From Fobs to Phones: Why Digital Car Keys Won’t Replace Physical Keys

Imagine never having to worry about lost car keys. Drivers just pull out a phone, open an app, and start the car. Digital car keys promise to make that possible — but is it that simple? Whether you're running a dealership or a fleet, here’s what you need to know about digital key technology and why physical key fobs aren’t going away anytime soon.

Common Questions About Digital Car Keys

What Are They? 

Digital keys, also called phone-as-a-key (PaaK) technology, let drivers use their phones instead of fobs by pairing the phone to the vehicle through the manufacturer’s app. There are also third-party tools designed to work with various mobile devices and vehicles. 

Functionality varies, but digital keys can offer the ability to:  

• Lock or unlock the vehicle when leaving or approaching
• Start the engine  
• Adjust vehicle settings
• Share access with other drivers   

What Are the Pros and Cons?  

Are digital keys better than fobs? That depends. Like any technology, there are benefits and drawbacks: 

Pros  

• No need to carry a physical key  
• Easily sharable vehicle access across multiple drivers  
• Ability to grant and revoke access remotely 
  
  

Cons
 

• Security vulnerabilities, such as relay attacks
• Compatibility issues across different devices and users 
• Risk of being locked out if someone loses their phone or the battery dies
• Dependence on a strong Wi-Fi or cellular connection 
   

What Vehicles Use Digital Keys? 

While Tesla is best known for PaaK technology, several other car brands now offer this feature for some or all models:

Do You Still Need Physical Fobs?  

While eliminating the need to manage key fobs is nice in theory, it’s not practical. There are several reasons to hang on to physical keys as backups:  

• Vehicle maintenance  
• Valet parking
• Lost, stolen, or dead phone
• Connectivity issues   

In addition, some people might feel uncomfortable using digital keys — especially if they have privacy concerns or aren’t tech savvy. Even if your operation adopts digital keys, it’s still important to keep physical fobs on hand and manage them securely with an electronic key control system. 

The Impact on Dealership and Fleet Operations  

Dealerships

When we surveyed 138 automotive sales, service, and general managers, 38% said digital keys would affect dealership operations, while 40% said they wouldn’t. Some saw the potential for faster, more efficient processes. The rest believed digital keys would complicate operations. So how might digital keys fit into dealership operations? Let’s look at their potential impact on sales and service.

 Sales 

In our survey, 70% of respondents said they don't currently sell vehicles with an app-based key system. Over 60% said digital keys won’t replace fobs, with 50% citing low consumer demand. Even respondents who expect digital keys to replace physical ones said it’ll take time — only 5% believe it’ll happen
within the next couple years. 

As digital keys gradually gain traction, they could allow salespeople to access vehicles more easily on the lot or offer contactless test drives by providing temporary digital access. But they also bring added challenges:  

• Security: You’d need to manage both employee and customer access to digital keys. In fact, 69% of our survey respondents said app-based key systems raise security concerns.  
  
  
• Post-Sale Support: Customers may come directly to salespeople for digital key troubleshooting, so sales staff would need training for initial setup and clear support channels for more complex issues.  
  
  
• Workflow Integration: Many sales processes still revolve around physical keys, so you’d need to account for digital key technology in your workflows. 
  
  

Service 

Quick, reliable vehicle access is essential for service department efficiency. But 55% of the service managers we surveyed said digital keys would impact their maintenance and repair services.  

Here’s how the process would work: When bringing in a vehicle with a digital key, the customer would grant your dealership temporary access. Technicians would then use a service tablet or other device to unlock and start the car.   

However, some challenges include:    

• Technical problems (e.g., connectivity loss) 
• Permissions issues (e.g., if access expires before the vehicle is ready) 
• Integration into workflows designed around physical fobs 
  
  

Until digital keys become more widespread, physical keys will remain an essential part of your dealership’s processes in both sales and service. 

Fleets 

If you’re a fleet operator, digital keys’ fleet management benefits might appeal to you:  

• Simplified vehicle access  
• Improved visibility into who’s using which vehicle and when  
• Remote vehicle immobilization in the event of theft or unauthorized use
• Driver tracking for accountability and reporting 

But these benefits come with challenges too, depending on the type of fleet you manage.  

Rental Car Fleets

Customer comfort with technology varies. For those traveling to more rural areas, connectivity could disrupt vehicle access — like the hikers who were locked out of their rental car when they lost cell service. 

Corporate Fleets  

Some drivers may prefer physical keys. If they don’t have company-issued devices, they might object to using their personal phones. In addition, any digital key solution must meet your organization’s cybersecurity, legal, and privacy requirements. 

Government and Law Enforcement Fleets  

Any digital key technology must comply with strict cybersecurity and data privacy standards. Many public-sector fleets still rely on physical keys and struggle to balance limited budgets, aging vehicles, and the demand to modernize.  

While digital keys offer potential advantages for your fleet, consider how they align with your organization’s security requirements, drivers’ tech savviness, and operational needs. It’s also a good idea to have backup keys on hand. 

The Staying Power of Fobs 

Digital keys are part of our connected future, but that doesn’t mean you’ll say goodbye to fobs. While digital keys offer some benefits, they’re not ready to fully replace physical keys — and may never completely do so. Whether you're managing test drives, servicing vehicles, or managing a fleet, a reliable, secure key control system is still a critical part of your operations.