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Pavan Mathew is Global Head of Connected Car for Telefonica Digital.
Many of us dream of autonomous cars. Just imagine the relaxation of completely hands-free driving that is both seamless and safe, unlocking new time for us to work, talk, and learn while going from point A to point B. A recent report from Telefónica Digital found the percentage of cars with built-in connectivity will jump from 10 percent today to 90 percent by 2020.
Will the connected cars of 2020 offer night vision, automatic alcohol detection via breath monitors, virtual driving simulations, and advanced lessons (remotely administered) to practice our reaction times when safely parked in the garage? The Internet of things has come to the car industry in a big way, unlocking the possibility of all manners of innovation and evolution.
As I’ve spoken to many people around the world gauging the reaction to the Connected Car Industry 2013 report, I have been struck by the depth and interest in the massive transformation in the car industry, the largest and most disruptive change in the industry in over 100 years.
Everyone from major OEMs in Germany to other value chain players in the UK and the U.S. had a view on the findings from the report, and a few key themes are dominating the discussion:
Embedded, brought-in, or hybrid?
Should automakers build in connectivity, or should they deploy a hybrid model that allows consumers to bring in their desired connected devices so they can personalize their connected experience?
With user experience at the core of connected car innovative efforts, there are several arguments about the ideal nature of the telematics involved (integrated telecommunications and informatics, e.g., GPS capability).
There is a lot of excitement about hybrid and smartphone-based telematics solutions, but certain vehicles require embedded connectivity in order to remotely track battery charging status and other operating parameters, leading Ford to abandon the brought-in approach with the Ford Focus Electric.
The differences in opinion could make cars the stage for the the next platform war as differing policies will lead to consumer choices being influenced by a preference in style of telematics integration.
4G or not to 4G?
As cars are a long-term purchase and the customer-product relationship spans years, connected car manufacturers are trying to anticipate not only what consumers want now but what they will want. With 4G, your car can become a Wi-Fi hot spot — but would it be too much, too soon?
The hardware and chip to enable a car with 4G is expensive and results in higher data consumption (and, consequently, usage bills for the consumer). Despite constant increases, 4G coverage also remains unavailable in many areas of the world.
However, 4G is seen by many as the next standard in mobile coverage, and with the comparatively slow development and manufacturing cycle (often needing to plan one or two years ahead of the market) in the auto industry, many are wondering if the technology should be adopted in advance.
Billing and payment relationships
The emergence of connected cars, while exciting, poses concerns on the best model for payments, including who should pay and how.
Connected cars offer a new suite of services, so the conversation quickly switches to who will pay for them. Some are relatively simple, like embedded calling and SMS, the bills for which can run directly through the telecommunications provider. But if the car is “connected” for anything from being a roving Wi-Fi hotspot through to diagnostics and real-time reporting, who will pay for the data? Do consumers have the appetite for yet another billing relationship? Is there an appropriate subscription model? Should it be charged as an optional extra or bundled in the sale price. Or indeed could it be ad-supported, which brings in the questions of safety and privacy?
GM’s OnStar (which includes emergency services, collision detection, roadside assistance, etc.) uses a subscription model, but what will be the billing mechanism for other services such as Spotify? The question of what developers will prefer is in the forefront of many minds in the industry.
What about the secondhand market in the case of connected cars? Will severing account and data ties with your car be a new headache for consumers and for the companies who want to ensure they have accurate user data?
The connected car environment is the latest computational frontier and is also a new consumer environment, providing potentially meaningful business models and revenue streams. The report made clear that automotive manufacturers are committed and excited by the opportunity.
Connected cars are here and will be in our future. They are a powerful tool for safety and enhance the driving experience. There are many issues being discussed today, but I’m glad to see the industry is as enthusiastic about the challenges as it is about the opportunities that lie ahead.