ON TREND
Automotive IoT – Connected intelligence for the road ahead
JUNE 2025
COMMENT
Get your motor running, head out on the highway
Automotive IoT depends on vehicle connections to ensure vehicles run optimally, can communicate with OEMs and road infrastructure and can support applications from infotainment to safety. The next wave will see greater intelligence embedded into vehicles at the point of manufacture so they can process data at the edge. This will enable more effective EV charging, introduction of richer assisted driving and ultimately set the pace for elements of autonomous driving.
OEMs continue to closely guard embedded technology and are increasingly strong as the gateway to in-car technology. That encompasses both hardware and software as the software-defined vehicle (SDV) becomes a reality.
The next decade will see 5G become the dominant technology for connected vehicles. It will also see autonomous capabilities move into the mainstream, although who bears responsibility for autonomous vehicles still remains an open question.
What is clear is that the combination of OEMs, IoT enablers and mobile network operators have formed the core ecosystem that will take the automotive industry forward into the era of ubiquitously connected vehicles.
INTERVIEW
The biggest drive is coming from existing services becoming more developed, more frequently updated and more central to the vehicle experience
André Schlufter
director of Automotive Connectivity Innovation, Cubic C3
IoT Now: Is it new services driving data traffic in automotive or richer and more data intensive developments of existing offerings? What do you see as the main services driving the uplift in traffic?
André Schlufter: It’s a combination of both, but the biggest drive is coming from existing services becoming more developed, more frequently updated and more central to the vehicle experience.
Infotainment is a great example. Video and audio streaming, app-based services and navigation are no longer extraneous features, they’re core to the in-car experience and expected by today’s drivers. As software-defined vehicles (SDVs) become more widespread, consumers expect the same level of reliable connectivity in their car as they do in their home.
Another major driver is over-the-air (OTA) updates. As original equipment manufacturers (OEMs) invest in continuous software improvement, vehicles will generate and process much larger volumes of data across their lifecycle. This encompasses everything from feature updates, safety improvement, security patches, and diagnostics. And the demand is already there. Our research found that 40% of global consumers are willing to pay for connected services such as video and music streaming, so we can already see that connected entertainment is becoming a key expectation for consumers.
We also expect an uptick in data traffic from predictive maintenance, usage-based insurance, fleet management, EV battery monitoring and advanced driver assistance systems (ADAS) as the scale and frequency of connectivity across millions of connected vehicles creates a significant increase in data traffic.
IoT Now: Who is the provider here? Is it automotive OEMs, IoT enablers such as connectivity management platform providers, mobile operators or somebody else?
AS: Today’s provider network is collaborative. No single entity owns the entire connected vehicle stack. Global connectivity providers such as Cubic³ deliver orchestration platforms that unify operators and enable seamless cross-border connectivity. OEMs own the relationship with the customer and the experience they ultimately have with the vehicle. Mobile operators own the network coverage, while connectivity platforms exist in the middle, managing connectivity for OEMs across regions, networks and vehicle lifecycles. This orchestration layer is increasingly important as OEMs need a single platform that can support connected services and everything that comes along with it – whether it’s jurisdictional compliance, fleet management, or service continuity across global regions.
The industry increasingly recognises connectivity as a priority. Our research found 86% of OEMs said connectivity is important for protecting vehicles throughout their entire lifecycle, highlighting how connectivity is at the core of their SDV strategies.
IoT Now: Given vehicles have long lifespans, is future-proof technology being embedded by OEMs or will the market’s reliance on retrofit systems continue?
AS: OEMs are increasingly embedding future-proof connectivity while the vehicle is on the assembly line, rather than aftermarket. Connected services are directly tied to the long-term value and lifecycle of the vehicle. For example, a car sold today has the potential to be on the road for more than 15 years, so OEMs need technology that can remotely evolve alongside changing regulations, network capabilities, and consumer expectations.
This means support for eSIM, OTA updates and flexible capabilities is essential. The vehicle needs to be designed for continuous evolution, not just at the point of sale.
Retrofit systems will still play a role, particularly in commercial fleets and older vehicles, but for new automotives, the path ahead is toward embedded, software-defined connectivity.
IoT Now: What’s the impact of EVs – do their charging needs and battery management account for significant uplifts in data traffic?
AS: EVs are an impactful part of automotive data growth as they drive new connectivity requirements around battery health, range optimisation, charging status, energy consumption and predictive maintenance. They need OTA communication with charging networks, mobile apps and energy providers.
Most importantly, EVs accelerate the shift towards software-defined mobility. Battery performance, charging efficiency and driver experience can all be improved through software and data. As a result, connectivity becomes critical for entertainment, driver convenience, and ultimately for the core operation and value of the vehicle.
By 2030, Mc Kinsey expects 95% of new vehicles sold globally will be connected. These services will continue to be far more integrated into how vehicles are bought, operated, maintained, and monetised. The winners will be the OEMs and ecosystem partners that can manage that connectivity globally and reliably across the full vehicle lifecycle.
MARKET REPORT
Connected vehicles shift into a higher-data gear
It’s no surprise that massive growth is expected in the connected vehicles segment over the next five years. That growth comes in massively increased volumes of data transmitted, exponential growth in the number of connected vehicles and huge uplifts in revenues generated in the sector. Familiarity with edge data and its growing criticality to various use cases is driving adoption of vehicle-based systems alongside the move to electrification which demands greater communication to optimise charging.
Analyst firm Omdia has published recent research which concludes that the majority of cellular IoT data traffic will come from the automotive sector. The traffic encompasses firmware and over-the-air (OTA) updates from original equipment manufacturers (OEMs), audio and video streaming, and infotainment. The firm expects connections in the automotive vertical to exceed one billion by 2035 with data traffic growing from 30.7 exabytes in 2025 to 135.4 exabytes in 2035.
5G will be the dominant technology as OEMs seek to ensure longevity and car-makers continue to standardise on cellular connectivity. The firm says 89% of automotive modules will use 5G technologies by 2035 and vehicle-to-everything (V2X) communications are a key driver of connectivity needs.
5G drives OEMs’ longevity plans
Transforma Insights foresees an even bigger overall market for connected vehicles. It predicts the total number will double from 876 million at the end of 2025 to 2.1 billion at the end of 2035. This figure is based on vehicles that have their own connection and those that use alternatives such as a customer’s mobile phone. The firm details a fundamental split between those vehicles that rely on tethering to the driver’s handset for connectivity and those that rely on a dedicated cellular connection. In 2025, tethered vehicles accounted for 45% of connections, a figure which will fall to 37% in 2035.
The firm also sees sales of connected vehicles growing from 137 million in 2025 to 194 million in 2035. It sees head units as a significant part of the market with revenue from these growing from US$26.6 billion in 2025 to US$72 billion in 2035. The firm defines total IoT revenue from head units as that generated by connectivity application and connectivity module.
Evolution from 4G to 5G will continue and the firms says 5G will grow from 11% in 2025 to 93% in 2035. Although initially touted as a critical enabler for the automotive market, 5G adoption has been relatively slow, albeit faster than in many other IoT markets. Currently, 5G is largely chosen for its greater longevity and bandwidth compared to 4G, rather than for advanced network features. Automotive OEMs tend to have a keen sense of future-proofing, since the connectivity hardware they fit will often need to function for a decade or more.
Figure 1: Connected vehicle head units IoT forecast
Data takes the wheel for the journeys of the future
While driver infotainment, navigation and safety have been central to connected vehicle adoption, a new wave of richer, data-intensive services is coming to market. AI, even richer media and the ability to engage with far more granular sources of information within vehicles and cargos is possible and at the heart of the next generation of connected automotive intelligence.
“Increased automotive data traffic will be driven by both improvements to existing connected services as well as new AI-defined connected services,” confirms Jay Gude, the senior manager for Product and Go-To-Market at Harman. “Existing connected service categories, like remote services, infotainment, telematics, over-the-air (OTA) and safety services will continue to evolve with more real-time data and AI-driven intelligence for more personalised and seamless consumer experiences.”
“At the same time, new AI-defined vehicle services will also add another layer of data demand,” he adds. “Vehicles will need connectivity to continuously manage, update and train AI applications across the vehicle, from advanced driver assistance systems (ADAS) to digital cockpit agents and personalised in-car experiences. Core safety functions will still rely heavily on onboard compute but connectivity will be critical to improving these systems over time through software updates, model updates and monitoring and learning loops.”
For Rob Fisher, the senior director of product management at Imagination Technologies, changing capabilities within vehicles are resulting in new habits. “The main increase in cellular traffic is coming from the change in how much of a vehicle’s capabilities is software-defined and subject to regular over-the-air updates,” he says. “A car’s infotainment system, driver assistance system, vehicle control system: all of these are now software-defined and OEMs are pushing out semi-regular updates to their fleets. These downloads include security updates map refreshes, feature enhancements and new capabilities covering all areas of a vehicle’s operations from the user interface to battery management algorithms. They are intermittent, but increasingly high-bandwidth and will be a main driver of the increase in cellular data use as they grow both in regularity and size.”
“For new vehicles, the emphasis therefore is very much on designing a robust, flexible platform from day one,” Fisher adds. “The intent is that the core computing infrastructure, once deployed, stays with the vehicle for its full life, with capability expanding over time through software.”
Established services with enhanced capabilities
There’s an evolution of established services which are transforming their appeal by adding new, richer functionality alongside introduction of new intelligence at the edge. “We’re seeing a combination of both factors, although much of the uplift is coming from existing services becoming richer and more data-intensive,” says Raj Kanaya, the general manager of the Automotive Business Unit at Aeris. “Infotainment and navigation are evolving into broader digital service platforms, while connected vehicles increasingly rely on OTA software and security updates. Vehicles are also generating and exchanging more real-time data for diagnostics, predictive maintenance, driver behaviour, route optimisation, fleet operations and advanced safety services.”
Barbara Pareglio, the senior technical director and Smart Mobility lead at GSMA, agrees: “The majority of growth is coming from existing services becoming significantly more data-intensive, rather than entirely new ones,” she says. “Infotainment is evolving towards high-quality video, gaming and personalised services, while vehicles are generating far more uplink data through high-definition mapping, ADAS and continuous telemetry. In some markets, particularly China, connected vehicles are increasingly being positioned as an extension of the digital lifestyle, providing a smartphone-like experience with rich entertainment, streaming and connected services. This is further accelerating demand for data-intensive infotainment applications.”
“At the same time, new use cases are accelerating this shift,” she adds. “Software updates are becoming larger and more frequent, while services such as cooperative mobility through C-V2X, remote driving support and the continued development of autonomous driving capabilities are introducing increasingly latency-sensitive and data-intensive traffic requirements. This is why programmable network capabilities, increasingly exposed through initiatives such as GSMA Open Gateway, are becoming increasingly important to support these services at scale. By 2030, this will expand into real-time, data-driven mobility services where vehicles, infrastructure and networks operate more as a single system.”
Evolution not revolution
Evolution not revolution is the theme, which is of little surprise given that vehicles have long lifespans so can’t design-in support for services that may turn out to be passing fads. “Automotive IoT growth is not only being driven by entirely new services,” says Hommer Zhao, the founder of OurPCB. “A large part of the increase will come from existing vehicle functions becoming richer, more connected and more data-intensive, from infotainment and over-the-air updates to diagnostics, battery management and predictive maintenance. This creates pressure not just on mobile networks and IoT platforms, but on the hardware inside vehicles. Connected vehicles need reliable PCB assemblies, wiring harnesses, connectors, sensors and thermal management systems that can keep working through years of vibration, heat, cold, moisture and software updates.”
There’s no big shift in terms of who provides automotive IoT either. The market is still composed of OEMs which typically own the on-vehicle hardware, makers of the hardware, connectivity providers and those who provide services.
“OEMs play a crucial role in shaping connected services as vehicles become more software-defined, using connectivity and telematics to deliver OTA updates, remote diagnostics and usage-based insights,” explains Kanaya. “However, the successful delivery of these services depends on a broader ecosystem. Mobile operators provide cellular access, while specialist automotive connectivity and SaaS platforms manage areas such as global coverage, eSIMs, device provisioning, service activation and delivery. This management layer becomes increasingly important as programmes scale to large numbers of vehicles and services must be supported throughout the vehicle lifecycle.”
No single provider
For Pareglio, there is no single provider: “Automotive IoT depends on multiple players working together,” she says. “Car manufacturers control the vehicle platform and user experience, but they rely on mobile operators for connectivity, alongside cloud, platform and application providers to deliver services. In many cases, connectivity is delivered through specialised automotive connectivity providers, which sit between the car manufacturer and the underlying mobile network operators. While the connectivity ultimately runs on mobile network operator networks, car manufacturers may interact primarily with these intermediary providers rather than directly with the operator itself.”
The OEM’s role is not under threat. “The OEM will continue to be the provider of the in-vehicle experience to the end user,” says Gude. “However, behind the scenes, the technology stack necessary to execute future AI-defined connected services is going to be more complex, relying on multiple providers and requiring an ecosystem of providers coming together. The ecosystem starts with hardware players that provide the core compute, modems and software foundations for the vehicle. From there, it expands across cellular, satellite and Wi-Fi network providers, eSIM and iSIM management operators, telematics and cloud providers, and application software vendors building new connected and AI-defined vehicle services. The real value is in bringing all these players together so they can work reliably, securely and continuously across the life of the vehicle.”
Figure 1: Connected vehicle head units IoT forecast
Transforma Insights forecasts revenue from connected vehicle head units growing from US$26.6 billion in 2025 to US$72 billion in 2035.
2025
US$26.6bn
2035
US$72bn
Speeding towards software defined vehicles
The next wave of innovation is the evolution to software-defined vehicles which, according to IoT Analytics is a top strategic priority for 45% of automotive OEMs. The firm singles out tech-natives such as Tesla and Rivian and Chinese OEMs such as BYD and NIO as among the early adopters, with legacy OEMs lagging behind still. The firm says the move to SDVs is disrupting the supplier landscape. For traditional automotive suppliers to stay relevant, they need to closely monitor the software-centric needs of legacy OEMs and understand the new competitive landscape with tech-centric suppliers.
“New vehicles are increasingly being designed with future-proofing in mind,” confirms Gude. “We’ve been part of the software-defined vehicle (SDV) transformation for years now, where the core objective has been to simplify vehicle architectures and enable OEMs to deliver new value through software over time, even after production. That becomes even more powerful in an AI-defined vehicle (AIDV) environment where future-proofing isn’t just about pushing software updates but also about deploying new AI models, re-training existing models and continuously improving vehicle intelligence throughout the life of the car.”
“Vehicles are already moving toward centralised and zonal architectures, which reduce complexity and make it easier for OEMs to deploy, update and scale applications across the vehicle,” he adds. “In an SDV world, that enables continuous feature enhancement, while in an AIDV world it creates a step-change in future-proofing because the vehicle can become smarter as models improve and new use cases emerge. Retrofits will still have a role, particularly for extending services to older vehicles, but the real future value will increasingly come from software, AI model management and continuous improvement built into the vehicle from day one.”
Driving off into the 4G sunset
5G, because of the likely sunsetting of 4G technology during the lives of new vehicles, is dominating cellular automotive decisions. “New vehicles are increasingly being designed with 5G connectivity and the ability to support remote software updates,” says Kanaya. “However, vehicles remain in use much longer than individual generations of mobile network technology, so the connectivity built into them must adapt as networks change. In practice, OEMs will need to plan for future network standards through a combination of flexible embedded connectivity and targeted upgrades where necessary.”
Away from cellular connectivity, there are alternative technologies that are being assessed more widely. These won’t be a replacement for cellular but technologies such as low earth orbit (LEO) satellite and non-terrestrial networks (NTNs) will fill coverage gaps.
“The GSMA is actively working through its NTN community to support greater interoperability between non-terrestrial and terrestrial networks, although current capabilities remain relatively limited and are often deployed for specific use cases rather than mainstream connected vehicle services,” says Pareglio. “LPWAN technologies may also play a role in localised smart city applications, such as connecting vehicles with parking infrastructure. However, LPWAN deployments are typically limited to specific urban areas and do not offer the widespread coverage needed for broader connected vehicle services.”
“For latency-sensitive and safety-critical applications such as cooperative driving, autonomous driving and remote intervention, cellular technologies remain essential,” she adds. “4G and 5G, alongside C-V2X, provide the reliability, latency and scalability required. The industry is therefore moving towards a hybrid model, where multiple connectivity layers work together to deliver seamless performance.”
By the numbers
The data points below are drawn from the Omdia and Transforma Insights forecasts cited in the market report.
0bn
Automotive connections forecast by Omdia for 2035
0 EB
Automotive cellular IoT data traffic forecast for 2035
0%
Automotive modules expected to use 5G by 2035
0bn
Connected vehicles forecast by Transforma Insights for 2035
0m
Connected vehicle sales forecast for 2035
0bn
Connected head unit revenue forecast for 2035, US dollars
Enhancements not replacements
For Kanaya, cellular also remains the go-to technology for automotive use cases. “Non-cellular technologies can enhance cellular connectivity, especially in remote areas or where vehicles experience coverage gaps,” he explains. “For instance, satellite connectivity can provide an additional layer of resilience for fleets operating across rural or cross-border routes. However, non-cellular options are generally less suited to high-bandwidth or latency-sensitive services such as video streaming, large OTA updates and real-time connected applications. Cellular will therefore remain the primary foundation, supported by Wi-Fi, satellite and other technologies where there is a specific operational need.”
As vehicles are required to do more, act intelligently and handle the challenges of increased automation, assisted driving and richer media, cellular uniquely provides most of the required communications capability, most of the time. Other technologies will fill the gaps in remote locations but not become the dominant form of connectivity.
OEMs also look to be tightening their grip on what happens in the vehicles they manufacture. IoT enablers and mobile operators will be generating good business supporting the connectivity but the head units and in-vehicle hardware look increasingly to be an OEM call. The move to SDVs doesn’t look to be changing this; the OEM simply controls the software in addition to the hardware.
What is clear is we’re looking at an automotive future in which 5G is the dominant connectivity technology, OEMs maintain control of in-vehicle activity and significant care is being taken as we inch forwards into the autonomous and assisted era.
EDITORS TAKE
Automotive IoT takes the wheel
In this episode of EDITORS TAKE with George Malim, we focus on the connected vehicle ecosystem: how OEMs, mobile operators and IoT enablers are preparing for software-defined vehicles, richer in-car services, EV data demands and the long transition from 4G to 5G.
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