Connected Cars 101
What they are, and where they’re going
- Modern connected cars contain a network of components, including a communication system, IoT sensors, a data center, a software platform, and a user interface; while the technology my vary by car, each component is critical to a connected car’s functionality
- Benefits of connected cars are centered around the user experience, and include increased safety, efficiency, and entertainment features
- Challenges of connected cars are mostly data-related, as the industry faces genuine privacy, security, and communication limitations
- Stakeholders including OEMs, consumers, technology partners, and autonomous car makers have a large stake in seeing the connected car landscape eclipse the $300B market size it is expected to reach by 2030
- Today’s connected car technology is paramount to the future of autonomous driving
The automotive industry is undergoing a major transformation, driven by the rise of connectivity.
Connected cars are vehicles equipped with advanced components that allow them to communicate with other vehicles, infrastructure, and the cloud. This connectivity creates new possibilities for automobiles globally, with value spanning improved safety and efficiency to new entertainment functionality.
In this piece, I’ll introduce the connected car, some of the benefits and challenges facing connected cars and their manufacturers, and assess the future of the industry. Enjoy!
What is a Connected Car?
A connected car takes the automobiles we know, love, and drive today, and combines it with features to boost functionality. The main features of many modern connected cars include a communication system, IoT sensors, a data center, a software platform, and a user interface.
Communication system
This is the system that allows the car to connect to the internet and other vehicles. This system allows the car to send and receive data to and from other vehicles, to automotive infrastructure, and the cloud. A connected car’s communication system oftentimes leverages multiple technologies, including cellular networks and dedicated short-range communication technology.
- Cellular networks are the most common way for connected cars to connect to the internet. They offer wide coverage and high speeds, which makes them ideal for data-intensive tasks such as streaming media or downloading maps
- Dedicated short-range communication (DSRC) is a short-range wireless communication technology that is specifically designed for connected cars. It offers low latency and high reliability, which makes it ideal for safety-critical applications such as collision avoidance.
IoT Sensors
Internet of things (IoT) sensors are the eyes, ears, and nose of a connected car. IoT sensors can provide real-time insight into what is happening in and around a connected car. Some of the sensors that are commonly found in connected cars include:
- Cameras are the eyes of a connected car. They’re used to provide the car with a visual understanding of its surroundings. Cameras can be used for purposes including lane departure warning, automatic emergency braking, and traffic sign recognition.
- Radar sensors are used to detect objects in the car’s surroundings. Radar sensors leverage radio waves, are less power-hungry than cameras, and provide services like blind spot monitoring, rear cross traffic alert, and adaptive cruise control.
- LiDAR sensors create a 3D map of the car’s surroundings. They leverage beams of light, and are especially useful for real-time object detection. Some autonomous car manufacturers rely heavily on radar and/or LiDAR sensors to keep drivers and other safe.
- Ultrasonic sensors are used to detect objects in the car’s immediate surroundings, and can be used for parking assist and blind spot monitoring.
- Inertial measurement units (IMUs) are used to measure the car’s acceleration, rotation, and orientation. They help with lane keeping assist and rollover prevention.
These sensors register information about a car. Once collected, data from these sensors are sent directly to a car’s data center, where it is stored, managed, and processed.
Data center
This is the central location where the data collected by the car is stored and processed. It generally includes the following components:
- The data processing unit (DPU) is responsible for processing the data collected by the car’s sensors. The DPU can be a dedicated chip or a general-purpose processor.
- The data storage center stores the data collected by the car’s sensors in a hard drive and/or a solid-state drive.
- The software in the data center is run on the DPU and controls the operation of the car’s data center.
A connected car’s data center can be located in the car itself, in the cloud, or in a combination of both. Components of a car’s data center that are located in the car itself are typically called an onboard data center. Components that are located in the cloud are stored in an offboard data center.
Software Platform
The software platform of a connected car is the foundation on which all other software in the car runs. It is responsible for managing the car’s hardware, providing services to the car’s occupants, and communicating with other cars and infrastructure.
The software platform of a connected car typically includes the following components:
- The operating system (OS) is the foundation of the software platform. It manages the car’s hardware and provides basic services like file management and memory management.
- The applications are the software that provides specific services to the car’s occupants. For example, there may be applications for navigation, entertainment, and telematics.
- The middleware is the software that sits between the OS and the applications; it communicates with the car’s hardware and provides services to the applications.
- The drivers are the software that allows the car’s hardware to communicate with the software platform. Much like your HP printer from 2006, there may be drivers for the car’s sensors, its engine, and its transmission.
User Interface
This is the way that the car’s occupants interact with the connected car system. It can be a touchscreen display, a voice-activated system, or a combination of both. Within the user interface, drivers and passengers and access and navigate through applications that are connected to other connectivity components of the vehicle.
The UI of a connected car can include some or many of the following elements and applications:
- The home screen typically displays a map of the car’s surroundings, as well as shortcuts to frequently used applications.
- The navigation application is used to plan and follow routes. It typically includes features such as traffic information, real-time traffic updates, and voice-guided navigation.
- The entertainment application is used to play music, watch videos, and access other forms of entertainment.
- The telematics application is used to connect the car to access essential services.
- The settings application configures the car’s climate control, the audio system, the navigation system, and other car settings.
The Benefits of Connected Cars
There are many potential benefits to connected cars, including improved safety, increased efficiency, and new entertainment features.
Improved Safety
Connected cars can use data to communicate with each other and with infrastructure to prevent accidents.
Many current connected cars have features such as automatic emergency braking, lane departure warning, and blind spot monitoring (my trusty Mazda3 has each of these features).
However, by leveraging its communication system and data center, advanced connected cars can detect other cars and objects in their surroundings, help the driver take evasive action in the event of a near-accident, and even warn nearby connected cars of upcoming hazards (such as a stopped vehicle or a pedestrian crossing the road). They could also use data to optimize traffic flow, which can help to reduce congestion and accidents.
According to a study by the Insurance Institute for Highway Safety (IIHS), connected cars could prevent up to 50% of pedestrian fatalities.
Increased Efficiency
Connected cars can use data to optimize their performance, such as by adjusting their speed to save fuel or by avoiding unnecessary braking (AKA eco-driving!). Additionally, connected cars can use data to provide drivers with real-time information about their surroundings, which can be used to help drivers park their car. In some cases, the cars can even automatically steer drivers into a tight parking spot.
A study by McKinsey & Company found that connected cars could save the average driver $180 in annual costs by 2030.
New Entertainment Features
Connected cars can provide drivers and passengers with entertainment, information, and telematics systems.
- Entertainment features include streaming music, watching videos, and playing games
- Information systems can provide access to navigation, weather, and news
- Telematics services can include roadside assistance and remote diagnostics
The market for connected car services will take shape as more connected cars hit the road, and as the technology in connected cars becomes more powerful and more ubiquitous. As a result, we could see even more entertainment features provide benefits to connected car drivers.
A study by Strategy Analytics found that the market for connected car services is expected to reach $140 billion by 2025.
The Challenges of Connected Cars
While there are many potential benefits to connected cars, there are also some challenges that need to be addressed. These challenges include privacy, security, and communication.
Privacy
Connected cars collect a lot of data about their drivers and passengers through their IoT sensors. This data — which includes the car’s location, speed, braking patters, and occupants’ personal information — can be used to track the car’s movements, to target the occupants with advertising, and potentially to steal their identities.
Connected cars also have the ability to share data with third parties, such as app developers, traffic data providers, and insurance companies. However, it is not always clear how the data will be used, lending uncertainty to how private this shared data truly is.
Security
Due to their connected nature, connected cars are vulnerable to cyberattacks. These cyberattacks can appear in different forms, such as malware (which can be installed on the connected car’s computer system) and hacking (which can be performed by a perpetrator from a remote location). The downsides of these attacks could be devastating, as attackers could potentially steal data, track the car’s movements, disable the vehicle, or even cause an accident.
Communication
Currently, the main communication challenges that cars face relate to real-time, inter-car communication. While cellular networks are extremely beneficial for connected cars to reach the internet, there are latency limitations on cellular networks that can make it hard for connected cars to communicate effectively when real-time communication is important.
Moreover, connected cars from different OEMs may use different communication protocols. This — combined with the fact that there is no single standard for connected cars — makes it even more difficult for different vehicles to communicate with each other.
The U.S. Department of Transportation’s ITS Joint Program Office, NHTSA, standards development organizations, the Society of Automotive Engineers International (SAE), the Institute of Electrical and Electronics Engineers (IEEE), and the Crash Avoidance Metrics Partnership are working together to update and publish a set of connected vehicle standards.
Potential Mitigants
Addressing these technology challenges can help connected cars become safer, more secure, and more reliable. Below are some potential mitigation strategies that connected car makers can deploy to reduce the harmfulness of those with malicious intent.
- Data minimization: Connected cars should only collect the data that is necessary for their operation. This will help to reduce the amount of data that is collected and stored, which will make it more difficult for the data to be stolen or misused. Unfortunately, since the cost of data collection, processing, and storage is so low (and since the applications of data are bountiful), most car OEMs are not incentivized to minimize the amount of data collected.
- Data governance: Because OEMs are not likely to minimize the data collected, connected cars should have a clear data governance policy in place. In theory, this policy would outline how the data will be collected, used, and stored.
- Data encryption: The data that is collected by connected cars should be encrypted. End-to-end encryption makes it more difficult for data to be stolen or intercepted.
- Data security measures: Connected cars should have strong security measures (like like firewalls, intrusion detection systems, and access control) in place to protect their data.
- Data management: The data that is generated by connected cars should be managed effectively. This includes things like data storage, data processing, and data analysis.
Why are Connected Cars Important?
The connected car landscape is expected to be worth $324.9B, with over 570 million cars on the road by 2030. It’s expected to grow the fastest in China, the United States, Japan, Germany, and India (Omdia). As the size of the industry balloons, there are many players who each have stake in the future of connected cars.
Among these stakeholders include Car OEMs (the manufacturers of the connected cars), the software providers, car buyers, self-driving car makers & investors, and audio/video streamers. Each of these stakeholders have potential to expand their reach as connected cars become more common.
By 2030, about 95 percent of new vehicles sold globally will be connected, up from around 50 percent today
Car OEMs & Software Providers
Connected Car OEMs are racing to make their connected features a unique selling point to prospective buyers. However, due to the many components of a connected car, transitioning a traditional automobile into a connected car is not a simple task. As a result, many Connected Car OEMs are relying on Google and Apple (and some are choosing to build their own in-house)
- Google’s approach to connected cars is a platform approach, leveraging its Android Auto and Google Play services
- Apple’s current approach is more closed, requiring an iPhone to operate CarPlay
The cost of building a connected car service and integrating it with third-party apps and services is high, but OEM’s that choose to build their own do it for specific reasons, including:
- Differentiation across the product line (some people may not want Apple & Google integration)
- Preventing data sharing with third parties (not only Apple & Google, but also being able to set the terms of data sharing with 3P apps)
- Possibility to monetize further via a subscription model
It’s perhaps too early to tell which is the “right” way to develop a connected car, though as more vehicles on the road become connected, we’ll likely garner a deeper understanding of what makes some connected car services more compelling than others.
Consumers
Connected cars offer a variety of benefits to consumers, as explored earlier in this piece (safety, efficiency, and entertainment). Connected cars that are equipped with these advanced safety, efficiency, and entertainment features have a higher value proposition. A connected car may not appeal to all car buyers, but that isn’t the goal. Connected car technology will only appeal to some prospective buyers initially, and a diverse lineup of vehicles will continue to fulfill the needs of consumers until the general population is ready to make the change.
A recent Nielsen study found that of the 44% of consumers who plan to purchase a new car within the next two years, 39% say they’re very likely to purchase a connected car
Self-Driving Car Makers
Connected cars are essential for the development of self-driving cars. Self-driving cars need to be able to communicate with each other and with infrastructure in order to operate safely. Connected cars provide the necessary infrastructure for self-driving cars to operate (more on this later).
Cutting edge technology is required for the dream of autonomous driving to become a reality
Audio and Video Streaming Services
Connected cars can be used to stream music and video directly to the car’s entertainment system. This technology doesn’t leverage bluetooth, but uses the car’s native connectivity system to stream content directly from the service provider — a big change to how many (including myself) stream content in the car today.
While radio still dominates the majority of the automobile audio space (Omdia), many modern connected cars allow for seamless integration with audio streaming services, including Spotify, YouTube Music, and Apple Music. Audio streaming services are more personalized than standard radio channels, and offer a seamless user experience between their different devices.
The future of video streaming in connected cars is just getting started. Currently, apps such as YouTube and Netflix are available on one of the most common connected cars in the United States — the Tesla Model 3.
The value proposition — as described by Tesla CEO Elon Musk in 2019 below — is clear to most consumers.
The Future of Connected Cars
The future of connected cars is bright. As the technology matures and the challenges are addressed, connected cars will become ubiquitous. Some of the specific trends that are expected to shape the future of connected cars include new connectivity features, new safety features, and new technology features (including autonomous driving and advanced entertainment).
New Connectivity Features
As new technologies (even those that are not designed for connected cars) are developed, they are being integrated into connected cars.
For example, 5G cellular networks are starting to be deployed globally, which offer faster speeds and lower latency than 4G networks. 5G networks are expected to be rolled out in most major markets by 2025. When adoption rates grow, this will provide a major boost to the development of connected car applications. Connected cars will be able to take advantage of the higher bandwidth by streaming high-definition video and downloading large software updates in a fraction of the time it used to take.
One report predicts that 1 in 4 cars will have 5G connectivity by 2025, and a connected car study from 2022 predicts that connected cars will hit 2.5 billion connections in 2030
New Safety Features
While many modern connected cars (like my Mazda) have safety features including automatic emergency braking, lane departure warning, and blind spot monitoring, connected car manufacturers are expected to continue to push the envelope on safety features as the technology becomes more capable .
A study from 2017 cites that 75% of U.S. drivers cite safety as “very important” when evaluating a car.
Because safety is a top priority for most, advanced safety features will likely be critical components of tomorrow’s connected cars, including those discussed earlier (re-iterated below)
- Detection technology for other cars, objects, and hazards
- Driver assist function in near-accident circumstances
- Traffic flow optimization
Self-Driving Capability
Autonomous driving is still in its early stages, but it is a rapidly developing field with over $160 billion of investment over the last 12 years. Many await the arrival of self driving cars due to the expected safety benefits, reduced traffic congestion, and new mobility options for individuals with disabilities. In fact, the Insurance Institute for Highway Safety expects there to be 4.5 million self-driving cars on U.S. roads by 2030.
The rise of autonomous driving will require vehicles to be able to communicate with each other and with infrastructure in order to operate safely. In other words, connected cars are laying fundamental groudwork for the future of self-driving cars.
A McKinsey analysis of Germany found that by 2040, self-driving vehicles could save the country €1.2 billion a year through lower costs for hospital stays, rehabilitation, and medication alone.
While the technology is not perfect, while some people may be hesitant to adopt self-driving technology, and while the industry faces a regulatory uphill battle, the future of self-driving cars is promising.
Entertainment
The growth of the entertainment market, as connected cars become capable of providing passengers with more and more features, is going to be exciting to monitor.
As mentioned earlier, the market for connected car entertainment services is still taking shape; we’ll start to see what new features connected cars offer as services (like Spotify, YouTube, and Netflix) build more compatible features.
Features don’t stop when the car starts, though. One long-awaited feature of self-driving cars that Tesla CEO Elon Musk teased (below) is the ability to stream video while driving.
Streaming video in an autonomous vehicle represents the peak of a connected car’s functionality. It leverages each component of a connected car while allowing the driver and passengers to do whatever they want, including something as unrelated to driving as watching video on demand.
Connected cars can make our roads safer, more efficient, and more enjoyable. As technology evolves even more, I’m sure we can expect to see even more exciting innovations and applications for connected cars!
