The number of connected cars (natively connected by an integrated embedded cellular module) will grow from 362.44 million in 2024, to 841.21 million in 2030. As a percentage of the global total of cars on the road, this installed base represents a penetration rate that grows from 20.53% to 42.95%.
The increasing popularity of EVs has hit a stumbling block, but global legislative efforts to encourage consumers to purchase new vehicles (often EV or hybrids) will help to age-out many older non-connected cars.
Consumers increasingly expect their new vehicles to provide in-vehicle WiFi connectivity, for their devices, and to have the native ability to access entertainment and navigation services, without the hassle of having to pair and tether a smartphone.
For the automakers, the increasing amount of software in their vehicles means there is an increased need to push software updates and optimizations to them. Historically, this would have necessitated the vehicle being brought to a service center, but with native connections, this is now possible remotely.
It is no surprise that 5G is increasingly popular among new vehicle sales, and that the WiFi-based DSRC approach has fallen out of favor – with the latter seen declining inside the installed base of cars on the road, through the period.
However, the volume of cars that have been connected with 4G, 3G, and sometimes 2G, is still sizeable. It is surpassed by the 5G volume in 2029 – a year when 5G is still growing but where Other Cellular has peaked.
However, significant volume discounts are offered by the MNOs to the automakers, which are often resold to the new car buyers as a promotion for the first year of ownership. After this, the owner must directly renew the connectivity deal, or purchase a new plan. This is a major churn opportunity for the MNOs, and so the first year of ownership is pivotal for proving the value of these native connections in the vehicle.
As such, our connectivity revenue is assuming a best-case scenario, with a high uptake. There are a lot of cars with native connections that will not have an active subscription, at the start of the period, and we believe MNOs will be more successful at activating these connections in second-hand vehicles, as the period progresses.
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