Monetizing Connected Car Data

Article By : Egil Juliussen

Agreeing that "data is the new oil," companies like Otonomo are positioning themselves to monetize the data from connected cars.

That connected cars are going to generate tons of data has led to the realization that car data monetization is a promising opportunity. Hence, I am asking key questions like: where are we and what do we know?

Fortunately, we have learned quite a lot in the last month because Otonomo is going public via a SPAC (special purpose acquisition company) named Software Acquisition Group. On February 1, Otonomo and its SPAC made an investor presentation that has a wealth of data that are giving us much better perspectives on current status and future potential of driving data. The investor presentation is available on Otonomo’s website: Reshaping automotive data to accelerate value (otonomo.io).

I am summarizing the new data monetization information and with my perspectives in this column.

Otonomo overview

Otonomo is the leading company in this emerging market. The next figure is a big picture of Otonomo’s current market status, customers and how its business works. The top of the figure shows the auto OEMs that already provide data to Otonomo and it is quite impressive. Data suppliers include BMW, Daimler, GM, Ford and a total of 16 OEMs.

(Click on the image for a larger view.)

As of early February 2021, over 40 million vehicles provide data. The data volume is 4.3 billion data points per day. A typical data point consists of five parameters with a time stamp. A common example is longitude/latitude, speed, heading and ignition status. If I assume each data point is about 12 bytes, the daily data volume to Otonomo is about 400 billion bits per day.

The red section in the above figure is a summary of how Otonomo’s software platforms work. The raw data from Otonomo’s data suppliers requires considerable changes before it is ready for sale to customers. This is explained in more detail below.

Otonomo has multiple business models including growing SaaS product offering that are tailored to vertical markets. Otonomo also uses a Marketplace platform for large customers and a Self-Serve platform for small customer. Otonomo introduced its Self-Serve Platform and API, which provide online access to real-time and historical and aggregated connected car data.

The auto OEMs get paid for their data via revenue sharing agreements with Otonomo.

Data customers

Otonomo segments the car data into multiple segments as shown in the black portion of the above figure. The segments include driver and driving data, road and traffic information, car operational data, location data with future categories likely to be added.

Otonomo is currently focused on six vertical markets—insurance, transportation, financials, vehicle fleets, car dealerships and smart cities. Otonomo has over 140 car data customers as of early February 2021.

Raw data to legal data

The car data from OEMs is raw data that must be treated before it becomes legal information that can be sold. Otonomo’s investor presentation has a good picture of what must be done get from raw data to legal information as shown below.

Source: Otonomo Investor Presentation Feb 1, 2021. (Click on the image for a larger view.)

This Otonomo slide shows how much work is needed to make data into useful and valuable information for a large variety of customers. The data arrives in many different formats and has to be normalized into one format. Personal identifiers have to be removed. One of the hardest tasks is to follow over 15 different regional and local privacy regulations that are deployed based on where the customers are using the data.

Otonomo: future market perspectives

Otonomo’s investor presentation has a wealth of data on its future business prospects for the next five years. I am summarizing the most important data from my perspectives in the next table.

(Click on the image for a larger view.)

Connected vehicles and data volume

In August 2019, Otonomo received about two billion data points per day from 18 million vehicles. This increased to 3.1 billion data points per day from 22 million vehicles in July 2020. Otonomo currently receives an average of 4.3 billion data points per day from over 40 million vehicles. For the 40 million connected vehicles, this is an average about 110 data points per vehicle per day. If I assume an average of 110 data points per vehicle per day in 2025, the daily data volume is 28 billion data points or around 2,800 bits per day. This is probably on the low side since the average per-car per-day will increase due to the addition of new parameters.

The growth in connected vehicles by 2025 is strong with current OEMs growing from 40 million to 118 million. Connected vehicles from new OEMs will add up 140 million in 2025 for a total of 258 million connected vehicles.

Otonomo believes the OEMs prefer Otonomo versus the leading high-tech players such as Apple or Google. From the OEMs’ perspectives, Otonomo is neutral party that is not a long-term competitor in multiple segments of the automotive industry.

Data parameters

Otonomo is collecting over 150 data parameters, which is expected to grow in the future. The number of parameters vary by OEM from 50+ for FCA-PSA to 80+ for Daimler. Otonomo lists four categories of parameters — mobility, behavioral, diagnostics and safety with example parameters.

  • Mobility comprise vehicle ID, trip distance, odometer, ignition, engine status, GPS, speed, and vehicle category.
  • Behavioral parameters include blinker status, brake pedal pressure, wheel position, accelerometer, horn status, outdoor-indoor temperature, windshield wiper status and media-infotainment status.
  • Diagnostic parameters cover engine temperature, RPM, pressures, oil level, gear position, fuel level, EV battery level, coolant temperature and DTC (Diagnostic Trouble Codes).
  • Safety parameters involve airbag status, door status, seatbelt status, ADAS status, hard braking, harsh acceleration, and sharp turns.

Future revenue projections

Otonomo provided a lot of interesting revenue projections to 2025, which is summarized in the above table. Otonomo’s 2021 revenue is forecasted at $3 million with an aggressive growth to $574 million in 2025. Average revenue per vehicle will grow from $0.05 in 2021 to $2.47 per vehicle in 2025. Otonomo forecasts average transaction revenue will increase from $1.02 in 2021 to $2.82 in 2025.

Otonomo’s rapid growth is due to multiple factors such as geographic expansion, additional data types for sale, more than 6X expansion of connected vehicles and a much larger number of data customers.

Data value to customers

Otonomo also included estimated car data value for key vertical segments as shown in the above table. Three segments are measured by an estimated dollar value per vehicle per year. Fleet operators have the largest value at around $25 per vehicle per year. Insurance customers are in the $15 per vehicle per year for usage-based-insurance (UBI) applications. Car dealerships also has $15 value per vehicle per year.

Three other vertical segments have much lower rates and are measured in dollars per million data points. The financial industry is willing to pay around $30 per million data points. Smart city projects are in the $40 to $80 range per million data points. Various transportation projects are willing to pay up to $100 per million data points.

Summary

Thanks to Otonomo’s near-term SPAC-based IPO event, we now have much better understanding of the car data monetization industry—from growth potential of connected vehicles to revenue prospects and customer pricing ranges.

The next figure is from Otonomo’s investor presentation and is a good summary of Otonomo’s auto OEM data suppliers and key customers by categories.

Source: Otonomo Investor Presentation Feb 1, 2021.

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