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In 2019, Harley-Davidson hit hard at CES with its LiveWire connected electric motorcycle model, which can be recharged by smartphone. The same year, the Japanese Bridgestone (world No.1 in tires), bought the telematics division of TomTom for nearly one billion euros. These events show the  strong enthusiasm for telematics, which is often seen as a flourishing market.

But what exactly do we mean by telematics? This portmanteau word, constructed from  telecommunications  and  information technology , designates the convergence between telecommunications and information systems. In recent years, our cars have tended to become real rolling computers, emitting ever greater amounts of data in real time. According to a study by the Gartner firm [1], the volume of data emitted by the global vehicle fleet should increase by 236% each year between 2013 and 2030. This growth, linked to a sharply increasing rate of vehicle equipment by telematics , is enabled by the progress of telecommunications infrastructures (4-5G, WLAN, IoT…) as well as those of data storage and processing techniques ( cloud-computing, IA, machine learning…). The use of these masses of information emitted by automobiles and their processing (either by systems embedded in the vehicle, or by remote structures) allow the development of sophisticated applications.

Fleet management has greatly benefited from the contributions of on-board telematics . Many players (from  pure  telematics players like Masternaut to leaders in fleet management like Arval or ALD) have developed services intended to optimize fleet management. They are thus based on geolocation and the processing of driving data to analyze, among other things, driver behavior, fuel consumption, fleet dispatching, use of each vehicle, etc. Between a significant reduction in TCO ( Total Cost of Ownership, total cost of ownership), an optimization of the use of the fleet and increased safety, the benefits would be multiple.

Auto insurance is also shaken by the arrival of telematics. More and more insurers are therefore offering tailor-made policies whose premium is indexed to the number of kilometers driven ( PAYD, Pay As You Drive ) or driving behavior ( PHYD, Pay How You Drive ). While these policies are very successful in countries where car insurance is expensive (such as Italy), they are still struggling to meet their audience in France. Nevertheless, many French insurers (Groupama via its subsidiary Amaguiz, Axa via its subsidiary Direct Assurance, MAIF, etc.) have taken the plunge.

The field of possibilities opened up by telematics thus seems very wide, which explains the strong growth of this market. According to a survey by the American research firm Report and Data [2], the global automotive telematics market could grow by nearly 19% each year between 2019 and 2026. Thus, many companies have invested or are in the process of making invest in this area. They come from very different backgrounds. There are thus telecommunications operators (SFR, Orange via its subsidiary Ocean), IT giants (SAP which offers a fleet management system ), innovative start-ups (like the French WeNow, which recently raised several million euros and offers a package designed to promote eco-driving). Automobile manufacturers and suppliers are also developing their presence in the telematics market, with the ambition of diversifying their product catalog or of becoming service operators. This is evidenced by the partnership concluded in 2018 between Opel-Vauxhall and Masternaut, for the installation of telematics solutions as original equipment, or the investments made by the French equipment supplier Valéo, which absorbed the  pure players  Peiker and Kuantic, in 2016 and 2017.

However, the horizon does not seem completely clear for automotive telematics. Indeed, many obstacles could threaten the market. Telematics solutions first of all come up against a certain reluctance on the part of drivers or large fleet managers. According to a study conducted by the organization FleetEurope [3], 62% of  fleet managers  face  driver mistrust or even rejection . This is the obstacle most frequently encountered in the implementation of telematics solutions, in front of the impact of privacy laws. (51%). In Europe, the framework defined by the GDPR (General Data Protection Regulation) can be seen as an obstacle to the rapid and massive development of telematics services insofar as it makes the sharing of data subject to the user’s consent. The  lack of return on investment comes third in the obstacles to the development of telematics (43%). In fact, the development of telematics services requires investing both in hardware (telematics boxes), in the collection, processing and analysis of vehicle data, but also in the development of efficient and innovative services (UX design, marketing and distribution model, fleet management applications and software, etc.). And the impact on TCO does not necessarily seem obvious, whether for an individual or for a fleet manager.

To face these different challenges, some players have taken the lead. More and more developers of telematics solutions are adding functionalities to strengthen respect for privacy. We thus think of the Masternaut box that it is possible to unplug to stop geolocation. In 2017, the CNIL issued a series of recommendations for the use of automotive data supervised and respectful of the GDPR. Finally, initiatives are starting to be taken at the sectoral level to facilitate data sharing. The Plateforme de la Filière Automobile (an organization bringing together the main players in the automotive sector in France) has for its part embarked on work to define standards to facilitate data sharing.

Telematics is thus a promising market, which nevertheless faces many obstacles. Will telematics stakeholders be able to find sustainable business models and meet the demand for safer and more ethical data use?

Cyril Rousset and Lionel Chapelet

lionel

cyril

 

 

 

 

 

 

Credit: photo DR

[1] Hype Cycle for Connected Vehicles and Smart Mobility, Gartner, 2017

[2] https://www.globenewswire.com/news-release/2019/06/11/1867173/0/en/Vehicle-Telematics-Market-To-Reach-USD-98-27-Billion-By-2026 -Reports-And-Data.html

[3] https://www.fleeteurope.com/en/financial-models/europe/features/telematics-survey-safety-and-management-benefits-trump-driver-resistance?a=BUY03&t%5B0%5D=Telematics&curl = 1

 

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