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Connecting Cars

What factors are driving us towards a world of connected cars?

The increase in the adoption of telematics systems is on the rise worldwide, driven by convenience, greater safety and a vast range of attractive added value services. At present these services are either integrated through smartphones and tablets or embedded directly into cars. However, in the long run, embedded systems are expected to clinch the market. In the European Union, for example, all new cars sold as of October 1, 2017 will have to be mandatorily equipped with the e-Call emergency alert system.

Gartner Research has predicted that by 2020, in four years’ time, there will be one quarter billion connected vehicles on the road and that during the next five years, the proportion of new interconnected vehicles will increase dramatically, making connected cars one of the major nodes in the evolving Internet of Things.

McKinsey&Company estimates that the global market value for connectivity devices and services will rise from the current €30 billion to €170 billion by 2020. As a matter of fact, the report also indicates that 13% of buyers are no longer willing to purchase a new vehicle without Internet access and over 25% already prioritize connectivity over features such as engine power and fuel efficiency.

And while connected cars may still be viewed by many as a luxury feature, James F. Hines, Gartner Research Director, points out that “The connected car is already a reality, and in-vehicle wireless connectivity is rapidly expanding from luxury models and premium brands, to high-volume midmarket models.”

Added value services and driving analytics will be the key revenue sources for the connected car environment. Indeed, Infonetics Research predicts that this revenue stream will reach a value of $16.9 billion worldwide. “The connected car services market is growing at a 25% compound annual growth rate (2013–2018), nearly 21 times the growth rate expected for traditional mobile voice and data services during the same time period.”

Finally, a key factor in the evolving connected car environment will have to be played by a new mind-set: drivers who truly comprehend the advantages at hand and agree to release and share telematics information. As Business Insider reports, there will 220 million connected cars on the road by 2020, but only 88 million drivers will have activated connected services. Indeed, a car that connects to the Internet is not the same as a car connected to the Internet of Things.

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