Connected Autonomous Vehicles will Evolve the Digital Economy

With a growing data influx from connected and autonomous vehicles, automakers their partners and third-party organisations are  looking to develop connected autonomous vehicles (CAVs) as a key platform for evolving the digital economy.

They will use artificial intelligence and machine learning, as well as cloud platforms, to offer new services from the value data emanating from each vehicle. The key consideration is about how to extract enhanced value for the data, and to understand the impact of siloed development approaches to the software defined vehicle, as well as the need for standards across in-car media systems. There is also a need to comprehend how aggregators, content providers and operating systems (OS) suppliers can work with automakers to monetize the vehicle through new consumer experiences.

Payment models

Varun Krishna Murthy, industry analyst for connected and autonomous driving, Frost and Sullivan, believes the next generation of services and experience that CAVs will create will be led by valet parking services. He believes they will be offered on a pay-as-you-go (PAYG) basis or as part of a subscription model. Much depends on the frequency of need for any given service.

He explains that valet parking at a shopping will mostly PAYG as it doesn’t occur on a daily basis. “However, if you are using valet parking in a large community, at your accommodation, or for regular usage you might use a subscription model,” he suggests before proposing that the second new service or trend will involve assisted and piloted driving services at Level 2+ and Level 3 of automated highway driving. In his opinion this could be offered as a service.

Assisted or piloted driving

“With hardware included in the vehicle and software activated via over-the-air, this would broadly be classified as feature-on-demand and it would enable assisted or piloted driving,” he explains. For a journey from London to Birmingham you could, therefore, use Level 3 driving either as a subscription of as PAYG. There will also be some convenience features that will be offered as a service, such as heated or ventilated seating.

Replicating smartphones

As for the digital economy, it started with plastic cards and then with payments via mobile. Nowadays, the mobile phone is significantly replicated on the car screen to permit purchases from the car – quite often as an extension of the e-commerce and infotainment options one can get on a smartphone. So, to pay for these services, there will be payment gateways using apps to enable payment through the car. They may include usage-based insurance, using a telematics black box.

He adds: “Every vehicle will come connected and so the OEMs will keep tracking vehicle usage and driver behavior. Other services will be based on this. There could also be mobility services, such as shuttles, robo-taxis, and logistics.”

Beyond siloed development

So, what is the impact of siloed development approaches to the software-defined vehicle? Well, one example is Volkswagen, which has created a company, CARIAD, to focus on developing vehicle that Krishna Murthy says will be future-proof in a change from the last decade. That era focused on sustainability, and CO2 reduction. Over the next 10 years, the shift will be about enabling vehicles to be updated in the same manner that smartphones are – perhaps even when they aren’t in use.

Developing expertise

The problem, he says, is that there has been “a lack of expertise, a lack of skillset in-house, and so automakers are either collaborating with AI companies, or developing them inhouse through their own ventures”. An example is Volvo, which has Zenseact. He adds: “Stellantis is collaborating with BMW for Level 2 and Level 3, as well as with Waymo for Level 4, and so there are different strategies being deployed by the vehicle manufacturers.

“Apart from collaboration, OEMs are working at a Group level to development approach rather than an OEM approach to software development. This helps them optimize cost of development, maintenance, management, updating and deployment.”

Need for standards

Why is there a need for standards across in-car media systems and how will this evolve as vehicles become more connected and autonomous? As vehicles become more autonomous, driver activity is inevitably going to reduce. With that, he says, comes the greater prospect of the driver being distracted by spending more time on in-car media apart from other highly engaging devices.

He explains: “This means that if these systems allow movie watching or email reading while the driver is driving the vehicle and switching to piloted driving, the movie or emails have to be switched off and ensure the drivers attention is on the road.”

Monetizing consumer experiences

That said, there is also a need for aggregators, content providers and OS suppliers to work with automakers to further monetize the vehicle through new consumer experiences. “Automakers are already working with all three of them and they are in fact working directly with solution and service providers at various levels,” he comments.

Vehicle manufacturers are the ones driving the dialogue with the aim of managing the entire value chain. Their resolve is to identify any possible monetizable features within the vehicle. That monetizable opportunities may lie in data or features-on-demand.

These nascent ecosystem opportunities, although appealing to automakers, may uncover a host of essential new learnings, business model approaches and partnership opportunities simply because they don’t often have the expertise or the experience in creating them. The technologies they will use in their vehicle will be beyond their traditional view of what a vehicle is.

This will lead to many different business model and partnership approaches, or to the acquisition of other companies with the skills and resources they need to evolve their vehicles to create new services and experiences – including e-commerce. This will make them a greater part of the digital economy, and it will impact on all sectors of the ecosystem – including insurance, infotainment, features-on-demand, parking, and vehicle maintenance.

When Level 5 autonomy is achieved, and when no human is driving the vehicle, they will increasingly become an invaluable platform to sell new services. Likes smartphones, they will become a platform that’s integrated with the digital economy, and so the opportunities to work out how to use data to monetize them has to start now. The internet will no longer just be in your pocket. It has wheels.

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