Digital Disruption in the Auto Industry

[Former Member]

Connected Cars

Connected cars are here. Practically all new cars sold in the U.S. are equipped with built-in connectivity. By CTIA estimates, by 2017, 60 percent of all cars sold in the U.S. (about 10 million vehicles) will have built-in wireless connections.

Visionaries, practitioners and analysts of connected car technologies have broad, rich and sometimes divergent views of what constitutes “connected cars”, the ramifications of an always  connected world—often in the context of the burgeoning Internet of Things (IoT), and how soon industry and consumers will experience its benefits and possibly perils.

But there is an agreement that these benefits— as well as the perils—will be profound.

When attempting to gauge the impact of connected cars we need to recognize the four forces that are in play: technologies, automakers, consumers and regulators. And these forces are not always in harmony with each other. In a series of upcoming blog posts, I am going to address these forces and their interplay, and discuss topics that range from business models to connected car technologies, and invite you to weigh in the discussion.

Digital Disruption

Much has been written and new content appears daily on the potential benefits of connected cars. At a high level, these tend to fall into a number of broad categories:

• Navigation: Real-time traffic information, driving directions, weather conditions, fueling locations and prices, parking information and other location based information and services reduce drive times, ease congestion and lower carbon emissions.
• Communication: Short range wireless connectivity between consumer devices and the car, and built-in wireless broadband connection offer a variety of hands-free and voice-activated communications and control options.
• Infotainment: Broadband access to live streaming of cloud-based content and services.
• Safety: Vehicle to vehicle communication and vehicle to infrastructure (traffic lights, infrastructure-embedded sensors) communication, aided by built-in active safety: lane departures and (semi)autonomous behavior prevent collisions.
• Health: Integrated biometric sensors connected to web-based health and wellness services.
• Maintenance: Wireless connectivity enables remote access to engine diagnostics, over-the-air software updates, roadside emergency services and tracking of stolen vehicles.

Autonomous Cars

Further into the future, the industry envisions an omnipresent fleet of autonomous cars, which could significantly improve traffic conditions and mobility:

• Traffic throughput would be centrally managed and continually optimized, easing congestion, shortening commute time and reducing carbon emissions.
  • Autonomous cars, aided by digital road infrastructure should reduce car crashes to near zero. A study conducted for the National Highway Transportation Safety Agency (NHTSA) showed that nearly every single car crash is a result of a driver error, with the leading causes being inattention, speed, alcohol impairment and perceptual errors.
  • Disabled, elderly, and visually impaired people could enjoy greater mobility.
    • Autonomous cars that obey traffic rules, employ active safety measures and aren’t operated by inattentive or impaired drivers could lead to reduction in law enforcement resources and lower the cost of automobile insurance.
    • Autonomous cars will need considerably fewer passive crash protection features, making them simpler and lighter and therefore less polluting and less expensive to operate. Simpler design will reduce manufacturing cost, energy and waste.

Connected Cars and the Internet of Things

The emerging world of connected vehicles is not simply one of cars with cellular communication and Internet connections. Rather, cars are becoming part of the Internet, or, in today’s parlance, they are yet another “thing” in the Internet of Things (IoT). Connected to consumer devices, digital infrastructure, and a wealth of streamed cloud-based content and services, cars are no longer self-contained independent systems but rather a constituent of a network in which much of the value comes from outside the car itself.

Connected cars are becoming part of the IoT, with high hopes and the commensurate potential risks and many unknowns. In the next blog post I’ll discusses macro industry trends and critical factors that are shaping the evolution of the connected cars ecosystem.