Connected cars will reward OEMs that know where to lead

It is becoming part of a broader technology ecosystem in which software, data, cloud infrastructure and customer-facing applications all play a decisive role. For original equipment manufacturers (OEMs), this creates both an opportunity and a threat. They have more ways than ever to create value after the point of sale, but they also face powerful competition from technology companies that are better positioned in some parts of the digital stack.

The connected vehicle value chain can be understood as a layered structure. At the bottom sit the physical vehicle, embedded hardware, sensors, computing units and electrical architecture. These remain core automotive domains, shaped by safety, reliability and regulation.

Above them are software platforms, operating systems and middleware that allow the vehicle to function as an updatable digital device. Higher still are applications and services, from navigation and infotainment to remote control, charging, diagnostics and personalised in-car experiences. At the top are cloud services, analytics, artificial intelligence and developer ecosystems that turn vehicle data into scalable commercial products.

This structure matters because value is not distributed evenly. OEMs have traditionally controlled the product, the customer relationship and much of the aftersales opportunity. In the connected era, however, value often emerges where data is interpreted, combined and acted upon.

A vehicle may generate large volumes of data, but that data becomes commercially meaningful only when it supports services such as predictive maintenance, insurance, fleet optimisation, energy management or subscription-based convenience features.

That is where the competitive pressure intensifies. Hyperscale cloud providers bring infrastructure, artificial intelligence capabilities and cross-sector experience that most carmakers cannot replicate quickly. Consumer technology firms understand interfaces, app ecosystems and user habits in ways that shape customer expectations inside the vehicle. Telecoms operators, semiconductor companies and software specialists also influence key parts of the stack.

Yet this does not mean OEMs are destined to lose relevance. SBD Automotive’s view points towards a more nuanced future. Carmakers still occupy a critical position because they are responsible for vehicle safety, system integration, brand trust and regulatory compliance. They decide how data leaves the vehicle, which partners can access it and how digital services interact with physical systems such as batteries, brakes, powertrains and driver assistance features.

The task for OEMs is therefore to choose carefully where to compete, where to collaborate and where to control. Trying to own every layer of the ecosystem may be unrealistic and expensive. Giving away too much control, however, risks reducing the OEM to a hardware supplier in a market where the most attractive margins sit in software and services.

The winners are likely to be those that combine automotive authority with digital openness. They will build strong software foundations, protect the customer relationship, create clear data governance models and form partnerships that add scale without weakening their strategic position. The connected car is not just changing how vehicles work. It is changing who captures value from mobility.