Closing the gaps: A car isn’t a smartphone on wheels – yet

In keeping with the structure of the previous article, this one is divided into three perspectives: customer, app landscape, and technology. Each of these sections is further subdivided to address specific gaps. Figure 1 depicts this structure and summarizes the main gaps identified in the previous article.

Figure 1: Perspectives and gaps

In the article, we want to focus on recommending actions that OEMs can take to close, or at least narrow, these important gaps, drawing on insights from a recent worldwide online survey of more than 2,700 participants from China, the US, and the EU. This article will focus on the most important of those gaps. Suggestions for closing the other gaps will be put forward in our forthcoming Connected Vehicle Trend Radar report.

Customer perspective: usability & customer interaction

Value Proposition

Transportation is still the major value proposition for today’s cars. This relatively narrow focus means there is a gap between the range of functionality available to customers via their vehicles and via their smartphones.

Transportation is likely to remain the vehicle’s main value proposition, even in the era of autonomous driving, but OEMs can narrow this gap by broadening the vehicle’s value proposition through augmented applications and connected services.

Once fully autonomous driving is possible – and this is no longer a fantasy since level 3 approvals are already being obtained by OEMs[1] – the car-smartphone gap can be narrowed much further. The key will be to transform periods that are currently spent purely on driving/transportation into immersive customer experiences, and thereby broaden the value proposition as far as possible.

Current research in the field of autonomous driving mainly focuses on its technical feasibility and enablement, and neglects the customer’s role, and especially that of the driver. The progress towards autonomous driving will gradually turn drivers into passengers. As that evolution happens, the driver’s attention can be transferred to other activities. Therefore, the role of connected services must be reconsidered: They are no longer limited to assisting the driver during the journey, but will be able to address a much wider range of areas and functionalities, transforming the vehicle into an “experience device.”

More than 50% of our survey participants state that once autonomous driving becomes possible, they want to use entertainment features (e.g. online games, videos, music), social media, and web browsing features during the time gained. These new opportunities are not limited to fully autonomous driving cars, but are also applicable to preliminary stages such as highway pilots or other level 3 autonomous driving functions.

OEMs should therefore reconsider how different people will use their products. Given that drivers will become more like passengers, and that customers in general know exactly how they want to use their spare time, great opportunities for OEMs will emerge. Thus, we recommend transforming a journey into an experience using connected services.

This can be achieved by developing new applications based on technology such as AR – for example, games where you compete against other passengers and cars, or virtual tours through cities and landscapes. Displayed content is no longer limited to the on-board computer or heads-up displays. Potentially, the entire vehicle can now be used for entertainment and interaction. Handled this way, the autonomous vehicle can not only become a “living room on wheels,” but also open up new business opportunities in the automotive sector (e.g. creating offices or meeting rooms on wheels).

With this extended value proposition, OEMs can enhance their brands with new offers and differentiating features in the market.

Seamless integration

Another gap identified in our previous article is that the car is not integrated into a customer’s digital portfolio. Currently, switching between different devices is not the flexible, seamless experience that customers expect and want. Our survey results show the importance customers place on closing this gap. For 42% of our participants (57% in China), integration of smartphone apps into the vehicle is a determinant of willingness to pay for connected services.

To satisfy this requirement, OEMs should now open up their ecosystems to third-party app developers. The best way may be for OEMs to establish an app store containing the full range of (externally developed) apps that customers already use on their smartphones alongside its own apps. By including these third-party apps, the customer experience is optimized since the switch between smartphone, tablet, and car is more convenient and seamless. This move to an open ecosystem has the additional advantage of offering OEMs new revenue potential; one option is a revenue-share model where a per-transaction commission is collected – a similar model to that used by the Apple App Store and Airbnb.[2] Since the car will then be perceived as an additional sales channel by external providers (e.g. Amazon), this will strengthen the overall positioning of cars in the digital portfolio.

To support and enable this seamlessness, centralized account management should be established, either within the car or – even more conveniently – via the smartphone app associated with the car. This feature will enable customers to store the credentials needed to log into the different app accounts once and then automatically synchronize their different devices and app data with the car. As a result, data consistency is ensured. Already, the latest BMW models allow the user to log into their Spotify account by scanning a QR code.[3] Centralized account management would enhance ease of use even further.

Ecosystem perspective: app availability & operating system

App availability

Relatively few apps are available in connected vehicles compared with the wide choice available to smartphone users. More than half of survey participants have 20-30 apps on their smartphones in addition to the pre-installed ones, and some people have even more.

Naturally, cars and phones feature different types of apps: The most popular ones on the smartphone tend to relate to social media, email, messaging, and games, whereas vehicles tend to run apps such as navigation, infotainment etc. However, that looks set to change. Nearly 60% of our participants say they would like to have the same variety of apps in their vehicles as on their smartphones and would use them as intensively. This feeling is strongest in China, where 82% favor that answer.

According to the survey results, more than 65% of participants would like their cars to offer the same navigation and music or video streaming apps that they use on their phones. Around 45% would like to have in-car access to their smartphones’ news and social media apps; 35% would like apps for mobile banking, payment, email, and charging electric vehicles; and 33% for online shopping.

Customers’ desire to use smartphone apps in their cars reinforces our earlier point that partnerships with third parties will be critical to success in expanding the app landscape. So what sort of incentives and enablers should OEMs offer to tempt developers into their ecosystem? Possibilities include:

• Access to data: For example, an OEM could offer to support an online provider of repair and maintenance workshop services by sharing car status information to help create personalized offerings.
• Developer platforms to facilitate app development for the OEM’s ranges: Mercedes-Benz /developers is an example.
• Adoption of open-source policies as standard to make it easier for app developers to provide end-to-end support for apps in vehicles, from development to maintenance and updates.

Centralization around a limited number of OSs

Whereas the smartphone app market is centralized around Google/Android and Apple/iOS, the automotive industry’s OS landscape is much more fragmented, making it unattractive for third-party providers. We foresee that, as has already happened in the smartphone OS landscape, the automotive OS market will become consolidated, though not to quite the same extent. More insights regarding operating systems and ecosystems are discussed in Connected Vehicle Trend Radar 2.

Meanwhile, individual OEMs urgently need to review their OS strategy. They have a choice of three options:

• Use an existing OS, probably Android Automotive
• Build their own OS
• Take a hybrid approach, using Android Automotive and the Android Open-Source Project (AOSP) as a starting point and later building a comprehensive OS landscape

In deciding between these options, an OEM needs to keep in mind several strategic questions. How well do standard solutions fit the business’s needs? What are the key drivers of the OS for customers? (Premium and volume OEMs may answer that last question differently.) And how much budget is available for OS development?

Whichever of the three options an OEM selects, we recommend pursuing it in collaboration with suitable partners. OEMs should think strategically about how best to cooperate with other OEMs, IT companies, or even companies in other industries.

Collaborations between OEMs are already under discussion. BMW, Daimler, and VW recently announced their intention to build a common OS for e-cars, though they were subsequently unable to agree a way forward. Such collaborations may take various forms: For example, an OEM with its own OS could license it to others as a service. We strongly recommend that OEMs aim to match the high standards of functionality and reliability set by IT companies to safeguard their competitiveness if they decide to keep OS development within the automotive industry.

In fact, partnering with IT companies, and capitalizing on their strengths in the OS area, is essential. These companies have not been slow to enter the automotive industry themselves. Google announced Android Automotive in 2017, and by 2022 it will feature in more than 15 vehicle models, from brands including Polestar, General Motors, Ford, Renault, Nissan, and Stellantis. Seven years after the launch of Apple CarPlay, Apple plans to add climate control, speedometer, and seat adjustment to CarPlay via cooperation with OEMs. In the future, Apple will possibly also implement its CarPlay innovations in electric cars of its own.[4]

Technology perspective: innovation & updatability

Development time

Vehicles have a much longer development cycle than smartphones do. Cars typically take at least five to six years to develop, compared with one or two years for smartphones. Partly because of this long cycle, a vehicle can already seem outdated when it’s launched.

OEMs have two main ways to close this gap. The first is to adopt customer-centric product development approaches, which can help to ensure that customer needs are met by the finished product. By involving the customer as early as possible in development, and maintaining that dialogue throughout the development cycle, OEMs can better understand current requirements and pain points, and predict future ones.

The second way to close this gap is to deploy software-based or virtualized techniques to further speed up development. One advantage of this approach is that vehicle designers and testers can test new vehicles before they’re built by using virtual solutions such as AI-powered simulations, together with augmented and virtual reality. This can reduce development time significantly and the resultant product is likely to be better because more configurations can be evaluated and tested, with fewer physical prototypes (which means less cost). Another advantage of software-based or virtualized techniques is that they make it possible for customers to try out the vehicle’s user experience during the early stages of development. That way, the customers can provide early feedback to vehicle designers to inform development iteration. Techniques like this are already being used by industry leaders as they can reduce time-to-market; physical testing with customers can be completely omitted in most cases.

Processing and response time

A car is more limited than a phone as to the amount and type of data it can work with, and how it can use this data. To bridge this gap, OEMs need to transform today’s hardware-defined cars into tomorrow’s software-defined ones.

Today’s development approach can’t support software-designed vehicles because of the way software is created. Although OEMs build some software elements in-house or in close collaboration with strategic partners, they buy others in from various suppliers, then integrate them as best they can. The result is that the typical car relies on a wide range of development languages and software structures, leading to incompatibilities and inconsistencies that tend to drive up complexity.

This approach is increasingly problematic because the “softwarization” of today’s cars demands seamless integration of subsystems and components. OEMs therefore need to put great emphasis on decoupling their hardware development cycles from those for software, to be able to develop software faster and deploy it more frequently. They must also streamline the development approach, and align development languages and software architecture, regardless of who is developing each element. OEMs should also think about their ability to process and analyze data efficiently; the proliferation of applications and sensors in vehicles will soon create a “data explosion” for which OEMs need to prepare if they are to achieve a satisfactory response time.

If done correctly, offloading heavy processing to the cloud is another way to improve the responsiveness of connected services. OEMs should therefore work with their partners to create a cloud-based digital infrastructure that provides a smart, scalable foundation for delivering connected experiences to customers.

Some of these changes are already starting to happen, as part of a shift in the automotive industry’s rationale. Rather than adding computers to cars, OEMs will in the future build cars around computers.

Key recommendations

Customer perspective: usability & customer interaction

• Re-design the connected services portfolio from a driver-centered experience towards a passenger-centered one – especially for (semi-)autonomous vehicles
• Integrate commonly used third-party apps and foster seamless synchronization across other devices via centralized account management

Ecosystem perspective: app availability & operating system

• Understand the smart vehicle as an element in customers’ digital portfolio and ensure that they can use the same digital services (apps) in the vehicle as on other devices.
• Act immediately and consider strategic cooperation with other OEMs or big tech companies to stay relevant if the OS becomes a decision criterion for vehicle purchase.

Technology perspective: innovation & updatability

• Adopt customer-centric product development approaches to better understand and integrate today’s and tomorrow’s market requirements. Deploy software-based or virtualized techniques to expose customers to the vehicle’s user experience during the early stages of development.
• Transform today’s hardware-defined cars into software-defined ones by decoupling hardware from software development cycles. Build a cloud-based digital infrastructure to deal effectively with the upcoming data explosion in vehicles.

While tackling the gaps between vehicles and smartphones, we should be aware that we’re dealing with a moving target. If it takes two to five years to close a gap and we start now, there’s a risk that when we get to 2025 the car will be comparable with a smartphone from 2022 rather than one from 2025. To catch up with smartphones, we need to anticipate what future phones will be like.

We might also want to question whether the smartphone is really the model we should be aiming for. Should we perhaps be looking for inspiration from other industries and technologies instead, or as well? We’ll pursue this line of enquiry in our forthcoming Connected Vehicle Trend Radar report.

Authors:

Sebastian TschödrichVice President – Automotive, Capgemini Invent	Dr. Marc CäsarDirector – Automotive Digital, Capgemini Invent

Contributing Authors:

Marc Pauli, Yue Ma, Simon Monske, Michael Röller, Katharina Schepp, Konstantin Hauser and Christopher Hofmann

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[1] https://www.daimler.com/innovation/produktinnovation/autonomes-fahren/systemgenehmigung-fuer-hochautomatisiertes-fahren.html#:~:text=searchquery%7D%7D%20%C3%BCbereinstimmen.-,Erste%20international%20g%C3%BCltige%20Systemgenehmigung%20f%C3%BCr%20hochautomatisiertes%20Fahren,ein%20Level%2D3%2DSystem%C2%B9

² https://businessmodelnavigator.com/?id=41

[3] https://global.chinadaily.com.cn/a/202110/23/WS61734c97a310cdd39bc70ba0.html