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How GM's High-Margin Software Engine Is Becoming a Key Catalyst
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Key Takeaways
OnStar hit 12M subscribers in 2025, with Super Cruise up 80% YoY, boosting GM's recurring revenues.
GM expects software and services revenues to rise $400M in 2026, with deferred revenues reaching $7.5B.
Second-generation vehicle architecture in 2028 will expand OTA capacity and support hands-off driving.
When investors think about General Motors (GM - Free Report) , they usually focus on trucks, SUVs, or electric vehicles (EVs). But beyond vehicles, this auto giant is expanding its software and subscription ecosystem. And the numbers are starting to matter.
Last year, OnStar reached a record 12 million subscribers, including more than 120,000 Super Cruise subscribers, marking roughly 80% year-over-year growth. OnStar is GM’s in-vehicle safety, connectivity, and subscription platform. Unlike vehicle sales, which are cyclical, OnStar generates subscription-based revenues. That creates more stable cash flow. OnStar Fleet subscriptions hit 2 million, more than double any competitor. The scale gives General Motors a growing base of recurring, higher-margin revenues.
Management expects software and services revenues to increase by about $400 million in 2026. Deferred revenues from these offerings are projected to reach $7.5 billion, up around 40% year over year. This provides visibility and supports long-term profitability.
Super Cruise is central to this push. Super Cruise is General Motors’ advanced hands-free driver assistance system. The company plans to continue expanding Super Cruise across North America and launch it in South Korea, the Middle East and Europe.
Importantly, GM plans to introduce its second-generation software-defined vehicle architecture for both ICE vehicles and EVs in 2028. The new system will bring key vehicle functions like powertrain, infotainment and safety onto one central computing platform. It will offer 10 times more over-the-air capacity and significantly higher bandwidth, allowing vehicles to improve over time.
This new architecture also supports GM’s future eyes-off, hands-off driving technology, beginning on highways. The setup will use multiple layers of sensing technology, including lidar, radar, and cameras, drawing on GM’s experience with Super Cruise and autonomous driving.
All these points point to a broader shift. Software, subscriptions and digital upgrades carry higher margins than vehicle hardware. As penetration increases, these services are expected to boost prospects. While GM is still an automaker at its core, the expanding software engine is becoming an increasingly meaningful part of the long-term story.
Competitive Context: F & STLA
Ford (F - Free Report) continues to build out its connected vehicle ecosystem through BlueCruise and other digital services. The company has been expanding hands-free driver assistance across more models and regions. Ford plans to introduce a roughly $30,000 EV platform with Level 3 eyes-off BlueCruise capability by 2028, targeting more affordable highway autonomy.
Stellantis (STLA - Free Report) is also advancing its software-driven vehicle model. Its focus is on monetizing software, energy services, data, and subscriptions across millions of vehicles worldwide. The transformation centers on a new architecture built around STLA Brain, STLA SmartCockpit, and STLA AutoDrive, defining its multi-year move toward connected, software-defined vehicles.
The Zacks Rundown on GM Stock
Shares of General Motors have gained 40% over the past six months, outperforming the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, GM trades at a forward price-to-earnings ratio of 6.5, way below the industry. It carries a Value Score of A.
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for GM’s earnings has been revised over the past 90 days.
View the Zacks #1 Rank List
Image: Bigstock
How GM's High-Margin Software Engine Is Becoming a Key Catalyst
Key Takeaways
When investors think about General Motors (GM - Free Report) , they usually focus on trucks, SUVs, or electric vehicles (EVs). But beyond vehicles, this auto giant is expanding its software and subscription ecosystem. And the numbers are starting to matter.
Last year, OnStar reached a record 12 million subscribers, including more than 120,000 Super Cruise subscribers, marking roughly 80% year-over-year growth. OnStar is GM’s in-vehicle safety, connectivity, and subscription platform. Unlike vehicle sales, which are cyclical, OnStar generates subscription-based revenues. That creates more stable cash flow. OnStar Fleet subscriptions hit 2 million, more than double any competitor. The scale gives General Motors a growing base of recurring, higher-margin revenues.
Management expects software and services revenues to increase by about $400 million in 2026. Deferred revenues from these offerings are projected to reach $7.5 billion, up around 40% year over year. This provides visibility and supports long-term profitability.
Super Cruise is central to this push. Super Cruise is General Motors’ advanced hands-free driver assistance system. The company plans to continue expanding Super Cruise across North America and launch it in South Korea, the Middle East and Europe.
Importantly, GM plans to introduce its second-generation software-defined vehicle architecture for both ICE vehicles and EVs in 2028. The new system will bring key vehicle functions like powertrain, infotainment and safety onto one central computing platform. It will offer 10 times more over-the-air capacity and significantly higher bandwidth, allowing vehicles to improve over time.
This new architecture also supports GM’s future eyes-off, hands-off driving technology, beginning on highways. The setup will use multiple layers of sensing technology, including lidar, radar, and cameras, drawing on GM’s experience with Super Cruise and autonomous driving.
All these points point to a broader shift. Software, subscriptions and digital upgrades carry higher margins than vehicle hardware. As penetration increases, these services are expected to boost prospects. While GM is still an automaker at its core, the expanding software engine is becoming an increasingly meaningful part of the long-term story.
Competitive Context: F & STLA
Ford (F - Free Report) continues to build out its connected vehicle ecosystem through BlueCruise and other digital services. The company has been expanding hands-free driver assistance across more models and regions. Ford plans to introduce a roughly $30,000 EV platform with Level 3 eyes-off BlueCruise capability by 2028, targeting more affordable highway autonomy.
Stellantis (STLA - Free Report) is also advancing its software-driven vehicle model. Its focus is on monetizing software, energy services, data, and subscriptions across millions of vehicles worldwide. The transformation centers on a new architecture built around STLA Brain, STLA SmartCockpit, and STLA AutoDrive, defining its multi-year move toward connected, software-defined vehicles.
The Zacks Rundown on GM Stock
Shares of General Motors have gained 40% over the past six months, outperforming the industry.
From a valuation standpoint, GM trades at a forward price-to-earnings ratio of 6.5, way below the industry. It carries a Value Score of A.
See how the Zacks Consensus Estimate for GM’s earnings has been revised over the past 90 days.
General Motors currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.