The Race To Build Technology For Connected Cars Speeds Up

As cars and trucks become “smarter” (deeper connections to the web, improved self-driving capabilities), the technology required to keep those vehicles connected to the digital world is becoming more important. An example of that came this week.

According to Bloomberg, Japan-based wireless provider KDDI, which developed an “auto connectivity platform” for Toyota, has “signed on several other Japanese carmakers to test and deploy the technology.” KDDI declined to name those companies until the deal is formally announced. Toyota has a 12 percent stake in KDDI, the report said.

The platform in question is a “data communication module that works around the world,” Bloomberg said, enabling vehicles to access wireless networks without the help of global roaming services.  The report continued, “Rival carmakers are forming similar partnerships with telecom and technology companies as they compete to provide drivers with in-car connectivity and develop vehicles that avoid accidents and, eventually, drive themselves.”

In fact, the market for global automotive connected-car technology is experiencing an 11 percent compound annual growth rate (CAGR), and will reach nearly $8.5 billion by 2021, according to Technavio.

“The global automotive connected-car platform market has the presence of many vendors, and the market is witnessing the introduction of new players, owing to the rising demand for connected-car technologies across the world. Hence, the competition among the players is expected to intensify further during the forecast period,” Technavio said.

Among the direct factors driving that growth is the introduction in the European Union (EU) of eCall, an in-vehicle device that automatically contacts authorities after a collision on the road. Starting this past April, all new vehicles sold in the EU were required to have eCall.

“Regulations for emergency response systems like eCall are expected to fuel the demand for the automotive connected-car platform during the forecast period,” Technavio said. “For instance, Cisco Jasper is gaining prominence in the automotive connected-car platform market as Cisco is expanding aggressively to collaborate with OEMs for the adoption of the connected car platform.”

Besides Toyota, other carmakers are forming partnerships around connected platform technology. Honda is researching the technology with SoftBank Group, which also provides wireless communication services, according to Bloomberg. And AT&T has said it is “working with 25 of the largest car and truck makes — including Audi, Honda, Tesla and BMW — on the technology,” according to that report.

Such moves present new opportunities for wireless carriers, Bloomberg noted. “KDDI is betting on ‘internet of things’ platforms, like those used for connected-cars, for growth as the phone market has become saturated in Japan, where the number of wireless subscriptions already exceeds the population.”

The growth and increasing revenue appeal of connected-car platform technology comes amid a greater focus on who will control the data from those vehicles, as described in a recent PYMNTS article about automotive data sharing. For instance, industry observers say that nearly every new vehicle that is bought or leased is, by default, programmed to share data with manufacturers.

“Data security and privacy are among the most critical drivers or inhibitors in the next generation of mobility services,” said Sarwant Singh, senior partner at Frost & Sullivan. “Automotive OEMs and mobility service providers know how important it is to be responsible data stewards and earn consumers’ trust.”

As regulators, lawmakers and industry leaders work out the security and privacy issues, the technology required to make cars and trucks a bigger part of the digital world seems likely to develop quickly, given all the major players involved.