Cars are becoming platforms for innovation in the auto industry

The race to build the fully connected car is on. More and more automotive companies are using connected vehicle services to differentiate themselves. Automakers such as Ford, Nissan, and Tesla are investing in R&D, staffing up on software and artificial intelligence, and signing off on new partnerships designed to accelerate the competition. Some studies show that the auto industry’s focus and investments on software and solutions will continue rising rapidly — reaching $82.01 billion in 2020.

So why is this battle for connectivity and innovation heating up so quickly? Drivers and passengers today expect to access connected services in their vehicles, just as they do in all other aspects of their daily lives. In fact, an Accenture survey found that drivers are twice as likely to choose a vehicle based on its technology options rather than on its performance. To meet these emerging consumer expectations, the auto industry must go beyond simply offering better in-car information and entertainment, or infotainment. The next generation of sophisticated connected services now includes proactive remote fault discovery and maintenance; customer service, streamlined recall and parts inventory management; laser-based sensors to help avoid accidents; and mobility-related services such as carsharing, electric vehicle charging and parking services.

As innovation increases, cars also need to be upgradable. Consumers will always want the latest technological advances, which will increase the requests for new apps, remote services, and software upgrades. According to expert reports, shared mobility, connectivity services, and feature upgrades are on expected to increase automotive revenue opportunities by about 30 percent, or about $1.5 trillion in 2030.

The auto industry is also facing new competition from companies such as Apple, Uber and Google parent Alphabet to Samsung, IBM, Intel and other tech giants and are investing billions in changing the automotive game. According to some, tech companies are more interested in owning the ‘brains’ of the vehicle because of the enormous potential that automation and software will have on the car market. Start-ups are also emerging to move the needle in areas such as advanced human-machine interactions, cybersecurity, analytics IoT platforms, driver safety, mapping solutions, eCommerce or freight aggregation platforms. Just last year, Frost & Sullivan reported that over 1700 startups along with technology companies are expected to disrupt and transform the automotive industry, as we know it.

As IoT, AI and connectivity continue to disrupt our world, we are likely to see more change in the automotive industry in the next decade than we’ve seen in the last 50 years. Information communication technologies (ICT) and the auto industry are coming together, and tech companies are looking at the lucrative opportunities of the market. In the past, the innovations were found under the hood or inside the car. Today, big advances extend well beyond the vehicle through mobile connectivity and business model transformations. Cars are quickly becoming true platforms for innovation — and connectivity is the driver.

Written by Igor Ilunin, head of IoT at DataArt.