As technology and connectivity continue to improve, many things around us continue to become “smarter” – smartphones, smart watches, smart TVs, and even smart refrigerators. All of these devices and machines are tied to what we call the Internet of Things, or IoT, a phrase first coined by Kevin Ashton of MIT in 1999. The IoT is a network of objects that can connect and exchange data through the Internet.

Aside from just our household appliances gaining increased connectivity, our vehicles are as well, with over 237 million cars connected to the IoT in 2021. A connected vehicle incorporates components such as sensors, devices, cloud technologies, and applications that give them the capability to interact with other devices, vehicles, and even infrastructure.

One way this connectivity can be utilized is by managing multiple commercial vehicles such as cars, trucks, vans, etc., also known as fleet management. The market for fleet management with the IoT is expected to grow from $23.67 billion today to $79.20 billion by 2030. This technology contributes to effectiveness and efficiency in the fleet management industry in many ways.

First, the vehicles connected to the IoT will allow fleet managers to track them in real-time. As a result, scheduling and routing can be done quicker and more effectively. Additionally, emergency events such as a vehicle breakdown can be identified immediately.

In the many other ways IoT-connected vehicles aid in fleet management, they also have advantages for the average consumer. Connected cars often include numerous sensors that can monitor multiple vehicle functions such as battery life, fuel efficiency, temperature, and more. The vast amounts of collected data on vehicle performance are important for identifying potential issues before they happen, allowing for predictive maintenance. Predictive maintenance is important for lowering costs and increasing vehicle uptime, or how often it is operational.

A 2018 PWC report found that predictive maintenance results in a cost reduction of about 12 percent and an uptime improvement of about 9 percent. Additionally, the technology also reportedly reduced risks associated with safety, health, environmental, and quality by 14 percent and increased the lifetime of a vehicle by up to 20 percent. These benefits are useful for both everyday drivers and large companies that own many vehicles.

A smart automobile also provides some important quality-of-life improvements to drivers. The average American driver spends around 14 hours per year looking for parking, costing them an estimated $345 in time, fuel, and emissions. With a vehicle connected to the IoT, drivers can access mapping data that identifies open parking spots and therefore save time. Similarly, smart vehicles can collect data that can aid in predicting traffic patterns and allow drivers to save time by choosing more effective routes. Furthermore, these vehicles can have the capability to share information with smart traffic light systems. The technology, already being experimented with by Volkswagen, Honda, Ford, and more, will give drivers information about when traffic lights will be green and adjust routes accordingly, saving more time, fuel, and emissions.

Smart vehicles can also have the capability to communicate with each other while on the road, known as vehicle-to-vehicle, or V2V, communication. This technology can give cars the ability to send others information about their surroundings that can be used to identify potential crashes or other safety hazards. According to the National Highway Traffic Safety Administration, 615,000 motor vehicle crashes and 1,366 deaths from incidents could be prevented with V2V technology. Vehicle-to-vehicle communication can also help ease traffic congestion and decrease emissions.

While there are a plethora of potential benefits to IoT-connected vehicles, the technology does face some challenges. As smart vehicles collect massive amounts of data, about 4 terabytes in 90 minutes for autonomous vehicles, concerns about the security of this data grow. As a result, both in and outside the U.S., regulations concerning data privacy are increasing. The California Consumer Privacy Act, or CCPA, gives consumers the right to know about or opt out of the distribution of their data, among other protections. Both China and Europe also have strict data protection laws that, if broken, can fine firms millions of dollars.

It is important to consider both the risks and benefits of smart vehicles as the industry grows, more IoT connected vehicles enter the roads, and relevant policy is written. There is clear potential in the market to increase the efficiency of both businesses and the average consumer in addition to making our roads a safer place to drive.


Written by Andrew Barton, Public Policy Intern


The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.