Data as the new sunshine

The data opportunity for automotive companies

Data is a multi-billion-dollar opportunity. Recent Capgemini research shows that:

• In Europe alone, there are currently 57 million connected cars. By 2030, there will be more than 230 million.
• Today, the revenue generated from data and data-related services in the automotive industry is around 0.35 EUR cents per vehicle, per month. This will rise ten-fold to 3-4 EUR by 2030.
• An autonomous vehicle could be generating close to 100 TB of data a day by 2025 (for reference, a Tesla Model S using Tesla's self-declared semi-autonomous functions generates about 4 GB per day). That's a lot of data and it begs the question of how much of this data is valuable and relevant.

Source: Capgemini Invent | The Vehicle Data Big Bang

Where is all the data coming from?

There are five key sources of data for automotive companies to consider: telematics (GPS navigation, automatic emergency call, advanced driving assistance systems, and car sensor data in general sense), R&D and production, environmental data (like VW's Car2X or Michelin's DDI), customer data, and supply chain.

Every moving part and every action taken by a car or driver can generate data, from driver behavior as indicators of mood and stress, through to consumption, navigation, and wear and tear of components. If something is happening in your vehicle, there is a way for it to be captured as data. Then there is the connected smartphone and all the information it carries and communicates, and individual infotainment interactions - they all provide data signals that can be used to understand what drivers and passengers expect from their mobility experience.

If it seems like a lot already, it's going to get a lot bigger with 5G, autonomous driving, and enhanced in-passenger experiences. The same is happening in production, across supply chains, and with customers … every action and interaction is a data signal that can be captured and used to optimize or transform processes or to create new sources of revenue.

How can all this data be used?

These five sources of data - telematics, R&D & production, environment, customer, and supply chain - can be used for a variety of different use cases, functions, features, and new business models.

In my view, there are currently nine main types of business use cases for the growing volumes of data. They are around: Products and Services, Sales, Fleet and Maintenance, Research and Development, On-demand Functions, In-car Experience, Infrastructure Optimization, Safety and Security, and New Insurance Models.

Here are just a few examples of how automotive companies can transform data into enhanced business performance:

• Selling data to third parties to generate revenue.
• Using data to inform new products, services, and business models (like in-car entertainment as a subscription service, new engine modes 'on demand' or insurance policies based on driver habits).
• Combining data from across all connections on the supply chain to create a holistic view, and then plan, simulate, and anticipate multiple scenarios to prevent shortfalls as early as possible.
• To improve reporting capabilities around environmental impact (i.e. CO₂), and then using the insights to identify opportunities for reduction and ongoing performance measurement. As the importance of ESG credentials and performance against publicly stated sustainability (e.g. net zero) goals grows, this area has significant reputational and financial implications for businesses. Data is fundamental to measuring and improving performance.

To sell or not to sell?

Automotive companies have a choice in terms of whether to sell raw data to third parties or retain it for internal purposes and proprietary monetization opportunities. For example, Honda sells anonymous camera and sensor data to third parties in order for them to derive insight about vehicle usage and entertainment preferences. Many automotive companies are selling telematics data for insurance and Fleet & Maintenance purposes. (e.g. predictive maintenance) to companies like Otonomo, Wejo or Caruso. Selling data can provide a quick and lucrative source of revenue but OEMs need to first understand whether they could be generating more and differentiating value themselves from this same data, and whether they have the skills, capacity, and inclination to do so. Decisions about whether and when to sell data to third parties should be taken within the context of a holistic data strategy.

Data is a different ballgame for automotive companies

In a way, automotive OEMs are like farmers who have just discovered that their businesses are sitting on top of huge reserves of a valuable natural resource. The farmer knows he is sitting on something valuable but lacks the expertise to process it and extract maximum value. In this situation, there are three options:

• Do nothing.
• Sell the data to third parties.
• Seek to transform data into valuable insight that is used to develop new services, business models, and revenue streams.

The first option is not really an option at all. The second option, to sell raw data to third parties, reduces automotive OEMs to the role of pure manufacturer and means waving 'goodbye' to the customer relationship. It also means being left behind while data-focused new entrants like Nio and Tesla increase their market shares, and traditional tech giants like Google and Amazon - equipped with their industry-leading data and software capabilities - grow their presence in the rapidly evolving mobility competitive landscape. This leaves us with the third option - to try and transform data into valuable insight that can be used to inform business and product strategy.

Automotive OEMs have a unique advantage - customer trust

Despite being relatively inexperienced when it comes to dealing with such huge amounts of data, automotive OEMs have a key advantage over newer competition in this space - trust.

According to Capgemini research, customers are happier to share their data with automotive OEMs than they are with insurance companies, public authorities, and platform providers. This represents a real opportunity to win customer loyalty and maximize the value of relationships by designing and building mobility experiences informed by data and by promoting services known to be relevant.

As we move towards a future of autonomous mobility, there is potential for vehicles to become third living spaces, where we can work, rest or be entertained while getting from A to B (as articulated by Audi in the promotion of its urbansphere concept). This vision is based on connectivity and a suite of data-based services being provided … all of which represent intriguing revenue-generating opportunities. If indeed vehicles do become third living spaces for us, then building trust between provider and customer and maximizing business value from that trust will be key to increasing market share and success.

4 tips on how to maximize the data monetization opportunity

• Find out which data is worth collecting and contextualizing. It's easy to get bogged down trying to capture, store, and process every byte of data in the belief that it's all useful. It's not about how much data you have - it's how you use it. Identify the opportunities you want to pursue and shape your data management strategy accordingly.
• Establish a holistic data strategy and a cross-function data office that identifies and reviews monetization opportunities, ensures data is appropriately accessible across the organization, and evaluates when it makes sense to sell data to third parties or share with partners in order to achieve differentiating new value propositions.
• Build on customer trust to gain competitive advantage. Today, OEMs are in the driving seat, with a relatively high level of trust from customers. This represents a fantastic opportunity to build loyalty and deeper, broader relationships with customers.
• Enable smart and quick decisions and collaboration. Data, for all its value, can also be burdensome. Collecting and storing data can eat up valuable resources - human, IT capacity and financial. Through data democratization, partnerships and dedicated, cross-function data capabilities better results can be achieved faster.

No 'one size fits all'. Consider regulatory and cultural differences toward data use

What might be a "no go" culturally and legally in the EU, can be a great opportunity for data monetization in the Japanese, American or South-Korean markets. Monetizing data requires the ability to harness global scale and expertise, while being nimble enough to adapt to individual markets and their specific regulations and preferences. Customer trust is key to success in the mobility industry of the future. Responsible and ethical use of customer data is vital in order to build and maintain customer trust.

The race is on. Let the sunshine in.

The volume of data being generated by vehicles is growing every day and organizations from across (and beyond) the automotive landscape are identifying and acting on data monetization opportunities. What's your stance? The time to act is now. Are you sitting, selling, or leading the pack by harnessing data sunshine as part of your enterprise-wide strategy?

Learn more. Check out the point of view from Capgemini Invent - The Vehicle Data Big Bang.