Since 2014, more and more vehicles have featured embedded cellular modems, allowing them to connect to the internet. In this post, we’ll answer how many connected cars are being sold and operated today, and how this opens up opportunities for your business.
In the 1990s, the introduction of on-board diagnostics led to the connected car. Vehicle connectivity back then was simply meant for drivers to quickly place emergency calls during an accident.
Since then, U.S. drivers have clocked in 50% more miles driven while fatalities per 100 million miles have dropped by 20%. The connected car has grown far beyond emergency calls, bridging vehicle data with cellular networks for advanced GPS navigation, traffic alerts, maintenance warnings, and more.
When compared to the modern-day evolution of computers and phones, cars may look like they’re moving at a much slower pace. But the foundation for automotive innovation is set. It’s just been too difficult for new ideas to breach the surface.
The use cases of a smartphone multiplied tenfold because third-party apps found new ways to elevate our daily habits and processes with cellular connectivity. Yet complex and fragmented automotive design systems have limited developers from tapping into the vast potential of connected cars in the same way.
In this guide, learn how many connected cars are on the road today and how businesses are taking advantage of this number to build apps for vehicle experiences, policies, behavior, and more.
There will be 400 million connected cars on the road by 2025.
Every year, vehicle manufacturers equip more of their models with internet connectivity. ABI Research expects sales of connected cars to reach 115 million globally in 2025—almost four times as much as in 2020.
The United States was the country with the largest percentage of connected vehicles sold last year. Of all passenger cars sold in the country in 2020, around 91% were connected. That’s over 13 million connected vehicles sold in the U.S. alone.
A connected car is a vehicle shipped with a built-in 3G, 4G, or 5G cellular modem right from the factory. With internet connectivity, the car is able to communicate with apps and services, similar to how a smartphone would. Connected cars can also communicate with external networks and infrastructure, like other vehicles, electrical grids, roads, and buildings.
Each car manufacturer develops its own connected services account. This is a mobile app where drivers can access vehicle information by communicating with the car’s embedded cellular modem. For example, Chevrolet’s connected services account is called OnStar and their mobile app is called MyChevrolet.
Vehicle telemetry data include a car’s location, odometer reading, fuel tank level or EV battery level, tire pressure, and engine oil life. Using the app, vehicle owners can check the location of their car, lock and unlock it, preheat the car, and get notified when they run low on gas—all directly from their phones.
The first mass deployment of vehicles with 4G LTE happened in 2014. By 2015, mobile apps like Chevrolet’s now-discontinued RemoteLink were already seeing millions of interactions a month from connected services subscribers. Today, 66% of drivers in the U.S. use connected services.
Connected car data was introduced to power capabilities across use cases like infotainment, safety, navigation, diagnostics and efficiency, and payments. But today, connected cars — which includes 97% of electric vehicles — produce data that directly impact new and emerging use cases for sustainable energy, research and development, auto insurance, and transportation infrastructure.
Vehicle connectivity allows utilities and their third-party partners to facilitate communication between power grids and electric vehicles. Managed charging is a form of demand response that energy companies can implement to control grid load during peak hours of electricity usage.
Utilities are able to integrate directly with EVs using EV APIs and obtain information on battery capacities or state of charge within a designated area. This helps them predict loads on the grid, set time-of-use rates, or remotely start and stop charging to actively manage demand.
How apps are doing this: Mobile application, Optiwatt, works with utilities and EV drivers to help schedule charging during hours with lower demand for electricity and cheaper rates. Vehicle owners provide Optiwatt information on their electricity providers and integrate their vehicles to the app to see detailed information on electricity demand in the area and the best hours to charge their vehicles.
Experts predict R&D optimization to be one of the most monetizable use cases for connected car data by 2030. R&D efforts include using connected car data to conduct studies on vehicle health, driving behavior, EV charging patterns, and more. Local governments, public entities, corporations, and end-consumers can benefit from up-to-date automotive databases to help with infrastructure planning, automotive sales, technology implementation, or business strategy.
How apps are doing this: Battery report software, Recurrent, uses vehicle connectivity to build battery health reports for drivers who integrate their EVs with the app. By obtaining data on battery capacity and usage, Recurrent is able to build a rich dataset of battery information across different EV makes and models. These reports facilitate the sales of used EVs for both drivers and sellers.
Shifts in driving behavior during the pandemic have led insurance companies to reevaluate risk assessment methods. Top auto insurers in the United States are using vehicle telematics to administer hardware-free pay-per-mile solutions. This allows them to retrieve mileage readings directly from odometers, unlike OBD-II dongles that calculate approximate mileage based on location and start and end times of a driver’s trip. With car connectivity, insurance providers find it easier to price premiums more accurately, which prevents intentional or unintentional mileage underreporting.
How apps are doing this: Usage-based insurance analytics provider, True Mileage, connects to vehicles to collect mileage by time of day. This data is then run through the company’s analytics models to calculate an accurate discount for policyholders. This allows True Mileage to categorize risk and adjust rates accordingly when offering COVID-19 premium refunds. It also helps them continue offering suitable discounts to drivers in the long term.
Connected car data can be used to improve roads and infrastructure by enabling: 1) vehicle-to-vehicle communication, 2) vehicle-to-everything communication, 3) new ways to collect funds for services and improvements.
The roll-out of 5G technology will accelerate plans to use communication between cars and roads as a way to manage congestion and proactively reduce collisions. Mileage data from electric vehicles are also being collected by states to roll out road usage charge programs that can help fund better roads and highways.
How apps are doing this: Tolling solutions provider, Emovis, uses vehicle connectivity to obtain accurate mileage readings from EVs for pay-per-mile road tax programs. In this program, EV owners opt in to pay for road usage based on the number of miles driven in place of a one-time registration fee.
If your business is developing an app for cars, a lot rides on your ability to manage multiple technology components and product deliverables. This includes but isn’t limited to hardware, software, data infrastructures, content and services, sales, and customer relationship management.
This is where you ask your team, “Do we build or do we buy connected car integrations?”
Ultimately, there are a few factors to help you make a decision.
Target markets: How many vehicle brands should your app communicate with to reach desired audiences? Building and maintaining vehicle integrations take time, headcount, and long-term costs. If you’re a smaller company or division planning to scale an app to 10 or 20 vehicle brands, you might want to consider a solution partner for API standardization.
Privacy management: Do you have the necessary compliance and protocols for authorizing and managing consumer data? And if not, do you have the time and talent to tackle this from scratch in-house? Connected car data is extremely valuable and closely scrutinized. With more consumers and businesses worried about API cybersecurity, your integrations need thorough protection from all kinds of risks.
Industry competition: Will you lose out on customers and market differentiation if product roadmaps are delayed by your technical strategy? Recurrent prioritized speed to market in the competitive EV battery software space. Working with an API partner helped them speed up production by 6 to 12 months.
Team bandwidth: Does your team have the time and headcount for core product delivery, additional infrastructure development, ongoing maintenance, and added customer support in the case of errors? Splitting the focus of your team can be detrimental to your go-to-market timelines. Integration quality should be unkept by a dedicated team with the necessary expertise and bandwidth.
Smartcar partners with mobility businesses to avoid these bottlenecks through a centralized platform and customer support. To learn more about our APIs for connected cars, schedule a free demo today or check out our beginner's guide to car APIs!
This post was updated on March 21, 2022.