Here's why tech companies like Apple and Google want to disrupt the auto industry

BI Intelligence

Tech companies are primed to disrupt the auto industry over the next five years. These new players in the car market are looking to offer internet-based dashboard infotainment systems, connected car components and may even manufacture or sell their own cars.

Why are tech companies trying to disrupt the auto industry? The answer is that the car industry generates a massive amount of money. BI Intelligence estimates that last year the connected car portion of the total car market was worth nearly $400 billion. That's more than the 2014 market value of the smartphone, PC, and wearables market combined. Yet that's still only a fraction of the $9 trillion automotive industry.

In a new report from BI Intelligence, we take a deep dive into the connected-car market. We size the market for connected cars, determine the average selling price over time, and assess different manufacturers' approaches.

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Here are some of the key takeaways from the report:

• The connected-car market is growing at a five-year compound annual growth rate of 45% - 10 times as fast as the overall car market. We expect that 75% of the estimated 92 million cars shipped globally in 2020 will be built with internet-connection hardware.
• But of the 220 million total connected cars on the road globally in 2020, we estimate consumers will activate connected services in only 88 million of these vehicles.
• Connected-car vehicle prices are out of reach for most car buyers, but they will drop significantly in the next few years. The high average selling price of $55,000 is driven by the fact that connected-car shipments tilt toward the luxury category.
• Connected-car technology is now split between approaches that put the internet connection in the car and those relying on a secondary device. Embedded connections don't require a phone's data plan to operate, and consumers and carmakers gain access to a wider variety of features and data.
• Embedded connections will win, in part because they offer two clear advantages to carmakers. They allow auto companies to collect data on cars' performance and send updates and patches to cars remotely, avoiding recalls related to the car's software.

The report contains charts and data that can be downloaded and put to use.

In full, the report:

• Sizes the connected car market and who will benefit the most from consumer adoption
• Determines total revenue from connected car sales between 2015-2020
• Assesses what percentage of connected cars will actually have services that are used by consumers
• Explains the two key competing connected car technologies and determines which one will win out and why
• Examines how car companies will pair with wireless service providers to bring internet service to cars
• Looks at key examples of sales among select connected car manufacturers

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