Automotive Infotainment & Telematics New Architecture = New Business Models May 24, 2018 Strategy Analytics, Inc 1 Roger C. Lanctot Director, Automotive Connected Mobility Global Automotive Practice
TELEMATICS MARKET STATUS Gen 1.0 Launched: 1996 Objective: Monetize to consumers directly Findings: Free-Trials too short Result: Huge number of de-activated subscriptions 6 months FREE! Only $10 per + = month! Market FAILURE May 24, 2018 Source: Infotainment & Telematics Service 2
TELEMATICS GEN 1.0 IN-ACTIVE SUBSCRIPTIONS (CUMULATIVE) Source: Strategy Analytics Infotainment & Telematics Service May 24, 2018 Source: Infotainment & Telematics Service 3
TELEMATICS GEN 1.0 INACTIVE SUBS = DEAD $$$ Over $19 Billion wasted 2011 2017 Source: Strategy Analytics Infotainment & Telematics Service May 24, 2018 Source: Infotainment & Telematics Service 4
AUTOMOTIVE EMBEDDED MODEMS GLOBAL ANNUAL SHIPMENTS Only 51% of vehicles shipped will have embedded modems Telematics 1.0 May 24, 2018 Source: Infotainment & Telematics Service 5
GEN 2.0 - TELEMATICS ARCHITECTURE OVERVIEW - UPDATE IoT OEMs Cloud OTA Cloud Headunit/ Cockpit Domain Controller Telematics ECU/ Smart Antenna Ethernet Cockpit Domain Controller Smart Antenna Telematics ECU ADAS Powertrain Gateway ECU Powertrain ECU ADAS ECU Chassis ECU Body ECU Body Chassis May 24, 2018 Source: Infotainment & Telematics Service 6
GEN 2.0 ARCHITECTURAL CHALLENGES LINKING VEHICLE DOMAINS Where will the Cellular Modem/TCU/RF reside? Head unit? One? Two? Three Modems/TCUs? Gateway? Smart Antenna? Essential: Data monetization requires a connection between ALL Domains and TCU May 24, 2018 Source: Infotainment & Telematics Service 7
GEN 2.0: AUTOMOTIVE DOMAIN CONTROLLER ARCHITECTURE Gateway ECU + Domain Controllers Gateway ECU TCU Chassis Domain Controller Powertrain Domain Controller Body Domain Controller Safety Domain Controller Cockpit Domain Controller Center Display ECU Chassis ECU 1 Powertrain ECU 1 Body ECU 1 Safety ECU 1 Instrument Cluster Display Chassis ECU 2 Powertrain ECU 2 Body ECU 2 Safety ECU 2 HUD (Optional) May 24, 2018 Source: Infotainment & Telematics Service 8
EMBEDDED TELEMATICS OEM REGIONAL SHIPMENT VIEW Units (000's) Telematics Shipments: 31 Million units in 2017 to 84 Million units in 2025 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 North America: ecall/telematics highly dependent on car maker strategies Europe: ecall telematics highly dependent on regulatory activity and selected OEMs Japan: Navigation is still dominant, Telematics roll-out is lead by Toyota China: Will be the #1 region for embedded Telematics shipments by 2021 (North America #2) North America Europe South Korea Japan China India Russia Brazil Rest Of the World May 24, 2018 Source: Infotainment & Telematics Service 9
HOW WE CONNECT WILL BE EASIER IF WE KNOW WHY Where will the TCU reside? Head unit? Separate box? Who will manage the carrier relationship? What will the basis of the carrier relationship be? Subsidized? Multiple carrier solution? White SIM? Add car to existing wireless plan? Who will manage telematics service providers? Who will manage/own the data? Headunit/ Cockpit Domain Controller ADAS Powertrain Body Telematics ECU/ Smart Antenna Ethernet Cloud Gateway ECU Chassis 10
IT S THE SOFTWARE, STUPID! Space Shuttle: 500,000 lines of code Boeing 777: 3-4 millions lines of code Mercedes S Class: 100 million lines of code May 24, 2018 Source: Infotainment & Telematics Service 11
SOFTWARE RECALLS Number of Automotive Software-Related Recalls in U.S., 2011 2016 Typical (Non-OTA) software updates cost between $300 - $600 per vehicle. ~ $3 Billion spent by OEMs to do (non-ota) software updates in the US alone in 2017! Source: CX3 Marketing May 24, 2018 Source: Infotainment & Telematics Service 12
SOFTWARE MANAGEMENT CONNECTIVITY KEY TO SECURITY 13
MULTIPLE APPLICATIONS, BUSINESS MODELS Audience measurement Drive Time Metrics (Nielsen/Gracenote?) REVENUE SHARE Usage-based insurance and claims management Verisk, Lexis-Nexis, CCC, Octo, etc. BOUNTY-STYLE LEAD GENERATION Customer relationship management (CRM) service scheduling Cox Automotive, DealerFX, Time Highway, etc. LEAD GENERATION/DIAGNOSTIC ALERTS Traffic information HERE, TomTom, INRIX, etc. PAID FOR BY DOTs AND MUNICIPALITIES Parking and weather information Parkopedia, HERE, INRIX, etc. AS ABOVE Road hazard alerts HERE AS ABOVE Beginning of a shift away from subscription-focused monetization toward both direct (CRM) indirect (traffic, weather info etc.) monetization of data. ONE BIG BUT: Traditional telematics leaders BMW, Daimler, GM can t walk away from $B s in sub rev. 14
BMW CARDATA, GM MARKETPLACE 15
Phase One Phase Two Phase Three AUTOMOTIVE MARKETPLACE CHANGES Marketing, engineering, other departments must pay. Medium-Term retail model faces significant challenges Long-Term model becomes passenger-centric and operationally fleetmanagementfocused Internal data sharing including dealers Data sharing 1-to-1 with external third parties i.e. insurance companies deployment of data APIs Aggregating and sharing of data across auto makers and reselling of data 1-tomany 16
CONNECTIVITY: A PLATFORM FOR MOBILITY SERVICES Increase vehicle utilization Reduce vehicle ownership Remove older, less fuel efficient vehicles Increase usage, penetration of newer, safer, more fuel efficient vehicles Increase exposure of cars to non-owners Introduce the idea of shared transportation resources setting the stage for the wider adoption and acceptance of autonomous vehicles 17
# OF CARS, MEMBERS 18,000,000 350000 16,000,000 300000 14,000,000 12,000,000 250000 10,000,000 8,000,000 200000 150000 members cars 6,000,000 4,000,000 100000 2,000,000 50000 0 2017 2018 2019 2020 2021 2022 2023 2024 0 18
IMPACT: OWNERSHIP Company Cars Community Cars Campus Cars Vehicle as Amenity Concierge Cars Loaner Cars *SOURCE: LMC Automotive 19
NEW USE CASES Shared cars also serving as ride hailing vehicles Campus, amenity, company cars Dealer loaner cars and concierge offerings Exposure of the vehicle-less to cars Gig-related applications delivery and non-delivery services Public transportation resource On-demand access to vehicles 20
REVENUE $2,500,000,000 Car Sharing Revenue Outlook $2,000,000,000 $1,500,000,000 revenue $1,000,000,000 $500,000,000 $0 2017 2018 2019 2020 2021 2022 2023 2024 21
DEALER OPPORTUNITIES Dealers have been slow but there is an increasing recognition of the value of carsharing for customer loaner cars and innovative ad hoc vehicle use scenarios Dealers have expertise to bring to the proposition including roadside assistance, vehicle cleaning and prep, repairs, and vehicle delivery and retrieval Dealers also understand the logistics, financing and insurance implications all of which have posed challenges for auto makers Transportation on demand Audi on demand, Cadillac Book 22
CHALLENGES Growth has been slow and uneven Market entries have been followed by market exits Issues include failure to understand local market demand or vehicle usage behaviors Some markets are already over-supplied Vehicles continue to suffer from theft and vandalism recent Enterprise experience in Chicago Lack of marketing support from service providers particularly car makers still in the process of building their networks of shared cars 23
OPPORTUNITIES Governments cities and Federal instituting vehicle use limitations or regulations favoring shared cars More campuses and other closed facilities turning to autonomous, shared transportation Increase in vehicle utilization Inclination of consumers to use shared rather than owned vehicles Revenue upside as motivator for service providers, car makers 24
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ROBOTAXIFICATION OF THE AUTO INDUSTRY 25 of Nvidia s 320 Drive PX partners are robotaxis 30
KEY TAKEAWAYS & CONCLUSIONS Domain Integration: Safety and infotainment are beginning to merge via the Cockpit Domain Controller (CDC). Emergence of Mobility: Car companies setting the stage for autonomy, multimodal transportation options Software Eating the Industry: Car companies ramping up software investments internally and externally Cloud Connectivity: Car companies stepping up cloud partnerships for managing data, software, connectivity can t do it all in house In-Sourcing Telematics: BMW, Daimler, others? Cutting Ties to Carriers: Less commitment to a particular carrier trying new models disrupting relationships DSRC Lingers: DSRC remains an issue in Europe VW, Renault because of commercial vehicles Headunit/ Cockpit Domain Controller ADAS Powertrain Body Chassis Telematics ECU/ Smart Antenna Ethernet Cloud Gateway ECU May 24, 2018 Source: Infotainment & Telematics Service 31
Automotive Infotainment & Telematics May 24, 2018 Strategy Analytics, Inc 32