General Motors has equipped over 30 of its models in North America with 4G LTE and plans to offer every 2016 model with the high-speed wireless data service. Why? Convenience. And money. Around $350 million worth, says GM, although it’s not saying exactly how.
Chuck Stevens, GM’s executive VP and CFO told the throngs of financiers at a Bank of America Merrill Lunch conference that the OnStar LTE service is an “untapped, under-appreciated opportunity.”
“Based on our plans today, which are still in the early stages of really taking advantage of this technology, we expect to see $350 million of profit improvement between now and 2018 specific to 4G LTE, and in our view, that’s just the beginning,” Stevens says.
However, exactly how that money is going to be made hasn’t been made clear.
AT&T provides the data connection and bills owners through their monthly wireless bill, anywhere between $5 and $50 a month, depending on the service. That $350 million figure could come partially from the deal GM struck with the telecom company, and combined with what the automaker will charge for the optional hardware on its vehicles.
When we asked GM directly, all they would give us is this statement:
OnStar’s contribution is included in GM’s EBIT. We aren’t going to break it down because we don’t disclose OnStar financials. That said, we know that 4G provides a significant profit opportunity for GM. The OnStar 4G LTE connection provides an innovation “platform” for other services.
Regardless, GM’s push to connect all of its cars certainly has profit potential, but $350 million over three years seems ridiculously high given what it currently offers.