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Former Member
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In a previous blog post I discussed the digital revolution the automotive industry is undergoing and how cars are transforming from self-contained independent systems to connected subsystems in the Internet of Things (IoT), where significant value to drivers and passengers come from outside the car.

While the bold vision of connected cars holds much promise, the road ahead will not be without challenges. There are obviously formidable technical challenges such reliable and safe autonomous mobility that are discussed frequently, but may become a reality only in a decade, possibly later. On the other hand, key building blocks such as active cruise control, lane departure warning, self parking and others are already entering the mainstream car market.

Nevertheless, the future of connected cars depends not only on communication systems and intelligent mobility features, but also on market adoption and broad ecosystem. In this blog post I discuss several of those issues that often elude the rose-colored glasses wearers that cover connected car industry.

Reaching a Critical Mass

Cars equipped with active safety systems, optimized navigation and routing algorithms, parking reservation applications and other advanced in-vehicle systems will undoubtedly have a positive impact on safety, fuel efficiency, the environment, and overall driver experience. But meaningful improvements in traffic conditions and overall safety require that all traffic participants: vehicles, traffic signals, traffic management systems and other systems to work in tandem as parts of a well-calibrated federated decision-making structure.

There will be a long transition period in which cars with and without vehicle-to-vehicle communication and with different levels of autonomous behavior share the roads. The availability of senor and information rich infrastructure that could potentially communicate with cars will be even slower to come. So while the technology building blocks will trickle into the mainstream, their collective impact will lag behind.

Rethinking Car Ownership

Tech savvy, always-connected Millenials seem to be a natural demographic to drive up adoption of device-rich connected cars. However, Millennials appear to place less importance on car ownership than older generations do, and are quite content using car sharing and mobility services such as ZipCar, Uber and Lyft.

In fact, this trend is not unique to Millenials. According to a recent KPMG assessment, the era of the two-car family will likely decline, especially in highly urbanized areas.

The vision of a ubiquitous fleet of public and private on-demand vehicles that can address practically most of the transportation needs of future challenges our long term view of car ownership. But in the interim, the hesitancy in car ownership, especially on the part of affluent urbanites may lengthen the time to reach a critical mass of connected cars.


As the industry is making rapid progress in the technologies that bring broadband service to the car and enable car-to-car connectivity, and the National Highway Traffic Safety Administration’s (NHTSA) announcing it will make vehicle-to-vehicle communications mandatory, some important underlying policy issues are beginning to surface.

  • Data Privacy and Use Rights. To what extent should OEMs protect their driver-generated data and keep them proprietary? What are the rights of drivers and car owners? I will discuss this topic in a future blog post.
  • Security. Means to secure cars and public infrastructure from data theft and malicious attacks.
  • Open and Net Neutral Communication. Allocation of communication spectrum to facilitate interoperability and ensuring open and ‘neutral’ Internet, which I will discuss in a future blog post.
  • Regulations. Enabling and governing new services that may run against local regulations and ordinances or simple resistance to change. Case in point: Haystack, a location-based parking app was banned in multiple cities

Open Innovation

While the automakers are assuming ownership and taking a visible role in developing safe and reliable in-vehicle electronics and infotainment, they continue to struggle in maturing connected car technologies and taking them to the market, periodically facing delays and poor quality that surprise and disappoint automakers and consumers alike.

Recognizing this challenge, OEMs are moving key research and engineering activities, especially in user experience design and advanced software and electronics, to innovation hubs in Silicon Valley, Israel, Germany and other high tech locations.

Automakers are also acknowledging that much of the drive and innovation in connected cars are coming from non-automotive technology partners like Google, Intel and Microsoft. In the same vein, new methods and standards such as AUTOSAR and Genivi are formulated not by SAE and AIAG but rather by broad consortia of diverse automotive and non-automotive constituents.

The new ecosystem and relationships with its constituents appear to disrupt some of the tried and true fundamentals in automotive R&D and manufacturing, especially in the need to move from a relatively slow forward-feeding linear product development process to agile development methodologies that take advantage of the enhanced cadence and flexibility of software development. I covered this topic in this webinar (registration required).

Supply Chain

The open innovation environment automakers are adopting, however unenthusiastically, may create another disruption, this time to the way OEMs have traditionally managed their supply chains.

Traditionally, long product development cycles of automotive systems and even longer useful life of cars necessitated a stable network of long term suppliers that could provide parts and service throughout the life of a vehicle.

A similar mindset reigned in the early days of connected cars. For example, General Motors’ OnStar telematic service was, and, in fact, still is, based on a bespoke hardware and a single wireless service provider. This approach and its slow refresh cycle hinder the ability to benefit from the rapid evolution of in vehicle electronics, wireless communication standards, and wealth of new services. Furthermore, as I will discuss in a future blog post, this strategy is counter to the expectations of the always-connected consumer.

OEMs and Tier One suppliers are finding it difficult to change the traditional model of working with only a handful of strategic Tier One suppliers, and be open to collaborate with a longer list of technology providers that seems to change almost daily. To complicated matters, many of these potential suppliers not only have different culture and business practices, but often do not have the quality standards, rigor, scale and business practices of traditional suppliers.

While there is a genuine interest on both sides to close those gaps, I periodically discover circumstances where cultural and procedural differences stand in the way. And I except that the dynamic of the connected car industry and in the Internet of Things in general will bring new participants, put others out of business and drive industry consolidation for years to come. OEMs will find this difficult to deal with.