SAP for Automotive Blogs
Explore blog posts by automotive thought leaders and SAP experts, paving the way for a smoother journey with SAP. Post a blog to share your own expertise.
Showing results for 
Search instead for 
Did you mean: 
Former Member
0 Kudos

Connected Car on the Cheap

On-Board Diagnostics (OBD) II is a global standard hardware and software system required by the U.S. Environmental Protection Agency (EPA) to be installed on all light-duty vehicles and trucks, as well as heavy-duty engines. The standard governs the car’s self-diagnosis of emission related components and subsystems, and provides access for repair technicians, state inspection facilities, and car owners to certain operational and health parameters of the car.

The diagnostic data available from the car’s OBD port also includes some 300 data points, depending on the vehicle manufacturer and model, which are not governed by the EPA's OBD II standard, such as knock sensor information, fuel injectors PCM signal, ignition voltage, cylinder timing, transmission shift points and ABS braking events.

Although OEM-specific data isn’t subject to EPA’s regulation and OEMs can even use some of the J1962 standard connector signals at their discretion, aftermarket OBD diagnostic scan tools are available for a wide range of car makes and models. Furthermore, the Right to Repair movement to protect the rights of car owners to decide where and how they have their vehicles serviced, whether at a new car dealership or an independent service facility, is putting pressure on OEMs to make this information available to the independent aftermarket.

In recent years, a plethora of consumer-grade plug-in OBD modules appeared in the market from companies like Automatic, Zubie, MetroMile, Plex Devices and Dash. In essence, you connect one of these devices, either wirelessly or via Bluetooth, to your cell phone and, voilà, a connected car.

Automotive OEMs Are Cut Out of the Loop

So where does this leave the automakers?

Since the beginning of the connected car era, arguably going back as far as the mid-80s (GM’s OnStar service business unit was formally lunched nearly 20 years ago in 1995), OEMs had a hard time converting telematics and connected car services into profitable businesses. Emergency services weren’t enough to drive up adoption, and consumers certainly did not think they ought to pay for remote diagnostics.

While OEMs were busy trying to sell telematic services through proprietary and closed business offerings, the aftermarket was much more diligent. The value of the treasure trove of data flowing from the OBD II port wasn’t lost on many, from insurance companies to app developers to do-it-yourselfers and hackers.

These companies leverage the standard physical connector and data stream to collect vehicle information, repackage it, and sell it back to the consumers, cutting the OEM out of the loop.

More Open Standards Are Needed

Not for the first time, startups are more creative and move much faster than OEMs. They are better positioned to understand and respond to a heterogeneous customer population with diverse needs that range from lowering insurance cost to facilitating an always-connected lifestyle to those for whom a car is merely a mode of transportation.

Even Tier One suppliers, some of whom are in the forefront of telematic and connected car innovation, are hamstrung by the antiquated business models and lack of open standards (beyond OBD II) that would allow them to design vehicle systems that can deliver a rich and diverse set of content and services to meet the needs of connected consumers.

This market will not wait for OEMs to get their act together, and those that don’t actively participate will lose opportunities to offer differentiating services, enhance customer loyalty, and generate additional revenue in the process. For instance, car connectivity startup Mojio is turning itself into a telematics development platform for businesses that want customized telematics services.


In the spirit of year-end predictions, here are mine:

  • Don’t let the announcements about technology collaboration with Google, Apple and Microsoft mislead you. In the near term, the status quo will persist: OEMs will resist opening up the platform and will be slow to bring outsiders into the fold, especially when it involves giving them access to critical vehicle information. Whether driven by fear of exposing critical information to competitors and regulatory bodies, relinquishing opportunities to exploit the information to deliver value-add services, or just traditional thinking, OEMs will continue to dictate the cadence.
  • Highly dependent on OEMs product and market strategies, Tier One suppliers will not be as effective in getting innovation to the market as they could. Tier One suppliers such as Bosch, Continental, Delphi and Visteon are well positioned to advance the state of the art in connected cars based on common standards-based connectivity platforms. However, as one of the aforementioned suppliers mentioned during a recent conversation, the lack of a unified vehicle architecture on the vehicle side continues to be a challenge. Hopefully, initiatives such as the Genivi Alliance to adopt an in-vehicle infotainment (IVI) open-source development platform will highlight the value in adopting open standards.
  • In the interim, third parties will continue to leverage cheap off-the-shelf technologies and the lack of decisiveness of conservative OEMs to offer consumers connected cars gadgets, apps and business services (many free of charge) such as gas station locations and prices, charging station locations, parking information, traffic updates, and many others.

All in all, the activity in the connected car space will continue to top of mind for OEMs and suppliers, other participants such as wireless carriers and service providers, regulatory agencies, and the general public. The heightened activity, however, will not bring significant convergence in the next several years.

OEMs are in the middle of the conversation. Those OEMs that pursue open architectures and collaborative business models, even investing in those startups and initiatives, will be in better position to both react to and influence innovation in connected car technologies and services. As a result they will be in a position to enhance their strategy and competitive position relative to OEMs that maintain an overly protective attitude.