San Francisco, California - As cars increasingly resemble digital devices, a group of technology firms that can send wireless software updates to cars are in hot demand by carmakers scrambling to catch up to Tesla in the arena of over-the-air updates.
Interest in the technology, through which certain car functions can be upgraded much the same way as an iPhone, comes as Tesla is set to deliver an over-the-air update for hands-free cruise control in October, allowing its electric Model S sedans to drive themselves on freeways.
Strategy Analytics consultant Roger Lanctot commented: “Tesla has made great strides in raising the profile of over-the-air updates, making it appear somewhat sexy by showing how features could be added.
“They're almost poking the traditional carmakers in the eye by making it look so easy.”
That has spurred the big automakers to get more serious about over-the-air updates, although they are hampered by the challenge of making software compatible with internal combustion engines, dealers worried about losing service revenue and security concerns.
Honda spokesman Matt Sloustcher said: “There's a whole mindset change.”
ALREADY ONLINE
Oren Betzaleli, product strategy head for Israeli over-the-air updates firm Redbend, said four years ago it was hard to get in the door.
“Today, over-the-air updates is so important to carmakers that we can get in right away to see the VPs of manufacturing,” he said.
Betzaleli said between six and 10 auto companies were “engaged” with Redbend's technology for cars but declined to name them. There are about 70 different computers in every modern car, each with software that has to be managed.
Michelle Avary, vice-president for auto products and strategy at wireless carrier Aeris, said she had “yet to speak to a single original equipment manufacturer that was not active in this space right now.”
The technology has set off a wave of partnerships, investments and acquisitions. Audio products maker Harman paid $170 million (R2.4 billion) in January to acquire Redbend and another $780 million (R11 billion) to buy Silicon Valley-based Symphony Teleca, another over-the-air updates firm.
Some big carmakers, including GM, BMW and Mercedes, are already using over-the-air updates, but mostly for their entertainment systems.
Mahbubul Alam, chief technology officer of Michigan-based global over-the-air updates firm Movimento, predicted that in three years nearly all car makers would have some kind of OTA capability.
Tesla has already introduced more than 75 features via over-the-air updates, from raising the ground clearance of cars to boosting acceleration.
MINIMISING HACKING
The recent hacking of a Jeep Cherokee through its telematics system has highlighted security vulnerabilities as cars add more digital technology, and auto experts say over-the-air updates are the best way to minimise breaches because weak links can be quickly repaired.
Besides the practical advantages for consumers, who won't need to waste time at dealerships, the technology may save money for automakers because up to half of warranty repair issues and recalls can be corrected through over-the-air updates.
The cost of fixing an issue through a safety recall, in which dealers are compensated for repairs, versus an over-the-air updates was higher by a factor of 20 to 30, said Alam, without saying how he arrived at that estimate.
A September report from research company IHS estimated that global cost savings from over-the-air updates would grow from $2.7 billion (R38 billion) in 2015 to more than $35 billion (R495 billion) in 2022. Those potential savings were eroding earlier resistance to over-the-air updates, said Lanctot.
“That's where the chief financial officer says to the chief information officer, ‘Get out of the way, buddy, if we don't do this, we're going out of business.'“
“NO TURNING BACK”
As much a tech company as an automaker, 12-year-old Tesla is free of the constraints its rivals face - complicated combustion engines, huge model ranges, four-year development cycles and a reliance on car dealerships.
Tesla “started from a blank piece of paper,” said Avary. “They didn't have 100 years of legacy engineering to contend with.
“Your typical combustion engine is still very mechanical. Your gasket blows, it's gone. Tesla is different, they have a lot more software in their cars, it's a very different beast.”
Traditional carmakers' reliance on car dealers also impedes over-the-air updates adoption, with some dealers worried their lucrative service revenue will drop off if car owners come less frequently to dealerships when fixes are done by over-the-air updates, said Lanctot.
“It's not in carmakers' interest to annoy the dealer,” he said.
Jackson, Michigan, Chrysler dealer Wes Lutz defends his role, arguing that while Tesla's higher income clients may be tech buffs keen on over-the-air updates, the average car owner is less savvy and needs hand-holding.
“When it's daylight savings time and the clock changes, I have customers lining up out the door!” Lutz said.