Connected Car is a broad category, encompassing a huge range of hardware & software technologies, systems, and components – both inside and outside of the vehicle. Consequently, Connected Car promises to be tremendously disruptive to Automotive – chiefly due to the number of gaps & opportunities created for new business models to transform and disrupt.
Connected Car is also driving business dynamics – efficiency, opportunity, differentiation, and disruption – to create a rich tapestry of creation, competition, and innovation. OEM’s, Tier 1’s, Dealer Groups, and Fleets are now in a position to reconsider and re-engineer their businesses from top to bottom. Existing industry leaders are also faced with new competitors, who are disrupting the industry to take business away from them.
Primary examples are Tesla, Rivian, Canoo and others on the OEM side; new Mobility entrants like Wunder, RIdecell, Lyft, and Uber on the Fleet side; new startups providing cybersecurity like Karamba, GuardKnox, Upstream, plus Tier 1’s like APTIV; OTA solutions like Sibros, and Tier 1’s like Harman, Bosch, and Continental; battery and charging technologies like QuantumScape, ProLigium, Enevate, and ChargePoint as well as tech giants like Apple, Amazon, and Google threatening all aspects of vehicle operation and ownership.
It’s an exciting and potentially perilous time for incumbents and they have some very challenging calls to make about their next business moves and technology investments.
To decide these complex business decisions to best advantage and choose the optimal area of monetization focus, motormindz recommends consideration of the following key questions:
• Efficiency (Power of Suppliers): Where do large costs exist in your current ecosystem and supply chain, that might be greatly affected through the application of new technologies?
• Opportunity (Power of Customers): Where do significant consumer “pain points” exist in the experiences you provide, and can new technologies be used to greatly reduce these? What is the cost of doing nothing?
• Differentiation (Threat of Substitutes): Where do you have existing technology skills, products, and/or capabilities that can be used to compete more effectively or that can be exploited by competitors?
• Disruption (New Entrants): Where do gaps in offerings, skills, products, and services offered by the market in total exist that could be used as disruption points for you, your competitors, and/or new entrants? How can you capitalize on them? How must you defend against them?
Explorations of each of these approaches can be seen in the latest initiatives being explored by key market players. And, while it’s too early to conclude if any of these will ultimately succeed, they serve as real-world examples of the kind of thinking industry players should be applying:
This effort is aimed squarely at transportation and logistics – which are significant cost centers for commercial customers. These big customers are increasingly under pressure from competitors like Amazon to improve delivery speed and accuracy, while reducing cost. Commercial vehicles represent a large business, so BrightDrop is a serious effort to defend GM’s business from both existing manufacturers like Ford and Daimler, as well as start-ups like Rivian and Canoo.
BrightDrop leverages existing GM capabilities in Connectivity, acquired through its development of OnStar. BrightDrop notably features OTA updates and remote services created for both OnStar and 3rd party fleet partners. BrightDrop also leverages investment in a multi-purpose battery and electric powertrain platform, called “Ultium.” And GM also has extensive logistics expertise.
But there are significant risks. GM is betting that it can provide vehicles and services, so well-integrated, that fleet customers will buy the entire ecosystem. The risk is that Fleets traditionally buy vehicles from several OEMs to maintain negotiating leverage. Another risk is that Fleet Management solution providers have powerful existing relationships with Fleets and will see BrightDrop as a direct threat. Another risk is that the BrightDrop experience may not be competitive with competitive offerings. Customer expectations are high, and fleet management is a new business for GM.
These risks notwithstanding, GM appears to be creating a comprehensive offering – including not only delivery trucks, but also vehicles for warehouse and delivery, as well as fleet management, upfitting coordination, and electrification services.
This venture represents large potential for OEMs with commercial customers. If successful, it could increase traditional commercial vehicles business for GM, while positioning them into a new, value-added business of fleet management and logistics. motormindz can help identify, uncover, and evaluate these types of opportunities.
As a new automaker, Tesla faced several big disadvantages, one of them being not having an extensive dealer network to hold vehicle inventory, manage sales, and provide service. Tesla has used technology to overcome many of its disadvantages, and disrupt the dominant model for selling and servicing cars through:
o Extensive on-line shopping
o Dramatically reduced costs for showrooms and inventory
o Pick-up and delivery services for both sales and service
o Extreme use of OTA software repairs, expanded into the ability to sell OTA product features, services, and accessories
Sales and Service are major ecosystem cost centers, but Tesla’s approach appears to significantly reduce them, placing additional pressure on existing players. Sales and Service are also major pain points for consumers, and Tesla is clearly offering a better alternative.
Warranty service is also a large component of OEMs’ annual costs, with a direct impact on the bottom line. Tesla’s use of OTA updates appears to offer significant cost savings.
Tesla is leveraging extensive software skills and a built-from-the-ground-up electrical architecture that is designed for easy data read/write capabilities. They have used these advantages to build a Sales and Service system that is unique, and difficult for legacy players to duplicate.
Yet, there are risks with Tesla’s approach. Consumers can experience inconvenience due to lack of easy access to sales and service facilities. Also, competitors are working to close the gap and duplicate its advantages in software management, while retaining their physical assets. Additionally, Tesla may face challenges as it reaches larger volumes of sales and older vehicles needing repair and maintenance.
So far, Tesla has used technology to turn disadvantages into advantages. motormindz can help you spot similar opportunities to disrupt the system, or to defend against threats from companies like Tesla.
Rivian is reducing the cost of insurance on vehicles through a comprehensive approach to reducing risk and repair costs through a systemic approach.
Rivian’s insurance is built and priced for the specific vehicle that the customer orders, directly within the vehicle ordering process – right down to the accessories. Rivian then manages any repair claims within its own network, giving it tight control over repair costs.
In addition to costs, Rivian is reducing claim likelihood by providing cost incentives to consumers for usage of their vehicle’s ADAS features. Rivian uses Connected Car technology to verify usage and provide coaching & feedback to encourage safer driving.
Rivian is leveraging some unique advantages to achieve all of this. As a new manufacturer, Rivian starts with a completely fresh model for insurance and claims management, because they have better information about its vehicles and parts than insurers do since there is little accident history of Rivian vehicles to date.
By employing these techniques, Rivian is looking to achieve significant benefits for themselves and consumers by reducing claims costs and rewarding safer driving – saving consumers hundreds of dollars per year. Additionally, close management of claims will ensure that customers replace damaged vehicles with another Rivian vehicle, driving brand loyalty. Furthermore, usage insights gained from customers provide invaluable feedback for product development.
Rivian’s approach also comes with risks. Rivian does not have much history, so it risks underpricing its insurance and overpaying claims. Additionally, customers have established relationships with insurance carriers, and they may not be willing to buy insurance from Rivian.
Rivian’s strategy is using technology to redirect market share through an improved experience. This could help Rivian’s vehicle sales, while building a new value-added service, and cementing loyalty with existing customers. motormindz can help you identify similar ways to use technology to channel new opportunities, or to defend versus these new threats.
Although the above approaches and strategies are different, there are common threads through all three of them:
• They show the use of technology to find efficiencies in the way the auto business has worked for many years to attack and reduce significant cost centers.
• They show attempts to solve significant customer pain points. If successful, they will create significant market advantages.
• None are without risk, yet all are aimed at creating value for consumers using unique strengths, skills, products, and/or service offerings.
• Finally, all these examples show significant commitment of financial and human resources in pursuit of disruptive strategies.
These are very exciting times within the Connected Car ecosystem, with both incumbents and new players alike finding ways to use new technologies to explore disruptive strategies. motormindz has experience identifying and leading industry innovation, with solutions that make disruptions more feasible. Get connected with us, so we can help you “get” Connected.
To learn more about motormindz’ Connected Car Vision, or how we’re helping OEM, Supplier, and Technology Provider clients address the opportunities presented by Connected Car Vehicle and Driver Data with Monetization Models and Strategies to best position themselves to profit from the Connectivity revolution, visit motormindz.com/connectedcar.