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Connected cars and the impact of digital transformation on the auto industry

While the safety, speed and quality of cars produced by the automotive industry have improved tremendously since its beginnings, it’s taken until now for change to come in terms of their design, capabilities and function.

Cars are evolving from simply a means of transportation to sophisticated, large-scale computers on wheels. The impact of digital transformation on the auto industry is driving this evolution and the connected car is starting to make considerable headway, offering new possibilities for automakers, as well as consumers.

Vehicle connectivity is not a new concept — just recall OnStar and ATX Group where you could press a button and make a phone call in an emergency, or a call would be made automatically in the event an airbag went off. But it has a whole new meaning today, offering everything from satellite-view maps with live traffic visualization, in-car streaming music and media, internet browsing and more. And as the technology matures, customers’ expectations for connectivity in their vehicles are evolving too, from a nice-to-have feature to an essential tool.

This is evidenced by the findings of a “Managing Automotive Technology Trends” survey of 126 automotive decision-makers, where 53% of respondents stated that connected cars are a key element to their automotive vision. In addition, nearly 70% indicated that a connected and digital experience for consumers is becoming more important than vehicle performance.

Given that, let’s explore what the future of connected cars might look like.

Autonomous vehicles: A growing need for connectivity

The adoption of fully autonomous vehicles won’t be immediate. Over 70% of surveyed decision-makers said that mass adoption of autonomous vehicles won’t happen until post-2030. However, as autonomous vehicles do start to enter the market, the need for connected cars to offer entertainment will begin to grow as people look to fill the time they would typically have spent behind the wheel fighting traffic with other things.

Automakers might then embrace connectivity to enhance the passenger experience by integrating augmented reality on heads-up displays to provide an engrossing, educational encounter. Imagine passing Buckingham Palace or The White House, for example. Information could pop up on the windshield outlining when the buildings were built, their history, who the architects were and more as the vehicle drives by.

Infotainment and the connected car

Automotive infotainment is one area where consumer tech companies and automakers are competing for control of the connected car. While Apple and others currently produce applications, such as CarPlay, which reproduce existing user interfaces inside the car, half of the automakers that responded to the survey are confident they will own the infotainment system of the future.

Connectivity truly opens up new opportunities with an auto’s infotainment system — from marketers using it for targeted advertising to automakers creating a more personalized and convenient driver experience, such as paying for a service or product without having to even open the car door. The latter is a reality already with Jaguar and Shell teaming up to enable people to pay for fuel through the Jaguar’s infotainment system.

The automotive software updates that connected cars will require do present a unique issue though.

Automakers typically build cars to have a platform lifecycle of five years. This creates a challenging scenario with respect to connectivity: How do you meld vehicle and phone technology to create an environment where automakers are able to compete? How do you convince customers to invest in an in-car infotainment system rather than simply sticking their smartphone on the dashboard and using that?

Looking ahead, it makes sense for the automotive industry to invest in infotainment services they themselves develop. Focusing on well-integrated, vehicle-specific experiences will give built-in infotainment systems a distinct advantage over mobile phones, particularly given in-car infotainment systems can also deliver information specific to a car’s performance, as well as things like tire wear, when service is needed and more.

Cybersecurity is essential

Thirty-seven percent of consumers would not even consider purchasing a connected car, according to a survey conducted by McKinsey, due in large part to concerns about security and data privacy. Automakers are well aware of this and although security is not a new issue, it is now becoming a necessity that they ensure a driver’s safety not only physically but also digitally. In fact, security was the top challenge the industry faces in delivering connected automobile systems as voted by survey respondents.

So, how will the industry do that?

Security is a non-negotiable for automobiles. Systems capable of withstanding the rough conditions of weather, terrain and all that a vehicle has to handle, while also remaining effective, will be a must. As will significant redundancies and alerts to malicious behavior throughout the entire system, touching every component at each service layer, including the cloud device management software, the communications module and more. Constantly changing security threats and risks also require the capability for rapid change to update these systems. The most effective means by which to accomplish this is to wrap security around every part, then around the entire vehicle itself, as well as around various sections, cocooning the connected car from not just physical but also digital harm.

Finding a solution for how to accomplish all of that without baffling the user interface system — so someone coming out of the grocery store with an armful of packages isn’t required to input an 18-digit code and endure a bio-scan just to unlock the car, for example — presents a further challenge. Constructing an effective security system will require balancing user experience, simplicity and stringent best practices.

Data privacy must be respected

There are two types of data being gleaned from the connected car. The first is specific to the car, engine and machine itself, the second to the driver and passengers. It is beneficial for manufacturers to have access to this information because it enables them to determine how to make an even better vehicle in the future and offer an improved user experience.

The real challenge exists in determining how to glean all of this information without violating consumers’ privacy. This has grown even more complex with the advent of increasing restrictions in privacy laws — such as the GDPR passed by the EU in 2018. All companies are grappling with it as they strive to find a balance between complying with privacy regulations and wanting to learn more and provide benefit to their customers.

And while this growing data set is an unusual issue for automakers to work through, the industry recognizes data privacy concerns and the need for all data to be anonymized. Then, to the greatest extent they’re able, they can try to identify general automotive trends without the information being tagged to an individual.

A new mindset for automakers

As the industry continues to undergo unprecedented change amid the growing demand and need for connectivity, automakers will have to embrace an “adapt to survive” approach to remain competitive.

Today, the industry infrastructure is designed around having a powertrain department and a transmission department, and one for the interior and exterior, and for safety … in other words, an automotive machine wrapped around separate mechanical, electrical and safety systems. With the impact of digital transformation accelerating, automakers will need to swiftly develop a cohesive, future-focused mindset.

This also means that now is the time almost every automotive department needs to start having an IT mentality as well. They need to ensure that they’re doing their jobs differently considering the potential changes soon to impact the industry, from autonomous vehicles to a connected environment to the rise of shared ownership, all-electric powertrains, etc. Numerous companies are currently focused on improving the driving experience. But what will happen in the next decade when driving becomes autonomous? What will the go to market look like? Those who’ve adopted and ingrained this IT mindset are setting themselves up for a more sustainable, forward-thinking future.

There is almost no doubt that rethinking and reinventing their strategy, goals, areas of focus and investment are the most significant challenges automakers will be taking on in bringing tomorrow’s connected cars to market. But that comes with tremendous opportunity. From a simple four-wheeled vehicle, autos are evolving into smarter, more capable, soon-to-be-autonomous systems. And one of the driving forces behind this shift? The need for connectivity.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

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