Revving up the value of connected car data
In 2020, connected cars represented over 90% of all new cars sold in the USA alone, with 5G cars expected to represent over one quarter of global connected car sales by 2025. After a few years of dealing with unprecedented supply chain disruptions, parts shortages, and a fluctuating trade and political climate, car manufacturers are looking to connected car technologies to help them compete and stand out in an increasingly fierce and fast-moving market.
Today’s connected cars can handle data volumes as high as 25 gigabytes per hour – and that’s only going to go up. This variety and volume of back-and-forth data helps manufacturers develop better vehicles and in-car experiences, reduce energy consumption, and increase safety. It also powers entirely new revenue streams such as on-demand subscription models, and customised tools for fleets and logistics providers to help them significantly improve efficiency and profitability.
But for many traditional auto manufacturers and OEMs, this is uncharted territory. They realise the value that is locked in driver and vehicle datasets, and they understand the importance of offering customised driver experiences and features. But to effectively implement these new operational processes and business models, stakeholders across the automotive value chain must collaborate and incorporate new streams of technological know-how. Part of that collaboration includes centrally storing and managing disparate volumes of transactional and usage data – and leaning on AI-powered solutions and analytics to realise the full power and business potential of all that data.
Connected car data sources
Modern cars are equipped with hundreds of sensors which are the primary source for connected car data. However, enhanced connectivity and high-capacity computing mean that there are a variety of other places where that data can come from. These are the three main sources for connected car data:
- Vehicle telematics are comprised of devices, like GPS, in-vehicle sensors, and control units – in other words, all the tools used to receive and record data in a connected car.
- V2X communication stands for “vehicle to everything” and is real-time communication between a vehicle and any entity that may affect – or be affected by – the vehicle. V2X is actually an umbrella term that is comprised of seven different vehicle-to-something communication sets:
o Vehicle to network (V2N) connects the vehicle using existing cellular networks (LTE, 4G, 5G). Essentially, the car becomes like a device itself, allowing it to interact with other vehicles and other devices, just like a mobile phone.
o Vehicle to infrastructure (V2I) is a bidirectional exchange between the vehicle and the road infrastructure including cameras, traffic lights, lane markers, road signs, parking meters, etc.
o Vehicle to vehicle (V2V) uses dedicated short-range communication (DSRC) frequencies allowing vehicles in range to share their speed, location, or heading.
o Vehicle to cloud (V2C) leverages V2N access to broadband networks to exchange data in the cloud. This is often used by manufacturers to remotely perform software updates and vehicle diagnostics. It may also be used to communicate with other IoT devices that the user chooses to connect.
o Vehicle to pedestrian (V2P) can, for example, connect to sensors on wheelchairs or strollers to warn of their proximity. More sophisticated systems can also learn to spot and identify upcoming pedestrians or children playing near the road.
o Vehicle to device (V2D) is usually powered by a Bluetooth connection. Examples include Google Android Auto or the Apple CarPlay system that lets smartphones, tablets, and wearables interact with the car’s infotainment system.
o Vehicle to grid (V2G) with “grid” being the power grid, V2G provides a bidirectional data exchange between EVs and the smart grid. This technology helps to optimise power usage and even support “prosumers” to sell or redistribute surplus EV battery power.
3. Car infotainment systems are designed to deliver information and entertainment via touchscreen displays and audio/video interfaces. When paired with smartphone integration services, they give drivers hands-free access to things like texts, emails, and music libraries. They often also support streaming video services to entertain passengers in the back seat(s).
Harnessing vehicle data: easier said than done
The stakes are high for connected car manufacturers. There’s no market for smart technologies that only work most of the time. Nor will customers be happy to pay for services that can’t demonstrate immediate usefulness and robust security protocols. A few of the hurdles that today’s auto makers are working to overcome include:
● Missing infrastructure: For decades, mobile phone providers have worked toward the ultimate goal of providing “coverage anywhere”, all while steadily improving their networks’ capacity to handle increasing demands for speed and bigger data volumes. Connected car manufacturers face similar challenges and, again, the stakes are high because “fairly reliable” connectivity simply isn’t good enough. As users place more reliance on vehicular connectivity, and as more services are developed and sold, loss of connectivity creates exponentially more inconvenience and problems for the driver. Most auto makers are looking to 5G as the obvious choice for reliable connectivity, but that’s not entirely in the bag yet, so the industry remains planted firmly at the drawing board, with significant investments going into skills and R & D for future connectivity technology.
● Lagging cybersecurity: For connected car technologies to grow more relevant and competitive, car manufacturers are capturing increasingly personalised data from users. This can include biometrics, preferences, frequent destinations, and portals to other devices and personal applications. Yet, surprisingly, only 10% of security professionals in the automotive industry say their organisations have a centralised cybersecurity team that is equal to supporting the product development process as it matures. As consumers get more data-savvy, they are increasingly demanding transparent and immensely robust security protocols for all their IoT and connected devices – including cars.
● Complex data and subscription models: Processing and managing the growing volume of connected card data is a challenge that rises in cost and complexity every year. For connected car features to remain viable and profitable, car manufacturers must define many of the variables that affect the cost of connectivity, and how to recoup those costs in a way that makes sense and adds value for consumers.
The source of the data, the car’s geographical location, available infrastructures, and performance requirements all have significant impact on the type of subscriptions that can be realistically offered. For example, while all connected car drivers have an expectation of seamless service regardless of where they are located, there may be some tolerance for disruption of consumer infotainment services, whereas emergency vehicles, or victims of accidents or breakdowns have a much more zero-tolerance approach to fluctuations in connectivity. From the manufacturer and customer’s point of view, the user-facing costs associated with subscription services should remain predictable. To address this challenge, car network service providers will have to clearly define their features and limitations so that users understand what to expect.
● High competition for customer loyalty: Smartphones have set the bar incredibly high when it comes to speed, user experience, functionality, and usability. For car manufacturers, this means not only do they have to develop really useful and practical in-car applications – they also have to make them as intuitive and easy to use as the driver’s smart phone. This is actually a pretty daunting task and one that connected car manufacturers are in a race to get right. Longstanding criteria like fuel efficiency and zero-to-sixty ratings are now being cited alongside “intuitive interface” as competitive features in a new car.
Monetizing car data with new mobility services
A 2020 survey by McKinsey unearthed that on average, as much as 60% of respondents would switch car brands to achieve improved connectivity. Similarly, 39% of consumers were interested in unlocking additional digital features after purchasing a vehicle. This translates into potential global revenue from car data monetization as high as US$ 750 billion by 2030. As car manufacturers recover from a disruptive couple of years, the most innovative and resilient auto makers and OEMs are exploring ways to double down on better customer service offerings and greater opportunities for new revenue. Here are some of the new revenue methods:
● Generating direct revenue by customising functionality and services to allow drivers to unlock the features that are most important to them. For example, urban drivers may value data that helps them find and pay for parking, whereas a rural user might prefer sensors to monitor driver fatigue or access to live road conditions. Older drivers may want advanced safety options, where younger drivers or parents may value better infotainment and video streaming. So essentially, a new connected car is something of a blank slate: Only the most essential connected data is included, but to switch on additional features in the cloud, drivers must choose and pay for the specific features they want.
● Adding value to existing products by offering connected solutions that help drivers save money and optimise efficiency. For example, partnering with insurance companies and using driver data to deliver personalised insurance and warranty plans to reward conscientious drivers. Or analysing driving patterns and frequent destinations to deliver tailored schedules and route-planning services that help drivers save fuel and time on their regular commutes. We are also seeing enormous growth in independently owned MaaS (mobility as a service) fleets such as Uber and Lyft, urban delivery networks, and peer-to-peer car-share networks. And while these networks are powered by mobile connectivity, they also have enormous potential to become more streamlined, efficient, and profitable with the application of customised connected car data insights.
● Optimising logistics networks to support the growing demand for same-day and next-day deliveries. The Amazon Effect has changed the shape of supply chains and fulfilment logistics. As consumer goods are atomized from one or two central warehouses into hundreds of regional distribution centres, businesses are challenged to keep their last-mile delivery fleets running smoothly. When connected car data meets AI-powered analytics, logistics managers can optimise routes, lower maintenance costs, and reduce the frequency of breakdowns and delays.
● Reducing risk and loss is a primary concern for any fleet manager – regardless of the type of vehicle or nature of their service. Connected car data systems can perform regular diagnostics on vehicles, warning of impending problems and reminding about necessary maintenance. Sensors can also help assess driver behaviour to ensure safe and courteous practices, as well as efficient use of time on the road and downtime. And these are just a few examples of the wide range of customisable commercial data subscription services that help to reduce risk and add value for both the customer and the manufacturer.
Car data privacy and automotive cybersecurity
In modern connected cars, the growing volume of personal data and the increased integration of other IoT and mobile devices represents an obvious security threat and makes connected cars an attractive target for hacking.
In 2021, the WP.29: Vehicle Cyber-Security Management System was developed in cooperation with the United Nations Economic Commission for Europe (UNECE). The document recognised the potential vulnerability of connected cars as targets for cyber attacks. The intent of WP.29 is to make cybersecurity an integral part of the entire connected car ecosystem. Soon, OEMs will need to implement a certified cybersecurity management system (CSMS) across the entire lifecycle of any given connected vehicle.
At the moment, many cybersecurity companies are working with suppliers and other industry players in the adoption of CSMS protocols. This includes securing design and development phases with encryption technologies like Format-Preserving Encryption (FPE) and using Virtual Private Networks (VPNs) to hide characteristics of the original data and communication networks. These are a few of the crucial steps that manufacturers and OEMs are taking to meet security requirements throughout the supply chain – while still allowing for the collection and processing of important data. This balance is essential for realising the full potential of connected car data.
Connected car data: where do we go from here?
In addition to the growing ubiquity of connected car technologies, the World Resources Institute reports that EV passenger vehicle sales have also risen by approximately 50% per year since 2015. If this rate of growth continues, EVs could make up about 50% of all car sales by 2026 and close to 100% by 2028. And while experts say that we’re still several years away from truly autonomous cars, advanced driver assistance systems (ADAS) are rapidly becoming more sophisticated and competitive.
So, what does this mean for the automotive industry? On the one hand, it’s a great deal of change to absorb in a short amount of time, and it means working with a lot of new tech-heavy OEMs, developers, and security partners. But on the other hand, it’s something of a renaissance – bringing actual game-changing innovation to an industry that prior to the digital age, had not changed all that much in 50 years. And in the end, it is data that supports and informs all of this new technology. How drivers behave, how vehicles perform, where people go, and how they want to get there…data delivers the answers to all these questions. And when that data is brought together in an agile, AI-powered hub, to be analysed and managed, it delivers the powerful and actionable insights the auto sector needs to move with its drivers, into the digital age.
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