Faster acceleration is just a click - and a credit card payment - away in new electric cars as the likes of Mercedes jump on a trend set by Tesla




The 2022 Polestar 2 electric car.
The 2022 Polestar 2 electric car.  
  • Mercedes-Benz and Polestar invite buyers of their electric cars to pay up for more horsepower.

  • Both brands recently introduced software updates that boost a car's performance for a fee.

  • Tesla pioneered using software updates to unlock special features in its cars.

Mainstream carmakers are following Tesla's lead by offering performance upgrades via costly software updates.

This week, Polestar - the EV startup jointly-owned by automaker Volvo and its Chinese parent company Geely - announced an over-the-air update that boosts the power output of the Polestar 2 in North America.

The upgrade gives Polestar's long-range, dual-motor sedan an additional 68 horsepower, for a total of 476. Polestar said in a release this also drops the car's 0 to 60 mph time to 4.2 seconds.

The caveat is that the update costs a one-time fee of $1,195. It's the latest example in a growing trend of automakers opting to charge customers for an upgrade after purchasing their vehicle.

As vehicles become increasingly computerized and internet-connected, automakers see huge potential in remotely tweaking a car's capabilities or adding new ones altogether - and charging owners handsomely for doing so.

Luxury automaker Mercedes will soon offer an "Acceleration Increase" feature for its EQS and EQE electric sedans and their SUV counterparts. Drivers who want some extra power have to cough up $1,200 - every year.

Tesla pioneered remote software updates in cars and offers extra performance to owners of its Model 3 sedan and Model Y SUV who cough up a couple thousand dollars.

Big-picture software play

Efforts to monetize software-enabled features go beyond performance upgrades. As automakers pour a collective $74 billion into software development through 2026 (according to auto consultancy SBD Automotive) - they're investigating new types of revenue. BMW, for example, lets owners pay over time for heated seats or a heated steering wheel.

"I see the industry as a whole going towards what they're calling features as a service," SBD EV principal Robert Fisher told Insider in October. "They're looking to monetize these updates somehow."

The big question is how buyers respond to the new trend. An April study by Cox Automotive found that 75% of US consumers are unwilling to subscribe to most vehicle features. "It still leaves a bad taste in the mouth of at least the American audience," Fisher said.

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