A Blog by Jonathan Low

 

Jul 16, 2021

Your Next Car Will Anticipate Your Needs. But You Will Pay Extra

Car buyers will be able to download new features and enhancements.  

And fees those choices generate may be the basis for the new automotive industry business model. JL

William Boston reports in the Wall Street Journal:

As cars morph from vehicles to get around town to artificial intelligence-enabled, smartphone-like connected devices packed with software for work and play. In the near future, cars won’t only be able to constantly update and adapt to situations months and years after the time of purchase, they will be able to use AI to anticipate the needs of drivers and passengers and tailor their offerings accordingly. This also has the potential to create a new business model for auto makers, with car owners paying on-demand fees or monthly subscriptions to get access to new features.

The next time you buy a car and fret about whether or not to splurge on that snazzy new feature, fear not: Chances are you’ll be able to download it later.

In the past, the ordeal of deciding which features you could afford and which you could live without may have been painful and time-consuming, mainly because you would be stuck with whatever suite of options you chose until the time came to buy another car.

Those days are quickly fading as cars morph from vehicles to get around town to artificial intelligence-enabled, smartphone-like connected devices packed with software for work and play. In the near future, cars won’t only be able to constantly update and adapt to situations months and years after the time of purchase, they will be able to use AI to anticipate the needs of drivers and passengers and tailor their offerings accordingly. This also has the potential to create a new business model for auto makers, with car owners paying on-demand fees or monthly subscriptions to get access to new features.

These could include additional horsepower from the electric motor that you might only need on a road trip through mountainous terrain. Or a subscription for heating the steering wheel and seats during the winter.

Auto makers like General Motors Co., Ford Motor Co. , Volkswagen AG , BMW AG and Mercedes-Benz are shifting from banging metal to software-centered design with which they hope to make money even after they have sold you the car.

Tesla Inc. has been doing this for years. Early on, it took control of the software development process, from chip design to AI systems. The company is already collecting huge amounts of data from customer vehicles that it uses to improve the car’s systems through over-the-air updates, which automatically and remotely update the car’s software, just like with a smartphone. Tesla offers subscriptions for what it calls “Premium Connectivity,” which covers things like video streaming and live traffic visualization. Chief Executive Elon Musk has raised the possibility that Tesla could offer its advanced driver-assistance package as a subscription but has not launched that yet.

Older auto makers are following Tesla’s lead. Many have created in-house software operations to catch up. A Volkswagen division is developing core software for the company’s vehicles and aims to have a system in place with advanced autonomous functionality by 2025.

AI promises to become more deeply embedded in the car to adapt the experience to individual users. As the car collects data from a person’s daily routines it learns how that person drives, who usually sits in the car, where they often go. With access to a person’s digital calendar, the car’s AI assistant could begin to anticipate routines—Friday afternoon soccer practice or the Monday morning staff meeting—even deciding on its own to wake you early enough to avoid heavy traffic. If cars someday drive themselves, the vehicle could take greater control of routing, all functions of AI and machine learning being used to adapt the car to its environment.

“We’re moving into this realm where cars are being outfitted with very powerful AI-capable computers with over-the-air updates. The benefit of that is the software will give you new features, some of which we haven’t thought of today,” says Danny Shapiro, head of automotive at chip maker Nvidia Corp.

Even as the technology is developed, it is not certain that consumers will subscribe to features, such as seat heating, that now come standard. The auto industry is trying to replicate a move the software industry made from selling software licenses for one-time fees to creating recurring revenue by making customers subscribe.

“The question is whether people are willing to pay,” says Axel Schmidt, head of global automotive at the consulting firm Accenture. “Are you willing to pay $2 so the car finds you a parking spot instead of circling around for half an hour to find it yourself?”

If the smartphone experience holds lessons, analysts say, it is that people do take advantage of the opportunity to allow technology to help them personalize their experiences. Inside the car, digital assistants and sensors that observe passengers allow the car to learn about them and adapt to their routines.

Auto makers are also taking a page from Apple Inc.’s playbook, using the car’s software to establish a profile of the user that, just like the Apple ID, would allow that person to carry his or her profile to other vehicles, even when car-sharing. Auto makers have already paired customer IDs with their digital offerings, but in the future the ID will be a key that unlocks a person’s preferences from seat position and driving style to music playlists and navigation histories, accessible in any car. This will become a big driver of shared mobility, analysts say.

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“In shared mobility you will be able to port your mobile world,” says Mark Wakefield, global co-leader of consulting firm AlixPartners’ automotive practice. “Even things like sound isolation where you can be in a [vehicle] with other people and you can’t hear them, you only hear your own music.”

Subscription features aren’t limited to personal preferences. Data generated in traffic in real time could also be turned into a business, making certain information available for paying customers.

A host of safety and advanced navigation features could come standard or available with a premium subscription as cars become more connected and exchange real-time information directly, instead of routing the data through a cloud, says Giovanni Lanfranchi, chief technology officer of Here Technologies, a digital mapping company owned by a group of big auto makers.

Here is working on a pilot project that uses car-to-car communication to predict traffic situations just five minutes ahead, using AI and machine learning to achieve up to 95% accuracy.

“This is something that only a machine can understand,” he says. “I’m learning about you to offer a better experience.”

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