The average car generates gigabytes of data already — between the engine, infotainment and other computerized systems. And that is only today — before the addition of things like cameras, in-car commerce applications and self-driving car radar systems that experts say are right around the corner. Tomorrow that data will be measured in terabytes.
And all that data has the potential to be big business for automakers — very big business. According to a September 2016 report from McKinsey, carmakers could be looking to soak up between $450 billion and $750 billion in revenue over the next decade from using car-generated data to develop new products and services.
“Artificial intelligence and big data will make vehicles one of the most important windows into the habits of consumers next to their own phones and computers,” Ed Hellwig, the executive editor at Edmunds.com, told The Washington Post in a recent interview. “Automakers will know more than they ever have about how their vehicles are used, which could lead to entirely new designs and features.”
*Could* being the operative word in that sentence, since gathering, securing and organizing the petabytes of data thrown off by these cars right now is a cost for auto manufacturers rather than a monetizable benefit.
“Everybody wants car data,” Otonomo CEO and Co-Founder Ben Volkow noted in an interview. “We want to move from the age of data mobilization to the age of data monetization. But in order for connected cars to really take off and provide the kind of useful data that’s worth monetizing, car manufacturers need a platform they trust to share and negotiate data between them.”
Otonomo wants to be that platform, according to Volkow, and has raised $40 million from leading VCs, Daimler, former vice chairman of GM Steve Girsky and auto parts maker Delphi to build it. First launched two years ago in 2015, the Israeli firm is now partnered with nine auto manufacturers worldwide (BMW and Daimler are so far the only two that it can publicly name).
Car companies, he noted, already knew the importance of data and that it was going to be the real power of connectivity. But, before accessing that power, manufacturers are mostly seeing the costs of installing modems, the costs of extracting data and the costs of storing it. The goal: taking that cost and flipping it into revenue.
Selling cars, he noted, has margins in the single digits. Selling data correctly, on the other hand, has margins nearing 100 percent. But how does one monetize the data correctly?
Creating the Marketplace for Data
How about making it easier, for starters?
Like any other business, automobile manufacturers don’t want to — nor can they, really — manage multiple technical environments and integrations between themselves and the various service providers like insurance companies, smart cities, workshops, dealerships, developers and even hedge funds that want to purchase access to that data.
Nor can they make the data usable and secure with strong encryption, layer seven firewall and data anonymization.
Volkow said that its cloud-based platform serves as the gateway between the services and apps drivers want and the security the automotive industry needs for that data. The goal, he said, is to make the data easy to use for those service providers — a complicated task, since every car manufacturer is different, and the data they throw off is also different. One of the values that a platform like Otonomo adds is the ability to normalize it to “one language” and to package it in a way that makes it universally comprehensible.
The Road Ahead
With its $40 million in funding — $25 million of which was raised this past spring — Volkow says his firm’s main goal is to accelerate its global expansion vision and push for continued growth. Growth that he says is particularly crucial given the size of the company’s main emerging competitor in the selling-car-data-to-third-parties game: Google.
And that is just the tip of the competition iceberg. Ericsson’s Connected Vehicle Marketplace, IBM’s CarData platform, and Ford’s proprietary FordPass platform are all looking to make car data mobile as well as monetizable.
Volkow acknowledged that Otonomo also faces uncertainty when it comes to the future of regulation around use of data, particularly as it affects consumer privacy — though he noted that his firm is extremely proactive when it comes to keeping all stakeholders, automakers, app designers and service providers compliant by letting them know what data can and can’t be gathered or monetized in accordance with local rules and regulations.
“Data is the new currency,” Volkow said, adding that automotive data can provide real-time insight into making cars safer and more efficient to operate.