For decades, car companies competed on how
much horsepower they could pack under the hood, while still leaving enough
space for drivers to actually get in the vehicle. In the coming years, however, when automakers talk about high
performance, they will probably be referring to computational power – terabytes, not torque, and RAM rather than revs.
Engineers at Toyota already joke that the main role of a car’s wheels is to stop all the computers from dragging along
the ground.
What is being described is the era of the software-defined vehicle – where the quality of the electronics and software
is more important than the mechanical hardware. And the tipping point has already happened. A modern car today may
contain 150 computers and more than 100 million lines of code.
A key element of this evolution is connectivity. The real-time relay of data to and from the vehicle is transforming the
mobility ecosystem. In a world run from our smartphones, cars are rented on-demand via an app. If a passenger is bored
on a long journey, they can stream the latest movies and games to the vehicle’s onboard screens. Even driving itself is
expected to become optional as 5G wireless and a new generation of sensor technology enable autonomous vehicles.
Meanwhile, infrastructure providers such as electric vehicle (EV) charging stations use connectivity to manage their
equipment and to meter and charge customers. By 2030, 95 percent of all new cars produced will be connected, compared
with 50 percent today.
What links these services together is a combination of data transfer and processing, coupled with seamless, integrated
payments. After all, the new generation of applications has to be paid for and with as little disruption to the end user
as possible.
Welcome to the future of motoring...
In its simplest form, a connected car is a vehicle that is
able to wirelessly connect to the internet and communicate
bi-directionally with other devices.
But as Tristan Attenborough, Global Head of Energy, Power, Renewables &
Metals/Mining at J.P. Morgan, explains:
“When we think of the ‘connected car’ we have to ask ourselves the questions, ‘Who are we connecting, and why? What are
they interested in being connected to?’”
It’s not just about the fun stuff – ordering food via your car screen at the drive-through, or automatically playing
your favorite music as you start your vehicle. “Once the car is connected you can then bring all types of services into
the vehicle,” says Raja Kuppuswamy, CEO of J.P. Morgan Mobility Payment Systems. “The biggest limitation right now is
the networking itself. With 5G, you will have much faster connectivity, then you will get the best user experience.
That’s where everything is going at the moment.”
Connectivity is also supporting far greater levels of safe, driverless automation than ever before. Take LiDAR – which
stands for light detection and ranging. This technology uses laser pulses to accurately map the shape and distance of
surrounding objects. In combination with hi-res digital cameras and cloud-based analytics, it allows cars to navigate
environments in real-time. LiDAR is already a key part of advanced driver assistance systems (ADAS), such as assisted
parking, blind-spot monitoring or collision-avoidance, where the car can automatically correct course if there is a risk
of a crash. United with the roll out of ultra-low latency 5G networks, it is now paving the way for the rise in
self-driving vehicles.
Whilst the promise of autonomous cars effortlessly ferrying people from A to B grabs headlines, connectivity also offers
another major benefit – the ability for drivers to bring their digital footprints into the vehicle with them.
As we live more online, drivers and passengers want to bring their favorite music, video or gaming choices with them.
They want to be able to send emails to work, or buy goods from their favorite e-commerce sites. And they want the same
experience whether they are in a rental car, a taxi or their own vehicle.
“The car is becoming an intelligent everyday
companion that supports its users thanks to the constant connection to the cloud and other data platforms,” says Knut
Krösche, Head of Digital Business & Mobility Services at CARIAD, which is building the automotive software platform for
Volkswagen Group GbmH.
Meanwhile, a survey from BMW showed that 73 percent of buyers would switch car brands if they could bring their digital
lives with them to the new vehicle.
Stellantis – the merger between Fiat Chrysler and
PSA Group – is predicting $22.5 billion a year in revenues from
software products and subscriptions by 2030. But this is only possible with payments that work simply and seamlessly
with a single swipe, touch or voice command across any application. These are known as integrated payments and as in-car
consoles become marketplaces for a range of products, these types of payments will become essential. As Ali Almakky,
Global Head of Payments Solutions for Mobility at J.P. Morgan states, “When it comes to digitalization, it has to either
offer value, savings or convenience, otherwise it just won’t happen.”
For example; if you are driving and want to purchase a new tire, or order coffee and food to be ready at the next rest
stop, you will want to avoid having to pull over and start inputting your card details. Likewise, if you want to upgrade
your car’s software package to offer more advanced features, such as autopilot or access to traffic reports, you should
be able to do so with as little friction as possible.
For providers, this type of seamless payments ecosystem is easier said than done, especially as the range of third-party
services grows. Right now, it is still a challenge to create one payment solution, with one log-in, that can work
seamlessly with lots of different companies, services or applications. It requires back-end functionality that can
onboard multiple different vendors ranging from e-commerce players and software companies, to utilities and financial
service firms, and still allow payments to feel effortless to the car’s user.
In one solution, the car itself will be the means of storing and transferring funds – essentially a digital wallet on
wheels. However, there are concerns that this will add friction to the consumer experience, as users will have to log-in
each time they drive. There could be confusion over who is actually at the wheel, while it also limits vendors to
targeting consumers only when they are inside the vehicle.
“If I’m a transportation company,” says Attenborough, “I want a share of your spending when you’re not in your car, when
you’re on the train or on the bus or getting a taxi or scooter, or you’re just walking and you’re not in your car. So,
if I confine my connectivity to the car, I’m missing out on a big piece of your mobility spend.”
