It is estimated that there will be about 220 million connected cars on the road by 2020, generating revenue of about $2.3T from the car sales and another $152B from hardware and software components. The segment is seeing an insane 45% CAGR. Nearly all car companies like BMW, Audi, Ford, Honda, Mercedes-Benz, Volkswagen; communication companies like Aeries, AT&T, Jasper, Sierra, Verizon and Software companies like Blackberry, Huawei, Apple, Google, Pandora, Spotify, etc are entering into contracts to develop these advanced connected cars.
Today, a large majority of people in the world are not yet aware of what connected cars are and what they can do. And yet, the connected car market is growing at ten times faster a rate than the overall car market. Today, the prices of these connected cars are way out of the bounds for a large majority of the world population since they fall in the luxury category, however, as seen with most technologies, the prices of the connected cars is set to go considerably lower in the coming five years or so.
Newest research in the connected car segment is aimed at developing approaches that could put a standalone internet connection and those also that would be relying on a secondary device like a mobile phone to connect to the internet. This could help car manufacturers collect data about the car’s performances and avoid product/software-related recalls.
According to a McKinsey Report, 13% of the buyers it surveyed across four countries – Brazil, China, Germany and United States were no longer even interested to consider buying a car that does not have internet connectivity. Moreover, over a quarter of the respondents to the survey had voiced opinions that they would consider internet connectivity as more important a feature over standard automobile features like engine power and fuel efficiency.
Despite the leaps and bounds in research, there also lie concerns on whether customers would be willing to pay a price premium for embedded connectivity and other features, and not just use their smartphones to enable connectivity. There are challenges, but there are even greater opportunities here, when it comes to the case of the connected cars, for everyone – for automobile manufacturers, for telecom companies, for software companies and even for customers.