General Motors is cutting rates in half on its OnStar 4G LTE data plans, a bid to drive greater use of in-vehicle Internet service and plug what the company sees as a key differentiate.
Prices will drop across the tiers of data offered for the 4G service, which allows users to connect up to seven devices to a vehicle’s mobile hot spot. One gigabyte of data drops to $10 per month, from $20, for example. Ten gigabytes now cost $40, down from $80.
GM said the economies of scale from more than 3 million vehicles sold with 4G connections over the last two years has allowed the automaker to reduce data plan pricing. GM was the first automaker to broadly deploy embedded Wi-Fi when it rolled out the service in summer 2014 across most of its vehicle lineup.
“Wireless connectivity has proven to be a beneficial technology for many Chevrolet customers, from contractors who use their Silverado as a mobile office to families using their Suburban on a summer road trip,” Sandor Piszar, Chevrolet’s truck marketing director, said in a written statement. “As our customers increase their usage of the technology, we are able to make it more affordable for them.”
Chevy customers alone have used more than 3 million gigabytes of data since the service was launched. The feature has proved most popular among vehicles typically used as family haulers. More than 60 percent of Suburban owners use their 4G Wi-Fi service, GM said, followed by Tahoe and Traverse owners.
The percentage of users is not quite as high among Silverado owners, although those customers tend to be the heaviest users, a GM spokesman said. Silverado owners accounted for more than one-third of the 3 million gigabytes consumed.
GM shares revenue from the 4G service, which is offered through a partnership with AT&T. The companies have not disclosed terms, but GM CFO Chuck Stevens told analysts during an April 2015 conference call that GM expected the 4G service to add $350 million in profits by 2018.
Shared revenue from the 4G plans is only one component of that profit opportunity, Stevens said. GM also makes money through services enabled by the broadband connection, such as a partnership with Progressive Insurance that allows customers to get feedback on their driving habits that could lead to discounts on their insurance premiums