Ubiquitous connectivity has triggered a revolution with everything becoming connected and becoming a ‘thing’ on the internet. Today’s devices have become smarter and intelligent and can communicate with each other making the yesteryear’s sci-fi movie scenes a reality. This digital revolution, driven by connectivity, has positively impacted the automotive industry with vehicles getting connected.
The connected vehicle is not only revolutionizing the way people travel from one point to another but is also unfolding a whole new world of opportunities and possibilities for the OEMs. While on the one hand it has become a must for the OEMs to offer connected vehicle services to sustain and grow in the market, it also enables newer, non-traditional business and revenue streams for the OEMs.
The global connected car market size post-COVID-19 is expected to be USD 53.9 billion in 2020 and is projected to reach USD 166.0 billion by 2025, at a CAGR of 25.2% from 2020 to 2025. [source: marketsandmarket].
Key factors that are driving this growth:
The impact of connected vehicles is not limited to the automotive industry only. There are multiple adjacent industries in the connected vehicle ecosystem that are also getting impacted. The figure below depicts a few of those impacted adjacent industries.
The connected vehicle is opening up enormous possibilities and opportunities for the automotive OEMs. These opportunities being presented to the OEMs are both short-term as well as long-term opportunities.
The buying decision of the consumers today depends on the overall experience being delivered by the vehicle. Hence to attract customers, OEMs can deliver more exciting telematics services as well as in-vehicle apps. In order to generate revenue, OEMs can provide location-based advertisements and services. OEMs can additionally analyze the driving behavior and can provide adjacent value-added services such as Usage-based insurance either by partnering with an insurance company or by themselves.
The connected vehicle also provides cost-saving possibilities for the OEMs. OEMs can enable over-the-air software and firmware updates, thereby potentially saving costs. OEMs can also potentially save costs by gaining insights from remote diagnostics and analytics.
From a revenue generation standpoint, OEMs can analyze the drivers’ data to understand the drivers’ behavior and habits and can provide personalized and customized services to the drivers.
While on one the hand the connected vehicle is opening up a lot of possibilities for the OEMs, on the other hand it is also introducing a few challenges. One of the major challenges is that OEMs need to be aware of security.
With the vehicle becoming an IOT device, there are many entry points for cybersecurity attacks and the vehicles have become increasingly vulnerable. A connected vehicle today has great similarities to a computer. As computers have to be continuously monitored and protected against attacks in the same way, the connected vehicles need to be protected against attacks such as hacking, sniffing, distributed denial of services, etc.
In order to deliver connected vehicle services, OEMs will need to invest in a robust connected services platform that is reliable, extendable, scalable, and secure.