Several car data firms fail as automakers look at software as a potential source of profit

Wejo and Otonomo, two startups with promising potential, are struggling. 

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By the end of the decade, automakers will make billions in new software revenue, hiring engineers left and right, poaching tech giant executives, and finding ways to monetize all the data connected cars generate. 

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Startups that help carmakers sell data would think this is fertile ground. Two high-profile companies in the space - Otonomo and Wejo - have faced financial difficulties.

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Otonomo reported only $2 million of revenue in the third quarter of 2021, after merging with a special purpose acquisition company. However, losses widened despite an increase of 12-fold. To preserve its dwindling cash, the company cut jobs in December. A digital roadside assistance company called Urgently and Otonomo announced a merger on Thursday.

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With its creative approach to shoring up its finances, Wejo, another British startup, completed a SPAC merger in 2021. Bloomberg Opinion columnist Chris Bryant has dubbed the deal a Re-SPAC - which involves merging with another blank-check company to raise $100 million in fresh funding after issuing a going-concern warning last year. A cash-positive company is Wejo's goal by 2025. 

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A Wejo spokesman wrote in an email that the General Motors-backed company is succeeding and growing regardless of macroeconomic conditions. In the first nine months of 2022, sales amounted to just $4.8 million, but it anticipates triple- or quadruple-digit growth this year. 

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Why are automakers' software expenditures so high while Wejo and Otonomo's revenue is so low? 

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No standardized format exists for capturing data by carmakers or suppliers. Data needs to be scrubbed, standardized, and organized so that third parties, such as insurance companies, fleet managers, and city planners, can make use of it. 

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There is a problem with carmakers not sharing information that is useful to outside buyers, or sharing data that isn't very useful to them. A second constraint is that some data can only be valuable when gathered by many automakers at the same time. 

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It's not just the handful of brands that have an agreement with Otonomo that need to see cars parked in a particular area at a given time if they want to track parking-spot usage in Paris.

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 Rental car companies with multiple brands in their fleets would want predictive maintenance data on their whole fleet, not just a few cars. A slice isn't worth paying for if you can't see the entire pie. 

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The automobile industry will have to work hard to provide the same kind of data to a single marketplace. In order to build new features and charge subscription fees, carmakers are increasingly doing some of this analytics work in-house. 

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A Ford spokesman said the company sells data through different channels depending on the use case - startups, insurance companies, data aggregators - after expanding a deal with Wejo to process car data for insurance companies. The data for BlueCruise, Ford's subscription-based driver-assistance system, is handled internally. 

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Single-data marketplaces seem logical in theory but have had a difficult time getting off the ground. During a recent interview, a former startup executive compared the situation to Kevin Costner's 1989 film Field of Dreams in which he builds a stadium in a cornfield in order to attract famous baseball legends' ghosts. No one came to the marketplaces that Otonomo and Wejo built.

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It is possible that these companies will come up with a successful business model. While connected cars have been discussed for years, it still feels like they are just getting started.