This past week we reviewed the automotive industry. We looked at 1,500 automotive startups and analyzed patterns across the top 450+ companies. Investors that attended our breakfast include KDDI Open Innovation Fund, Cisco Global Infrastructure Funds, SAIC Capital, Singtel Innov8, LG Technology Ventures, Global Brain Corporation, Movens Capital, Horizon Connect and more.
Content Of The Event
In this report, I wanted to understand how all transportation startups build a competitive advantage. I attempted to map the entire transportation startup industry, see chat below. I then filtered these startups into 12 main categories and labeled the top startups per category. I then looked through every startup to understand how they innovate by function, feature and use case.
Takeaway
By having both a macro and detailed view of the ecosystem allows us to predict disruption within the transportation industry. Below I try to highlight the important takeaways from each category.
Automotive tools category, also known as connected vehicle solutions, are becoming the interface between drivers and their vehicles. There is a lot of fragmentation and niche solutions that address entertainment, navigation, ADAS, diagnostics, driver analytics, security, safety, manufacturing, smart city features and more. All of these solutions seem to be pieces of what will eventually become an automotive OS. Analytics, interfaces, actions are still at the early stages but they will converge to build an end-to-end ecosystem of vehicle management and experience. Many other automotive categories and car manufacturers are building their own connected car solutions into their products or services. What will be important for automotive tools is their ability to convert insights into valuable products or services.
Automotive management tools are attempting to simplify their entire process, creating a seamless process for employees or customers. How far they assist with either customer or employee is their key differentiator. This can be guiding customers through the discovery to purchase, while integrating all the necessary third parties or tools to complete the transaction with little to know intervention. Or helping employees understand how to sell vehicles, premade methods to close leads, and automated follow up post-purchase. Or this can be helping mechanics by automating quotes, parts purchasing, recording of work and communication with customers about their status. This can also be all the tools, training and hardware necessary to launch mobility services. Each platform’s goal is to launch and manage the entire process in the simplest means possible and requiring little intervention.
Autonomous platform category is the most valuable software category of the transportation ecosystem, partly because it can be the most disruptive to the transportation industry and many others. Ironically, they have the lowest number of exits per category, this could be partly because its relatively new and unknown space. At the moment, there are a number of software and hardware players looking to build the fully autonomous vehicle platforms. Some are looking to partner with automotive OEMs, others are building solutions that can be added to existing cars and some are going as far to build their own vehicles. The use cases that seem practical today are closed loop shuttle services, L3 ADAS for OEMS, semi truck platooning and driver warnings/notifications. The challenge is getting to actual market applications before they run out of cash.
Geolocation is a unique category that is setting the foundation for travel, navigation and location data insights. These startups are optimizing for accuracy or building massive data sets. It seems the goal is to build deeper consumer behavior insights. Others seem heavily focused on creating advanced navigation tools for developers, autonomous vehicles or mobility services. Some startups are starting to build out mobility and fleet management tools. The future of this category seems to blend with transportation services or business intelligence services.
For all manufacturing categories, there is this general trend of building IoT enabled, electric vehicles. Smart solutions built into most devices are catered to ease of use, performance, safety and preventative maintenance. These startups don’t provide the depth of IoT solutions that the automotive tool categories provides, but there's a lot of crossover. Motorcycles, bicycles and scooters are building vehicles that already have the ability to connect to a vehicle sharing platform. A handful of startups provide their own mobility platforms to companies that want to launch their own fleet services. Is this the start of all vehicles being manufactured to participate in vehicle sharing ecosystems? The trend of cars seems to be slightly different. If you look at automobile manufacturers, all new vehicles are primarily electric. The most common features offered by new cars to be within entertainment and ADAS. Car manufacturers seemed to be more focused on providing unique and exciting travel experiences. They’re trying to integrate with your digital life, provide personalized driving experiences, stream unique content and provide travel services that are starting to blend with the travel industry. Will the future of the automotive industry be luxury cars and ridesharing services?
Automotive marketplaces are trying to make it a seamless process to purchase and sell quality cars. The biggest feature of most marketplaces are their inspection services. This can mean only cars that pass their inspection services are listed on their platform, they will have a team that will come to appraise your vehicle before you buy or they score sellers on their marketplace based on a number of factors. To increase car capacity, some provide dealership management tools to feed dealerships inventory to their marketplace or they guarantee they’ll purchase cars from customers. Beyond commissions from transactions, marketplaces are offering financial services, warranties, maintenance and more. It also seems marketplaces are becoming media companies offering blogs, video content, news, data and more. Marketplaces that instill trust and have a great selection of cars will continue to prosper.
Transportation services category has almost half the funding of the entire automotive industry. This industry exploded with the rise of ridesharing services. Peer car rentals and crowdsourced fleets are dominating this category. Services with private fleets tend to have more specialized vehicles. Majority of these services are providing on demand transportation. The primary feature many transportation services share is their claim to have a rigorous onboarding process for new drivers. This category is eating into so many other industries including ecommerce, delivery services, financial services, consumer services and more. Transportation services are a blend of advanced fleet management solutions that own the order management process. As this category grows, they will become better at integrating fleets with other ridesharing services providing almost unlimited capacity. Then the shift will be on the order management, whether that's booking rides, food/parcel delivery or other consumer services. Transportation services’ ability to capture mass amount of consumers to their applications allows these startups to expand into categories like messaging, banking, loyalty and more, which we’re seeing more of outside the US. Autonomous/connected vehicles and fleet management/mobility integrators will only speed up this process.
Other transportation services that include bicycles, scooters and motorcycles are following a similar route of automotive transportation services. Except they tend to be heavily focused on simplifying last mile transport. They will become more integrated with public transportation services, navigation tools and travel services.
The IoT smart city automotive category highlights smart city products specifically catered to automobiles. There are a lot more startups that offer smart cities tools in the IoT report, so this category doesn’t do justice. However, the majority of these tools are trying to improve traffic, emergency response or compliance. Just building analytics and cost savings business intelligence seems to be a tough process to scale. How IoT products can get closer to transactions within the city (parking, ticketing, tolls) is where there seems to be an opportunity to scale.
Charging services category focuses on startups building charging networks. This category still seems early for automobiles and there are some challenges with charging vehicles quickly. However, this category is the new oil for the future of automobiles. Startups outside the US that are building battery swap networks for motorcycles already seem like a massive opportunity. This industry seems like a long term play and dependent on the evolution of automobile manufacturing.
Fueling service category focuses on startups that ship fuel to customers. This seems like a perk for employees especially in massive, car dependent cities like Los Angeles. This category is blending with mechanic services category. There seems to be a lot of opportunities within simple on demand car maintenance, washing and refueling. Outside of simple maintenance, the largest challenge is facilitating a marketplace of drivers with complex/unknown car needs with a massive number of mechanics. Whomever can instill trust with customers, provide a seamless process of problem discover to fix and ensures quality will do well.
Finally, the parking services category focuses on startups that help manage parking lots or drivers find parking. The top parking solutions provide parking lot managers with platforms to manage and market their available lots, while feeding this inventory into their application or marketplace of drivers looking for parking. Some of these solutions are also getting into car sharing services as well which I think is a great addition to parking spaces.
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