Connected Car Market

[387 Pages Report] The global connected car market is projected to grow from USD 12.4 Billion in 2024 to USD 26.4 Billion by 2030 at a CAGR of 13.3%. The connected car market is experiencing exponential growth, driven by various factors. Foremost is the surging consumer demand for constant connectivity and reliance on technology, particularly among tech-savvy populations. This insatiable need for connectivity is being met by rapid advancements in automotive technology, such as the rollout of 5G networks and AI-powered features. Governments are also playing a catalyzing role, with regulations like the US Department of Transportation's mandate for vehicle-to-vehicle communication technology in new cars. The popularity of automation, ridesharing, and mobility services is further propelling the connected car market. Finally, the increasing production and sales of vehicles, especially luxury models, supplement this dynamic sector's growth.

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Market Dynamics

DRIVER: Increasing Adoption of Telematics and usage-based Insurance

Telematics has merged into the automotive mainstream at a rapid rate. Car telematics help improve driving behavior and road safety and align insurance premiums via usage-based insurance (UBI). According to GSMA (Global System for Mobile Communications), the telematics industry is estimated to reach USD 750 billion by 2030. There are two significant reasons for the growth of the telematics industry. First is governments' increasing willingness to mandate telematics services such as emergency-call capabilities, which is already happening in the European Union and Russia. Second is the increasing demand for excellent connectivity and intelligence in vehicles. Also, the automotive telematics market is projected to grow from USD 9,041.6 million in 2024 to USD 16,111.0 million by 2030, at a CAGR of 10.1% from 2024 to 2030. This growth is driven by the increasing demand for vehicles with telematics services, growing concerns regarding safety in the event of breakdown and accidents, rising demand for advanced technologies, and the high purchasing power of consumers. Stolen vehicle assistance, insurance-based assessment, and other advanced services are aiding manufacturers in enhancing vehicles' overall safety and efficiency.

RESTRAINT: Lack of infrastructure for the proper functioning of connected cars

Vehicles are not connected to the cloud or one other because of the restricted network connectivity on highways. Compared to industrialized economies, the expansion of IT infrastructure on highways is occurring more slowly in developing nations like Mexico, Brazil, and India. The necessary 4G-LTE and 3G communication networks are only available in urban and semi-urban areas. Low connection is a problem even though many third-party logistics companies operate in rural and semi-urban areas. As a result, developing the connected automobile industry in developing nations may need more IT and communication infrastructure in these areas and a delay in governmental regulations. Additionally, industry participants may be subject to national telecom laws, such as those about legal intercept and in-country entity requirements, as telecom service providers. It will be necessary to discuss and regulate the cross-border use cases and the interoperability of the various platforms. Our reliance on data networks also brings up the issue of net neutrality—in which internet service providers give some data transmission priority.

OPPORTUNITY: Development of ridesharing and mobility services

Connected autonomous car technology is quickly evolving, and several companies are focusing on this technology, with Tesla leading the way. Autonomous self-driving vehicles are expected to create ridesharing and mobility services opportunities. For instance, Waymo already has driverless cars picking up passengers, while General Motors plans to roll out its service by the end of 2019. Ford indicates it will have a self-driving fleet ready for ridesharing by 2021. Ridesharing and other mobility services with autonomous cars will require a strong IoT backup, as accessing all the services would require connected vehicles and devices. Wi-Fi, 4G, GPS, Bluetooth, and 5G (upcoming) are vital in ridesharing. With the growing number of connected devices, ridesharing will be accessible to a more extensive user base in the future than it is today. Technological advancements in electric vehicles will increase the demand for autonomous vehicles. Shared mobility is also a key growth driver for autonomous vehicles. As people are comfortable sharing rides, it opens revenue doors for ride-sharing companies and mobility service providers. Currently, semi-autonomous vehicles are used in some of the ride-sharing services. Developing connected autonomous vehicles would drive ride-sharing growth as these vehicles do not require drivers and, hence, can reduce costs for service providers. Ridesharing with connected autonomous vehicles would increase the profits of service providers as there will be no share of drivers in the rides. Tesla plans to launch the first robotaxi as part of a broader vision for an autonomous ride-sharing network by 2020. Tesla estimates that running a robotaxi would cost around USD 0.18 or less per mile. This would challenge the USD 2–3 gasoline-powered ride-sharing vehicles per mile. It is a disruptive technology that can lead to the development of new mobility models and provide vast opportunities for ride-sharing and other mobility services.

CHALLENGE: Cybersecurity

The connected car market faces significant cybersecurity risks that must be addressed to ensure driver safety and data privacy. Poorly designed vehicle architectures can allow hackers to remotely access critical systems like brakes and steering, potentially causing accidents. Connected cars also collect vast amounts of personal data, which could be breached and used for identity theft. For example, in 2015, researchers demonstrated how they could remotely hack a Jeep Cherokee, taking control of the vehicle's functions and turning off the engine on the highway. Overcoming these challenges requires robust security measures from automakers, like solid encryption and regular software updates, and collaboration with suppliers and regulators to establish global cybersecurity standards. Prioritizing cybersecurity is crucial for the connected car market to reach its full potential while maintaining consumer trust.

Connected Car Market Ecosystem.

The major connected car market companies have the latest technologies, diversified portfolios, and global distribution networks. The major players in the connected car market include Continental AG (Germany), Robert Bosch GmbH (Germany), Harman International (US), Visteon (US), and Airbiquity Inc (US).

The embedded connectivity segment is estimated to be the largest market during the forecast period.

Embedded systems dominate the connected car market globally due to their seamless integration with vehicles, cost optimization benefits, and ability to meet regulatory requirements. Automakers leverage embedded solutions to comply with government mandates like the eCall system in Europe and California's OBD II standards, ensuring vehicles are equipped with essential connectivity features. Embedded systems also enable automakers to offer cloud-based services such as remote diagnostics, over-the-air updates, and real-time traffic information, enhancing the overall driving experience while optimizing consumer costs. For instance, Tesla's (US) vehicles highlighted the power of embedded connectivity by providing features like remote diagnostics and over-the-air updates through a fully integrated system that sends vehicle data to the cloud for immediate assistance.

The demand for safety and security features further drives the preference for embedded systems, as they facilitate critical functionalities like automatic emergency calling (eCall) and remote diagnostics. Embedded solutions offer a reliable and comprehensive approach to connectivity, ensuring an essential level of integration with the vehicle's electrical architecture for enhanced performance and security. As the connected car market continues to evolve, embedded systems are poised to maintain their dominance by providing a robust foundation for advanced features and services that cater to the growing needs of consumers and regulatory standards worldwide.

trong>Aftermarket is the fastest-growing segment in the connected car market.

The aftermarket provides a more affordable and accessible option for consumers to add connectivity features to their existing vehicles. Aftermarket solutions like dongles that plug into the OBD-II port are significantly cheaper than buying a new connected car from the dealer. This makes connected car technology available to more consumers who cannot afford a new connected vehicle. Also, the aftermarket allows consumers to customize their connectivity features based on their specific needs and preferences. Aftermarket providers offer a wide range of products like WiFi hotspots, vehicle tracking devices, and dashcams that can be easily installed in any vehicle. For instance, companies like Pioneer (Japan) and Kenwood (US) offer advanced infotainment systems that include GPS navigation, Bluetooth connectivity, and smartphone integration at a fraction of the cost of new car models equipped with similar features. This makes it easier for a broader range of consumers to enjoy the benefits of connected car technology without purchasing a new vehicle. Also, ERM Advanced Telematics (Israel) launched StarLink Tracker in January 2023, an aftermarket device that integrates advanced vehicle tracking, driver behavior monitoring, theft prevention, Short-Range wireless communication, Wi-Fi, and 4G capabilities in a single device.

Also, the aftermarket is benefiting from the increasing popularity of vehicle sharing and rental services. Companies like Uber (US) and Lyft (US) are equipping their rental fleets with aftermarket connectivity solutions to enable driver monitoring, navigation, and in-vehicle entertainment features. As the sharing economy grows, so will the demand for aftermarket connected car technology in commercial fleets. For instance, Verizon Connect (US) offers a range of aftermarket telematics devices that can be easily installed in any vehicle to provide fleet management capabilities like GPS tracking, driver behavior monitoring, and fuel usage reporting. This allows businesses to optimize fleet operations and reduce costs without purchasing new connected vehicles. Hence, the aftermarket segment is the fastest-growing segment in the connected car market due to its affordability, customizability, and applicability to the sharing economy. As consumer demand for connectivity rises, the aftermarket will play an increasingly vital role in making connected car technology accessible to the masses.

Onboard unit to hold the largest market share in the connected car market

The onboard unit (OBU) segment stands out as a pivotal component in the connected car market, serving as the central nervous system of modern vehicles. This OBU acts as the brain and starts communication among various vital functions. It gathers data from sensors across the vehicle, monitoring engine performance, tire pressure, and GPS location, relaying to a central server or cloud platform. This data fuels essential features like remote diagnostics, emergency assistance, and even stolen vehicle tracking, exemplified by General Motors (US) OnStar system, offering services such as roadside assistance and diagnostic reports to keep drivers informed and safe. Beyond data collection, OBUs are the gateway to a realm of advanced connected car functionalities, providing real-time traffic updates, weather alerts, and in-car Wi-Fi hotspots for continuous connectivity on the go. Moreover, OBUs play a critical role in Advanced Driver-Assistance Systems (ADAS), such as automatic emergency braking and lane departure warnings, leveraging sensor data processed in real-time. For instance, Tesla's (US) Autopilot system utilizes OBUs to interpret camera and radar data, enabling precise control of steering and braking to enhance safety by avoiding collisions and maintaining lane integrity, highlighting the pivotal role OBUs play in driving technological advancements for safer journeys.

The dominance of OBUs is underscored by their market size, with the global On-Board Diagnostics (OBD) market, a subset of the OBU segment, projected a CAGR of 54.6% from 2024–2030. This growth rate highlights the indispensable role OBUs play in the connected car market, ensuring seamless communication, enabling advanced features, and shaping the future landscape of connected vehicles. As the automotive industry continues to evolve, OBUs will remain at the core, facilitating innovation, enhancing safety, and driving the next phase of connected car technology.

Asia Pacific connected car market is expected to hold the largest market share during the forecast period.

The Asia Pacific region is poised to lead the growth in the connected car market, driven by factors that highlight its potential as a key player in the automotive industry. China is at the forefront of this growth trajectory, fueled by its expanding economies and increasing connectivity infrastructures. For instance, China, the world's largest automotive market, is witnessing a surge in connected car adoption, with companies like Geely (China) and BYD (China) incorporating advanced connectivity features to fulfill consumer demands. Moreover, in September 2022, Changan Automobile (China) launched a new brand 'Zhuge Intelligence' offering various vehicle connectivity services and unveiled the CD701 Prototype, its first vehicle built on the new SDA platform. Also, in a developing country like India, in December 2022, Tata Motors displayed its connected car technology, advanced driver assistance systems (ADAS), and hydrogen as a fuel alternative at the Auto Expo 2023.

Moreover, key players are investing continuously in plant expansion and partnerships with other technology providers to increase their presence. For instance, in March 2022, Hyundai (South Korea) inaugurated its first manufacturing facility in ASEAN, located in Indonesia, with an investment of USD 1.55 billion. With an annual capacity of 250,000 units, the facility produces models equipped with the latest connectivity features for Creta, Santa Fe, Tucson, Stargazer, and IONIQ 5. Also, In June 2022, Qualcomm Technologies Inc. (US) expanded its relationship with PATEO Corporation (China) to develop Next-Generation Qinggan Intelligent Cockpit Platform Solutions, focusing on intelligence, smart car connectivity, service-oriented architecture (SOA), and intelligent cockpits based on central controllers.

Furthermore, innovative city initiatives in the Asia Pacific region are reshaping urban mobility and fostering the growth of connected vehicles. Cities like Singapore and Seoul are investing in smart infrastructure to support connected mobility, with initiatives like intelligent traffic management systems and electric vehicle charging networks gaining traction. In Singapore, the Smart Nation initiative includes projects like autonomous vehicle trials and intelligent traffic management systems, creating a conducive environment for adopting connected cars. These developments highlight the region's initiative-taking approach towards sustainable and efficient transportation solutions, positioning it as a hub for connected car innovation and growth in the coming years.

Key Market Players

Major manufacturers in the connected car market include Continental AG (Germany), Robert Bosch GmbH (Germany), Harman International (US), Visteon (US), Airbiquity Inc. (US), Cloudmade (UK), Intellias (Ukraine), Tesla (US), Ford Motors (US), Audi (Germany), AT&T (US), Qualcomm Technologies Inc. (US), Verizon (US), TomTom International BV. (Netherlands), Sierra Wireless (Canada), APTIV (Ireland), SPA (Italy), Panasonic (South Korea), Microsoft Azure (US), Telefonica (Spain), and Geotab (Canada).

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Scope of the Report

With the given market data, MarketsandMarkets offers customizations per the company's specific needs.

The study segments the connected car Market:

Connected Car Market, By Service

• Navigation
• Remote diagnostics
• Multimedia streaming
• Social media & other apps
• OTA updates
• On-road assistance
• eCall & SOS assistance
• Remote operation
• Auto parking/connected parking
• Autopilot
• home integration
• Stolen Vehicle Recovery/Warning

Connected Car Market, By End Market

• OEM
• Aftermarket

Connected Car Market By Form Type

• Embedded
• Integrated

Connected Car Market, By Hardware

• Head Unit.
• Central gateway
• Intelligent antenna
• Electronic control unit
• Telematics control unit
• Keyless entry system
• Sensor

Connected Car Market By Transponder

• Onboard unit
• Roadside unit

Connected Car Market, By Network

• DSRC
• Cellular

Connected Electric Car Market, By Vehicle Type

• BEV
• PHEV
• FCEV

Recent Developments

• In February 2024, The Continental Introduces a New Digital Tool to Check Truck Tires, known as ContiConnect Lite. It bridges tire sensors and tire management, offering an accessible gateway to selected ContiConnect features via smartphone. This tool allows fleets and truck drivers to access tire data, manage up to five vehicles, and receive alerts for tire conditions, enhancing safety, reducing breakdowns and maintenance costs, and improving fuel efficiency. ContiConnect Lite is particularly beneficial for smaller fleets using intelligent tires or Generation II sensors, requiring no additional hardware and providing convenience through the ContiConnect On-Site app available on IOS and Android versions.
• In February 2024, Harman International launched the HARMAN Ready Connect 5G Telematics Control Unit (TCU), a significant advancement in automotive connectivity that leverages Qualcomm Technologies, Inc. (US) Snapdragon Digital Chassis. The 5G-enabled TCU is designed to deliver rich in-cabin experiences for consumers while reducing time to market and engineering efforts for automakers. It offers features like enhanced traffic notifications, communication between the car and the environment, and improved connected mobility experiences focused on entertainment, productivity, and situational awareness. The future-proof solution provides modular hardware upgradability and a scalable software architecture to maximize reuse across product variants, highlighting Harman and Qualcomm's collaboration to revolutionize automotive connectivity.
• In February 2024, Karma Automotive's recent acquisition of Airbiquity's technology assets and software product portfolio marks a significant step towards enhancing its connected vehicle solutions. With Airbiquity's expertise in over-the-air updates, software development tools, data management, and analytics, developed over two Decades ago, Karma aimed to integrate these capabilities into its Karma Cloud Services and embedded vehicle technology. This strategic move expands Karma's technological offerings and positions them to deliver software-defined and continuously connected vehicles, leveraging Airbiquity's established solutions deployed globally across diverse transportation industry customers.
• In September 2023, Robert Bosch GmbH introduced video perception software as a standalone product that can be used independently of any hardware, providing automakers with maximum flexibility by allowing the software to be used on diverse SoCs (systems on chips). This software-based solution is crucial in transitioning from assisted to automated driving and parking, capturing and processing image data of the vehicle's surroundings to enable various driver assistance and automated driving functions. Bosch's innovative approach in offering video perception software independently highlights its commitment to advancing technology in the automotive industry.
• In January 2022, Visteon's introduction of the AllGo App Store for the connected car marks a significant advancement in their suite of connected car technologies. This innovative platform offers an "app-as-a-service" solution that benefits content providers, automakers, and consumers by providing a curated selection of automotive-optimized apps. By seamlessly integrating with pre-loaded apps and enabling over-the-air updates, Visteon ensures a tailored, driver-centric experience with the latest infotainment features. Collaborating with early-stage developers globally, Visteon is building a robust pipeline of new automotive-optimized apps, enhancing the in-vehicle experience, and demonstrating their commitment to driving innovation in the connected car ecosystem.

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