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Fasten your seatbelts- Disruption is on its way!

The global auto industry is BIG. The contribution of automobile in the global growth can be estimated by the fact that the U.S. automotive industry, including dealerships, has historically accounted for approximately 3 to 3.5 percent of U.S. gross domestic product. The number of employees in the U.S. automotive industry (including manufacturing & dealers) in 2016 have persistently increased since the last recession in 2008 and have surged past 2.9 million people.

Some 77.73 million automobiles are expected to be sold by 2017. Global car sales are expected to exceed 100 million units by 2020.

But

Today, the car manufacturers are under attack! Startups from all over the world are dismantling the automobile.

Dismantling automobile

Now that other internet connected-device markets are mature, Cars are a new frontier for tech startups. The market opportunity is significant since more than 76 million passenger cars were sold globally in 2016.

Today, the time is changing and auto sector is disrupting. The disrupted landscape of future might be significantly different from what it is today. While many companies are working to connect cars to the cloud, other startups are trying to use that data to revamp driver safety, construct navigation systems, or provide more methodically priced insurance plan. Also embryonic technologies like autonomous car software, heads-up driving displays that boost driver safety, and using real-time traffic data to enrich navigation are on anvil. With technology pushing the automobile sector at the edge of disruption, this is what may come up in this vast sector as the future unfolds.

Why disruption is important?

In the case of automobile industry, while there have been significant hardware improvements especially in the areas of material science and design techniques, they have not kept pace with the innovation of the car’s software. Going forward, the software, like most other industries today will take the lead and may become the binding interface between the driver and the hardware. In short term when the driverless cars are under testing process, they may have a backup chauffer in the car itself but in the longer term, as the technology gains confidence, we’ll see a truly driverless car.

The current internet generation or the iGen will most likely value connectivity and computing power when making purchase decisions. The car buyers of the future will also expect the same and will look forward to software upgrades[i] (just as it happens on a mobile phone), which will provide a superior experience. The automotive industry is inching towards producing cars where software can be refurbished without necessitating a change in hardware or a visit to the dealer. Another significant requirement of iGen might be a smooth transition from outside the car to the inside, and vice versa. Staying connected will be a way of life for them. The automobile of the future, driven by the Internet of Things (IoT), will be controlled with the buyer’s handheld device or voice.

The automotive industry is approaching a tipping point of disruption, with the driverless electric automobile taking shape. The connected car market is currently growing at a compounded annual growth rate of 45% – 10 times faster than the overall car market. BI Intelligence [ii] estimates that 75% of the cars shipped globally in 2020 will be built with internet-enabled hardware.

OEMs have resolved that they will not experience a ‘Kodak moment.’ Hence the future of the automotive industry will be determined by a partnership of auto OEMs and technology firms for an infinitely smart and advanced car.  Google, which has been working on self-driving cars since 2009, unveiled a custom-designed two-seat prototype in 2015. Built in Michigan by Roush Enterprises, the car uses parts from established suppliers such as Bosch and Continental.

Where are the disruptions happening?

In terms of disruption activities, the market position of the car today is similar to where the smartphone was in 2010 – it’s just taken off and is ready to explode. Following five areas in and around today’s cars are on the anvil of disruption:

Interconnectivity amongst cars (Connected cars)/V2V communication:

History reprises herself, but she whispers. One must hook close and listen faithfully to figure out exactly what she’s getting at. Most of the time we can only in hindsight discover what she was trying to say.
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There is a close analogy in the patterns of disruption when you compare the future of connected cars to the past of the smartphone industry. At some point within the next 2-3 years, users will come to assume car connectivity to be normal, similar to the adoption curve for GPS navigation. As this new era commences, the telecom measurement of ARPU will morph into ARPC (average revenue per car).

In the context of connected cars, acronyms “V2V” and “V2X” pop up a lot. These are two vital concepts in the world of connected cars. The first one, V2V, is acronym for “vehicle to vehicle.” It denotes all kinds of interactions between vehicles on the road.

V2V is still in its inception stage in many ways, but it could emanate a new era of road safety when it becomes more popular in cars. Instead of just sensing other cars, V2V vehicles can communicate with them openly, permitting cars to maintain an internal map of all neighboring vehicles with their speed and direction. That will make it much easier for the car to provide supervision to the driver about when it is safe to change lanes, alter speed, or merge.

V2X is even more thrilling – it is short for “vehicle to everything.” This is a wider concept that encompasses V2V to comprise infrastructure like traffic lights, stop signs, and building sites. When cars are able to connect with these elements of the driving landscape, they will also be able to give the driver forewarnings about impending speed changes and other essential maneuvers long before the driver can see them. For example, when workers start repairs on a patch of the highway, they could set up a beacon that transmissions a speed decline and lane jam warning to incoming vehicles. The cars then feed that info to their drivers, who can slow down and shift lanes far in advance to save time, reduce traffic, and promote safety.

Most Active Startups & Deal Activity

  1. Startups such as and Savari are building upon V2V and V2X communications.
  2. High Mobility, a German company has developed software for carmakers that empowers users to make themselves “visible” to their cars via a smart device. BMW featured High Mobility’s systems at the Consumer Electronics Show presented precisely how a smartwatch could be used to drive an i3 with gesture control. Dash, Ambiquity and Truvolo are other incipient eminent players in the connected-cars market.

This is how it will change the industry

  1. Many experts envisage that with connected cars will come vehicle-based apps. This means that corporate commuters may be able to easily “tailor” their rides. Imagine being able to regulate the vehicle’s cooling or radio directly from a smartphone. In short term, chauffeurs will be able to keep their focus on the road and you’ll be able to tailor the ride to your personal specifications.
  2. Commentators have also estimated that traffic apps will robotically alert drivers and passengers when accidents happen or routes are backed up. People will both know about any possible delays as soon as they arise, and they’ll be able to consider substitute routes.
  3. Connected cars will profit all drivers and commuters, but they will be particularly beneficial for chauffeurs and business travelers. Improved connectivity means augmented productivity and ease. The future of the automobile and of travel itself, is upbeat and it’s coming to a chauffeured vehicle near you.

Car Automation

It’s mid June 2025, and you are en-route a corporate meeting on a blue-sky morning. The windshield’s smart tint has pitched in to guard the sun’s dazzle so you can thumb through messages and the news stream on your heads-up display. Traffic is easy—more than half the cars on the road are fully autonomous, keeping the whole thing moving along at a comfy speed. The phone rings and the news stream halts. It’s your first-grade daughter’s sparkling face on the HUD (heads-up display), wishing you—again!—happy birthday.

Self-driving wherewithal would symbolize the most drastic change in car technology in decades, and the main peril to traditional car companies who, in response, are collaborating with tech companies to counter the challenge. If that’s how the market will evolve, it’s not such a scary prospect for incumbent car companies. They have decades of exposure conjoining third-party components into their vehicles, and their prevailing manufacturing and distribution facilities will give them a big benefit over companies that try to start building self-driving cars from scratch. Making cars drive themselves is mostly a software problem. Google is spending profoundly in its self-driving car program, gambling that its proficiency in software development will permit it to claim a key role in the car industry of the 21st century.

It’s worth citing here that traditional car companies have fared to keep their heads above water by outsourcing the hard technical problems to third parties. A lot of car companies — including Tesla and several conventional firms — have initiated offering cars with “advanced cruise control” or “autopilot” capabilities. And several of them have purchased their technology from Mobileye, an Israeli startup that builds car sensors and software that allows cars to stay in their lane and avoid hitting other cars in front of them.

Going forward, cars will continue to look more or less like they do today, but over time we’ll have to grab the steering wheel less and less repeatedly. Ultimately during a advanced phase, gripping the steering wheel will become so sporadic that it will make sense to sell cars with no steering wheel at all.

Most Active Startups & Deal Activity

  1. CB Insights [iii]stated that an assortment of private companies infused in a range of startups covering a wide range of automotive categories, and automakers were especially active, led by GM’s gigantic stake in Lyft and acquisition of Cruise Automation early last year. Nexar, which is coming up with a smartphone-based, AI-enhanced dashcam app, and Pearl Automation, manufacturer of a substitute camera that connects to a driver’s smartphone via Wi-Fi, both raised cash in June 2016.

This is how it will change the industry

  1. The eventual role that AVs could play about the economy, agility, and society as a whole could be deep. While it’s dubious that any on-road vehicles will feature “fully autonomous” drive technology in the short term (for instance, by 2020–22), AVs are already a real world phenomenon in selected applications that feature organized environments, such as mining and farming. In these cases, the regulated nature of operations and the likelihood to function on private roads expedite adoption. Some of the benefits of autonomy in these fields include labor-cost savings and the drop in carbon dioxide (CO2) discharges through optimized driving (shown to cut emissions by as much as 60 percent).
  2. Car insurers have always delivered consumer coverage in the event of accidents caused by human error. With driverless vehicles, auto insurers might shift the soul of their business model, concentrating mainly on underwriting car manufacturers from liabilities from technical failure of their AVs, in contrast to shielding private customers from risks related with human error in accidents. This change could transform the insurance industry from its current focus on millions of private consumers to one that involves a few OEMs and infrastructure operators, similar to insurance for cruise lines and shipping companies.
  3. AV technologies could help to improve the industry supply chains and logistics processes of the future, as players employ automation to upsurge efficiency and flexibility.
  4. According to McKinsey[iv], AVs could free us as much as 50 minutes a day for users, who will then spend traveling time working, relaxing, or accessing entertainment. The time saved by commuters every day might add up worldwide to a mind-boggling one billion hours—comparable to twice the time it took to build the Great Pyramid of Giza. It could also create a enormous pool of value, possibly generating global digital-media revenues of €5 billion per year for every additional minute people spend on the mobile Internet while in a car.
  5. AVs could alter the agility behavior of consumers, possibly decreasing the need for parking space in the United States by more than 5.7 billion square meters.

Vehicle Cybersecurity

Connected, driverless vehicles are around the corner. Many of the most inventive and deep-pocketed organisations in the world are competing to bring them to market — and for good reason: the monetary and societal gains they will generate will be remarkable.

But any transformational technology breeds new challenges and threats in addition to benefits. This is no exception.

One of the main fears that society will face as transportation transmutes in the coming years is vehicle cybersecurity. It is an issue about which much is still unfamiliar, even among those working at the cutting edge of the industry.

Thankfully, a major mischievous cyberattack on an automobile has yet to take place. But the latent danger was demonstrated theatrically last year when two white-hat hackers distantly took control of a Jeep Cherokee and cut its transmission on the highway as part of a research initiative. The well-publicized event prompted Chrysler to recall 1.4 million vehicles.

One of the central challenges in vehicle cybersecurity is that the various electrical modules in a car (known as electronic control units, or ECUs) are attached via an internal linkage. Thus, if hackers accomplish to gain access to a susceptible, peripheral ECU — for instance, a car’s Bluetooth or infotainment system — from there they may be able to take control of safety critical ECUs like its brakes or engine and create havoc.

Cars today have up to 100 ECUs and more than 100 million lines of code — a gigantic attack surface. Further obfuscating matters, auto manufacturers source ECUs from many different providers, meaning that no one player is in control of, or even acquainted with, all of a vehicle’s source code.

The risk of automotive cyberattacks will only emerge larger as society shifts to autonomous vehicles. But even before autonomous vehicles become prevalent, car hacking is already a very real risk. Further, in a situation when plentiful vehicles are connected, they will undoubtedly be susceptible to cyberattacks.

Most Active Startups & Deal Activity

  1. Given the stakes, it is no wonder that this area has enticed a bout of recent startup and investment activity. Argus Cyber Security, the largest and most recognized of these startups, raised $26 million in Series B funding last fall. Lately, Harman acquired cybersecurity startup TowerSec for $72.5 million. In April 2016, Israel-based Karamba Security also raised $2.5 million in seed funding.

This is how it will change the industry

  1. The significance of safeguarding individual sensors is perhaps most imperative in today’s connected car, which Deloitte calls “a data center on wheels full of Internet-connected features.” A typical automobile today comprises about 70 computational systems running up to 100 million lines of programming code, firm says.
  2. Cyber security in the automotive sector will only raise in importance as vehicles depend on more intellect in the future. As noted in a 2016 report by consulting firm KPMG, deep learning—an advanced form of artificial intelligence—is driving substantial change for autonomous cars and for the automotive and transport industry. The study projects that by 2030, a new mobility services sector tied to products and services related to autonomy, agility and connectivity will be worth more than $1 trillion globally.
  3. The coming new era in automotive product expansion and manufacturing will highlight the vehicle’s nervous system, including a computer “brain,” sensors, controls, driver interaction and data storage. This will mean a great shift in organizational structure, talent acquisition, and operating models for most car manufacturers. It also means vehicle companies will need to keep cyber security in mind during the course of the entire production process.

Navigation

The navigation and control of an autonomous vehicle is a highly intricate task. Making a vehicle smart and able to run “unmanned” requires broad theoretical as well as practical understanding. An autonomous vehicle must be able to make choices and respond to situations entirely on its own. Navigation and control serves as the major restraint of the overall performance, accuracy and sturdiness of an autonomous vehicle. Navigation is a key facet when designing an autonomous vehicle. An autonomous vehicle must be able to sense its location, navigate its way toward its destination, and avoid hurdles it encounters.

Five years ago, navigation systems used to be just another component in the car that OEMs used to outsource from third party vendors. Today OEMs see a greater value in a closer collaboration with ‘nontraditional’ suppliers such as Sharp, Google (Android Auto), Apple and Nvidia ensuring higher emphasis on quality, usability and performance standards.

Most Active Startups & Deal Activity

  1. A number of startups are basically trying to zone in on the auto issue, instead of building services that compete Android or Google Maps. PathSense, a 10-person navigation startup centered in Palo Alto, California has released four SDKs, three for Android, one for iOS, which endeavor to improve precision, speed, and lower battery drain when using GPS or geolocation tools on mobile. PathSense, in a way, seems to be marketing itself to Google or Apple. It has tech and talent, two things the giants are in need of, particularly for their own autonomous projects.

This is how it will change the industry

  1. While navigation is the glitziest application of augmented reality in cars, the technology would also make driving secure. For one thing, the system lets drivers keep their eyes on the road. But pooled with sensors and cameras, the system could clearly signpost the distance between applying the brakes and halting, warn about pedestrians or cars in the blind zone, or show that the driver is in danger of swinging out of his lane or too close to another car.

Driver safety

The two main marketing points of smart and autonomous vehicles are security and convenience. The idea is that well-programmed computers and high-functioning sensors can regulate a vehicle & driver more safely than a person, because computers cannot be distracted or put under pressure.

Observers believe driverless cars will make automobile transport a whole lot safer, and McKinsey predicts they could cut US auto accidents by 90%. While this might save insurers money on disbursements in the near future, demand for insurance will ultimately decline as risks of a car crash drop. In expectation of this shift, some insurers are rolling out usage-based insurance policies (UBIs), which charge consumers based on how many miles they drive, and how safe their driving practices are.

Volvo, for example, has it’s eyes set on a “death-proof” smart car by 2020. Although this is the same year some forecast autonomous cars will hit the markets, Volvo remains engrossed on giving the driver more tools to be safe, instead of making the car intricate enough to drive itself. Volvo’s deathproof car also seem to bank on several technologies equipped in autonomous vehicles such as collision evasion, pedestrian detection and adaptive cruise control. By trusting vehicle control to the car’s computer, obstacles are easily detected and avoided, averting deaths in the process.

Most Active Startups & Deal Activity

  1. SmartDrive Systems, a forerunner in driving performance solutions that decrease crashes and improve fuel efficiency, raised $50 million in funding. The funding, provided by Oak Investment Partners, New Enterprise Associates and WABCO, will fuel the company’s global growth, further boost product innovation and upkeep the brand’s mounting patent portfolio.
  2. Zendrive, a startup that uses smartphone sensors to measure drivers’ conduct, has raised $13.5 million in Series A funding led by Sherpa Capital, with involvement from Nyca Partners, Thomvest Ventures, and earlier backers First Round Capital, BMW i Ventures, Fontinalis Partners.

This is how it will change the industry

  1. The National Highway Traffic Safety Administration discovered that over 90% of car crashes involve human fault. In the residual cases, factors such as weather and futile car components were main causes. Robots can possibly be programmed to make quicker and better decisions while evading human pitfalls such as driving while drunk or texting. A paper from global consulting firm McKinsey & Company evaluates that a 90% crash reduction rate could have saved the US economy $190bn in 2012 alone
  2. Technological improvements, such as seat belts and antilock brakes, have facilitated lowering the number of overall car crashes from 6.7m in 1988 to 5.7m in 2013, according to the National Highway Traffic Safety Administration. Fatal crashes dropped from 42,130 in 1988 to 30,057 in 2013.
  3. Researchers believe that computer-driven cars will reduce the harshness of injuries caused in car accidents. “If you have something react faster than humans, even if it can’t completely avoid a crash, you could still save lots of lives,” Richard Wallace, director of transportation systems analysis at the nonprofit Center for Automotive Research in Michigan said.

 

The Road Ahead..

In addition to revamping the automotive industry, the growth of autonomous vehicles will likely have a profound impact on society.

  1. Ford is testing a self-driving Fusion hybrid in a new 32-acretest track at the University of Michigan campus, designed to simulate an urban driving environment.
  2. Audi has done its own test runs, including a trial on a section of a Florida highway that was set aside for autonomous car research.

Research is emerging to show how safe autonomous cars might be when they run alongside conventional cars on the road.

In an investigation of car accidents concerning self-driving cars from 2012 to 2015, published in October by the University of Michigan’s Transportation Research Institute, autonomous cars got a higher crash rate per million miles toured than traditional cars – but robot cars were not at mistake in any of the bangs. Injuries from those crashes were also milder than those that involved only traditional vehicles, the report said. The analysis looked at publicly available crash data from 1.2m miles of test drives by Google, Delphi and Audi and found just 11 accidents.

Whether self-driving cars will swap conventional vehicles will hinge not only on technical enhancements, but also policies that will need to be put in place. Those rules have only started to surface.

Even though various segments in autonomous vehicles like driverless cars, trucks and tractors are on the anvil, it is very likely that the most growth-contributing industries will undergo the first set of fully autonomous vehicles in the most real-life environment. If need be considered, autonomous trucks and tractors make most sense to be first on the roads compared to cars. First, they have a huge potential to impact the real economy like the farm sector and logistics and secondly, the current ecosystem needs lesser modifications for them to flourish.

If Anand Mahindra, chairman and managing director of Mahindra and Mahindra Ltd is to be believed, “the sequence of autonomy is going to come first for tractors” as “Tractors don’t run into anyone in the field. They do not cause paranoia. They are the easiest to make autonomous and they raise productivity dramatically”. Mahindra also said that automated trucks will follow tractors.

Though the world is not sure about which kind of vehicle will change its gears first but what’s almost sure is that autonomous vehicles are not far away from becoming a reality and it’s no more about “If”, but about “When”?

[i] https://www.wired.com/2017/01/teslas-new-autopilot-may-seem-lame-critical-reboot/

 

[ii] http://www.businessinsider.in/The-connected-car-is-creating-a-massive-new-business-opportunity-for-auto-tech-and-telecom-companies/articleshow/46222271.cms

 

[iii] https://www.forbes.com/sites/dougnewcomb/2017/01/27/car-tech-startup-investment-exceeds-1-billion-in-2016/

 

[iv] http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/ten-ways-autonomous-driving-could-redefine-the-automotive-world

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