Connected-car makers, telecommunications companies, and app developers will see significant revenue from selling connected-car features, such as in-car entertainment. The cost of connected-car services and products often comes at a surcharge to users, either included in the up-front price of the car or paid over time. The various connected-car services and products could generate an estimated $152 billion in revenue for carmakers in 2020, according to Strategy&.
Entertainment is the feature consumers show the most interest in, followed by connected safety features. Sixty-nine percent of respondents in a recent survey indicated that they would like streaming music for their cars, such as services provided by Pandora and Spotify, and 52% of consumers would like their car to alert them about traffic signals, congestion, accidents, and more.
- For all the excitement among automakers and other connected-car partners, only one-third of Americans are interested in connected-car features for now. Owners of luxury cars tend to be most interested in the connected car. However, in a positive sign for connected-car makers, those who use these connected services are very satisfied with them.
- Consumer awareness is very low: In a recent survey, about 80% of US consumers said they had either never heard of connected cars or were unsure what the term referred to. In the poll, 44% of drivers said they had never heard of connected cars. An additional 42% had heard of the term but didn't know what it meant.
- The primary barriers to the connected-car services market are the high price and major concerns around whether these vehicles will be vulnerable to hackers' attacks. Prices will begin to come down over time and carmakers will need to partner with technology companies and security experts to overcome technical hurdles and make sure connected cars are safe from hacking.
- Self-driving cars will be the next major automotive technology, but that is a long way off. According to one industry estimate, 180,000 completely self-driving cars will ship in 2020.
Carmakers typically offer a selection of features in their connected cars, including safety products; traffic-management tools; entertainment consoles and apps; and vehicle management. Some of these features are available only in cars with embedded connections, and some can be found in cars running both embedded and tethered technology.
While we believe that the biggest benefit connected cars offer automakers is internal [...]