innoVentures insight: Connected Car

Posted on 7th May 2014

In our latest insight Castrol innoVentures seeks to offer our comment on the digitisation of the automobile.

The digitisation of the car parc is accelerating fast at two levels:

1) The increasing use of technology to make cars more autonomous (driver assist) to improve the driving experience and safety
2) Making the car a connected node in the internet of things to provide improved in-car entertainment, but also to use the data generated for new business models and offers.

The market potential is significant and is bringing new technology players into the ecosystem, which will either support or compete with existing OEMs for dominance. Although at this stage, self-driving connected cars may seem very abstract and futuristic, there is increasing evidence showing their filtration into everyday experiences. 11% of new cars today are classed as ‘connected’ and this is expected to grow to 80% by 2017. Telematics have enabled our cars to communicate with us and anyone who observed the consumer electronics shows in 2014 would have been inundated with connected car developments and self-driving cars . Telematics are the forbearers of autonomous connected cars. It is clear that our highways of the future will be full of vehicles communicating with each other to enhance safety, efficiency and comfort for drivers. There are significant benefits of driverless cars:

  • A million fewer road deaths every single year
  • Give mobility to the elderly or disabled
  • End congestion in an increasingly busy world
  • Increase productivity and boost the economy
  • Massively reduce emissions

This is creating dynamic challenges and opportunities in the automotive space. Consumers will be attracted by the quality interface, interoperability and performance of the connectivity, rather than the engine. The opportunity for Castrol is to leverage our expertise in high performance products and consumer trust to create value adding services to consumers and maintain brand relevance.

Key Trends & Insights

Autonomous cars, or cars with a high degree of autonomous systems that allow self-guiding without driver intervention, are only in the project phase, but they will represent the new technological wave and a true trend in the automotive industry by the year 2035.

According to an analysis conducted by IHS Automotive, cars that will drive themselves will represent 9 percent of all the models that will be sold worldwide by 2035. This means some 54m vehicles will have the ability to steer themselves without driver intervention
Gartner predict that “Cars will become the first robot most of us experience in our lifetime”
Legislation changes are helping trigger this, with self-driving cars being legalised in US states and subsidies to promote the growth of these industries. Following such trigger points will allow us to ascertain the integration of connected vehicles.

Implications for Castrol

It is always difficult to predict the future; however some trends the connected car drives may have an impact upon Castrol:

  • Smart (predictive) maintenance becomes a real possibility with new diagnostics, impacting directly on the predictability of our business and the marketing opportunities
  • Connected cars can facilitate car sharing through location and access points, which will lead to less consumer vehicles on our roads; however the fleets for car sharing will cover many more miles than the average personal vehicle and will require greater levels of maintenance.
  • Commutes may become longer as commuters can maximise their commuting times creating greater strain on the car requiring more accurate maintenance.

The benefits of telematics include predictive maintenance and Castrol being able to tell our customers what is happening to their car in order to minimise disruption. There will be different requirements based on the lubricant necessities of these vehicles that Castrol shall have to adapt to. That’s why we, in Castrol innoVentures, are creating options and evaluating a number of scenarios and this can be seen in our investments in consumer telematics (Zubie), the connected workshop (Repairpal) and Carama in Malaysia). We have also taken a position in Peloton, who provide active safety systems to synchronize pairs of trucks, reducing collision-related expenses and fuel costs.