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How Big Data is Transforming the Entire Automotive Industry – Not Just Smart Cars

By 2020, connected car services will account for approximately $40 billion annually, according to an SNS Telecom report. These services include infotainment, navigation, fleet management, remote diagnostics, automatic collision notification, enhanced safety, usage-based insurance, traffic management and autonomous driving.

At the root of each of these applications is big data. Yet, the data that is collected, interpreted and leveraged will not only enhance smart cars; it will transform the entire automotive industry into one of automation and self-sufficiency.

Role of big data

The automotive industry’s investments in big data will account for over $2.8 billion in 2017 alone, estimates SNS. Exemplifying big data’s growing importance, Delphi, one of the world’s largest automotive parts manufacturers, raised over $25 million in venture capital financing for Otonomo, a startup that developed a data exchange and marketplace platform for vehicle-generated data. The company’s systems gather driver and vehicle data from different automakers and original equipment manufacturers (OEMs), then normalize the data so different organizations can use it to learn more about drivers collectively, or reach them with new products and services.

To improve customer retention, automotive OEMs now rely on big data and analytics to integrate data-driven aftermarket services closely aligned with the supply chain. One such service is predictive vehicle maintenance, which is comprised of predictive intelligence gathered about parts that need to be replaced more frequently as a result of driving behavior. This can also inform product requirements for next year’s model.

Growth of the connected car industry

Automakers have correctly noticed a growing consumer interest and a significant business opportunity for connecting their cars. In-car infotainment centers are expected to generate $15 billion in sales by 2021, up from $7 billion in 2016, says London-based IHS, a provider of information and analysis to the automotive industry. By 2020, BI Intelligence predicts 381 million connected cars will be on the road, an increase from 36 million in 2015, and connected cars will generate $8.1 trillion between 2015 and 2020.


Perhaps the most significant example of the transformation of the automobile today is part two of Tesla’s “master plan,” as outlined by CEO Elon Musk. The electric car giant plans to create solar roofs with integrated battery storage, create self-driving car technology that is “ten times safer” than manual driving, and implement car sharing to allow Tesla owners to earn money by lending out their cars.

The automotive industry is ripe for disruption. Digitization, increasing automation, and new business models are giving rise to four trends: diverse mobility, autonomous driving, electrification, and connectivity, all of which will reinforce and accelerate one another and drive change.

Case Study: IoT is redefining the customer experience. Nokia case study.

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