The connected mobility experience is the future of consumer vehicle ownership and brand loyalty. It represents a major market opportunity, one that will be worth $361 billion worldwide by 2030. In the meantime, automakers, major technology companies and Tier 1 suppliers are engaged in a strategic struggle over the customer data and the technology needed to fully realize the connected vehicle experience.
Whoever owns the data and the in-vehicle platforms stands to benefit the most in this automotive paradigm shift as they are closest to the consumer. They’ll have the most direct view into user behavior to leverage for experience improvements and new services that add revenue and increase customer lifetime value. Understanding the landscape, the value they bring to the connected driving experience and the potential stakes can illustrate the role of customer data and technology in creating the connected mobility experience and reshaping the automotive industry.
Automakers face a changing automotive landscape in which technology-enabled experiences — rather than individual features — are the key to creating customer loyalty and driving revenue between vehicle purchases. At the same time, growth in electric vehicle popularity means automakers will earn less on vehicle services.
To execute their new connected experience strategy, automakers need to use the data generated by customers using their vehicles. That data provides insights the automakers can use to create subscription services for in-vehicle experience upgrades, deliver over-the-air vehicle updates and provide in-car customization for each driver.
For example, customer data could enable a connected vehicle to automatically customize seat positions, climate, sound and mirror adjustments for each member of a household when they sit in the driver’s seat. They will seek to enable additional personalization of the vehicle features to increase brand loyalty.
It’s not only customer relationships and new revenue streams at stake for automakers. If automakers don’t own their connected customer journey and the data it produces, they risk becoming marginalized to contract manufacturers that make hardware to support tech experiences owned by other players. Automakers realize this and are building their own organizations to support more advanced software defined vehicles to support their new connected experiences.
Meanwhile, major tech companies already have enormous amounts of consumer data that they use to create experiences in multiple settings, from work to social media, payments, entertainment and more. Much of this data comes from smartphone use and is already linked to specific user identities, which gives tech service providers an apparent advantage when it comes to customer behavior visibility.
These companies are looking for opportunities to enhance and expand the user experience in and out of the vehicle by combining their holistic view of the customer experience with data generated by the in-vehicle experience. Consider the competition to create ever-better dashboard touch screens that connect to smartphone platforms. The trend away from including switches and knobs on vehicle dashes and consoles allows for better upgrades but also opens to door to software providers. Big tech companies also stand to play a larger role in shaping the in-vehicle experience as EVs become a bigger portion of the vehicle market.
Of course, many electrical and digital components for vehicles aren’t made by automakers or major tech companies. Tier 1 suppliers who make, service and update chips and other vehicle equipment would like to own and leverage the data those components generate. For example, earlier this year a major chipmaker that supplies the auto industry announced a partnership with a well-known software-as-a-service company. Their goal is to build a proprietary in-vehicle Internet access platform that provides real-time personalization of the driver experience.
Each of these players in the connected experience arena aims to deliver seamless experiences that provide value to their customers, and they all bring something unique to the task. However, the complexity of the typical automobile means that automakers, tech companies and suppliers may need to collaborate rather than attempt to fully dominate the experience space.
For example, Tier 1 suppliers and big tech companies that want drivers to use their services in-vehicle need permission from the automakers to access their platforms and use their in-car data. Meanwhile, automakers are creating their own platforms for in-vehicle experiences, so they can control the brand experience and the data drivers generate. That level of exclusivity would effectively lock smartphone apps out of the connected car experience in those manufacturers’ vehicles, which means the tech providers could lose access to tracking data from that part of the consumer journey.
Branded automaker customer data platforms might be ideal for the manufacturer, but they may not meet the customer’s needs. For example, automakers currently can associate vehicle data with specific vehicle identification numbers and owner identities, but they struggle to tell the difference between the owner, their spouse and other family members who might all drive a particular vehicle. Delivering experiences tailored to each driver requires data that right now resides mostly with tech companies — for now.
Currently, there appear to be two scenarios for connected mobility experience creation. In one, automakers leverage big tech data by building their experiences on tech companies’ auto platforms, co-developing experiences based on shared data. In the other scenario, automakers build and own the in-car platform, and other providers can build apps that adhere to the automaker’s guidelines.
The connected vehicle ecosystem is complex, the technology that enables it is dynamic, and the competition among industry players to innovate is intense. However, consumers are the ones who will ultimately shape the connected mobility experience, by making choices about which vehicles, subscription services and connected experience elements to purchase. They won’t necessarily care who provides the software and technology that underpins their end-to-end vehicle ownership experience, as long as it delivers value by making their drive more comfortable, more convenient, and more entertaining. Whatever mix of automaker, supplier and tech resources meets that consumer expectation will own the experience market in the future.