Worldwide shipments of “connected” vehicles – cars and light trucks with wireless cellular connectivity that interfaces with the vehicle data – will reach 51.1 million units during 2019, a 45.4 percent increase over 2018 levels, the research firm International Data Corp. (IDC) said Thursday.
The well-known market intelligence firm, in its first-ever report on the segment, said that 76.3 million units will be shipped worldwide by 2023, a 16.8 percent compounded annual growth rate over a five-year period that began last year.
By 2023, 70 percent of all vehicles worldwide will be shipped with factory-installed or “embedded” connectivity, IDC said. In the U.S., 90 percent of all vehicles will be shipped with built-in capabilities. For example, virtually all new General Motors vehicles (NYSE:GM) are being manufactured with connectivity capabilities installed at the factory. Both GM and rival Ford Motor Co. (NYSE:F) are using connectivity for, among other things, offering in-car delivery services to customers of Amazon.com. Inc.’s (NASDAQ:AMZN) Prime service.
Older vehicles that don’t have factory-installed systems can still connect with an aftermarket device which is a self-contained unit installed in a vehicle’s port.
The growth of the connected vehicles market is being fueled by the ability of automakers to utilize the technology for cost avoidance and revenue generation, the effect of evolving government regulations and consumers’ desire for a “more immersive vehicle experience,” the report said.
“The automotive ecosystem is positioning the vehicle as the next emerging digital platform,” said Matt Arcaro, IDC’s research manager, next-generation automotive research. The ability to scale up the technology will be the “key to unlocking its potential,” Arcaro said.