How Internet of Things can transform cars

BMW and SAP have teamed up to create cloud-based services for connected cars. Mercedes-Benz is also betting big on IoT—by 2020, all its vehicles will feature autonomous driving and high levels of internet connectivity.

Cars are no longer just a means of safe and convenient transportation. With the emergence of the Internet of Things (IoT), automobiles have the potential to become more than just means of transport. Imagine how much easier our lives would be if our cars could pick up groceries on their own, offer us alternative routes in case of bad drivers nearby, or send automated alerts when a part needs replacement. Some of these capabilities are already being included in high-end vehicles.

Gartner forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30% from 2015, and that the number will reach 20.8 billion by 2020. In fact, by 2020, it is estimated that more than 250 million vehicles will be connected and packed with sensor technologies. These ‘smartphones on wheels’ will heighten passenger experience and transform the way we buy, drive and service our cars.

In the driver’s seat

IoT is accelerating the pace of innovation in the automotive industry, making vehicles more self-aware, contextual and potentially autonomous. This trend is driven by an amalgamation of trends such as the move towards digital lifestyles, demographic shifts, as well as the rise of smartphones and the mobile internet. Industry lines are blurring, as new competitors from electronics, telecom and financial services space join the innovation revolution.

One of the primary drivers of the connected vehicle is its ability to collect and use information from the ecosystem—including the driver, the surroundings and any other devices connected to it. It can also leverage digital information about a driver—personal and multimedia preferences and financial to medical information.

Connected vehicles will produce 350MB of data per second by 2020, which can be used to make cars smarter, safer and efficient. With the future of car ownership under scrutiny, automakers need to find ways to monetise data and other business opportunities offered by connected automobiles.

The power of data

BMW and SAP have teamed up to create cloud-based services for a connected car, including notification alerts for drivers when they need to fill fuel. The driver receives retail coupons such as a free cup of coffee at selected service stations, based on an individual’s recorded preferences.
Mercedes-Benz is betting big on IoT. By 2020, all its vehicles will be emission-free, and will feature autonomous driving and very high levels of internet connectivity. The ‘me app’ from Mercedes offers drivers real-time information about vehicle vitals, through smartphones and smart watches. Drivers can control several functionalities through the app—from heating and locks to navigation.

For GM, connected cars that can communicate with the manufacturer via 4G or LTE are safer as well as more reliable. Onstar Corporation, a subsidiary of GM, provides subscription-based in-vehicle security, communication and remote diagnostics. Real-time diagnostics can check the health of most important systems in cars, even while driving. By amassing data from all its vehicles, GM could detect potentially faulty parts in its vehicles, triggering a recall before an accident occurs. GM is looking to open up its databases to outside developers to produce new revenue streams. For example, an integration with OpenTable could automatically load a driver’s chosen restaurant address into the dashboard 30 minutes before reservation time.

Carmakers can leverage the data generated by connected cars to guide their internal decision processes. They can understand and predict customer preferences, and use analytics to support design, testing, production planning and quality assurance.

Connected car future

IoT is gaining traction in the automotive sector, but carmakers have only begun to scratch the surface. The reality is today cars are a combination of high-end hardware and software. Manufacturers will need to transform themselves into technology companies in order to leverage software applications, network management and analytics systems for expanding the IoT potential.

Automakers will also need to address engineering, legislative and market issues as they navigate change in an ever-expanding ecosystem of players. Standards will need to be established to ensure that data can be shared between systems and connected car applications will have to become more secure and reliable. As we move into the age of services and experience, building strategic partnerships across the value chain will be the key to delivering not just a connected vehicle, but also a holistic brand experience.