M2M: The business case for connected cars
Connected cars -- vehicles augmented with Internet-connected intelligent systems and services -- are driving into the fast lane. The number of connected cars is increasing rapidly: Not only are self driving cars set to become legal in the UK from 2015 (as they are already in parts of the US), but analysts expect the market to be worth €39 billion by 2018. So, what do connected cars offer the enterprise?
what is a connected car?
Today’s connected vehicles combine increasingly powerful embedded or on-board intelligence with an Internet connection. This putting applications such as in-car telematics – the long-distance transmission of computerized information from your car to service providers – into the mainstream.
In the EU, Russia and Brazil, recent laws demand new vehicles must carry an embedded SIM and wireless modem from 2015. This “eCall” legislation is intended to enable the vehicle to request help if involved in an accident or stolen, but the mandated connectivity is an opportunity for service providers, developers, and your enterprise.
Current understanding of the connected car opportunity is presently defined by consumer-facing solutions such as Apple CarPlay and Google Auto. These solutions use the intelligence and connectivity inside a smartphone together with a vehicle’s own proprietary systems.
Most automobile manufacturers have confirmed plans to make future vehicles compatible with both Apple and Google in-car systems; analysts at SBD believe such smartphone integrated systems will be more popular with automakers than tethered (embedded) solutions, because of technical and policy hurdles related to connecting the handset with the in-car computer.
The following examples show how an ecosystem of services can support vehicles, their drivers, and your business.
Europe's new eCall legislation comes into effect in 2015, immediately turning the region into the world’s largest connected car market.
You don't need to wait for the benefits of connected machines -- there are plenty of smartphone-based or connected third-party device systems you can use right now. This means you can access apps and location services to help you avoid congestion or solutions to monitor and improve your driving patterns. As in-car sensors improve they will develop the ability to communicate with other nearby vehicles, sharing warnings of traffic accidents or alerting drivers if vehicles are driving unsafely close together.
Such solutions are already in development by firms like NXP and car firms, including Hyundai. These systems will enable connected cars to augment your driving experience to improve safety. The next step is driverless cars: Google, Tesla, Nissan and several other carmakers are all working on self driving vehicles which will drastically reduce driver error and improve safety as they hit European roads starting next year.
Why does this matter to your business? These solutions will cut the potential for driver error, reducing your accident and maintenance costs.
Insurers already offer “Pay How you Drive” policies in which driver’s agree to carry connected sensors in their vehicles to monitor their driving. Fleet management systems such as Teletrac’s award-winning GPS Fleet Director solution, also monitor driving habits, watching for harsh braking, speeding and stop sign violations.
Access to this data lets insurers charge good drivers less. Ptolemus research claims these “black boxes” can reduce the number of accident claims by 30% while Teletrac claims they cut insurance premiums by 30%. There are already around 500,000 such policies in the UK. As embedded connectivity becomes mandatory with eCall, such driver analysis systems will become standard fitting in future vehicles.
Why does this matter to your business? Connected vehicles can reduce your insurance and running costs.
Car manufacturers are developing remote diagnosis and monitoring solutions for connected cars. These systems rely on the car’s built-in computer systems to monitor the car condition, brake and engine health data which they share with maintenance centers and/or drivers so problems can be addressed fast. Drivers enjoy the convenience while car manufacturers get to offer extra features and services in their vehicles.
Manufacturers already use these tools to help them assess warranty claims while accident/emergency investigators are using these for crash scene evidence collection. There is also potential for insurance firms to acquire this data from connected vehicles, which should reduce premiums for maintenance-conscious drivers. The opportunity to cut costs, offer services and open new income streams means every car manufacturer is developing its own remote diagnosis solution.
Why does this matter to your business? Connected vehicles can reduce overall maintenance costs by enabling accurate vehicle condition analysis, avoiding unexpected maintenance surprises.
Business users will benefit from increased fuel efficiency, helping them meet emissions reduction targets.
GreenRoad director, Andy Cozens, observes that most people drive inefficiently – they’re in a hurry, love speed, and think they are good drivers. GreenRoad has developed a reward system that praises safe driving practices, based on criteria such as speed, vehicle handling and braking intensity. This "gameification" of good driving seems to nurture good habits. Cozens believes that by giving instant feedback drivers can correct bad habits and improve fuel efficiency -- he claims customers see crash-related costs fall by 70 percent and fuel consumption fall 6% to 15%, reducing CO2 emissions.
Why does this matter to your business? These systems will reduce running costs and help achieve CO2 emissions reduction targets.
The promise of the connected car still requires significant efforts on the part of governments, technologists, vehicle manufacturers and carriers. These stakeholders are developing standards fit to cope with national borders, connectivity and other bumps in the road.
When it comes to security car thieves are technologically literate and are figuring out how to break into vehicles fitted with electronic safeguards. Evidencing this claim AVG claims almost half of 89,000 vehicles in London that were reported broken into or stolen were electronically hacked (to open the door or start the car, for example).
You don't even need sophisticated equipment, just some way of accessing the vehicles Controlled Area Network (CAN). Disgruntled auto manufacturing employees with access to a car maker's central remote diagnostics system can even use these to hack a vehicle. Kaspersky Labs warns, "Connected cars can open the door to threats that have long existed in the PC and smartphone world." The risk will be mitigated by the ongoing efforts of varied connected car stakeholders to improve security.
There’s also some reluctance among some drivers to install such systems in vehicles because of privacy fears. Even though 70 percent of drivers are interested in using in-car telematics, a July Motorpoint survey found 71.5 percent of UK drivers opposed eCall regulation and the imposition of embedded SIMs.
Partly that's because they don't want their driving speed snooped on by government, and partly because there’s no international consensus on how to pay for these systems: for example, while Spanish drivers prefer one-off payments those in the UK, US and Germany want free basic services with extra charges for more.
Enterprise users must also consider data protection. If your company collects data from your fleet of vehicles you must be certain not to collect private employee data, such as weekend or driving habits, as this may breach data protection law.
Despite the hurdles analysts believe connected vehicles are the future. “By 2018 most new vehicles will come with integrated apps as standard,” said Juniper Research analyst, Anthony Cox. Ultimately they offer enterprises a significant opportunity to achieve significant business efficiency in health and safety, fuel efficiency, insurance costs and more using connected cars.