Analysis on the Development Model of In-Vehicle Information Service System

The Internet of Vehicles is a typical application of the Internet of Things technology in the transportation field. As the market matures, its connotation has been further expanded. This article discusses the Internet of Vehicles in a narrow sense, namely Telematics services ( vehicle information service system ), which refers to a service system that integrates users with various service resources through the vehicle terminal.

This article attempts to find the correct development path for the future of the Internet of Vehicles by sorting out and analyzing several existing development models of the Internet of Vehicles. This article is from Shanghai Automotive, published on October 10, 2016, and the author is Yan Feng from SAIC Motor.

0 Preface

Since Premier Li Keqiang proposed the strategy of "formulating an 'Internet+' action plan in the government report in 2015, promoting the integration of mobile Internet, cloud computing, big data, Internet of Things and modern manufacturing, promoting the healthy development of e-commerce, industrial Internet and Internet finance, and guiding Internet companies to expand into the international market", the Internet's subversion and transformation of traditional industries has become a trend. The Internet is not only about re-exploring the potential of the industry, but also about re-transforming and subverting traditional industries with Internet thinking. From Tesla redefining people's understanding of cars to Internet giants such as Apple, Google, Microsoft, Alibaba, Baidu, and LeTV launching a full-scale battle for the Internetization of cars, the era of Internet of Vehicles has arrived.

In a narrow sense, the Internet of Vehicles refers to Telematics services (vehicle information service system), which refers to a service system that integrates users with various service resources through the vehicle terminal. In a broad sense, the Internet of Vehicles also includes intelligent transportation systems.

1 Development Status and Application Prospects of Internet of Vehicles

1.1 Current Status of Internet of Vehicles

The connotation of the Internet of Vehicles has evolved from the embryonic stage of navigation to the primary stage of TSP services, and then to the intermediate stage of "scenario-based" services. "Scenario-based" services are aimed at four major users, namely drivers, passengers, vehicle manufacturers and vehicle managers, forming a comprehensive service system that integrates multi-role and multi-scenario applications, as shown in Table 1.

Table 1 Evolution of Internet of Vehicles application scenarios

1.2 Application Prospects of Internet of Vehicles

From the perspective of the end goal of the Internet of Vehicles, it is to realize unmanned driving and is the core part of intelligent transportation. The Internet of Vehicles is the core information and communication platform of the future ITS (Intelligent Transportation System) and will play an increasingly important role [1].

(1) Ensure road safety

The Internet of Vehicles can effectively reduce the incidence of traffic accidents and make travel safer through related technologies such as emergency braking, accident scene warning, intersection warning, speeding warning, wrong-traffic warning, and prohibition of fatigue driving.

(2) Preventing traffic jams

The Internet of Vehicles can effectively alleviate traffic congestion pressure through intelligent traffic management, road condition monitoring, early warning, and non-stop charging, reducing traffic congestion by about 60%, improving road utilization, increasing the capacity of existing roads by 2 to 3 times, and shortening driving time. At the same time, it can also reduce energy consumption and reduce automobile exhaust emissions by 25% to 30% [2].

(3) Promoting the upgrading of the automobile industry

Implement the Internet of Vehicles strategy, incorporate the automotive manufacturing industry into the innovative environment of my country's new communication technologies, enhance the capabilities of new automotive technologies, and drive the development and upgrading of the automotive industry with digital technologies.

(4) Realizing Intelligent Transportation

All major parts of traffic management can be achieved through the Internet of Vehicles, such as intelligent control of traffic lights, traffic accident handling, smart parking lot management, electronic non-stop toll collection, smart bus dispatching, etc., using the Internet of Vehicles as a communication management platform to achieve intelligent transportation.

2 Analysis of the Internet of Vehicles Industry Chain

The industrial structure of my country's Internet of Vehicles is complex, as shown in Figure 1.

Figure 1. A simplified diagram of the Internet of Vehicles industry chain

(1) Original Equipment Manufacturer (OEM)

Vehicle manufacturers are the carriers for the realization of Internet of Vehicles services. They are at the center of the traditional industrial chain, have great voice and appeal, can effectively integrate many resources, and have great advantages in developing the Internet of Vehicles.

However, due to the competitive relationship among vehicle manufacturers, the Internet of Vehicles services provided by vehicle manufacturers are limited to their own brands, making the Internet of Vehicles services of each brand independent and incompatible. In addition, the Internet of Vehicles services provided by vehicle manufacturers are generally expensive and can only be installed in bundles on their own brand cars. The customer scope is limited, and promotion in the aftermarket is unfavorable.

(2) Content Provider (CP)

Content providers mainly provide music content, video content, news content, weather content, etc., which are reflected in the form of direct content access, in-vehicle APPs, etc., and have little say in the entire Internet of Vehicles industry.

(3) Service Provider (SP)

Service providers mainly provide security services, rescue services, call center services, insurance services, etc. Most service providers cooperate with other companies (such as vehicle manufacturers, communication companies, etc.) to transform into TSPs.

(4) Telematics Service Provider (TSP)

In the industry chain, in-vehicle information service providers directly face users and provide users with navigation, road information remote diagnosis and control, entertainment information, dealer activities and other services. TSP occupies a core position in the entire industry chain, integrating and supervising service content forward, and providing services backward in two ways:

One is to serve as a "white label" service provider, with the brand determined by the vehicle manufacturer;

The other is for TSP to provide Telematics services to users under its own brand.

In addition to integrating resources and providing services, TSPs are also responsible for collecting fees and distributing profits[3].

(5) Equipment Provider (EP)

Equipment providers provide integrated in-vehicle terminal equipment including hardware, systems, software and applications, and serve as Tier 1 in the original equipment market to provide support for vehicle manufacturers. According to the design plan provided by the vehicle manufacturers, they integrate and install relevant system software, positioning software, sensor chips, GPS modules and other electronic components and equipment to produce dedicated in-vehicle terminals.

In the aftermarket, simply buying equipment or cooperating with service providers to provide TSP services generally does not give you much say.

(6) Communication provider (TP )

Communication providers provide wireless network communication services, including Internet services, telephone services, etc., which are the infrastructure for the realization of the Internet of Vehicles. In China, the main ones are China Mobile, China Unicom and China Telecom.

(7) Government

The government is both a regulator and guide in the Internet of Vehicles industry chain, and is also a user of Internet of Vehicles services, playing a leading and driving role in this industry.

3 Analysis of the development model of Internet of Vehicles

Through the analysis of the Internet of Vehicles industry chain, we know that TSP occupies a core position in the entire industry chain, integrating and supervising service content forward and providing services to users backward. According to the status of market participants in providing TSP services, there are the following development models in the market.

3.1 OEMs are in a dominant position

The vehicle manufacturer provides TSP services independently or controls other TSP service providers to provide services for them. The vehicle manufacturer has many profit items in the Internet of Vehicles industry chain:

In addition to the fees paid by users for purchasing terminal equipment and subscribing to package services, vehicle manufacturers can obtain a certain profit share through cooperation with third parties;

Revenue from advertising on new media platforms based on the preferences and needs of car owners for dining, entertainment, and leisure venues involved in travel;

Revenue from sharing points of interest through interactive participation of car owners, a hotspot platform for life services and ranking of points of interest, and from the introduction of hot CP/SP resources.

Regardless of whether it is a self-operated TSP or other TSP suppliers provide services, the OEMs have the highest revenue share due to their dominant position and large initial investment. However, looking at the entire connected car market, no OEM-led TSP service has achieved profitability. According to the current situation of my country's connected car market, the development model led by OEMs can be divided into three specific types: self-operated, joint venture, and pure outsourcing.

(1) Self-operated

The vehicle manufacturer builds its own car networking service brand, and its subsidiaries or departments provide services. Dongfeng Nissan is a representative example, and its subsidiary Dongfeng Nissan Data Marketing Company provides CARWINGS Zhixing+ TSP services. Because it is self-operated, the vehicle manufacturer has complete control, high internal communication efficiency, timely problem solving, and timely response to user feedback.

At the same time, vehicle manufacturers also face some difficulties in self-operation:

OEMs lack experience in building and operating connected vehicle services, resulting in high management and control costs;

Secondly, the initial investment is huge, such as establishing a T platform, call center, and setting up a dedicated company or department, which is costly;

The vehicle manufacturer's subsidiaries or departments manage and operate the vehicle, with low profit requirements, little pressure, and a lack of long-term development driving force.

(2) Joint venture

The vehicle manufacturer and TSP professional service provider set up a joint venture to jointly operate the Internet of Vehicles services for the vehicle manufacturer's brand vehicles. OnStar is a representative example. OnStar and SAIC Group each hold 40% of the shares, and SAIC GM holds 20%. Shanghai OnStar Company was established to provide security-based Internet of Vehicles services for Cadillac and Chevrolet under GM.

In the joint venture model, the vehicle manufacturer and professional TSP suppliers jointly manage and operate, and can share resources, experience, talents, etc., which has obvious advantages. However, as a subsidiary of the vehicle manufacturer's holding company, it has greater operational independence and focuses mainly on profitability, which may affect the vehicle manufacturer's overall Internet of Vehicles strategy. Moreover, cooperation between two or more parties may lead to conflicts of interest and great internal friction.

(3) Pure outsourcing

The vehicle manufacturer signs an outsourcing agreement with a TSP professional service provider, and the outsourced TSP service provider provides the vehicle manufacturer with its own Internet of Vehicles services, such as Toyota's G-book outsourcing to 95190. The advantage of this model is that the vehicle manufacturer can manage and control the TSP, lead the business direction, and ensure the efficient operation of the TSP service. After all, the third-party TSP has a professional team, operation management experience, a full set of operation qualifications and a sound management process.

But there are also problems. Third-party TSPs do not only serve one vehicle manufacturer, which poses a risk of data leakage to the vehicle manufacturer. And once the vehicle manufacturer wants to operate the Internet of Vehicles business itself, the replacement cost is high.

3.2 Telecommunications operators are in a dominant position

The business model dominated by telecommunications operators mainly appears in the aftermarket. Telecommunications operators develop a complete system for Internet of Vehicles services on their own, including building a TSP service operation platform, planning service functions, content procurement and outsourcing, formulating sales strategies, pricing and charging, and all other operations-related activities. All revenues are distributed by telecommunications operators based on costs and the profit contribution rate of each participant. Telecommunications operators have the largest investment and the highest share of revenue.

The advantage of communication operators in becoming TSPs is that they have a huge network platform advantage, rich operational service experience, and a ready-made large-scale call center. However, there are also inherent deficiencies. Communication operators do not have a deep understanding of the automotive industry, have no market channels in the automotive industry, and cannot accurately grasp the needs of automotive consumers. In terms of product design, communication operators rely too much on mobile communication networks and tend to ignore the comprehensive characteristics of Internet of Vehicles services.

3.3 Cooperation Model between OEMs and Telecommunications Operators

OEMs and communications operators cooperate in complementary ways:

The communication operator solely provides network communication, TSP platform construction, resource integration, network maintenance and call center operation, and collects fees;

The vehicle manufacturer provides the vehicle carrier, designs personalized service functions, and is responsible for marketing and business promotion.

In this model, communication operators invest more and contribute more, which is the core of this business model. Therefore, the fees are collected by the communication operators, paid to the equipment providers and content and service providers, and then the income is redistributed according to the profit sharing previously agreed with the vehicle manufacturers.

The advantage of this model is that the vehicle manufacturer understands user needs better and can design Internet of Vehicles products that meet user needs. It also has its own brand market channels and many years of marketing experience. Telecommunications operators generally have their own call centers, which greatly reduces operating costs. The disadvantages are also obvious, and there is a possibility of interest disputes. The three major domestic telecommunications operators all cooperate with vehicle manufacturers, China Telecom cooperates with Huatai, China Mobile cooperates with Changan, and China Unicom cooperates with BMW.

3.4 Cooperation Model between OEMs and Internet Companies

The vehicle manufacturer and the Internet company sign a cooperation agreement to integrate resources for the Internet of Vehicles or Internet car business, cross-border operations, and provide Internet of Vehicles services to car owners. Domestically, SAIC and Alibaba, BAIC and LeTV, Changan and Huawei are representative. The advantage of this model is that the vehicle manufacturer has the qualifications to manufacture vehicles, provides vehicle carriers and a large number of car owners, and the Internet company has cross-border operation experience and basic resources. The two sides complement each other's advantages. Under the background of the government's promotion of the "Internet +" strategy, they can use policy dividends, innovate business models, attract capital markets, and quickly and efficiently promote the Internet of Vehicles business.

With the launch of the first Internet car with its own Internet of Vehicles service by SAIC and Alibaba, Internet car manufacturing is no longer limited to PPTs, but is beginning to move towards users. However, this model also has its flaws. Internet companies inherently do not understand the automotive industry. The automotive industry’s capital-intensive, scale-intensive, and low-frequency characteristics also limit the innovation of Internet companies to a certain extent. This model needs time to be tested[4].

3.5 Third-party leadership

The third-party-led model is generally seen in the aftermarket, where third-party companies build their own service platforms and call centers, select service and content providers, develop marketing plans, and provide users with a complete set of Internet of Vehicles services through OBD devices and mobile APPs. Due to the openness of universal OBD interfaces or mobile APPs, they can serve different brands, different countries and regions, and are not restricted by car brands or models.

The advantage of this model is that the third-party company has a high degree of autonomy. With its predecessor's experience in direct contact with users, it can more accurately grasp the needs of users. However, the disadvantages are also obvious. Independent third-party companies must have strong funds to build platforms and call centers, and have high platform operation capabilities. In addition, they must independently develop and sell Internet of Vehicles products, which requires high corporate strength.

Domestically, NavInfo’s FunDrive and 95190’s SmartDrive are representative. Judging from the user scale and profitability, this model is still immature.

4 Conclusion

The Internet of Vehicles is a brand-new network application in the automotive industry, an application system of Internet of Things technology in the field of intelligent transportation, and the core foundation of the new generation of intelligent transportation systems. After analyzing the current status and prospects of the Internet of Vehicles and the main development models of the Internet of Vehicles, this article points out that the Internet of Vehicles is a huge and complex system engineering. It is necessary to establish a win-win development model under the guidance of the government and with the active participation of relevant enterprises to provide power and support for the long-term development of the Internet of Vehicles.