Richard Bishop of Bishop Consulting on what's needed to make V2X mainstream—and what potential new revenue streams that might bring
Vehicle-to-infrastructure (V2X) telematics can go mainstream either by being mandated into existence by government regulation (as is being considered in the US) or via market-driven forces (as is the case in Europe). Let’s take a look at both situations.
The current Safety Pilot Model Deployment funded by USDOT/NHTSA is yielding data that the agency will use to make a decision in 2013 whether to proceed with a mandate, an NCAP incentive, or more research. A large team is already at work within NHTSA examining the issues and drafting candidate language. The recent re-election of President Obama bodes well for a mandate, as at least some of the NHTSA leadership is likely to remain in place and they have been enthusiastic about a bold move forward.
What if the answer in 2013 is a yes? Expect about two years for a final rule, then maybe a three-year phase-in period; therefore, the first mandated equipment would appear on US cars around 2018.
V2X in Europe
The European car manufacturers have recently announced a target of 2015 to begin selling cars with V2X equipment. They are holding in-depth talks with infrastructure operators called the Amsterdam Group, who have likewise stated their intention to support 2015 deployment. From all indications, the automakers are ready to go at that time.
Will the infrastructure side be ready? Maybe in isolated hot spots initially. Much will depend on incentives and funding provided by the European Commission, which has signaled strong support. But anything in the public sector takes time—usually a lot of it.
What is the business motivation for the European OEMs to deploy V2X? One indication was provided at the 2012 ITS World Congress via a talk by Nadja Rapplod of Facit Research. The analysis concluded that services such as traffic information and safety do not have strong business potential; therefore, the target is on commercial passenger car fleets. This is especially promising in Europe, where mid- and high-level executives are typically provided a car by their employer as part of their employment contract. (For more on fleets, see Industry insight: Fleet telematics.)
Passenger car fleets
Currently in Europe, there are 2.5 million fleet cars, and this is expected to grow to 5.7 million fleet cars by 2016. Services related to commercial passenger car fleets include items such as coordination and control for fleet management, multimodal information, stolen vehicle recovery, diagnostics/maintenance, and creating individual driving profiles for insurance.
The analysis concluded that a cost reduction of 20% is possible, mainly in fuel savings. This translates to 80 euro cost savings per month per vehicle. While some of the data to support these services can (and does) flow now on commercial wireless networks, the analysis concluded that V2X on-board units create an improved and standardized platform with higher quality communications.
The European carmakers have made it clear to the European Commission that they prefer a market-driven approach, not a mandate, and this appears to be the Commission stance as well. As vehicles come to market in Europe, those companies also selling cars in the US could bring V2X to that market as well, ahead of a government-imposed mandate timeline.
All indications are that V2X has moved from an “if” to a “when” and the signals as to timing are increasingly clear. Even in Japan, while different approaches are being pursued, some form of V2X is likely to take root.
New revenue streams
What potential new revenue streams will result? Service providers in the telematics ecosystem will benefit as the use of detailed insurance-relevant and diagnostic data becomes commonplace. (For more on insurance, see Industry insight: Insurance telematics.) Volumes of radio and antenna hardware—for both cars ad roadside units—will rise steadily during the remainder of the decade.
Special purpose services for commercial vehicles will emerge, potentially using roadside units deployed by private sector players (truck stops, distribution centers, etc) and therefore not requiring public sector action. As a powerful new communications platform, other services will proliferate to take advantage of detailed vehicle data and high bandwidth no-fee communications using standardized equipment for both markets. (For more on data, see Industry insight: Telematics and data.)
For more on V2X, see Industry insight: Telematics and V2V/V2X technologies.
For the latest on V2X, check out V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt.
Coming up: Consumer Telematics Show 2013 on January 7 in Las Vegas, Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Telematics India and South Asia 2013 on April 16-17 in India, Insurance Telematics Europe 2013 on May 8-9 in London, Telematics Russia 2013 on May 14-15 in Moscow, Telematics Detroit 2013 on June 5-6 and Content & Apps for Automotive Europe 2013 on June 17-21.
For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.