SBD researcher Alex Oyler talks to automotiveIT International about the connectivity trends transforming the automotive industry 

Alex Oyler is head of carIT at SBD Automotive. His research includes connected vehicle cloud platforms, OTA and service deliveryOyler works with clients in global markets including automakers in Japan, China, USA, and Europe. Paul Fisher spoke to him on tech trends in the connected and autonomous car space. 
Paul Fisher: SBD recently published a piece based on findings from January’s Consumer Electronics Show (CES). There is some revision on the viability of fully-autonomous cars – they may appear later than expected, or even not at all. Why is that?
Alex Oyler: There are two perspectives. The first is actually putting Level 4 or 5 cars into production. There are mobility shuttles operating in downtown corridors or closed systems, like airports. These closedloop environments remain the most viable pasture for production of first round autonomous vehicles. And for establishing confidence with consumers, that’s where OEMS are targeting efforts first
How far away is a fully autonomous vehicle, that safely delivers people to their destination?
In closed loop systems, that already exists. But for widespread adoption we’re at least 10 years out. And the reason isn’t the technology. It’s the infrastructure required to support fully connected autonomous vehicles, from governments as well as from OEMs – and the providers that are building the technology into that infrastructure. It’s going to be a while until we can get sufficientinfrastructure.
Given the expected delay, are we seeing a shift from the theory that the car industry will collapse under the onslaught of autonomy? Will a mixed landscape of vehicles and ownership models emerge?
It is a mixed picture. The biggest disruption we’re seeing right now is that fewer people are buying new cars, and OEMs are struggling to establish profitable revenues – Ford is quitting sedan production [in North America] for this reason.The popularity of mobility solutions like Uber and Lyft is definitely having an effect. People see it as a reasonable alternative to go from A to B rather than owning a car, and this is doublytrue for people who live in urban environments We’re seeing a renaissance in public transportation as well with cities really looking at how at how they can enhance their public transportation, linking it into a broader mobility and environment context.
But the fear of obsolescence must remain. OEMs see one time sector leaders collapse after new technology came along. Do you think this fear is driving them into panicked decisions?
I wouldn’t necessarily call it panicking. I think they are trying to identify where the best place is to reinvest capital so they don’t fall behind in the next 10 years. The OEMs need to explore different areas of revenue generation as the trend of new cars not selling isn’t slowing down. So, for example, GM investing in Cruise, Volkswagen just acquired WirelessCar from Volvo. 
And what else should they do?
If I’m an OEM looking at my business model, I need to figure out more effective investment. Whether that is developing in-house technology or establishing partnerships with mobility providers, like Waymo and Lyft. These are areas I’d be looking at to reduce overall costs, and increase ability to sell new vehicles and/or subscription services.
In the supplier ecosystem, look at what Intel is doing. It acquired Mobileye, and is partnering with SoftBank. It’s established an almost entirely vertically integrated value chain for the development of autonomous vehicle systems. Suppliers are looking to take much of the complexity out of the development of autonomous vehicles, or even next-generation vehicles so the overall cost to an OEM for bringing that to market is also reduced.

In-car entertainment and in-vehicle infotainment (IVI) are definitely open to disruption and change, aren’t they?

Google is a major disruptor. It’s integrating native automotive services into Android and establishing partnerships with OEMs to bring their own flavour of Android to market with embedded apps such as Google Maps, Spotify, Waze and so on. 

Bringing the Google experience into the vehicle is super disruptive because a seamless entertainment and mapping experience is something that OEMs have failed to create in the past. Almost all of them are confusing or have some sort of deficiencies.

So what’s the solution? 

When you add any Android or Google experience into that, it takes a layer off the complexity. But the biggest threat to the OEMs now is understanding how they can build better IVI experiences without selling the farm to Google. Because there’s a downside of doing that with Google – access to a ton of consumer data from the OEM customers.

At the same time, automotive is using, supporting and extending open-source projects. Automotive grade Linux is a great example. Finally, collaboration between OEMs is something that’s becoming more common because scale is one way to beat the tech giants.

If there is an IVI voice ecosystems like Google Assistant or Alexa available, why is Daimler insisting on introducing Hey Mercedes, why remain proprietary?

They aren’t willing to give up on that in-vehicle brand experience to the point where occupants are interacting with a non-proprietary voice assistant. They want to have their own proprietary systems in the vehicle to build out the brand extensions, rather than just signing on the dotted line and saying to Amazon or Google: “Our consumer, it’s now yours…”

What are the macro-trends in car IT and connected vehicles for the next five to ten years? 

OEMs aren’t happy with the software as a service (SaaS) solutions on the market for connected vehicles as they can’t change or add new features to those platforms with the providers quickly enough. The cost profile is too high, or they waste cycles changing service providers from model to model.

So we’ve seen companies like Volkswagen acquiring Wireless Car, Daimler with its TSS division, GM with its OnStar vision and Ford with Autonomic. They are building up their internal cloud and platform development capabilities so that they’re not dependent on SaaS providers. 

What about software businesses looking to capitalise on this?

Companies like Amazon and Microsoft are rightfully capitalising on the idea that OEMs want to digitally transform themselves. So they come in and say we’re going to give you the infrastructure. We’re going to give you a number of our market leading cloud platform services for IOT and then you can build your own proprietary software on top of that, maintain control over what you’re bringing to market from a connected vehicle perspective. 

And the OEM wants to monetise all of this consumer data from the vehicle. Part of that is internal analytics and data science programmes, but another part of is working with partners who have brought together different external industries such as insurers, governments and so on who are willing to pay for that data. 

So there’s a level of outsourcing that’s happening around the exposition of consumer and vehicle data to third parties. That will become much more popular over the next five years.

Will we see a real disrupter from Silicon Valley, one that finally builds a marketable car?

Yes, but what form that ends up taking might be different form what people expect. It will be small scale. Google or Apple are not going to announce, and then within a year have robo-taxi services in the 50 major metro areas globally. They’re going to be taking a slow-and-steady approach to building their own vehicles. Apple and Google in particular are going to have completely different ideas about their business model, and be how consumers use the vehicle.

Google’s willing to partner with FCA for its Waymo division, using the Chrysler Pacifica for the platform. Whereas Apple has published almost nothing about what they’re doing from the car perspective. 

In either case though the biggest issue to the industry returns to that theory that the OEM business model becomes commoditised, and so that’s where we’re seeing investment hedging that risk. Even if the tech giants aren’t to market yet, OEMs at all costs want to avoid that commoditisation.