With the electric and automated vehicles sector predicted to be a $149 billion market by 2030, what should global automakers do now to unlock future revenue streams and harness their vehicles earning potential?
From one-time sale to ongoing engagement
The era of traditional vehicles is ending as software becomes increasingly central to customer experience. This spells good news for manufacturers who, through their SDVs (software-defined vehicles) will have multiple opportunities to interact with and understand their customers.
Gone is the one-off sale model, a final dealership handshake before your customer drives away into the sunset. Now, software means automakers can not only continue to engage their customers but, via data-driven engagement, build stronger and more valuable relationships. It is a shift that will generate recurring revenue streams and cultivate brand loyalty provided your vehicle has the right connectivity.
A McKinsey study published earlier this year found that 38% of drivers surveyed in China, Germany and the U.S. are willing to switch brands for better connectivity. This figure rises to 51% for drivers of battery-electric vehicles (BEVs). It highlights the growing importance of a connected car experience for auto customers and how crucial connectivity is to these bigger goals. For automakers themselves, seamless connectivity means their SDVs can gather key information on driving habits and preferences, ensuring personalised services based on real-time data, from targeted features and proactive maintenance to customised services.
Monestising the vehicle lifecycle
While the average car is owned for about six years, connectivity can extend this ownership period to eight years or more, retaining customer loyalty for longer.
With data costs and complex subscriptions impacting direct monetisation efforts, fostering innovative partnerships will be key to unlocking this market. It’s imperative partnerships are forged with service providers to deliver enhanced driver experiences, while advanced connectivity solutions will ensure careful management of the data usage and consumption risk these new relationships generate.
Opportunities that can be harnessed over this extended lifecycle are:
- Indirect Monetisation:
This approach prioritises customer loyalty and brand reputation, driving sales and repeat business. Over-the-air (OTA) updates deliver software improvements and feature enhancements throughout a vehicle’s life, optimising performance and increasing owner value. Additionally, remote diagnostics and repair capabilities streamline servicing by identifying and resolving issues without additional time and cost to the customer.
- Direct Monetisation:
In-car advertising is expected to be a major revenue driver, with a projected market size of $10 billion by 2030, according to a recent Strategy& report. However that’s not the only opportunity, features and services such as: in-vehicle productivity applications to conduct video conferences or collaborate on documents, sensor-led interactive experiences that can transform long drives into gamified adventures and the ability to run errands or engage in commerce services from your car using context-aware data will transform the user experience and grow revenue.
With data costs and complex subscriptions impacting direct monetisation efforts, fostering innovative partnerships will be key to unlocking this market. It’s imperative partnerships are forged with service providers to deliver enhanced driver experiences, while advanced connectivity solutions will ensure careful management of the data usage and consumption risk these new relationships generate.
Moving forward
The global SDV market is projected to reach $210 billion by 2032, with upwards of 95% of new vehicles sold expected to be ‘connected.’ Undoubtedly, there are many opportunities for automakers to deliver new, personalised experiences that will deliver ease and satisfaction for their customers while generating new revenue streams for them, however these all hinge on robust and seamless connectivity.
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