With CB Insights reporting a record year for autotech funding deals*, here is a look at how Connected & Autonomous Vehicle (CAV) technology companies are reshaping the automotive industry, with a focus on Europe and Israel, whose booming tech scene is following in the wake of unicorns such as Waze and Mobileye.
With three out of four cars sold in the UK being connected by 2020, and in-car electronics now approaching 50% of total product cost, the holy grail of transportation – the autonomous vehicle - is much closer than most people realise. The automotive industry is going through the biggest change in decades, with traditional barriers to entry being lowered and disruptive new players carving out niches and capitalising on new business models. At the dawn of a new era in the industry, here is a breakdown of four market segments vying for a part of a prize worth £51 billion prize in the UK alone.
1. Vehicle to X communication (V2X)
It is important to distinguish between connected and autonomous – often terms used interchangeably. In reality, ‘connected’ is an enabler for autonomous, with companies like Tesla deploying progressive levels of connectivity and autopilot leading to fully autonomous. Other mainstream automakers are deploying at different rates driven by increasing levels of Advanced Driver Assistance Systems (ADAS), while the Google philosophy seems to be fully autonomous only when it’s ready, as Chris Urmson outlined in his TED talk last year.
Connectivity is already here, and is the first wave of change in the auto industry to have a major impact on consumers’ lives. Very soon, connected ‘smart map’ systems such as Continental’s eHorizon will be able to recommend optimum speeds to guide us efficiently through traffic lights and crowd-source information about road conditions. Fleet owners are using connectivity to gather real time information about driver behaviour and regulatory compliance (e.g. driver hours), and car owners can access diagnostic data through a smartphone app.
Companies like Veniam and High Mobility are blurring the lines between devices by opening up innovative new channels for Internet of Things (IOT) content and services for vehicles, such as vehicle WiFi hotspots.
Other notable applications of connected technology include driver health monitoring, such as the embedded driver's heart and respiration sensing system being developed by the pan-European Harken consortium.
While it may be ok for your phone to reset following a technical glitch, a vehicle travelling on a motorway cannot fail under any circumstance. Even today, the average vehicle contains more lines of code than an F-35 fighter jet, with this figure set to triple as cars become intelligent, connected self-driving devices. Combine this vulnerability with the use of potentially sensitive personal data (just think about how often you connect your phone via Bluetooth to a rental car), and the threat quickly becomes very real.
Cyber security is therefore potentially the highest area of growth as well as risk, and new, specialist players are emerging, such as Israel based Argus and Towersec, providing pioneering intrusion and protection systems for mission critical devices. The momentum of this segment can be seen by Harman International’s recent acquisition of Towersec, and Argus closing a $26 million series B funding round last year.
3. Autonomous technology
As we consider self-driving capability and new ownership models such as ‘Mobility as a Service’, the automotive industry is now opening up to more than just ‘non-traditional’ tech companies such as Google or Apple. Expert players like AdasWorks are now developing everything from cost-effective sensor fusion algorithms to artificial intelligence systems and pioneering ADAS (Advanced Driver Assistance Systems). Other companies such as award winning Switzerland based Fastree3D are developing 3D vision technology and Israeli Mobiwize use non vision-based sensors to delivering real-time insights for better fuel-efficiency and safety.
Technically a subset of V2X, the term ‘telematics’ has been around for some time, and while it is often used to describe the collection of mileage and diagnostic data from vehicles, many companies are taking this much further by combining IOT driven ‘connected’ intelligence to provide huge added value. Greenroad’s vision of ‘driver and fleet performance management’, for example, provides a clear enabler for autonomous driving by collecting aggregated vehicle data around road safety hotspots.
As connected cars are an enabler for autonomous driving, the field of telematics is an enabler for the connected car, by opening new revenue streams, promoting safer driving and increasing customer engagement. As such, it’s no surprise that this segment is gaining the most traction right now, with 50% of the companies shown in the infographic above. UK based Carlock is helping drivers by providing 24/7 monitoring of their car’s position, while companies like ULU, Autotrip and Engie offer low cost, plug and play devices for intelligent fleet management.
With GM’s widely publicised recent acquisition of Cruise Automation and Harman’s acquisition of Towersec, 2016 looks set to be another record year for Autotech. Combined with the seemingly limitless opportunities for telematics and connected car technology to integrate into other areas such as retail, smart homes and intelligent infrastructure, it certainly makes this space one to watch for investors and manufacturers alike.
Disclaimer: This map is not exhaustive and designed purely to give the reader an insight into each segment, with a geographic focus on Europe and Israel.