Services
Stellantis (STLA), the fourth-largest vehicle maker, is chasing the software services subscription market as it seeks to diversify beyond selling cars. The company said it expects to generate roughly $22.5 billion in revenue from services and subscriptions by 2030. Stellantis is the latest vehicle maker to target services as a way to grow annual sales.
General Motors (GM), Ford (F), BMW (BMWYY), and now Stellantis are expecting big revenue boosts from software and services. The vehicle makers have watched the success Tesla (TSLA) has had in this area and want to replicate that.
Stellantis is betting that its connected vehicles, which have infotainment systems, GPS, and digital driver assistance built-in, will fuel its growth. As it stands, about 12 million of Stellantis’s vehicles are connected. By 2030 the car company expects 34 million of its cars to be able to support over-the-air updates. By 2024, the vehicle maker forecasts that most of its new vehicles will have these capabilities.
Some of the services Stellantis plans to offer include GPS maps for offroading, driver concierge services, vehicle service scheduling, and in-vehicle entertainment such as movies and games. By sending updates over the air, Stellantis thinks it will extend the life of the vehicle and boost their resale values.
Is Stellantis the Next Tech Company?
By focusing on software and services, Stellantis will start to look more like a tech company than an automaker. Both software and services have higher margins and provide new revenue opportunities for the company. Stellantis said sales could potentially double as a result of this focus on software and services.
In addition to announcing its new revenue streams, Stellantis announced a deal with Foxconn to design chips for its vehicles. The companies will also manufacture semiconductors for third parties. Stellantis is the latest vehicle maker to announce plans to move beyond manufacturing. It is betting on software, services, and semiconductors as ways to transform itself and the industry.
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