Five Bold Predictions for the Automotive Industry
As the second largest market for vehicle sales globally, it’s no surprise that companies in the United States are racing to produce better and smarter cars. Big names like Tesla and Google are the leading innovators in the autonomous car industry and are transforming transportation.
A fact sheet from the White House states that US auto sales reached an all-time high of 17.4 million units, and vehicle production exceeded 12 million. According to Statista, there were 37 new car models introduced into the US market in 2016. A strong market for automobiles means increased investment and growth for the auto industry, more developments of innovative vehicles like connected and autonomous cars.
The Evolution Automotive Vehicles
Telematics, or the long-distance transmission of computerized information, has been integrated into vehicle technology. Telematics can be applied to so many more useful applications, including:
- Satellite navigation systems
- Vehicle tracking — including trailer and freight container tracking
- Fleet management
- Roadside assistance
- Emergency warning systems
- Vehicle diagnostics
- Car sharing
- Auto insurance
The growth of the automotive telematics market is driven mainly by the need for safety and security measures. It’s also known to effectively increase productivity and reduce labor and fuel costs and operating expenses. According to Statista, nearly 15 million original equipment manufacturer embedded automotive telematics will be sold in North America by 2018. Statista also predicts that global telematics market revenue is expected to increase to around $46B by 2020.
In 1996, General Motors presented the first connected car feature with OnStar. Today’s connected cars are capable of Internet access, are equipped with sensors, and interact with surrounding vehicles or objects.
The ability to diagnose a vehicle’s problem using remote diagnostics was first introduced in 2001. Two years later, services for connected cars included vehicle health reports and turn-by-turn navigation. In 2014, the Audi A3 was the first car equipped with 4G Wi-Fi Hotspot access. Today, cars with 4G are becoming the standard.
With help from the federal government and U.S. Department of Transportation (USDOT), there has been significant progress made in the areas of research, development, testing, and deployment of connected vehicles. The USDOT Connected Vehicle Safety Pilot Program, which was launched in 2015, is a research program that tests and evaluates technology that enables different modes of transportation and other devices to communicate with one another. This is useful to determine how technology for connected vehicles performs.
Connected car technologies and services
BI Intelligence estimates that by 2020, 75% of cars shipped globally will be capable of connecting to the internet. Today, the market for connected car packages, which are built-in or subscription-based services, will continue to center on premium vehicles but the technology will eventually become available to the mass market. Connected Car Report 2016 by Strategy& reveals that the global car market has the potential to build value from the sale of connected car packages from $52.5 billion in 2017 to $155.9 billion in 2022.
New cars sold that are connected to the Internet worldwide from 2015 to 2025
An autonomous vehicle is capable of navigating with little or no human interference. Also known as driverless cars and self-driving cars, they can detect their surroundings using a variety of techniques such as radar GPS and computer vision. Besides California, several states including Florida and Nevada allow autonomous vehicles on public roads for testing purposes. Testing is limited to the state’s rules and regulations, such as requiring a human driver be present.
Of the 20 companies that plan on building self-driving vehicles in the next five years, these are well-known players:
- Volkswagen Group of America
- Mercedes Benz
- Tesla Motors
Tesla is working on releasing a fully self-driving car next year. Google, Volvo and Toyota are aiming to release their autonomous cars by 2020. BMW is set to release an all-electric car with autonomous capabilities in late 2021, and another that is fully autonomous in 2025. Ford is also set to deploy a fleet of self-driving cars as a ride-sharing service in 2021.
IHS Automotive forecasts that the price for the self-driving technology will increase a car’s sticker price by about $5,000 in 2030 and about $3,000 in 2035 — the same year that HIS Automotive forecasts that there will be about 54 million autonomous cars in use worldwide. Twenty-nine percent of the self-driving car sales, or nearly 3.4 million, will be in North America.
The Changing Face of Vehicles
Traditional car manufacturers have evolved from creating fuel-efficient cars to hybrid electric cars and then fully electric cars, and today’s “intelligent” connected and autonomous cars. This is definitely a new chapter in the Automobile Age.
Companies like Google and Apple are building what’s been referred to as “computers on wheels.” Google, which began developing prototype autonomous vehicles in 2009, maintains a test fleet of autonomous vehicles that has driven two million miles since December of 2016. Apple’s Project Titan, on the other hand, was known to be developing an electric vehicle, called the iCar, in 2015, and believed to be unveiled in just two years. This may be true because in April of 2017, Apple was listed as one of the companies that was issued an Autonomous Vehicle Testing Permit by the California DMV.
Uber and Amazon are other interesting players in today’s automotive industry. Uber announced that it was going to start developing autonomous cars in 2015. Since then, independent tech news, Recode, claims that documents show that of the 20,354 miles driven by Uber’s autonomous cars, a safety driver had to take over at every mile. Interventions were due to different factors, but one thing is clear — Uber has to make improvements. Amazon, which has already been testing drone delivery since 2015, has shown interest in self-driving cars to deliver packages. However, it is believed that Amazon will more likely be an end-user rather than the creator of autonomous vehicles.
Total number of miles Uber’s cars drove autonomously per week
The Platforms & Services on Automotive
Android Auto allows users to view what you see on your phone, such as Google Maps, on your car display. The main point of the platform is to minimize distractions while driving as it allows users to use voice actions and is built with a simple interface. Android Auto also lets the user access Google Play Music, make calls, and reply to messages.
Similar to Android Auto is Apple CarPlay, which Apple calls “the ultimate copilot.” CarPlay works together with your car’s built-in display. Simply connect your iPhone and you ask Siri to get directions, make calls, send and receive messages, listen to voicemail, and listen to music.
Smartphone integration in cars will not only make driving safer with hands-free controls, but convenient as well. According to an article in Roadshow, although many car manufacturers support both CarPlay and Android Audio, an additional 30 manufacturers will support Apple CarPlay and over 50 for Android Auto in cars due to be released in 2017. Platforms like these will mean better services, less distracted drivers and more apps to use while driving.
Ridesharing: Telematics has made ride sharing, or car sharing services, like Zipcar, Getaround, and Hertz 24/7, a popular business. The technology has allowed for billing drivers based on the miles driven from tracking data. This has evolved to real-time ridesharing, instant ridesharing, or on-demand ridesharing, which allows for carpooling based on one-time shared rides that are available on short notice.
Telematics: Telematics enables a driver’s behavior to be monitored and transmitted to an insurance company based on place and time. Data like miles driven, rapid acceleration, and air bag deployment, allows insurance providers to better understand the driver by identifying patterns and assessing accident risks — thereby providing more precise insurance premiums. Driving data can also be analyzed to help insurers estimate accident damages more accurately to reduce fraud. According to ABI Research, next year, insurance telematics subscriptions could exceed 107 million globally. According to SMA Research, by 2020 approximately 70% of all auto insurance carriers are expected to use telematics user-based intelligence.
Entertainment Services: In-car entertainment (ICE), also referred to infotainment, is no longer limited to the ability to plug your mp3 player into your car to listen to music. It has evolved into automotive video players, USB and Bluetooth connectivity, in-car internet, and Wi-Fi. Car manufacturers have developed their own ICE in newer car models. Business Wire, Inc. expects that the global automotive infotainment market will reach $73B by 2020.
Leading automotive infotainment vendors in 2015 (Based on estimated infotainment revenue)
Five Predictions for Automotive
We’ve certainly come a long way from standard cars. Numerous changes and improvements are being made — and they are being made quickly. The US Department of Transportation believes that the combination vehicle and infrastructure technology could provide unprecedented levels of safety, mobility, and environmental sustainability. Our Five Bold predictions for the automotive industry are:
1. Autonomous Cars will hit the roads by 2022, and flying cars are soon to follow.
2. The Auto Industry will be the first important Vertical Industry to use Big Data, Machine Learning and build Artificial Intelligence.
3. Auxiliary Content and Services on Automotive will boom and Automotive will become a Services Platform. Automotive will Impact Associated Services in a larger way. Insurance, Ownership and Ride Sharing will change the face of automotive.
4. The automotive consumer will start to see more proactive and personalized customer service in the next few years. The auto industry will start utilizing data and predictive analytics that will enable them to improve customer service through proactive means. Today a car goes into the shop to be repaired. In the future preventative measures will be taken based on data so cars won’t need to go in to be repaired.
5. Collaborative Monetization in the ecosystem will happen. The traditional auto industry go alone OEMs will start to collaborate with other verticals to make profits from disrupting trends. OEMs will start to move out of their auto centric view to services based brand loyalty.
Get ready for some interesting and exciting times ahead. We are in the perfect storm of Innovation with advances in automotive technology and a combination of technology trends like big data, predictive analytics, and image recognition. As cars get connected and smarter this incredible confluence is expected to have a huge impact on the environment with less pollution, lower accident rates and lower insurance rates. The face of the automotive industry will change exponentially.
Do you have any Thoughts or Comments on our Predictions ?
We would greatly appreciate hearing about some of your predictions for the industry. Let us know your thoughts in the comments below!