IoT and the future of the automotive industry (part 1)

By Joe Couling

The Internet of Things (IoT) is a technological revolution of such magnitude that it’s difficult to grasp. Fully realised, the IoT represents total connectivity. This means a vast network of smart devices relaying information to one another and adapting in an instantaneous feedback loop. This has profound implications for every sector not least the automotive industry.

The future of the automotive industry looks to be dominated by new trends. Automakers are moving aside for software developers, consumers are demanding the same smart functionality from their car as from their mobile phones, private ownership is declining, and revenue models are changing. Gartner predicts that by 2020, more than 250 million vehicles will be connected globally. The car is set to become a connected appliance first and a vehicle second.

Vehicle to everything – V2X integration

When it comes to harnessing the potential of the IoT within the automotive industry there’s still a significant knowledge gap yet to be bridged. Vehicle-to-everything (V2X) integration will see the car become a device fitted with sensors and part of a connected driving infrastructure that incudes smart traffic lights, smart stop signs, wearable devices, and other cars.

The information these sensors will relay is vast and much of the potential for creating value is centred on who can aggregate and analyse that data. A platform is needed that can make sense of multiple information streams and importantly turn that data into actions.


The landscape of the automotive industry is rapidly changing to address this problem. In the new climate, automakers that don’t adapt won’t survive. New alliances are being formed like Toyota and Blackberry QNX’s partnership and the marketplace is seeing an influx of new entrants as the old giants like Ford and General Motors jostle for place with Silicon Valley software developers like Google and Apple.

The future of the automotive industry is one where software developers must think like car-makers and car-makers must think like software developers. Mercedes Benz has seized on this theme hosting ‘Hack with the Best,’ an event for aspiring software developers and designers to workshop ideas for the future of the car. Ideas included exercising while driving, to automated petrol refuelling.

What’s clear is that while these new innovations may see our relationship with the car change, they offer new and untapped revenue possibilities for those that can establish themselves in the market first.

Massive potential for new revenue models

Taking a cue from software developers, automakers have the option to extend the customer relationship beyond the immediate point-of-purchase. This could see a shift from the car as a one-time transaction to a more complex multi-service model. In the future, customers will want to be able to surf the web, and access an array of services while driving. In car software raises the possibility of pay-per-use in-vehicle services, licensing for tiered services depending on a customer’s needs, and even subsidised rates when combined with ad-supported content.