While not all recalls can be fixed via an OTA update, close to one-third of those from last year could have been addressed over the air, saving carmakers at least $6 billion, according to ABI.
For example, a Chrysler, Dodge, Jeep and Ram recall last year dealt with a hacking incident involving a Jeep; that recall affected 1.4 million vehicles. Fiat Chrysler Automobiles (FCA), the world's seventh largest automaker, sent USB drives to affected customers to fix the security hole.
"This method, in place of an OTA update, increased security risk, the plausibility of owner identification, and the inability to ensure that the patch was done and done correctly," ABI Research said. "Ford and Toyota also faced similar situations through their own recalls."
As the level of vehicle autonomy grows, cybersecurity will become increasingly critical. ABI Research anticipates the automotive industry will begin to see more mergers and acquisitions over the next two years as carmakers emphasize the value of software management solutions.
For example, the OTA market is spurring a flurry of acquisitions like the one between, leading IVI system maker Harmon, who last year acquired OTA software supplier Redbend.
Another big acquisition targets is Argus Cybersecurity, which just received Series B funding from Magna International and recently partnered with security vendor CheckPoint Software Technologies, according to Beardslee.
Another leading software management vendor in the automotive industry, Movimento, refreshes more than 3 million vehicles per year and can detect and delete cyberattacks within 10 milliseconds, according to Beardslee.
"Movimento, in particular, is a huge acquisition opportunity," Beardslee said.
The move toward OTA updates brings new challenges, in particular the threat to car dealerships and the danger of customers opting out of software upgrades.
"The car dealers have everything to lose," Beardslee said. "When the automotive industry becomes fully OTA, car dealers lose not only the revenue enhancement that they acquire in making updates and repairs, but they lose the associated foot traffic.
"Customer opt outs, on the other hand, were a challenge long before the arrival of OTA and one that [carmakers] will likely find a way to address as they move toward a recurring revenue generation model in the early 2020s," she added.
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