McKinsey have just released a report which predicts:
that the global revenue pool from car data monetization could be as high as $750 billion by 2030
That caught my attention for two reasons. Firstly $750bn is a truly huge market to come out on nowhere. For context Gartner predicts the wearables market will be $29bn this year (including Fitbit and smart watches). Secondly, in my experience it’s hard to make money out of data that’s produced as a by-product of another service, at least directly. Lots of startups have ‘sale of data’ lines in their business plans and they very rarely come to much. Rather, the way most companies make money out of the data their service produces is to use it to build better products – the way Google uses our search data to sell better advertising (and build a better search product).
The excitement is coming because cars, particularly electric cars, are increasingly connected and will generate huge amounts of data. To their credit McKinsey developed 30 use cases for automotive data. Most of the aforementioned startups don’t go that far. They just assert that their data will be worth something to somebody.
However, the excitement doesn’t make it much beyond that. Some of the use cases McKinsey lists out are interesting (predictive maintenance, usage based insurance), some a bit so-so from a revenue perspective (emergency call service, over the air software add-ins) and some are merely enabled by internet in the car (car pooling, in-car hot spots).
There isn’t much in the report on how they get from these use cases to a $450-750bn market. There are around 1.2bn cars on the road now so that would be $375-625 per car – which is quite a lot. The most obvious way that will happen is if a chunk of the maintenance and insurance markets start to become counted as part of this total.
That’s already starting to happen, particularly on the insurance side. Overall, I haven’t found the new opportunities I hoped I might when I read the report’s $750bn headline figure.