Report: Connected Car Prices Expected To Drop

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The connected car is already on the market and generating significant revenue for car makers and tech companies.

By 2020, BI Intelligence estimates that 75% of cars shipped globally will be built with the necessary hardware to allow people to stream music, look up movie times, be alerted of traffic and weather conditions, and even power driving-assistance services such as self-parking.

In a new report, BI Intelligence takes a deep dive into the connected-car market. The report sizes the market for connected cars, determines the average selling price and how it will decline 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. BI expects 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, BI estimates 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.