The Real Winners in Connected Car Services

Data from connected vehicles is now a reality and there’s much more to come as older vehicles are replaced by those that ship with connectivity. Our industry touts the benefits of vehicle apps to consumers and they are real.

It’s relatively easy to demonstrate the benefits of connected services to individuals: safety, convenience, entertainment and communication.

There are also huge potential benefits to society. Colin Sutherland, executive vice-president of sales and marketing for Geotab, thinks there’s been too much emphasis on personal advantage, anyway. Take the example of personalized insurance. “Back then, it was very focused on the person behind the wheel.” The incentives of insurance discounts, when weighed against the monthly fee for the car’s connection, weren’t enough. Sutherland says, “The telematics industry needs to rethink who the stakeholder is in the data itself.”

A social good?

We have solid projections about how many lives autonomous vehicles would save. Other than that, it’s difficult to calculate the benefits of connected services to society.

Lisa Joy Rosner, chief marketing officer, Otonomo, points out that connected services can have dual benefits. Some concierge services, such as in-vehicle delivery or finding the nearest gas station, mostly help the individual, Rosner says. “Accident detection or emergency response are critical not only for the individual. The faster the response and the quicker the accident is removed, the better it is for society as a whole.”

In fact, according to a 2018 survey by Otonomo, American drivers’ interest in connected car services aligns with societal concerns. Out of eight possible benefits, respondents ranked safety highest:

• 94% were interested in their cars alerting them to dangerous driving conditions ahead;
• 93% were interested in faster response times for emergency responders in the event of an accident;
• 92% were interested in early detection of necessary maintenance and repairs;
• 84% were interested in improvement of quality and safety of roads, based on feedback from their cars;
• 84% were interested in having their cars suggest gas stations on the route when they need gas;
• 79% were interested in discounted insurance based on driving data specific to their cars;
• 62% were interested in having their cars suggest coupons to be used depending on their location and time of day;
• 44% were interested in an app that allows deliveries to their vehicle’s trunk.

When weighing society against the individual, Chip Goetzinger, deputy general manager, vehicle connected services, Nissan Group of North America, points out that this is not a zero-sum game. “While connected services do benefit drivers and owners, many services already in the market today also contribute to public good,” he says. As an example, ownership of electric vehicles can have less environmental impact than gasoline-fueled cars, if electrical generation is clean.

Nissan supports and encourages EV adoption by its NissanConnect EV service, he notes. “Better tools for customers and owners to plan their journeys, locate available charging stations, and actively manage their charging strategies improve the customer experience and facilitate EV ownership.”

Rosner suggests another example of dual benefits: using data to improve weather information benefits everyone. “If you’re already sharing your data, why not your weather data? The value is incremental, but there is no danger in sharing your weather information. It’s completely anonymous,” she says.

Complicated value chain

To date, the financial onus for connected services has, for the most part, been on the vehicle owner. While automakers are moving away from the data subscription model, personal vehicle and fleet owners still pay a premium for a connected vehicle and often pay for connected services.

Maybe, if these do benefit society as a whole, they should be subsidized. In 2016, the RAND Corporation studied the impact of autonomous vehicles and concluded that the social benefits outweighed the likely disadvantages. What’s more important, RAND found that many of the benefits would go to society rather than those who purchased the vehicles. Therefore, it said: “Subsidies or taxes may be necessary in order to maximize social welfare by equalizing the public and private costs and benefits.”

Or maybe third parties should pay. Geotab’s Sutherland sees third parties as most motivated to make sure that vehicles become connected and that the connection is used. For example, insurers not only want to sell policies for new vehicles, they need to gather millions of miles of data to improve their risk models. Dealerships want to be able to send reminders for service and recall work. Body shops want to deal with crashes more efficiently. Even fuel stations and charging networks might want to message drivers, he says.

“The assumption,” he says, “is a person will be able to choose how he wants to consume his data and who he wants to share it with. The reality is, a person doesn’t know the answer, doesn’t know the networks or options.”

In order to achieve those societal benefits, Sutherland believes, we need an ecosystem of suppliers to provide better goods and services to vehicle owners and then share that data in aggregated form back to city infrastructures. “You’ll only be comfortable if you know how your data is shared and handled,” Sutherland adds.

Data sharing and trust

Indeed, trust and privacy remain barriers to the adoption of connected car services, let alone widespread data sharing among infrastructure, city entities, automakers and third parties. “We have seen a shift in the industry as a whole, looking at using car data to benefit people,” says Rosner. “There’s a tug of war between wanting these services and being willing to share data.”

Sutherland concludes: “We need to stay laser focused on security, reliability and scalable systems. That means respecting privacy laws and updating end-user agreements so that people receiving connected services understand that, collectively, our industry is doing the right thing. Then we can start building on top of that.”