Digital Automotive – A Defence of “Crazy”

GM is not as stupid as it sounds.  

• GM has confirmed its decision to drop CarPlay and Android Auto. which has been widely derided as “crazy”, but if GM wants to have any real access to digital services, it has to entice users to use the software in the head unit and not rely on their smartphones.
• CarPlay and Android Auto are both features that allow users to connect their smartphones to the vehicle and project digital services running on the phone onto the vehicle’s infotainment screen and use peripherals like speakers, microphones and the vehicle’s GPS signal.
• Since their first launch, they have become very popular partly because they make it easy to bring digital life into the vehicle, but mostly because the digital experiences of all the OEMs (except Tesla and Rivian) remain so dreadful that few people want to use them.
• Smartphone projection has become so popular that most surveys will find that between 33% and 50% of respondents will say that not having smartphone projection in the vehicle means that they won’t purchase it.
• I can empathise with this finding as when I rent a car, the only thing I want when I turn it on is for the smartphone projection to work.
• Against this backdrop, GM’s decision to remove smartphone projection appears to be suicidal, but digging a bit deeper, I find that this is not as crazy as it sounds.
• RFM Research has concluded that while humans continue to drive vehicles, they will essentially only use two digital services in the vehicle.
• One is navigation and the other is media consumption (audio obviously), meaning that if one wishes to replace smartphone projection, these are two functions one has to get 100% right.
• GM believes that the combination of having a digital experience more deeply integrated into the vehicle than a smartphone can ever be and its own user experience can overcome the desire for smartphone projection, which is a bold bet
• However, it is not “crazy” as both Rivian and Tesla have demonstrated that one can still sell vehicles without projection if the vehicle is both desirable enough and has a good digital experience.
• GM needs to come up with a decent user experience and also ensure that the media consumption and navigation experiences are good enough to prevent the user from reaching for his or her smartphone.
• To help with this, GM is running Android Automotive, which is Google’s operating system for vehicles in the head unit, which in GM’s case includes the Google Assistant, Google Maps and Google Play.
• This means that for anyone who uses Android, not having Android Auto is a non-issue, as the head unit will be able to do everything that Android Auto can do and more.
• It will just need to ensure that the user is logged in, which may become an issue for rental vehicles, but for vehicles that are owned by the user, this is not a problem.
• Hence, the remaining issue is Apple, which makes up a substantial proportion of the US smartphone market and is GM’s core market.
• For these users, it has to get navigation and media consumption right and also delight them with the other aspects of the user experience in a GM vehicle (a big ask).
• A significant number of iPhone users already use Google Maps, which will already be in the head unit, meaning that GM still has to solve for Apple Maps and media consumption.
• I suspect that there will be a workaround for Apple Maps, such as transferring the destination to Google Maps in the head unit, and the two main media consumption services, Apple Music and Spotify, are already available for Android.
• Consequently, with a bit of finesse, I think that GM should be able to come up with a workable solution that keeps the user’s smartphone in his or her pocket.
• However, it will need to convince users not to give up on GM the minute that they hear that smartphone projection is not being offered, and this is going to be tricky.
• It will have to focus on the great user experience that it has created using all of the other features in the car, as well as the ability to offer Google services.
• This is where GM has to be careful because Google Play will also be in the vehicle, which means that users will be able to purchase services using Google Play rather than a store that GM has created or had white labelled.
• This is critical as RFM Research has identified that one of the best opportunities for OEMs to earn digital revenues is by distributing the apps and services of 3^rd parties.
• Having Google Play present in the head unit alongside its own offering is a key risk to that opportunity as millions of developers already develop and use Google Play for distribution.
• This is an issue to be dealt with further down the road because if GM fails to execute well, it will lose market share and be forced to support smartphone projection once again and the Google Play issue will be moot.
• Failure will cost GM all of its digital credibility and ensure that its future is that of a maker of Android smartphones on wheels with the margins and market power to match.
• However, I think that GM has a shot at getting this right, as there are now many digital surfaces in the vehicle and there are workarounds available for iPhone users.
• Google’s Gemini voice assistant is one of these, and if GM can fine-tune Gemini to offer a great voice-based user experience, smartphone projection will become less of an issue.
• These are all big ifs, but faced with digital irrelevance, GM is doing the right things to maximise its chances of having a seat at the table when it comes to carving up the potentially very large market for digital services in the vehicle.