With the move towards the car as a software defined vehicle, it ceases to be just mechanical carriages to get people from A to B.
Jeremy Rollison, senior director of European Union government affairs at Microsoft rightly argues in a recent edition of The Parliament magazine that cars are now more like electronic devices than pieces of mechanical engineering. He believes this shift creates a number of challenges, while also unlocking business models and revenue streams in the form of connected experiences and mobility services for customers.
This transformation is leading automakers to team up with technology providers to overcome their challenges as vehicle manufacturers would not usually be described as being digitally native. It’s just not been their primary area of expertise. So, it is justifiable to seek expertise from outside of their industry from within the software space. Automakers have a choice. They need to commit to partnerships to either build and monetize smart services; or catch up fast to be able to develop in-house hardware and software for the purpose of creasing value.
Key to this value creation will be their ability to collect and analyze consumer and vehicle data. Why? Well, they need to exploit data to generate a profit by offering data-driven cloud services. This could be achieved by working with technology vendors such as Microsoft. Such a strategy as this could transform automakers’ operations by creating efficiencies in production and logistics. It could also enable innovation in areas such as road safety and autonomous driving and unlock new mobility solutions by leveraging insights from connected vehicle data, Rollinson argues.
In his article he adds: “It is clear where European carmakers increasingly see their future. VW estimates industry revenues from software and services could hit €1.2Trn in 2030, and Stellantis’ projections are €4Bn a year by 2026 and €20Bn by 2030. It is why we are now seeing these companies hire more software than mechanical engineers.”
“Partnerships with technology providers like Microsoft allow the European automotive industry to transform, creating efficiencies in production and logistics, enabling innovation in areas like road safety and autonomous driving and unlocking new mobility solutions by leveraging insights from connected vehicle data. Advanced cloud technology rests at the core of this transformation.”
Jean-Pierre Dumoulin, Stellantis connectivity and IoT infrastructure senior fellow, says that his company has for more than a decade focused on cloud technologies for mobility and services. This development has accelerated since 2021 with the creation of a new software division. He adds: “With a strong partnership with Amazon, Stellantis forecast €20Bn revenues in 2030 based on connected vehicles services, fata services, features-on-demand, and software-defined vehicles.”
Automakers are at an inflection point, says Dave Nemtuda, senior director, OEM product and business development at LexisNexis Risk Solutions. While for 100 years or so it didn’t change much, it’s now very much in flux. This is driven by industry trends such as autonomy, connectivity, and electrification. To this end, he says automakers are making significant investments in the technology and features in their connected vehicles. “New business models focused on recurring relationships with customers and evolving distribution models are driving many more direct to consumer interactions powered primarily by connectivity. The cloud is a ‘must have’ for a cost-effective mobility solution provider. Connected Vehicles produce a tremendous amount of data and mobility providers need capabilities to store, process, analyze and act upon said data.”
AI cloud driver
Artificial intelligence (AI) is another driver for the cloud, which plays an essential role in its development. Danny Shapiro, vice-president of automotive at Nvidia says data has to be collected, curated, ingested, labelled, and used to train deep neural networks. From a computing perspective, he describes it as being a massive undertaking that involves an iterative process to enhance AI models.
He explains: “Once the models have been created, they are tested and validated in the cloud using simulation. Only then can the AI software can then be installed in the vehicle via over-the-air updates. This process will continue throughout the life of the vehicle. While the car is operating, connectivity to the cloud is not required but it is an added benefit for getting information from a variety of sources such as traffic, infrastructure, and weather for safe driving operations. An autonomous vehicle must remain exactly that, autonomous. So, autonomous driving decisions must be made onboard and not in the cloud.”
Cloud is everywhere
However, the cloud is everywhere in mobility, suggests Dumoulin. It provides computing power, scalability, and opportunities for collaboration. He also concurs with Shapiro that AI cloud-based solutions are the key to the future of mobility. They will enable autonomous driving and an enhanced customer experience. Technologies such as vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) solutions via 5G networks are also deeply relying on cloud. Dumoulin describes them as being “mandatory enablers for new mobility experiences”.
Nevertheless, he agrees with Jamie Warren, technology principal at Futurice UK, by arguing that cloud is not defining mobility in any absolute sense. Yet using the cloud to define the best customer experience, Dumoulin says, remains a key success factor. He adds: “Stellantis also stays attentive to affordable mobility, there will still be a place for simple non-connected vehicle – like AMI. Cloud doesn’t define mobility which remains a human activity at its core. Many other social and cultural factors contribute to defining mobility. These include changing patterns of work, economic activity (and pressures) along with environmental concerns.
“That said, cloud is absolutely an enabler. It’s an enabler not just for the individual driver – or the growth of services like ride-sharing and car-sharing, it also enables potential collaborations between industry players. Cloud, and in particular data sharing, offers novel B2B value exchanges. We expect to see products and services created that make use of advanced vehicle performance and maintenance data in areas such as insurance and on-demand at-home repairs and upgrades.”
With the cloud he finds new B2C business models are beginning to emerge. Automakers are looking at how they can evolve driving experiences through subscription services. Some automakers are offering services such as heated seats, improved performance and acceleration. He adds that cloud-based connectivity solutions could improve safety by allowing cars to communicate with each other (V2V Communications) and infrastructure (V2I) to warn of upcoming hazards such as traffic jams or accidents.
Manish Menon, global program manager at Frost and Sullivan says there are six cloud catalysts, which include cloud connectivity. With cloud connectivity automakers can improve and future-proof vehicle designs, open up new services, improve the UX and enable data monetization activities. Data can be used, for example, to future-proof vehicle design making sure the design of a vehicle is up-to-date with the preferences of a particular consumer socio-demographic. For example, in Europe there has been a shift away from hatchbacks to SUVs, and globally there is a shift towards SUV. This has been occurring since 2015, it’s a shift that has occurred for multiple reasons.
He adds: “With user interface and UX, the benefits of cloud connectivity allow OEMs to know whether I am using infotainment devices or my phone. This can be about a song you prefer or lighting in the vehicle. This data is being collected these days. This is where the machine learning part comes into play. With so much random data inside the vehicle, you can put it into a model to improve what UI and UX looks like.”
Data analysis: crucial
Nemtuda concurs that data analysis has a crucial role in the development of the future of mobility. He says cloud-led data analysis will drive efficiency of the consumer activation and reservation processes. It will also be used to optimize the ‘mobility fleet’ of vehicles, which he says are about what vehicle is needed at what location and at what time and date. He says cloud data analysis will also enable in-vehicle add-on services such as enhanced navigation, entertainment, performance features, consumer risk assessment, including a driver’s license check.
Dumoulin believes that the next steps for the future of mobility in the cloud involves AI for autonomous driving. With the enablement of the cloud, it will lead to the development of predictive solutions, MaaS, intelligent transport systems and 5G. In the longer term, he thinks that satellite communications “could enable ubiquitous connectivity and progressively move the computing power of vehicles in the cloud, enabling full cloud-based vehicles”, which he predicts will be more simple and less expensive.
In conclusion, Shapiro claims that automakers will be able to do things they could not previously do with traditional vehicles by putting the cloud infrastructure in place. In the past people used to buy a vehicle, which would then immediately and progressively depreciate. Yet with a software-defined car, like with a smartphone, they will purchase a vehicle that has only the very basics on it, and improve it by adding functionality and services to it over time with each cloud-based software update. The future of mobility is therefore going to be very much in the cloud.
— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_