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Connected Cars: Disruption in Mobility Connected Cars: Disruption in Mobility www.commercetools.com e eCoerce olution or nnoators and Visionaries commercetools is a next-generation software technology company providing the building blocks for the new digital commerce age. The cloud-native platform enables brands and retailers to build innovative shopping experiences across all touchpoints like web, mobile, voice, and in-car. www.commercetools.com Introduction When the automobile was invented at the end of the 19th century, it was basically meant to serve as a substitute for horses and carriages. With the help of a combustion engine, an array of knobs, switches, and a steering wheel, drivers could drive their vehicle around, carrying other passengers and goods. Now, imagine if a time machine could bring Karl Benz, Gottlieb Daimler, and Henry Ford to our time, what would they see? Electric cars are becoming more popular, instead of complex combustion engines, those cars only need simple electric motors. Cars are connected to the internet, which allows them to get automated updates and have drivers and passengers enjoy all kinds of entertainment. Oh, and no more knobs needed: people just use e eCoerce their voice to play a new song, look for the next service station, pre-order a cup of coffee or make dinner reservations. And in a not-so-soon future, vehicles drive autonomously, so no human drivers are needed. olution or For sure, things have changed a lot. These days, the web is ubiquitous, connecting people and things with each other. Why should cars be an exception? Electronic mobility and autonomous driving are changing the way nnoators and in which car manufacturers deliver value to their customers. This next paradigm shift in mobility is the concept of “connected mobility”. It is an amalgamation of new technologies, software, and user-friendly solutions to take the automotive industry towards autonomous driving. Visionaries Connected mobility is expected to put all major economies in the world on a significant growth curve. This growth will be unprecedented, with an estimated annual value of around $560 billion by 2035 for the core services around self-driving vehicles1. As connected cars become a new mobility phenomenon, the two most prevailing questions are: How will autonomous driving change the patterns set by traditional OEM companies? And what does the future look like in terms of features, digital services, and value-add? In this whitepaper, we will take a closer look at the changes that the automotive industry is going through and the many opportunities and new commercetools is a business models which are evolving. next-generation software technology company providing the building blocks for the new digital commerce age. The cloud-native platform enables brands and retailers to build 1 How Automakers Can Survive the Self-Driving Era (A.T. Kearny), 2016 https://www.atkearney.com/documents/10192/8591837/How+Automakers+C innovative shopping experiences an+Survive+the+Self-Driving+Era+%282%29.pdf/1674f48b-9da0-45e8-a970-0dfbd744cc2f across all touchpoints like web, mobile, voice, and in-car. www.commercetools.com Connected Cars: Disruption in Mobility 3 The Automotive Industry is Changing, Fundamentally Until the past few years, large automobile and original equipment manufacturers like Audi, BMW, Ford, Toyota, Volkswagen, and others held the major market share of the automobile industry. However, the tables are somehow turning. Auto OEMs are now being challenged by the software and service industry to adopt connected mobility through digital services. They are facing some hard questions about value propositions, capabilities, service partnership, and best practices to take the lion’s share in the future. Given their already established infrastructures and customer base, it is not hard for OEMs to develop solutions that integrate a connected lifestyle with existing mobility to realize the dream of mainstream connected mobility. Digital Services Mobility Dealerships Used Car New Car In-Car Mobile My Car Aftersales Web Additional Services Mobility-as-a-Service This is where it gets interesting. What we’ve seen in the last couple of years is the need to find new forms of mobility which connect to different modes of transportation. This resulted in a wide range of service providers, from car sharing (e.g., Car2Go), ridesharing (e.g., Uber) to new on-demand electric scooters. Customers can determine which of these vehicles to use, in which and quickly rent them. Service providers then make these cars available, maintain them, and pay for the insurance. In the fully connected world of Connected Cars: Disruption in Mobility 4 the future, we will see integrated intermodal mobility: not only can private companies offer their services to consumers, but they can also connect their infrastructure to public transportation systems. As a result, for the automotive industry, the idea of people purchasing, owning and using a car is being challenged. Instead of buying or leasing a vehicle (ie. the hardware), consumers temporarily rent one. This “as-a- Service” idea has already been gaining traction, e.g., in the software industry – you have all come across the “SaaS” (Software-as-a-Service) model, now this idea also makes its way to the car drivers. Connected Cars: IoT Devices on Wheels A connected car is a vehicle equipped with telematics boxes which can establish an internet connection via a GSM module – very similar to how mobile phones operate. So if we think about which multiple use cases there are for apps on an iOS or Android device, it is easy to imagine just how many different use cases there are and will be in the future. In other words, the car, which used to be just a chassis with four wheels and an engine, turns into a device which plugs into the Internet of Things, sending and receiving data. According to PwC, there are eight segments which characterize connected cars2: • Mobility management: functions that allow the driver to reach a destination quickly, safely, and in a cost-efficient manner (e.g.: Current traffic information) • Commerce: functions enabling users to purchase goods or services while on-the-go (e.g., fuel, food & beverage, parking, tolls) • Vehicle management: functions that aid the driver in reducing operating costs and improving ease of use (e.g., vehicle condition and service reminders, remote operation, transfer of usage data) • Breakdown prevention: connected to a breakdown service, with a back end algorithm predicting breakdowns and an outbound service intervening via phone, SMS or push notification • Safety: functions that warn the driver of external hazards and internal responses of the vehicle to hazards (e.g., vehicle condition and service reminders, remote operation, transfer of usage data) 2 https://en.wikipedia.org/wiki/Connected_car Connected Cars: Disruption in Mobility 5 • Entertainment: functions involving the entertainment of the driver and passengers (e.g., smartphone interface, WLAN hotspot, music, video, Internet, social media, mobile office) • Driver assistance: functions involving partially or fully automatic driving (e.g., operational assistance or autopilot in heavy traffic, in parking, or on highways) • Well-being: functions involving the driver’s comfort and ability and fitness to drive (e.g., fatigue detection, automatic environment adjustments to keep drivers alert, medical assistance) As car manufacturers and customers realize the additional benefits of integrated vehicles, the number of connected cars which are sold around the world is growing. Connected Cars: Disruption in Mobility 6 Electric Mobility is Changing the Game When Elon Musk introduced his vision of building a company around fully electric cars, the global automotive elite mostly treated this as just another one of his crazy ideas – like building a space rocket. After setting up Tesla Motors Inc. in 2003, the plan was to begin with a premium sports car aimed at early adopters, and then move into more mainstream vehicles. Less than ten years later, the Model S was both produced and sold. Until now, the company has shipped more than 520,000 cars3 to the USA, Europe, China, and other countries. Now Tesla cars have a share of 20% of all the world’s battery-only fleet4 and they are a common sight these days. But Tesla is not the only one building zero-emission cars, in fact, there are quite a number of companies who have been producing battery-driven or at least hybrid engine cars: Audi has just released its all-electric SUV e-tron5 (see case study below), BMW launched its first mass-produced zero emission car, the i36 in 2013, Renault sells the Zoe7, which has been on the market since 2012, likewise the Nissan Leaf8 has been available since 2010. And as a newcomer, the startup e.GO from the German city of Aachen has released its first compact passenger car e.Go Life9. In general, sales of electric cars have gone up considerably over the last several years. 3 https://en.wikipedia.org/wiki/Tesla,_Inc. 4 https://edition.cnn.com/2018/11/13/business/tesla-volkswagen/index.html 5 https://en.wikipedia.org/wiki/Audi_e-tron_(2018) 6 https://en.wikipedia.org/wiki/BMW_i3 7 https://en.wikipedia.org/wiki/Renault_Zoe 8 https://en.wikipedia.org/wiki/Nissan_Leaf/ 9 https://www.e-go-mobile.com/en/models/e.go-life/ Connected Cars: Disruption in Mobility 7 In Europe, Norway is the country with the most ambitious goals regarding zero-emission cars. In fact, the country wants to ban the sale of combustion- engine powered cars by 2025. The Scandinavian country incentivizes the purchase of electric cars: consumers don’t have to pay the value added tax for those vehicles, and they are also exempt from carbon dioxide, nitrogen oxide, and weight taxes. Additionally, owners of zero-emission cars get discounts on parking, toll roads, and ferries. Connected Cars: Disruption in Mobility 8 Electric Batteries and Charging Infrastructure But electric engines are not the only part of the story.
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