420 million connected cars expected by 2018

Think tank, IDATE, forecasts a 57% surge in connected cars to 420 million in 2018, up from 45 million connected vehicles in 2013.

The researchers noted that a “connected car” is one equipped with access to the Internet, whereby it can communicate with the outside world. This allows the car to share Internet access to other devices both inside and outside around the vehicle.

The embedded systems will lead the market with 222 million units by 2018, IDATE said.

“The strategy of most manufacturers is to make their cars connected,” said Samuel Ropert, project leader of the report.

“The main driver here is based on the regulation related to safety issues in Europe and the underlying revenue opportunity for them. In the USA, the recent GM announcement to embed 4G modules in all new cars is seen as a key trigger for market take-off.”

IDATE said that, for telcos, the revenue opportunity could be interesting as the connected car will generate traffic that telco will charge indirectly.

It said that all main M2M mobile carriers are involved in the connected car space, as it represents a major market by volume. In a context where their traditional mobile revenues are flat and even declining in some regions, providing mobile connectivity in cars is a key business opportunity for telcos, the research group said.

Beyond car-related applications in driver assistance, from the perspective of a telco, the car can be seen as an additional cellular device, with a potential high-consumption service profile with such usage as the mobile Internet, entertainment on demand and mobile hotspot features.

“The prime business model remains the traditional wholesale relationship (B2B2C), even though AT&T unveiled a retail data plan for Audi A3 in early March and AT&T is expected to announce a new version of its share plan by the summer 2014 which includes the connected car,” IDATE said.

For Internet players, the automobile is an additional connected device just as smartphones, tablets and laptops and needs to be addressed.

“However, Apple and Google do not have really the same approach. Indeed, whereas Apple aims to introduce its technology to interface with its products, Google is promoting the embedment of its technology into the car as a regular device.”

“Google also wants to collect data to provide the most accurate advertising as possible, such as a related point-of-interest, based mainly on location,” IDATE said.

In 2018, the connectivity revenue for connected cars will exceed EUR8 billion (R117 billion), the research group said.

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420 million connected cars expected by 2018