Telematics in Europe: Gearing up for growth

Telematics in Europe: Gearing up for growth

The telematics industry is on a roll. The rapid rise of smartphones has led OEMs to integrate Web- and app-based solutions into vehicles, and the emergence of connected PNDs with real-time services has made embedded solutions beyond simple navigation more attractive.

The industry is projected to grow 22 percent per year to more than €7 billion by 2016.

Much of that growth will take place in Europe, where car manufacturers have proven eager to act on the connectivity craze.
At the same time, electric vehicles are beginning to penetrate the market with telematics solutions that eliminate range anxiety and illuminate details about charge.

And, after years of delays, eCall seems to be approaching adoption, bringing with it the promise of a mandatory embedded solution on which the telematics industry can build.

“Things are actually starting to happen after many years in the doldrums,” says David McClure, director of telematics at SBD.

“The wait-and-see attitude that most vehicle manufacturers have had toward [telematics], because there’s been so much uncertainty of if, when, and how [eCall] will be introduced, is finally starting to go away.”

“Every single OEM has announced some form of plan for telematics,” seconds Steve Wollenberg, co-founder and vice president of business development at Automatiks.

“That was not at all true five years ago, and 10 years ago they were all pulling out of telematics. Now pretty much every one of them [is involved]. They may not be deploying telematics until 2012, but it’s coming."

The iPhone effect

The primary challenge for telematics in Europe has historically been demand.
Europeans have proven less concerned with security than their American counterparts, and OEMs have been unsure about upfront costs and eCall.

The smartphone craze has changed that in a flash.

Suddenly, everybody wants to be connected in their homes, in their offices, and in their cars.

With demand there, OEMs snapped out of their decade-long lethargy.

This year, MINI and smart showcased new head-unit interfaces that feature iPhone-connected services like streaming Web radio, traffic data, turn-by-turn directions, and other apps.

Likewise, BMW has upgraded ConnectedDrive into a mobile communication platform and has embraced iPod Out; Mercedes-Benz has launched the mbrace platform; and PSA Peugeot Citroën and Renault have introduced standard telematics systems in many of their models.

“Nobody’s standing still,” Wollenberg says.

“There’s a big inflection point going on, where these services are getting more and more development effort put behind them because the sheer numbers of users have gotten so large on these handsets, the growth rate is so significant.” (For more on smartphones, see ‘The smartphone: friend or foe of in-car infotainment?’.)

The rise of the iPhone has impacted the nature of telematics services themselves, as well.

Companies like Nokia and Google have created their own map databases, allowing them to provide turn-by-turn navigation for free.

In response, firms including TomTom and Garmin have been forced to embed connected services like real-time traffic, weather, and green routing in their PNDs.

“There’s a perception that navigation is going free, it’s becoming a commodity that you get free with your phone,” says McClure.

“Certainly, one of the ways [companies can respond to that trend] is through connected services, trying to move away from a generic routing from A to B to real-time live information on that journey from A to B.” (For more on the future of navigation, see ‘Navigation 3.0: What’s next for nav’.)

The eCall promise

Despite increasing attention to smartphone integration, eCall is still a major factor in the European telematics market.

The idea of eCall is to create a universal emergency number throughout Europe that allows drivers, no matter the language they speak or the country they’re traveling in, to get quickly directed to the closest emergency response center.

Executing this idea has turned into a decade-long debacle, as EU member states like France, the UK, Denmark, and Ireland have been reluctant to commit due to cost concerns.

To this day, no one can say exactly when eCall will roll out.

“The European Commission every now and again starts to shout about passing legislation and mandating eCall,” McClure says.

“Our most optimistic guess would be late 2013, maybe realistic is 2014, but some people in the industry don’t even see it until 2015 at the earliest.”

Nonetheless, when eCall arrives—and it almost certainly will arrive—it will provide a uniform embedded solution for which the telematics industry can design.
And so, telematics companies continue to wait for the EU to get its act together, and OEMs continue to wait and see what will be required of them.

“The dream would be that you have one connectivity module in the car and you support all services from that,” says McClure.

“If and when eCall is mandated in the car, that may be the driving factor to put a phone module in every car, and once that’s there, it really becomes an enabling facility for many other telematics services.” (For more on eCall, see ‘Has eCall’s moment finally arrived?’.)

The electric charge

The widespread emergence of electric vehicles is yet another critical component of the telematics industry in Europe.

The EU has stated the goal of having a million plug-in vehicles on the road by 2020, and the first series-production electric vehicles will hit European roads in 2011.

Most of those EVs will be city electric vehicles, with a range of less than 100 miles.

Drivers of such vehicles will have to make the most of their limited electric mileage.

Telematics solutions that limit range anxiety and anticipate charging needs are thus in high demand.

Renault, for instance, has partnered with Better Place to create intelligent navigation for the Fluence Z.E., which will trundle off the factory line in mid-2011.

Better Place’s in-car software notifies drivers of green routes, real-time traffic information, and dynamic route guidance with immediate re-routing features.

“These services are going to be important for smart charging, for range anxiety, you’re going to see a lot of green routing applications in those EVs,” says Wollenberg.

“At Automatiks, we’re getting more and more requests and seeing more momentum in the space.” (For more on range anxiety, see ‘Telematics and EVs: Reducing “range anxiety”’.)

Hybrids will also provide an incentive for telematics solutions, Wollenberg says.
Countries like Sweden offer large tax rebates or credits for electric vehicles, but it’s unclear how much of a rebate should go to drivers of hybrids.

Telematics can provide an audit trail as to whether drivers are using their hybrids mostly as electrics, mostly as gas, or somewhere in between, and can help the government attach the rebate appropriately.

“It’s just another cost motivation as to why some of these technologies will be deployed,” Wollenberg says.

“If an end user might have the ability to get a tax credit of €5,0000 or €10,000 more if they can show that capability, it’s well worth putting two or three hundred euros worth of hardware in the car.”

Hubs of growth

As telematics in Europe moves into a strong growth phase, a number of regions are positioned to lead the charge.

Generally speaking, telematics hubs have cropped up in Europe in places similar to Silicon Valley in the US—close to academic universities and entrepreneurial funding.

Munich, Paris, Gothenburg, and Turino have all established themselves in this way.

On a country level, Germany, with its strong block of OEMs, has been a historical leader in the telematics market and will continue to be an engine for implementing high-end solutions.

France has emerged in recent years as a leader in low-cost implementations.
PSA Peugeot Citroën, for instance, now offers a lifetime membership to eCall for under €300 and has managed to reduce the cost of innovative solutions for collision warning and other in-car features.

“While Germany is the powerhouse for the high-end systems, [France] is doing a very credible job of trying to bring some of this technology to the masses,” McClure says.

Sweden is yet another key player, with the cluster group Telematics Valley trying to position Sweden as a world expert for telematics, and Italy has emerged as the leader for pay-as-you drive insurance.

Looking forward to emerging markets, the telematics industry can expect to see growth in Eastern Europe, McClure says, in countries like Poland that are starting to take more interest in anti-theft solutions.

And China and Brazil, of course, offer strong offshore opportunities that will color the direction European telematics takes in the years to come. (For more on emerging telematics markets, see ‘Emerging telematics opportunities in Brazil’, ‘India’, ‘Russia’ and ‘China’.)

“Most vehicle manufacturers are thinking about how they can replicate their European services in as many regions across the world as possible,” McClure says.

If you want to keep up with the latest trends and innovations in the European telematics sector, check out Telematics Munich.

Andrew Tolve is a regular contributor to TU.

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