The digital transformation of the automotive industry is in full swing, changing the economic landscape. According to Precedence Research, the global market for connected cars is projected to grow from an estimated USD $44.68 billion in 2024 to approximately USD $181.90 billion by 2034. According to McKinsey, by 2030, more than 90% of vehicles sold globally will be connected.

The focus on software-defined vehicles (SDVs) is fundamental to this growth. With technologies such as advanced driver assistance systems (ADAS) redefining how mobility is connected. This transformation not only ensures that mobility is connected, and becomes "smart mobility," but also requires manufacturers to completely redesign their operational processes.

Flexible and scalable IT solutions have become crucial for the industry. With cloud playing a vital role in this transformation.

Increasing demands and limited resources

A growing dilemma is emerging within many IT functions in automotive companies. They have less time and resources to focus on business-enabling initiatives. On-premises data centers, also known as private data infrastructure, are expensive to set up and manage, both in terms of capital expenditure (CapEx) and operating expenditure (OpEx). The challenges associated with traditional on-site data centers include:

Limited scalability
High CapEx costs for buildings, cooling systems, and racks
Significant OpEx costs, including equipment maintenance and physical security

The definition of a data center ecosystem has evolved, and now goes beyond providing space and power. Data centers are expected to serve as centers of innovation, breaking away from legacy infrastructure and associated constraints.

The modern data center doesn’t simply run workloads—it generates, simulates, reasons, and adapts continuously. This calls for a transformation of infrastructure design and operations. The need for innovation in the sector is changing with the rapid adoption of new technologies like artificial intelligence (AI) and Over-the-Air (OTA). Leading many automotive companies to shift their IT priorities to initiatives like:

Cloud adoption
Connected mobility
Shared mobility
Autonomous driving
Integration of external services (for example, telecommunications and financial services)

However, IT leaders often lack the time and resources to focus on these alongside routine data management and monitoring tasks. IT teams that run workloads in on-premises data centers spend a significant amount of time on day-to-day data center management.

The shift towards colocation data centers

Many automotive companies are opting for a mix of cloud, colocation, and on-premises environments to overcome the challenges of:

Latency
Security
Availability

These factors require high-performance and resilient data center environments. Especially in the automotive industry, given the safety and reliability requirements of connected cars, SDVs, and autonomous vehicles. By leveraging colocation solutions, automotive companies can benefit from:

Improved scalability: Scale capacity easily and meet growing demands without the need for significant investments. From single cabinets to multi-megawatt halls.
Hybrid cloud enablement: Simplify Hybrid IT with direct cloud access, low-latency interconnects, and platform-wide orchestration.
Latency-sensitive applications: Position infrastructure near users and partners for lower latency and faster digital experiences.
Enhanced security: Benefit from enterprise-grade security measures.
Increased reliability: Robust infrastructure and expert management ensure high availability and redundancy.

Digital Realty's colocation solutions are designed to meet—or beat—the highest security, efficiency, and performance standards. Empower your automotive business with digital infrastructure solutions that help you adapt to change, streamline operations, and deliver exceptional customer experiences.

Trusted by some of the world’s most ambitious companies, Digital Realty’s global footprint spans 300+ data centers in 50+ metros, helping 5,000+ customers.

Learn more about how Digital Realty is driving automotive innovation with data center solutions.

What's next?

In the second part of this series, we'll delve into what characterizes a robust colocation data center. We'll look at how colocation can help your business overcome challenges with increasing data volumes. You'll learn:

Key features of a robust colocation data center
How to optimize your data management strategy
The benefits of partnering with a leading colocation provider

IDC Datacenter Colocation Service Vendor Profile: Digital Realty