Nine in 10 new cars to have machine-to-machine connectivity by 2022: report

Within 10 years, there will be 700 million cars connected to wireless networks, and 1.1 billion aftermarket devices for services such as usage-based insurance that will be made possible by this technology, suggests a recent report from Telefonica SA.

London-based Telefonica Digital published Thursday its Connected Car Industry Report 2013, which predicts the market for machine-to-machine (M2M) communications in the automotive sector alone will generate $422 billion in revenue in 2022, up from $22 billion in 2012.

“By 2022 there will be 1.8 billion automotive M2M connections,” according to the report. “This will comprise 700 million Connected Cars and 1.1 billion aftermarket devices for services such as navigation, usage-based insurance, stolen vehicle recovery (SVR) and infotainment.”

Contributing to the report were 12 executives from Telefonica, Audi, BMW, General Motors, Jaguar Land Rover, Kia, Renault, Futurizon and Machina Research. The report is based on interviews conducted by Machina Research with eight major auto manufacturers and on Machina’s analysis of the machine-to-machine market.

Over the next 10 years, the report predicts a “significant market shift, as the number of cars with built-in connectivity platforms increases significantly.”

“Machina Research predicts that by 2020, 90% of new cars will feature such a platform, growing from less than 10% today.”

But the cost of using those networks and paying patent licensing fees for embedded devices could be a problem, the report suggests.

“Licence fees for W-CDMA, LTE and other technologies in M2M devices do not come cheap,” according to the report, which was referring to wideband code division multiple access and long-term evolution technologies, used to transfer data on wireless cellular networks.

“There are numerous applications where it is uncertain which technologies might ultimately be required,” according to the report. “Big decisions will need to be made about network technologies that the customer will have to live with for 15-20 years.

Furthermore, customers will have to pay the full licensing cost of all embedded technology at the point of installation. This might seriously inhibit the growth of the M2M market.”