The New Automotive Gold Rush: Inside the Business of In-Vehicle E-Commerce
This new market, projected to be worth over $5.4 billion in 2025, is transforming the automotive industry from a world of one-time sales to one of continuous "servitization." Automakers are no longer just selling you a car; they are selling you a subscription to a constantly evolving set of services. This new business model is rapidly splitting into two highly successful categories and one major, unexpected challenge.
Category 1: The "Features-on-Demand" Revolution
The most lucrative and controversial part of this new economy is "Features-on-Demand" (FoD). Automakers are now building vehicles with all the necessary hardware pre-installed at the factory, and then charging customers to "unlock" those features via software.
This creates an entirely new, high-margin revenue stream that lasts for the entire life of the car. Premium brands like BMW and Mercedes-Benz are the clear leaders in this space.
BMW's ConnectedDrive Store: A BMW owner can log into their in-car app and purchase or subscribe to a range of features. They can buy the "High Beam Assistant" as a one-time purchase, subscribe to the "Driving Assistant Plus" (advanced cruise control) for a set period, or even purchase the "BMW Drive Recorder," which uses the car's built-in cameras as a dashcam.
Mercedes-Benz's "me connect" Store: Similarly, Mercedes owners can purchase digital extras like advanced navigation packages, in-car gaming, or performance-enhancing software that fine-tunes the car's driving dynamics.
The Business Model: This is a gold mine for automakers. It allows them to simplify manufacturing by building "fully-loaded" cars and then monetize them over time. For the consumer, it offers the flexibility to try a feature before buying it or to subscribe to a feature like heated seats for only the winter months. It fundamentally changes the car from a depreciating asset to an upgradable device.
Category 2: Seamless Car-Centric Payments
The second, and most practical, part of the in-car e-commerce boom is the integration of payments for services directly related to the act of driving. The goal is to eliminate the friction of pulling out a phone or credit card.
Automakers are partnering with payment giants like Visa and Mastercard to turn the car's infotainment system into a secure payment terminal, often using the in-car fingerprint sensor for authentication.
The most successful applications include:
Parking: The car's navigation system identifies a participating parking garage, and the driver pays for the session directly from the dashboard.
EV Charging: This is the killer app. An EV driver can pull up to a charging station, and the car automatically authenticates and pays for the session—a service pioneered by Mercedes-Benz with its "Plug & Charge" feature.
Fueling: Drivers at connected gas stations can authorize the pump and pay for fuel from their screen.
Tolls: Integrated toll-collection services can automatically pay for tolls, eliminating the need for a separate transponder.
The Business Model: This is a high-volume, low-margin business driven by convenience. Automakers take a small transaction fee, creating a steady and reliable revenue stream while dramatically improving the day-to-day ownership experience.
The Stalled Dream: What Happened to Contextual Commerce?
What about the original dream of ordering a pizza from your dashboard or paying for a coffee from the drive-thru lane? This third category, known as "contextual e-commerce," has proven to be the most challenging.
In 2017, General Motors launched "Marketplace," a high-profile platform that was supposed to do exactly this, with partners like Starbucks, Dunkin', and Applebee's. However, GM quietly shut down the service in 2022.
The reason? Systemic complexity. As a Porsche Consulting report noted, the ecosystem for these non-car-related payments is incredibly "fragmented." Integrating with the point-of-sale (POS) systems of thousands of different merchant chains—each with its own software—is a logistical and technical nightmare. Furthermore, driver safety and distraction concerns make a complex shopping experience impractical.
While the "shopping" and "food" icons may still exist in some in-car systems, their real-world application has stalled. Automakers have discovered it's far more profitable and practical to focus on controlling the high-margin features of their own vehicles and the core payments related to driving, leaving the food and shopping to the driver's smartphone.
Conclusion: The business of in-vehicle e-commerce is not the single, all-encompassing "app store" that was once predicted. Instead, it has evolved into a highly successful, two-pronged strategy. Automakers are successfully becoming service providers by selling their own digital upgrades and subscriptions, while also becoming toll-takers by simplifying the essential payments for parking, charging, and fueling. The dream of a car that orders your coffee for you, however, has taken a backseat to the much more profitable business of selling you the car itself, over and over again, one software update at a time.
