Elon Musk has predicted that Tesla will design a car by the end of 2017, which can drive itself from Los Angeles to New York without any human intervention. Just a few years behind him are some other top players like Ford, Google, Baidu and GM, who are trying to launch similar projects in the near future. Driven by IoT, the automotive industry is on the verge of a revolution. According to a Business Insider report, 94 million connected cars are expected to be shipped by 2021, which will represent a CAGR of 35% from 2016(21 million connected cars). This will generate $8.1 trillion between 2015 and 2020. This revolution will not happen only in the cars but also all other modes of transport like buses, trains and public transportation mediums.

With the evolution of automobiles, the relationship between software providers and automobile makers will also evolve to adapt with the rapidly changing automotive industry. This industry is dynamically shifting from just hardware to more than software, from industrial silos to connected industrial ecology and from a product mindset to experience and services. The way to success lies in the strategic relationship between these key players with a clear vision to define their roles in the roadmap to the future of automobiles.

Evolution

From just wheels and engine, how automobiles have transformed to smart cars is really fascinating. It all started first in 1911 with the installation of electric starters in the vehicles. Gradually many other gadgets found their place like cigarette lighter in 1925, radio in 1930, power steering, 9-track player, cassette deck and air bags in 1956, 965, 1970 and 1984 respectively. These pieces were just initiating the start of a new era of technology on which the concept of connected cars was going to be built.

The timeline for evolution of connected cars can be broken down into five pieces-the research and development piece, the embedded technology piece, the infotainment piece,  the V2X piece and the all new mobility piece. Let’s have a short walk through each of these.

Research and Development

It was the decade of 60s when GM was experimenting with DAIR-Driver Aid, Information and Routing. This technology used punch cards to instruct change in directions with the help of radio relays and magnetic sensors built in the roads. Although being ahead of its time, this initiative never came out of research phase because of installation of those sensors across a wide stretch of roads being both economically unfeasible and technologically unviable, at that time. Even GM did not dare to DAIR.

Embedded Technology

In the 90s, GM again came up with new idea of Onstar-an embedded phone (Digital Communication Module) in the vehicle, which wirelessly communicated information to automakers or TSPs (Telematics Service Providers). It helped to collect and analyze data to provide service to the customers in terms of safety and emergency. This new era brought manufactures of DCM chips and providers of TSP into the picture, which was previously occupied wholly by the hardware providers. It also initiated a shift from product based strategy to service oriented business model with various touch points across the customer lifecycle. But the high prices of these technologies with no clear value projection to the customers led to its low adoption by the customers, with reluctance to pay more.

Infotainment

With the onset of millennium, mobile phones were ubiquitous and the rise of smart phones was knocking at the door. These all led to the introduction of infotainment in the automobiles, i.e. unlike embedded technologies, the applications were now in the driver’s smart phones with Bluetooth in the car to connect. Like its previous era, this also brought two new stake holders in the ecosystem- app-providers and software suppliers. All the major players like Google, Apple and Blackberry released their propriety software in this field. One who owns the dynamic data of the customers can drive their position in this field now and hence automakers now gradually began to fear the involvement of software providers. Automakers felt that if they lose control of their customers, the automobiles will be merely a commodity with value driven by the software providers. To mitigate this, some players like Toyota joined hands with Blackberry QNX to create an open platform to support larger number of apps as well as more robust mechanism to design user interface. But just like the embedded era, customers were not willing to pay an extra sum for these added features.

In my next blog, we will be continuing the rest of evolution stages along with the future ahead of the car of the future!