The quest for telematics 4.0
Dialogue with the value chain: Detroit executive roundtable summary
Telematics 4.0 — the seamless integration of mobility and the web — presents stakeholders in this sector with an unprecedented range of opportunities. Approximately 104 million new cars are expected to have some form of connectivity by 2025, with potential revenues reaching US$25 billion, up from US$2.5 billion today.
For stakeholders in this sector to be able to realize this huge potential, strategies will be needed that can make in-car connectivity a viable proposition for the enterprise, while offering value to the end customer.
We’ve explored these issues in two reports:
- The quest for Telematics 4.0: Creating sustainable value propositions supporting car-web integration
- The quest for Telematics 4.0: Dialogue with the value chain: Detroit executive roundtable summary
Closer look at our roundtable
EY’s Global Automotive and Telecom Centers recently brought together more than 30 senior decision-makers from original equipment manufacturers (OEMs), suppliers, telcos and telematics companies, thereby bringing the whole value chain representing telematics around one table. This conversation formed our report Dialogue with the value chain: Detroit executive roundtable summary.
Making sense to customers
As we heard from participants at the roundtable, it’s a given that the customer wants connectivity. But the debate gets really exciting when the discussion moves beyond the consumer.
It’s when all the other stakeholders in the telematics ecosystem — from dealers, to telcos and OEMs — work out how to support connectivity and contribute to it that things get really interesting.
Looking ahead, three key areas will interact together, not in isolation, to drive take-up rates:
1. Value — Stakeholders must understand what customers are willing to pay for and how. Will subscription packages be attractive, or should connectivity be packaged with other carrier services?
What should be offered for free to open more profitable revenue streams?
2. Usability — Value is a vital consideration, but user-friendliness and reliability are also must-haves. Providers must be equipped to provide a seamless user experience; but whose responsibility should this be — the OEM, the carrier or the telematics service provider?
3. Flexibility — Customers want more choices; from now on, providers must develop the flexibility needed to keep up with, and adapt to, the pace of technology-driven customer choices across all telematics services — from bundled basics (safety and security services) and pay-per-use “freemium” services, to premium subscription services.
Increasingly, customers will be asking if cars can offer the kind of flexibility that mobile packages do in terms of changing models, handset compatibility and also choice of connectivity (for instance, embedded and integrated versus tethered).
Driving the enterprise value
We heard about a range of approaches for realizing and recovering the investments that have been made in telematics. All participants see their businesses evolving at pace in the coming years, as they drive toward delivery of integrated services and solutions.
The shape of these business models will be molded by decisions to control some service offerings and outsource others.
Recognizing that vehicle-centric applications hold vast revenue potential, a number of OEMs have plans to launch their own application stores and/or their own applications. They also will fight to keep control of the human machine interface (HMI) as a powerful brand differentiator and revenue-generating opportunity.
Telematics has a very complex value chain, which involves players from various sectors. EY helps major stakeholders throughout this ecosystem to develop and sustain the innovative business models that are needed going forward.
Our services include the following:
- Business process innovation and transformation (connected car, fleet management, car sharing)
- Blueprints for selection of suppliers to implement connected car-IT infrastructures, quality assurance after implementation
- Transformation integrator, design of operating model, architectural design, IT risk and security management, transformation facilitation
- Business diversification strategy and risk assessment, market strategy for new products and services, research for unchartered product segments
- Identification and assessment of potential investment opportunities and risks associated with new markets
- Cross-border corporate income tax advisory and income tax compliance
- Tax incentives for investments in car-sharing across geographies
- Legal and regulatory risk analysis and compliance, including data security
Considerations for telematics stakeholders