IoT Blog
IoT Blog

Three Reasons Why Automakers Are Embracing 5G

by Andreas Kohn, Director of Marketing, Automotive Solutions
As mobile network operators (MNOs) move to bring new high speed 5G networks online in 2020, automakers have been at the forefront in incorporating 5G into their product development plans. There are several reasons why automakers are rapidly adopting 5G – but three of the key ones are long product development and lifecycle timelines, the cost benefits of adopting 5G for car connectivity services, and 5G’s ability to allow them to differentiate themselves with new and enhanced connected car capabilities.

Long Product Development and Lifecycle Timelines

The complexity of current car designs, combined with the need to refine designs to meet expected future customer demands, and extensive government safety test requirements, mean it can take three to four years for a new car to move from the drawing board to the factory floor. In addition, once sold the average expected lifetime of a car is ten to fifteen years. As a result, automakers must look ahead when it comes to designing connectivity into their cars, making sure that this connectivity will not just help differentiate the car when it is introduced, but also continue to provide connectivity over the car’s entire expected life. 

Today, automakers are already working on new car designs for 2021 and 2022, when MNOs will be rapidly rolling-out 5G throughout the world, and they want to make sure they can offer new car buyers 5G connectivity in their vehicles as soon as it becomes available. In addition, automakers need to assume that current 4G networks have a limited shelf-life, with many MNOs having already shut down their 2G networks and announcing plans to shut down their 3G networks over the next couple of years. The shutdown of the OnStar wireless network in 2007 is still fresh in many automakers minds, as well as customers’ frustration when these OnStar services were no longer available. Automakers want to make sure cars rolling off the assembly line in 2021 will not just be able to deliver their customers the latest and greatest wireless connectivity available, but also that MNOs will still provide the extensive wireless coverage necessary deliver this connectivity into the 2030s – requiring them to begin integrating 5G technology into their new car designs today. 

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Cost Benefits of Adopting 5G

5G networks will support higher speeds (multi-Gigabit) than existing cellular networks. This will likely result in MNOs charging less on a per bite basis for data transmission. As a result, even though 5G will be a new technology in 2020, MNOs will probably price 5G data transmission rates at a lower rate than 4G, particularly for companies who can purchase data transmission capacity in bulk. For car makers planning to bundle wireless connectivity into their cars, or just offer this connectivity as a standalone service, these lower data charges can help them increase the ROI of these cellular connectivity services. 

New and Enhanced Connected Car Services 

Though autonomous driving continues to get all the hype, it is connected car services that are really gaining traction in today’s automotive market. While automakers delivered approximately ten million vehicles--approximately 10 percent of all new vehicles—with embedded connectivity in 2015, this figure is expected to increase to 30 percent of 100 million new cars by 2019. In addition, by 2025, analysts forecast that all cars sold in developed markets will include an embedded telematics solution.

As more and more connected cars are sold, existing services (such as navigation, infotainment, in-car Wi-Fi and predictive maintenance) are being enhanced, while new services (such as insurance and electric vehicle-specific services) are being introduced. The distinguishing characteristic of infotainment and many other of these services? They benefit from continuous, high speed, high quality bandwidth, whether it is an in-car Wi-Fi system being used by a team of business colleagues heading to a meeting, or an infotainment service streaming cartoons to kids in the backseat of a minivan. In addition, the need for more bandwidth increases as automakers and car owners install a larger number of connected car applications into vehicles, both due to the data used by these services and the data needed to update them on an ongoing basis. In both these cases, 5G’s higher speed can provide significant benefits. 

Moreover, while fully autonomous self-driving cars (Level 5) are still a very long way from being commercialized, new partially autonomous driving services could arrive within over the next few years. These services could benefit from 5G’s ability to provide direct car-to-car and car to infrastructure communications. Automakers who do not integrate 5G into their cars will not be able to take advantage of the latest car-to-car or car-to-infrastructure communication technology, potentially slowing down their ability to offer new partially autonomous driving services.

In many ways 5G is an evolutionary, rather than revolutionary, step forward in wireless connectivity, particularly when it comes to connected car services and other mobile IoT applications. However, though the need might be less urgent, there usually comes a time when industries need to embrace evolutionary innovations or risk falling behind the competition. For automakers and 5G networking technology, that time is now.

Start with Sierra to learn more about how Sierra Wireless can provide automakers with the embedded modules, Smart Connectivity Services, scalable cloud services and other Device to Cloud (D2C) solutions they need to build connected cars that enhance car buyers driving experiences while also creating new revenue opportunities.