The next multi-billion dollar frontier for car manufacturers – hint: it’s not EVs
by Andreas Schroeter, Movinx Chief Product Officer
The next multi-billion revenue opportunity market is coming from somewhere unexpected. It’s not electric cars – front and center of every car manufacturer’s vision – it’s car apps.
My prediction: Within the next 10 years, car apps will be the key differentiating factor when choosing a car.
From phones to smartphones
Let me draw a comparison to smartphones: 15 years ago the mobile phone was there to make phone calls. In 2007, the iPhone signaled a defining moment for the phone industry. Suddenly, the main purpose shifted away from just making phone calls and within 10 years, smartphones became the new normal.
Smartphone penetration of mobile phone market
Car apps becoming more relevant
Today, car apps are mainly used as a key to open the door, or to pre-heat/cool the car. But this is shifting, starting with electric vehicles. People can check their charging status in apps – for EV owners, the app is an integral part of how they use their car every day.
The rise of electric vehicles
Similar to the iPhone, EV’s defining moment probably came around 2019 with the Tesla Model 3 running at full capacity. EV sales are set to explode and will fuel the usage of car apps.
Soon, having an app for your car will be the “new normal”, just as having a smartphone is. Car apps are now where smartphones were at the beginning of 2008: iPhones had been released a year before and noone could have predicted its explosive growth. Within 10 years, smartphone penetration rose from 6% to 81%. EV penetration in the US is now at 4%, lagging behind the global market by about a year.
Within the next 5 years, I project that >50% of new car owners will use their car app on a daily basis. And while there will be some basic free functionality, most will pay around $10/month for more advanced features. With 15 million cars sold in the US every year, this is a multi-billion dollar market. I think of it as the emergence of an entirely new subscription market similar to Amazon Prime, Spotify and Netflix.
Penetration of EVs: How EV sales have started to take off
In my next post, I take a closer look at today’s car apps and who is doing well, who still has potential to grow.