Emerging Market for Vehicle Data: Vehicle Owners will Provide as well as Subscribe to Data
Data is the new oil and it is the king when it comes to the future of mobility. It is fueling innovations in autonomous vehicle and connected cars. There is a need for a system that acts as a refinery for the new oil. In the short to medium term, billions of cars will be connected, and connected cars will generate gigabytes of raw data every hour. Furthermore, autonomous vehicles in operation are expected to generate 10 times more data as compared to the connected cars. There is a challenge with respect to data extraction and standardization and making it meaningful for the OEMs as well as the customer. There is also growth opportunity in leveraging raw data, refining it, and employing it to realize the full potential.
Data standardization is one of the most important issues. The data logs are different for every vehicles. For instance, a few manufacturers provide fuel related information in gallons, while others provide it in liters. Thus, it is important to bring normalcy to the data. In addition compliance and privacy should also be maintained. These will further improve the consumer trust on the brand. The platform should be able to extract the raw data, refine it and provide it to the third parties without hampering the user’s privacy. There is a need to gain data visibility and provide a gateway for the different applications that rely on car data.
Otonomo has developed a platform to collect data from the connected cars and monetize it by selling to third party companies such as on demand charging and fueling, insurance based on usage and others. Otonomo acts as the middlemen for carmakers and third party companies willing to offer automotive related services. Otonomo has created a marketplace where third party companies can buy data based on their needs and products. All types of data can be transmitted by a car, and this data can be further shared with the government authorities, insurance companies, and advertisers. The company has developed an anonymization engine and consent management hub to protect user privacy and manage consent for information sharing.
Connected cars will become predominant over the short term. Many new developments will help consumers detect free parking spaces, provide guidance with the optimal route, and find places to recharge and refuel. The centre console in a vehicle will provide all the information that driving passenger or driver needs. One of the recent developments in the sector is the usage-based insurance. This can also be employed on the vehicle bought on lease to decide monthly lease payments. The other use case of the same system is in emergency service. In case of accident, the connected car will provide critical information such as number of people in the car, impact force, usage of seatbelt and others to first responders. This will further help improve car care and reduce the time of response and action with all details in place as soon as the user meets with an accident. Once the intelligence enters the automotive ecosystem to generate and refine the data, everyone is expected to be benefit. There are many companies apart from Otonomo, including Verisk Analytics Inc, Microsoft Corporation, IBM, and Volkswagen, which have cashed in on the data wave. Volkswagen is building a concept called “Connect – Volkswagen We”. The company aims to provide every user with a unique id to serve its customers in an efficient way. This new market is expected to face tough competition from OEMs who are conceptualizing to enter in the ICT domain.
The data extracted from the connected car market will enable several different applications, some of which are plotted on the above graph with respect to contention level and the intensity. Insurance companies will be right on the top in the marketplace. Every insurance company would like to collaborate with the data analytics provider to win more customers. The highest value will be recognised by applications such as display advertising, infotainment applications, and charging on demand. The data related to maintenance and accounting will be provided only to the car manufacturers, so there will be low contention and intensity and provide more efficient dealer management system. The data is also expected to be integrated with the smart cities to manage traffic, emission and others. The data will also be shared with the municipalities
Central console is expected to be the game changer for the data analytics platform. OEMs need to develop user friendly consoles that provide data in a much more efficient and unique way. Insurance companies will be the first to buy the data extracted for the connected car. This will further help them to offer appropriate plans based on the user driving. In addition, it will also open up new avenues for the insurance companies. The insurance companies are also expected to offer incentives to the people who drive with care and within limits, which will further boost the usage. The companies with data analytics platform should crack a deal with every insurance provider. This will increase the competition as well as the commission for the automotive data analytics company. To lower the vehicle cost, consumers will have to pay with their data. It is crucial to ensure that the customers realize the value of data shared. Thus, it is very important for the data aggregators to be careful with the pricing. At present, the average usage-based insurance is approximately $1,300, and for the insurance companies, the comfortable pricing is between 4% and 6%. The dynamics of supply and demand will play a major role in the marketplace, and the price needs to be the winner for both the service provider and the service receiver.