“Fasten your seatbelts, it’s going to be a bumpy night.” – Margot Channing as played by Better Davis in “All about Eve”

It is the evening before my test drive of Tesla’s new Model S, the $100,000 sedan intended to change everyone’s thinking about what an electric vehicle can be or do.  But what the car can be or do is secondary to the impact the company is having on the automobile industry.

What is interesting is that Tesla’s impact has almost nothing to do with the car itself, but it is important to first understand how the car itself is influencing industry thinking about infotainment systems, safety and connectivity.

My test drive tomorrow in Washington, DC, follows an impromptu test drive last week in Silicon Valley.  I did not have the nerve to drive the car, which was privately owned, instead experiencing the naked, neck-snapping EV aggression from the comfort and safety of the passenger seat.

The Model S is a coiled spring capable of reaching 60mph in 4.4 seconds.  Along with that speed comes balance and poise with extra attention paid to steering and suspension. 

Of course, in the automotive infotainment industry the Model S has garnered attention for its 17” center stack display and embedded connectivity.  The display is impressive and the system’s access to streaming audio or Internet radio content sources via the embedded modem is the ultimate in convenience.  (Every competing system in the market accesses the driver’s mobile phone and data plan to deliver these services.)  The wireless access is free for the first three months and Tesla has yet to announce the pricing or pricing tiers thereafter.

More impressive than the convenient access to content, though, is the provision for over-the-air software updates – a capability that Tesla appears prepared to liberally leverage to its advantage.  In fact, the 17” display facilitates the process by detailing the latest software updates to the driver as they occur – usually overnight with the customer’s approval.  (Since first introducing the capability, Tesla has shifted to conducting initial download tests on the marketing fleet before deploying to consumers.)

The embedded modem also allows Tesla to monitor vehicle performance at all times, as was reflected in the recently disputed NYTimes review of Tesla's new East Coast fast-charging network intended to enable a gas-free, electrified journey from Washington, DC to Boston.  Setting aside the details, CEO Elon Musk's use of vehicle data to question the claims of the reviewer regarding his speed and use of HVAC was a revelation to some.  But, as a company representative clarified later to me, Tesla does NOT gather location information, only performance data.  And the customer opt in is purely binary - yes or no - and, with no location data, clearly does not encompass probe data for enhancing traffic information.

There are shortcomings to the Model S infotainment system which are readily apparent from a short drive.  The user interface – tends to default to a vehicle information screen.  Often featured prominently is a Google map which, while driving, may pixilate or disappear entirely based on the quality of the wireless connection.  This is a bit surprising given the fact that Audi has been out for two years already with AudiConnect consistently displaying Google Earth imagery over the Nokia Navteq map thanks to 2GB of cache memory.  Of course, Audi and Tesla currently share a lack of automatic crash notification capability.  (Tesla execs say they have yet to figure out a solution for replacing Google maps for the launch in China.)

What is missing in the homegrown head unit of the Model S, which is based on Linux, is a personalized experience that anticipates the driver’s needs and preferences and/or anticipates driving information needs such as traffic or weather data.  While multiple content aggregators have demonstrated interfaces fusing multiple inputs into a user interface capable of actively anticipating the contextual information needs and wants of the driver, Tesla appears to have put its entire emphasis on vehicle information management and map illustration.

Yet, even in its presentation of map information the Model S lacks 3D graphics or even Audi’s Google Earth.  Also missing is a more advanced safety portfolio leveraging sensors and cameras.  Company representatives say a more advanced safety offering is in the works and the center console display is ideally suited and prepared for such an integration.

But these “complaints” are quibbles, especially in the context of a car that can be transformed overnight by software updates.  The Model S I drove in last week may actually be different, by now, from the Model S I drive tomorrow.

But the real impact of Tesla lies in its distribution and service strategy.  Tesla is selling its cars from more than 22 stores nationwide and has won its first battle with traditional automobile dealers as a Massachusetts court dismissed a lawsuit brought by the Massachusetts State Automobile Dealers Association (MSADA).  The lawsuit claimed that Tesla was in violation of Massachusetts law governing the sales and servicing of cars.

The National Automobile Dealer Association has indicated its intent to support the MSADA’s efforts to challenge Tesla’s sales model setting up an ongoing clash between the massively influential and politically connected NADA and Tesla, which is backed by a combination of deep pockets, green technology cachet and its own political connections.

At a time when antipathy between North American automobile dealers and OEMs is at a peak around the question of facilities standardization and modernization strategies, Tesla presents a disruptive approach to vehicle sales that aligns well with the growing retailing mantra of the Apple Store.  In fact, as part of the NADA’s Phase II report on factory image programs focused on showroom modernization and standardization, the association’s consultant noted Apple’s stores as a touchstone for future store design.  (Tesla hired Apple's former VP of real estate, George Blankenship more than two years with precisely this objective in mind.)

It is no secret that car makers have been trying to steal a few pages from Apple’s playbook with “genius bars” popping up in Hyundai showrooms and with Ford, BMW and GM all adding more in-store personnel/sales counselors to explain new vehicle systems.  But if Tesla is successful in defending its right to sell cars from company-owned stores, a no holds barred struggle could emerge between OEMs and independent dealers in North America.

Further challenging the traditional model is the fact that Tesla showrooms are divorced from the vehicle servicing function.  Vehicles are serviced by independent agents dispatched directly to visit customers.  Tesla has indicated plans, at least in Massachusetts, to open a service location separate from its store, but even this concession is viewed by MSADA as either a violation or a compromise of the law governing vehicle franchises which must have service on-site.  (Tesla is showing its cars in a mall in Natick, Mass.)

So, Tesla is disrupting the automotive market in a number of ways such as:

Including the cost of the embedded wireless service in the cost of the vehicle – though reserving the right to charge for this at some point in the future

Delivering Internet radio and streaming audio via the embedded modem

Delivering seemingly unlimited and endless software updates over the embedded modem

Developing vehicle systems almost entirely “in-house” with only limited support from traditional industry suppliers

Servicing the cars using independent agents

But, most importantly, selling the cars via company owned stores and with little or no service component - since there is almost nothing to service.

With all of the attention paid to Google’s self-driving cars in the past year, one might have concluded that Google was the most disruptive force in the industry.  In fact, it is Tesla that is rocking Motown, Munich, Tokyo et. al. with its fresh-baked, homegrown approach to automotive marketing.

In comparison to Tesla, Google is a virtual lapdog doing everything it can to play nice with car makers offering up Google Maps, POIs, Google Earth, Google Search and even Android as tools for vehicle development.  Even the Google car is seen as nothing more than a marketing platform for Google technology intended for sale to the industry.

Tesla is taking no prisoners and tipping its hat to no conventions as it continues to hit or surpass its own financial and production targets.  The company is selling cars with 25% margins in a market where new internal combustion engine driven cars are sold with single digit margins and dealers hope to make up the revenue on service.  And, like Google, Tesla is sharing its powertrain development with Toyota (RAV4 EV) and Daimler - which provided Tesla with a steering wheel for the Model S.

What should OEMs do?

It is not too late for car makers to update their dealer franchise strategies and business models.  Among the steps that ought to be considered is giving dealers greater flexibility around the manner in which facilities upgrades are funded and approved.  Car makers should recognize the important customer interface role played by dealers and work to lower their costs of doing business (ie. reduce the expenses associated with diagnostic hardware and software) and give dealers access to vehicle data derived from telematics systems.

Independent dealers need to be viewed by car makers as important allies in connecting with consumers.  It is time to put aside the adversarial relationship that is undermining the customer interaction – a relationship that is essential to improving customer satisfaction scores and retention.

It is inevitable that OEMs – particularly in the luxury segment - will seek to open showrooms to match Tesla’s high profile market presence.  But these measures should go hand in hand with supporting the existing independent dealer network.  Whether or how the OEMs choose to walk this tightrope remains to be seen.  In the meantime, Tesla will be opening soon in a mall near you

*A final note on the Model S infotainment system: The car comes with access to Slacker and TuneIn Radio via the embedded modem, an industry first.  Additional apps will require Tesla approval before being implemented.  The system also allows for Web browsing.  More importantly, the nature of the configuration suggests an upgrade path focused on software rather than hardware, since the 17" display consumes so much of the space normally reserved for a more traditional center stack.  Not all drivers will be pleased with the 17" display, which tends to wash out in bright sunlight, but it is fairly stunning at night.  The navigation feedback in the display is supplemented with instrument cluster guidance.  Some customers will be tempted to rip out the standard 17" display and start from scratch - but most will be too jazzed by the car's performance to much care about that kind of radical automotive surgery.

2012 will be remembered as the year of usage-based insurance. But in retrospect it is a lot of sound and fury signifying nothing. Is usage-based insurance the silver bullet to simultaneously reduce traffic congestion, carbon emissions and highway fatalities?

The ultimate objective of UBI programs is to modify driving behavior or reward existing good driving behavior. (Yes, I know, insurance companies are looking to reduce churn by rewarding their best customers and stealing their competitors' best customers, but let's look at it from the consumer's perspective.) Some progress was made in 2012, but there is ample room for improvement in the area of on-board/embedded systems, OBDII plug-ins, aftermarket systems and smartphone apps.

So where do we stand at the outset of 2013? 

First, it is important to understand the key objectives of driver behavior modification: 

1.  Increased safety
2. Reduced emissions
3. Increased fuel efficiency
4. Lower insurance premiums

I start the year off in a new 2013 BMW 3 Series with a remarkably distracting BMW Apps iPhone integration (not reviewed here).  In trading up from my 2011 BMW 3 Series I have pleased my wife by moving to remote keyless entry, but disappointed her with a car that has no seat warmers – unlike its predecessor.  Like its predecessor, it also lacks a backup camera or sensors.  (Clearly out of step with the impending U.S. mandate.)

Still, the new car does come with a turbo-charged four cylinder engine and start-stop technology significantly reducing fuel consumption while increasing horse power.  There are multiple sources of feedback around green driving in the car and there is a toggle near the shifter to select driving style – Sport or ECO PRO.

With ECO PRO, the driver can extend the range of the vehicle by adjusting driving style according to cues in the instrument cluster.  It is no surprise that a German car company offers such a function since an hour-long drive on the Autobahn can produce dramatically different fuel consumption – and, hence, range – results based on speed.

A system for discouraging speeding in a BMW is a stroke of genius, particularly for me, given the fact that my record of violations spiked following the acquisition of my first BMW.  (There is no app – not even Coyote or Trapster – that would have saved me.)

The ECO PRO driving mode introduces a series of instrument cluster symbols and signals making very subtle (it IS a BMW after all) suggestions primarily based on reducing acceleration.  ECO PRO also ties into the operation of climate control systems for maximum fuel savings.  The system is even able to calculate and display for the driver the estimated percentage of fuel savings based on the settings selected.  The driver can also control the timing and nature of the driving tips offered by the car.

This system can provide a history of fuel consumption including energy recovery.  And, yes, it can also control the rate of cabin heating or cooling and the output of the seat heater – if there were one.  Similar systems are available from other car makers, but I am most familiar with the BMW offering and it is emblematic of an industry trend.

In contrast to this system of buttons, settings, alerts, icons and statistical analysis, my wife’s Toyota Sienna is equipped with an aftermarket Pioneer Aha Radio which periodically provides an “ECO Graph” of her driving performance.  I personally think my wife is something of a lead foot, but she thinks she is performing pretty well in this report.

Unfortunately, the report appears at random intervals and fails to explain what, if anything, my wife is doing well or how she can improve.  For her, the driving feedback is simultaneously interesting, intriguing and frustrating.  She thinks there should be rewards – anything from gold stars to insurance discounts – associated with her good driving.

There is no doubt that she is correct.  Her driving experiences in 2012 included a brief stint testing Progressive Insurance’s SnapShot usage-based insurance OBDII plug in.  The device annoyed her with loud beeping during hard braking, but wirelessly delivered a graphical presentation of her driving behavior to a Website. (There are a wide range of third-party offerings with Website dashboards charting driving behavior and providing driving tips.)

Progressive offers SnapShot in Virginia, where my wife and I live, but after mailing the device back to the company, the insurer never responded with an evaluation or offer of coverage.  SnapShot claims customers can save up to 30% in the program. 

Whether that is actually true or not depends on how much you trust an insurance company.  Progressive more or less discourages drivers the company determines will not benefit from the program.

My wife briefly tested another OBDII plug-in from a company called GridLoyalty.  Founded by a former Intelligent Mechatronics executive, GridLoyalty promised a range of affinity offers based on driving behavior.  Unfortunately, most of the affinity offers were associated with organizations – such as convenience stores – in the Las Vegas area.  While the device provided wireless feedback to a Website – a la Progressive – there were no offers in Virginia.

In the year past, insurance companies and their third-party partners, crowed about the wonders of usage-based insurance.  Even government regulators embraced usage-based insurance as a tool for reducing driving and, therefore, congestion and emissions.  Studies show that drivers in UBI programs tend to drive less in general and after joining the programs.

In spite of the enthusiasm and publicity surrounding UBI programs and more than five years of market availability there are still fewer than 2.5M users of these systems around the world.  There is good reason for this lackluster consumer response.  The programs offer minimal savings and require a significant surrender of privacy.

The daily relevance of an insurance discount is less a benefit than a sword of Damocles swinging over the head of the driver in case that driver deviates from his or her previously safe pattern of driving.  What is missing are daily rewards and/or penalties.

MetroMile, an insurance startup, is introducing a pay-per-mile based offering that the company hopes to expand to other value propositions such as vehicle service and warranty offers.  The MetroMile offer is a step in the right direction, but falls short.  What is really missing is a more comprehensive affinity program tying vehicle use to offers and discounts for driving-relevant products and services such as fuel, parking, restaurants and tolls.

The MetroMile offer (Company Website: http://bit.ly/ZRHooE) is attractive for its simplicity relative to offerings from insurance companies.  But what is necessary is for local governments, tolling authorities, roadside franchise operators and such to coalesce around wireless payment systems to enable a more broad-based program of driver rewards and, yes, penalties – ie. drive less, save more.

Implications:

Car makers, such as BMW, are already delivering on in-vehicle systems designed to modify driving behavior.  The next step is actually rewarding that good behavior with more than just insurance discounts based on intrusive tracking systems. 

A free cup of coffee, tank of gas, parking space, hamburger or oil change ought to be enough to convince nearly any driver to be willing to share their location information and vehicle data.  Though distracting, BMW Apps does provide smartphone-based vehicle information feedback while also enabling some limited remote operation of the vehicle - illustrating the fact that there is a role for the smartphone in this new value proposition.

And what about traffic management authorities able to reward drivers - from specific neighborhoods and/or on short notice via smartphone apps or other alerts! - for NOT driving on days when high levels of congestion or pollution are anticipated?  Or maybe specific drivers are granted HOV lane access or other driving privileges on demand or for a particular time of day - or for a premium as in the Washington, DC area.  There are clear opportunities for public-private collaboration and/or direct consumer engagement.

Is there a future for usage-based insurance?  Yes, there will always be consumers who will do anything for a discount of any kind.  But usage-based insurance is likely to remain a niche application for the foreseeable future.  That niche role will be a disappointment to governments hoping for UBI programs to provide a market-based means for reducing emissions and traffic.

But if car makers are able to build more effective affinity programs, then UBI programs will benefit from the expansion of vehicle data sharing.  The question is which marketing partners and OEMs will lead the way in 2013 and what will these programs look like.  And, finally, is it possible to retrofit a 2013 3 Series with seat warmers?

The news from General Motors, reported by the GMAuthority a week ago, was that 1,849 Volts were sold in July a 125% increase over the year ago period and a 100-unit improvement compared to June 2012. I couldn’t be happier to hear some good news about the Volt – with its clever dual-mode, extended-range powertrain, but the GMAuthority report proceeded to tout the minimal sales of Volts to “fleets.”

For some reason the word “fleet” continues to be a dirty word in Detroit and other automotive capitols, at least in North America. When an automotive executive hears “fleet” the normal association is to rental car fleets where cars are sold at steep discounts to clear out inventories and make up for shortfalls in retail sales.

There is another kind of fleet business, which is commercial fleets, and commercial fleets are increasingly interested in green technologies as represented by the Chevy Volt. The roster of corporate incentives for private employee vehicle purchasing is growing (See: http://www.hybridcars.com/corporate-incentives.html) but GM remains on the outside looking in.

GM remains locked in an out-of-date mindset that associates fleet sales with all things negative. The Volt, now in its third year, may be outselling the Nissan Leaf but it is no secret that the sales volumes for this innovative and cosmetically attractive and socially acceptable green machine have been disappointing. It is also no surprise that most of the executives responsible for the initiative from its inception have been exiled from GM, with many joining competitors - including some that touted fleet sales.

The Volt accounted for 10,666 units sold in the first seven months of 2012, a 270% increase over the same time period last year. The Leaf moved 3,543 units, down 26.3%. Both figures were reported by GMAuthority.

GMAuthority further notes that Volt sales have gotten a lift in California where the state has granted solo access to carpool lanes for Volts – adding that “about 1 in 3 Volts are now sold in the Golden State.” This local demand translates to a 34-day supply of Volts in California vs. a 52-day supply everywhere else.

In a separate bulletin from GMAuthority, the news source comments on attractive new lease rates for Volts. All of these efforts have the flavor of too-little-too-late to make the Volt the kind of viral success it was intended to be.

I still nearly catch my breath every time I see a Volt on the road - partially because it is such a rare occurrence. The attractive styling – in contrast with the dowdy Leaf and Toyota Prius – combined with the ecological cred still imparts a powerful aura to the car. But steep dealer markups in its early restricted availability days and the cold shoulder turned to the corporate fleet market have consigned this loss-producing car to a highway heading to nowheresville.

It’s not too late for GM to wake up to the private/retail sales opportunities in the corporate marketplace. But it is a shame to consider the thousands of units in potential sales that have already been lost.

It’s important for one to know one’s place in the world. This is especially difficult given the fact that one’s place may change. When this happens there may be telltale signs, like emails or polite taps on the shoulder or a whisper in the ear. TomTom should consider this commentary a “heads up” – the kind of alert a friend gives another friend when a sharp or heavy object is flying toward someone’s head.

The heads up is that it is time for TomTom to take a one-two punch to its current strategy.

Punch One: Launch a white label fleet telematics program to enable faster growth of the business services group and capitalize on the fleet industry’s current movement toward consolidation.  Servicing the fleet industry is a critical global market differentiator for TomTom and it is not too late to take advantage.

Punch Two: Shift to Android as a more potent platform for enabling in-vehicle app distribution.  (More on Punch Two at a later date.)

One has to love this company which has parlayed some of the cleverest marketing and product innovation into traffic and portable navigation market leadership.  The problem for TomTom, sadly, is that the market has moved on.  This has never been clearer than in the latest earnings report.

It’s true the company was able to report growth in its automotive segment (43% to €59 million), content and services (19% to €107 million), licensing (27% to €36 million) and business solutions (33% to €17 million), but the largest business, consumer, plunged (23% to €225 million).  The decline in the consumer business of €68 million, more than offset the aggregate gains in the other segments of €30 million. 

What was unclear from the company’s financial release was whether – after “impairments” and restructuring charges the company was actually profitable.  Earnings per share for the most recent quarter were positive though the year-to-date-earnings remain negative.

Core business is down

TomTom acknowledges that much has changed in its core business of selling mobile navigation devices.  While the company still claims portable navigation market leadership in Europe and some market share gains in the U.S., this leadership is over a dwindling market.

TomTom reported a decline in the total European portable navigation market during the quarter to 3M units from 3.4M in the year-ago quarter, with the U.S. falling even more severely to 2.1M units from 2.9M.  The company further noted that the speed of the market decline may be contributing to an inventory hangover, something that has plagued the segment for more than a year. 

If you have any doubts regarding the state of the portable navigation industry, a visit to your local electronics retailer will reveal a category suffering arteriosclerosis.  Without sufficient demand, existing products are not selling through quickly enough to maintain innovation momentum.  The new stuff is backed up because the old stuff is not selling through.  And, as a result, the portable navigation department is usually a mess.

The speed of the decline is spurring a restructuring at TomTom intended to reduce expenses by €50 million and likely to include significant personnel reductions.  Similar reductions have been experienced elsewhere in the industry including Navteq’s layoffs in its Traffic.com group.

To its credit, TomTom has moved to pursue business services and fleet opportunities under the WebFleet and WorkSmart brands. Yet despite claiming to be the fastest growing fleet telematics service provider in Europe and posting €17 million in revenue in the current quarter, TomTom is not keeping pace with more focused competitors in the fleet space.

The messaging on TomTom’s Work Website is out of step with more focused fleet operators, all of whom are enhancing their existing solutions with traffic and routing capabilities competitive with TomTom’s.  As the new kid on the block, TomTom may be able to successfully fight the good fight and convince operators it has a more robust solution for tracking drivers and delivering competitive traffic and routing information.  Or maybe it makes more sense to be a white label provider to all players in the fleet market.

White label enables scalability

The importance of the fleet business to TomTom’s prospects cannot be overstated.  With sales of portable navigation devices evaporating and inventory backing up, it is critical for TomTom to find new sources of revenue.  While the portable business is not entirely disappearing, the company has long depended on robust sales of these devices to support the content and services business which includes traffic data.

TomTom pioneered the use of probes in mobile devices to create traffic data which helps the company to deliver not only state-of-the-art traffic solutions but also for refining its industry leading routing engine.  So the success of content and services, best known for its traffic and routing offering, depends on the consumer mobile navigation business.

TomTom simply cannot afford to stand idly by while its portable navigation business shrinks taking its content and services business with it.  The fleet side of TomTom, however, holds the key to survival.  Fleets fitted with TomTom hardware or software are capable of taking up the slack from lost navigation device sales.

But TomTom needs to replace lost portable navigation nodes at a faster pace.  While the company noted an increased take rate for Live Services (which includes traffic data) for its mobile devices, the volume decline negated the increase in the take rate. 

By shifting to a white label service position in the fleet market TomTom can emphasize the fact that it has been a cloud service delivery player in the market since before the cloud was called the cloud.  TomTom was the first supplier to create an in dash app delivery platform for companies such as Toyota and Renault.  And the company’s routing, traffic and navigation tools are rock solid and ideally suited to the needs of the fleet industry.

Still, for some reason, TomTom clings to its brand position.  And while it clings, incumbent players in the fleet industry are adopting or partnering or creating their own traffic and routing solutions.  TomTom need look no further than ALK Technologies to find a company with a laser like focus on the needs of the trucking industry and a flexible business model to enable it to support customers branded or otherwise.  ALK’s flexibility has been rewarded with deals with Qualcomm and Xata among many others.

The point of a white lable initiative is to accelerate growth and rapidly scale.  Thirty-three percent growth, though impressive, won’t rescue our friends in Amsterdam.

Implications

The fleet market holds the key to TomTom’s revival and a white label strategy is the engine.  But let’s not stop there.  To keep driving its automotive business, where competition is keen and margins thin, TomTom ought to heave its brand ambitions overboard and slip into something unbranded to lubricate its Tier One relationships.

Automotive Tier Ones are looking for navigation partners with content and app delivery platforms.  TomTom still, to this day, offers the only effective in-dash app deliver platform, most recently adding TripAdvisor, Twitter and Expedia to the range of apps enabled for its mobile devices.

While auto makers and their suppliers are struggling with Bluetooth and USB connections, iPod Outs and MirrorLinks, TomTom has the slickest solution in the industry for delivering applications and content safely and securely into the dashboard.  C’mon TomTom, you don’t have to turn on the red light.  It’s time for the white label. 

Cross Country Automotive Services (CCAS) and AAA have almost simultaneously launched mobile EV charging programs in the U.S. CCAS described its program as “the nation’s first mobile charging warranty roadside assistance program." AAA announced in July its first roadside assistance truck with the capability to charge electric vehicles.  These programs are the precursors of ubiquitous mobile EV charging services, removing range anxiety from the psychological barriers to EV acceptance, but leaving sticker shock yet to be overcome.

Both programs are offered in a limited number of cities and are clearly targeting the earliest of adopters – ie. purchasers of Nissan’s Leaf EV – while anticipating the arrival of more Leaf-like vehicles.  The AAA program appears more forward looking than the CCAS program in that it offers two charging level options along with all of the usual roadside assistance services (tire replacement, battery charging, etc.) and, if all else fails, it can tow the customer’s vehicle.

CCAS says its mobile chargers may be mounted on small trailers and consist of 10 kWh propane-powered generators that charge the disabled electric vehicles. One of the AAA vehicles shown earlier this year features a removable lithium-ion battery pack for mobile charging.

AAA describes its program as a pilot via which the organization will evaluate the appropriateness of different technologies for use in different geographies around the U.S.  Other vehicles will be equipped with generators powered by alternative fuels and other power sources.

Both the CCAS and AAA programs offer emergency charging assistance – five or more miles of range for as little as 15 minutes of charge - to drivers whose EV batteries have been depleted.  Available to both service providers and dealerships, the CCAS chargers offer the capability to quickly and safely charge multiple vehicles concurrently through a Level 2 charging protocol, delivering consistent utility grade power. In addition, the charger is capable of back-to-back services without the need to recharge any onboard batteries.

AAA says its mobile EV charging roadside assistance vehicles can provide Level 3 (DC fast charging) and Level 2 (AC quick charging) to electric vehicles.

The seven initial markets for the CCAS program are: Los Angeles; Phoenix; Nashville (Tenn.); Portland; San Diego; San Francisco and Seattle. The company says the first mobile charge within the program was successfully completed on August 26 in Phoenix, taking only 15 minutes to provide driver with an additional 5 miles. Cross Country will be adding additional mobile charging units to other areas throughout its national service provider network across the country.

AAA announced it initially will deploy its trucks with mobile electric vehicle charging capability in six metropolitan areas across the U.S. as a pilot program, including Portland, Seattle, the San Francisco Bay area, Los Angeles, Knoxville (Tenn.) and the Tampa Bay area. The phased rollout will begin later this summer and continue into the fall. Let the charging begin.

Additional insight:

http://bit.ly/qlP7i1 - When is 54.5 mpg not 54.5 mpg? US CAFE Targets May Disillusion US Car Buyers - Insight - Ian Riches - Automotive Electronics Service 

The conventional wisdom in the industry is that 50 percent (or more) of OEM profitability occurs after the sale of the vehicle. The dealer plays a critical role in this process as the primary customer interface. Unfortunately, dealers and OEMs have never been on the best of terms. And when it comes to leveraging service opportunities to crank up profits there remains much room for improvement.

The good news for dealers is that there are a proliferating range of suppliers and solutions to make the connections between car buyers and their dealers more “sticky” and more profitable. These solutions are focused on either vehicle diagnostics or service scheduling or both. This is not a new challenge for the industry, but new technology is altering industry relationships and changing the customer experience.

The increased interest is actually supported by recent findings published by JD Power and Associates in its 2011 U.S. Automotive Emerging Technologies study. According to the results of a survey of nearly 18,000 vehicle owners, remote diagnostics was the feature with the highest degree of interest after the market cost was revealed.

Interest after market price is revealed

                Remote vehicle diagnostics – 55%

                Non-branded premium sound system – 52%

                Wireless connectivity system – 50%

                Rear-vision camera system – 46%

                Blind spot detection – 45%

                                                                SOURCE: JD Power & Associates

A handful of companies are leading the way in closing the diagnostics/service gap.  Xtime, is the market leader in what it calls ServiceCRM.  GoPoint Technology has an iPhone app and OBDII connection to allow dealers or consumers to diagnose vehicle problems.  And Vinvox has an OBDII plug-in to allow dealers to manage and monitor customer vehicles needing repairs or maintenance.

GoPoint and Vinvox are new to the market, with Vinvox in the very earliest start-up stages.  Xtime, on the other hand, already boasts a robust following among OEMs.  In fact, Xtime is unique among these three companies in pursuing relationships with OEMs, while GoPoint and Vinvox are designed to be offered directly to dealers – and GoPoint as the only direct to consumer play.

Xtime says its ServiceCRM automates and integrates electronic service menus as well as online/dealership/call center/smartphone/telematics scheduling, online bill pay, electronic service notifications, comprehensive shop control, greeter boards, management reporting and certified DMS connectivity into a unified, web-based platform.

Xtime says it delivers its ServiceCRM product via the Internet to over 3,200 dealers today.  This “Software as a Service” or SaaS business model  empowers the dealer to schedule customer service visits and promotional campaigns.

The company is also piloting a Mobile Service Advisor (Q3) to enable a full check-in solution.  Xtime says its MSA includes electronic inspections, advisor appointment views, trim-level menus, vin scan, photo/video capture, automated customer signatures and electronic notifications, for fast customer check-in.  All functions are delivered on a tablet computer.

Xtime says it is the exclusive provider of these functions for car companies such as Infiniti, Nissan, Lexus, Toyota Canada, Southeast Toyota, Chrysler and Hyundai and is the preferred provider at BMW, Toyota USA and Audi.  Xtime is also the exclusive provider for many of the industry's leading dealership groups, including AutoNation, Group 1 Automotive, Sonic Automotive, West Herr, Luther, Ferman and Checkered Flag.  CustomerTraac, The Market Store, DME (owned by JM Solutions), Aspen Marketing and Dealer’s Greatest Assets (DGA) all use Xtime to power their centralized call centers for service scheduling.

Xtime is actually an important element of Hyundai's Blue Link telematics eco-system providing a critical link between Hyundai, the customer and the dealer.  The ability exists within the Xtime implementation with BlueLink for automatic notifications to go to dealers in the event of a vehicle DTC (diagnostic trouble code) occurrence.  If the consumer opts in - to share vehicle information - and if the feature is enabled dealers will be notified of the DTC and can then reach out to notify the customer.

This capability is an industry first when and if it is enabled at the launch of Hyundai's Blue Link solution.  The Hyundai implementation stops short, however, of providing dealers a proactive view of the status all customer cars.  Privacy concerns are likely impeding this next step.  But privacy is not interfering with advances in the aftermarket.

GoPoint’s iPhone-based solution is unique in putting diagnostic capabilities in the hands of the consumer or the service manager.  Unlike a competing solution from CarMD, which is a dedicated device, GoPoint combines a free downloadable app for the iPhone with a diagnostic cable for the OBDII connection to tap into the vehicle codes on the Can bus.

But there is more to the GoPoint solution than meets the eye.  The solution is also being used in four U.S. states by SpeedEmissions as a certified emissions testing application called Carbonga.  And for car servicers or car dealers there is a cloud based solution, FuzzyLuke, which puts the application in the hands of customers to enable them to diagnose vehicle problem codes and upload them to a Web-based application for service scheduling. FuzzyLuke claims the iPhone application and OBDII connection cable help car dealers and service operations tap into the $60B market in unperformed maintenance.  

Vinvox also integrates with smartphones and offers Web-based means for both consumers and dealers to view vehicle history and warranty and repair status along with vehicle codes, but Vinvox dispenses with the cable in favor of an OBDII plug-in with a cellular connection.  VinVox’s Retriever provides real-time notifications of required service or maintenance to the dealer and driver giving the dealer a powerful customer relationship management tool.

Implications:

What is clear is that OEM telematics systems have failed to fulfill the promise of customer/vehicle relationship management.  Aftermarket providers are diving into this yawning gap with clever solutions intended to empower dealers to better manage their fixed servicing assets while also enabling consumers to better understand that functional status of their vehicles.

How the OEMs could have missed this opportunity is hard to comprehend.  There is no doubt they see the money being left on the table now, though.  Within a few years, car makers will have refined their dealer service integration solutions and, maybe, they will win dealers back.

The goal is a centralized CRM/VRM model that gives the OEM a view to global vehicle servicing activities while giving the dealer the tools he or she needs to manage and measure customer service opportunities and, at the same time, creates a Web-based window for the consumer to better understand the service and maintenance status of their own car.

The vision has been at least partially described in the past by telematics service suppliers such as Hughes Telematics.  And Yamei Electronics has a fully realized solution in use with 1,800 car dealers in China.  (http://bit.ly/mSEUsB - #Yamei Puts Dealers in the Telematics Driver’s Seat – Insight)  It’s time for OEMs to plug into the customer’s interest in their own vehicle and the value of the dealer interface.

 

GM’s Chevy Volt is the best thing to happen to electric vehicles since the Prius hybrid. In fact, it would be even bigger than the Prius if more than 10,000 were being made next year. The car represents revolutionary technology. It makes electric vehicles palatable to the mass consumer – at least conceptually if not based on the $41,000 price tag. The electric vehicle business was in desperate need of a car like the Volt that could take the worry out of driving electric. By adding the internal combustion engine (ICE) to drive the electric motors when the vehicle’s on-board battery is exhausted the Volt offers an acceptable range for any kind of driving requirement.

The car also features cutting edge componentry with a low-weight, low-energy stereo system from Bose, an OnStar telematics system (with five years of free service) with an iPhone app, and a multiple-screen vehicle diagnostic experience. The car looks and feels and drives like the future. But the simplicity of the Volt concept belies the complexity of the electric vehicle business and therein lies some long-term concern for the viability of any alternative fuel vehicles. A big contributor to the complexity of the EV picture has been the Regulatory Authorities.

My kingdom for a PZEV

The regulatory authorities are well-meaning bureaucrats who are trying to stimulate demand with financial incentives for specific types of cars while providing guidance to the auto maker community regarding which kinds of vehicles will be acceptable to meet fleet emission standards. These efforts have produced an alphabet soup of vehicle categories and a maze of definitions that have been further confounded by the automotive press. From the regulatory authorities we were originally given (see Strategy Analytics reports referenced below for detailed definitions and history):

·        TLEV – Transitional Low Emission Vehicle

·        LEV – Low Emission Vehicle

·        ULEV – Ultra-Low Emission Vehicle

·        SULEV – Super-Ultra Low Emission Vehicle

·        ZEV – Zero Emission Vehicle

These categories would be humorous in and of themselves but they have already been superseded by:

·        ILEV – Inherently Low-Emission Vehicle

·        PZEV – Partial Zero Emission Vehicle

·        AT-PZEV – Advanced Technology Partial Zero Emission Vehicle

·        NLEV – National Low Emission Vehicle

Again, it is tempting to chuckle, but these categories have very real and very specific definitions that can mean the difference between a $7,500 vehicle incentive and a combined $12,500 vehicle incentive. The Volt is a case in point. Because the car was introduced with an 8-year/100,000 warranty on the battery instead of a 10-year/150,000-mile warranty it did not qualify as an AT-PZEV according to the California Air Resources Board (CARB) requirements and missed out on the additional $5,000 incentive in California for which the Nissan Leaf does qualify. (This was in spite of the fact that GM reportedly tested and validated the car for the 10-year warranty and expects to boost the warranty for the current Volt or on a new version of the car by 2012.)

EVs not EZ

To make matters worse, the automotive press and industry trade associations have their own roster of EV categories – presumably reflecting their assessment of consumer perceptions. The Electric Drive Trade Association lists the following categories:

·        HEV - Hybrid Electric Vehicles

·        BEV - Battery Electric Vehicles

·        EREV - Extended Range Electric Vehicles

·        Plug-in Hybrid Vehicles

·        Fuel Cell Electric Vehicles

The Volt is sui generis! It is the only EREV, according to the EDTA. This is something that bothers industry types. This would be a minor point if it were the end of the conversation regarding the definition and categorization of the Volt, but it is not. According to some sources the Volt operates as a “plug-in series hybrid” or as a “power-split or series-parallel hybrid” depending on speed or driving mode. By the way, in California, the Volt is considered a ULEV and not a SULEV based on emissions testing.

When is a Volt not a Volt?

Few cars in the history of the automotive industry have been subjected to as much scrutiny as the Chevy Volt – suggesting some strange American instinct toward eating its own young. The Chevy Volt is unquestionably the nastiest, most clever move the automotive industry has pulled in decades. It just seems to frustrate the heck out of regulators and journalists and analysts. GM pulled a fast one out of its hat – one just wishes the company had plans to pull more than 10,000 out of its hat this year. (One might argue that Subaru of America has been a good deal more clever than GM. The company has sold a combined total of hundreds of thousands of PZEV designated Foresters, Legacies and Outbacks that are “sometimes even cleaner than some hybrid or alternative fuel vehicles,” according to the company.)

“I’ll ask my manager.”

Which is where the Chevy dealers come into this story. Having recently attended a Chevy Volt launch event I visited my local Chevrolet dealer. There was a single Volt on the showroom floor, as promised by the Website. (There are four or five Chevy Volt dealers in the area. Not all Chevrolet dealers qualified to sell Volts.) The car in the showroom had a “Do not touch” sign on it with a message that the car was already sold. Of course, that meant that the car was also locked so that the dealer was not able to give test drives, could not demonstrate the clever on-board and OnStar systems, and could not allow a customer the experience of simply sitting in the car. A salesperson indicated that he did not know when they would get any more vehicles and he was not sure what other dealers in the area had any Volts. I returned home and entered my name on the dealer’s waiting list and was called almost immediately. The salesperson on the phone said four cars were due to be shipped in January and one, a white one, was not spoken for. To reserve this incoming Volt, the salesperson said, I would have to put $5,000 down. I asked about the widely reported $350 lease on the car – an attractive option considering the limited life of the battery. The salesperson said there was no lease available and then he suddenly added that to get the Volt that was coming in January I would have to pay $5,000 over MSRP. There is little that will kill enthusiasm for a new car faster than a dealer charging $5,000 over MSRP. It wasn’t bad enough that I could not drive the car, could not sit in it, could not see it do its sexy technology stuff right there in the showroom.

Whether you want a ULEV, an EREV or a serial-parallel hybrid, you will still need to be prepared to do battle with a dealer who will use your enthusiasm against you. Who knew changing the automotive industry would be so difficult. (For the record, GM and Chevrolet representatives say they have specifically asked dealers NOT to charge above MSRP for the cars and there definitely IS a $350 lease offer on the Volt.)

Further insights: http://bit.ly/gtyxic - EV/HEV Technologies Supply & Fitment Database - Kevin Mak - Automotive Electronics Service http://bit.ly/devMOq - Hybrid Technologies Legislation/Support - Kevin Mak - Automotive Electronics Service http://bit.ly/eC7kFy - Impact of Volt, Leaf Transcends Modest Sales Expectations - Roger C. Lanctot - Insight – Automotive Multimedia & Communications Service

Porsche is changing horses in the stolen vehicle recovery department, opting for Autotxt’s stolen vehicle recovery solution for the 911, Boxter and Cayman, according to industry sources. The change may be coming as a result of Autotxt’s new architecture which enables a single electronic control unit (ECU) to provide a wide range of vehicle diagnostic and remote control capabilities in addition to vehicle tracking. An official announcement is expected later this week. This single ECU solution from Autotxt has the potential to transform the relationship between the driver, the smartphone and the car, providing an enhanced opportunity to sell stolen vehicle recovery systems in the context of a low-cost smartphone-based telematics application. The technology has implications for customer and dealer relationships as well as for broader branding and marketing purposes. It also creates a new path for app distribution to drivers. Finally, the announcement shows Porsche taking one step closer to the inevitable introduction of telematics. Porsche has had a telematics system in place, ready to launch, for many years. The choice of Autotxt move the company that much closer to that decision while providing an in-place solution to satisfy the European eCall mandate. The Autotxt solution for Porsche - which will supplant the existing offering from Cobra Automotive - provides for both reactive and proactive stolen vehicle notification and recovery. In the reactive mode, the vehicle owner must notify the service provider, Autotxt, when the vehicle has been stolen. In the pro-active, or early-warning, application, the service provider is notified of any unauthorized vehicle movement at which point the driver is contacted. The Porsche application – which is a dealer install - may also offer the same functionality provided by Autotxt for Jaguar Land Rover and Aston Martin. Those implementations use the driver’s Bluetooth-enabled phone as the driver identification tag. Alternatively a keyfob can be provided. The system allows for up to seven Bluetooth driver IDs. Porsche is still evaluating this provision. The Autotxt offering is unique in the flexibility of its ECU. Like other modules coming into automobiles for related tracking, tolling and telematics applications, the Autotxt device is deeply embedded in the vehicle with access to the controller area network (CAN) codes. Autotxt expects to make available by Q2 2011 a smartphone application for remote vehicle control and diagnostics. Autotxt executives expect to be able to provide remote control functionality including remote activation of heating and air conditioning, windows, door locks and remote starting along with data logging and vehicle diagnostics. The multifunction ECU, therefore, can become an event data recorder as well as an eCall or bCall platform while also gathering and distributing data on overall vehicle operation available to either the driver or the dealer or both. The device could also handle trip reporting, battery status for electric vehicles and a wide range of location-aware applications. In this way, the car maker retains control of the in-vehicle connectivity experience in contrast to the widely reported terminal mode approach of conveying the smartphone HMI into the car. Autotxt expects to have versions of its system available for Android and other platforms by the middle of next year. The Porsche deal is global in scope as are the implications of the ongoing Autotxt development activities.

Change is coming to the automotive industry via U.S. government entities that suddenly have the cash, the power and the public mandate to significantly influence the direction of vehicle design and surface transportation. With multi-billion dollar investments in two of the one-time Big Three automakers, the Federal government suddenly has unprecedented leverage over the industry along with a clearly defined agenda for enhancing safety and reducing vehicle emissions. Just a few years ago industry participants were inclined to eye roll and shake their heads at the plans of connected vehicle (VII, V2X) and HEV/EV advocates, preferring to stick with the prevailing traditional disconnected ICE (internal combustion engine) vehicle mentality. In the words of an old American advertising slogan: When something works you stick with it. What a difference a few years, an economic downturn and a massive embarrassing recall can make! Consumers are shifting to 4- and 6- cylinder vehicles. And even without incentives, consumers are turning to HEVs most notably Toyota’s Prius. What were once seen as pie in the sky visions of connected electric vehicles have rapidly become remarkably realistic opportunities – even if substantial EV sales volumes are still somewhat out on the horizon (SA EV/HEV forecast - http://bit.ly/9s3lid). Hundreds of billions of dollars have been invested by federal and local governments – as well as overseas governments – to incent EV development and sales. (Strategy Analytics has a spreadsheet of more than 300 EV/HEV legislative initiatives worldwide -  http://bit.ly/aRdhK8.) At the same time, the National Highway Traffic Safety Administration (NHTSA) has stirred to life stimulated by both a distracted driving crisis (from growing fatalities due to talking and texting drivers) and the Toyota unintended acceleration debacle. NHTSA, which was quite recently focused on fusion safety system technology in cars – making use of multiple sensor inputs to assist drivers in maintaining lanes, monitoring blind spots and avoiding crashes – has firmly shifted to an emphasis primarily on avoiding and surviving crashes. The agency is also seeking data recorder mandates among other initiatives. The crash avoidance portion of NHTSA’s campaign has V2X written all over it. While monitoring blind spots and maintaining a lane are important vehicle applications, true crash avoidance technology can only be achieved with vehicle connectivity to other vehicles nearby and not so nearby as well as to infrastructure using DSRC technology. In fact, at the latest ITS meeting the organization made clear that it is compiling a database of 5.9MHz DSRC providers who will be able to meet the antipated demand for line fit and aftermarket modules. DSRC was heavily touted and endorsed at the latest ITS meeting in Houston. The ITS is on the verge of releasing its roadmaps for V2X implementation. It is worth noting that the organization is expending significant energy on providing for the use of mobile devices and aftermarket boxes to enable connectivity. (Coincidentally, the European Union has announced its endorsement of similar connected vehicle objectives and implementation plans – http://bit.ly/bFaIUm.) The time lines may still be conservative and technical issues remain (see ITS conference concluding presentation http://bit.ly/bYio4k), but the mandate and the mission is increasingly clear on both the emissions reduction and the safety fronts: In the future, connectivity will be king. Still, despite the increased interest in safety among legislators, consumers and the Federal government, safety remains a tough sell with consumers. (SA – Consumers Interested in Safety, but not at Current Prices - http://bit.ly/a56WTM) This is why the increased influence of the government is so important. It will require government mandates to change vehicle designs and force consumer acceptance. Now, more than ever, the Feds have the influence and industry participation they require to bring significant change to pass. This type of mandate applies to EVs as well. The U.S. is unique in the world in its governmental inability to force through the kind of fuel taxes that could change behavior. Lacking this lever, Federal and local governments have turned to incentives to encourage consumers – and car makers – to bring electric vehicles to market. (This and the CAFÉ standards regime - http://bit.ly/cBwp2r - U.S. #CAFE Standards Give Impetus to Wide Range of #Green Technologies.) Here, again, the influence of the government along with growing consumer interest in both HEVs and EVs are approaching a transformative critical mass. Industry observers have questioned the wisdom of fostering EV technology when the current state of technology is as limited as it is. But it is only with this kind of government support that the obstacles of charging infrastructure, battery capacity and price can be overcome. Ray Lood, the director of NHTSA, removed any doubt about the government’s passion for change in the automotive industry when he described his own anti-distracted driving efforts at the recent ITS event in Houston as “a rampage” (http://tinyurl.com/24vzrka). A rampage indeed! Change is coming, probably faster than previously conceived possible. It is coming with government impetus and supervision and it is coming whether the industry likes it or not. Additional Insight: http://bit.ly/bbhqGj - Voice HMI: Connected Car Opportunities and UX Best Practices - Chris Schreiner http://bit.ly/ajzQay - Future Promise of V2X Wireless Comms – Chris Webber http://bit.ly/9qf1Mh - EV/HEV Technologies Supply and Fitment Database – Kevin Mak http://bit.ly/9esI9W - Advanced Driver Assistance Systems: Supply and Fitment Database – Kevin Mak