Automotive connectivity revenues expected to rise

4th December 2020
Alex Lynn

Global automotive connectivity revenues will race ahead to $48.3bn by 2027, over five times higher than 2019, generating opportunities and challenges for mobile operators and their infrastructure providers. The full added value revenue opportunity associated with automotive connectivity will be much larger still by around an order of magnitude, rising to around $500bn by 2027.

This revenue growth will come on the back of rapid vehicle-to-everything (V2X) deployment connecting automobiles automatically with each other as well to roadside infrastructure, pedestrians and cloud-based network services via the internet. Cellular in the form of C-V2X will increasingly dominate this V2X arena as it is decisively winning the standards war over the WiFi-related technologies, DSRC and G-ITS.

These are primary conclusions of the latest report from RAN Research, entitled Cellcos jostle at start line of $48 billion connected car market. The report notes that the revenue opportunities will be evenly spread across the four main regions covered in the forecast, that is North America, Europe, China and the rest of Asia Pacific, each accounting for over $10bn by 2027. This partly reflects the global nature of the automotive industry as the major OEMs seek multinational connectivity deals as part of worldwide strategies for V2X.

Even the largest operators will have to establish cross border partnerships to meet these aspirations and establish themselves as leading players within the V2X ecosystem, also bringing in providers of cloud services, software and underlying components. Two key hardware components of V2X will be OBUs (On Board Units) and RSUs (Road Side Units), supplied both by start-ups and established vendors.

C-V2X combines traditional cellular networks with a new local layer operating in the 5.9GHz band that has long been reserved for automotive communications by regulators. This will enable the integrated short- and long-range communications required for autonomous driving but which will enhance safety and advance other use cases in any case.

Mobile operators can build on the base of internet vehicle connectivity established over 3G and 4G/LTE during the last decade for infotainment and navigation. This will lead to more advanced and lucrative connectivity services around V2X, increasing safety and bringing on autonomous driving, as well as richer infotainment. There will be the chance of tapping into greater revenues behind the upfront connectivity, which RAN Research predicts will be almost an order of magnitude greater at around $600bn by 2027.

Automotive cellular connectivity will swing towards 5G but there will be significant growth over 4G/LTE over the next few years in many regions during the transition phase. The exception will be those few countries such as China and South Korea where there has been strong early investment in 5G, so that 4G/LTE will be phased out sooner.

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