The global Vehicle feature-on-demand market is booming as the automotive sector shifts its focus to software-defined vehicles. It allows automakers to provide customers with additional capabilities through Over-the-Air (OTA) updates, turning the vehicle into an infinitely flexible digital system. The vehicle feature on demand market is growing, driven by the rise in demand for advanced and innovative applications in the automotive industry. Additionally, the industry is under increasing pressure from trade barriers and hardware supply chain volatility, but the feature-on-demand model remains a primary avenue for margin protection. The market at present is characterized by a dual-track approach where high-volume manufacturers are directing their attention to the user experience, thereby creating more connectivity and comfort features. Meanwhile, the luxury brands are selling sophisticated Advanced Driver Assistance Systems (ADAS) and performance upgrades through this solution for monetization. This change in the market structure is a technological shift and also a shift in tactics aimed at boosting the lifetime value of each vehicle unit produced.
The rapid spread of Software-Defined Vehicle (SDV) architectures is the main driving force behind the Vehicle Feature-on-Demand market. The traditional automotive systems used decentralized Electronic Control Units (ECUs), which restricted the ability to change the vehicle functions after delivery. Nevertheless, the radical move from decentralized to centralized, zonal architectures has been joined by high-performance computing platforms like NVIDIA DRIVE Thor, which, in turn, has enabled the deep integration of software. Consequently, the Feature-on-demand demand is increased directly because of this architectural shift, as it enables OEMs to place hardware in the factory during manufacturing, which will be later turned on by software, thus providing a scalable revenue-generating infrastructure for after-sales.
Growing 5G network and connectivity: The implementation of connectivity and 5G is a major technical factor that increases the demand for real-time services. Moreover, almost all new cars coming to the market in North America and Europe now have built-in 5G modems. The super-fast connection is necessary for the uninterrupted provision of large software packages like high-quality mapping updates for navigation or complicated algorithm fixes for self-driving cars. As a result, the reliability of the networks is such that it reduces the resistance of consumers during the purchase process, and thus, this leads to faster adoption of functions available for booking through digital stores like Mercedes me Store or BMW ConnectedDrive.
Consumer shift towards Personalization: The gradual transformation of procurement patterns is completely due to the consumer's demand for personalization and flexibility. Modern customers of vehicles associate their cars with consumer electronics, and they want the same lifecycle of updates. The incorporation of features on-demand steps into meet this expectation since it enables the owner to make the vehicle fit to the personal needs/ This includes features like switching on heated seats only during winter or charging the specific road trip with a premium sound profile. Furthermore, the OEMs can bring in a wider clientele that would otherwise reject pricey optional packages at the time of purchase by making it easier for them to access the high-end features right from the start.
Monetization of ADAS Through Subscription-Based Models: The monetization of ADAS has been another major factor driving growth. Besides, BlueCruise from Ford and FSD by Tesla, such features are increasingly becoming a subscription-based offering. Through the technique of continuous learning as well as through OTA updates, these systems pass on a practical value proposition that allows justifying the recurring payments. Thus, there is a transition in hardware sales that has moved from being a one-time sale to a long-term service relationship, with software-based performance and safety upgrades significantly driving the demand.
There is a resistance from consumers, which is the major challenge for the industry, wherein paywalled hardware holds a substantial position, making the owners think they have a right to use the features installed in their cars. This pessimistic outlook might raise data privacy worries and can kill demand if not responded to by means of explicit value proposals. This is on the upside and necessitates establishing flexible tiered pricing and trial-based models that are highly useful. Moreover, the requirement for meeting cybersecurity standards can give rise to the needs of the specialized software vendors for integrating Security-on-Demand as a value-added service.
August 2025: Hyundai, through its Bluelink Store, unveiled its new on-demand digital features for the IONIQ 9, allowing the owners to customize their driving experience and even enhance it through downloadable updates that come with themed display graphics, dynamic exterior lighting patterns, and virtual gear-shift features that give a traditional driving feel, all of these are made available over-the-air and were initially introduced in 14 European markets as part of Hyundai's strategy for the provision of software-enabled vehicle services.
The market is segmented by offering, feature, vehicle type, and geography.
By Feature: Safety & ADAS
The Safety and Advanced Driver Assistance Systems (ADAS) segment is the most valuable driver in the Feature on Demand market. The attribute for the increase in demand is that the automated driving algorithms keep on improving and being enhanced even after the purchase. With the advancement in sensor fusion and perception algorithms, the OEMs update their vehicles with improvements in the algorithms. For instance, Level 2+ and Level 3 proposals and functionalities need constant updating and identification in accordance with changing requirements and specifications in the area of safety. The consumers express a strong willingness to pay for "Safety on Demand" instead of infotainment, as they consider it a long-term investment in their vehicles to increase their lifespan and resale value. The segment is marked by strong revenue streams through the monthly subscription model for functionalities like parking assistant professional and highway pilot.
By Vehicle Type: Passenger Vehicles
The passenger car segment leads in terms of Feature-on-demand technology due to the large number of connected vehicles in this segment, in addition to diverse use cases among consumers. The demand from this segment arises from consumers looking for a lifestyle-integrated experience that allows for development in sync with lifestyle requirements surrounding vehicle capabilities. The modularity of passenger vehicle software provides a wider range of possibilities in this sense for OEMs, who can now offer anything from performance boosts to aesthetic digital upgrades of dashboard displays.
Moreover, competition in the consumer automotive market means brands have no other choice but to use Feature-on-demand as a differentiator by providing over-the-air solutions and feature additions, which increase customer satisfaction and loyalty. Indeed, this is a strong demand in premium and luxury segments, where customers want the newest technologies to be made available instantly, with absolutely no need to go to physical showrooms.
The North American countries, like the United States and Canada, dominate the market for Feature-on-Demand services. The driving factors are the remarkable penetration of electric vehicles and the subscription-based technology user base that is the first to adopt the new technology. Tesla has done so well that it has set a market example of OTA updates, which now the likes of Ford and GM are following quite aggressively. The regional market absolutely has a very powerful infrastructure and major software developers in its favor, yet it could also be facing possible setbacks due to the right-to-repair laws in some states that may force the opening up of the Feature-on-demand locks.
In South America, the market growth is slow but steady, as countries like Brazil are regarded as the main market for Feature-on-demand. The demand comes mostly from the connected services sector, with a focus on vehicle security and telematics because of the high vehicle theft rates. Local manufacturers are starting to introduce entry-level Feature-on-demand functions in the top models with emphasis on navigation and vehicle monitoring. Nevertheless, the growth is limited by poor 4G/5G coverage in some regions and the lower middle-class income, which makes expensive software subscriptions less attractive to the general public.
Europe is the leading region in terms of technology in the Feature-on-demand market, with countries like Germany and France, which are also the home of luxury brands such as BMW, Mercedes-Benz, Stellantis, and Volkswagen Group. The situation of the demand is mainly dictated by the EU's strict safety and cybersecurity regulations, which have led to a unified software management approach. The European market is significantly oriented towards demanding performance-related Feature-on-demand and advanced cabin technology. The existence of the "ConnectedDrive" and "Mercedes me" ecosystems has played a vital role in the maturity of the market, as a large segment of luxury car owners has already participated in multi-year software service contracts.
The Middle East and Africa market for Feature-on-demand is witnessing considerable growth that is stimulated by the "Vision 2030" initiative, along with a sharp change in the direction of smart city infrastructure. The demand for advanced climate control and infotainment FoD features catering to the region's severe weather is being fuelled by the high acceptance rate of luxury SUVs and the coming of new electric vehicle (EV) brands such as Lucid and Ceer. Besides, the government's spending on 5G infrastructure is giving the required support for uninterrupted OTA updates, thus making the Kingdom a premium software service market for strategic growth.
The Asia Pacific has the largest Feature-on-Demand market in the world, which is dynamic, and the competition is very intense between the regional electric vehicle insurgents like XPeng, Toyota, and NIO, and global OEMs. The demand is supported by the consumer segment that values digital integration even more than traditional mechanical specifications. The regional car makers are focusing on providing full-stack feature-on-demand, which includes advanced voice assistants as well as urban autonomous driving features. Countries like China, Japan, and South Korea, with their swift 5G rollout and the government's benevolent stance towards New Energy Vehicles, have offered opportunities in the largest volume market for feature-on-demand services.
List of Companies
Tesla
BMW
Ford Motor Company
Volkswagen Group
Mercedes-Benz
Toyota Motor Corporation
Hyundai Motor Company
Volvo Cars
General Motors Company
XPeng Inc.
The market for vehicle feature-on-demand is characterized by two competitive spots – one for the traditional OEMs and one for the software-first electric vehicle manufacturers. The German "Big Three," i.e., BMW, Mercedes-Benz, Volkswagen, are taking advantage of their huge installed bases by creating digital stores with standardization, while the US and Chinese EV companies are focusing on software as their main product differentiator. The competition is gradually shifting toward "Software Ecosystems," where the objective is to embed the vehicle in the user's digital life.
BMW Group
BMW, through its Operating System 7 and 8 platforms, has become a major player among the OEMs in bookable functions. The road map of the company goes through the flexible equipment, whereby features like Adaptive M Suspension and High-beam Assistant can be trialed for a month before committing to purchase. BMW also announced that it would reach 10 million OTA updates by October 2024, thus proving the magnitude of its software delivery system. The strategy of the company relies on "Driving Dynamics on Demand," thus capturing the market of enthusiasts.
Tesla, Inc.
Tesla is one of the main players in the feature-on-demand market with a completely vertically integrated software system and a full-fledged Self-Driving (Supervised) feature, which is the most talked-about case of an expensive hardware-driven feature that is sold as a software upgrade, and the whole industry has been made aware of it. The company’s plan includes continuous and gradual iterative releases, with Model 3 and Model Y often getting updates for everything from cold-weather best practices to new infotainment apps. Tesla's claim is innovation-first, and taking advantage of its fleet to beta-test new features before they are monetized.