Automakers Soon Will Have New Ways to Profit from Driver Data

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There’s so much data streaming from modern cars that automakers have had trouble making sense of it all. An estimated 250 million vehicles worldwide are expected to contain connected features within the next five years, and automakers—inundated with detailed information on drivers’ whereabouts, in-car entertainment selections, and vehicle diagnostics—are searching for ways to harvest and profit from that data stream. With that in mind, global supplier Delphi Automotive has announced a series of partnerships and investments intended to establish platforms that will help their OEM customers extract customer data and generate revenue from it.

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Delphi executives announced that their company has acquired minority stakes in two Israeli companies and established a strategic partnership with a third firm. The moves are all centered on improving vehicle connectivity and data analytics. Valens, a chipmaker, will help Delphi speed the transfer of data, moving it approximately six times faster than today’s averages. Otonomo establishes a common platform and serves as a data broker between OEMs and third parties. Rosenberger, a German connectivity company, helps tie together systems that enable driver-assistance features, automated driving, and connected platforms.

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Terms were not disclosed. Otonomo said Delphi’s investment is part of a $ 25 million fundraising round involving multiple investors.

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Glen DeVos, Delphi chief technology officer, said the moves answer three key questions. “First is the vehicle,” he said. “How do you move it around? Second is, How do you get it back and forth from the cloud? And third is, What do you do with it in the cloud?”

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The moves come on the heels of two related Delphi acquisitions: the 2015 purchase of data-analytics company Control-Tec and the purchase of Movimento, which specializes in over-the-air update capabilities, earlier this year.

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Of the most recent announcements, the one with the broadest implications for automakers and motorists is Delphi’s stake in Otonomo. The Israeli tech company is essentially creating a data marketplace. What makes the company’s services attractive to automakers is the ability to aggregate data from multiple companies and provide a more comprehensive data set to interested parties. That reach is significant.

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If a third-party service “wants specific information on vehicle or consumer behavior, Otonomo could be customizing the query for that data,” DeVos said. “That’s a lot of flexibility and customization to tailor that data set to a third-party provider.”

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What kind of third party? These might include insurance companies, tolling authorities, roadside burger joints, city planners, and emergency services. In its 2016 Connected Car Forecast, global automotive consulting firm SBD noted that OEMs anticipate building after-sales relationships with customers through connectivity and using that data to offer them insurance discounts or reduce warranty expenses.

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“That’s one of the most exciting parts of this,” DeVos said.

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Consumers may be less excited. For all the industry chatter about making money off vehicular data, others have been pushing to ensure that driver data remains owned by drivers. In 2014, AAA, the nation’s largest motoring club, urged automakers to be transparent about the ways they extract data from customers.

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Congress, too, has taken interest in automotive privacy. In 2015, a provision in the Fixing America’s Surface Transportation (FAST) Act established that customers own the data that resides in the event data recorders that come in all new vehicles. That law didn’t address the reams of other telematics-based data streams, but Sen. Ed Markey (D-Mass.) has sponsored legislation that would direct federal agencies to establish standards that safeguard driver privacy.

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• How the Connected Car Will Defend against Hackers

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• Delphi and Mobileye Focus on Fully Self-Driving Cars for 2019

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Delphi says that data harvested by Otonomo is anonymized and that customers would have the right to opt out of any connected services. Opting out of using connected services, however, doesn’t mean that drivers who do use those services would have any say in what automakers do with the data those services collect.

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And given that a Republican-led Congress voted only last month to roll back Federal Communications Commission restrictions on the selling of data that internet service providers mine from consumers, there’s likely little chance Markey’s privacy protections will become law. Both in the country overall and in the auto industry in particular, big data is about to mean big business.

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