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June 7th, 2016

The Next Big Automotive Revolution

The next big automotive revolution is here: Connected & Autonomous
Automotive connectivity has been around for a couple of decades now, but it has only picked up momentum in the past five years, largely due to customer demand. The opportunity is huge, the space is crowded and the business models are varied.

Introducing The Connected Car Ecosystem
While the space is exploding, no one has yet captured all the promise and all the players in one graphic model.  Our Connected Car Ecosystem aims to do that.  We will update it quarterly as new entrants join the space.

Ecosystem Infographic

About the Landscape
Fueled by smartphone technology, the connected car market is exploding in a manner akin to the mobile ecosystem with the introduction of smartphones. And the promise of autonomous vehicles is adding yet another dimension to the ecosystem, forcing currently disparate industries like transportation and government to engage in conversations.

This infographic limits the ecosystem to telematics and infotainment for the consumer automotive OEM space. Generally speaking, telematics represents features/functions under the hood, anything to do with vehicle drivability, emergencies, maintenance, geo-fencing and other remote vehicle control applications. Infotainment, as the name suggests, has more to do with information and entertainment feature/functions provided for the personal benefit of driver/passenger. GM-OnStar pioneered telematics in 1996 and Ford pioneered infotainment with its Microsoft based Sync System in 2007.

Both telematics and infotainment require connectivity, and OEMs provide it in multiple ways. Some OEMs provide embedded connectivity, while others leverage a bring your own device (BYOD) model.

In the embedded connectivity model, some use an onboard module for telematics but leverage BYOD for infotainment. In yet another model, the Infotainment Head Unit (IHU) provides connectivity for both telematics and infotainment features.

Some OEMs only provide infotainment options. In cases of OEMs leveraging the IHU, the head unit manufacturers collaborate with various telematics service providers, modem suppliers and wireless integrators to provide the end-to-end connectivity. All of the OEMs, with the exception of a vertically-aligned Tesla, rely on their tier ones in various engagement models to provide the connectivity solution today.

Different levels of maturity on the part of OEMs mean different ways the customer can leverage connectivity. All OEMs provide basic web access, but many also provide a mobile app that can be used to remotely connect, monitor and control their vehicles. How rich those features are depends on how far along the OEM is in enabling digital communication with its vehicles. Some OEMs provide access to vehicle features via the IHU, and many are exploring and providing wearable access to their vehicles, as in the Nissan Nismo.

One of the primary advantages of connectivity for the software-laden vehicle architecture is the possibility of updates to the software to fix problems, prevent failures and enhance performance. The only OEM that leverages this today is Tesla. Entering the automotive scene late has given Tesla the advantage of designing its system for Over the Air (OTA) updates into every electronic module in the car. Other OEMs have limited capability to do this and are wary of mass roll-out due to possible security concerns. Additionally, due to the multi-vendor tier one architecture in the prevalent OEMs, OTA coordination can be expensive and time-consuming. The gateway module architecture can solve this problem, though it will not completely eliminate the integration issues.

Though the enterprise backend is not shown explicitly in the infographic, it plays a major role in bringing these technologies together. While telematics provides vehicle insights, with an enterprise-wide customer 360 implementation, OEMs can really gain insights into customer preferences beyond just vehicle behavior to provide comprehensive solutions.

The key In-dash systems that drive infotainment feature functions are operating systems and BYOD projections. The leading operating system currently is QNX, followed by Linux. Android is also making headway with Google’s aggressive vehicle strategy. The Open Automotive Alliance that was announced at CES 2014 has paved way to providing Android Auto, a projection of Android smartphones in-dash, essentially bringing the same experience to the car. Apple’s Carplay is another smartphone experience bought into the vehicle. And finally, many OEMs have their own App stores, through which they can offer customers apps like Cadillac Cue and Hyundai Bluelink.

Opening the Doors for New Business Models
The possibility of apps in dash opens doors for content providers to service customers in vehicle. As illustrated, travel, merchant, music, location based services (LBS), traffic and parking are only a sample set of the categories of content providers; the most popular ones being music, traffic and location-based-services. OEMs are exploring new partnerships and opportunities to open up their vehicles for contextual, personalized and targeted commerce by combining their customer and location preferences with the service provider options.

Connectivity has ushered in novel opportunities like rideshare, usage-based insurances and innovative fleet management solutions. With increased electric vehicle adoption, connectivity will help smart-grid and power companies to manage  power consumption efficiently.  Organizations like EPRI, along with partner OEMs, are striving to create standards for utility-based vehicle features like demand response, aggregation, renewable balancing, and dynamic pricing.

Rideshare is another area taking on new dimension as millennials shift the transportation paradigm, preferring Uber or Zipcar to owning their own vehicles. OEMs also want a piece of the action, evident from GM’s Maven program and its investments in Lyft and Sidecar. Other OEMs are exploring similar opportunities. Uber is working with many OEMs and Google to invest in a self driving Uber fleet. Meantime, Ford announced a rideshare app for Ford vehicles. Toyota, VW and BMW just this month announced investments with Uber, Gett and Scoop ridesharing companies respectively.

OEMs are also opening up their enterprises securely via developer portals to encourage innovation and development of potential new business models.

The times are exciting and the landscape is ripe with opportunities. We will update the Connected Car Ecosystem each quarter, because one thing in this space is certain: what is here today could be completely obsolete as soon as next year.

Do you know a company that should be included in the Connected Car Ecosystem?  Contact us today!

Vijitha Chekuri

Tags: Autonomous vehicles connected car Connected car ecosystem connectivity ecosystem IoT user experience Vehicle Data

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