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November 6, 2017 Strategy Analytics, Inc 1 Automotive Infotainment & Telematics AND - Capital Markets Day 2017

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November 6, 2017 Strategy Analytics, Inc 1

Automotive Infotainment & TelematicsAND - Capital Markets Day 2017

RICHARD ROBINSON

November 6, 2017 Source: Infotainment & Telematics Service 2

• Director – Global Automotive Practice• Previous: Alpine as HMI lead on Navigation and Infotainment Design

[email protected]

AUTOMOTIVE PRACTICE – SINCE 1988

November 6, 2017 Strategy Analytics, Inc 3

LEADING-NAME CLIENTS ACROSS THE VALUE-CHAIN

70% of Tier 1 Suppliers

90% of Major Auto Semiconductor

Suppliers

70% of top OEMs

FIVE SERVICES TO COVER ALL AUTOMOTIVE OPPORTUNITIES

INFOTAINMENT & TELEMATICS

AGENDA

Next Generation Connected Vehicle Architecture

• Gen. 1.0 Market Status

• Gen. 2.0 Market Drivers

• Domain Convergence - Data Collection/Management

• Gen. 2.0 Data Management Opportunities

• Indirect – Direct - Cloud based - AI & Digital Assistants

• Navigation:

• Autonomous vehicle

• Hybrid

November 6, 2017 Source: Infotainment & Telematics Service 4

MARKET STATUS

•Telematics 1.0 business model• Trying to monetize the consumer directly• Too many de-activated subscriptions• “Free periods” too short

November 6, 2017 Source: Infotainment & Telematics Service 5

6 months FREE!

Only $10 per month!

Market FAILURE+ =

MARKET STATUS

IN-ACTIVE SUBSCRIPTIONS (CUMULATIVE)

November 6, 2017 Source: Infotainment & Telematics Service 6

Source: Strategy Analytics Infotainment & Telematics Service

MARKET STATUS

INACTIVE SUBS = DEAD $$$

November 6, 2017 Source: Infotainment & Telematics Service 77

Source: Strategy Analytics Infotainment & Telematics Service

Over $19 Billion wasted 2011 2017

TELEMATICS IS A VALUE ADD

MORE OEM’S OFFERING EXTENDED FREE TRIAL

November 6, 2017 Source: Infotainment & Telematics Service 8

To Proprietary

Proprietary

Proprietary,

SiriusXM

4G LTE

4G LTE

2.5G/3G/4G

2.5G

4G LTE

4G LTE

2.5G

3G

2.5G

* GM’s OnStar Basic plan, and Mercedes’ mbrace Connect plan are free for 5 years with 2016+ GM vehicles and 2016+ Mercedes vehicles.

OEM

Typical Players in U.S. OEM MarketCarrier

6 Months

4 Years

6 - 12 Months

5 Years

5 Years*

1 Year

1 Year

5 Years*

1 YearEmbedded telematics is evolving to longer free trial period.

Free TrialNetwork

SpeedTSP

B2C

B2C

B2C

B2C

B2C

AUTOMOTIVE EMBEDDED MODEMS – MARKET STATUS

2017 OEM SHIPMENT ATTACH RATE - EU

November 6, 2017 Source: Infotainment & Telematics Service 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

France Germany Italy Spain UK

Telematics Status EU - 2017

Embedded Connectivity No Embedded Connectivity

• Italy: Only 27% of vehicles will ship with embedded connectivity in 2017

• France, UK and Germany: Have the highest adoption with 40% to 42% in 2017

• Spain: 32% of vehicles shipped in 2017

AUTOMOTIVE EMBEDDED MODEMS

GLOBAL ANNUAL SHIPMENTS

November 6, 2017 Source: Infotainment & Telematics Service 10

0

20.000

40.000

60.000

80.000

100.000

120.000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Un

it S

hip

me

nts

(0

00

's)

North America Europe South Korea Japan China India Russia Brazil Rest of World Non Connected Cars

51% of vehicles shipped will have embedded

modems

Telematics 1.0

Telematics 2.0

INFOTAINMENT & TELEMATICS

AGENDA

Next Generation Connected Vehicle Architecture

• Gen. 1.0 Market Status

• Gen. 2.0 Market Drivers

• Domain Convergence - Data Collection/Management

• Gen. 2.0 Data Management Opportunities

• Indirect – Direct - Cloud based - AI & Digital Assistants

• Navigation:

• Autonomous vehicle

• Hybrid

November 6, 2017 Source: Infotainment & Telematics Service 11

MARKET DRIVERS

GEN 2.0 TELEMATICS ARCHITECTURE

November 6, 2017 Source: Infotainment & Telematics Service 12

Cloud

IoT

OTA

OEMs

Telematics ECU

Cloud

Smart Antenna

Headunit/

Cockpit Domain Controller

Telematics ECUCockpit

Domain Controller

Smart Antenna

Body

Chassis

ADASEthernet

Powertrain

ADASECU

PowertrainECU

Body ECU

Chassis ECU

Gen 2.0

November 6, 2017 Source: Infotainment & Telematics Service 13

GEN. 2.0 MARKET DRIVERS

DATA COLLECTION AND MANAGEMENT

Driver data – Personal account information, personal contacts, payment information, driving behavior data, biometric data, personal preferences data (e.g. HVAC settings, seat position, audio source preferences, etc.), app/feature usage data, microphone data, in-cabin camera data, in-cabin sensor data (e.g. seat sensors)

Vehicle data – inspection/regulatory data, collision/forensic (e.g. EDR) data, diagnostic/trouble code data (e.g. OBDII/ EOBD data), proprietary OEM data, sensor data, parts performance data, emissions data, vehicle security data (e.g. firmware/software security information)

Content data – media (music, video), POI data, other types of data provided and/or owned by third parties

V2X data – Wireless network condition information, connected device information (e.g. smartphones, docked tablets) V2V data, IoT data (e.g. connections to smart home devices or EV charging stations), Location/GNSS data, other satellite connectivity data, infrastructure data (e.g. toll ECU data)

Environmental data – Physical road conditions (e.g. ice, potholes), weather, traffic, road hazards/furniture, outside temperature, available parking spaces

November 6, 2017 Source: Infotainment & Telematics Service 14

Sample Use CasesUX Enhancement

- Analyze UI usage

- Analyze in-vehicle app usage

- Learn driver/passenger preferences

- Enhance services (e.g. concierge service) based on analysis of usage data

- Analyze driving style to improve autonomous driving systems’ performance

- Monitor wireless network conditions to troubleshoot connectivity issues

Process Improvement

- Get ahead of recalls/warranty exposure

- Make changes on the production line

- Streamline OEM parts inventories and deliveries

- Collection of high-resolution location data to enable autonomous driving

- Ensure compliance with changing global regulatory environment

- Testing/simulation (potentially in near real-time when 5G networks become available)

Monetization

- Direct sale of data to third-parties (e.g. retailers, insurers, government entities, media companies, telecom operators, etc.)

- Targeted marketing efforts (e.g. dealer CRM, eventually advertising)

- Provide fleet-related data to third parties (e.g. vehicle load /weight conditions, location, fuel usage, driver/passenger identification, etc.) for direct or indirect monetization

GEN. 2.0 MARKET DRIVERS

DATA COLLECTION AND MANAGEMENT

November 6, 2017 Source: Infotainment & Telematics Service 15

Number of Automotive Software-Related Recalls in U.S., 2011 – 2016

Source: CX3 Marketing

GEN. 2.0 MARKET DRIVERS

SOFTWARE RECALLS

• Typical (Non-OTA) software updates cost between $300 -$600 per vehicle.

• ~ $3 Billion spent by OEMs to do (non-OTA) software updates in the US alone in 2016!

OTA OEM IMPLEMENTATION STATUS

November 6, 2017 Source: Infotainment & Telematics Service 16

OEM Telematics Control Unit

Infotainment System

Powertrain/ Safety

All ECUs

2020

2020

2020+

2020+

2020

TBDTBD

2020+

TBD TBD

TBD

TBD

TBD

TBD

TBD

TBD TBD 2020+

TBD TBD TBD

TBD TBD

TBD

TBD

TBD TBD

TBD

Wi-Fi

2017

TBD TBD

GEN. 2.0 MARKET DRIVERS

OVER THE UPDATE BUSINESS MODELS

Business Models

Subscription: Subscriptions are generally annual or quarterly (depends on OEM) and pricing is either per vehicle module being updated or per vehicle. This generally applies when providers are selling to OEM customers. All subscription models include separate one-time NRE for integration and either include upkeep/maintenance fees with the subscription price or charge a separate annual fee.

Per Campaign: Some OEMs only want to pay per OTA update campaign, but this is less common as most are realizing they’ll want to send multiple campaigns. Pricing is per vehicle module. This generally applies to OEM customers.

Licensing OTA Components: Some companies license their OTA update solution, or specific OTA update platform components/modules, to customers, allowing them to run the platform or components on either the customer’s or provider’s servers, depending on preference. The license fee is either a one-time fee or an annual fee.

Revenue Share: A future model under consideration by OTA solution providers is to share revenue with OEMs that charge for software/feature upgrades.

November 6, 2017 Strategy Analytics, Inc 17

GEN. 2.0 DATA MANAGEMENT OPPORTUNITIES

November 6, 2017 Strategy Analytics, Inc 18

Vehicle manufacturers (OEM’s) are looking to exploit vehicle data

Requirement: Understand how people drive and monetize their interests

1. Indirect data management: • Data brokerage through 3rd parties• Backend Process/Logistics

2. Direct data management: • Wallet on wheels• Ecommerce platforms in the car• Ecommerce platforms on Smartphones

3. Cloud Services & AI/Digital assistants• Amazon web services etc.• Alexa, Cortana, etc.

INDIRECT DATA MANAGEMENT

OTONOMO

Industry Example: Otonomo’s Car Data Exchange and Marketplace

• Provides a marketplace where OEMs can manage vehicle data collection and sell data to third parties

• Current OEM client is Daimler

• Interest from 7 other automakers

• Delphi InvestmentNovember 6, 2017 Strategy Analytics, Inc 19

DIRECT DATA MANAGEMENT PLATFORM

BMW CAR DATA

BMW launched its CarData platform on May 30, 2017, in Germany:

• Provides customers with access to their vehicle data when requested

• Complies with the EU’s General Data Protection Regulation (GDPR)

• Provides a platform where third-party companies can make use of aggregated vehicle data

• BMW stated 8.5 million BMW Group vehicles on roads can potentially share data with this platform

November 6, 2017 Strategy Analytics, Inc 20

Source: BMW

OEM DATA MANAGEMENT PLATFORM

VEHICLE E-COMMERCE/WALLET ON WHEELS

21

Honda in-vehicle fuel and parking payment demo at CES 2017

Partnered with Visa, fuel pump vendor Gilbarco Veeder Root, and parking services company IPS Group to enable drivers to pay for

fuel and parking

General Motors OnStar Go e-payment integration

OEM partnered with Masterpass to enable payments to merchants offering products and

services through OnStar Go

FROM CALL CENTERS TO AI/CLOUD

November 6, 2017 Source: Infotainment & Telematics Service 22

Call Center

Wi-Fi

A.I.

IoT

OEMS’ INFOTAINMENT AI PARTNERSHIPS

November 6, 2017 Source: Infotainment & Telematics Service 23

OEM Digital Assistant Status

BMW/MINI Amazon Alexa, Microsoft’s CortanaAlexa – Launched (BMW Connected App for Alexa), Alexa in all BMW/MINI models by mid-2018, Cortana – Demonstrated

Ford Amazon Alexa Planned launch in Ford electrified models

GM IBM Watson, used with OnStar Go backend Launch was planned for early 2017

HondaHANA, proprietary assistant developed in partnership with SoftBank

Concept demonstration

Hyundai Google Assistant, Amazon AlexaGoogle Assistant – Launched in Genesis, Alexa – Launched in 2017-MY vehicles and select 2016-MY vehicles

Mercedes Google Assistant, Amazon Alexa Both planned for launch sometime 2017

Nissan Microsoft’s Cortana, Amazon Alexa Cortana – planned launch; Alexa - launched (2017, 2018-MY)

ToyotaLine’s Clova, YUI, proprietary digital assistant technology

2018 for Clova, YUI concept demonstration

Volkswagen Amazon Alexa Planned, launch date not yet announced

INFOTAINMENT & TELEMATICS

AGENDA

Next Generation Connected Vehicle Architecture

• Gen. 1.0 Market Status

• Gen. 2.0 Market Drivers

• Domain Convergence - Data Collection/Management

• Gen. 2.0 Data Management Opportunities

• Indirect – Direct - Cloud based - AI & Digital Assistants

• Navigation:

• Autonomous vehicle

• Hybrid

November 6, 2017 Source: Infotainment & Telematics Service 24

AUTONOMOUS IS A SOFTWARE PROBLEM

September 2017 Copyright© Strategy Analytics 2017 25

Many cars with hardware:

Few cars SAE L4 or above

Source: Strategy Analytics Autonomous Vehicles Service

NAVIGATION ISSUES

FOR FULLY AUTOMATED DRIVING

• Accuracy & Update Frequency• Fail Safe At present, if the map has an error then the human driver is

able to make a decision as to the best way to proceed. This normally works – but even with human processing skills we still see events where a vehicle as taken an inappropriate or incorrect route

• Fail Safe?? Minute-by-minute updates will be required to account for unexpected road closures etc.

• Destination Entry• Currently: Navigation systems are excellent for getting within a few

tens of metres of our destination. • Future: For fully automated driving we will need to potentially specify

a much more accurate destination, and have a co-ordinated hand-over to a parking mode if the vehicle is to wait for us

TomTom Level 3 Proposal: Have a traditional route option and an ‘autonomous’ route option (with limited/no driver interaction)

• Traffic conditions, simpler, longer?

September 2017 Copyright© Strategy Analytics 2017 26

Source: ranker.com

ROLE OF MAP / NAVIGATION IN LOCATING

SELF-DRIVING VEHICLES IS STILL UNCLEAR

• It is generally agreed that any self-driving vehicle needs to be able to locate itself with an accuracy of around 10 cm

• A blend of technologies will be required:

• HD Maps / On-board sensors?

• Satellite positioning?

• Dead-reckoning?

• No agreement on exactly how to blend

• Maps: what’s the balance between survey vehicle and user-generated content?

• Sensors: Do we use all of RADAR, LiDAR (current), Camera etc.? Or just a subset?

• Satellite positioning: Is current consumer-grade sufficient?

• IMU (Inertial Measurement Units): Are today’s MEMs-based units good enough?

June 2017 Copyright© Strategy Analytics 2017 27

Source: TomTom

HIGH-PRECISION…ALL THE TIME

Integrated inputs from:

• Highly Automated Driving/ADAS Domain

• Navigation UI

• HD Map

• Real time (Environmental)

• Lane fusion

• Sensor data• Camera/Lidar/Radar

August 2017 Copyright© Strategy Analytics 2017 28

HIGH-PRECISION LOCATION DEMAND

• High-precision location assumed to be required for all L3 and greater applications, and on increasing number of L2

• Cadillac CT6 uses LiDAR-based map data (Trimble GPS, Geodigital maps)

August 2017 Copyright© Strategy Analytics 2017 29

HYBRID NAVIGATION

Varying approaches:

1. Map data is embedded & Data services are cloud-based • Traffic, parking, fuel station, etc.

• Many OEMs using this approach.

2. On-demand/dynamic downloading of map data • Incremental and regional map data via over-the-air update platform

• AND – Map fusion

• Elektrobit, TomTom, etc. use NDS.

3. Offload all map data and data layers/services to the cloud • Mapbox’s original approach

• Tesla’s approach using Google Maps

30

HYBRID NAVIGATION

Types of Data to Offload to Cloud: 1. Non-essential data with larger storage requirements:

• 3D buildings

• Satellite imagery

2. Dynamic data/services:• Real-time lane-level information – closures & road hazards

• POI data affected by time of day (e.g. business hours, open hours)

• Fueling/charging station availability and pricing

• Traffic incident and flow information - Decode on server not IVI unit

• Parking data - availability of on-street & garage parking

• Weather service and road weather data - upcoming road segments

• Toll road information

31

HYBRID NAVIGATION

Cloud Services Considerations:

1. Maintenance “downtime” not allowed• System must be available at all times

2. Fault tolerant delivery of map updates & data services• Mechanism must be in place for rolling updates

3. System must scale• New processing nodes must be made automatically

• Need access to data centers in all service regions

32

HYBRID NAVIGATION

Automaker views:

1. Many OEMs still have legacy, physical-media-based map update business segments • Ford, Hyundai, VW, etc.

2. Toyota has moved to cloud-based maps for Entune 3.0 • Dynamic Navigation, via the Toyota Smart Center

3. File size and processor issues• Large file sizes are a challenge

• Less-capable infotainment processors still make embedded map updates slow

• Legacy vehicle architectures (using CAN) are not suitable for high-data-volume (OTA) updates

33

HYBRID NAVIGATION: MARKET REQUIREMENTS

1. Personalization of destinations and routes• System should learn drivers’ routes and destinations over time• Should learn preferred POIs• Should be able to support dynamic re-routing based on calendar appointments

2. Long-term predictive traffic for departures, routing, and ETAs• HERE claims it can predict traffic conditions up to 12 hours in advance

3. Enhanced navigation should offer lane-level guidance• Show correct lane vehicle must be in to take a given highway exit• Show correct lane to avoid road hazards

4. Use of sensor data• Real-time sensor data would be available on-board/embedded• Sensor data can also be crowdsourced and processed in the cloud for

delivery to vehicles on network (e.g. camera data, such as with Mobileye’s REM platform)

34

June 2017 Copyright© Strategy Analytics 2017 35

Any Questions?

Richard Robinson

[email protected]

Strategy Analytics, Inc 36

Automotive Infotainment & Telematics

November 6, 2017