The potential for connected cars generating data for third-party companies to tap into has attracted a wave of startups eager to help carmakers sell that information. However, it has become clear that making money from car data is more challenging than anticipated.
Despite collecting large amounts of data, companies struggle to find customers willing to pay for their services or find that the value of the data is insufficient to support a profitable business model. Many companies, from all verticals not only in the mobility space have developed extraordinary technology but have failed to find a successful product, making it hard for potential clients to prioritize implementation or even trying them out. Consequently, clients prefer to build something in-house that is specific to their needs.
Although the potential of connected cars generating data is vast, there is still a journey to find profitability. Challenges such as data privacy and security, lack of standardization, limited access to data, regulatory uncertainty, and difficulty in effectively monetizing data must be overcome. Although easier said than done, creating a product that requires less customization, allows customers to see a fast return on investment, and justifies not developing in-house solutions may be necessary in the short term to prove the value to OEMs and other stakeholders. While the value added by car data firms has yet to be fully realized, determining the most effective way to monetize this data remains a priority.