Connected Car Report 2016 risk opportunities and agitation on the road autonomous vehicles

Remote hackers Kill a Jeep on the road-with me in this

Connected Car Report 2016 Opportunities, risks and problems on the road to autonomous vehicles.
By Richard Viereckl Dietmar Ahlemann, Alex Koster, Evan Hirsh, Felix Kuhnert, Joachim Mohs, Marco Fischer, Walter Gerling, Kaushik Gnanasekaran Julia Kusber Juliane Stephan, David Crusius, Henning Kerstan Trent Warnke, Schulte Manuel Jonas Seyfferth Edward H Baker.
The race to build the fully connected car, and ultimately completely autonomous vehicle is already underway to cross the finish line successfully, and exactly where the finish line is, remains to be seen in this report based on extensive market research, interviews with experts from the automotive industry, and engagement with automakers, suppliers and technology companies worldwide automotive practice of strategy, strategy consulting group PwC, answers these questions.
Today, 70 percent of sales of services connected world come from premium brands In 2022, this figure drops to 50 percent at the expense of declining margins While connected services generate sales of 155 billion USD, most this value will be offset by lower sales of existing features such as navigation, entertainment and security systems These trends contribute to a tightening of benefits to OEMs and suppliers increased R & D costs will not convert an increase in global sales of the supply side, by 2030, the benefits available to traditional automakers and suppliers may drop 70 percent to less than 50 percent of the entire industry the balance 120 billion can be captured by new entrants, including new technology suppliers, mobility services or digital services Many of today's manufacturers and suppliers lack the skill, agility and courage to transform their digital business quickly enough to take advantage of this change.

The report is divided into seven sections, each focusing on a key issue on the opportunities and risks are in the business models of the industry, the ecosystem, market growth, distribution and technology involved in the development of the car connected.
How technological change affects the distribution of value in the rapid auto industry restructuring.
How can manufacturers to recover their investments in connected and autonomous vehicles.
How quickly the market for connected packet car grow, and how revenue opportunities decompose in terms of area car segment, and packet type.
How suppliers are transformed by the change of the whole sector, and what would it take for them to succeed.
How China will enter the automotive market connected, and how those efforts, encouraged by his digitally sophisticated car buyers and a wide range of innovations, affect the car of the future.

How will be connected car technology protected against cyber attacks and how automakers respond effectively to organizational and related technical challenges.
How autonomous vehicle technology, now in the early stages of development, transform the driving experience of the future.
Car manufacturers, suppliers and technology companies are starting to jockey for position Our goal here is to provide a deep understanding of where your business is located, and what it takes for you to win.
Dietmar Ahlemann, Evan Hirsh, Alex Koster, Felix Kuhnert, and Richard Viereckl.
D rivers around the world use the growing amount of digital technology in their cars Many normal characteristic of the performance data of car monitors such as speed, energy efficiency and the level of gas tanks; heating and cooling; and the audio system have all been scanned in the hope of providing the driver easier use and better information and car, including smart phones and other devices carried on by drivers and passengers now reached around the world surrounds for streaming music from the cloud, real-time traffic information, roadside assistance and personalized recent innovations allow cars to monitor and adjust their position on the road to alert drivers s' they are drifting out of their lane, and slowing down if they get too close to the car in front of all in all, today's car is a technological marvel.

The car of tomorrow will be a radical change in form and function, compared to what's available today Although many commentators have described the future in terms of autonomous vehicle, which is just a part of the change to come The vehicle of the future is already taking shape in a variety of forms, although it is unlikely to reach full maturity on public roads and highways 10 and 20 years, however, there will be enough innovation before then to transform car there will be new levels of connectivity between vehicles, enabling new services inside and outside the car there will be new types of cars, many people dedicated to specific uses, such as round -Hailing and ride sharing fleets of car culture, including the conventional wisdom on how vehicles should be controlled and managed, change has succeeded already, the very notion of what a car is for radically rethought.
These changes to motor vehicles will, of course, also transform the automotive industry that the connected car matures in technology, it will influence market trends and automotive functionality relationship builders such as safety sensors, signals maintenance detailed engines, and integration of smartphones are already becoming common in the new luxury vehicles industry leadership will move, in some cases, new players, while traditional manufacturers of equipment OEM original is pressed greatly accelerate their innovation approach not only in technology, but in their cultures, approaches to mergers and acquisitions, management styles, and talent recruitment.
In this report, we take a deep look at the way the car is being transformed by technology, and what are the economic consequences of this transformation will be for many players in the automotive industry worldwide automakers, suppliers, technology and software companies, fleet operators and others but first, it will be helpful to put it in context, and watch market developments and structural changes underlying the current and future development of the connected car and autonomous vehicle.
For the purposes of this report, we use the following definitions.
connected cars are those who have access to the Internet and a variety of sensors and are therefore able to send and receive signals, the direction of the physical environment around them, and interact with other vehicles or entities.

autonomous vehicles also known as self-driving cars or robotic cars are vehicles running without human pilot, which reduces transportation costs and enhances convenience and safety in most cases.
This report contains the results of Study 2016 Connected Car, the fourth since 2013 The annual survey is conducted by the practice of automotive strategy, consulting group PwC strategy is based on an analysis of market volume, data innovation and industry growth, consumption research and interviews with industry leaders It explores the technologies involved in the development of these new forms of motor vehicles, the dynamics of the industry likely, and emerging market for the present and future.
Progress towards connected cars and autonomous vehicles is stimulated by four interdependent trends All of these are leading to changes in what cars are and how they're used.
The radically new technology cheap Technological innovation is accelerating, especially the quality of connectivity based on the fifth generation wireless technology capable of broadcasting data from near real-time cloud; the computing speeds needed to run artificial intelligence, and directing a vehicle self-driving; the evolution of low-cost complex sensors that can make a car act as if she is aware of its environment; and the software that ties it all together innovative companies, both established automobile manufacturers and newcomers to the technology industry, investing accordingly in new technologies and new services This is especially true in the high-end market where automakers like BMW and Tesla are pushing technology to the limit, but other types of connected vehicles are developed as well, including urban cloves low cost, Robo-taxis, even the 3D printed bus.

The high-tech new entrants leading high technology companies faster Nontraditional are not just offering new services such as add-ons for automobiles They gain traction on the same technology that makes cars run and in so doing they disrupt the value chain of traditional vehicles Mobileye technology, for example, provides solutions throughout the SoC for driver assistance systems, and Nvidia manufactures systems for functions of the dashboard and autonomous driving and mapping meanwhile, Apple would have invested up to 10 billion in an iCar, while Google is working on a complete operating system for connected and autonomous cars own self-driving Google cars have already covered more than May 1 million miles These and other newcomers operate differently automakers traditi ls and suppliers, with a greater willingness to try new ideas and accelerate product development cycles of their business models based on the data is different too, being much more dependent on revenues to over rvices and selling information as such, they have the potential to significantly change not only the car itself, but how the whole industry works who will be where in the supply chain from the foundry to the client that the right to win many new players have identified the car as the most attractive place to enter this industry.
New concepts of mobility and customers increasingly urban tastes and interests of potential buyers are subject to a substantive change Urban residents in western markets seem to lose interest in owning their own car, a trend exacerbated by their desire to move to urban areas, where just aren provided your car and where public transport and sharing applications can ride easily meet their needs in the face of affordability Millennials problems; some live with their parents or in households shared and put off homeownership why Although car sales at record highs in affordability of automobiles in the United States remains a key limitation for future growth the movement towards car sharing and carpooling services will be driven largely by significant reductions in transport costs expected with cars connected Meanwhile, in China, where the members of a huge and growing class average still dream of owning their own car, making them by far the largest market for new cars in the coming years, new drivers are already waiting very sophisticated levels of connectivity and services in the cars they buy.
Changing delay regulatory and political constraints of policies and regulations generally technological progress, at least at the beginning of a new phase, for example, seat belts were first offered as an option in 1949, but the legislation requiring their use did not appear until 1970, in Victoria, Australia, we can expect the regulators to address new technology laws ensuring the safety of unmanned vehicles, once the technology is available, however, the towns offer momentum discouraging the use of private cars, especially those who led by electricity, or by public policies such as congestion pricing and additional bike paths by controlling emissions directly.
These trends explain why car manufacturers have invested heavily in related technologies, new carpool services and other transportation options, including prices that investment in Uber Toyota, VW and GM's in Gett s Lyft and he explains the entry into the market of digital readers centric data such as Google, Apple and Alibaba, are all sensitive to the changing demographics of driving and non-driving public.
Given the many factors that now influence the automotive industry, and many newcomers looking to grab a share of the action not to mention the dense fog of hype obscuring what is real from what is not there there is a possibility of real risk and industry at the moment as income and material moving profits to software, from products to services, and from the old economy to the new, some players will succeed and others will falter exposure breaks down how one industry is likely to change between 2015 and 2030, if current trends continue as expected.

Table 1 Scenario for value shifts in the automotive industry, in 2015 30.
Much of the overall industry growth will come from emerging markets, while growth in Western markets will be flat or even decline slightly.
Overall, the auto industry appears healthy, with revenues increasing by 5 trillion to 7 $ 8 trillion, and profits of 400 billion to 600 billion A closer look however, indicates that changes in value will be significant much of the overall growth came from emerging markets, while growth in Western markets will be flat or even slightly reduce the automakers will increase revenue, but their proportion of all revenues will decrease, as the proportion of income the secondary car market will grow faster than the average, at least in the short term, shared mobility increases use, but it will decrease later with growth electric vehicles will revenues suppliers of engines, interior and chassis electronics, software, cloud computing services, and batteries and carpool income robofleet and similar sectors will grow even faster, as well as income from pure digital services such as on-board entertainment and location-ba sed information providers.
The benefits of the industry will be more likely to bifurcate the benefits of new cars will decrease as the industry moves to less differentiated, low-cost vehicles such as Robo-taxis, as robofleets put price pressure on manufacturers automobiles, and the cost of the car technology increases But electronics suppliers and technology, including batteries benefit from strong volume growth and high margins comparably their more sophisticated components and bring the shared mobility digital services will capture a larger portion of overall profits, thanks to strong growth in these businesses and healthy margins they can achieve.
Estimates cited depend far the connected car, and finally the self-driving car, changing to include a wide range of technologies and services part 2 breaks them into three main categories.
Table 2 The complete line of connected cars technology and services.

Consumer Services Offers include Internet- and digital cloud services that add to the driving experience Some are general Internet services such as entertainment, e-commerce, social platforms and adaptations of health services consumed outside the car that should continue to provide their current players of other industry called intelligent mobility services, are more specific to auto travel, and can be part of a bundled option They include carpooling, the car sharing and services related to navigation such as finding nearby hotels and room reservations recommended many industry leaders, OEMs that manufacture and sell automobiles under their brands, pour significant amounts money in innovation and mastery in this area the role these manufacturers automobi them will ultimately play in this space, beyond providing the necessary connectivity drive and displays, remains to be seen.
Connected Car packages These functions, which use advanced features to improve or help manage the operation of the car will be offered as bundles for both retail and commercial buyers cars At present, most are supplied in unique shape, built-in features, but they can also be in the form of services based on subscription or aftermarket systems, or made available through smartphone applications Finally, they can be absorbed in standard features of the security package today, for example, includes features such as automatic braking systems, protection against collision and emergency assistance, but this category matures, it will become becoming part of the whole autonomous driving, which will gradually automate the driving activity of the character Car Car eristic online services also cover vehicle management services such as fuel-efficient driving, remote maintenance, logbooks and other capabilities.
This supply side technologies are the underlying systems that connect the car to the world and support the provision of the other two groups in the past, they would have been provided by traditional suppliers in the industry in the future, these systems will be more provided by the latest technology companies and even car manufacturers themselves, if they can vertically integrate fast enough to compete with the integration, however, is already proving very difficult supply-side technologies include assistance systems for ADAS conduct; Human Machine Interface HMI; infotainment support; and services for providing access to connectivity, computing, and the cloud.
Underlying all this is the car itself, of course, will pass through his own transformation We expect electric vehicles to be sold, and the car to take more specialized forms, including top vehicles at long range distance and cheap -VOLUME urban pods and Robo-taxis and other vehicles sharing startup.

It is clear that the traditional car manufacturers and suppliers need to significantly accelerate their ability to transform their current rate of innovation is too slow to keep all new players enter the field This is particularly true in the areas of new capacities technological, piloting and launching new products, and sets the legacy and spirit overcome functional silos.
The answer is not necessarily to pump more investments in the connected car or autonomous driving technologies, but investing more thoughtfully to recognize your company's strengths align with the new technologies and how to build the capacity to differentiate your business and stand out in the new technological environment You may also need to speed up your own internal management transformation to become more agile and monitor change, while maintaining and improving your distinctive identity as an automaker.
The outlook and earnings for the connected car manufacturers.
Besides the differences between low-cost and luxury cars look almost alike Most of them now offer dashboard displays that allow pilots to operate different functions in the car and monitor the condition of the car via a digital interface, but otherwise, the cars have not evolved that much of the 20th century more models, today's digital features are costly, complex, unintuitive, and unsexy; 500 smartphone offers a more compelling user experience.
This why vehicle manufacturers, suppliers and various technology companies have already invested billions in developing new technologies and services that could differentiate their offerings top five manufacturers spent 46 billion on R & D in 2015 to 8 percent increase year-over-year for most of the industry, however, success has been elusive and there is very little noticeable difference between the players.

Not surprisingly, these spending levels have also raised the anger of CFO of the automotive business, which continue to challenge current and future returns of these investments continued infighting between carmakers traditional R & D departments and their new stores of Digital innovation uncertainty about the technological feasibility and business case for connected services also slowed progress.
The question is this How can companies in the automotive industry make money in the world of connected cars Specifically, how can they take advantage of the new services they develop for cars The answers are not obvious, but they are visible when you start to differentiate the options and opportunities based on skills that automakers have already generating profits and customer loyalty.
The value of available sources for the automobile industry and its surrounding ecosystem are emerging Some of these income gains can be achieved today, while others will not become viable for several years, even decades five levers creating the most probable value are as follows, ordered so that those with the potential for short-term cash flow come first, and those who have long-term appeal later.
Sales of motor connected packages to consumers, most come with new Audi cars, Mercedes-Benz, and Tesla are already doing.
Use of car connected data to increase the internal efficiency, quality and product differentiation.

Defense of the price levels of the list by the differentiation, using the connected services to strengthen customer loyalty.
Setting up a complete ecosystem of consumer services, with revenue sharing.
Creating systems for the use of customer data, such as a customer information database, to monetized through future business models and yet unspecified especially in mobility services and transportation options multimodal.
Companies need to reassess the strategies they use to create value, the capacity to carry out these strategies and even corporate cultures that support their traditional ways of doing business.
The success of these efforts won t depend on work that customers want and build rather, it will take a full on rethinking how OEMs, suppliers and technology companies work separately and together, in the new business ecosystem for the connected car development This will require that companies reassess the strategies they use to create value, the capacity to carry out these strategies and even corporate cultures that support their traditional methods, pre-digital do business.

If you are a carmaker, we see six primary movements you can do to capture some of the value available in the world of connected cars.
Change your mental model Remember that the connected car is not a product but a set of technologies that will change your core business model will require a change of mental models business leaders corresponding for example, while a typical new car develops seven-year cycle, the cloud-based services are regularly developed in the months and deployed in real time to customers worldwide the combination of services and data allows for instant, sometimes the innovation in customer service directed otherwise cloud infrastructure allow separation equipment, services, software, and data, enabling specialists to enter the field of car manufacturing to a number of points.
You must also understand the value of analysis and learning technologies of the machine to create dynamic processes in real time in service and customer interactions, enabling companies to capture significant savings through automation and predicting customer behavior because the entire customer relationship will change as digital access will create a direct link to end customers, with which OEMs can interact almost every day, not just when they're considering the purchase of a new car.
Cannibalize your cash cows and build a premium experience to today's OEMs take a micropricing approach to selling online services encourage customers to purchase a variety of existing navigation, infotainment and safety features on a base la carte This approach creates too much complexity for customers, dealers and builders themselves, with little added value, it will soon be replaced by cheaper and better connected services offered by OEMs and third digital readers as well.

According to our research, when the first purchase customers are willing to pay up to 15 percent of the list price of a car, or up to 10 000 for technology connected car But this figure down 90 percent or more snapshots customers complete online configurator, and few companies in the automotive industry or any other so far have managed to make customers for life subscribers Consider struggles streamer Spotify music to move users to a subscription model; to date, only 30 percent did.
If you want to establish connected services as a revenue source, you must learn how to sell and not the technology itself, but an experience bonus, in which these services are reconfigured into multiple digital beam that can be sold at different prices, depending on their sophistication the key is to take a page companies like Apple and Samsung on how to use digital services to keep prices premium in the market including Think about cloud-based services that can create stickiness, lock -in even if migrating their data to another provider is painful enough for customers reluctant basic mobility services could for example be complemented by services like Siri driving using a natural language processing software as part of the brand experience and learning of driver behavior as expected ncer training their car again if they switched brands.
Set reasonable expectations for your own innovation development can t expect business prospects to depend on the services you aren t equipped to provide, for example, many car manufacturers dream of maintaining a platform for companies to third-party content for drivers and passengers Unfortunately, this strategy is likely to continue to be a dream.
True, the connected car, especially the autonomous car, will eventually emerge as the fifth screen in the lives of people the next point link between media consumption after movies, televisions, personal and mobile phones computers If you are a car manufacturer, it's very unlikely that you'll always be able to monetize this screen beyond the supply of equipment and software in the car itself, you face the same dilemma as telecommunications companies , which provide the pipes through which many online services of travel but do not generally receive income content.
Most carmakers didn capabilities to create a company focused on the content or keep it with the speed and flexibility of a true digital supplier Even when they've turned to acquisitions to acquire expertise, differences in culture and priorities have so far kept these successful businesses you might be able to provide services related to mobility, such as finding a hotel or the cheapest petrol station in the area, but these deals won t create many independent value, except as part of your service package.

Instead, focus on innovation Create your driving experience with access to your car without friction transparent many features and interfaces to technology partners Why not let the companies and digital entrepreneurs established digital media; online mode, the grocery store, and retailers of electronic products; Online health care providers; and access as your captive audience, while taking a share of what they sell.
Use your data in many sectors, such as retail, banking, airlines and telecommunications companies have long used the data they collect customers and their connected devices to improve products and services, develop new offers, and more effectively market the automotive industry has been frequent digital touch points to be able to do the same the connected car changes all that you can now have access to an RF return channel drivers and passengers provide an overview of driving habits, preferences touch point, the digital service use and condition of the vehicle, in near real time These data can be used for all sorts of things, including the development of new products, preventive and predictive maintenance, optimized marketing, u pselling and make data available to third parties is an opportunity not to be missed.
Moving steadily toward autonomous technology Tesla Death of a test driver in a road accident in June 2016 will not slow down the development of fully autonomous car within two months of the accident, Audi announced that he set up a self-driving subsidiary, Ford said it was the release of a fully self-driving car in 2021, Volvo said it would test a standalone robofleet the streets of Pittsburgh in early September.
The self-driving car will be the most valuable contribution to automakers top and bottom lines in a generation The share of the world drivers who say they look forward to these technological miracles is growing rapidly, and these drivers say they are willing to pay a premium for the convenience course, even autonomy will eventually become a standard feature on cars, but no OEM can not afford to miss this opportunity.

Resisting diversification in companies where you lack the capacity to earn With the advent of truly autonomous vehicle is an opportunity to deploy a full range of rental mobility services automated cars, carpooling frictionless fleets hailable Robo taxis all available digital platforms based on cloud many manufacturers are in pursuit of this vision, despite its many risks you can see a huge potential, based on the market capitalization of carpooling services.
Most manufacturers are realistic enough to admit that they lack the ability to succeed in the mobility space, although they also understand that these platforms may well become the automotive industry that Google and Facebook is the Internet points of convergence and control they have taken stakes in mobile companies, assuming that this will give them access to capabilities, technologies, skills and cloud platforms Toyota has invested in Uber, GM in Lyft, Apple Didi Chuxing, Daimler and VW myTaxi Gett, while BMW's DriveNow.
Unfortunately, most of these investments are not likely to pay as OEM, you are not likely to be the best owner of one of these companies, it will be difficult to build scale, synergy with your heart business car manufacturing and access to the right talent capabilities required for a digital platform rapid success of products and services development, a powerful management of digital customer relationship, large analytical data are misaligned on the strongest capacity of a typical OEM Worse, mobility investments can distract you from your core business.
The way forward for the automotive industry is plagued by uncertainties overcome speed bumps, pitfalls to steer around, traffic jams to negotiate, as the number of players looking to capture some of the value taken multiplications Just keep the movement EXPRESS- technological revolutions taking place, and many new business models, they are enabling, is no easy task.
It is clear that many manufacturers will struggle to fully participate in valuable pool already established as the industry digitizes For them, the risk is that they become mere vehicle manufacturers increasingly commoditized dumb pipes on wheels through which the connected and mobility really valuable services spend But the rewards for those who can understand how to move the digital value chain and still be closer to the customer will be.

Dietmar Ahlemann, Alex Koster, David Crusius, and Henning Kerstan.
C onnected cars will be more entertaining, more efficient and safer than conventional cars, and they will release drivers to conduct other activities along the way to work, run errands, and when traveling, but how much money the OEM automotive industry is to be able to make the connected car This is a difficult question to answer to fitness as the car of the future is still uncertain will, as the exact nature of connected and standalone packages that automakers likely will sell their cars.
In the future, OEMs will probably sell their cars, and trying to capture the value added package with three primary options connected safety, including driver assistance, channel management, etc., driving autonomous, including adaptive cruise control and self-parking, among other and connected car features and services, including vehicle management, consumer-oriented, and commercial applications.
The specific contents of each package will change over time Most features of the current security package, for example, will eventually converge with autonomous driving package cars become more autonomous Until then, the security features are most often sold as part of a new car and included in the list price of the car in the future, the autonomous driving program will expand to include new features such as predictive choice of driving profile, a range levels of automation standard driving mode congestion and vehicle parking mode To- communications vehicles designed to predict dangerous conditions, and active communication with the surrounding infrastructure and all ultimately connected services include driver and customizing passengers via cloud services; voice, gestures, and motion control; augmented reality; biofeedback; integration with wearables and home; and the ability to define internal climate controls of the car before the drivers enter.

Our research shows that the global car market has the potential to create significant value from the sale of connected packages car to end customers fully 155 9 billion in 2022, up from 52 to 5 billion in 2017, representing an annual growth rate average 24 percent 3 Table 3 realizing that value, however, will depend on a number of critical actions.
Table 3 connected car Estimated revenues and market share by product package, in 2015 22.
Improving sales channels for connected services if this potential value is to be fully realized, OEM will sell 320 million packs of cars connected between now and 2022 Current data suggest that by the end of 2016, equipment the world will be able to sell 1 4 million car packages logged a month to reach the full potential value of the technology, they will increase this figure almost six times, 8 2 million packages per month this Sá commercial challenge and mass distribution that few companies are equipped to meet dealers and e-commerce channels today are unable to explain the benefits to consumers or manage service requests new complex features of the related vehicle technology new investments and changing practices of sales and customer service will nécessair es.
Integrate and features beam in a simple car experience Simplicity sells other sectors such as telecommunications and the media demonstrated how bundles get better sales and loyalty of the brand.

Today, 40 percent of the value of the package connected car is priced in the price of the car's basic list Exhibit 4 This ratio varies with the package.
Table 4 Connected potential value of the car package, price list vs selling options, 2016.
In the future, we expect that the features will commodify, and a much larger share of connected car services will be sold under the base price list This supports an overall experience simpler and more integrated to car owners.
In 2022, the autonomous packet will have the greatest differential impact on sales of approximately 54 9 billion cars, up 31 percent per year from 2017 and 58 security packages will generate 2 billion in 2022, a average annual growth rate of 27 percent, most of the value will be included in the list price, and eventually integrated into autonomous services connected packages packages will be third in value in 2022, bringing to 42 8 billion , a growth rate of 16 percent and a part of this potential will be captured by third players, driving down both the participation rate and price OEM deals.
In 2022, 75 percent of online car packages will be sold as part of small cars cheaper, and prices for the package will be correspondingly lower.

Prepare to spend premium sales volume The market for connected packet car in 2017 will continue to focus on high-end vehicles, where 33 8 billion, about two-thirds of the total value will be captured No surprise because OEMs generally focus their product launches on the upper end of the market, and the value added services can help justify the high prices they get for these cars by 2022, however, the value of the connected car to find on the market volume will catch up, reaching 50 percent of the total seat of part 5 by then, 75 percent of online car packages will be sold as part of small cars cheaper , and prices of packages will be smaller proportion of the large increase in the volume market will cut costs and put risk differentiation Yet companies that can design a vehicul e distinctive large public, cheaply connected with major car and features autonomous vehicle could carve out a powerful position.
Exhibit 5 Projected connected car share earnings between high-end cars and volume, 2017 22.
On a car base by base, packages connected car will represent March 8 percent of the total price of high-end cars, or 4243, 2017, and this will rise to 14 2 percent, or 7513, in 2022, the volume market however won t see similar gains ,; Figure respective 2017 April 5 percent of the total, up to 6 9 percent Exhibit 6 This difference is partly the result of more buyers of premium cars that opt ​​for these packages, while only two-thirds of cars on the market volume will be logged Thus, if the automakers hope to slow the commercialization of their online car packages, they will understand how to monetize these packages more on automotive markets volume.
Table 6 cars Ticket prices connected as a percentage of total vehicle price.
This requirement is made more difficult by the fact that compact small cars and subcompacts will take an increasing share of volume markets and account for 67 percent of the total potential of the market in 2022 it would be moving up from 55 percent in 2017 More the car, the higher the price list and thus more potential value packages connected car accordingly, it seems likely that the connected car features more mature, lower prices, are becoming as common as air bags are aujourd 'hui and eventually lose their ability to differentiate.

Staying in the market development but does depend on many automakers see developing countries, especially the BRIC countries Brazil, Russia, India and China as a huge market growth for their cars, but the impact on earnings potential value in connected cars, we believe, won t be as great as hoped; the automotive markets, these economies will not be too big for the rest of the world the one hand, although growth in the volume of cars sold, there will be high, the price of these cars will probably decrease a result, the potential car value connected in the European Union and the United States overall, about 70 percent in 2017, will decline slightly, to about two-thirds in 2022, while the value of the BRIC markets will increase to about 27 percent of 24 percent next year see Exhibit 7.
Table 7 potential Connected car revenue by region in 2017 22.
The risk faced by all OEMs moving further into the world of connected cars is that they could be overwhelmed by third party suppliers who can provide the same or similar services in the market, be it at a cost significantly lower or free, thanks to a monetization model quite different, which is a model to make money from these deals If this happens, OEMs will not be able to monetize their services as planned, and these services will become faster trivialized and included in the list of car prices as musts, rather than nice to haves This is already happening with car packages connected base in the volume segments.
Essentially, OEMs and third-party providers are facing a race for innovation in connected cars will expand the share of products services in automotive OEM connected packages must remain at the forefront of innovation by regularly offering new services innovative and high price to differentiate their premium segments, but they will feel as anxious to provide an increasing range of products of services that can operate as efficiently as possible, in both high-end segments and volume in both cases, the OEM will struggle to remain competitive with big digital players, which do not bear the cost of physical assets and the many expenses that come with these assets as a result, many manufacturers may eventually decide to focus on their ancient heart of trade, commodity production cars through which to Others capture the value of the premium associated with online automotive services.
D torn by the huge demand for new digital technologies associated with connected cars, an outside corporate explosion list based on traditional automotive supply giant not only technology companies but ambitious start-up and play a role increasingly to provide all kinds of automotive systems not to be outdone, OEMs and traditional industry suppliers are working feverishly to develop their own access to new technology and the talent to compete, even they are investing heavily in downstream businesses such as ride sharing.

Following this activity, the industry supply chain has changed faster and more dramatically in just the last few years than ever before and the coming changes in the next five to 10 years will be even more impressive The the costs and risks are enormous, and it remains unclear what the industry will look like in 10 years.
Even capturing the current state of the industry which types of companies provide such systems is not an easy task yet done so critical to understanding the changes taking place on all providers in the chain industry supply will compete for a place in this new world just as strongly that car manufacturers they work with the strategies include the following measures.
Partner with the coming technology companies to accelerate rapidly, especially for components in new areas that require fast access time to market or are already served by your competitors.
Investing in acquisitions, but limit them to relevant strategic areas, for example, to help build capacity that are critical to the future differentiation or are at the heart of your future business model.
internally innovate in areas that have enough time and require complex integration by many players, for example, in algorithms related to autonomous driving.
For OEM Increase your vertical integration where it will help build the market and play an important role in future markets.

For suppliers COMPROMISE some of your activities OEMs to where you want to participate, and outsource the early intensive competition rest areas could include business models dependent data, mobility services, and autonomous algorithms .
The rapid growth of new players entering the fray outside the automotive sector is already beginning to transform the structure of the connected car industry make smarter and ultimately autonomous vehicles a reality requires a level of technological innovation of hardware and software and the adoption ever seen, and much has its roots in other areas we see two kinds of newcomers in this space companies established adjacent industries and technology startups.
The established players in areas such as telecommunications think AT T, Cisco Systems and IT software, and consumer electronics Apple actively move to apply their skills in the automotive world, taking advantage of the enormous scale and learning effects much consumer markets and commercial automotive those new technologies that have an established ecosystem and existing network working particularly hard to use these assets to attract and block new car buyers, for example Pandora, Airbiquity and Apple with its iTunes offering.
Meanwhile, in just the last few years, an impressive number of startups have emerged in the vehicle space connected to the middle of an explosion of manufacturers and Alike venture capital activity providers are paying attention to the rise of these brand-new players, and even participate with examples include Quanergy, Otto and AdasWorks Although the emergence of these new businesses may be threatening to some established players OEMs and suppliers, it can also give traditional companies the opportunity to access new technologies or capabilities that would otherwise be unavailable.
That why some established companies looking to invest in partnerships with, and even acquire some of these newcomers offers include investment in AdasWorks Bosch, Delphi partnership with Quanergy, investment in Volvo Platoon, and partnerships GM and VW with Mobileye s access to relevant technologies, such as sensors, connectivity solutions, semiconductors, artificial intelligence, etc. will become increasingly critical for suppliers and OEMs most of these companies simply don t have the resources, talent, organizational skills, or fast moving culture to build these new technologies internally on their own.
If the marketing speed is an essential factor in the development of a particular characteristic, in partnership with a supplier may be desirable if the ability requires control or however is very complex, companies should consider the acquisition of the supplier another motivation may be the desire to keep a new technology from the hands of competitors at the end of 2015, Daimler, Audi and BMW combined forces to purchase the Nokia precision mapping division, called here, partly to prevent the service fall into the hands of a future potential competitor such as Google or Apple.

Leveraging new players will probably be particularly important in the areas of software development and artificial intelligence, considering the process of innovation and rapid development and the mentality of trial and errors essential to success in two areas Although the new car development cycle can be as long as seven years, the iteration software cycle is usually a few months longer, which makes coordination between the two very difficult software development and coordination are complex as well for artificial intelligence functions in ADAS and HMI systems that allow vehicles to learn the preferences and different styles drivers and possibly operate their own.
The ability to monitor a software team will become an essential part of the competence of managing a leader of the automobile.
OEMs and suppliers have been actively grow their software capabilities internally during the last decade GM, for example, has reduced the contract outsourcing and instead hired more than 8,000 software developers while Bosch is looking employ 14,000 software engineers in 2016 alone develop features for the connected vehicle as part of its push into the Internet of Things This emphasis on software development will continue, and the ability to supervise a software development team either internally or subcontracted become an essential part of the management competence of a leader car.
The three types of OEM players, suppliers and newcomers looking to gain a foothold in the construction company of various components more intelligent and connected vehicles ADAS, infotainment, communication and HMI The latter, communications, includes a wide range of vehicles and services connected devices How FARE companies in the race to offer these features will be largely based on whether they can build, buy or partner for separate technologies and capabilities each function depends Exhibit 8.
Table 8 The supply side of connected cars, investment deals, partnerships and new entrants.

ADAS technology of these driver assistance systems and safety rapidly changing discreet warning and provides assistance to more comprehensive, integrated and connected technology systems, readers of hardware and software coming to market and help accelerate these developments, either by transferring their technologies to other industries automotive or starting new companies to focus on specific new technologies for future vehicle applications.
For example, Nvidia, a leading manufacturer of electronic chips and systems for visual computing, debuted manufacturer of graphics chips for the gaming industry, then launches in the automobile in the 2000s Its powerful X1 chip Tegra can process images from multiple data sources, such as cameras, radar and laser imaging, and allow automatic learning systems for automotive companies like Nvidia leverage their years of experience in their field foothold in the automotive sector and to rapidly achieve a high degree of scale and maturity.
This makes it almost impossible for OEM and traditional vendors to develop competing technologies themselves, and therefore many of them must have access to these technologies by other means This year, for example, automotive supplier Continental CSA acquired Hi-Res 3D Flash lIDAR business and technology for using laser beams to measure distances to cars and other objects on the road, extending its sensor technology portfolio in 2015, Delphi has made a strategic investment in Quanergy in order to jointly develop a lidar system at low cost, a basic technology needed for autonomous vehicles mass market and Valeo signed a technological cooperation agreement with Mobileye, also in 2015, to develop systems cameras facing the front and the fusion of the sensor fusion sensor is a technology that analyzes the Data from a variety of sensors and other sources of surveillance to provide a more complete picture, for example, using multiple cameras to simulate the depth perception.
Meanwhile, to follow the requirements of the rapid advancement of digital technology, most manufacturers and many suppliers are aggressively trying to strengthen their software development capabilities In early 2016, GM acquired Cruise Automation, a manufacturer the self-driving technology, to bring in- house its software specific ADAS capabilities and tap into the talents of capabilities the software industry and the rapid development of cruise last year, the German auto parts manufacturer ZF acquired -Based its US supplier TRW as executive vice president of sales and business development Peter Lake noted in a statement company, it was part of the modular approach ZF TRW for automated driving the agreement brings the capabilities of TRW in radar and vision systems, safety-oriented on-board computers, and power steering ZF electronic current portfolio, allowing it to offer OEMs more sophisticated, integrated ADAS.
Infotainment Many manufacturers have developed their own infotainment systems brand property, including table units edge and the software that runs them and allows them to interact with other devices in the car, such as smartphones Now they also work modularization architecture of these systems, they would accelerate the development of various aspects of the systems while reducing the complexity of their maintenance.
Audi, for example, began a partnership with NVIDIA in the mid-2000s to accelerate the cycle of automotive innovation in close collaboration, the team developed a modular infotainment system, hardware development decoupling software and reducing the development time of a new system of so in seven years to one.

The integration with smartphones is becoming a key dynamic in infotainment Ultimately, cars contain a mixture of onboard infotainment functions and based on intelligent device.
On a parallel track, a variety of software players, including giants like Apple, Google and Baidu, are vying to capture a share of the infotainment space Today, most manufacturers offer in systems embedded in smart mirror device like Apple and Android Auto carplay, while support for the supply of Baidu in Asia increased integration with smartphones becomes a key dynamic in infotainment ultimately, the cars will contain a mixture of functions 'onboard infotainment and based smart device, with variations of the brand and geography.
Indeed, the software continues to be central to progress in the infotainment systems with traditional suppliers focusing on improving their development capabilities, for example, Harman began making several critical strategic acquisitions , the purchase of three S1nn software companies and Symphony Teleca in infotainment and Redbend in connected vehicle services contracts have made Harman probably most successful provider of industry infotainment systems related services, and provided access to updates and cyber technologies over-the-air.
Continental has also been active in this space Despite its army of 11,000 software engineers, the company is unable to meet the requirements of increasingly demanding many software OEM customers, a common problem at suppliers senior Thus, in 2015, he bought Elektrobit Automotive and 1,900 software engineers to 680 million acquisition using Continental serves as a partner with OEMs in the development of complete systems, rather than just as the integrator of hardware .

HMI This is a technology layer through which the driver and passengers to interact with various vehicle systems, mainly infotainment and connectivity features, but more and more vehicle management systems such as ADAS The business is still dominated by traditional suppliers like Continental and Visteon much of the current focus of these companies involves the effort to simplify the cockpit electronic consolidating electronic control units ECU of the car Otherwise, could be up to 60 ECUs in a separate car, all performing different tasks and often making too complex controls to manage Some companies are also pioneering the integration ADAS and infotainment an integrated digital interface for the driver.
These providers see HMI as a key area to differentiate their offerings and actively build internal capacity for their long history of analyzing driver behavior gives them an advantage, and they understand the rules governing regulatory bodies such as national road US Transportation security administration to try to ensure road safety, undistracted.
But consumer electronics companies, too, have considerable experience in creating functional, user-friendly experience for consumers far, they are not very active on the HMI market, although Google and Android Auto carplay Apple are already on the market these companies will certainly look to increase their commitment to the HMI market.
Meanwhile, auto suppliers and equipment manufacturers are actively integrating both HMI technologies specific non-automotive companies such as Nuance Voice Control, immersion interactive touch or haptic functions and MyScript handwriting recognition, which is useful to decode the finger movements the development of these technologies in- house is often impossible, as these companies benefit from the scale of the investment and learning from other industries, not just automotive.
car services Although the smartphone is still the most common form of connectivity in vehicles, companies are working hard to embed connectivity in the car itself these efforts can be divided into three types of communications infrastructure in -jacentes the connected vehicle services and connected devices services.
The communication infrastructure between the traditional suppliers is Valeo, which acquired Peiker Germany in 2015 for access to its board telematics and mobile connectivity technology to create secure solutions, high-speed connectivity among the new entrants are Cisco Systems and NXP Semiconductors, which banded together in 2013 to invest in Cohda Wireless, a specialist in wireless communication for automotive safety applications.

connected vehicle services in addition to the communication infrastructure, companies are developing a variety of services that can help the security and management of the vehicle itself, such as the diagnosis of the remote vehicle, cyber security, over-the- air updates of the system, fleet management, insurance and based on the use range of companies already active on the market is remarkably broad, including analysis companies, insurance companies and operators mobile networks.
The desire to build new capacity has pushed many Ford car services, partnerships and State Farm Insurance have partnered in 2012 to provide insurance services based on the use of Ford customers has helped ability obtain data from Ford Sync system, while State Farm used these data to calculate insurance rates in 2015, BMW and Pivotal have formed a partnership to provide the automaker with big data and predictive analytics capabilities allowing BMW to better understand the experience of the driver and get valuable information on vehicle performance, for example, the correlation of parts failures with data on bumpy streets, extreme temperatures, and other conditions driving.
Device Connected Services These are offered directly to drivers and passengers They include smart phones services such as streaming music, e-commerce, social media, integration with smart homes, access to city ​​services such as traffic management and transport services, including hail and ride car sharing.
OEMs were particularly energetic in their efforts to participate in the ride area Hailing Notably, in 2014, Daimler moovel in partnership with IBM to develop car-sharing application for its car2go Service And in 2016, GM has invested 500 million in Lyft, a ride -Share a service that competes with Uber, hoping to open new sales channels for driverless vehicles taxi possibly GM also acquired Sidecar, the proprietor of the idea of ​​Tour- hailing, and launched a car-sharing service called Maven designed to compete with companies like Zipcar and Hertz July 24.

Finally, among the main objectives of Ford's strategic investment in Pivotal has been accelerating its development of software based on the cloud, hoping to provide innovations in mobility services to customers faster.
The roles throughout the automotive supply chain blur and recombine, and it is essential that all players understand where it is and where it should be heading, if it is to capture a fair share of the value of this rapidly changing market retaining their positions won t a given for traditional OEMs and their traditional suppliers, ambitious, high-tech companies moving fast within the scope.
By Marco Fischer, Kaushik Gnanaserakan and Julia Kusber.
S ince mid-2015, China's economic growth slowed to a 25-year low for the year The slowdown, coupled with government repression against corruption and a weaker renminbi is widely affecting companies most observers expect China to continue to its economy from an investment-intensive, heavy export model to a more sustainable model driven by consumption No matter how change, per capita disposable income is likely increase for urban residents and rural economic policies and the government, and the country of the consumer base of the middle class already among the world's most important will continue to grow.
Like the country itself, the growth of the automobile industry of China has been remarkable, and it is already the largest in the world, but its growth is expected to slow somewhat light vehicle sales through May 2016 were the pace of the economy as a whole, up to 6 9 percent to 10 2 million units, thanks largely to the fiscal stimulus that will continue until 2016 and even vehicles manufactured locally grow in popularity China will continue to be a key growth market for automakers and suppliers around the world.
The growth of the connected car and the autonomous vehicle technologies makes the Chinese market even more critical automotive manufacturers and suppliers across the country already seem to have a clear advantage over their foreign competitors Indeed, thanks to a virtuous circle of connected consumers, the Government support, and advanced technology, China can take the lead in the race around the world to build connected cars dependent on its rate of innovation companies the ability to move faster than their Japanese counterparts, US and Europe and have the future of the connected car.

Consider the young, highly connected and increasingly wealthy Chinese consumers According to estimates Goldman Sachs, people born between 1980 and 1990 accounted for about 30 percent of China's total population in 2015. This youth cohort is growing more urban and more easy and rapid adoption technologies Nearly two thirds of Chinese customers online store once a month, against only 22 percent of customers in the United States according to the survey total retail PwC 2016 and increasingly shop on their mobile devices Singles Day China Black Friday 2015, mobile accounted for 72 percent of all purchases on Tmall, the largest online retailer in the country this should not be surprising, given that 500 million Chinese already have smartphones.
Chinese customers are more concerned about a car technologies in car design or performance.
These connected consumers are now turning their attention to the country's auto market already, China has the youngest buyers of premium cars in the world, and these tech-savvy customers demand cars connected at much higher rates than anywhere Moreover in fact, several surveys have shown that when making purchasing decisions, Chinese customers are more concerned about driving a car of technology that its design or performance, and would be willing to switch brands for a connectivity.
They are willing to pay more than 75 percent of Chinese customers would be willing to spend more on security features, and more than 60 percent would pay more for vehicle management functions that monitor of use, diagnostics and data record accidents over 85 percent of Chinese customers in the volume segment would be willing to move to another car brand if it offered more connected at a reasonable price features These consumers rank security-related features such as collision avoidance, hazard warning and call above the urgency list of connected car deals they would like, followed by features such as infotainment, navigation, eCall, bCall and state and vehicle maintenance, according to the blog Insights GfK.
Chinese car buyers are already underway for the imminent arrival of the fully connected car and they receive considerable support from the Chinese government in 2015, the State Council announced its latest 10-year plan called Made in China 2025 in order to transform the country into a center of innovation in various sectors, including the automotive industry the government plans to support national companies working on connectivity and renewable energy technologies, hoping to make them leaders industry, both locally and globally in a statement, the Ministry of industry and information Technology announced the objectives for smart and connected vehicles by 2025 reduction of traffic accidents more than 30 percent, setting autonomous safety driving speed of 120 kilometers per hour, which reduces the consumption energ ie 10 percent, and reducing emissions by more than 20 percent.
The Chinese government is very active in supporting R & D in our auto industry, said Li Keqiang, a professor at the Research Center for Intelligent Vehicles and connected at Tsinghua University There are several research institutions supported wholly or partly by the associations of the Government and industry We have already helped the government to implement several major R & D projects for the connected car.

Because of his efforts, in 2030, Chinese companies should control 80 percent of the domestic market for vehicle entertainment modules and possibly 100 percent of satellite navigation systems market Of course, the Chinese government protects its market interior to foreign competition through trade and regulatory barriers; Google Maps, for example, is not available in the country and the new 10-year plan can further increase the barriers to entry for Western competitors like Google, Apple and Amazon.
Thanks in part to government support, Chinese OEMs, traditional suppliers, and technology companies entering the market today are ready for real growth and the same potential domination, the market for cars and connected systems and Some work packages through partnerships with OEM and outside the country, and others by entirely local activities.
Two has secured BMW, Mercedes-Benz, Ford biggest technology companies, Baidu and Alibaba, already pushing hard to develop their own platforms for connected cars Baidu, for example the country, and Hyundai, and own China BYD, using its CarLife platform connectivity, which, like Apple or Android carplay Auto, allows internal car infotainment systems to connect with Volkswagen smartphones, which is by far the automaker more sold in China, agreed to use the software While General Motors and Audi Baidu is also working on a telematic service for cars, called MyCar, which would monitor traffic data and car-, which will also help the company in its ongoing efforts to develop an autonomous vehicle.
And Alibaba, in partnership with the Chinese manufacturer SAIC unveiled RX5, a so-called Internet car in June 2016 include the characteristics of the payment service car Alipay Alibaba, which allows drivers to pay for parking , refuel or buy more coffee, it offers three LED screens and space for up to four removable 360 ​​degree cameras to record video and take pictures, a mirror smart mirror, support for voice commands, and an intelligent mapping system on board.
In a press release Jian Wang, Chairman of the Board of Alibaba Technology, was quoted as saying: What we create is no internet in the car, but a car on the Internet This is an important step in the industry automotive intelligent operating systems become the second motor cars, while the data is the new fuel future cars will become an important platform for Internet services and the intelligent hardware innovation We will adhere to a world where everything is interrelated.
The range of other partnerships illustrates auto market booming China connected.

Two of China's domestic manufacturers, Dongfeng and Changan signed agreements in 2014 with the telecommunications giant Huawei Technologies, establish a technological cooperation on connectivity and autonomous driving vehicles.
Audi announced its intention to work with Tencent, which operates the popular messaging service WeChat countries to enable vehicle location sharing.
France PSA, making Citro ns and Peugeots, equip some of its cars with Wi-Fi access point in cooperation with Alibaba, and provide application to remotely check the vehicle location and fuel levels.
Mobile and Deutsche Telekom China signed an agreement to create a platform for Internet connected cars in China.
The Airbiquity U S, the world leader in connected vehicle technology and Baidu, China's largest Internet service provider, announced a partnership to provide Internet services connected car to the Chinese automotive market.

Also suggested that China's efforts have been in space connected car, the country has yet to progress very far on the front of the autonomous vehicle that's somewhat ironic, given that it seems to have the ideal environment including strong government support and a great interest among customers to develop one.
The difficulties have to do with the complexity of the driving environment Most of the current efforts to develop a self-driving car took place in Europe and the United States and do not work or are not applicable in China s partly because China's driving conditions are complex in terms of traffic, road conditions and driving behavior, compared to countries such as Sweden and the US where companies are actively testing these systems.
This level of complexity has forced China to maintain its ban on road tests of self-driving cars until the rules are set by the Ministry of Industry and Information Technology, delaying the progress Although China will eventually end up with a system adapted to its own realities, these difficulties are likely to slow its progress, which depends in part on the adoption of ideas and also technologies.
The combination of China's interest to customers, government support and technological innovation offers several natural advantages in the construction of the car connected But as promising as the Chinese market is, and will definitely, challenges remain not only for Chinese companies, but for every world carmaker and the supplier who wants a share of this huge market.
Chinese manufacturers themselves, for example, are not yet competitive in markets outside of China, and none of them has made much progress in the development of technologies and systems for the car connected to their own this is unfortunate, given how much the mature environment in China's progress in this area to achieve their goals, these companies have become more active in this area, focusing on the most connected car offer features to their domestic customers and improve their innovation capabilities internally or through partnerships, such as SAIC makes with Alibaba.

Despite the benefits of these transactions, Chinese automakers are facing a higher risk these tech companies could soon begin competing directly with manufacturers already they gain considerable industry experience and customer information collection precious and Chinese consumers know and trust in these new entrants Indeed, if this trend continues, China technology companies, already the first engines may very well begin to compete in the highly innovative market of the country global automotive markets as well.
It is likely that technology companies will still need to work to be successful with OEMs in China.
Yet it is likely that technology companies will still have to work with Chinese suppliers for successful Internet companies can not succeed in cars connected while on themselves, said Professor Li manufacture and sale of cars needs special abilities, that high-tech companies didn It would be difficult for them to compete with the quality, reliability and safety standards, manufacturers have already achieved, while fuel consumption, the development of fuels alternative and renewable, and environmental issues are also barriers.
Given its size and growth potential of the Chinese market is essential for the future of all OEMs worldwide growth plans While the Chinese government has erected barriers to the participation of these companies, while offering support considerable national actors and the country's automotive business is growing in size and sophistication, such obstacles can only be strengthened, leaving foreign companies in the cold.

But the market is still important and potentially important always competition In response, foreign companies should benefit from China technological environment increasingly innovative to develop and test their own automotive applications and connected services and focus more on strategic partnerships with Chinese technology companies, to better meet the needs and requirements of the Chinese consumer.
O ems, suppliers and technology companies are beginning to realize that the connected car could be a Cyber ​​nightmare unless the right steps are taken now Determined hackers have already broken in some car systems, the management functions of vehicle navigation security functions and causing problems with the driver's ability to control the future car break-ins could even affect more than one car at a time, disrupting traffic or targeting a fleet of cars pirates iT could go after increasing amounts of personal data flowing between the car and the cloud thanks to consumer applications and car-based services and they might even use the car to sneak in OEM computer systems, suppliers or car service providers.
As digital functions and services cars become more sophisticated, hackers are likely to turn their attention to stealing software code and new features to offer users free, disrupt the entire business case for the awareness of consumers connected car of the problem is on the rise and could eventually lead to mistrust of the connected car increased regulatory scrutiny could increase the cost of construction of these vehicles.
connected cars are vulnerable, in part because they are complex machines composed of many different digital systems, any of which could be a weak link and they are built through a combined effort of OEM and third party crowd both traditional Tier one suppliers and new entrants as technology companies and software No single company was ultimately responsible to fix them, and much of the current lack of security can be attributed to the difficulty of organization orchestrate the complex effort to make these vehicles.

No connected digital system is perfectly secure, of course, but the connected car must be as safe as possible, and it should be the responsibility of the OEM to ensure that it is Apart from purely technical issues involved, do is a matter of putting together the appropriate environment project in which can be developed, tested and maintained necessary security software Here is how.
By ensuring that connected cars they sell are as safe as possible, automakers face a number of technical and organizational challenges see Exhibit 9 These have so far been difficult to overcome two in particular exit.
Table 9 Factors affecting the development of cyber security software for cars.
Integrating security into the development process Many OEMs problems donation to face t come from the actual effort to develop the best security software but are inherent in how these companies are building new car Car companies are complex organizations with many competing interests in developing a new car requires the entire supply chain to focus on the next date of commencement of production After that bar, the vehicle, a combination of hardware and software, will remain on the market for years So the cars have a particularly long life cycle, and any software necessary updates generally require a costly product recall.
Build your cyber security capacity Many automakers simply don t have the necessary development capabilities They are not software companies, whose forces are in the very fast and iterate constant complex computer code Their innovative development process current security software involves binding to the car equipment accordingly, update the software, and related back-end systems, is a very cumbersome process that slows the response to new threats and because each newly developed car requires its own separate combination of hardware and software, companies must keep supporting hundreds of different versions.

If the car's software can be updated remotely through its connectivity features, the process could be simplified considerably Many companies are working on this, but so far only a handful of which Tesla managed it.
Most manufacturers are still not sure how their efforts to develop and maintain the connected car safety should be integrated into their business structures the responsibility to do the real work, and making sure it is well fact clearly not the solution will involve integrating all relevant business functions such as R & D, IT companies, finance and sales, in the development effort, and manage multiple vendors whose systems must also secure .
Finally, the development of secure software requires its own complex set of support functions, including risk management, progress monitoring and reporting, and incident management, and all these have to be implemented if software development effort is to succeed.
The resolution of these challenges means managing a conflict based on the time of auto product development cycles are long, but software development cycles are little more cultures where two very different organizations operate exacerbate automakers deviations are very likely to use their traditional rigid schedules set by their life cycles typical products These schedules are often determined by their internal software development organizations, which can be very powerful and are more used to write software that regulates the internal functions of business, too, can have a significant influence of the car on all development activities, even those connected to the car, and this department are not known for moving quickly.

The task of coordinating internally developed security software with the security efforts of third-party systems and services dramatically increases Each OEM development challenge has long and intertwined relationship very closely with its key suppliers of electronic products, but suppliers are generally in line with the product life cycle OEM connected automotive systems providers work differently, especially technology companies and software just now entering the market.
The development of security software is only half the battle The software must be thoroughly tested to ensure that the connected car is as secure as possible.
The development of security software, of course, is only half the battle The software must be thoroughly tested to ensure that the connected car is as secure as possible But again, the differences in the product development cycles cause challenges for automakers too often under the pressure of poorly coordinated schedules, the software is released before it is tested adequately.
If companies run most of their efforts towards the development, testing may undergo companies can not put a strategy of comprehensive testing and appropriate procedures in place in this case, the testing process does not have the key elements necessary, including the test catalogs that define the process by which the software must be tested without them it is not possible to determine if the software meets all the requirements for quality and safety, or to identify and resolve defects in the software.
The lack of verification procedures, moreover, also affects how companies determine the risks associated with technology in the connected car, and if their software has a clear handle without testing methodology, can not be made the necessary risk management procedures, leaving developers unsure about the safety and reliability of their software.

Addressing these issues requires that companies develop a complete test strategy and appropriate test procedures and implement a comprehensive test catalog Moreover, these procedures should be standardized as much as possible to ensure that the quality software is compatible and that the tests provide measurable results regarding the risk potential and the confidence level that can be compared between the different elements of the software.
After the test, and security software is implemented in cars, software teams must also regularly update the software as potential new threats emerge, and not send easy given the task complexity technical software, the need to coordinate the update process with third party suppliers, and long life cycles of car products again, the process requires consistent procedures and strict implementation of the distribution process, which must all be the responsibility of the OEM.
Clearly, strong cyber security is vital to the success of the car connected not only to keep the car and its growing number of services related to safe from hackers, but to instill the high level of confidence to keep buyers cars coming back for more.
The complexity of the technology and processes involved in connected cars is what makes the task of car security software developer so difficult now have many systems to send and receive information, and they are all vulnerable to attack are the back-end systems that process the wealth of data of the car sends consumers No wonder more and more aware of the difficulty of keeping their brand new cars secure.
A possible solution may involve cloud computing advances now allow cybersecurity protections built into the remote distributed computing instead of focusing on the firewall, organizations can instead monitor and track the behavior and and isolate and identify entry suspicious behavior near real-time as the connected car becomes more widespread, opportunities emerge to integrate the efforts of car manufacturers with this type of cyber security innovation.

Given the complexity of the effort to secure the car is connected, and the large number of actors whose software is used to keep the car connected, securing these vehicles should be a collaborative effort OEMs are certainly in the best position to lead this effort, but it means that they must accept full responsibility for the task, and be responsible when things go wrong Yes, there is and will always be risks, but these risks can be mitigated if the many challenges for the organization, development and testing are squarely met and overcome.
T he connected car is an intermediate step on the way of truly autonomous vehicle future much discussion when vehicles without driver zip about, picking users on demand, transporting them safely to their destinations along optimized routes in personalized comfort, drop, and then disappearing into the neutral corner depending on your point of view, whether this vision won t come true for decades, or it may already be happening in one form relatively Uber rudimentary and Volvo announced plans to put the car without driver on the streets of Pittsburgh in September 2016, and Ford said it plans to introduce its first self-driving cars in 2020.
The autonomous car, however, is not likely to be at your service for at least a decade, when several critical technologies, but especially emerging artificial intelligence AI, machine learning, the human-interface HMI machine and key elements of will they reach an advanced state so they become standard features, even the least expensive subcompact Or will they car of the underlying infrastructure and the different characteristics, they could afford finally achieve a higher level of maturity see Exhibit 10 Where these technologies are now being shelved future expectations obtuse and the videophone, the jetpack and flying car.
Table 10 Technologies for the maturity rate connected car and adoption.
At present, even the most intelligent cars are so stupid they're engineering marvels, but they're adamant wonders.
At present, even the most intelligent cars are pretty stupid, at least as regards the recognition of differences between people, they're programmed to do the same things to you what they do to everyone that you like it or not lock the doors even if you Don want t locked them, they won t start unless you wear your seat belt, and they direct you along roads that do not make sense to drivers with knowledge local in many ways, they're engineering marvels, but they're adamant wonders they behave the same way whether you're driving, or your grandmother.

The progress of the promise of artificial intelligence and machine learning to change all that even if it is held by a dealer Robo-taxi fleets, the car that picks you up you acknowledge and reset its systems to meet your preferences and expectations once you get in, the seat will conform to your favorite position, and the cabin can even change your favorite color the infotainment system tunes itself to your liking, perhaps new business during your morning commute, and the last episode of the TV series that you have been watching on the way back if you sleepily, he turn down the volume, then back again just before reaching What is your destination your driving style a bit aggressive or more defensive the car consistent with that too.
The purpose of building intelligence and learning ability in cars that will let them know who you are, understand your moods, adapt to different circumstances and respond to new requirements and new tasks on the fly It kind of information has been taken to a high degree of maturity in robotics; industrial machinery have access to a wide range of sensors and network data that give a detailed picture of their work and allow them to easily interact with humans or call for maintenance in advance course, cars on the face of the much more complex way, constantly changing traffic conditions and weather patterns, moods of the driver and passengers, they need to be much smarter.
The inputs to the learning system of the machine will be the much more sophisticated autonomous cars are already equipped with sensors, cameras and laser systems that monitor the conditions of the traffic situation and traffic soon these technologies will move inside the car, the observation and analysis of the condition of the occupants, their comfort, their level of consciousness, perhaps even their health and AI systems will take into account external data sources such as social media market for e-commerce and entertainment, and systems of the smart home, providing updates and other suggestions for the future, maybe, your car not only learn from you and its environment immediate, but thanks to his relations with other people and cars, leading to a kind of swarm intelligence that will increase exponentiell way e its understanding and learning potential, allowing it to combine its data with other data collectors cars and benefit analysis based on the cloud for new scenarios and problems solv ing strategies.
The effort to boost the intelligence built into cars gained momentum In 2015, Toyota announced that it will invest more than 1 billion in AI over the next five years to improve car safety Its business case Improved security can be used as a major selling point for its cars that AI and machine learning can become a differentiation capacity for Toyota or any other automaker, will depend on how it can push technology, and whether the benefits and features, which will undoubtedly be offered initially as expensive options in the high-end cars, is closing fast as standard equipment in consumer cars, built in the list price.
The car of the future will know a lot about you and its environment, but what do you know about your car, it was once a car dashboard includes a fuel gauge and a few dials or worse, silly things like lights indicating temperature and oil pressure Then dashboards grew increasingly complex and increasingly digital; Now almost all the cars offer a bit more of an LED screen through which you control the infotainment, navigation and climate control systems and provides a wealth of data on the state of the car, while the tire pressure to the outside temperature.
However, graphical user interfaces and many control mechanisms of these systems have proved terribly against-intuitive, making it difficult or distracting for drivers to understand how to adjust and access the information they need and now, as these systems are better, the huge amount of data available not only to the car itself, but by the navigation system, road infrastructure, and the entire Internet exploded Simplify the user interface and to how it is controlled more intuitive, through the ears and sense of touch haptic science and visually, is the task of the man-machine interface technology.

The rear side windows and car also become potential projection surfaces for functions such as entertainment and web browsing.
Already, some cars offer head-up in the form of basic information such as the speed projected on the windshield in front of the driver and with additional data from the sensors and around the car, it will be possible to project all kinds of information on parking, the location of hotels and restaurants and reservations, upcoming traffic signs, and as the side windows and rear of the car also become potential projection surfaces for functions such as entertainment and web browsing.
Other cars now have cameras pointed at the driver who can recognize when he or she seems to be drowsy, and they can vibrate the steering wheel to help pay the attention of drivers That, too, will become more sophisticated, allowing the system to recognize a greater variety of expressions and moods; a look of surprise or anger, for example, can cause the car to go into emergency mode, slow to determine the cause of other surfaces may change color or texture to further guide the driver's attention or to reflect variable moods passengers Materials already exist that can change their appearance and feel a car seat, for example, could change the firmness and texture depending on whether the passenger or the driver wants to participate more fully in the process of browsing, or sit down and relax you, and whether or not it detects muscle stiffness.
Voice recognition, too, will certainly become part of increasingly vital to the way we interact with our cars Most cars can already link to our smartphones, which allows us to make calls using voice commands; some allow us to tell the car to navigate the house, or changing the temperature setting cabin Soon the car will be able to communicate much more information that way, verbally warning us about a traffic jam before and suggesting alternative routes, saying that hotels in the area have vacancies or update us on the score of a current football game.
And once the car is fully autonomous and fully connected to the surrounding infrastructure, its powerful combination of artificial intelligence and HMI will allow the driver to tell him to drop you at home, go alone to find preferably a parking space one where he won t get a ticket and you write a description and map of where he's stationed course, you won t really need to know its location, because all you have need to do the next time you need it is text unpark himself and pick you up.

The real smart, fully connected car will require a huge amount of computing power systems and super-high-speed communications, and both are already in development.
The next step in the widely available and stable connectivity will be fifth-generation networks that can operate at rates 100 times faster than the current LTE technology already, a consortium of telecommunications players including Vodafone, Huawai, Nokia, Ericsson, Qualcomm and Nvidia have shown such a network, which will be essential in providing real-time information in rapidly changing situations such as sudden emergencies When these networks aren t available, Wi-Fi networks at short distance such as DSRC short range communications allow cars to maintain their links with the environment and other cars These networks are already in use, particularly to provide traffic information on the highways.
At present, internal data network linking the car's sensors, controllers and processors, HMI systems and Wi-Fi modules aren t particularly fast, even compared to external networks, they can connect to that will change the sophisticated technology and data processing needs and car transfer continue to grow Any delay in running a self-driving car in heavy traffic or in complex urban environments can not be tolerated Finally, OEMs and suppliers will develop gigabit data transfer networks that will support the high-speed systems on a chip necessary to process the data necessary for autonomous driving, especially the treatment of the camera, laser radar and image While outsourcing some needs computer of the car to the cloud on the fly is possible, the answer must be i nstantanée, 100 percent available and easy to connect even when moving between the nodes cells.
Whether any or all of these technologies will really bear fruit is always in the air again, many of their benefits and risks, are already coming to the point.
Certainly, the benefits to drivers and passengers are much how we use and interact with our cars become much more customizable, as they become more sensitive to our needs and preferences They get us where we want to go much more efficiently and safely, choosing the fastest routes, reducing traffic jams and reducing the risk of accidents.

Companies will benefit OEMs, suppliers, and any company providing services on board will have access to much more information on drivers and passengers, and their behavior, interests and preferences, which can be used in the market for them much more precisely a big market for upgrades and after-sales services will probably be set up, like the market for applications and accessories that have grown so quickly around smartphones; this will provide additional revenue for OEMs and open new start-up opportunities and technology providers and automated personalization of fleet cars to user preferences will facilitate the transition from individual ownership to mount hail and ride sharing and make use of robocars more attractive.
Concerns remain, of course, as we have seen, securing the connected car of cyber attacks is no easy task and the wealth of data available on the car and its occupants their whereabouts, driving habits, behavior, preferences and interests should be carefully managed to keep it private and decide who is allowed to use and how.
Indeed, for both drivers and companies, the risks are considerable deficiencies in any of these areas accidents, data breaches, misuse of personal information can jeopardize the entire effort to build the car self- conduct.
Finally, this vision of autonomous vehicles customizable to our needs and interrelated world around us, it will take a considerable amount of trust and flexibility for many people to accept it will be a strange new world where the state of our cars hovers somewhere between a personalized environment very advanced and apparatus we do not even get to drive one can even imagine a future where you drive your car yourself is illegal, and people who love to drive are relegated to tracks isolated public roads.
It's a long way in the future, of course, and we will have much time to get used to coming changes if the transition occurs as soon as the transition from horses to cars without horses, it will probably go smoothly .
Innovation stop and go-conversation with Stefan Bratzel.

P layers in the global automotive industry are working hard to make the vision of the connected car and autonomous vehicles a reality, experimentation, testing and construction technology that will further connect cars to the world around of them, and the development of prototypes of cars that can drive themselves already.
For a report on the progress of these companies, we turned to Stefan Bratzel, director of Automotive Management Center at the University of Applied Sciences in Bergisch Gladbach, Germany Trained as a political scientist, Bratzel gravitates towards the automotive industry all working on transportation issues environmentally friendly in 2004, he founded the center, which is devoted to research on innovation in alternative powertrains and the connected car and autonomous him and his colleagues, he led an evaluation over several years of innovation in the industry efforts OEMs, suppliers and technology companies are racing to perfect the car of the future Bratzel spoke with the strategy of his office in the center of the seat.
Study Strategy of your institute shows that a lot is happening in the auto industry What innovations have surprised you the most during the last 12 months Which ones are the most disruptive.
Bratzel global OEM quickly spurred innovation in the field of security The number of innovations in accident prevention has increased more than 500 percent, and the help system for driving innovations ADAS over 400 percent over the last eight years, these innovations provide two main benefits customers first, driving becomes safer active collision warning technology can recognize pedestrians in the street, and the support systems active cross-traffic can prevent very dangerous accidents communication vehicle to vehicle becomes a reality, as in the new Mercedes E-class Daimler cars can now effectively warn drivers of dangers before they see them.
Second, driving becomes more convenient improved human-machine interfaces can now use natural language processing to control most functions of the car, and other advances in ADAS continue to facilitate driving the new BMW 7 Series offers the parking assist, and Tesla has recently introduced its most disruptive Invoke function will be continued advances in autonomous driving deployed by both historical automakers and new players such as Google and Tesla.

Strategy are actors who take different approaches to the car of the future.
Bratzel Traditional manufacturers follow an upgrade path for autonomous driving, improving technology and gradually adding features like vehicle to vehicle and vehicle to infrastructure communication to make it more secure and car travel It's more comfortable and Driver- Automobile- centric approach, focusing on the more traditional ways to improve the quality, reliability and sophistication of technologies, introducing them into their car first great value, and sell to buyers looking state.
Nontraditional players aim is not to offer autonomous driving as a feature, but rather to offer mobility, and try to make money by using the free time to the driver.
But it is also a revolutionary approach taken by non-traditional players like Google and Uber Rather than carefully go through the first three levels of autonomous driving, where there is still a driver in the car, they focus on levels four and five fully driverless cars these players don t worry about improving the quality of the cars themselves do they care to bring the Internet into the car instead, they see the car as part of Internet their goal is not to offer autonomous driving as a feature, but rather to offer mobility, and try to make money by using the free time to the driver.

Strategy appears to be a very different business model How do you see the business models of the automotive industry evolving with the introduction of self-driving cars.
Bratzel These new players who are interested primarily in the concept of mobility, mobility on demand, and business models evolve service-oriented trends in connectivity, alternative sources of energy, mobility and service autonomous driving customers benefit and added value are low when these trends are considered in isolation Answering e-mails in the car via voice control is nice, but not exactly a killer app for the next 10 years, however, a new dynamic innovation and business will arise from the convergence of these trends, generating completely new customer benefits in the world of mobility and beyond, and the creation of a high probability of disruptive change these trends will provoke a virtuous circle self-energizing and self-reinforcing innovation activity.
Mobility Services and autonomous driving, for example, lead to the mobility on demand, without driver Rising collective Robo-taxi fleets will lead to a sharp drop in prices of passengers per kilometer robot cabins with battery electric propulsion will be able to get to the inductive charging stations and can even be used as energy storage buffers and connectivity between vehicles through the Internet of Things will ensure that enough Robo-taxis are available to answer mobility needs of all customers.
Ultimately, this will lead to a battle of business models between incumbent manufacturers and new players over the next 15 years because 10 or 20 years to be perhaps the most disruptive period in the long history and industry complex.

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