Electric vehicle (EV) manufacturer Tesla revealed it will charge customers $10 per month for its premium tier of in-car connectivity beginning in January 2020.

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The monthly fee only applies to vehicles ordered after June 2018 and allows Tesla's cars to access features like media streaming, satellite maps, and an internet browser.

Owners who choose not to pay for premium connectivity will still have access to a free, standard tier that provides connectivity for navigation and system updates. Previously, Tesla provided free connectivity for its vehicles, only establishing the standard and premium connectivity tiers in July 2018, but hasn't charged for the premium tier until now.  

Tesla's move to charge drivers for in-vehicle connectivity is likely due to the mounting cost of connecting a growing fleet. As of September 18, 2019, there were around 536,000 Tesla vehicle identification numbers (VINs) registered in the US alone, up 383% from around 116,000 the year prior, per Bloomberg — and the volume of data generated by the cars likely increases along with the size of the fleet.

While it is unclear what it costs Tesla to provide connectivity for its vehicles, the company has struck multiyear deals with telecoms, including AT&T and Telefónica in 2014, to be the connectivity providers for its vehicles. Tesla's $10 monthly fee could help it offset the costs of such deals as the volume of data generated by its vehicles continues to rise. 

However, with data processing costs expected to rise for automakers as vehicles generate more data, firms need to find ways to curb these expenses that go beyond passing them along to consumers. Currently, connected cars can generate around 25 GB of data every hour, but that number could jump to 5 TB of data per car every hour when autonomous cars hit the road.

One way that automakers can cover their data processing and connectivity costs while also driving up revenue is by monetizing the data, such as by selling information to vendors or insurance companies. Monetizing vehicle data presents a large opportunity for automakers, as it could generate up to $450 billion to $750 billion globally by 2030, per McKinsey.

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