Car data industry still hasn’t struck “oil”, two prominent market exits show
Otonomo and Wejo, two of the largest players in the connected vehicle space, have exited the market. According to S&P Global, this reflects the difficulties of monetizing vehicle data, a source of revenue sometimes referred to – somewhat prematurely, as it turns out – as the “new oil”.
Everybody agrees on the potential of the connected car market. By 2025, there are expected to be 350 million vehicles on the road worldwide with over-the-air (OTA) update capabilities. That opens up the perspective of aggregating and then monetizing billions of connected vehicle data points, to optimise the results of smart cities, corporate fleets, and vehicle insurers, to name but three potential areas of interest.
However, one of the major obstacles to creating revenue from vehicle data is that this requires close and even-handed cooperation between a great variety of stakeholders. These include OEMs, tier-1 suppliers, hardware manufacturers, datacentres and cloud computing providers, app vendor, and last but not least, public authorities and semi-public agencies and organisations. And their interests don’t always overlap.
The issue for connected vehicle data providers like Otonomo and Wejo is not that they don’t have enough data, but that they don’t have enough buyers, says S&P Global. This may change as a new generation of connected vehicles comes onto the market, but that is too late for both Otonomo and Wejo.
In 2021, the companies were still valued at $1.4 billion and $657 million, respectively. As it turns out, they didn’t grow fast enough to satisfy market expectations. In 2022, both companies combined produced revenue of just $15 million, against operating expenses of more than $250 million. In February, Otonomo was acquired by Urgent.ly for just $270 million. In May, Wejo declared bankruptcy.
So, what went wrong? In short: nobody’s yet ready to share. Stakeholders are still fighting over who exactly owns vehicle data, and how to share revenue. Meanwhile, private consumers remain reluctant to adopt (and pay for) connected services. As a result, the market for connected vehicle data was a lot smaller than both companies had hoped for.
Down, but not out
The connected vehicle data market may be down, but it is not out. Important players – including HERE, TomTom, and INRIX – remain active in the field, often supplementing pure vehicle data with location-based services, which may be a more viable way forward.
And it may just be that Otonomo and Wejo simply missed the moment. As S&P Global points out, about one in four new vehicles coming onto the market in 2025 will have in-built 5G connected capabilities. That, and the 350 million OTA-enabled vehicles on the road by then, may allow the connected vehicle data market to strike the “oil” that both companies had been looking for.