#220

Bi-Monthly Market Insights

DIS

Disruption Radar

Every week sees a barrage of new announcements from the industry - with new vehicles, technologies, features,partnerships, and acquisitions announced at an increasingly frequent rate. These alone often vary largely between
regions and in scale – from a new piece of technology intended specifically for one market, to a new vehicle
envisioned for a global audience.

TABLE OF CONTENTS
Introduction

These announcements can also span further across the automotive landscape – with new legislation andregulations unveiled, new challenges faced by OEMs, suppliers, and start-ups across the supply chain, and new
products unveiled by technology firms and entertainment companies designed for the automotive industry. With
such a high volume of announcements made so frequently, it can often be easy to miss the relevance, context,and significance of each one.

BackgroundImpactNext Steps

SBD’s series of Bi-Monthly Market Insights works to filter, highlight, and contextualize the most importantannouncements coming out of the industry. Further analysis works to identify their impacts in both the short-termand long-term and map out the best practices for responding to them. Delivered twice every month to balancewith the highly changing market situation, each report provides concise insights and clear actions on a range ofrelevant topics.

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Key questions answered> What are the mostsignificant announcements
coming out of theautomotive industry?

> What has happened thatwarrants a deeper
examination?

> What are the impacts ofannouncements, both in
the short-term and in thelonger-term?

> What should decision-makers
be considering as a reaction
to announcements?

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Bi-Monthly Report for 2022

Example slides
from the reportBig Thoughts

3G sunsettingThis quarter’s Big Thought

3G sun-setting to leave
27Mln US cars in the dark
88 Million cars on US roads now have built-in connectivity, but
SBD estimates that up to 27 Million* of those cars could loseaccess to vital connected car services like eCall and bCall
during 2022.
Why? Network operators are sunsetting their 3G networks tofree-up bandwidth for 5G service, and most OEMs have yet to
implement countermeasures that will allow consumers toupgrade their 3G-enabled vehicles.
In this insight we explore which brands are most exposed to3G-sunsetting and how some are finding creative ways to keep
their customers connected.

4*Not all vehicles have active connections

4

3G sunsetting

Big Thoughts

What is happening?

27

Who is most affected?
Ford Group

Honda Group

MillionGeneral Motors

Volkswagen 3%# of 3G-enabled cars in USA that
could be disconnected as 3G
networks are closed down (32% oftotal USA connected car parc)

37%

Group
4%

% of all
3G-equippedvehicles

Hyundai Group
7%BMW Group

Millions of connected cars in USA

250

5%

3%

3%
RNMA Grp

Key takeaway

Other7%

3G-sunsetting

Toyota Group11%

Mercedes-Benz

200

9%Stellantis• Verizon was the first to shut down 3G
from December 2021, followed by
AT&T from February 2022 and TMobile/Sprint is expected to do thesame from March 2022.
• Around 1/3 rd of all vehicles withembedded TCUs currently rely on 3G
networks – that’s 27 million vehicles

11%• Not all of these are necessarily activeconnections – many of those vehicles
will have required subscriptions after
an initial free period, and OEMs
4G/5G
typically only achieve a 15-25%
subscription rate.

150

100

50

3G

05

By the end of 2022 all telecom
operators in USA will have shut down
their 3G networks. This will leave up to27 Million 3G-enabled vehicles without
the ability to connect to servers.

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

• However, millions of customers will beaffected by 3G-sunsetting, and manyof those may be surprised by services
suddenly not working.

2030
5

Big Thoughts

3G sunsetting

Why does it matter?
Negative press

Dissatisfied customers
So I got the email from BMW "Impending
changes to 3G technology and your BMW ", I
called them and they said my car not eligible toupgrade! My car comes with telematics unit,
the car already has an active subscription till
2025....

Key takeaway
Although the decision to close 3G
networks isn’t being taken by OEMs,
they are very much feeling theconsequences:• Press – Journalists have been quick tohighlight which brands are mostaffected and which aren’t yet
providing alternatives.
• Dissatisfaction – Owner forums are
already filling up with confused andangry clients questioning why theirrelatively new cars were fitted withobsolete equipment.
• Safety – 27 Million fewer connectedcars equates to approximately
500,000 fewer eCalls, of which 5,000
could be life-saving.

Road safety

Commercial opportunities• Commercial – at a time when many
car makers are finally extracting realcommercial value from vehicle data,losing such a large proportion ofconnected vehicles hits their bottomline.

66

3G sunsettingBig Thoughts

Where next?
Key takeaway1

By the end of 2022 all 3G networks
will be shut down and up to 27
Million cars will be disconnected

3G sun-set
Confusion

FutureOutlookLawsuitsRetrofits

2

Even with the best comms strategy, expect
a significant number of consumers to notfind out until it is too late3

OEMs are likely to face large class-action
lawsuits, with lawyers claiming OEMs
knowingly fitted obsolete hardware

4OEMs to continue ramping up 4G-retrofit
programs, potentially with aftermarket orTelecom partners

4G Deja vu57

1-3yrs3-5yrs>5yrs

At some point we will be back in the sameplace, and proactive OEMs will start
thinking now how to minimise disruption

The industry is in a short-term scramble
to ensure consumers who werepreviously enjoying connected services
are able to continue accessing them.
• In the coming months expect to see
more negative press and consumer
feedback relating to de-activatedconnected services – potentially
including specific examples of how
eCall services were disabled on 3Gequipped vehicles involved inaccidents.

• In response, OEMs will be looking forways to quickly and cost-effectively
replace 3G with 4G connectivity
without the need for costly retrofitting of entire TCUs.
• Longer-term, OEMs may at somepoint during the 2030s face the samedifficulties with 4G sun-setting.
Although that seems far away, theproblem will be 3 times bigger as theentire vehicle parc will be connectedby then (compared to 30% today).

7

Big Thoughts

3G sunsetting

Who to watch out for?

“We’ve made it easy for automakers to keep theircustomers connected beyond the 3G sunset. Our OEMgrade solution is affordable, ready for deployment andmost importantly, provides drivers and passengers witha high-value mix of features, including life-saving
emergency services.
Kenny Hawk – CEO Mojio

Key takeaway
Mojio and VW/Audi have announced apartnership to deliver owners of 3Gequipped vehicles a 4G dongle that
supports many of the services
previously offered via the embedded
TCU. SBD spoke to Mojio CEO, Kenny
Hawk, to get his thoughts.
• Mojio is offering the same program toother OEMs, which includes a plugand-play 4G LTE OBD-II telematics
device, automatic eCall and access toa range of app-based features.

• The package is offered at a 1-time
price of $295 – significantly cheaper
than many of the retro-fit 4G
solutions offered by various OEMs.
• VW is offering the solution to ownersof certain MY2014-16 vehicles
equipped with Car-Net free of charge.

8• Audi has worked with Mojio to offer abranded version called ‘Motion for
Audi Connect’ – according to Mojio
the program was rolled out inmonths.
8

Big Thoughts

3G sunsetting

How should you react?

1239Over-communicate
While most OEMs have sent some level ofcommunication to their customers (at least
the ones they still have contact details for)
OEMs shouldn’t assume the message has been
received. Consider broader campaigns linked
to clear alternatives.

Quick & Affordable
Something is better than nothing, and sooner
is better than later. While aftermarket dongles
may not offer the same functionality asembedded solutions, consumers are more
likely to respond positively to it than if they
are asked to pay a large HW/fitment fee.

5G-friendly
4G-sunsetting may seem far away, but it isnever too soon to be considering ways toprepare all vehicles for a 5G future. Even if
OEMs aren’t yet ready to start fitting 5G,
optimizing packaging/antennas as well as
supporting scalable chipsets can help minimize
disruption later on.
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If you have any questions or feedback about thisresearch report or SBD Automotive’s consulting services,
you can email us at info@sbdautomotive.com or discusswith your local account manager below.

info@sbdautomotive.com

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USAGarren Carr
North America
garrencarr@sbdautomotive.com+1 734 619 7969

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