Usage-based insurance, built-in Google connectivity and fleet management solutions are some of the connected vehicle capabilities automakers have recently deployed or found that customers are taking up with subscriptions.
Rivian Automotive reported May 11 during its most recent quarterly earnings call that the early owners of its R1 trucks and SUVs have had strong take rates of the company’s insurance product that is integrated with its connected vehicle platform.
“That allows us to build very robust, data-driven insights into the business and, importantly, through some of these data-driven insights, allows us to continue to evolve the relationship that we have with our customer,” RJ Scaringe, founder, chairman and CEO, said during the call.
The electric vehicle maker has also done several over-the-air updates (OTAs) with customers’ vehicles, adding a garage door opener, enhanced self-driving features, more drive modes and more diagnostics platforms.
Bringing Digital Lives Into Cars
Volvo, too, is expanding its range of connected services. Volvo Car USA announced earlier this month that Google built-in will be installed in the entire 2023 lineup, which will begin arriving at U.S. retailers this summer.
With this capability, drivers will have access to voice control through Google Assistant, navigation through Google Maps and access to additional apps through the Google Play store. The cars will also be able to receive OTAs so that they can receive and install software updates remotely.
“As part of the Google ecosystem, Volvo cars now offer a seamless transition between digital life at home and on the phone, bringing customers’ digital lives, and much greater personalization, directly into their cars,” the automaker said in a statement announcing the new products.
Offering Connected Solutions for Fleets
On the fleet vehicle side of the business, Rivian is producing its EDV commercial vans that are paired with its FleetOS fleet management platform that can predictively analyze the need for maintenance and manage the health of the life cycle of the vehicle.
The company has an order from Amazon for 100,000 of these commercial vans. It is now producing the vehicles and its 2022 full-year guidance is 25,000 total vehicles produced, with EDVs being about one-third of that total production.
“As we ramp production and deliveries of EDVs, we are excited about the impact that our close partnership with Amazon will have in the commercial vehicle space,” Scaringe said.
Fleet solutions are also proving to be in demand at Ford, which formed Ford Pro last year to focus on commercial fleets. In addition to vehicles, Ford Pro offers software, charging, financing and other services.
“The early innings would suggest that the big subscription revenues and opportunity and upside are in Ford Pro with telematics, fleet management, energy management and ADAS on the retail side,” Ford President and CEO Jim Farley said during an online press conference in March.
Driving Margins as Car Park Grows
Like many other automakers, Rivian said it expects growing demand for connected services. Asked by an analyst during the earnings call why Rivian hadn’t left the development of the behind-the-scenes software to others and built only the customer-facing software in-house — as some other brands do — Scaringe said the company wants to fully leverage all the sensors and hardware in the vehicle to create a unique customer experience and continually improve it.
“More than just putting a new color on the screen, but actually going deep into the performance of the vehicle, whether that’s referring to self-driving, whether that’s referring to performance attributes or whether that’s digital characteristics or digital capabilities of the vehicle,” Scaringe said. “We feel really strongly that it’s important to both develop and control the full stack.”
With insurance, FleetOS and other software-enabled services, Scaringe said Rivian is leveraging its digital infrastructure across both the consumer and commercial sides.
“The 65% long-term gross margin opportunity that our software and services side of the business delivers allows us to ultimately drive and increase margins rapidly over time as we think about the compounding effects that can deliver from our growing car park,” Scaringe said.