Exploring the Global Shift to Digital Keys in the Automotive Market
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Market Overview
The automotive industry is rapidly adopting digital key technology, a shift away from traditional physical keys to more convenient, secure digital options. The global market for digital car keys is growing fast, with vehicle manufacturers replacing key fobs for a better user experience and increased security. As vehicles become smarter and more connected, the demand for digital key solutions will continue to grow. From 2024 to 2031, ABI Research forecasts the market to expand at a Compound Annual Growth Rate (CAGR) of 17.2%. This will bring annual shipments of digital car keys to nearly 60 million by the end of the forecast period, with hybrid connectivity being the norm. Keys that combine Bluetooth® Low Energy (LE) with Near Field Communication (NFC) and Ultra-Wideband (UWB) dominate the market.
Digital key solutions require specialized chipsets and embedded Secure Elements (eSE) within vehicles to ensure secure authentication. In addition to the digital key itself, complementary solutions like Near Field Communication (NFC) cards or embedded smartphone wallet keys are also being integrated into vehicles. As the market evolves, ABI Research has observed a few factors shaping the adoption of digital keys globally. Technology options, open standards, and consumer attitudes dictate the development of automotive digital keys.
“Most OEMs enable some form of digital key functionality across their vehicle lines, with variation across the different vehicle segments. Cheaper mass-market vehicles are mostly limited to Bluetooth® LE-only in China, and Bluetooth® LE- or NFC-only in other regions. UWB is only found in more premium vehicle segments, which correlates with the consumers that are more likely to own smartphones capable of UWB digital key communication. Bluetooth® LE+NFC solutions are found across multiple market segments.” – Abu Miah, Analyst at ABI Research
Enabling Technologies
Digital keys rely on a variety of advanced technologies to provide secure, reliable, and convenient access to vehicles. Essential components include:
- Chipsets and eSEs: These are vital for authenticating the digital key and ensuring secure communication between the key and the vehicle. The eSE is housed within the vehicle and handles cryptographic operations. It also ensures the secure storage and transfer of data.
- Communication Protocols: There are several communication technologies used in digital keys:
- Bluetooth® Low Energy (LE): This is a popular choice for digital keys due to its low power consumption and wide range. It enables seamless pairing and authentication between the vehicle and the digital key. Bluetooth® also has a higher range than NFC and UWB.
- Near-Field Communication (NFC): NFC works over shorter ranges and requires the user to tap the key near the vehicle for authentication. It is less susceptible to security threats, but is more restrictive in range.
- Ultra-Wideband (UWB): This technology provides precise location tracking, offering higher security and accuracy than Bluetooth® LE and NFC. It is often used in premium vehicles, where security and functionality are top priorities. For example, Audi recently announced plans to allow customers to use UWB-enabled devices to unlock and start their cars hands-free.
- Digital Key Management Platforms: To ensure the safe and efficient management of digital keys, Original Equipment Manufacturers (OEMs) require a robust platform for provisioning, sharing, and terminating keys. These platforms can be cloud-based and often integrate with OEM apps for added convenience.
Open Standards Versus Proprietary Solutions
An important decision digital key vendors must make is whether to use open standards or proprietary solutions. While open standards like those developed by the Car Connectivity Consortium (CCC) and other international organizations provide greater interoperability and a better user experience, proprietary systems can offer quicker time to market.
- Open Standards: These systems are becoming the industry norm, as they allow for smoother integration between vehicles, smartphones, and cloud-based services. They also provide a better user experience, allowing for features like key sharing across platforms. Some of the major standards include the CCC, Intelligent Car Connectivity Ecosystem Alliance (ICCE), and Intelligent Car Connectivity Open Alliance (ICCOA).
- Proprietary Systems: Some OEMs, especially those in China, prefer proprietary solutions due to the speed of deployment and the ability to bypass certification processes. This is particularly common for companies aiming to bring digital key technology to market faster, although it may limit interoperability and user experience in the long term. Tesla, for example, continues to use proprietary digital key systems.
While open standards are gaining momentum globally, proprietary systems still have a place in certain markets, especially where speed of deployment is a must.
The Chinese Differentiator
China has emerged as a leader in the adoption of digital key technology, with around 30% of vehicles in China equipped with digital key functionality in 2023. Three trends stand out regarding the Chinese market for digital keys.
- Consumer Attitudes: Chinese consumers are generally more open to new technologies, and the demand for digital key solutions is higher compared to other regions. The willingness to adopt new tech has fueled faster implementation.
- Bluetooth® LE Adoption:: Bluetooth® LE is the preferred digital key technology in China, thanks to its long-range capabilities and lower cost. Unlike other regions, where NFC solutions may be more common, Bluetooth® LE offers more convenience and is less expensive to implement. Additionally, the risk of theft is perceived to be lower in China, making Bluetooth® LE a more viable option.
- Proprietary Solutions:: Chinese manufacturers are more likely to implement proprietary digital key systems. This is largely due to the faster time to market and the ability to bypass the certification process required for open standards. The country’s regulatory bodies, such as ICCE and ICCOA, play a significant role in enabling this rapid adoption.
Despite these advantages, China’s approach to digital keys may not be easily replicated in other regions. The different regulatory landscape, consumer behavior, and security concerns make it difficult for other markets to adopt the same methods at the same speed.
Key Companies to Watch
Conclusion
To dive deeper into the digital key ecosystem and its trends, download the report Automotive Cybersecurity: Securing Vehicle Access from ABI Research.
Related Research
Report | 4Q 2024 | AN-6233
