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Digital Service Providers

How The Battle Between Automakers And Big-Tech Opens Doors For Digital Service Providers

Apple, Amazon, Google & other tech giants are boldly going where no tech company has gone before human mobility. Jim Farley, CEO of Ford Motor Company noted this development when he said “We know our competition today is Amazon, Baidu, Tesla, Apple, Toyota, and others.  

The impending autonomous vehicle boom will no doubt change the automobile landscape for good. Together with connected cars, electrification, and smart mobility, they have managed to make traditional automobile OEMs uncomfortable in their seats.  

So, why are tech giants so interested in automobile? And why haven’t the traditional players been able to stave them off? 

Globally, the connected cars market is growing at a 5-year CAGR of 45% – almost twice as fast as the car market itself. While connected cars are still a bit out of reach for the average consumer, this is expected to change in the coming years. Not to mention the huge volumes of personal data that is waiting to be extracted. This, in turn, presents numerous opportunities for service providers in new-age tech to seize a piece of the $200MM global connected cars market. 

OEMs Are Falling Behind 

The entrance of non-auto tech players like Google & Amazon have widened the scope of the automobile market. Their investments in experimental technologies like computer vision & AI-driving as early as 2009 are paying off in a big way now. Seeking new applications for the technologies they have perfected over the years, they have brought a sense of “innovate or die” into the segment. 

Traditional auto-OEMs have always been behind the curve when it comes to adopting new-age tech. Making fast and bold technology choices is not exactly their strong suit.  

So far, OEMs have been unable to leverage modern technologies like AI, ML, IoT & Advanced Analytics to deliver cutting edge solutions. This is where tech giants are able to upstage them, even though most solutions are still in the PoC stage.  

Even in the area of EVs, most players exhibited a lot of inertia despite Tesla proving that there is definite consumer interest.  

Because of this, they are now fighting to remain relevant. 

One strategy to do this is to forge partnerships with former rivals. In early 2019, BMW & Daimler inked a 1 billion partnership to develop a suite of mobility services togethers.  

Some of these strategic partnerships are also done with an eye on the emerging electric & autonomous vehicles market. They include Ford & Volkswagen agreeing to investigate ways to work together in this segment and Honda investing ~$3bn in GM’s driverless unit.  

But the winning strategy, however, seems to be partnering with startup service providers.  

Numerous Opportunities for Digital Service Providers 

Where there is disruption, there are startups seeking to capitalize. Automobile is no different. The common thread among these startups is their reliance on tech like AI, ML & Analytics to deliver solutions to problems that most considered to be unsolvable. 

Take, for example, Nexar. This Israeli Vehicle-to-Vehicle startup uses AI-based camera enabled with computer vision algorithms to identify & analyze cars and their movement patterns. The result is an early warning system that warns the driver about imminent danger. 

Vehicle-to-Infrastructure startups like Derq, on the other hand, leverage IoT & data analytics to communicate with traffic lights, streetlights, parking meters etc. They offer intelligent driver assistance and performs driver behavior analysis while on the move.  

OEMs are always shopping around for opportunities to partner with such service providers or even outright buy them out. Service providers with a proven track record in these disruptive technologies but lack the resources to make any measurable impact are the right pick for OEMs. 

Some examples are BMW’s acquisition of Mobile parking payments startup ParkMobile and Ford’s acquisition of vehicle connectivity platform Autonomic. 

The automobile industry is looking for service providers in the below areas: 

  • Embedded Engineering 
  • Data Management/Warehousing 
  • Public/Private Cloud Solutions 
  • Mobile application development solutions  

And many more such emerging fields. 

Service providers with a proven track record in the above areas and with expertise in other AI, ML, Analytics-bases solutions stand to win long-term deals from OEMs. 

The Draup for Sales platform features a proprietary dashboard tracking real-time signals and market movements in the automobile industry. By feeding in your areas of expertise, the platform will intelligently find optimal partnership opportunities across geographies for specific use cases and technology capabilities 

Using the Ecosystem tool, service providers also obtain an in-depth view of location intelligence data for hundreds of global automobile hotspots & identify high-value opportunities.