Connected Vehicles Explained: How Modern Cars Really Communicate

Connected vehicles are redefining how cars interact with the world around them. Enabled by cellular networks, cloud platforms, and embedded systems, modern vehicles can communicate in real time and receive over-the-air (OTA) software updates. They can generate rich insights for automakers, solutions providers, fleet operators and transportation providers. With these capabilities, you can enable safer operations, smoother workflows, and better user experiences for your organization, partners and customers.

 

 

As more vehicles gain these capabilities, the demand for connected vehicles is accelerating. Indeed, the global connected car market is projected to increase from more than $97 billion in 2024 to $390 billion by 2034, a compound annual growth rate (CAGR) of 14.91 percent, according to Research and Markets Connected Car Market Analysis & Forecast.

 

In this blog, we’ll explore what connected vehicles are, how they work and how they can achieve safer operations, smoother workflows and better experiences.

 

 

What Are Connected Vehicles?

 

Connected vehicles go beyond typical smart features by enabling real-time, two-way communications with external systems. Unlike traditional vehicles limited to in-vehicle smart tools, connected automobiles can transmit data, receive remote updates, and seamlessly integrate across multiple technology layers:

 

• Telematics is the foundation layer. It includes the in-vehicle hardware and software that gather, process, and transmit data such as GNSS location, vehicle diagnostics, and driver behavior.
• Cloud platforms are the integration layer. They store, analyze, and share connected vehicle data in real time, enabling over-the-air (OTA) updates, remote diagnostics, and API integration with third-party applications.
• Digital services are the application layer. They deliver the features that drivers, operators, and enterprises interact with directly, including infotainment and navigation, predictive maintenance, usage-based insurance, and shared mobility functions such as geofencing or remote unlock to name a few.

 

Together, these layers define how connected vehicle technology creates value for automakers, solutions providers, fleet operators and transportation providers across the ecosystem.

 

 

How Do Connected Vehicles Communicate?

 

At a high level, connected vehicles send and receive data over cellular networks via in-vehicle telematics hardware to cloud applications via programming interfaces (APIs). Together, these layers move data in real time to support communications, service delivery, diagnostics, and OTA updates between your vehicles and the systems your clients depend on. Let’s look at each of the layers more closely:

 

Cellular Connectivity: 2G, 3G, 4G/LTE and 5G IoT Networks

Cellular connectivity is the foundation that allows connected vehicles to function at scale. When cellular is not available, typically in rural and remote areas, satellite internet serves as the connection to connected vehicles. Connected automotive solutions send telemetry over cellular networks like Long-Term Evolution (LTE)/4G and 5G and through Internet of Things (IoT) networks, to enable real-time communications. In some parts of the world, including the European Union (EU), older 2G and 3G connected vehicle services are still in use. Solutions like the Aeris IoT Accelerator platform ensure reliable, secure, and scalable global coverage, which is essential for deploying connected car solutions across multiple regions.

 

Embedded Telematics and In-Vehicle Hardware

Telematics is the gateway that connects vehicles’ internal systems with the outside world. Onboard telematics hardware, combined with an embedded subscriber identity module (eSIM), links internal smart vehicle systems and external networks. Vehicle fleet telematics gather real-time data for global positioning (GNSS) tracking, dashcam video, and secure cloud transmissions for diagnostics, automation, and analytics.

 

Cloud Integration, APIs and Real-Time Data Exchange

Cloud platforms and APIs facilitate real-time communications between smart vehicles and automakers, fleet managers, insurers, and third-party applications. This architecture supports OTA updates, remote diagnostics, and advanced controls that create an improved user experience (UX) and seamless digital ecosystem for the fleets and end users.

 

 

Benefits of Connected Vehicles

 

Connected vehicles deliver significant benefits compared with unconnected vehicles, making them essential for IoT fleet management at scale — especially for enterprises that operate in multiple regions. Here are benefits you can expect from your connected vehicle deployment:

 

Enhanced Safety Features

Connected vehicles deliver critical safety enhancements that reduce accidents through early warning systems, real-time communications, and improved situational awareness, especially in poor weather conditions and blind spots. Safety features include location sharing, driver behavior monitoring, automated collision notification (ACN), and roadside assistance.

 

Advanced Security Features

Connected vehicles add advanced security controls that help protect fleets, cargo and drivers with real-time visibility into threats, anomalies, and risky behavior. Through features like mutual transport layer security (TLS), two-factor authentication and certificate management, fleet telematics security can reduce your exposure to outages, breaches, fines, and ransomware. Additionally, connected vehicles assist with stolen-vehicle recovery by flagging irregular patterns or behavior and identifying unauthorized usage.

 

Improved Operational Efficiency

Connected car technology streamlines day-to-day coordination. With real-time location tracking, vehicle health diagnostics, and automated alerting from fleet telematics, you can plan smarter routes, avoid congestion, and optimize fuel economy. Telemetry also helps you stay on top of maintenance by monitoring mileage, fault codes, and service intervals, then sending automated reminders or work orders.

 

Centralized Control and Monitoring

Connected car solutions enable centralized, remote control of fleet and eSIM management, so you can execute bulk actions, apply consistent configurations, and scale from one platform. Continuous real-time monitoring provides comprehensive visibility into fleet status and IoT inventory, so teams can identify and resolve problems quickly.

 

Reduced Environmental Impact

Connected vehicle technology helps lower emissions across fleets by reducing idle time and optimizing driver behavior. Additionally, connected vehicle deployments support enterprises transitioning to electric and autonomous vehicles with advanced diagnostics and analytics.

 

Cost Savings and Flexible Billing

Real-time adjustments and rate plan optimization can keep vehicle fleets cost-effective and competitive. Efficient fleet management lowers fuel usage and driver overtime and predictive maintenance reduces repair costs and downtime. You can also support usage-based insurance (UBI) to align insurance premiums with miles driven, vehicle speed, and operator behavior. Additionally, remote management and OTA updates reduce site visits and associated labor.

 

Better User Experience

Connected car services are necessary to enable the modern UX features today’s drivers expect. Navigation and infotainment systems stay updated and personalized services remember user preferences. These deployments also enable integrations with smart home systems and digital assistants that trigger helpful actions, like turning on the lights or adjusting room temperature, at the home or office.

 

Simplified Compliance

With better visibility and automated reports and risk assessments, you can simplify the compliance process and reduce the risk of audits and fines. Standard regulations include the Network and Information Security Directive 2 (NIS2), (for critical fleets), United Nations Economic Commission for Europe (UNECE) Regulations R155 and R156 (for cybersecurity), and the National Highway Traffic Safety Administration (NHTSA)’s non-binding Cybersecurity Best Practices for the Safety of Modern Vehicles.

 

 

Use Cases for Connected Vehicles Across Industries

 

The way you apply connected vehicle services depends on your role in the industry — whether you design and build vehicles, deliver bundled solutions, manage fleets, provide insurance or run transportation programs. Let’s explore common ways you can put connected vehicles to work:

 

OEMs and the Rise of Software-Defined Vehicles

As an original equipment manufacturer (OEM) of software-defined vehicles (SDVs), you can use connectivity and fleet telematics to deliver OTA updates for recalls and enhancements, run remote diagnostics to improve safety and cut service time and use real-time usage analytics to guide product decisions.

 

Solutions Providers and Connected Platforms

As a solutions provider bundling telematics, connectivity and fleet applications, you can use connected vehicle solutions to deliver end-to-end platforms for your customers. By combining data from vehicles, drivers, and infrastructure, you can offer integrated dashboards, usage-based billing, predictive maintenance, and advanced analytics. These capabilities let you differentiate your platform, shorten time-to-market for new services, and provide ongoing value to fleets and transportation providers.

 

Transportation and Logistics

As a fleet operator or logistics manager, connected data gives you real-time insights into delivery status, live location, vehicle performance, fuel efficiency and event alerts that help you coordinate routes, reduce idle time, and keep vehicles in service. Connected telemetry also extends to related assets like connected trailers, enabling you to manage status and condition alongside your smart vehicles.

 

Insurance and Risk Modeling

As an insurer or risk assessment team, you can leverage automotive connected services to deploy UBI) and behavior-based pricing models. Fleet telematics provide critical data that lets you align premiums and incentives to on-road behavior, investigate incidents with objective records, and spot emerging risk patterns earlier.

 

Rental, Subscription and Shared Mobility

As a transportation provider offering rentals, subscriptions or rideshare programs, you can rely on connected vehicle solutions for location verification, geofencing, remote unlock, and maintenance automation. With remote commands and role-based permissions, you can also shorten turnarounds between drivers and improve operational efficiency.

 

Smart Cities and Infrastructure

 

As a city planner or infrastructure operations, you can use a combination of information from connected cars and roadway sensors to optimize traffic flow control. In return, you get more predictable travel times and better data for route planning, staging and staffing.

 

 

How Aeris Powers Connected Vehicle Ecosystems

 

Aeris provides the backbone for connected vehicle programs with Aeris Mobility Suite. From global SIM management and IoT eSIM to telematics integrations and API-enabled platforms, Aeris supports OEMs, solutions providers, fleet operators, and transportation providers with scalable, secure ,and compliant connectivity.

 

• Device Management — The Aeris Mobility Suite Device Management Platform scales to millions of devices and acts as a high-speed coordination layer to keep your automotive IoT ecosystem in sync. With the platform you can remotely activate services in a few seconds, manage configurations, make OTA software and system updates, and support other capabilities designed to keep service reliable and responsive.
• Mobility Ecosystem — The Aeris Mobility Suite Mobility Application Platform accelerates rollouts with a tested library of apps that include location and usage functions like route guidance, trip history, boundary alerts, and idle notifications; safety tools like location sharing, automatic collision notification (ACN), and roadside assistance; security functions like alarms and remote access controls; health diagnostics and maintenance reminders; plus integrations with third-party services and voice assistants. Teams have reported cutting deployment time for new services by up to 70 percent.
• Service Management — The Aeris Mobility Suite Service Management Platform provides an end-to-end solution for rapid time-to-market and ongoing program evolution and improvement. With the AMS Service Management platform, you can package services into market offerings, manage complex vehicle and service dependencies, run a global online storefront with country- and region-specific currencies and tax policies and access complete subscription lifecycle management.
• Real-Time Analytics — The Aeris Mobility Suite Analytics Platform monitors manufacturing, shipping, sales, campaigns, activation, and resale in real time. It captures, uploads, anonymizes, normalizes, and stores vehicle data in a data lake and exposes insights via built-in tools and APIs. These capabilities help you and your partners make faster, more informed, decisions across the connected vehicle ecosystem.