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© Analysys Mason Limited 2014

Connected cars: worldwide trends, forecasts and strategies 2014–2024

Research Report

Connected cars: worldwide trends, forecasts and

strategies 2014–2024

June 2014

Morgan Mullooly and Michele Mackenzie



About this report

This report provides:

a 10-year forecast of the percentage of new passenger-

carrying road vehicles (cars) sold that include a

connectivity solution, as well as the proportion of vehicles

in use that have a connectivity solution

key implications and recommendations for mobile network

operators (MNOs)

an in-depth analysis of trends in the automotive sector that

will affect the growth of the connected car solution market

an overview of key trends in the connected car sector.

This report is based on several sources.

Analysys Mason‟s internal research, including our

forecasts of M2M device connections, revenue and

average revenue per connection (ARPC), and interviews

with stakeholders in the connected car market.

We have also validated our assumptions by comparing

them with operator insights and discussions with key

stakeholders in the automotive sector.

2

Geographical coverage Connectivity types

Regions modelled:

North America (NA)

Western Europe (WE)

Central and Eastern Europe

(CEE)

Developed Asia–Pacific (DVAP)

Emerging Asia–Pacific (EMAP)

Latin America (LATAM)

Middle East and North Africa

(MENA)

Sub-Saharan Africa (SSA)

Embedded

fully

semi

hybrid

Mobile device tethered

Aftermarket modular

commercial vehicle fleet

tracking

usage-based insurance (UBI)

Figure 1: Summary of report coverage [Source: Analysys Mason, 2014]



Contents

6. Executive summary

7. The market for connectivity solutions in cars is growing

8. Almost half of all vehicles will have embedded connectivity by 2024,

despite the long lifespan of modern vehicles

9. Key implications

10. Key implications for mobile operators

11. Forecasts

12. A number of connectivity options are being used to connect vehicles to

mobile networks

13. Embedded connectivity will be driven by sales of new cars, robust M2M

module form factors and advances in SIM-card technology

14. Fully embedded connectivity enables vehicle owners to avoid complex

set-up or device pairing processes, which could impair the user

experience

15. Semi- and hybrid-embedded connectivity enables car owners to „bring

your own SIM‟ (BYOS)

16. Embedded connectivity enables the best radio experience and vehicle

design innovations are affecting the in-vehicle performance of handsets

17. The percentage of vehicles with embedded connectivity will be almost

six times greater in 2024 than in 2014, growing from 15% to 89%

18. Mobile device tethered connectivity will be driven by new propositions,

such as Apple CarPlay, MirrorLink and Google‟s Android Projected

Mode

3

19. VMs will not rely exclusively on a single mobile device tethering

platform, so as to cater to their large and diverse consumer base

20. Mobile device tethered connections will grow from 4.3 million in 2014 to

645 million in 2024, at a CAGR of 65%

21. Innovative aftermarket OEMs are taking advantage of the momentum in

the connected car market and forming partnerships with MNOs

22. We expect the overall market for aftermarket modular connectivity

solutions to be small because it will experience significant challenges

23. Additional regional insight on the prospects for aftermarket modular

telematics solutions

24. Aftermarket UBI connections will peak at 56 million in 2019, before

declining as support for UBI through embedded connectivity increases

25. Commercial vehicle fleet tracking connections will grow from 45 million

in 2014 to 177 million in 2024, growing at a CAGR of 15%

26. Key trends

27. Semi-autonomous vehicles are only a decade away from becoming

commonplace

28. In the long term, autonomous cars will be entertainment hubs and drive

huge volumes of mobile data

29. LTE is the basis for new connectivity services in the car

30. Case study: EE has prioritised building out LTE coverage for the UK‟s

transportation network

Slide no. Slide no.



Contents

31. Operators can climb the connected car value chain with cloud-

connected services that offer anywhere, any-access multimedia and

SaaS

32. M2M middleware cloud platform providers are developing solutions that

enable operators to create value-added services for VMs and end users

33. Some operators are beginning to capitalise on opportunities in the

connected home space, which is linked to the connected car market

34. It is uncertain how willing consumers will be to pay for connected car

services

35. Operators could increase connected car revenue by tapping into the „big

data‟ opportunity, although ICT firms are better placed to do so

36. Regional insights

37. New car sales regional insight: forecasts for new vehicle sales and

vehicles in use

38. New car sales regional insight: North America and Western Europe

39. New car sales regional insight: Central and Eastern Europe and

Developed Asia–Pacific

40. New car sales regional insight: Emerging Asia–Pacific and Latin

America

41. New car sales regional insight: the Middle East and North Africa

and Sub-Saharan Africa

4

42. Market definition

43. Definition of geographical regions [1]

44. Definition of geographical regions [2]

45. About the authors and Analysys Mason

46. About the authors

47. About Analysys Mason

48. Research from Analysys Mason

49. Consulting from Analysys Mason

Slide no. Slide no.



List of figures

Figure 1: Summary of report coverage

Figure 2: Percentage of new cars sold that include a connectivity solution

by type, worldwide, 2014, 2019, 2024

Figure 3: Percentage of vehicles in use that include a connectivity solution,

by solution type, worldwide, 2014–2024

Figure 4: Summary of connectivity approaches for vehicle manufacturers

Figure 5: The characteristics of fully embedded connectivity

Figure 6: The characteristics of semi- and hybrid-embedded connectivity

Figure 7: Percentage of new cars sold that include an embedded

connectivity solution, worldwide, 2014–2024

Figure 8: Cars in use that include an embedded connectivity solution, by

region, worldwide, 2014–2024

Figure 9: The characteristics of mobile device tethered connectivity

Figure 10: Consortiums that support mobile device tethered connectivity for

vehicles

Figure 11: Percentage of new cars sold that include a mobile device tethered

connectivity solution, worldwide, 2014–2024

Figure 12: Cars in use that include a mobile device tethered connectivity

solution, by region, worldwide, 2014–2024

Figure 13: The characteristics of aftermarket modular connectivity

5

Figure 14: Vehicles in use that include a usage-based insurance connectivity


Figure 15: Vehicles in use that include a fleet management telematics


Figure 16: The evolution of user-facing automotive technology

Figure 17: Mobile data traffic year-on-year growth, by region, 2011–2012

Figure 18: XchangE autonomous vehicle concept by Rinspeed

Figure 19: Operational LTE networks by region, 2Q 2014

Figure 20: EE case study

Figure 21: Deutsche Telekom‟s personalised in-vehicle content concept

Figure 22: Profiles of M2M middleware cloud platforms for supporting

connected car services

Figure 23: Nest integration in Mercedes IVI

Figure 24: Deutsche Telekom‟s business model for connected car „big data‟

Figure 25: New car sales by region, worldwide, 2014 and 2024

Figure 26: Cars in use by region, worldwide, 2014 and 2024

Figure 27: Regional breakdown used in this report

Figure 28: Regional breakdown used in this report



The percentage of vehicles with embedded connectivity will be almost six

times greater in 2024 than in 2014, growing from 15% to 89%

17

Figure 7: Percentage of new cars sold that include an embedded connectivity

solution, worldwide, 2014–2024 [Source: Analysys Mason, 2014]

Figure 8: Cars in use that include an embedded connectivity solution, by

region, worldwide, 2014–2024 [Source: Analysys Mason, 2014]

15%

22%

30%

38%

48%

57%

66%

74%

80%

85%89%

0%

20%

40%

60%

80%

100%

201

4

2015

201

6

201

7

201

8

201

9

202

0

202

1

202

2

2023

202

4

Pe

rce

nta

ge

of

ne

w c

ars

so

ld

3045

67

97

139

192

259

339

433

539

654

0

100

200

300

400

500

600

700

201

4

201

5

2016

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

Ca

rs (

mill

ion

)

SSA

MENA

LATAM

EMAP

DVAP

CEE

WE

NA



New car sales regional insight: forecasts for new vehicle sales and

vehicles in use

The economic climate has not been favourable for new car

sales since around 2007. Consumers lacked confidence in

the economy and postponed purchases. Pent-up demand for

new vehicles will boost car sales worldwide in the next half

decade, because sales in developed markets should return to

normal levels. Sales will be strongest in the short term as

dealers push sales to clear their stock backlog.

However, new forms of car rental, leasing and sharing in

developed markets will put some downward pressure on new

sales. Companies such as DriveNow, Hailo, Liftshare,

Sidecar and Uber enable easy and affordable rental and

sharing of vehicles by using technologies such as

smartphones, GPS, social networks, remote unlock, mobile

payments, among others. The emergence of these „dynamic

carpooling‟ businesses could affect sales in urban areas in

particular – where owning a car outright is less necessary

than in rural and suburban areas, and where mobile network

coverage is consistent. However, regulatory uncertainty is

having an impact on these businesses.

In the emerging Asia–Pacific market, large populations, rapid

economic growth, and a growing middle class will boost sales

dramatically, from 26 million in 2014 to 82 million in 2024.

37

Figure 25: New car sales by region, worldwide, 2014 and 2024 [Source:

Analysys Mason, 2014]

Figure 26: Cars in use by region, worldwide, 2014 and 2024 [Source:

Analysys Mason, 2014]

0

25

50

75

100

NA

WE

CE

E

DV

AP

EM

AP

LA

TA

M

ME

NA

SS

A

Ve

hic

les (

mill

ion)

2014

2024

0

200

400

600

NA

WE

CE

E

DV

AP

EM

AP

LA

TA

M

ME

NA

SS

A

Vehic

les (

mill

ion)

2014

2024


Connected cars: worldwide trends, forecasts and strategies 2014–2024 45

Executive summary

Key implications

Forecasts

Key trends

Regional insights

Market definition

About the authors and Analysys Mason



About the authors

Morgan Mullooly (Analyst) is part of Analysys Mason‟s Enterprise team. His primary area of focus is on the

machine-to-machine (M2M), or Internet of Things (IoT) sector. This includes analysis on a variety of topics including

IoT enterprise requirements, forecasting, vendor profiles and service provider scorecards. Morgan was previously

the lead analyst for Analysys Mason‟s Spectrum research programme, focusing on spectrum valuation, LTE

strategies and white space technologies. Morgan has a Master‟s degree in Philosophy and Public Policy from the

London School of Economics.

Michele Mackenzie (Principal Analyst) is an analyst for Analysys Mason‟s IoT and M2M Solutions research

programme. She has 15 years of experience as an analyst. Prior to joining Analysys Mason in February 2014,

Michele was a freelance analyst with a focus on M2M and IoT technology and trends including smart cities,

transport, intelligent buildings, fleet management and telematics. She has written reports for Machina Research and

produced research for other clients on areas such as mobile broadband and digital media. Michele worked for

Ovum for 12 years where she focused on consumer mobile applications and held various roles including Practice

Leader for Consumer Services. She has also worked as a consultant for Ovum's consultancy division.

46



About Analysys Mason

Knowing what‟s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the

complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist

knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.

47

Consulting

Our focus is exclusively on TMT.

We support multi-billion dollar investments, advise clients on

regulatory matters, provide spectrum valuation and auction support,

and advise on operational performance, business planning and strategy.

We have developed rigorous methodologies that deliver tangible

results for clients around the world.

For more information, please visit www.analysysmason.com/consulting.

Research

We analyse, track and forecast the different services accessed by

consumers and enterprises, as well as the software, infrastructure

and technology delivering those services.

Research clients benefit from regular and timely intelligence in

addition to direct access to our team of expert analysts.

Our dedicated Custom Research team undertakes specialised and

bespoke projects for clients.

For more information, please visit www.analysysmason.com/research.



Research from Analysys Mason

We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,

through a range of research programmes that focus on different services and regions of the world.

48

Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research

projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and

services with customised industry intelligence and insights.

To find out more, please visit www.analysysmason.com/research.



Consulting from Analysys Mason

For more than 25 years, our consultants have

been bringing the benefits of applied intelligence

to enable clients around the world to make

the most of their opportunities.

49

Our clients in the telecoms, media and technology (TMT)

sectors operate in dynamic markets where change is

constant. We help shape their understanding of the future

so they can thrive in these demanding conditions. To do

that, we have developed rigorous methodologies that

deliver real results for clients around the world.

Our focus is exclusively on TMT. We advise clients on

regulatory matters, help shape spectrum policy and develop

spectrum strategy, support multi-billion dollar investments,

advise on operational performance and develop new

business strategies. Such projects result in a depth of

knowledge and a range of expertise that sets us apart.

We help clients solve their most pressing problems,

enabling them to go farther, faster and achieve their

commercial objectives.

To find out more, please visit

www.analysysmason.com/consulting.



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