Connectivity brings challenges and opportunities

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Connected opens up new revenue streams for the auto industry. The connected car is one of four concurrent disruptive threats that the industry faces alongside the electric vehicle, autonomous driving and the concept of transport-as-a-service.

The connected car is a result of the convergence of several ideas to use the evolving technology of network communications, known as the Internet of Things (IoT). The connected car’s role in the IoT is significant, since it brings together five key elements to the driver’s personal space and independent mobility: comfort, convenience, performance, safety and security.

The connected car crosses a broad array of intersecting technological developments such as home integration, mobility management, vehicle management, entertainment, well-being, safety and autonomous driving. The connected car is global in scope, with an array of pilots and studies deployed all over the world, expecting to roll out a number of connectivity features across the next five years, which will shape a further thirty years of development. 

Years ago, many key car makers embraced the world of financial services, as a mechanism for supporting sales of their vehicles. Now manufacturers and their suppliers are moving their core business even further away from traditional car manufacturing and distribution models, to data and mobility management and white-labelling solutions. The connected car is a core element of this strategic change.

The connected car experience and value chain can be divided into three broad areas: human-machine interface (HMI) or In-Vehicle Infotainment (IVI), connectivity suite and telematics. 

HMI or IVI 

A brand’s capacity to reduce distraction behind the wheel and build trust with the driver is essential for future safety and autonomous vehicle deployment. Though many companies are performing well in this space, Continental, Harman, Cerence and Alpine are most notable, though they face competition from Apple, Alphabet and new electric car makers like Tesla and BYD. 

Within the IVI segment, Continental, Harman and Panasonic are the well-established Tier 1 suppliers. The HMI segment is significantly less accessible for new challengers to the market, because the IVI is such a fundamental element of the vehicle experience. In-house designers are often inspired by aftermarket products. TomTom and Garmin pioneered the aftermarket navigation device market, only to then partner with brand manufacturers when the devices demonstrated popularity. Designers are also taking cues from the wider IVI world, not just that in the automotive sector. Aural chimes, the use of color and passive systems are all huge considerations to ensure the driver is not cognitively overloaded, ergo distracted, while behind the wheel. 

Gesture controls have been applied very strictly with two or three manufacturers integrating a handsfree tailgate solution to the rear of vehicles. BMW is currently the only manufacturer with contact-free volume control. Pre-Covid pandemic appetite for these features was weak, though this may change in light of the pandemic effects. 

Nuance has led the way with automotive voice recognition software since it first equipped a vehicle with Dragon Drive in 2004. Amazon’s Alexa platform is hot on its heels, maintaining a significant 69.7% of the smart speaker market in 2019. Despite the flop of Amazon’s Echo Auto, Nuance also faces challenges from IT heavyweights, such as IBM, Microsoft and Intel, and younger market players, such as Alphabet, Baidu and Facebook. 

Connectivity Suite 

Connectivity not only enables an enhanced in-car experience, but it will also improve safety and reduce accidents. It doesn’t however come without its challenges. Cyber security is the biggest future threat to connected vehicles. Connectivity-forward car makers, such as Daimler, Tesla, Geely and Nissan have all selected different approaches, but all recognize the importance of strategic partnerships to deliver this solution, particularly as the 5G race gets underway. 

Telematics 

This is set to be the cash cow for the industry. The fragmented telematics market will see consolidation, as the busy M&A trend continues. The diversity of the telematics industry across hardware and software in both commercial and consumer markets means a number of strong players are present. Established players like Mix Telematics, Geotab, OnStar, Donlen and Inseego will need to fight harder for market share in the future as others compete for a slice of the telematics pie.

Connectivity has enabled car makers to diversify their portfolios away from pure-play vehicle manufacture and into the world of the Internet of Things (IoT), where vehicles, as first demonstrated by Tesla’s Model S, can be repaired, upgraded or enhanced, by remote updates.

The embedded SIM card, or eSIM, is the key hardware component. Despite the need for a standardized global software-based SIM being recognized in 2010, it wasn’t until 2016 until the first version was available for commercial use. The eSIM enables car makers to offer real-time traffic updates with their navigation, updated local fuel prices and access to local weather at a basic level. In more sophisticated systems, the eSIM maintains the real-time functionality of the infotainment suite, while also offering passengers greater audio options, internet browsing and more responsive and engaging voice control functionality. Moreover, consumers will see less of a need to attend the dealership, as over-the-air software and firmware ‘remote’ updates become more common.

Reliable connection with minimal latency isn’t, however, easy to achieve in a moving vehicle. There are significant hardware expenses, not least in a stronger antenna to maintain connection between broadcast masts. 5G is set to improve connectivity, bandwidth and minimize latency further. The technology also brings swathes of other opportunities around vehicle-to-everything communications (V2X). 

V2X is the term essentially describing the vehicle’s position in the IoT. If the car is considered the connected hub, then from this hub, communication can occur with:

Though some of this communication will take place through dedicated short-range communications (DSRC), infra-red or short-wave radar, others will utilize cloud technology in order to give the vehicle information to process to determine its position in the road, keeping the driver safe. This level of connectivity then starts veering into the realms of autonomous vehicles, showcasing the networked nature of connected vehicle technologies. 

Meanwhile back in the cabin, car makers have created systems that ‘piggyback’ the data connection from a mobile device brought into the car, usually a smartphone; in what is known as a tethered connection. Using the device’s internet connection, the systems can widen the functionality available to the driver. The car can be tethered to the device via Bluetooth, hotspot or cable, though other wireless connections are beginning to emerge.

Connectivity also lends itself to the streamlining of logistics fleet solutions. Fleet managers who once had very little visibility over their consignments once they’d left the depot, can now keep rigorous tabs on driver, vehicle and cargo from one cloud-based telematics-supported interface. 

Telematics is an interdisciplinary field, where telecommunications, wireless communications, computer science, vehicle electronics and road transport converge. It spans various functionality from enabling remote locking and unlocking of a vehicle, to vehicle and trailer tracking, to driver behavior monitoring. Telematics will change the way road transport and insurance verticals operate irrevocably. 

Telematics also presents one of the greatest vulnerabilities to the connected car too, being the field most likely to be targeted by cyber criminals. 

Malicious hackers are also using artificial intelligence to their advantage and while security experts are implementing similar tactics to defend company systems, attacks are relentless. Since the stakes are so much higher in automotive cyber security, most Tier 1 suppliers are taking a holistic approach with end-to-end solutions. 

The challenge comes in trying to offer third-party app developers access to expand fleet and consumer services. Argus Cyber Security, the market leader, was acquired by Continental in 2017 in a bid to challenge Intel. The brand has continued to thrive, releasing an Over-The-Air Update (OTA) security solution in October of the same year. BT Security, Cisco, Harman Towersec and SBD Automotive & NCC Group and a myriad of smaller players, including Altran and Capgemini continue to vie for market share across different regions.

Use cases for connected vehicle technologies are wide-ranging, bringing multi-faceted benefits and challenges in a number of areas.