7 Predictions for Smarter Connected Cars

By Tien Tzuo February 17, 2015

What’s the difference between a technically connected car and a truly connected driver? That’s the $250 billion question facing the auto industry right now.

Connected cars are here. We have about a year before the novelty of a new car arriving with Wi-Fi and integrated telematics wears off. We have maybe 18 months before over-the-air updates, mileage-based insurance and semi-autonomous highway navigation become mainstream.

Gartner predicts that there will be 250 million connected cars on the road by 2020. By then digital diagnostics, infotainment channels and enhanced navigation systems are expected to constitute a $270 billion industry, up from $47 billion today.

Currently 13 percent of American drivers are taking advantage of some form of connected service, from GM’s OnStar to Toyota’s Entune to pretty much the entire Tesla driving experience. Apple, Facebook and Microsoft are all working on their own platforms.

I like new car bells and whistles as much as anyone. And I love the fact that legacy brands like Buick and Cadillac are driving a lot of this innovation.

But all this new connectivity and functionality is actually the easy part. The real challenge will be figuring out how car manufacturers are actually going to connect with their drivers.

Because like practically every industry around the world, the auto business is currently in the midst of a broad, systemic shift from transactional sales to recurring services. Companies are finding that real shareholder value lies in actively growing and developing a devoted customer base, not simply shifting units.

The lot price of that new Ford F-150 may some day be worth less than the ongoing services associated with it. The problem is that today most of these new services are tied to vehicles, not drivers.

We’re an itinerant nation. We move between cities, jobs, relationships, and cars. But we want to take our entertainment streams and social graphs with us, and not just on our cell phones.

The auto industry needs to present a vision of the connected car that goes beyond Google Maps and Spotify. It’s already in danger of handing over its dashboards to Google and Apple, which in my opinion is a huge mistake.

Here are a few predictions for how auto manufacturers are going to shift their back-office technology to offer more driver-friendly services, and truly own the customer relationship:

  1. They’ll learn from the mistakes of the cable industry and offer a la carte services instead of huge, unwieldy bundles. They’ll let their drivers try cool new services like Zubie and Autonet Mobile but also downgrade according to their needs and preferences.
  2. They’ll use more reasonable, consumption-based pricing models. A premium cost to have your car unlocked makes much more sense than a monthly insurance charge.
  3. They’ll partner with a variety of digital entertainment platforms, so that you can follow your favorite Netflix show from the living room to the back seat to your phone.
  4. They’ll create Apple-like ecosystems that will let people mod their Mini Coopers with cool third party apps, and share tips and tricks with other drivers.
  5. They’ll embrace more payment gateways to become truly global. Here in the US credit cards are popular, but Europeans prefer ACH-based bank withdrawals. The list goes on.
  6. They’ll take advantage of usage patterns to help their customers become better drivers: avoiding hard brakes, erratic lane shifts and speeding tickets. They’ll make ride-sharing safe and convenient. They’ll help the parents of teenagers sleep better at night.
  7. Finally, thanks to subscriber-based insight, they’ll be able to give their drivers the agency to truly customize the look, feel and behavior of cars without having to spend a ton of money at a garage. Does your Jetta need a little more clearance? Raise it up a couple of inches with your phone app.

All of this stuff is important, because from now on, when you drive that new car off the lot, the auto industry is coming along for the ride.