There is no hiding from the internet in today’s world. As we continue down the path of the connected car, automakers are betting big on in-car broadband systems. General Motors isn’t excluded from that list.
In fact, GM is expecting to see a hefty profit from offering OnStar 4G LTE wireless across many of the vehicles in the company’s lineup. During a recent investor meeting, GM executives revealed they expect at least $350 million in improved profits over the next three years from OnStar 4G LTE availability, according to Reuters.
But how does GM expect to reap reward from the expensive hardware?
The company revealed it receives a small cut from seller every time a customer purchases something over their OnStar system. Not only will this approach help the bottom line, but GM also revealed it plans on utilizing the service in a very Tesla-like matter.
GM said it plans to push software upgrades over-the-air, much like Tesla currently does, and estimates a savings of hundreds of dollars per car in repair costs. By 2020, it’s estimated of General Motors’ entire revenue, a tenth will come from services like OnStar 4G LTE.
OnStar was valued as high as $9 billion, according to Citi analyst Itay Michaeli. Now, he remains very bullish on what OnStar could expand into in the future.
“There’s an under-appreciation of what OnStar is morphing into with 4G LTE,” he said.
We couldn’t agree more. The sky is the limit with what OnStar could expand into in the future.