5G drives connected car surge

The continued trend for embedded mobile network access to become standard on ever more cars will see in-car connectivity hit the accelerator over the next seven years to reach 828.7 million, triple the 2022 total of 279.3 million, according to a study from Rethink Research.

As a result, said the company’s latest Wireless Watch research report and forecast on the connected car market, revenues derived from car connectivity will increase even more sharply and quadruple to $244bn by 2030, as 5G access becomes increasingly prevalent to deliver added-value services such as ultra HD streaming and more advanced driver assistance system (ADAS) features.

The report defines car connectivity as internet access over a public cellular network via an embedded SIM in the vehicle, rather than just a user’s smartphone tethered to a satellite navigation system. It explored the evolution from 2023 to 2030 by region, drilling down into eight countries in the vanguard of car connectivity, or where the most rapid growth will occur.

The Wireless Watch research counted only revenues directly attributable to car connectivity, rather than coincidental transactions such as online purchases that could be made anywhere. It noted that as 5G access becomes more common from cars, more services will come on board to deliver incremental revenues.

The report identified insurance as one of the biggest revenue earners from car connectivity, tapping an already massive revenue base. With the global automotive insurance market worth around $800bn a year, Rethink said the connected car only has to make a small difference to have a big impact both for insurers through reduced risk of paying out and their customers through lower premiums. It believed that connectivity would also stimulate the already growing field of usage-based insurance, such as pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) models.

One of the key technology findings was the prediction that a growing number of vehicles would also have local vehicle-to-everything (V2X) connectivity, which is increasingly the cellular variant C-V2X, rather than the earlier version derived from Wi-Fi known as DSRC or ITS-G5.

V2X is set to grow significantly over the forecast period, but since nearly all applications and services dependent on car connectivity have been non-V2X until now, Rethink’s forecast aggregates the two together.

On that basis, the analysis predicts the total number of car connections will soar from 279 million in 2022 to 829 million in 2030. The analyst noted that the revenue curve per connected car has a slightly different shape because 5G connectivity adds more value than other services, mostly 4G LTE now, because of the additional applications it will enable, especially under the banner of C-V2X.

Rethink forecast connected global car revenues rising from $66.4bn in 2022 to $244bn in 2030. These are seen as additional revenues enabled by connectivity, such as insurance services and infotainment paid for specifically by consumers.

Wireless Watch predicted that DSRC would be virtually extinguished in all leading markets by 2030, never having got off the ground at all in China.

Indeed, the report highlighted how the progression of wireless car connectivity would differ a lot between regions. Rethink said “the cuts of the pie” would change significantly between 2022 and 2030, with a swing in dominance from North America and Europe at the beginning, to Asia-Pacific at the end, driven by rapid growth across the latter region led by the powerhouses of China and India, although timing will be different in each case.