Reaching a Critical Mass of Connected Cars

By June 16, 2015 March 6th, 2018 Automotive, Internet of Things, Telematics

On the Voice America radio show Coffee Break with Game Changers on June 11, I argued that a “critical mass” of connected cars must be reached before we can realize some of the more important and exciting possibilities offered by connected cars, such as improved active safety, reduce traffic congestion and improvement in air quality.

I also suggested that the time to achieve this critical mass may be longer than some expect. If we assume that, perhaps, 30% of all vehicles need to be connected in order to have a meaningful impact, then it would take more than five years for a brand new technology to reach that level of penetration

According to the Bureau of Transportation Statistics (BTS), in 2012, there were 254,639,386 registered vehicles in the U.S. Of those, 183,171,882 were classified as passenger cars, while another 50,588,676 were light duty trucks. The rest of the fleet comprised of heavy duty trucks, buses and motorcycles.

The average age of cars in 2012 according to the BTS was 11.3 years, and, contrary to what one might assume, the fleet is actually getting older. To clarify, the average age figure doesn’t mean that most cars are 11 years old. The age distribution is log-normal: while there are many new cars on the road, there is a very “long tail” of much older cars.

In order for to reach the desired impact effect of advanced connected car features, new vehicles need to replace or supplement those that do not have this technology. The Bureau of Transportation Statistics data shows that 7,243,654 new passenger cars were sold in 2012. At this rate, it would take nearly 8 years to reach 30% penetration in passenger cars.  If all new vehicles of all types, including busses, RVs and motorcycles were to be connected, then the time will be approximately 6 years. On the other hand, if we assume that half of the entire on road fleet should be connected and utilizing advanced connected car features, then this time would nearly double.

And the time for effective marker penetration might even be longer. While sales of new cars continue to show slight increase year over year, this trend might start slowing down. There are several reasons for this forecast. First, younger adults, especially millennials, show less interest in owning a motor vehicle. Their attitude is reinforced by the ready availability of highly viable economic substitutes such as Zipcar car sharing and on-demand transportation services from Uber. On the other end of the age spectrum, baby boomers are keeping their cars longer or retiring to a lifestyle in which car ownership isn’t absolutely necessary and a brand new, technology-loaded car isn’t a priority.

(Image source: Feelart, freedigitalphotos.net)