The fiercely competitive automotive industry has long been at the forefront of technology innovation. The past decade alone has (among other developments) seen the emergence of hybrid and electric vehicles and self-parking cars, as well as increasingly sophisticated in-car digital services as standard such as sat-navs that connect to the cloud (via your smartphone or an in-car data SIM) and download the latest traffic information so they can route you around any trouble spots in real time.
But the transformation of the industry is about to move into a higher gear. Self-driving vehicles and the Internet of Things are, many believe, about to wreak havoc upon the automotive sector’s traditional business model.
Speeding Towards a World of Connected, Autonomous Vehicles
Consultancy giant PWC’s most recent annual study of the connected car industry, for example, said: “The industry will undergo fundamental change as semi-autonomous driving emerges, followed by an eventual shift to full autonomous driving. Auto makers that have always seen themselves as product suppliers will take on a new identity as providers of mobility services.”
Accenture, too, is heralding a new era for the automotive industry, noting: “Cars will incorporate embedded machine-to-machine solutions that talk to other connected vehicles and to appliances in consumers’ homes, among other convenient functions.”
Currently most car manufacturers develop and control their own proprietary set of digital services, but Accenture believes they will increasingly need to open up their in-car ecosystems to allow the use of third-party cloud apps and services. Much of the potential of smart cities and the Internet of Things depends on vehicles and devices operating on open standards, with open data formats. Customers will increasingly select vehicles that allow them to choose from a wide range of in-car apps and services that aren’t limited to those developed by the manufacturer itself.
But observers are in broad agreement that the biggest disruption to the automotive industry will come when self-driving cars begin to colonize our roads. Seval Oz was instrumental in the development of Google’s pioneering self-driving car and is now CEO of Continental Intelligent Transport Systems, a new division of the global transportation giant dedicated to taking advantage of the Internet of Things to develop innovative automotive services. Oz pulled no punches when it came to telling automotive manufacturers what they needed to do.
Be Intelligent and Open Up
“Self-driving vehicles are being talked about in every boardroom. But the car manufacturers are trying to innovate on their own, when what’s really exciting is not Internet of Things technology in itself, but being able to aggregate and analyze data from multiple sources and create layers of intelligence,” Oz said.
Self-driving cars are likely, she believes, to herald a new era where people will increasingly choose not to own a car. “People are waking up to the fact their car sits in their driveway 96% of the time doing nothing, a depreciating asset. Most millennials are questioning why they’d want something decaying and costing them money when all they really need is the ability to access transportation within a few minutes,” said Oz.
But she thinks that despite their commitment to innovation, auto manufacturers aren’t doing enough to prepare themselves for a fundamental shift in their business model. “They’re still telling themselves they’re in the business of selling cars. I say what they’re really selling is vehicle miles,” she said.
Shift Gear for a Future of Car Sharing
According to Oz there’s a huge opportunity here for the industry to move from an ownership to a shared-use model. With the Internet of Things enabling fully autonomous vehicles with smart, connected locks, it will be perfectly feasible for someone to run a largely automated service where people can request a car to drive itself to wherever they are and take them to their destination, with them able to keep the vehicle for their exclusive access as long as they require. But feasible doesn’t mean easy, she cautioned. “A lot of investment, time and change is required to build these flexible environments…The most difficult part is sticking together the system so it’s a full service solution.”
Automotive manufacturers need to start preparing and finding the right technology partners now if they hope to make the transition successfully, but those who get it right have the potential to reap great rewards. “If you can get people to travel more because you’re providing better, easier access to transportation, then your market becomes much wider and your vehicle miles start to grow,” Oz said. “There are incredibly exciting opportunities to create new efficiencies, innovative services and really change the game.”
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Originally published at blog.100tb.com.
