The decision to halt production of Car Thing comes at a time when Spotify struggles to maintain profitability. That’s despite revenue from its ad-supported tier reaching an all-time high, according to its Q2 2022 Quarterly Shareholder Release, while its monthly active user figures also beat estimates to reach 433 million by the end of the second quarter. But Car Thing was an odd product from the get-go.
In its quarterly report, Spotify mentioned that “[T]he Reported Gross Margin was negatively impacted” by the company’s decision to halt the manufacturing of Car Thing. The move cost Spotify approximately $31.35 million, bringing the gross margin down to 24.6%, while the adjusted gross margin without the Car Thing hit stands at 25.3%, as per the financial documents.
As for the rationale behind halting production, a Spotify spokesperson told TechCrunch that the decision was “based on several factors, including product demand and supply chain issues.” At the time of publication, Car Thing is still up for grabs from the company’s official website at $50 a pop, down from its original asking price of $90.
Spotify says existing units in the hands of customers won’t face any impact, but there is no word on how long Spotify plans to continue supporting the hardware platform for its music services. With production shutting down, it is evident that Car Thing has run its course. And with it, Spotify’s hardware ambitions have also taken a serious hit.
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