The popularity of connected vehicles is at an all-time high. Gartner predicts that the automobile industry will produce 61 million connected cars globally by 2020, up 21 million last year. Indian companies including startupsi2e1, Bezirk, ION Energy and Sun Mobility are also joining the bandwagon with an aim to transform the automotive industry with automation.
The potential of connected vehicles - often dubbed ‘smartphones on wheels’, is not just about constantly aggregating and analyzing data on speed, braking techniques and route ion to provide drivers with a better experience. For businesses, this data can also give rise to two new monetization opportunities: developing new services based on user data and using said data to enhance current business operations.
As climate change advances, automakers are also doing their part to reduce its impact by gradually moving away manufacturing petrol-fueled cars to producing electric vehicles that emit zero emissions. Some car manufacturers have even taken it a step further to produce smart cars, bringing upon a second automotive revolution: intelligent driving. They are using advanced technologiesmachine learning to analyze vehicle data and process environmental situations to automatically respond to potential threats and failures – meaning they are able to drive autonomously.
Asia seems to be embracing self-driving cars. According to Rakuten AIP survey, consumers in India and China are also highly receptive to self-driving cars, with 85 percent and 82 percent of them respectively indicating interest to ride such vehicles when they finally become available in their countries. The strong interest in autonomous cars both consumers and governments will help drive the adoption of driverless cars – and provide car manufacturers with a vein of gold ready to be mined if they can rethink their business model to focus on monetizing vehicle data.
Data monetization is expected to unravel US$33 billion in opportunity for vehicle manufacturers by 2025, according to Frost & Sullivan’s Data Monetization in Cars report. That’s huge.
There are two broad ways of monetizing car-generated data: direct and indirect data monetization.
With direct data monetization, data is treated as an asset and used as the basis to create new revenue streams. With permission customers, carmakers can share driving data that is captured by sensors in the car with third parties such as motor insurance companies. This allows them to offer usage-based insurance,drivers are beingged premiums based on the distance they clock, whether they keep to speed limits and if they accelerate or brake too hard.
Indirect data monetization uses insights car-generated data to enhance business operations and services. For example, by having information on a smart car’s performance, a carmaker is able to predict when the car requires maintenance, enabling it to provide repair instructions and prepare the replacement parts even before the car comes in for servicing. This not only prevents car manufacturers over-investing in maintenance labor and parts, but also delights customers as it shortens the time taken for maintenance.
Regardless of the data monetization strategy chosen, car manufacturers need a robust platform to efficiently store, analyze and manage vehicle data. This enables them to increase overall efficiency and optimize storage to lower operational costs. The platform should also make it easier for manufacturers to comply with the data privacy, availability and sovereignty requirements of different countries.
As cars become increasingly software-driven, mobility will experience not an incremental, but a transformational change. In future, self-driving cars will be a norm and become an extension of the smartphone, enabling consumers to be connected and productive anywhere and anytime.
At the same time, the data generated fully connected cars will not only help improve car manufacturers’ operations, but also present new revenue streams. As the road ahead for the automotive industry is lined with opportunities, it’s time for it to shift into high gear to reap them.