Elements from the smartphone industry are disrupting the connected car market. Much like the smartphone industry, evolving user behavior and expectations are underpinning human-machine interface (HMI) driven applications and experiences in the automotive industry. Such innovations have picked up momentum in the aftermath of the pandemic, positively impacting stakeholders across the connected cars spectrum.
It is against this backdrop that we must consider Volvo’s recent announcement that its 2023 vehicle models will be incorporating Android Automotive, allowing them to remotely receive software and operating system updates over the air (OTA). Volvo’s first all-electric car, the XC40 Recharge and the XC60 will be among the first beneficiaries of software update capabilities, allowing for the seamless integration of the vehicle with customers’ digital ecosystem. Continuous updates will support the prospect of highly personalized experiences, enhanced in-vehicle app functionality, access to the latest technologies, and superior connected services.
The adoption of Android Automotive is also central to Volvo’s electrification plans, with the Swedish automaker having committed to going all-electric by 2030. We have repeatedly said that the pivot toward EVs means that automakers will have to provide critical EV services which can best be realized through embedded telematics. Particularly in the context of vehicle electrification, connected OTA app updates improve customer confidence and energy management. Effective monitoring and maintenance of battery temperatures enable better driving range, while battery pre-heating functions support faster recharging. Customer confidence is improved through features such as EV charging station recommendations, proactive driver alerts, simplified trip planning, and charging load management. These features help customers to plan their trips efficiently while reducing cost and stress.
To learn more about the latest trends and forecasts in the global connected cars market please access our research report – Global Connected Cars Outlook, 2021 or contact sathyanarayanak@frost.com for information on a private briefing.
The Future is Connected
Frost & Sullivan anticipates a revenue potential of $15-$20 billion for the global connected car market by 2025 while highlighting the need for stakeholders to accelerate the development of software-defined vehicles (SDVs) and innovative business models.
The most prominent challenge facing the connected car industry today is ROI on software and connected service platforms. For automakers, the question of whether to develop products in-house or turn to outsourcing persists. While a few OEMs want to develop it in-house, a large majority of OEMs are open to working with vendors for their connectivity software needs and this is creating an opportunity for suppliers, including tech giants like Google, Microsoft, and Amazon. Automakers like Volvo, Audi, and the Renault-Nissan-Mitsubishi Alliance have partnered with Google to develop their infotainment systems with the Android Automotive OS as the basic platform. OEMs such as Toyota, BMW, and Stellantis have reduced their connected vehicle costs by moving away from fixed on-premises IT infrastructure to more efficient pay-as-you-go, serverless resources based on AWS.
The growing consumer preference for personalized solutions will accelerate the implementation of innovative features such as embedded connectivity, bio-based health monitoring, voice/digital assistants, and gesture recognition in vehicles. The market is transforming, with some automakers evolving into technology firms and others opting for a collaborative approach. Business transformations will occur when the core elements of next-generation platforms and business models are developed and become available on vehicles. Technologies such as 5G, widescreen displays, high-performance computers (HPCs), data lakes, and cloud computing will be at the front and center.
Our Perspective
As such trends unfold, OTA will play a crucial role in overcoming challenges related to legacy electric/electronic (E/E) architecture, security threats, high data costs, and slow update times on 4G networks.
Currently, infotainment, telematics control units (TCUs), and map-related updates are the main focus of OTA, with Frost & Sullivan forecasting a gradual transition to features over the air (FOTA). Indeed, the mainstreaming of service-oriented architecture will, we believe, result in a cohort of automakers controlling more functionalities and providing new service offerings through FOTA capabilities.
Attracted by the projected boom in-vehicle connectivity, cyber security specialists and OTA companies have flooded into the market, even as several Tier 1 companies have acquired companies with OTA capabilities in a bid to maintain their market relevance.
We will see OTA emerging as a key service delivery solution by 2025, wherein it will shift from being used primarily as a solution to avoid software-related vehicle recalls to becoming a feature on demand (FoD) solution. Our research also emphasizes that OTA updates will become subject to global regulations – like the UNECE WP.29 cybersecurity regulation – in response to the need for secure and traceable software updates.
Automakers will aim to introduce FoD for basic functionality upgrades such as, for instance, in-cabin lighting through OTA updates. 5G-ready TCUs will receive OTA upgrades with full 5G functionalities.
In essence, OTA will become the foundation for enhanced in-vehicle experiences, while emerging as a critical enabler of greater personalization. It will support seamless and secure features and security upgrades related to driver assistance systems and powertrains, among others.
It will facilitate application enhancements with targeted infotainment and improved navigation through map updates. It will allow EV automakers accelerate go-to-market strategies. And finally, OTA will work to ensure the protection of sensitive personal information as cars turn into computers on wheels.
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