5 Things Every Driver Should Know About Connected Cars

The connected car market is heating up. However, connected-vehicle technology could forever change the way we interact with our cars.

Mar 23, 2014 at 7:16PM

The era of connected cars has arrived. From vehicle-to-vehicle communication that makes driving safer to servicing your car using over-the-air updates, today's cars are smarter and more interactive than ever. The rise of connected-vehicle technology is creating massive opportunities for automakers and tech giants alike. However, what it means for drivers is less clear. It's in this spirit that we've outlined five things all car owners should know about the future of connected driving.

1. Carmakers and cell phone carriers want to charge you for data on the road
Cars are among the fastest-growing market segments for mobile devices and Internet content today. It's not surprising, then, that wireless carriers including AT&T (NYSE:T) and Verizon are fighting for a piece of this emerging growth market. AT&T currently provides Tesla Motors (NASDAQ:TSLA) with wireless network chips for its all-electric Model S sedans.

AT&T's network chips enable Tesla Model S drivers to search the Internet, access real-time traffic and navigation features, and hear Internet radio on the car's 17-inch touchscreen display. Tesla's agreement with AT&T utilizes Evolved High-Speed Packet Access, or HSPA+, which the automaker also uses to power remote diagnostics and over-the-air software updates in its electric vehicles. Tesla currently offers these connectivity and data services free to customers for four years. However, the EV maker does say, "in rare cases a customer may be charged for extreme data use."

Four years of free data connectivity and Internet radio is certainly fair. However, this could change in the future as more connected cars hit the road. AT&T has already signed on other key automakers including BMW, Nissan, and Ford for powering Internet connectivity in their cars. AT&T will also power the OnStar service in 2015 models of General Motors (NYSE:GM) vehicles.

On top of this, AT&T opened a 5,000-square-foot facility in Atlanta solely dedicated to research and innovation in the connected car space. The AT&T Drive Studio, as it's called, is a perfect example of how mobile carriers are aggressively teaming up with automakers in hopes of unlocking new revenue from drivers down the road.

2. Get your car serviced without ever taking it to a dealership
Tesla is pioneering another important advancement in connected-vehicle technology: remote servicing. "Tesla's Model S receives wireless programming updates via an installed cellular system to improve vehicle operations," according to Bloomberg. It's important to note that owners are always alerted to these updates before Tesla runs them. Using over-the-air updates, Tesla has achieved everything from fixing minor software glitches to improving the car's performance.

This is particularly cost-effective for auto manufacturers when it comes to potential recalls. For example, Tesla was able to issue a wireless update that increased the suspension of the car at highway speeds, following a series of Model S battery fires that resulted from high-speed collisions. The EV maker was able to run this firmware update simultaneously on thousands of Model S cars across the country without ever physically recalling any vehicles.

The connected car is the future of auto servicing, and we're starting to see more carmakers follow suit. In fact, Daimler is working on a platform that would let Mercedes-Benz owners add new functions such as predictive cruise control to their cars simply by updating the vehicle's operating system. This ties in nicely to the next thing to know about connected cars, which is how they communicate with mobile applications to enhance the auto experience.

3. Control your vehicle from your smartphone
Need to remotely start your car or unlock the doors? No problem. Smartphone apps interact with the connected car so that you can access certain functions from anywhere. Using the Tesla app, for example, Model S owners can use their smartphone to pinpoint the precise location of their car, honk the horn, heat or cool the car's interior before driving, and more.

Screen Shot

Source: Screenshot of Tesla app in Apple's App Store.

Mobile apps such as Tesla's allow drivers to directly communicate with their cars anywhere and at any time. Looking ahead, this level of convenience should help more consumers choose connected cars over standard models in the future.

4. Vehicle-to-vehicle communication will make cars safer to drive
The U.S. Department of Transportation has approved vehicle-to-vehicle communication systems for use in cars in order to prevent accidents. The government agency says V2V technology could help prevent as much as 76% of collisions on the road today, thus making driving safer. These systems could also help drivers conserve fuel and save time, according to the National Highway Traffic Safety Administration.

Using a wireless network, v2v communications let nearby cars share important safety data such as their speed and location with other neighboring vehicles. This way, your car could notify you of potential hazards or collisions before they occur.

"Decades from now, it's likely we'll look back at this time period as one in which the historical arc of transportation safety considerably changed for the better, similar to the introduction of standards for seat belts, airbags, and electronic stability control technology," said NHTSA Administrator David Friedman.

5. Connected cars are capable of storing and sharing driver data
As our cars become networked devices, automakers and mobile carriers are able to collect driver-generated data such as automotive performance and driving patterns. In fact, one in five new cars on the road today already collects and shares vehicle data with the car's manufacturer, according to the Los Angeles Times.

Moreover, the amount of data generated by smart cars is expected to grow dramatically over the next decade. "A combination of increased connected car sales and a growing scale of information coming from connected cars will result in the collection of some 11.1 petabytes of connected car data by 2020," according to a new IHS Automotive study.

Today, auto manufacturers are using the data they collect from connected cars for things like internal diagnostics, location, and vehicle status. However, as more connected cars hit the road, we should see more regulations put in place to safeguard how this driver data is used and who can access it.

It's still early in the connected-car cycle, and many of the kinks still need to be worked out. Nevertheless, it is an exciting time for drivers everywhere because, ultimately, connective technology has the potential to make cars smarter and safer for all.

How you can cash in on the Internet of cars
Connected cars are the future, and Tesla Motors is proving just how lucrative the industry can be for patient investors. After all, that's what investing is all about: getting in on revolutionary ideas before they hit it big. The problem is, most investors don't understand the key to investing in hypergrowth markets. Connected cars are still in the early stages, and there's a clear opportunity for you to cash in before this technology goes mainstream. Our team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this free eye-opening report.

Tamara Rutter owns shares of Tesla Motors. The Motley Fool recommends General Motors. It also recommends and owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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