The biggest data privacy risks of driving internet-connected cars

So-called connected cars, vehicles equipped with internet access, are becoming the norm, and their proliferation is sounding the alarm for consumer data privacy advocates.

By 2030, more than 95% of the passenger cars sold are likely to have embedded connectivity, according to Counterpoint Technology Market Research. This allows car manufacturers to offer functions related to safety and security, predictive maintenance and prognostics. But it also opens the door for companies to collect, share or sell data related to driving habits and other personal information that people may not want shared.

Most car manufacturers provide options to opt out of unnecessary data sharing, but as with many other consumer technologies where there is money to be made from the sale of data, these settings are often buried within menus, according to Counterpoint senior analyst Parv Sharma. A McKinsey report from 2021 predicted that various use cases for car-data monetization could deliver $250 billion to $400 billion in annual revenue for industry players by 2030.

To be sure, there can be valid reasons to collect driver and car data for safety and functionality purposes, and some essential services, such as emergency and security-related data sharing, may be difficult or impossible to opt out of. Predictive maintenance is among the reasons for more data sharing, allowing manufacturers to determine that a part used in its fleet is failing sooner than expected in order to issue a recall, said James Hodgson, smart mobility and automotive research director at global technology intelligence firm ABI Research.

But there are growing privacy concerns as reports proliferate about car companies sharing driver data with insurers, and as car companies get into the insurance business themselves. One is that driving habits and car-usage details could be reported to data collectors and shared with insurance carriers for rate decisions. That’s not to be confused with the new model of usage-based insurance, offered by companies from Progressive to Root, that offers drivers the potential to earn lower rates if they specifically allow insurers to install devices in cars that track their behavior.

There’s also a concern that sensitive personal information will be shared or sold to advertising companies, or inadvertently leaked in a way that bad actors can use it. 

“The amount of personal and car information that car companies collect, share and…