As several hot topics are rocking the world scene, probably many didn’t realize Massachusetts electors have just voted in favor of a new ‘Right to Repair’ law. It demands OEMs selling connected cars in this US state to equip them with a “standardized open data platform beginning with model year 2022.” This platform should make a lot of vehicle data available to dealers and independent repair shops for the purpose of diagnostics and maintenance. This ballot measure goes in a different direction from that proposed by OEMs, which was the creation of a manufacturer-controlled server.
While some may not see it as disruptive, this new law is one more stride in a major international push to make connected car data free. It adds to the US Motor Vehicle Owners’ Right to Repair Act. The European Union is also invested in making car data more accessible to third parties, which led some OEMs to establish neutral servers as a consequence. ‘Right to repair’ is also one of the main lines of the recently approved EU Green Deal, which means more to come. In short, there is a snowball effect and MA’s new law is far from being the last time we will hear about free car data laws.
What does this mean for the auto industry?
There is a clear movement to make car data freely accessible to all. In addition, vehicle owners are increasingly wary about privacy and data ownership. As the talk about data monetization comes more into the public domain, these consumers will become more eager to claim financial benefit for allowing companies to use their car’s data. This asks for companies in the automotive space to think on the long-term consequences of these trends.
In terms of future strategy, OEMs and other companies in the automotive space should focus less in selling data and more in selling services enabled by data. The reason is simple: if you sell data, you might have to share the benefit with others, namely car owners/drivers; or you won’t be able to sell it at all if the law determines it should be made free. But if you sell a service, you are simply charging for the development and delivery of that service, plus markup. Therefore, these are two very different situations.
What about OTA digital upgrades?
Over-the-air digital upgrades will become the revenue backbone of connected car services. However, in a future where data is free or belongs to car owners, who also have the right to modify their cars as they see fit, this means also the legal right to ‘jailbreak’ locked digital features. In fact, such is already happening as some companies already ‘jailbreak’ Teslas to offer digital upgrades at a lower price than the manufacturer – which can undermine the latter’s revenue potential. The solution is explained in our research How to Protect Connected Vehicle Monetization From Commercial Hackers. Even nurturing a policy of open data and ‘right to repair’, OEMs can still deliver ambitious revenue models for connected car services and upgrades when the right strategy is in place.