Call to arms as telematics battles for consumer hearts

Modern automobiles offer a wide array of telematics options but not everyone is convinced of their importance. Automakers have been trying to persuade the masses for several years and now a large number of tech companies (including Apple and Google) have entered the fray.

The reasons why are pretty clear to Praveen Chandrasekar, consulting director and research manager at Frost & Sullivan. Chandrasekar believes that OnStar, “the most successful telematics” solution available, has played a huge role in attracting more players to the market.

“OnStar has around seven million paid subscribers,” said Chandrasekar. “That is the gold standard benchmark for any OEM across the world, in terms of telematics, with that many customers paying for the service.”

Tony Posawatz, the former General Motors executive who launched the Chevy Volt, said there are a lot of challenges in attracting drivers to telematics.

“It’s not as simple as, ‘If the car provides this feature, will people like it or not?’” he said. “It’s really more a function of, ‘How do they interact with all the other connectivity elements that are happening and provide the best solution?’” Posawatz added that a greater degree of connectivity is inevitable but it’s up to automakers to employ those features in a way that delivers value.

TU-Automotiveasked if he saw a point in time when the car is almost like another device. Posawatz said. “The concept of doing mobile commerce or using the car as another device is one of the more interesting ideas out there. The question then becomes: does the car supplant the phone? Or does the phone become the device where you do all of your transactions, à la Apple Pay, and there’s some connectivity in the car?”

Pay-as-you-go

Visa and Honda recently teamed up to demonstrate how telematics can make it easier to pay for automotive-related expenses. The company’s fuel app concept allows drivers to pay for fuel from inside the car, while the parking app concept (designed with ParkWhiz) makes it possible to pay for parking with a single click. These ideas could usher in a new era of mobile payments but they’ll have to compete head-on with smartphones.

“Car payments, whether it’s for gas or food or toll, the question is: should it be tied to the car or to the driver?” said product and market strategist Joe Barkai. “Ideally, I think you want to use your phone so that, independent of the car you are driving, you can make a payment. But if it’s attached to the car, the car can’t come with you [into a store]. If you lend the car keys to someone, they could potentially use your payment solution. It’s an ongoing complication.”

eCall regulation

Last year the European Parliament voted in favour of eCall regulation, which goes into effect in April 2018. The new rules will require automakers to equip their vehicles with telematics units that automatically dial Europe’s emergency number when an accident occurs.

Chandrasekar attributes this regulation to some of the interest in telematics production. It could be another reason why traditional tech companies have become so invested in the manufacturing of telematics units. However, that doesn’t mean consumers are interested in paying for monthly services associated with telematics.

“In the US, people are far more willing to buy things on a subscription or monthly basis,” said Chandrasekar. “In Europe, that kind of willingness to pay a subscription by the month does not exist.”

Getting connected

One of the more significant topics at the 2016 Mobile World Congress was how a 5G cellular connection could enhance car connectivity.

“I think it can accommodate V2X [vehicle-to-everything],” said Phil Magney, founder and principal of Vision Systems Intelligence. “It’s an alternative to DSRC [dedicated short-range communications]. I think, fundamentally, the car is going to need to be connected to the cloud, it’s going to need to be connected to infrastructure. It’s going to need to be connected with humans. V2X, or vehicle to everything, for that matter, is important.”

Automakers aren’t expected to commercially deploy 5G for about five years but that may not be a problem for vehicle-to-vehicle (V2V) connectivity. Chandrasekar said that 4G, which is widely available today, could be enough for V2V communications.

As for the next evolution, Magney added that there are pros and cons to both DSRC and 5G. “We have to keep an eye on that because I’m sure some automakers will utilize [5G] as their main communications, perhaps in addition to DSRC,” Magney concluded.

Tremendous battle ahead

Posawatz expects to see “many experiments” in telematics and connectivity and he thinks automakers will respond in different ways with different customers.

“It will be a tremendous battle because, right now, the personal device has won,” he said. “There are more Internet searches done [on] mobile than anywhere else now. For the car to supplant that would be difficult. Can the car live symbiotically with that device and create some interesting leveraging? Therein lies the big question.”