Change is coming. Everything inside a car will be different!

Self-driving cars are all the rage. Google, Apple, Uber, Tesla, GM, Ford, BMW…everyone seems to be building one. Some are further along than others. Some are better at making noise than others. And some are more likely to deliver than others. I may be biased but I believe Zoox (a Silicon Valley startup) has the most ambitious, and wholesome view, of how mobility is about to be disrupted. A good overview of the autonomous cars world is here.

But the driving nature of the car is not the only thing that is going to change. Everything inside the car may be up for grabs. Consumers have endured crappy technology inside cars for too long, and have survived ridiculous prices to get various ‘upgrade packages’ installed. How the heck could a car company still possibly charge $2000+ for a simple GPS system is beyond me. But a radical transformation is coming and a gigantic industry of inside-the-car components and systems that has been dominated by Tier 1 suppliers may be up for grabs.

Haven’t you noticed how a typical stereo system in a modern car is usually pretty crap unless you upgrade with thousands of dollars…even though one can buy an amazing internet connected home stereo system for less than the price of a cell phone? Or that the seats are uncomfortable and made of crappy pleather?; or that the DVD system upgrade for your kids to be kept entertained on long rides can cost upwards of a few thousand dollars when two iPads with tons of latest content would cost only a fraction of that? Or that the rearview mirror still cannot be adjusted to sync with the seat and side mirror adjustments?; and dynamic noise cancellation features only exist on super luxury cars? And what about the fact that even the most advanced cars don’t remember and remind me via my phone where I parked the car, and take an image of who may have keyed my car while parked, or video capture a hit-and-run incident, or have breath analyzers on steering wheels so teenagers can’t drink and drive (or text and drive)?

There may be several reasons for this:

  1. Automakers are simply behind the times when it comes to digital technologies. Hard to believe, but once you meet an average engineer working at a Detroit automaker, it all starts to click together.
  2. General laziness by automakers to get on fast ‘code it and ship it’ cycles. They would like you to believe anything inside a car is a matter of life and death, but last I checked me not being able to find my parking spot quickly was not so.
  3. Regulatory environment that automakers deal with is complex, slow, and expensive. God only knows how many committees have formed and disbanded over the years to improve the seat belt harnesses that should be used in cars. Unfortunately there is a strange love/hate relationship between OEMs and regulators, esp given their history around issues of safety and environmental emissions etc.
  4. The auto-industry has a complex, tiered supply chain which they don’t want to change even though it is entirely broken. OEMs don’t innovate on technology very much — they are mostly just integrators and designers and marketers and financiers. Tier 1 suppliers are integrators and door keepers of new tech into the industry (and notoriously difficult to work with) and Tier 2 suppliers who actually develop new component technologies are mostly relegated to supply on a cost plus basis, leading to terrible economics. Much of the industry spends more time worrying how to survive bankruptcy cycles than how to out innovate and disrupt themselves with better customer service.
  5. others…

Yes, I am probably being too harsh….but I don’t think reality is too far from above. Its a tough industry, companies finding it hard to attract top talent, and hoping for status quo to remain so they can extract few more years of profitability before the next economic down cycle.

But startups are starting to recognize this as an opportunity to innovate faster and win. They are also recognizing that the power centers for automotive industry are also shifting a bit to the technology havens in Silicon Valley, NYC, Boston etc. In fact, one could argue there are more automakers today in Silicon Valley than in Detroit. Tesla, Uber, Google, Apple, Zoox are all Silicon Valley based car-makers. And more interested in acquiring and deploying latest technology than the incumbents. Even incumbents are taking notice and trying to devise strategies to address their shortcomings, such as setting up tech centers in SV developing partnerships with tech companies, and acquiring startups. All of this is incredibly good entrepreneurs AND for consumers!

Startups have realized that becoming a technology developer that tries to find channels to sell into (incumbent) automakers is a lousy proposition. So they are skipping ahead, and going direct to consumers and offering products consumers wants, products that integrate well with their existing digital lives (and iPhones), and products that are affordable. It should be quite obvious that a younger customer is quite likely going to be less interested in what shade of fake wood was used in a dashboard’s trim, but might be willing to pay monthly subscriptions for her kids to easily video-chat with grand parents while being driven to-from activities.

There are many good ideas to innovate inside the car, and we are already starting to see the needle move. For example:

  • Pearl Automation recently announced a camera device for car backup. Integrates with your phone and gives you all kinds of data and intelligence for safety etc, including over the air updates on new features and services.
  • Nexar just announced a new round of financing and declared they have recorded/analyzed over 5 million miles of driving of over 7 million cars. They want to provide intelligence on driver behavior using dashcams while DSRC (dedicated short range communications) has been stuck in OEM discussions for the last 10 years.
  • Navdy is building a heads-up display (and perhaps also an Amazon Echo for your car). OEMs have been talking about headsup displays for decades, but even now only the very very high end cars have this technology available.
  • Automatic provided a simple device to attach on onboard computers (OBD) for analytics for car use, maintenance etc. There is no reason why we should not have such data to improve our driving, keep our vehicles in better condition, and improve our insurance rates.

Above are just some examples…there are several others going the so-called “retrofit” route towards car accessories and electronics. As Apple/Android integrate further into the dashboard we should see even more companies popping up to improve our in-car experience, and providing us services that OEMs are simply not even thinking about in a serious way. Shipping product, esp hardware, is not going to be easy for any of these startups…but some of them have really stellar teams working for them, and I am hopeful that at least some of them will meet and exceed our expectations.