In the European Union, the automotive sector accounts for a startling 7% of GDP, and in the United States, it makes up almost 5%. Yet innovation at the intersection of driving and commerce promises to make this industry even bigger. Three ongoing developments will increase the size and power of the automobile economy — while also improving life for drivers. 

Owning an EV can be challenging. There are only about 60,000 fast EV chargers in the U.S. (as compared with close to 200,000 gas stations), and the fragmented charging ecosystem can be a pain.

To date, charge point operators (CPOs) still require customers to pay via their own proprietary apps, resulting in a lot of extra steps for consumers. This could be manageable when driving your regular routes, but imagine when you take a trip out of town or go on vacation. To use a new CPO, you would need to download its app, create an account, add card info to the account and sometimes even transfer money to it to prepay for future charges — all while parked waiting to use the charging point. That’s a lot of time and effort wasted when you are trying to get somewhere.

Separate apps and experiences might have made sense for CPOs in the early days of the EV economy. Back then, the EV driver pool consisted of a limited number of early adopters, and CPOs wanted to retain customers. But now, as EV ownership rises — more than 20% of new car sales globally in 2024 were electric — an open EV ecosystem in which any EV driver can use any CPO — an ecosystem just like the gas station experience we all know well  — is essential to support scale. Such a system, operating according to EMVCo standards, would make owning an EV easier, boosting adoption to the benefit of everyone involved, including  manufacturers, CPOs, third-party service providers and especially app-fatigued drivers.

The good news is that progress is happening. Just recently EMVCo published new specifications to support a more open and interoperable EV charging ecosystem. It’s an important move that aims to set the standard for how CPOs, manufacturers and payment technology providers such as Mastercard should work with the industry to lay firm foundations that support wider adoption — a move Mastercard welcomes that ensures its payments tech puts the EV economy in the fast lane.

Meanwhile, other inventive options are also arising, such as it's electric, which recently joined Mastercard Start Path, the company’s startup engagement program, to make it easier for people to charge their cars in cities. The startup partners with building owners in cities across the U.S. to harness their spare electricity supply to power public curbside EV chargers. This “behind-the-meter” connection between the chargers and properties’ electrical panels avoids the barrier of grid limitations and the costly, time-consuming process of creating a new utility interconnection. Then it's electric shares the revenue earned at each charger, back with the building, while making it easier for everyone in their neighborhood to drive electric.

Thanks to these innovations, EV drivers should expect a future of fewer apps, less confusion and time wasted, and more time enjoying new places, and new experiences. 

Searching for a parking space, paying congestion charges and topping up tolling cards can eat up time, fuel and a driver's patience. Integrated services with embedded payments will enable authorized vehicles and apps to identify nearby services and take the hassle out of urban mobility.

A single comprehensive platform — a “Spotify for parking” — could aggregate the parking space inventories of both on- and off-street providers, serving them up to drivers who’d be able to identify and reserve them in advance. Consumers would access the platform through their phones or their cars’ infotainment systems.

If parking options were further integrated into map solutions consumers already use, particularly effective on in-car large dashboard screens, drivers could be guided to nearby spaces. Authorized, embedded card-on-file tech would make paying frictionless.

The benefits would be wide-ranging. Some urban congestion is caused by drivers circling the block searching for free parking spaces, and municipalities, car rental companies, and tolling providers waste time, money and resource chasing drivers for congestion charges and fines — with many drivers often unintentionally failing to pay in advance when visiting new places with unfamiliar restrictions.

In addition, governments would benefit from the insights that such systems would generate, using it to inform urban planning. Visiting downtown stores would become easier and more pleasant, boosting the brick-and-mortar economy and attracting more investment.

This kind of urban experience is not simple. It requires car manufacturers and technology providers to work in collaboration with the myriad of urban service providers and municipalities. But the rewards for creating such a system — and revolutionizing the driving experience — are tremendous. 

Over-the-air (OTA) services, also known as features on demand, are delivered to vehicles via remote software updates, typically by subscription. For example, a carmaker can beam out improvements to sound system quality or introduce new features within a car’s infotainment system.

This model has prompted blowback. In 2023, one automaker, facing consumer resistance, canceled plans to charge a fee for heated seats. This suggests that consumers seem to dislike paying for features associated with hardware that’s been paid for and is already present in the car. Yet they become receptive when they’re asked to pay for services that they believe represent added value.

OTA gives an automaker much-coveted recurring revenue long after it sells a car. Customers get access to continuous improvements to their vehicles: Unlike yesterday’s cars, which started losing value as soon as they rolled off the lot, software-defined vehicles can improve and potentially gain in value over time — if their programming, as well as their hardware, is good. In the case of EVs, these improvements could be profound, because EV engines can be significantly altered via software fixes — giving them better acceleration, for instance.

Then there’s the recall process. Recalling vehicles costs automakers some $500 million each year. When possible, automakers are cutting these costs with “remote recalls,” which involve replacing or tweaking software on an OTA basis.

To be sure, there are pain points. OTA updates are complicated. A Ford vehicle, for example, contains software written by as many as 150 companies. Updates could require a range of digital expertise that car companies might lack. Yet the industry is adapting to overcome such challenges. Witness the rise of a small but real update orchestration sector, with nimble startups competing to take on software-intensive OTA work. 

Collectively, these developments represent a burst of innovation that will usher in the most fruitful period of innovation the automotive industry has seen since the dawn of mass motoring. The results will revolutionize how we get around — and inject a massive amount of new value into our economy.