EY - Automotive industry - the quest for telematics 4.0

Automotive industry - the quest for telematics 4.0

Executive roundtable summary 2014

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To gain more insight into the strategic priorities facing stakeholders, EY’s Global Automotive, Telecommunications and Insurance Centers recently brought together more than 30 senior decision- makers from across the connectivity ecosystem.

The third in our series of connectivity roundtables, this year’s event was held in Detroit and examined the business model for connectivity. During a day of far-reaching debate, we brainstormed ideas in these two key areas:

1. Sustainable connected car business models

  • What is not working in the ecosystem?
  • Moving toward a more open environment
  • Making the value chain more efficient and effective
  • Addressing the data imperative

2. Globalizing the connectivity ecosystem

  • Who should run the global connectivity agenda?
  • How should regional services operate?
  • What are the bottlenecks preventing growth?

Below we summarize the key findings of our roundtable and highlight the opportunities and challenges that lie ahead for all players in the connectivity marketplace.


Focusing on the business model

However complex the connectivity ecosystem may appear, the future of this technology will depend on a simple equation — how participants can create a sustainable connected car business, grounded in collaboration, with ROI being generated for players throughout the value chain and end customers.

Participants focused on where current bottlenecks are holding up progress throughout the ecosystem and how these can be cleared. Building on the consensus achieved at the previous roundtables, they agreed on the need for a much more collaborative environment, with players across the value chain participating and innovating on shared platforms through an open-source approach.

What is not working in the ecosystem?
Defusing friction between stakeholders in the connectivity ecosystem is essential. For the moment, OEMs remain challenged by how best to “sell” the benefits of connectivity to their dealership networks, while other value-chain participants are frustrated by OEMs’ unwillingness to share customer data.

Toward a more open environment
The need for an open platform is becoming more widely recognized as part of the drive toward increased collaboration across the ecosystem. Whether this means standards will have to be imposed on the industry remains to be seen, but as a foundation for more rapid and coordinated development, it will be a major step forward.

Optimizing the value chain
The pace of change in the connectivity marketplace is now so rapid that all participants — OEMs, service providers, insurers and carriers — are having to rethink how they will price and package their solutions for maximum efficiency and effectiveness in a fast-changing environment.

Addressing the data imperative
As always, access to and ownership of data is a core concern right across the industry. Ensuring that privacy is respected — and consumer information used responsibly — is uppermost in participants’ minds.


Globalizing the connectivity ecosystem

Wherever they are in the connectivity ecosystem, all stakeholders face a common challenge — how they can scale their connectivity strategies while taking account of local and regional differences in culture, regulations and technology.

The balance between regional versus global development is difficult to achieve. As connectivity deployments accelerate, we wanted to understand the challenges encountered by stakeholders as they move from country to country.

Who should run the global connectivity agenda?
Globalization of any connectivity offering is a complex undertaking. Multiple technical, regulatory, cultural and strategic issues must be taken into account and closely monitored.

How should regional services operate?
Deployment of global or regional connectivity provides exciting opportunities for monetization. As our roundtable indicates, participants are adopting multiple approaches to tackle the next phase of their connectivity journey.

What are the bottlenecks preventing growth?
Regulations, technology, cultural variations and complexity — across the connectivity ecosystem, players are grappling with these issues as they focus on developing models to globalize their offerings.


Considerations for stakeholders

  Carmakers Telecom operators Motor insurers
Service offerings
  • Integrate telematics offering with mobility solutions to support intelligent transportation solutions
  • Build the cost of diagnostics and security services into the price of the new car, while subscription model to be followed in aftermarket
  • Focus on vehicle data, as well as integration of data in the environment
  • Leverage other revenue streams, such as location-based advertisements
  • Integrate payment services within the vehicle (while ensuring data security)
  • Build telematics systems with enough capacity and performance to handle software upgrades
  • Offer 4G/LTE connectivity with high bandwidth services, such as internet gaming, videoconferencing, etc. for passengers
  • Provide flexible data plans, such as shared data plans or split billing services
  • Focus on network security for vehicle-related data
  • Telematics service platform to offer end services either directly to the customers or in collaboration with carmakers
  • Leverage data collection and mining capabilities to support carmakers
  • Develop an internal IT system to leverage telematics-based insurance data
  • Create attractive aftermarket proposition to drive uptake in car population on the road
  • Offer specialized products for fleets aimed at reducing the total cost of ownership
Collaboration and partnerships
  • Partner with automotive suppliers to build open and scalable technology (HMI)
  • Collaborate with aftermarket channels for optimal utilization of vehicle data
  • Outsource non-core services, such as billing and subscription management
  • Partner with carmakers to offer customer support services, such as subscription management and charging and billing services
  • Partner with various sector stakeholders to launch services in the aftermarket
  • Collaborate with carmakers to offer UBI based on integrated connectivity solution