Connected Cars Lay Groundwork for Data-Driven Future
The automotive industry is poised for a shift in business models
The applications that are enabled through the data connected cars open up lucrative new data-driven business models for both automotive companies and third party developers and services.
What is The Real Impact of Connected Cars?
Today, few companies are prepared to take advantage of the value which connected vehicles are bringing across many industries. Beyond gimmicky in-car hotspots and vehicles that can order pizza for you, the trove of value that can be derived from cars becoming not only our autonomous chauffeurs, but also the eyes and ears constantly mapping, monitoring, and communicating with our surroundings in real-time cannot be overstated.
Usual headlines around autonomous cars and connectivity features all center around the same business models and product offerings that have existed since the car’s inception – new button here, nicer styling there, along with a few new tech bells and whistles that make great marketing fodder. Under the hood, so to speak, connected cars are generating terabytes of data from their users and surroundings all the time, much of which could be leveraged by third party systems and developers to provide real-time road weather alerts, communicate with other forms of connecting transportation, and decrease overall traffic congestion through real-time routing and infrastructure communication.
Unfortunately, automakers’ sensitivity to sharing car data along with their inability to grasp the true value of data-sharing is limiting the potential growth and value expansion of connected cars. However, there are a few companies driving legitimate progress towards a data-driven future of the automotive and greater transportation industry – a future where data brokering is as much a viable business as building the cars themselves, and one where the ecosystems that are fostered among third-party developers and carmakers start to resemble those between developers and smartphones.
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What Trends are Impacting Connected Cars Today?
- Autonomous vehicle technology: the biggest enabler for connected cars, autonomous vehicles will glean vital data about the driver and its surroundings that will then be leveraged by a multitude of developers and systems. As cars progress from L2 to eventually L5, more connected features and data-driven business models will appear
- Reluctance of automakers to share data: carmakers are petrified of losing control of the “secretive” data behind their cars. As a result, two types of companies are sprouting up to solve the issue:
- OBD-2 Dongle Companies: these companies go straight to the infrastructure of the car by physically hooking an internet-connected plug-in to the car’s serial port. This allows these companies to skirt automakers’ qualms about sharing data by uploading the raw data to a cloud service
- Data Brokering Platform Companies: these companies are taking a more collaborative approach by working with both automakers and the third-party app developers to share data over a common platform where the automakers control which developers have access to what type of data and can monetize the data that is shared
- Derivative and emerging business models: buzz-wordy business models like car sharing and ride sharing are in extreme focus among automaker and tech company board rooms, but they’re merely derivatives of traditional taxi and rental car business models with a dash of tech thrown in. As automakers realize the monetary value of selling pieces of car data to third parties, carmakers will become their own data brokers and form margin-rich, data-driven business models
- Cybersecurity threats: media splashes are generally more hype than reality, but there are significant concerns around how to properly secure a car as more of its core features come online. Several middleware providers are gaining significant market traction by targeting this specific area
Who Are The Key Players Disrupting The Market?
- Otonomo: data broker and marketplace that enables trading of car-generated data between car manufacturers and app developers / service providers. Car data parameters can be packaged into data bundles and transferred, while maintaining specific rules concerning privacy, car owner consent, and security. Current partners include Delphi and Mercedes
- High Mobility: software development platform that makes it easier for third-party software developers to interact with carmakers looking to prototype new connected services and products. Current partners include BMW and Mercedes.
- Automatic (now part of SiriusXM): connectivity OBD-2 dongle provider that offers maintenance alerts, safety monitoring, fleet coordination services, as well as coordination with external devices and ecosystems such as smart home devices like Nest.
Where are Connected Car and Transportation Technologies Heading?
Connected cars, which includes both personal and commercial on-road vehicles, are laying the groundwork for much more person or payload-centric transportation ecosystems that can adequately move an increasing number of payloads through our existing dilapidated and insufficient infrastructure.
Transportation ecosystems will alter the ways in which we move things and people, making it a more efficient, higher-throughput process built around each person or payload. This coordinated effort is informing significant new modes of service delivery and customer value creation, reflecting the increasing importance of three critical elements: end-to-end solutions; a new generation of real-time, “state-based” platforms; and large-scale ecosystem collaboration. All three are driving businesses towards a fundamental shift in their business models to address the myriad of opportunities arising from services wrapped around connected products.
This phenomenon has far-reaching effects the likes of which pale in comparison to the “benefits” of connected cars being touted by companies today. Very soon, whether you’re an autonomous taxi service dropping a passenger at the airport or a last-mile logistics delivery firm picking up a shipping container from a port, it will no longer be sufficient to pass the person or payload off to the next partner or vehicle like a baton in a relay rally; transportation players must coordinate around the payload or risk losing out to stronger ecosystems.