Mobile carrier AT&T (NYSE:T) recently went public about its contract with Tesla Motors (NASDAQ:TSLA) to provide wireless network chips for Tesla's all-electric vehicles. While the two companies have worked together in the past, the partnership sheds light on the future of the connected driver.
Just the facts
At Mobilize 2013 a little over a week ago, AT&T's senior vice president of emerging devices, Chris Penrose, said that the company was bringing Internet connectivity to major auto manufacturers including BMW, Nissan, Ford, and Tesla.
Here's what we know: Tesla doesn't use 4G LTE in its vehicles, according to an AT&T spokesperson. Instead, Tesla's agreement with AT&T involves Evolved High-Speed Packet Access, or HSPA+, which is used to power two-way communications, remote diagnostics, navigation, and Internet access in Tesla's cars.
It's interesting that AT&T waited until now to reveal its partnership with Tesla. After all, the EV maker's Model S cars have been equipped with AT&T's Internet and data capabilities since they first hit the road more than a year ago. Nevertheless, it's nice to see AT&T take credit for its role in Tesla's innovative driving experience.
This is exciting for a number of reasons.
For drivers, it means a more connected driving experience. For example, drivers of connected cars can access Internet radio services such as Pandora and Slacker Radio. All of Tesla's cars currently offer free Slacker Radio, which lets drivers play any song on demand. Slacker Radio then creates a music station based on the requested song or artist. The Model S also has its own Wi-Fi hot spot so drivers can get real-time traffic alerts or use the car's 17-inch touchscreen to browse the Internet.
Need to remotely start your car, honk the horn, or unlock the doors? No problem. Today, smartphone apps interact with the connected car, so that you can access certain functions from anywhere.
For AT&T, connected cars offer a new growth avenue outside of mobile devices. Earlier this year, AT&T beat out Verizon Wireless for a connectivity contract with General Motors (NYSE:GM). As part of the deal, AT&T will power GM's OnStar security technology. Additionally, by next year AT&T's 4G LTE network will be integrated across various GM brands including Chevrolet, Buick, GMC, and Cadillac.
Similar to Tesla, this means GM customers can look forward to in-vehicle Wi-Fi hot spots, and new infotainment options including video streaming and faster application downloads.
The future of connectivity
The connected car is the next big thing in the auto industry. In fact, by 2016 more than half of all new cars globally will have factory-installed telematics, according to ABI Research. That's up from just 10% in 2011. And AT&T is at the forefront of this technological shift. Looking to the future, AT&T hopes its in-vehicle technology will make cars safer. Vehicle-to-vehicle connectivity, for example, may be able to warn a nearby car of a possible collision or notify emergency personnel when airbags deploy.
Today, the evolution of the connected car is just getting started, and AT&T should continue to benefit from its relationships with auto manufacturers.
Fool contributor Tamara Rutter owns shares of Tesla Motors. The Motley Fool recommends BMW, Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.