Features on Demand: The Quiet Revolution Reshaping Automotive Revenue

The shift to SDV has redefined how OEMs compete, making software strategy central to long-term value creation. An emerging trend within this transformation is Features on Demand (FoD): a model that allows drivers to unlock capabilities in their vehicles over time, often through software updates.

For OEMs, FoD represents a compelling promise: turning a one-time vehicle sale into a long-term revenue stream. But like any major shift, it comes with both opportunity and risk.

Why FoD Is Gaining Momentum

The rise of software-defined vehicles (SDVs) and over-the-air (OTA) updates has fundamentally changed what a car can be. Vehicles are no longer static products, they’re evolving platforms.

This unlocks several powerful advantages for automakers:

• Greater agility: Features can be deployed, updated, or refined post-sale 

• Ongoing revenue streams: Monetization extends across the vehicle lifecycle 

• Reduced complexity: Fewer hardware variations across trims 

• Lower upfront costs: Vehicles can be sold at a more competitive base price 

  
  

There’s also a ripple effect beyond OEMs. The aftermarket repair industry could benefit as well, especially as owners of older vehicles look for cost-effective ways to upgrade functionality without replacing hardware.

The Upside: A Win-Win?

At its best, FoD creates value for both automakers and consumers.

For OEMs:

• Revenue is no longer tied solely to the initial sale 

• A single technology platform can span multiple models 

• Production becomes more efficient with standardized hardware 

  
  

For consumers:

• Features can be added when needed, not just at purchase 

• Vehicles stay “fresh” longer through updates 

• Entry prices may become more accessible 

  

  SBD Automotive Research Study

The Risks: Not Everything Is Smooth Driving

Despite its potential, FoD introduces real challenges:

• Latent hardware concerns: Customers may resist paying to unlock features already physically installed 

• Paywall backlash: Subscription fatigue is real—and growing 

• Third-party workarounds: Unauthorized tools could bypass paid features, undermining revenue models 

  
  

In short, while FoD expands monetization opportunities, it also tests customer trust.

From Infotainment to Performance: How FoD Has Evolved

FoD didn’t start where it is today.

Initially, it focused on relatively low-stakes upgrades like:

• Connected services 

• Infotainment enhancements 

• Basic ADAS features 

  
  

But with the maturation of SDVs, FoD has expanded into more critical domains:

• Driving dynamics 

• Powertrain performance 

• Cabin experience and comfort features 

  
  

In parallel, markets like the US are seeing a gradual simplification of trims and packages, as more features shift to on-demand availability rather than fixed configurations.

Understanding the FoD Landscape: How OEMs Are Approaching It

To truly grasp where FoD is heading, it’s essential to look across the competitive landscape.

A typical FoD market study focuses on:

What’s being analyzed

• OEM strategies for FoD and software monetization 

• Feature availability across domains 

• Commercialization models (subscription, one-time unlock, bundles)

  
  

How it’s done

• Building a framework of current and future FoD features 

• Reviewing OEM disclosures, investor data, and product offerings 

• Mapping trends across brands and segments 

  
  

Who’s leading the charge

Key players often include:

• Tesla, Rivian, Lucid 

• Traditional OEMs like BMW, Mercedes, Audi 

• Mass-market brands such as Hyundai, Ford, Toyota 

Benchmarking against major players (e.g., GM) helps highlight differences in strategy and maturity.

The Big Question: How Big Is the Opportunity?

FoD isn’t just a strategy, it’s a market.

To estimate its potential, analysts typically look at two core areas:

1. OEM Strategy Forecasting

• Which features will be offered as services? 

• When will they be introduced across regions like the US, Europe, and China?

• How quickly will adoption grow?

  
  

2. Revenue Modeling

• What is the total addressable market for each feature?

• How many vehicles could support FoD capabilities?

• What pricing models will maximize uptake and profitability?

Domains commonly analyzed include:

• Autonomy and ADAS 

• Digital cockpit 

• Safety and security 

Pricing and Sales: The Commercial Playbook

FoD success isn’t just about technology, it’s about how it’s sold.

Chinese distributors and domestic OEMs will lead feature implementation (~5.9 million units) with the US and EU to follow with roughly half the unit sales (~3.3 million unit sales)

Pricing Strategies

Some OEMs are experimenting with embedding connected service costs directly into the vehicle’s MSRP, raising key questions:

• Should services be bundled or optional? 

• How long should free trials last? 

• What’s the perceived value to customers? 

Sales and Promotion

Understanding customer uptake requires analyzing:

• How services are packaged (individual vs bundles) 

• Subscription pricing models 

• Promotional channels (apps, websites, advertising) 

• Activation and fitment rates 

The goal is clear: turn availability into adoption.

What Comes Next?

FoD is still evolving, but a few trends are becoming clear:

• Mass-market adoption is coming, not just premium brands

• Feature complexity will increase, moving deeper into core vehicle systems

• Customer acceptance will be the deciding factor, pricing and transparency will make or break adoption

Ultimately, FoD represents a balancing act. Done right, it could redefine automotive economics. Done poorly, it risks alienating the very customers it aims to engage.

Final Thought

Features on Demand isn’t just a new revenue stream, it’s a new relationship between automakers and drivers. One where the vehicle you buy today isn’t the final product, but the beginning of an ongoing experience.

The real question isn’t whether FoD will succeed.

It’s how far customers are willing to go along for the ride.

If you would like to discuss how our FoD research can help your specific markets, vehicle segments or technology roadmap, please email info@sbdautomotive.com to set up an expert briefing or request a summary of the key findings.

Fahad Hamid  Manager C-AMS SBD Automotive

"Features on Demand reflects the move toward software-defined vehicles, giving OEMs better opportunities to provide customers with evolving and more personalized and contextual experiences. For OEMs, it offers potential to create ongoing value from new revenue streams and engagement opportunities. However, a successful implementation depends on delivering meaningful customer value whilst reinforcing brand identity and maintaining trust."