GDPR and the Automotive Industry: Protecting Data in Connected Vehicles

As the automotive industry continues to innovate, the convergence of cars with digital technology has taken centre stage. With the rise of connected vehicles, equipped with advanced systems that exchange data in real-time, concerns over the protection and use of personal data have become more significant than ever. This calls for careful attention not only by original equipment manufacturers (OEMs) but throughout the entire supply chain. The General Data Protection Regulation (GDPR), which came into effect in May 2018, plays a critical role in how the industry approaches personal data protection.

The Rise of Connected Vehicles

Connected vehicles have grown increasingly sophisticated in recent years, with the development of the Internet of Things (IoT), artificial intelligence, and cloud computing technologies. These advancements allow for a wide array of features such as real-time traffic updates, over-the-air software updates, autonomous driving capabilities, and even in-cabin entertainment. While these capabilities improve vehicle safety, convenience, and user experience, they heavily rely on the continuous collection, processing, and sharing of large volumes of data, much of which is of a highly personal nature.

Vehicles today are much more than simple modes of transportation – they are mobile data centres. Sensors installed in vehicles are capable of recording various types of information like vehicle speed, location, fuel usage, maintenance requirements, as well as driver behaviour such as steering and braking patterns, preferred media content, and even biometric data.

This wealth of information opens up a multitude of exciting possibilities for improving vehicle safety and developing new customer services. However, it also raises significant questions about privacy, the management of data, and, critically, who owns the personal data collected by connected vehicles.

What is GDPR and Why Does It Matter?

The GDPR is a legal framework introduced by the European Union to protect the personal data of individuals within its member states. It applies to any company that processes the personal data of EU residents, regardless of where the company itself is based. At its heart, the GDPR is designed to give individuals greater control over their personal data and ensure that businesses adhere to strict rules on how this information is collected, used, and stored.

One of the most straightforward principles of the GDPR is related to explicit user consent. Businesses must obtain verifiable, informed, and specific consent from individuals before processing their data. Moreover, individuals have the right to request access to their data, rectify any inaccuracies, delete it (“right to be forgotten”), and even transfer it from one provider to another.

Failure to comply with the GDPR can have serious consequences. Organisations found in violation of the regulation could face legal action, steep fines of up to €20 million or 4% of annual global turnover – whichever is higher – as well as severe reputational damage.

How Does GDPR Apply to the Automotive Industry?

With the advent of connected and autonomous vehicles, the collection and sharing of personal data have become embedded in every part of the automotive ecosystem. The GDPR represents a significant milestone in regulating the automotive industry’s use and processing of personal data.

For OEMs, suppliers, and third-party service providers, navigating the complex rules of GDPR is now a critical component of operating in the European market. Personal data gathered by vehicles can include everything from names and contact info to location data and driving habits. Given the increasing volume and sensitivity of this data, the automotive industry faces two primary concerns: consent and security.

Firstly, manufacturers must ensure that they explicitly inform and obtain consent from drivers and passengers for the processing of any personal data when utilising connected services or features. The data collection cannot be a ‘bundled’ acceptance of terms and conditions; it has to be specific and informed. For example, data related to geolocation for navigation services must be handled separately from driving behaviour data used for insurance telematics.

Secondly, safeguarding personal data from unauthorised access or breaches is paramount. Connected vehicles are constantly satellite-linked, sharing information with various external systems and third-party providers, from software companies to insurers, repair shops, and emergency services. As such, robust cybersecurity measures and processes must be in place at all stages of the data lifecycle to prevent vehicular hacking or misuse.

Consent and Transparency – A Fundamental Challenge

One of the fundamental principles of the GDPR is the need for consent. Automotive manufacturers must ensure they have specific, clear, and unambiguous consent before collecting personal data from customers. But how can consent be obtained effectively in a moving vehicle, from both a legal perspective and a practical point of view?

Obtaining this consent is no simple matter. When users step into a vehicle, most expect technology to work seamlessly without having to navigate complex privacy policies every time they start the engine. However, the collection of data, such as real-time geolocation information, often features prominently in the services that enable key functionalities. Therefore, automakers are tasked with developing user-friendly, integrated interfaces within vehicles that allow drivers and passengers to be informed about data policies and to give or retract consent easily.

Another issue pertains to what is commonly referred to as “implied consent.” In certain cases, having used a service may demonstrate that a user consents to their data being processed. However, under GDPR, assuming implied consent could lead to regulatory issues since the regulation requires explicit, informed consent. Transparency in terms of how and why data is collected is thus fundamental.

Security Challenges in Connected Cars

As with any connected system, security is one of the foremost concerns. The GDPR mandates stringent security measures for protecting personal data, including encryption and anonymisation techniques where appropriate. Security breaches involving personal data – such as unauthorised access or malfunctioning vehicle systems – carry serious legal implications as well as significant safety risks.

Because connected cars interact with complex networks, they represent an attractive target for cybercriminals seeking to obtain personal and financial data. Hackers who access a connected vehicle’s system may potentially manipulate everything, from the GPS system to the car’s physical control mechanisms. This could pose not only privacy risks but also life-threatening dangers.

The challenge for the industry is that cybersecurity must continuously evolve to outpace technologically sophisticated attacks. Additionally, multiple stakeholders are involved, each with varying cybersecurity practices – from the automaker to various third-party service providers. Automakers must aim to create secure vehicles that ensure the privacy of data throughout its lifecycle – not only while it is stored in a cloud database but while it is being transmitted between the vehicle, external systems, and service providers.

Automakers also benefit from implementing Privacy by Design principles. Rather than treating privacy as an afterthought, it should be integrated into the vehicle’s systems right from the initial stages of development. This includes building robust encryption protocols, using decentralised data storage methods, and designing user-centric interfaces for data consent and management.

Third-Party Data Sharing: Balancing Innovation and Compliance

Connected cars collect vast streams of data, but manufacturers often depend on extensive networks of third-party providers to process this information, especially to enable dynamic features such as fleet management, telematics services for insurance, or virtual assistants for infotainment. To comply with the GDPR, any transfer of personal data to third parties needs strict scrutiny.

GDPR regulations demand that both the controller (i.e., the entity that determines the purposes of the data use) and any processors (i.e., entities handling data on behalf of the controller) are jointly responsible for ensuring GDPR compliance. In the automotive industry, car manufacturers, cloud providers, software developers, insurance companies, and navigation service providers are just some of the stakeholders who handle sensitive personal data.

Thus, automakers need to establish clear, legally compliant agreements with their suppliers and third-party partners to ensure they too uphold GDPR standards. Data sharing requirements must be revisited, and appropriate contracts like data processing agreements need to be carefully executed to ensure transparency and accountability.

The Road Ahead: Striking the Right Balance

As the automotive industry becomes more data-driven, striking the right balance between innovation and data privacy is critical. Failing to sufficiently protect personal data not only risks violating GDPR, but it also impacts consumer trust.

Part of the industry’s ongoing challenge is educating consumers on the privacy implications of connected cars. Many vehicle owners may not be fully aware of how much data their vehicle collects or how that data is used. External regulatory pressures may also push boundaries in data management. These include the proposed introduction of new European Union Artificial Intelligence regulations, which will also impact how connected cars come to be used, particularly when dealing with algorithms and AI-based decision-making.

While ensuring legal compliance is essential, truly responsible data governance goes beyond the letter of the law. Building and maintaining consumer trust requires transparency, security, and a commitment to protecting their personal privacy.

As the automotive landscape evolves, the industry’s focus must be on deploying cutting-edge automotive technologies that elevate user experience while safeguarding personal data. Only by adhering to strict data protection standards, including GDPR, can automakers ensure not only regulatory compliance but the trust and reliance of their consumers in the years to come.