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Connected Cars market. Main trends and prospects of its development in Russia and the world

February 2020

Analytical Report (full version)

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Analytical Report (full version)

Connected Cars market. Main trends and prospects of its development in Russia and the world
Connected Cars market. Main trends and prospects of its development in Russia and the world
February 2020

Connected Cars market. Main trends and prospects of its development in Russia and the world

February 2020

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J'son & Partners Consulting has completed a study of the global and Russian markets for Connected Car systems. The study aimed to determine the prospects and opportunities for the Russian Connected Car market development.

 

The main expectations of the automotive transport industry players are related to such concepts as Connected cars, Driverless cars, Autonomous cars, etc. The development of these segments is aimed primarily at improving road safety, reducing the cost of operation and maintenance of vehicles as well as improving the comfort for road users. Almost all developed countries have national (state) programs in the field of connected and driverless cars.

 

Connected Car concept and main elements

 

In recent years, the Connected Car concept has been widely adopted throughout the world. J'son & Partners Consulting defines a Connected Car as a vehicle (car) with equipment for connecting to the global Internet, as well as interfaces for communicating with other connected objects — both inside and outside the vehicle, such as smartphones, trackers, traffic lights, other vehicles, road infrastructure, etc.

 

According to Cisco VNI 2019 forecasts, the Connected Сar segment is among the three fastest-growing segments of the M2M/IoT market in terms of the number of connections for the period between 2017 and 2022 (CAGR 28%).

 

 

Revenues in the Connected Car market consist of a one-time fee for equipment that provides access to the Network, the cost of installing it in the car (relevant for the secondary market), and a periodic subscription fee for various services. The range of equipment is from simple telematics devices for collecting, sending and receiving a limited amount of data to solutions that provide advanced capabilities for Internet eсcess and infotainment systems. The consumer services include ones related directly to the car (maintenance, diagnostics) and infotainment services (navigation, media streaming, etc.).

 

According to preliminary estimates by Statista, in 2019, revenues in the global Connected Car market grows by 16.8% to $21.8 billion, and the number of connected cars grows by 32.2% — to 157.9 million units (by 2023 it will reach 352.9 million units). The average revenue per connected car was expected to be $138.17 in 2019. The largest Connected Car market in the United States ($6.968 billion in 2019).

 

PwC forecasts that the Connected Car market will reach €122.6 billion by 2021. Its largest segments will still be security, Autonomous driving, and entertainment services.

 

Main market participants

 

The main participants in the global IoT transportation ecosystem include car manufacturers, electronics manufacturers, telecommunications companies, IT companies, etc.

 

Major technology industries’ players being experts in rapid innovation are beginning now to invest heavily in the automotive industry. The value chain in the automotive industry is turning from a linear model to an integrated network where several companies of different levels and segments provide a set of solutions, including hardware and software for Connected Car ecosystems, both for vehicles and the developing global mobility ecosystem.

 

Innovations in the connected car segment are experiencing an unprecedented boom, major car manufacturers are introducing telematics and infotainment services and driver support systems. German manufacturers such as Volkswagen, Daimler and BMW stand out from the general background. They present a series of new security systems, information support and develop mobility concepts. American and Asian car manufacturers, such as Ford, GM, and Toyota, also pay great attention to implementing innovations in Connected Car systems.

 

Telecommunications companies play the main role in providing communications for cars. In the most developed countries, in terms of the Connected Car industry, the number of connected cars offered by some individual operators already significantly exceeds the number of new mobile subscribers. For example, in 2018 the operator AT&T (US) under agreements with various car manufacturers added 7.9 million cars against 1.19 million "live" subscribers.

 

Major IT-companies (such as Microsoft, Google, and Apple) are also very active in the smart transportation segment. Microsoft is now developing Microsoft Connected Vehicle Platform (MCVP), which offers car manufacturers the technology infrastructure and support for integration of mobile assets and solutions, which serves as a source of automotive telemetry for the creation of custom consumer services, including telematics, navigation, performance services, and more. Microsoft partners include major automobile manufacturers, including Volkswagen and Renault-Nissan-Mitsubishi. Google has been testing driverless car prototypes since 2009; in some States, it has been testing them on public roads since 2012.

 

The Bosch group claims to be one of the most significant players in the IoT market, including the transport segment. Bosch combines hardware and software solutions to offer comprehensive mobility solutions. Bosch products and services are designed for various mobility segments and areas, including passenger and commercial vehicle services, equipment and components, spare parts and maintenance, engineering and development projects and services.

 

 

State programs

 

In most of the developed countries reviewed, as well as in Russia and China, long-term initiatives are being implemented in the field of connected and unmanned vehicles and intelligent transport infrastructure. In particular, within the framework of the strategic plan for the intelligent transport infrastructure development in the United States until 2020, it is planned to spend about $100 million annually for these purposes. In Russia, as part of the first stage (2017-2020) of the national technology initiative called "AutoNet", it is planned to create an ecosystem that includes, in particular, the development and harmonization of the regulatory legal and technical base, infrastructure and pilot projects on telematics transport and information systems, intelligent urban mobility and transport and logistics services. In 2019, almost 15 billion rubles were planned to be spent on this initiative, including 7.4 billion rubles from the Federal budget.

 

The Russian market of Connected Cars

 

In Russia, the market for Connected Cars is developing in accordance with the global trends, lagging behind developed countries by 2-3 years. The largest by a number of connections is the project on creation of the state automated information system "ERA-GLONASS" – as of July 15, 2019, more than 4 million vehicles were registered in it. Other major segments are telematics systems for monitoring commercial vehicles (Fleet Management) and monitoring heavy vehicles using on-Board devices ("Plato project"), security systems connected via a cellular network and infotainment media systems.

 

The Big Three Russian mobile operators are among the main participants in the M2M/IoT transport market. The growth rate of the market is relatively low — about 15-20% per year, which is due to its closeness (in particular, the use of proprietary platforms and solutions), peculiarities of the operators’ tariff policy and a clear bias towards the corporate market.

 

Major Russian automakers and IT companies are following global trends in the Connected and, in the future, Driverless Car concepts. Examples are the creation of the LADA Connect telematics system for managing many functions of the car and the “Yandex.Auto” infotainment platform, testing of unmanned vehicles on public roads and other projects.

 

Development of the ERA-GLONASS automatic emergency response system and additional services based on IT is one of the main factors for the growth of the Russian M2M/IoT transport market in the next few years. Another significant factor is the creation of unmanned transport systems – this project has received significant state support and funding.

 

The growth of the M2M/IoT market in Russian transport is constrained by the difficult economic and political situation, a significant decrease in demand for new cars, an increase in the share of used cars in sales, and an imperfect regulatory framework.

 

The main drivers of growth in the Russian market are:

 

- growth of mobile coverage of the country’s roads, as of mid-2019, the level of coverage of Federal highways in the European part of Russia and most of the roads in Siberia and the Urals by operators is close to 100%;

- the increasing popularity of geo-information services, high demand for navigation services in the future creates a demand for built-in infotainment systems;

- development of the Connected Car and smart transport infrastructure concepts is significantly influenced by government initiatives, including in the field of transport infrastructure development, construction of toll roads, implementation of systems for collecting funds from car owners, and others;

- one of the most important incentives for the introduction of intelligent transportation systems is the need to improve the efficiency of cargo transportation.

 

According to J'son & Partners Consulting, the market for Connected Cars in Russia will grow from 7.1 million in 2018 to 16.5 million in 2022, i.e. more than 2 times. The most capacious segments by the end of the forecast period will be:

 

- basic and additional services based on the state systems "ERA-GLONASS" and "Plato" (more than 10 million units);

- fleet management (3 million units);

- infotainment services (1.7 million units).

 

________________________________________

This newsletter was prepared by J'son & Partners Consulting. We make every effort to provide factual and forecast data that fully reflect the situation and are available at the time of the release of the material. J'son & Partners Consulting reserves the right to revise the data after the publication of new official information by individual players.

 

Detailed results of the study are presented in the full version of the Report:

 

«Connected Car market. Main trends and prospects of its development in Russia and the world»

 

TERMS, ABBREVIATIONS, AND DEFINITIONS        

SUMMARY

 

  1. CONNECTED CARS AND AUTOMOBILE M2M BUSINESS

1.1.    STRUCTURE OF THE AUTOMOTIVE TELEMATICS MARKET

1.1.1.Consumer sector

1.1.1.1.        Infotainment systems

1.1.1.2.        Smart car insurance

1.1.1.3.        Search and security systems

1.1.2.Commercial telematics

1.1.2.1.        Fleet Management

1.1.2.2.        Driver Behavior Management Systems

1.1.2.3.        Engineering services and management

1.1.3.Existing and future technologies for connected cars (V2X)

1.1.3.1.        Testing

1.1.3.2.        DSRC

1.1.4.Autonomous cars

1.1.5.Connected Car market forecasts by segments

1.1.5.1.        Number of connected cars

1.1.5.2.        Growth rates of the Connected Car segment in comparison with other IoT segments        

1.1.5.3.        Connected Car market size and structure in monetary terms

1.1.5.4.        Fleet Management in Europe

1.1.5.5.        Autonomous car market

1.2.    MAIN TRENDS, DRIVERS, AND LIMITATIONS

1.2.1.Main trends

1.2.1.1.        Green initiatives (electric vehicles) 

1.2.1.2.        Development of mobile Internet and smartphone applications

1.2.1.3.        Own telematics services from major automakers

1.2.2.Main drivers

1.2.2.1.        Good awareness and knowledge of telematics services

1.2.2.2.        Regulations and instructions from the government

1.2.2.3.        New standards and advanced technologies

1.2.2.4.        Availability of Connected Car functionality as an important criterion when buying a new car

1.2.3.Restrictions and barriers

1.2.3.1.        Expectations for highly specialized services at low prices

1.2.3.2.        Long deployment periods

1.2.3.3.        Fragmentation of the market

1.2.3.4.        Information security

1.2.3.5.        Lack of awareness about the availability of Connected Car features

1.2.3.6.        Unavailability of the regulatory framework

1.3.    OVERVIEW OF NATIONAL (STATE) PROGRAMS IN LEADING FOREIGN COUNTRIES IN THE FIELD OF AUTONOMOUS AND DRIVERLESS CARS

1.3.1.Switzerland

1.3.2.Singapore

1.3.3.USA

1.3.4.Germany

1.3.5.Netherlands

1.3.6.Japan

1.3.7.Hong Kong

1.3.8.Finland

1.3.9.Sweden

1.3.10. Great Britain

1.3.11. China

1.3.12. Russia

1.3.12.1.       AutoNet

1.3.12.2.       Program 1  

1.3.12.3.       Program 2  

1.3.12.4.       Program 3  

1.3.12.5.       Program 4  

1.3.12.6.       Program 5

 

  1. KEY PLAYERS IN THE CONNECTED CAR MARKET, BUSINESS STRATEGIES AND DEVELOPMENT CONCEPTS        

2.1.    CAR MANUFACTURERS

2.1.1.  General Motors

2.1.2.  BMW

2.1.3.  Mercedes-Benz (Daimler AG)

2.1.4.  Ford Motor

2.1.5.  Hyundai Motor

2.1.6.  Toyota Group

2.1.7.  Tesla Motors

2.1.8.  Volvo Group

2.1.9.  Nissan

2.2.    ELECTRONIC DEVICES AND COMPONENTS MANUFACTURERS

2.2.1.  Intel

2.2.2.  NXP

2.2.3.  Nvidia

2.2.4.  Qualcomm

2.2.5.  Huawei

2.3.    TELECOMMUNICATIONS COMPANIES

2.3.1.  AT&T Inc.

2.3.2.  Vodafone

2.3.3.  Verizon

2.4.    HARDWARE AND SOFTWARE MANUFACTURERS

2.4.1.  Microsoft Corporation

2.4.2.  Google LLC

2.4.3.  Apple Inc.

2.4.4.  Amazon

2.4.5.  Bosch Group

2.4.6.  Sierra Wireless

2.5.    COMMERCIAL TELEMATICS PROVIDERS

2.5.1.  Trimble

2.5.2.  Tom Tom Telematics

2.5.3.  Verizon Connect

2.5.4.  MiX Telematics

2.6.    STANDARDIZATION OF OPEN SOURCE SOLUTIONS

2.6.1.  Tizen Association

2.6.2.  Car Connectivity Consortium

2.6.3.  GENIVI Alliance

 

  1. THE RUSSIAN MARKET OF TRANSPORT M2M/IoT

3.1.    MARKET SIZE AND STRUCTURE

3.1.1.  Fleet Management

3.1.2.  Smart insurance and remote diagnostics

3.1.3.  Search and security systems

3.1.4.  Video recording and monitoring systems

3.1.5.  Infotainment systems

3.1.6.  Other segments

3.2.    MAIN PARTICIPANTS OF THE RUSSIAN MARKET OF M2M/IOT TRANSPORT

3.2.1.Telecom operators

3.2.1.1.        MTS

3.2.1.2.        «MegaFon»

3.2.1.3.        "VimpelCom»

3.2.1.4.        Other operators

3.2.2.            Equipment manufacturers

3.2.2.1.         Transport monitoring and fleet management

3.2.2.1.1.      SpaceTeam

3.2.2.1.2.      Omnicomm

3.2.2.1.3.      Company 1

3.2.2.1.4.      Company 2

3.2.2.1.5.      Company 3

3.2.2.1.6.      Company 4

3.2.2.1.7.      Company 5

3.2.2.1.8.      Company 6

3.2.2.1.9.      Company 7

3.2.2.1.10.    Company 8

3.2.2.2.         Autonomous cars

3.2.2.2.1.      Yandex

3.2.2.2.2.      Project 1

3.2.2.2.3.      Project 2

3.2.2.2.4.      Project 3

3.2.2.2.5.      Project 4

3.2.2.3.         GSM alarm systems

3.2.2.4.         On-Board devices for toll roads

3.2.2.5.         In-car communication devices 

3.2.3.            System integrators, distributors and developers

3.2.3.1.        ITELMA

3.2.3.2.        Company 1

3.2.3.3.        Company 2

3.2.3.4.        Company 3

3.2.3.5.        Company 4

3.2.4.Automobile manufacturers

3.2.4.1.        AvtoVAZ

3.2.4.2.        Company 1

3.2.4.2.1.      Project 2

3.2.4.2.2.      Project 3

3.2.4.2.3.      Project 4

3.2.4.2.4.      Project 5

3.2.4.3.        Company 2

3.2.4.4.        Company 3

3.2.4.1.        Company 4. Project 1

3.2.4.1.1.      Company 4. Project 2

3.2.4.1.2.      Company 4. Project 3

3.2.4.1.3.      Switching to 5G networks

3.2.5.Transport companies

3.2.5.1.        “Delovye linii”

3.2.5.2.        Company 1

3.2.5.3.        Company 2

3.2.5.4.        Company 3

3.2.6.State companies

3.2.6.1.        GKU DATA CENTER

3.2.6.2.        Company 1

3.2.7.Insurance companies

3.2.7.1.        “AlfaStrakhovanie”

3.2.7.2.        Company 1

3.2.7.3.        Company 2

3.2.7.4.        Company 3

3.2.7.5.        Company 4

3.2.7.6.        Company 5

3.2.7.7.        Company 6

3.2.7.8.        Company 7

3.2.7.9.        Company 8

3.2.7.10.       Company 9

3.2.7.11.       Other companies

3.2.8.Other participants (online-taxis, carsharing)

3.3.    MAJOR PROJECTS

3.3.1.  ERA-GLONASS

3.3.2.  “Plato”

3.3.3.  Other projects

3.4.    MAIN DRIVERS AND CONSTRAINTS

3.4.1.Drivers

3.4.1.1.        Increase in mobile coverage area

3.4.1.2.        Growing popularity of geographic information services

3.4.1.3.        Government initiatives

3.4.1.4.        The need to improve the efficiency of cargo transportation

3.4.2.Constraints

3.4.2.1.        Economic and political situation

3.4.2.2.        Stagnation in the automotive market in Russia

3.4.2.3.        Insufficient legal and regulatory framework

3.5.    FORECASTS FOR THE CONNECTED CAR MARKET IN RUSSIA

3.5.1.  On-board devices for fleet management

3.5.2.  On-board devices of the “Plato” system for charging heavy-duty vehicles

3.5.3.  On-board devices of security systems

3.5.4.  On-board devices for Smart insurance (insurance telematics) and remote diagnostics

3.5.5.  On-board devices (transponders) for taking payments from toll road users

3.5.6.  Infotainment systems

3.5.7.  ERA-GLONASS

 

  1. CONCLUSIONS

4.1.    RUSSIAN MARKET

4.2.    WORLD MARKET

4.2.1.  Main participants of the market, business strategies and concepts

4.2.2.  Estimates and forecasts

 

APPLICATION. LIST OF COMPANIES MENTIONED

List of pics

Pic. 1. Toyota's Entune infotainment system

Pic. 2. Active smart insurance policies in Europe and North America, million policies, 2018-2023

Pic. 3. Structure of the market of car security systems

Pic. 4. Growth of connected mobile resource management systems in the US in 2015-2019

Pic. 5. The main problems and barriers for V2X development

Pic. 6. Comparison of DSRC and LTE-V2X technologies

Pic. 7. Deliveries of connected cars in the world, million units, 2015–2021

Pic. 8. Annual deliveries of connected cars in the world, million units, 2014–2025

Pic. 9. The number of connected cars in the world (2015–2022)

Pic. 10. Degree of “connection” in the world

Pic. 11. Growth of the number of M2M / IoT connections by verticals (2015–2020)

Pic. 12. Structure of the global Connected Car market in 2021, billion euros

Pic. 13. Forecast of the global Autonomous Car market, $ billion, 2020-2035

Pic. 14. Time of using the autopilot in connected cars, billion min, 2025-2035

Pic. 15. Forecast of the LTE share in embedded telematics systems by region, 2014-2022

Pic. 16. Forecast of the number of vehicles that support Connected Car interfaces

Pic. 17. Influence of the availability of Connected Car functionality on the decision when buying a new car

Pic. 18. Potential attack vectors on Connected Car

Pic. 19. Connected Car drivers’ awareness of this functionality and its availability

Pic. 20. Connected Car customers’ awareness at dealerships

Pic. 21. Interaction diagram of the connected car and road infrastructure in terms of transmission of traffic signals to the roadside unit and directly to the car

Pic. 22. Strategies, standards, and regulations for unmanned vehicles in China

Pic. 23. Rating of car manufacturers by their innovation efficiency (innovation index), 2012-2017.

Pic. 24. Elements of the Daimler Mobility Concept

Pic. 25. Toyota Connected Car Service

Pic. 26. Assessment of satisfaction with car infotainment systems

Pic. 27. Elements of the Nissan Intelligent Mobility Concept

Pic. 28. Qualcomm C-V2X platform-based solution

Pic. 29. Verizon Hum

Pic. 30. Assessment of importance of voice control system availability in various devices

Pic. 31. Bosch Connected Mobility Concept

Pic. 32. Structure of the Russian Connected Car market by the number of connections, thousand units, 2018

Pic. 33. The number of connections in the segment of transport monitoring in the Russian Federation (cumulative total), million vehicles

Pic. 34. The number of new connections in the segment of transport monitoring in the Russian Federation, thousand connections

Pic. 35. The main participants in the Russian market of smart auto insurance

Pic. 36. The number of M2M SIM cards in Russia, 2015-2022

Pic. 37. The Russian M2M market: operator shares, million SIM cards, 2018

Pic. 38. Company 1. Product portfolio

Pic. 39. Kia Remoto mobile application

Pic. 40. Company 2. Autopilot system scheme

Pic. 41. Company 3. Basic elements of the unmanned car

Pic. 42. Incarnet ViH Router providing high-speed and stable mobile Internet access in the car

Pic. 43. LADA Connect telematics platform

Pic. 44. Company 4. Semi-autonomous medium-tonnage truck

Pic. 45. Company 5. Robotic loading complex (mining trucks)

Pic. 46. Forecast of the market of new cars in Russia, 2005-2022

Pic. 47. Forecast of the number of connections in the fleet management segment in the Russian Federation, 2015-2022, thousand active devices

Pic. 48. Forecast of the number of on-board devices in the Platon system, 2015-2022, thousand units

Pic. 49. The Russian market of Connected Car alarms, 2015-2022, thousand units

Pic. 50. The market for smart auto insurance and remote diagnostics in Russia in physical terms, thousand devices, 2015-2022

Pic. 51. The number of installed infotainment systems in Russia in physical terms, thousand devices, 2015-2022

Pic. 52. The number of installed ERA-GLONASS systems in Russia, thousand devices, 2016-2022

 

List of tables

Tab. 1. Classification, purpose and functionality of automobile anti-theft systems

Tab. 2. Creating added value in connected cars by various market participants

Tab. 3. Comparison of DSRC / WAVE and capabilities of other wireless technologies

Tab. 4. Automation levels for driving

Tab. 5. Legislation in some regions of the world regarding autonomous cars

Tab. 6. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Switzerland

Tab. 7. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Singapore

Tab. 8. The main parameters of the national (state) programs in the field of ITS, connected and unmanned vehicles in the US

Tab. 9. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Germany

Tab. 10. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Netherlands

Tab. 11. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Japan

Tab. 12. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Hong Kong

Tab. 13. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Finland

Tab. 14. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in Sweden

Tab. 15. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in the UK

Tab. 16. The main parameters of the national (state) programs in the field of ITS and unmanned vehicles in China

Tab. 17. The amount of funding allocated to equip automatic control systems and detect violations of traffic rules, million rubles at prices of the corresponding years

Tab. 18. Estimated economic effects of the road map implementation

Tab. 19. Tariffs for the "Fleet Control" service by PJSC "MegaFon"

Tab. 20. Domestic and localized in Russia foreign cloud services for transport logistics automation and warehouse operations.