Market Overview
Telematics Control Units (TCUs) are undergoing rapid technological evolution to meet the demands of the Software-Defined Vehicle (SDV). OEMs are adopting Wi-Fi 6, 5G, and even satellite communication technologies to support more data-intensive and latency-sensitive applications. For automakers, these software services can be monetized to expand the revenue opportunity. However, this evolution is occurring against the backdrop of geopolitical instability, chip supply uncertainties, and growing pressure to reduce costs.
While Chinese automakers lead in the deployment of integrated 5G and V2X features, Western OEMs remain cautious, particularly regarding domain consolidation. Despite regional differences in integration strategy and monetization success, both Eastern and Western OEMs share challenges in scaling in-vehicle services.
“With more functions being executed in the Network Access Device (NAD) with more apps and software, memory constraints are front of mind for Original Equipment Manufacturers (OEMs).” – Abu Miah, Research Analyst
(Source: ABI Research Charts & Data)
Integration Versus Flexibility in V2X Architectures
In the V2X segment, OEMs face a trade-off between integration and modularity. Chinese manufacturers have shown a preference for consolidated TCU architectures, combining infotainment and V2X modules. Solutions such as Neusoft’s 5G/V2X BOX and GM’s latest OnStar generation are examples of this approach. In contrast, Western automakers have adopted a more cautious integration model due to stringent safety standards and architectural separation guidelines.
This dichotomy is reflected in supplier offerings. Many vendors provide both discrete and integrated module options. While integrated systems offer cost advantages, OEMs still value the upgrade flexibility and vendor diversity enabled by standalone modules—especially as Qualcomm currently holds a monopoly on Cellular V2X (C-V2X) chipsets. The potential to adapt future architectures, particularly in light of geopolitical supply risks, makes the standalone model particularly appealing.
5G Transition Delays and RedCap as a Cost-Sensitive Option
Though 5G is rapidly emerging as the baseline for automotive connectivity, its adoption is uneven across markets. High module costs—estimated at over twice the price of comparable 4G alternatives—continue to deter many OEMs. In response, Reduced Capability (RedCap) 5G modules have emerged as a cost-effective compromise. Offering sufficient performance for most near-term needs and future-proofing against 4G Long Term Evolution (LTE) sunsets, RedCap is being evaluated particularly by European OEMs seeking more affordable pathways to 5G compliance.
This transitional trend will likely continue until broader chipset price competition drives down 5G module costs. Meanwhile, the dominance of Chinese and Taiwanese chipset manufacturing introduces further vulnerabilities tied to trade policy and diplomatic tensions.
Wi-Fi Evolution and Regional Adoption Constraints
Wi-Fi remains a vital component for data offloading and infotainment services in connected vehicles. Wi-Fi 6 is expected to take a majority share of TCU shipments by 2025/2026, driven by benefits such as higher throughput, increased range, improved latency, and better multi-device performance. However, regional disparities exist. In China, while Wi-Fi 6 adoption is robust, regulatory limitations on the 6 Gigahertz (GHz) spectrum have stifled interest in Wi-Fi 6E and Wi-Fi 7.
Outside China, OEMs see considerable value in advancing to these newer standards, particularly for OTA updates and high-bandwidth in-vehicle services. Wi-Fi 7 modules are not expected in vehicles until at least 2029–2030, reflecting the industry's characteristically long lead times between chipset selection and vehicle release.
Satellite and NTN Integration: Focus on Emergency Connectivity
Satellite connectivity is emerging as a supplementary layer to terrestrial networks, particularly for emergency services. Narrowband Non-Terrestrial Network (NB-NTN) services—such as Skylo’s integration with HARMAN’s Ready Connect TCU—are now being incorporated to enhance coverage for services like e-call and e-text. These early automotive deployments require minimal hardware upgrades and are expected to gain traction within 2 years.
However, higher-bandwidth New Radio NTN (NR-NTN) services remain a longer-term goal, with OEM adoption hinging on satellite constellation upgrades and more mature supporting infrastructure. This evolution will be critical to meeting the demands of emergency services and potentially broader infotainment or diagnostic features in the future.
Get the full report
As vehicle OEMs navigate geopolitical, technical, and economic headwinds, the Telematics Control Unit (TCU) stands as a crucial battleground for innovation and strategic positioning. Download ABI Research’s report, Future Telematics Control Unit (TCU) Architectures, for a complete analysis of TCU technology roadmaps, regional deployment trends, and implications for SDV development.
