In January, Toyota said its mobility software subsidiary “Woven by Toyota” was investing $44 million into Japanese rocket maker Interstellar Technologies. Rival Honda has been developing a proprietary reusable rocket since 2019 to launch low-earth orbit satellites to space. Chinese automaker Geely Holding Group, a Tesla competitor, has invested $326 million to manufacture its own satellites.
“What are those satellites going to be used for and what are they already being used for?” said Micah Walter-Range, president of consulting firm Caelus Partners. “Some of it is for improving navigation services for cars. Some of it’s for mapping. If you think about what’s going to be needed a little further down the road for autonomous vehicles, having full awareness of what’s going on on the road is incredibly valuable.”
Cars today use satellite connectivity for tracking and location, software updates and entertainment like satellite radio. But as cars become more and more connected, automakers need the infrastructure to make that possible. That’s where satellites, and the rockets needed to launch them, come into play. One recent report estimates that by 2030, connected vehicles could be a $742 billion annual revenue opportunity for automakers and suppliers.
“In the smartphone world, Apple is shifting from a single device sale to additional services that can be provided throughout the life of that device,” Walter-Range said. “So for a car, it’s the same deal. You know, once you sell that car, are there additional revenue streams that you can get by providing services? Some of those services can be delivered from space.”
One model is charging subscriptions for advanced driver assistance systems. General Motors‘ Super Cruise uses cameras, sensors and real-time location and map data from GPS satellites to allow the vehicle to do things like automatically steer and keep the car centered in a lane. In the company’s fourth-quarter earnings report, GM CEO Mary Barra said the company expected that within the next five years, Super Cruise would bring in about $2 billion in annual revenue for the company.
Watch the video to find out how else automakers and car companies can benefit from each other.
