As we head into winter – hopefully one that won’t overstay its welcome – market sentiment in commercial fleets and software remains cautiously optimistic. According to ResearchNester, the global telematics market is expected to grow from roughly $84 billion to about $91 billion next year, with commercial telematics – depending on the scope and methodology used – valued at around $109.4 billion, reflecting just how broad the fleet and logistics segment has become in recent market analyses. Software keeps pushing the ceiling even higher: analytics, predictive maintenance, driver-behavior insights, and automation tools continue to gain traction among enterprise fleets, making TSPs and SaaS vendors increasingly strategic partners rather than optional add-ons.
Rising fuel prices, tightening regulations, sustainability goals, and mandatory CO₂ reporting are pushing fleets toward smarter operational models, where telematics has effectively become the most scalable optimization lever. At the same time, the number of connected and “intelligent” vehicles – from commercial fleets to EVs and hybrids – keeps climbing, expanding demand for advanced software and SaaS built around actionable data rather than basic tracking. For TSPs and SaaS providers, this is a good moment to double down on data-driven features, value-added services, and clearer enterprise packaging, as customers are shifting from “tell me where my vehicles are” to “help me improve how my business runs.”
On the hardware side, the market is moving away from simple tracking toward full-scale IoT solutions that combine gateway capabilities, edge processing, stronger security, 4G/5G connectivity, and deep CAN integrations. Demand for next-generation devices keeps growing, while manufacturers sticking to basic 2G trackers gradually lose ground to more capable competitors. For TSPs and OEMs, this opens space for “smart boxes” paired with meaningful services: richer telemetry, predictive maintenance, EV integrations, and deeper diagnostics. And if your business blends hardware and software, this is a strong window to refresh your portfolio around modern 4G/5G use cases and consolidate your value-driven positioning.
Regulation is reinforcing these trends. In Europe, new vehicle types must support eCall over 4G/5G starting January 2026, and operators are already phasing out 2G/3G, with Sweden and France among the early movers. Most of the replacement load will fall on 4G/LTE because of its wide coverage and reliability, while 5G adoption will remain gradual and concentrated in urban, high-bandwidth, and low-latency applications – EV fleets, ADAS, video telematics, and edge AI. Technically, 2G/3G networks no longer align with modern requirements in security, power efficiency, and data throughput, but the migration is not painless. Critical sectors like fire alarms, security systems, and elevators still carry large volumes of legacy devices, and their replacement tends to be expensive and messy.
For telematics companies, this transition works as a double challenge: customers running outdated hardware increasingly experience failures and unstable connectivity, while supporting legacy devices becomes mounting technical debt. Strategically, this points to a clear product split: 4G/LTE as the backbone for mass-market use cases and 5G as the platform for premium, high-complexity, and high-margin scenarios.
Geopolitics adds another layer. The EU has introduced tariffs of up to 38% on certain Chinese EVs after anti-subsidy investigations, though both sides are now discussing price undertakings as a compromise. These "car wars" in dynamics can influence telematics adoption in EVs, push manufacturers to adjust supply chains, or reshape demand for connected services across regions. At the same time, Chinese automakers like Leapmotor are accelerating their European expansion, planning local R&D and active rollout of ADAS features – a move that will tighten competition in connected and autonomous capabilities and make TSP partnerships strategically important.
Cybersecurity and data resilience are becoming decisive factors for market trust. Companies relying on AI and real-time data streams are especially exposed: breaches carry high financial and reputational costs, and recovering from them is rarely straightforward. Security is quickly turning into a competitive differentiator, particularly for corporate fleets with strict compliance and operational-risk requirements.
Unfortunately, telematics isn’t immune to darker trends either. The same tracker that enables efficient fleet operations can be misused for illicit activities – for example, recent incidents in Lithuania involving weather-balloon contraband drops have forced temporary airspace closures as aviation authorities attempt to mitigate the risk. These cases serve as a reminder that connected hardware, SIM cards, and GNSS technologies can just as easily be turned against critical infrastructure.
Not going to end the article on a note of concern – just as every winter eventually gives way to spring, we hope the darker times will pass as well. At the very least, nature keeps reminding us that this cycle is inevitable.