General Motors expects to report around $350 million in profit during the next three years thanks to its partnership with AT&T Mobility (NYSE: T) to bring LTE to its cars, according to GM's financial chief.
GM CFO Chuck Stevens said the car maker's OnStar 4G LTE connection is an "untapped, under-appreciated opportunity." Stevens made his comments during an appearance at a Bank of America Merrill Lynch conference, according to Reuters.
"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 said.
In addition to GM, AT&T has connected car deals with Nissan, Audi, Tesla, BMW, Subaru, Ford Motor Co. and Volvo. However, no car makers have been so public about the financial benefits they are seeing or expect to see from connected cars.
AT&T and GM have been steadily expanding their relationship. In February 2013, GM announced that it was replacing Verizon Wireless' ((NYSE: VZ) service with AT&T's service in its OnStar offering beginning in 2014. Verizon had powered OnStar's service since it launched in the 1990s. In January 2014, GM revealed its first cars to be connected in partnership with AT&T.
Since then, GM has added LTE to more than 30 of its 2015-model vehicles in North America, and expects all 2016 models to have the connectivity, Stevens noted. AT&T and GM plan to bring the service to select European countries in the second half of this year.
AT&T lets customers with an LTE-capable vehicle from GM and other auto makers to add the car as another device to their Mobile Share Value shared data plan for $10 per month, the same price as a tablet.
AT&T activated 800,000 connected cars on its network in the fourth quarter of 2014. The carrier expects to have at least 50 percent market share of new connected cars in 2015. Yet AT&T executives also have acknowledged that they need to clearly demonstrate and market understandable use cases to gain traction with consumers in the connected car market.
- see this Reuters article
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Correction, April 1, 2015: This article incorrectly stated that AT&T has activated 800,000 connected cars; the company activated that number of connected cars during the fourth quarter of 2014 alone.