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By 2020, 90 percent of cars will be connected

Posting in Energy

The "connected car" is slowing breaking into the automotive industry, but new research suggests that the majority of cars will be equipped with this technology by 2020.

The "Connected Car Industry 2013" report (.pdf), published by Telefonica,  says that the "connected car" -- a vehicle equipped with Internet access and interactive dashboards -- will achieve mass-market penetration in the next few years.

Approximately ten percent of cars are currently connected, but the researchers predict this will increase to 90 percent by 2020. As a result, the traditional business model will need to change. Product lifecycles are often measured in years, but consumers will demand a more dynamic system where service bundles, vehicle lifecycles and customer support will be more "akin to the telecoms industry," the report says.

Telefonica believes that the connected car will change how vehicles are sold. The average time to secure a sale is roughly 20 minutes, but the report says this will become hours as consumers choose which extras they want to sign up for. In addition, instead of one-off or loan payments for a car, vehicle manufacturers will be able to tap in to new revenue streams, including data usage and the bolt-ons for interactive dashboards.

For the connected car to achieve mass-market penetration, the relationship between manufacturers and telecoms firms needs to deepen. Global connectivity arrangements, end-to-end services and data pricing is the realm of the carrier, and if manufacturers choose to pursue these arrangements, this will prove a catalyst to bring more Internet-enabled cars to production.

Although applications are expected to become part of the ecosystem, security and reliability issues mean that the potential market for apps in connected cars will be far smaller than the smartphone sector -- and it is unlikely to become an open system.

There is a disconnect between mobile device and vehicle lifecycles -- but this does not mean manufacturers cannot take advantage of connectivity to increase their revenue streams.

Read More: Telefonica

Image credit: Telefonica

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— By on July 3, 2013, 2:20 AM PST

Charlie Osborne

Contributing Editor

Charlie Osborne is a freelance journalist and photographer based in London. In addition to SmartPlanet, she also writes for business technology website ZDNet and consumer technology site CNET. She holds a degree in medical anthropology from the University of Kent. Follow her on Twitter. Disclosure