Author: Mike Montgomery
By 2030, the market for automation in cars will be $102 billion. To put that into some perspective, that’s close to today’s domestic vehicle-manufacturing market, which IBISWorld estimates at $127 billion in revenues.
According to Boston-based Lux Research, software and apps will account for 53% of that $102 billion.
That’s because as we move toward driverless cars, things like car bodies and engines are on their way to becoming commodities, while the real differentiators will be software-based. And as the big car companies struggle to keep up with Silicon Valley, many believe that the big four of the auto world in the coming years will be Tesla, Google, Apple and Uber.
That’s going to create a whole new market for nimble tech entrepreneurs, who will treat the driverless car as just another platform. Just as the mobile phone has opened up a whole new world of applications and opportunities that never could have existed even 10 years ago, the driverless car is poised to ignite another tech revolution.
Sahas Katta, 26, is one entrepreneur who is already making moves in the space. Katta gained a certain amount of fame two years ago when he hacked a Tesla S and created a Google Glass app, called Glass Tesla, that lets users see information about their car (battery life, interior temperature, etc.), and even do things like open the sunroof with the blink of an eye. The app went the way of Google Glass. But instead of going to work for Tesla, as many young engineers would have done, Katta decided to start his own company. His new company, Smartcar, is building a connected platform for car apps.
“Today, the car market is owned by 100-year-old companies,” says Katta. “There isn’t the capacity to expand on the technology of the car itself. But we’re going to see new players enter the field and they are going to bring the concept of an open developer platform.”
Google and Apple let other entrepreneurs build businesses on the back of their platforms, and there’s no reason to think they won’t do the same thing as they move into the car world. Both companies are working on self-driving cars. Google’s cars have driven over 1 million miles (one has even been pulled over by the police for driving too slowly) and Apple’s representatives have reportedly met with California officials to discuss plans for a self-driving car.
Reilly Brennan, the executive director of the Revs program at Stanford University, believes that tech entrepreneurs will initially make their mark in things like data analysis and security.
“Right now a vehicle creates a terabyte of data every two weeks” from the many sensors that can already be found on cars, says Brennan. “There will be a big market to make sense of all of that data.”
The data could be used for everything from getting a much clearer picture of a car before reselling it (creating a challenge for Kelley Blue Book) to helping improve the algorithms that will be the beating heart of self-driving cars.
Reilly also believes that tech entrepreneurs will be in a strong position to build systems that will protect the car networks from security breaches. Eventually, every car will have to come with a data plan. Protecting all of that streaming information will be paramount to society embracing self-driving cars.
And while the big auto companies aren’t know for acquiring small startups, companies like Google and Apple are. As the tech giants become more important players in the auto space, they’ll look to buy companies that can help them grow their auto footprint.
“A growing number of Stanford students are moving into the vehicle market,” says Brennan. “This is a rich sandbox for lots of different people to play in.”