Your car's data may soon be more valuable than the car itself

Riding a self-driving Uber around San Francisco
Riding a self-driving Uber around San Francisco

The most valuable thing about tomorrow's cars is something you'll never even see.

Forget the engine. Or the shiny rims. The money is in vehicles' data.

People have made fortunes selling cars and trucks. For many of us, a car is the second most expensive thing we'll ever buy. (A home being Number 1.)

But experts say the value of vehicles will likely pale in comparison to the riches from our cars' data.

car data value

"Data is the currency of the digital age," said Jim Barbaresso, who leads Intelligent Transportation Systems at HTNB. "Vehicle data could be the beginning of a modern day gold rush."

The gold rush analogy is a common one, made by everyone from Barbaresso to the CEO of Daimler. Here's why there's so much potential:

Cars increasingly have sensors and cameras to track their performance and their surroundings. Vehicle sensors, for example, can better tell when an engine part is in need of replacement. A back-up camera doesn't just help us park, it can tell how many pedestrians or vehicles are on a block.

These sensors generate data, which can be analyzed to make money. (If you doubt the way data can be turned into money, just look at the success of Google (GOOG) and Facebook (FB). They offer free services to billions, and make a fortune off the data they collect.)

Related: 2016: A tipping point for excitement in self-driving cars

A self-driving car can generate 1 gigabyte of data per second, according to Tom Coughlin, the founder of Coughlin Associates, which does data storage consulting. At that rate, about 30 seconds of driving would fill up the memory on a typical iPhone.

More data means more potential money. All sorts of creative business opportunities will arise.

"By collecting data from vehicles, you effectively digitize the public space, unlocking potential safety, security, municipal and commercial benefits," Eran Shir, CEO of Nexar, a vehicle communication company, told CNNTech.

Related: Self-driving cars could eliminate urban crashes

Some uses are already emerging, according to Ben Volkow, the CEO of otonomo, an Israeli startup that sells vehicle data. The information is of interest to parking apps, for example. A car driving down a street can identify open parking spaces thanks to its cameras and sensors. Knowing the location of the nearest open parking spot is valuable for anyone parking in a crowded city.

Volkow forecasts that by 2020, automakers will be able to make more money selling vehicle data than the cars themselves.

The ultimate goal of collecting vehicle data is building a self-driving car that can drive safely on every road on the planet. Without vehicle data to train self-driving cars, they won't function.

"Data is really king in this market," said Tasha Keeney, an analyst at ARK Invest, which forecasts that the autonomous taxi market could be worth $10 trillion in the early 2030s. (For comparison, vehicle sales are a $2 trillion market today.)

With cheap autonomous travel, the market for transportation will be vastly larger than it is today. People in the developing world, who couldn't afford to buy a vehicle, will be able to pay for cheap self-driving rides.

Self-driving taxis will allow the operators to deliver personalized, location-based advertising. For example, as you ride to work, a screen in the taxi could display an ad or discount to a nearby coffee shop. As you ride home later, the taxi could suggest a TV show to watch that night, or offer a deal to have your dinner delivered.

There's also a huge economic gain from avoiding car crashes -- which cost $242 billion a year in the United States.

To understand the gold rush underway, look no farther than the frenzied race to develop self-driving cars. The going rate for a self-driving car engineer is $10 million a person, according to an early leader of Google's self-driving car project. Tech and car companies, such as Uber and GM, have made pricey investments in young self-driving car startups -- essentially very expensive acqui-hires.

Related: The backlash against self-driving cars officially begins

Everyone in the industry must figure out how to get vehicle data, and then make it useful.

Many automakers are still stuck on making the economic case for connected cars, according to Mike Ramsey, a research director at Gartner who specializes in vehicles. Connecting a car to the Internet can cost $20-$35 a month, and the expense has to be justified.

Another hurdle is that tomorrow's cars will generate so much data, that it can't all be transmitted wirelessly. Companies will have to pinpoint which data is most valuable. Oliver Cameron, who leads the self-driving car team at Udacity, believes the winner of the self-driving car wars will be whoever is most adept at -- you guessed it -- data collection.

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