In recent years, developments in the automotive industry combined with trends in transportation have evolved the car from an underutilised machine that delivers its owner from A to B, to a dynamic hub capable of delivering a variety of services to a wide variety of passengers.
This is similar to the way that Apple’s arrival in the world of mobile telephony disrupted the status quo for handset OEMs and, in doing so, transformed an entire industry. The arrival of Tesla, Google and, of course, Apple in the automotive world has set alarm bells ringing in the boardrooms of the major automakers around the world. Which is why manufacturers – with the help of the Internet of Things (IoT) – are innovating and transforming their businesses back into the growth industry inspired by Henry Ford. And this has led us to a modern day automotive revolution.
Two of the most interesting developments in automotives revolve around the advent of affordable ride sharing services (particularly in metropolitan areas) such as Uber and Lyft and the autonomous vehicle. These two disciplines are both distinct, but overlapping.
Car ownership among millennials has been declining for some time for a whole host of reasons. But the chief driver was ushered in by the arrival of the smartphone. Jeremy Rifkin, author and economist, stated that, “25 years from now, car sharing will be the norm, and car ownership an anomaly.” Car sharing services are changing how people think about car ownership. Car ownership costs the average Londoner £250 per month and yet they spend less than half an hour per day using it. And you can guarantee most of that half hour will be spent sitting in traffic jams.
The majority of the time, a personal vehicle is parked. In the sharing economy, a connected car could broadcast itself as being available for use at various times of day. For example, the owner of an electric BMW drives into work in Frankfurt at 7am. They need to take the vehicle back home at 4pm. This vehicle is now available from 8am (charging time one hour) till 3 pm (to charge again for use at 4pm). It broadcasts its availability with a range that it can be driven for a fee. IoT connectivity is key to enable that vehicle to be remotely opened by the person reserving the car, to track where the car is and provide reminders about return time, etc. Now that car becomes a source of potential revenue for its owner, just like Airbnb for dwellings.
The transportation industry is being disrupted by ride sharing services, and it is adapting by bringing IoT into the vehicle to enable a host of new services of its own. Automakers, as well as the likes of technology companies such as Uber, Google and Apple, are already looking at what it takes to get to autonomous. In India, its estimated that 20% of new vehicle sales will go to companies like Ola and Uber by 2020, in a market with increasing vehicle sales. The OEMs are actively getting into this space as well – GM with Maven and Daimler with Car2Go. These are all playing a role in car ownership and one’s driving experience.
Autonomous vehicles will create tremendous amounts of free time for commuters. That 60 minute journey to the office becomes a time to catch up on work or domestic admin, or the latest TV series. Autonomous cars also promise to make our journeys safer and, thanks to superior route planning, faster. But making truly autonomous cars a mass market reality will take years according to most experts – though often the water is muddied by how people choose to define ‘autonomous’.
Volvo, Daimler, GM, are all preparing to deploy small fleets in controlled environments. This is not a technology that can be tested in a laboratory. We need to drive in real world conditions to see how the systems perform.
Once truly autonomous vehicle technology becomes a reality, that technology will be blended with ride sharing. This will deliver unprecedented levels of disruption to the car industry.
The green light
The two converging developments in the automotive industry of ride sharing and the autonomous vehicle are supported by, but not reliant upon, the push to go green. This represents an entire subset of the automotive revolution and is indirectly pushing an autonomous future. Uptake of electric cars is slow at present though since they’re are relatively expensive. But the costs are coming down. Furthermore, technical hurdles such as range are improving, in addition to recharging times. Meanwhile, greater supporting infrastructure is slowly but surely being rolled out.
Tesla and other EV companies have the advantage of being “new” companies with no legacy technologies, thinking or processes. They are able to apply the latest technology from various industries and disrupt the traditional OEM business. So they have been able to apply the latest technologies to get their cars to be autonomous.
The push by Electric Vehicle OEMs to attain Autonomous gets put on the “Green bandwagon” since they are environmentally better, due to their non-dependence on fossil fuels.
Ride-sharing also reduces wasted trips, parking and other unnecessary costs within the car transportation eco-system, by allowing cars to be used more. No more driving around to find parking – which saves time and space.
Navigating connectivity in the here and now
In Europe, the basic services that will first come to market due to eCall will be safety and security that will be triggered with automatic crash notification. This is not new in other markets like North America, but a majority of the OEMs in Europe are yet to launch eCall. Beyond consumer applications, there are also safety implications for fleet drivers, with new services that help prevent them from falling asleep while driving. Electronic log books will keep track of the number of hours a fleet driver has been awake and driving and provide alerts when it is time to rest, helping to prevent potential accidents due to drowsy driving.
Over-the-air software/firmware updates are going to play a crucial role in a world where cars are digitally controlled. A connected car designed with upgradeable electronic component units will bring forth a revolution on what is considered a new car versus a new-feature car. OEMs will be able to update software features on the vehicle on a regular basis. New age OEMs treat cars like another IT asset which needs the latest software updates to be delivered automatically. This will allow for cars to be kept fresh for much longer.
Security as a service is also a key consideration. There are several mechanisms in place to protect against manipulations/hacking of connected cars, as connected car are more vulnerable than their non-connected counterparts. Some steps that can be taken include restricting the connections to and from the vehicle to trusted end-points, ensuring core vehicle operations are not corruptible without authentication, encryption of data, automatic anomaly detection and remediation, and many other well-known security applications and practices already used in the IT world.
More than a machine
In some respects, the connected car has very much arrived. However, we’re years from a time when car ownership will disappear to be replaced by self-driving vehicles picking up and dropping off passengers in and around our cities. This is a utopian vision for some, but a dystopian nightmare for others. It could well be a generational issue. For Generation X and the Baby Boomers cars represent freedom. They’re more than just a machine. People have emotional bonds with their cars, they modify and customise the look and the feel, they sometimes give them names. The Model T which helped kicked off the revolution was available in any colour as long as it was black, but once people got their hands on affordable vehicles, they wanted them to look and perform differently from the one their neighbour owned.
But millennials, at least in bigger cities, are demonstrating that car ownership is not a guaranteed aspiration. Once autonomous cars do arrive, there will be less of a demand in terms of what the car looks like. The post-millennial generation are starting to come of age and the world they live in will be much the same as that of their predecessors. Things could be markedly different for Gen Alpha though (those born after 2011). The transformation for this group has the potential to be akin to the move from horse drawn carriages to cars.
In this brave new world, the revenue for automakers will not be derived solely from the margin on the finished product. Thanks to connectivity, the automaker has a connection to the customer way beyond the point of sale, and the ability to continuously improve the driving experience over time.