Trend Watch: Over-the-Air Updates
January 4, 2022
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According to industry experts, the automotive over-the-air updates market is expected to see considerable growth over the next few years, a result of new vehicle safety policies and the growing demand for connected cars and devices. Let’s take a minute to look at this growing trend and how it’s expected to impact OEMs and dealers.

What Are Automotive Over-the-Air (OTA) Updates?

Automotive OTA updates can be defined as technology that allows for quick, remote (“over-the-air”) software updates for the ECU (Electronic Control Units) inside cars. This allows drivers to update software on their vehicles without visiting an automotive service center. It also allows OEMs to remotely diagnose cars based on the data they receive via OTA technology.

Historically software updates have been performed by dealers and mechanics at their place of business. But after Tesla’s famous integration of OTA updates in order to react to a negative review on the Model 3’s braking distance, automakers have followed in their footsteps and are investing billions of dollars on hardware and software technologies that will enable them to extract data from vehicle sensors and push software updates out to cars.

“The rapid emergence of advanced connected car technologies across the globe is a major trend fueling automotive Over-The-Air Updates Market expansion,” Global Market Insights reports. “Studies suggest that the number of connectivity-embedded passenger cars to be shipped in the 2018-2022 period is nearly 125 million. This rising software-dependency of vehicles over the years has increased the need for consistent updates and improvements in vehicle technologies.”

The Impact on Dealerships

According to Steve Greenfield, CEO and Founder of Automotive Ventures, who spoke at a recent industry conference,  a recent study showed that of the $20 billion in warranty work completed by domestic dealerships annually, approximately $6 billion could “immediately disappear” as a result of OTA updates.

“As OEMs generate more subscription revenue from vehicle owners, a key question will be if and how this revenue will be shared with dealers,” Greenfield said. “The dealership model has proven to be very resilient over the past 100 years, and innovation across the various departments has enabled financial diversification and insulation from shocks to any single area of the dealership.”

The Impact of COVID-19

The global COVID-19 pandemic has only boosted the growth of the OTA updates market over the past couple of years. With consumers adhering to social distancing guidelines and concerned about health and safety, automakers are focusing more on OTA updates technologies as a means to assuage their concerns.

With the cost-effectiveness and convenience of OTA updates as well as increasingly connected vehicles, there’s no doubt that as we head into the latter half of the decade we’ll continue to see more partnerships and technological advancements as automakers try to stay competitive in this growing market.