The Automotive Industry: Motivated to Automate? 

Jan 16, 2017

The automotive industry is at a crossroads. With major manufacturers consolidating their dominance, creating vehicles that differ less and less with each version, and some even resorting to gimmicky design features to satisfy transient customer desires, the market is reaching the point of saturation. The industry is certainly primed for a huge upheaval in technical innovation, business practices and consumer demand, yet have we not been down a similar road before?

In 2006 the mobile handset industry was at a standstill; Nokia had cornered the market with their unassailable handsets and manufacturers were scrambling to compete, churning out clam shell, slide and swivel designs that invariably satisfied as many customers as they turned away. Enter the smartphone, and a completely new generation of technology, connectivity and service provision burst onto the scene, changing our everyday lives forever.

The automotive industry is currently experiencing the same process: customer demands for connectivity, autonomy, electrification and diverse mobility will soon combine to revolutionise the way we travel on an unprecedented scale. With the prices for car tracker hardware such as batteries and circuitry ever falling, the advent of 5G allowing connectivity to be ever more ubiquitous, and regulations pushing for lower energy consumption and fewer cars on the roads, manufacturers are already exploring ways of capturing these enticing new recurring revenue streams.

Take Tesla, whose recent release of their ‘Master Plan Part Deux’ included ambitious plans to develop automated buses, fully connected vehicles that form part of a shared fleet, and vehicles that have their own wifi hotspots, effectively transforming vehicles to an extension of the home; an independent space in which to relax, work, or even sleep on your way to somewhere else.

This may seem idealistic or even foolish, but Tesla are well on their way to achieving these goals, obtaining patents for a Qualcomm USB/Bluetooth/Wifi hub which enables seamless connectivity between ports, and having already produced their own Autopilot system, which, however, Tesla concede ‘still requires the driver to stay alert’ after the first fatal self-driving crash earlier this year involving one of their Model S vehicles.

But there is more to the story than grand ambitions and pioneering, if not fully developed, technology. In fact Tesla’s success lies in their comprehensive and disruptive business model of removing unnecessary steps between manufacturer and consumer, collaborating with OEMs with expertise in diverse fields, and reframing the automotive industry as a service provider, rather than solely one of manufacturing and retail. This is where many automotive companies will fail, and indeed already have, as in the case of Jeep, whose Cherokee was hacked and taken over by researchers from Wired last year as a way of illustrating the lack of impetus placed on cyber security.

Connectivity and automation are sure to be the driving force in this industry in the next few years, but manufacturers must realise the need for collaboration with existing experts in these fields, or face the consequences of vulnerable systems developed without proper knowledge of connectivity or security. Considering the potential for connected vehicles, up to and including complete automation, instantaneous ride sharing apps similar to Uber, integrated parking systems that find and guide you to free spaces, seamless vehicle tracking, and cars that not only predict the most efficient routes, but also automatically avoid collisions hours in advance, the margin for error when integrating these services is nothing to be trifled with.

Tapping into existing markets in the connectivity sector will be crucial for manufacturers moving forwards, and the current gap in the market leaves the door open for those willing to collaborate, to diversify their products and move into a new age of incorporated service provision. What Tesla’s business model shows us is that fostering customer relationships is increasingly important in our world of global connection and instant communication, something that automotive OEMs have traditionally left to their secondary dealers, a model that will not hold up in the automated, ride-sharing, networked future.

This, alongside the clear benefits of seeking partners with readymade technological expertise, makes it clear that the future of the automotive industry will consist of many different industries collaborating to create a truly interoperable composite of industry. Manufacturers will work closely with hard and software developers to ensure their systems are integrated properly and secured independently, they will utilise connectivity solutions such as Podsystem’s tailor made M2M SIM cards, and remotely view the status of their connected fleet solutions with an intuitive management interface such as Podsystem’s fully customizable White Label Platform.

These advances will be revolutionary in scope and scale, and automotive companies will have to radically adapt their business models and marketing strategies to keep up with tech giants like Google, Apple, and Samsung, who are already working on harnessing these newly emerging revenue streams by investing with OEMs in the automotive sector. But history teaches us that success in the connectivity sector comes with acceptance of compromises and risk: in 2001 John Deere recruited a team of IoT gurus to automate their vehicles, and now use tracking technology globally in their fleet, a proliferation that will surely be emulated in consumer vehicles once technology and regulation match the ever growing demand. The automotive industry will change just as drastically as the mobile handset industry did ten years ago – but who will be the first to accept the challenges of the future and create the iPhone of connected cars?