Dr. Shaoshan Liu is the founder/CEO of PerceptIn, Autonomous Mobile Clinics project lead at BeyonCa and Asia Chair of IEEE Entrepreneurship.
The traditional automotive industry generates the most revenue and profits by selling vehicles and maintenance services. Compared to the traditional automotive industry, the intelligent electric vehicle (IEV) industry opens a new door to numerous monetization opportunities.
In this article, we summarize the monetization opportunities of the IEV industry. For each monetization area, we compare the differences between traditional automotive business and IEV business so as to identify the potential business opportunities for IEVs.
Note that although IEVs are products by themselves, they are, more importantly, platforms for emerging business models. This article summarizes an initial list of monetization opportunities that are trending in the IEV industry, though there are still many monetization opportunities yet to be defined.
Car sale is the most profitable business model for the traditional automotive original equipment manufacturers (OEMs). In 2021, global car sales grew to around 70 million units and led to a $2.86 trillion market size. Today, almost 10% of the market belongs to IEVs, leaving tremendous headroom for future growth.
Used Car Sale
The global used car market size was over $1.50 trillion in 2021, but only a negligible percentage belongs to IEVs. Since IEVs are equipped with better telemetric data tracking capability, it is easier to track and value used IEVs. Leveraging the data advantages over traditional cars, an IEV used car marketplace is a hidden monetization opportunity that is yet to develop.
After-Sale Services And Maintenances
Vehicle maintenance and services market size reached nearly $790 billion in 2021. According to AAA, it is actually more affordable for IEV maintenance compared to non-electric vehicles. The maintenance of each IEV costs around $949 a year compared to $1,279 a year for a non-electric vehicle. IEV OEMs have access to most of the data generated by each IEV, and due to their data advantage, maintenance can be another major revenue stream for IEV OEMs.
The global automotive accessories market surpassed $500 billion. The connectivity and computing power available in IEVs enable these IEVs to integrate more interesting accessories and gadgets, such as AR glasses or VR headsets. I expect rapid growth of the IEV accessories market in the next decade. This creates a highly profitable area for tech startups.
The global auto insurance market size is around $740 billion. Since IEVs can capture drivers’ driving behaviors as well as the vehicle’s detailed operational data, there is an opportunity to revolutionize the auto insurance industry and greatly improve the efficiency, and thus gross margin, of the auto insurance industry. The key question is whether existing insurance can get access to this data or should each IEV OEM run its own insurance branch as well.
Charging is a new business model for IEVs, and it has been expected that charging will present a huge business opportunity, with the projection to reach at least $15 billion by 2030. Like the gas station business, charging stations come with additional business opportunities, such as coffee, deli, car wash and other services.
At this point, it is still too early to estimate the eventual size of the charging station market size for IEVs or how these charging stations should be operated to create more monetization opportunities.
This is exactly how internet companies, such as Google and Facebook, generate most of their revenue. Now the IEV OEMs need to equip themselves with the necessary technologies in order to monetize on the ever-growing user data. Probably in the near future, each IEV OEM will have an internal car data service provider (CDSP) group responsible for creating a new revenue stream from data.
The global video streaming market size reached over $372 billion, and the global gaming market reached $235 billion in 2021. In the future, video streaming and other forms of entertainment will take place in IEVs. Particularly, content specially developed for in-car consumption, such as short videos, will have a unique growth opportunity.
The global location-based services (LBS) market size is just over $36 billion. IEVs and LBS are natural fits for each other, and LBS will become an essential monetization engine for IEVs. I believe the LBS opportunity lies in conversational LBS or in recommending services to users through conversations.
Autonomous Driving Packages
We are still at the dawn of autonomous driving monetization. Only recently, Tesla started to offer autonomous driving packages at $15,000 per license. With an increasing number of IEVs sold, autonomous driving packages sale can potentially become a $100 billion business in the future, assuming that over 10 million vehicles will activate autonomous driving services.
Autonomous Mobile Clinics (AMCs)
IEV fleets with autonomous driving capabilities can be utilized to provide healthcare services to solve the healthcare access problem. AMCs are “self-driving vehicles equipped with medical diagnostic equipment, telemedicine capability and an artificial intelligence (AI) software” that can provide healthcare services.
Today, the global outpatient services market size is over $3 trillion. With AMCs, most health monitoring and outpatient services can be provided more efficiently and effectively. Concepts similar to AMCs, such as autonomous mobile offices, autonomous mobile restaurants, autonomous mobile hotels and more, can also be developed to transform each of these trillion-dollar industries.
In summary, the IEV industry is evolving into a platform for encapsulating complex business models, including business-to-business models for providing mobility services, business-to-consumer models for vehicle and service sales, subscription-based models for in-vehicle software packages, on-demand business models for in-vehicle entertainment and more.
In addition, IEV may disrupt other sectors such as healthcare. With my expertise in intelligent vehicles and biomedical engineering, I project that the IEV industry will expand its market size to tens of times the size of the traditional automotive industry as the IEV business ecosystem matures. With this said, it is important to keep an eye on the industry as these opportunities develop.