Volkswagen Rolls Out Horsepower Subscription

Volkswagen is offering UK drivers of its ID.3 electric vehicles an “optional power upgrade” that increases horsepower from about 148 hp to 168 hp. The 20 hp boost costs £16.50 ($22.50) per month, £165 ($225) annually, or £649 ($878) for a lifetime upgrade that stays with the vehicle if resold.

The upgrade is delivered entirely through software, reflecting Volkswagen’s growing push to monetize features digitally. Since May 2024, the automaker has offered subscription services for adaptive cruise control, navigation, voice assistant, and heated seats. However, Volkswagen has not reported on the financial results of these offerings, including its VW Flex vehicle subscription pilot launched last year, leaving open questions about consumer uptake and long-term viability.

A Volkswagen spokesperson told Fortune that customer response has been positive so far: “They have the opportunity to still enable additional functions that they may not have considered or needed when they first ordered their car.”

But consumer reaction online has been mixed, with many criticizing the model as paying twice for hardware already embedded in the car. This echoes BMW’s failed attempt to charge for heated seats, a move the company later walked back after widespread backlash.

The debate comes as Volkswagen faces mounting financial pressures. The company reported a $1.5 billion hit from tariffs in 2025 and continues to navigate slim margins on EVs, which executives acknowledge are less profitable than combustion vehicles.

INSIDER TAKE

Volkswagen’s subscription for horsepower is more than a quirky automotive upsell. It underscores a fundamental challenge many industries face: how to transition from one-time product sales to recurring digital services without alienating customers.

The automotive sector has a unique problem. Consumers still strongly associate features like horsepower, heated seats, or acceleration with hardware. Even when the functionality is controlled by software, charging a recurring fee feels like “double dipping.” As BMW’s own sales chief admitted, perception is reality.

Equally important for subscription leaders is the lack of transparency around results. VW has been layering subscription features onto its vehicles since 2024 and launched its VW Flex car subscription pilot last year. Yet there is no public reporting on consumer adoption, churn, or revenue impact. That silence suggests either modest uptake or caution in trumpeting results before there is meaningful traction.

For subscription executives in other sectors, the lesson is clear: value framing and proof points matter as much as pricing mechanics. Customers are skeptical of paying for features they believe they already own, and investors and partners are skeptical of models without clear data on performance. Subscription models succeed when customers see ongoing benefits and businesses can show credible adoption metrics.

Automakers are not alone in this struggle. Media, software, and retail companies also face skepticism when adding subscriptions without clear incremental value. Volkswagen’s experience is a live case study in the importance of customer psychology, transparent reporting, and the risks of applying the subscription playbook without rethinking how value is communicated.

The subscription economy continues to expand, but winning long-term requires more than turning features into fees. It demands careful alignment between product design, customer expectations, and the story you tell about why ongoing payments are worth it — backed by results you can point to.