Cashing in on digital services

Carmakers can expect additional revenue earned from digitally enabled services to increase tenfold within two decades’ time.

This will be aided by the roll-out of software-defined vehicles (SDVs), which present marques with multiple potential new revenue streams that are expected to exceed what they make from selling cars.

By 2030, digital services could generate as much as US$1.5 trillion in extra revenue for the global industry. And by 2040, this could jump to US$3.5tn and make up 40 per cent of total automotive industry revenue, according to research by Accenture.

Digital services are built on connected vehicle data integrated into ecosystems of infrastructure, service or technology providers. 

Connected services cover entertainment, for instance. Data services, such as predictive maintenance, can process vehicle data. Car-based services, including autonomous driving, interact with the vehicle itself.

Currently, digital services generate three per cent of global car manufacturers’ revenues. That fails to cover the billions they invest in SDV development, according to Accenture, a Dublin-based company specialising in IT services and consulting. 

In return for their investment, carmakers hope that SDVs will behave more like smartphones by converging cars with smartphones or via connected features of the car itself, such as paying at charging stations automatically.

In the future, software should become a source of new premium services, such as music streaming or valet parking, with potentially high profit margins.

Accenture adds that new-mobility services, such as ride-hailing and autonomous driving via over-the-air subscriptions, also promise to earn money for marques during a vehicle’s life cycle.