Disrupters are digging in for the long haul in automotive

The auto industry has undergone such radical changes in the last ten years. Can't we settle down? Nope.

At the 2016 Consumer Telematics Show, held in Las Vegas, experts warned of profound changes still to come. While the connected car is a reality, and autonomous vehicles are driving on public roads, another wave of disruption is coming, pushed by changing consumer preferences.

This was the warning given by Thilo Koslowski, vice-president and analyst in Gartner Research's automotive practice. He predicted that an automaker might even be acquired by a consumer electronics company.

In fact, even TU-Automotive has undergone a sea change. It was announced at the show that it has been acquired by Penton, an information services company. The acquisition unites TU-Automotive’s expertise and worldwide reach in events with Penton's publishing portfolio.

The conference took place in the context of multiple OEM announcements tied to the International Consumer Electronics Show (CES) that place the connected car even more clearly as an internet consumer device. Ford's partnership with Amazon to connect the car to the home was perhaps the most extreme example of how the automotive ecosystem is changing. Neither Ford nor Amazon have been players in smart home/home automation until Amazon's introduction of Echo. And this partnership marks the entry of still another consumer electronics giant into automotive.

Will Google or Apple – and, who knows, maybe Netflix or Facebook – ultimately eat the carmakers' lunch? Opinions were divided.

"You cannot make any strategy without thinking about Apple and Google," said Henry Bzeih, chief technology strategist, Kia Motors.

A panel discussed the platform wars: Do consumers want a unique vehicle experience or a copy of their smartphone platforms? There was no more consensus than there's ever been.

Mykhail Bykov, managing director of automotive solutions for software provider Luxoft, said it might be best if auto manufacturers stuck to what they know and let Google and Apple handle infotainment with the same flair they have for other electronic devices. "Today we are seeing partners trying to do infotainment that Google or Apple could do better," he said. Ultimately, in his opinion, it doesn't matter where the music playing through a car's speakers comes from. Carmakers should focus on integration, not end-user services, he said.

Chip Goetzinger, senior manager for vehicle connected services at Nissan, pointed out that it's no longer an either/or decision. Because the infotainment system is often the best way to deliver information about the car's systems to the driver and to deliver over-the-air software updates, the distinction between critical systems and infotainment is starting to blur.

Consumer expectation mismatch

This was far from the first time that we've heard that connected-car services will become an important part of the car-buying decision. According to Koslowski: "In 2016, connected vehicle features will become a critical buying consideration for average consumer in mature markets."

However, Andrew Hart, director of innovation and customer relations for SBD, and Bryan Krulikowski, vice-president of automotive and technology research for Morpace, asked a panel of consumers about a set of advanced features for cars and other connected devices but the focus was on safety and home automation, not on infotainment as we think of it today. They looked at apps that alert a mobile phone when the fridge is open or there are toxic fumes in the garage, as well as advanced safety features such as collision avoidance and lane departure warnings. Several of the six panellists already had at least some ADAS features.

The panel confirmed what many analysts and carmakers have been saying – consumers want and, will pay for, safety. As a sample consumer, Jamie driver of a 2014 Impala, said safety was one of the top reasons she chose her car – and she's be willing to pay an additional $10,000 for ADAS features.

Consumers aren't always logical, Hart pointed out. Companies might develop feature sets but consumers don't use specification sheets when they purchase cars. "They go by their guts."

Roger Lanctot, associate director of the global automotive practice of Strategy Analytics, presented data from one of his firm's consumer surveys that showed infotainment in the bottom third of a list of features important to consumers. At the top of that list were quality and price, decision factors that have likely not changed since the Model T.

In fact, for a conference focused on consumers, almost no attention was paid to infotainment services. Bzeih said: "Remember app stores? You don't even think about them anymore."

The focus instead was on safety and autonomy. Those two, of course, go together since advanced safety features are the path to full autonomous driving.

Autonomy in the distance

Koslowski placed autonomous driving at the peak of Gartner's Hype Cycle. "We need to reset consumer expectations," he said. But he promised that the technology wouldn't linger long in the trough of disillusionment.

What consumers should really expect, speakers agreed, is limited autonomous driving in constrained conditions.

The outlook for level 4 autonomy is hazy, most speakers agreed. While the technology is ready, consumers, the roadways and regulations are not.

The hand-off from autonomous systems to the driver is perhaps the big problem, most agreed. Once a driver removes attention from the road, there will be an inevitable lag before he or she can be expected to resume control. This period will vary among individuals, bringing up questions of how to set legal requirements.

"The system has to deliver right amount of engagement at right time to keep driver's mind from wandering," said Olaf Preissner, head of UX automotive and innovations at Luxoft. "The HMI should make it clear that the driver is still responsible for safe driving." Luxoft thinks that allowing the driver to see what the car sees is a critical part of building trust in the car's systems.

Serious about security

This was a seminal year for automotive cybersecurity, according to Joe Fabbre, director of platform solutions for Green Hills Software. "This was the year that the job of drumming up awareness is no longer necessary," he said.

Awareness, okay, but we are far from securing connected cars from cyberattacks. Fabbre estimates that over five years, an auto with 50M lines of code will have 7,500 undiscovered vulnerabilities with potential for zero-day attacks.

Potential and roadblocks

There is so much potential, and yet, so much of it remains unrealised. Koslowski predicted that by 2020, vehicles with the capability to update software over the air will generate 20% of total after-sale profits after the sale. That's a very different business model that all companies in the ecosystem should prepare for.

However, we haven't yet figured out how to prove over-the-air (OTA) updates are secure. How to notify drivers of updates and whether to allow them to opt in have not been determined. Moreover, there are legal issues, as Gail Gottehrer, a partner in the law firm of Axinn, Veltrop & Harkrider, pointed out. If a car owner refuses an update and then there is a crash, he or she would probably be liable instead of the carmaker, she said. However, that would have to be decided in costly litigation.

And, of course, regulation of autonomous driving is severely lagging behind the technology.

Ian Forbes, head of the Centre for Connected and Autonomous Vehicles of the UK Department of Transport, noted that regulators tend to move slowly. He said: "Placing government right in the forefront is probably a mistake." He said it would be better if industry proposed regulations that would meet public requirements. "You'd hope the industry would be able to come up with a method for handling these issues that the government could sign off on."

Koslowski's final advice to everyone in the industry: "Ask yourself. Who is your friend? Who is your enemy? Who is both?"

Then, you should probably embrace them all.

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