The new cars rolling out of assembly lines today have more
telematics features than five years ago. This is because automakers
globally seek to generate new and recurring revenue streams by
offering subscription-based connected services in a range of
vehicles across all segments. The integration of telematics is
becoming a standard feature in many new vehicles, reflecting its
growing importance.
For automotive original equipment manufacturers (OEMs) the
efficacy of these services will be one of the key constituents of
building and maintaining brand perception and loyalty. According to
S&P Global Mobility’s 2024 Connected Car Consumer Survey, over 80%
of the respondents said they are either “very likely” or “likely”
to recommend their connected services brands.
This vast potential of data monetization solutions throughout
the lifecycle of a vehicle is driving OEMs to expand their
telematics offerings. Some are deploying global platforms while
others are pursuing regional strategies. This year General Motors
made some popular features—such as automatic crash response and
remote vehicle commands—of OnStar, a subscription-based
service, standard on all its US models, starting with the 2025 model year.
The expansion of connected services has had a positive impact on
the vehicle telematics hardware and software industry. This year
suppliers such as Harman, Qualcomm, Marelli, Ambarella and Octo
Telematics have unveiled new solutions for in-vehicle telematics
applications. Also, new patents have been granted to companies such
as Calamp Corp and Zonar Systems in areas such as crash determination, driver scoring and remote vehicle diagnosis.
What will also contribute to growth of vehicle telematics is
increasing focus of governments in various countries on deployment
of technologies that enable road safety. The United States took a
big step in this direction last week by releasing a national deployment plan for vehicle-to-everything (V2X)
technologies. Commenting on the plan, U.S. Secretary
of Transportation Pete Buttigieg said, “The Department recognizes
the potential safety benefits of V2X, and this plan will move us
closer to nationwide adoption of this technology.”
Adoption of hybrid telematics systems on the
rise
S&P Global Mobility forecasts global demand for automotive
telematics systems to rise gradually from about 56 million units in
2023 to nearly 78 million units by 2029, at a compound annual
growth rate (CAGR) of about 6%. Embedded telematics control units
(TCUs) made up nearly 18% of the total telematics demand in 2023,
and this proportion will likely grow to nearly 21% by 2029. Hybrid
telematics systems, which support both embedded TCUs and consumer
electronics (CE) modules, hold the largest share of the overall
market.
Hybrid telematic systems offer increased flexibility as they are
capable of multiple connections across a variety of applications
and services. While particularly evident in the luxury segment,
adoption is expected to spread to other segments of the market,
albeit at a pace below that of the overall market.
While V2X connectivity has long been discussed as the ultimate
enabler of connected mobility ecosystems, its availability in light
vehicles remains very niche today with just over 1% of light
vehicles thus equipped. Moving forward, penetration will increase
markedly but will remain short of the near ubiquity that telematics
represent.
Greater China is the largest telematics
market
With Greater China further ahead in deployment of all things
CASE (connected, autonomous, sharing and electrification) related,
unsurprisingly the region is ahead of North America and Europe in
terms of telematics deployment in new light vehicles. The growth in
new-energy vehicles will drive the telematics market in this
region, as these systems are crucial in managing and monitoring EV
performance, enhancing optimization and efficiency of the driving
experience.
Vehicular telematics system growth is the result of a
near-perfect storm of market, technological and regulatory forces
combining to provide a benevolent environment for growth. With
those forces including the aforementioned CASE, OEMs wanting to
bolster alternative revenue streams, growing demand for usage-based
insurance, and rapid technological advancement (6G connectivity
arrives this decade) unlikely to subside any time soon, the
long-term future for telematics and V2X seems assured.
Authored by: Vivek Beriwal, Senior Research
Analyst
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