Big data generated by connected vehicles offer big opportunities.
However, industry executives say there is still much work to be done before the 1’s and 0’s are transformed into bigger numbers on the bottom line. As more sensors are enabled on vehicles and mobility infrastructure to capture where, when, and how autos are driven and function, the data will continue growing exponentially. The thinking goes that monetization eventually will greatly increase as well.
In fact, McKinsey research forecasts total global revenue from car data monetization may reach from $450Bn to $750Bn by 2030. In a report, McKinsey predicts winners in this industry will be companies that “provide new features and services ranging from connected infotainment to remote vehicle diagnostics, from emergency breakdown automated calling to tailored advertising in the car. For industry players, three value-creation models underlie these use cases: revenue generation, cost reduction, and enhancement of safety and security”.
Yet, the research asserts that companies in the automotive data business “have yet to capture fully the value of this data onslaught”. McKinsey calls this the “car data monetization gap”, which represents the difference between the potential value of data and the actual revenue or savings generated by the information.
Clearly the gauntlet has been laid down for mobility companies to bridge this monetization gap efficiently and effectively before it widens. That’s because on-board data is growing exponentially, transforming connected vehicles into “data centers on wheels”, according to Francois Fleutiaux, chief commercial officer, T-Systems.
In a blog post, he wrote: “Modern vehicles generate some 25 gigabytes of data every hour but autonomous cars will create up to 3,600 gigabytes of data per hour, according to expert forecasts.” Fleutiaux points out that data is not only generated while a vehicle is on the road, but “originates along the entire value chain, from design and development, through production, sales and use, to maintenance and repairs, all by itself”.
Stream data and chill
Carl Esposito, senior vice-president and president, E-Systems, Lear, told TU-Automotive in an interview: “The challenges automakers are facing include where to start and how to organize because the opportunities are very broad and cross-functional. Data collection and transmission capabilities are already built into many vehicles. The next steps are taking advantage of those capabilities and making better use of the information to improve products and the in-vehicle experience for consumers and continue to develop software-defined cars and trucks.”
For its part, Esposito notes that Lear is providing data routing and network transmission hardware and software to filter through vast amounts of data flowing through the in-vehicle networks. This aims to help sift and trap pertinent information when and where it’s needed. Esposito explains: “When you watch a movie on Netflix, they don’t send the entire catalog of movies at once, you get the movie you requested at the quality your network speed can handle, at the resolution of your device.”
He adds that it’s important that data traffic flows both ways, meaning vehicles consume data as well as generate it. He cites a few examples including enabling precision navigation by pushing information to a vehicle: “Imagine having customized massage patterns developed and activated in your seat that uniquely adapt to and address your personalized wellness and posture.”
Context is the key to unlocking and using data, according to Esposito: “It is always important to ask, ‘What problem are you solving?’ Then let the data enable the answer. You won’t find solutions just looking at the data, you need to approach the problem the other way around.”
Exploding data
“Data is complex, but cool,” quips Manish Mehrotra, director, digital business planning and connected operations, Hyundai Motor North America. “If you talk to data analysts, more is good but the challenge is if we produce more (data) but don’t consume more, then it becomes a problem. There are five stages of data: we are in Stage 2, producing data. Consumption, as an industry, we are probably at (Stage) 1.5.”
Mehrotra added that big data may be complex but they are making better aggregates out of it for future use. “Driving data may be relevant for six to nine months but after two years it may lose its value. Instead of purging the data, I create aggregates that say this customer drove on average, during the day, this many times for this many miles, and use it for some general customer engagement score.”
This type of data has become much more compelling and important in the age of COVID-19, especially for insurers offering UBI, but not exclusively for the insurance industry. Mehrotra said: “In the oil industry, I’m sure they care about miles driven, if I’m AAA, I care about it. They do it for different reasons. AAA says if people are traveling, they probably have more accidents.” Naturally, automakers and dealers recognize if customers are driving less it will affect part sales and repair volume as well as fewer mileage overages on leases.
As for monetizing customer data, Mehrotra explained that Hyundai considers data to be owned by customers. “Data sharing and any monetization needs to originate from a customer need or a value we think will be given to a customer if we were to share or exchange that data… a customer has the right to delete it. We don’t look at it like we’re spending so much to sort data, let’s sell it to make money.”
He points to UBI as an opt-in example which offers consumers a direct benefit (lower premiums) in exchange for data. He points to other interested parties including everyone from electric companies to city traffic officials to advertisers and consumer-facing companies.
Mehrotra noted that while the mounds of information can be daunting, a clear strategy helps make dollars and sense: “Data is king, the volume makes it complex but if you associate it to why you need it, life becomes simple.”
by Robert Gray
Source: https://www.tu-auto.com
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