Understanding the Connected Car Industry and How it Affects Us

June 1, 2021

A connected car is a car that communicates bidirectionally with other systems outside of the car. This allows the car to share internet access and data both inside and outside the vehicle.

General Motors was the first automaker to bring the first connected car features to market with OnStar in 1996 in Cadillac DeVille, Seville and Eldorado. The primary purpose was safety and to get emergency help to a vehicle when there was an accident.

25 years later the connected car marketplace has grown at a rapid pace. Many factors are contributing to its growth, but let’s first take a step back to learn more about the industry, the benefits of connected cars and what are the driving factors for its future growth.

Connected Car Application Types

The connected car industry can be broken down into four primary application types:

Mobility management: Application functions allow the driver to reach a destination quickly, safely and in a cost-efficient manner (e.g., current traffic information, parking lot or garage assistance, optimized fuel consumption, etc.)
Infotainment: Application functions enable users to purchase goods or services while on the go (e.g., fuel, food & beverage, parking, tolls). This also includes functions involving the entertainment of the driver and passengers (e.g., smartphone interface, WLAN hotspot, music, video, Internet, social media, mobile office)
Telematics (+mobility management): These functions aid the driver in reducing operating costs and improving ease of use.
Driver assistance: Applications involve partially or fully automatic driving (e.g., operational assistance or autopilot in heavy traffic, in parking or on highways).

Other application functions can also include breakdown prevention, driver safety and well-being (fatigue detection, medical assistance, etc.).

Connected Car Communication Types

There are many new opportunities to develop and improve vehicles making mobility safer, more efficient and more convenient. The most popular communication types are Vehicle to Vehicle (V2V) and Vehicle to Infrastructure (V2I). Based on Forbes Business Insights, the V2V communication segment is expected to dominate the market over the forecast period (2020-2027).

Today, there are five ways a vehicle can be connected to its surroundings and communicate with them:

Vehicle to Infrastructure (V2I). The technology captures data generated by the vehicle and provides information about the infrastructure to the driver. The V2I technology communicates information about safety, mobility or environment-related conditions.

Vehicle to Vehicle (V2V). Communicates information about speed and position of surrounding vehicles through a wireless exchange of information. The goal is to avoid accidents, ease traffic congestion and have a positive impact on the environment.

Vehicle to Cloud (V2C). The technology exchanges information about and for applications of the vehicle with a cloud system. This allows the vehicle to use information from others, through the cloud connected industries like energy, transportation and smart homes and make use of the Internet of Things (IoT).

Vehicle to Pedestrian (V2P). The technology senses information about its environment and communicates it to other vehicles, infrastructure and personal mobile devices. This enables the vehicle to communicate with pedestrians and is intended to improve safety and mobility on the road.

Vehicle to Everything (V2X). The technology interconnects all types of vehicles and infrastructure systems with another. This connectivity includes cars, highways, ships, trains and airplanes.

Connected Car Benefits

Connected vehicle technology can help the transport industry tackle some of its biggest issues including:

Safety

According to the U.S. Department of Transportation, motor vehicle-related crashes on U.S. highways claimed more than 37,000 lives in 2016. Furthermore, research showed that 94% of serious crashes were due to human error. With connected car applications, a vehicle can continuously monitor the environment, making up for lapses in driver attentiveness.

Mobility / Time

Connected vehicle mobility systems enable drivers and operators to make route choices that will reduce their journey time. The mobile applications are designed to provide a connected, data-enriched transport environment based on information transmitted from thousands of connected vehicles that are using the system at the same time. This data could help transport managers monitor and manage their transport system performance. For example, managing driver routes and utilizing resources as efficiently as possible.

Environment

With connected vehicle environmental applications, drivers will be able to make decisions that improve their efficiency behind the wheel resulting in a lower cost to the motorist and a reduction in CO2 emissions. Real-time information about traffic congestion and road conditions will also help drivers and transport managers make more informed decisions that can reduce the impact on the environment and cut down costs. Informed drivers will have the opportunity to avoid congested areas by taking alternative routes or public transport, or by rescheduling their journey, all of which can make the journey more fuel-efficient and better for the environment.

The Future of Connected Vehicles

Since the first connected car hit the market in 1996, technology has played an important part in the growth of the connected car market in recent years. The incorporation of concepts such as data integration and machine learning has opened up a vast amount of potential for market growth, and investors are intrigued by what connected cars have to offer.

Internet of Things

A contributing factor to the rise of connected cars is The Internet of Things (IoT) while it provides mobile services in the car with high-speed internet, which enables features like real-time traffic control and interaction with the car manufacturer service for remote diagnostics and improved company logistics automation.

The end of 2020 brought the beginning of the new 5G network that promises high speeds and better connectivity. Integrating 5G connectivity in vehicles would mean faster network speeds. If someone needs to make a call, they would have more coverage in rural areas and can connect more quickly through their car. Infotainment systems would also be able to integrate 5G and provide higher-quality service.

Technological advancements have drawn the attention of government organizations as well as public organizations. The advent of smart connected electric cars has fueled the demand for the product. The technology and benefits will fuel the demand for connected car solutions in the forthcoming years.

More Connected Car Facts and Statistics

Although the global coronavirus pandemic negatively impacted the connected car industry, it is expected to recover and grow around 166 billion U.S. dollars by 2025.
Customers are now willing to pay more and switch manufacturers just to be able to use mobile devices and connectivity.
The global market for connected cars is expected to grow by 270 percent by 2022, and more than 125 million passenger cars with embedded connectivity.
Fortune Business Insights says that the global market size was USD 14.34 billion in 2019 and is projected to reach USD 48.77 billion by 2027.

Article Sources:

“Automated and Connected Vehicles“, autocaat.org, 2015

“Global Connected Car Market Growth”; Statista retrieved May 2020

“Counterpoint Research Internet of Things Tracker”; 2019