Can V2X Be Profitable?

The most promising business models for short-range communication (PC5 or ITS-G5) in private vehicles are tolling, road charging, priority lane access, on-demand traffic signal priority, and seamless and accurate license plate recognition and payment in parking scenarios. Some present concrete costs benefits and monetization opportunities for road and parking operators, but their viability is intrinsically related to the availability of On-Board Units (OBUs) in vehicles. However, none of these applications generate direct and substantial revenues that justify carmakers' investment in the technology. Instead, they offer an opportunity to recoup some of the costs in case the hardware is already fitted in the car to comply with regulations or safety score standards. This is a similar trajectory to Driver Monitoring Systems (DMS), which, after becoming a mandated feature in several markets, including Europe and China, started being used for infotainment functionalities such as in-cabin personalization and payments via facial recognition. As a critical mass of compatible vehicles and infrastructure is crucial for realizing the benefits of short-range Vehicle-to-Everything (V2X), the emergence of business cases is inherently dependent on broader deployments.

While short-range communication business opportunities hinge on soft mandates (i.e., V2X inclusion in safety rating programs) and regulations that compel carmakers to offer the technology, the widespread adoption of cellular connectivity in vehicles offers immediate V2N opportunities.

The most significant and immediate V2X opportunities are found in long-range communication (Uu) applications because they take advantage of the large installed base of connected vehicles—228 million cars in 2022—and growing infrastructure Wide Access Network (WAN) connections—481 million in 2022. LTE 4G enables the exchange of local hazard information that generates value for final consumers and road operators, despite fierce competition from free navigation apps with road hazard alerts. Meanwhile, the significantly lower latency and higher bandwidth of 5G and distributed computing architectures (i.e., Multi-Access Edge Computing (MEC)) introduce new business models through the cellular network, such as Autonomous Valet Parking (AVP) to final consumers, Vulnerable Road User (VRU) detection, and cooperative perception; the latter being a key enabler of autonomous driving with the potential to boost automaker's revenues with autonomous driving software packages such as Ford BlueCruise and GM Super Cruise.

Despite the large addressable market and clearly defined use cases, the network-based V2X remains unexplored, primarily because of the challenge of conciliating the entirely different Key Performance Indicators (KPIs) of the private and public companies that constitute the V2N ecosystem.

Adopting the cellular network for cooperative mobility is highly dependent on developing a framework that addresses the separation of the business domain, operations responsibilities, privacy, and liabilities within the safety services ecosystems. 5G network slicing will play an essential role in executing such a framework because the logically separated virtual networks (slices) enable the separation of trust domains. The vehicle could have, for instance, a virtual network for entertainment, telematics, and one for V2X, with a clear separation of value creation, ecosystem players, and beneficiaries.

The new 5G capabilities will help the long-range V2X ecosystem evolve, but it will take time. The network-slicing business models themselves are still in development. It is still unclear how service provision (e.g., Quality of Service (QoS)) and billing will be established at retail and wholesale levels, especially when drivers move between coverage zones. Federated models have been discussed but have not yet been defined.

Another critical challenge is to persuade private companies to share data with their competitors. Cross-company data utilization, processing, and linking are minimal today because OEMs are protective about their fleet data and resist sharing it with other carmakers. Therefore, to propel collaboration, there must be an arrangement in which carmakers get compensation to give up data to the infrastructure and other public and private players.