No matter how you look at it, motor vehicles are important in our daily lives. Jump in your car to commute to work? You’re relying on a motor vehicle. Maybe you alternate between taking the bus or calling a Lyft? Motor vehicles strike again. Order a package from Amazon? Pick up medicine from the pharmacy? Buy food from the grocery store? Yup, you guessed it. Motor vehicles.

Karl Benz invented the first gasoline-powered automobile in 1885. Obviously, we’ve innovated a bit beyond this original model. We have cars that can park themselves! Yet, when we look to the transportation industry as a whole, we’re only seeing the beginning of what technology can introduce in terms of efficiency and cost savings. A large swath of this innovation will center around telematics and IoT.

So, What are Telematics?

Telematics is the field associated with monitoring an asset (such as a vehicle or piece of equipment) by using devices (often through onboard diagnostics [OBD]) to record movements and operating status on a computerized map. We need to step back a little into history to expand on telematics. Telematics actually out-dates IoT. Even from the onset, its roots are in the automotive and transportation industries. Developers created the first telematics system based off newly launched GPS satellites in the 70s. Consumers later received access to a telematics system in 1985 – the world’s first car navigation system.

Telematics have always involved the transfer of data from a device to a means of analyzing it – generally to a physical computer through USB ports. The computer receiving the data would have to remove the data from the device, locally store it, and await analysis.

How are Telematics Evolving?

As time progresses, telematics are becoming more and more tied to the internet, and therefore, overlapping with IoT. Developers have always built telematics on closed systems, but with the advent of APIs and interoperability, they have moved to open platforms to allow integration with other software or accessories. Now, telematics can exchange data via Bluetooth or cellular networks rather than just relying on a wire-based transfer.

Many goals of current telematics systems target the same problems we’ve been solving for since the creation of the first system, though the effectiveness and breadth have expanded greatly. Let’s take a look at some of the potential applications of telematics as the field becomes a larger segment of IoT.

Where Should We Expect to See Telematics Now?

Fleet Management

Many companies own a large number of vehicles and contract them out for use by other companies to complete deliveries, transporting, or hundreds of other applications. Those involved in fleet management or employed as a driver could gain thousands of hours back, resulting in billions of dollars, by implementing innovative IoT-powered telematics systems in trucks.

On average, drivers lose about 110 hours a year in manually logging driving usage data and the industry loses over 50 million hours recording and storing this data. On top of this, fleet managers use self-, retrospectively-reported data to keep tabs on their fleet’s performance, the drivers, and the health of each vehicle. This does not help managers predict maintenance issues for vehicles, streamline compliance, or adequately improve efficiency of its fleets.

IoT telematics systems can ameliorate a multitude of problems beyond decreasing paperwork. With a connected onboard diagnostics solution, managers and drivers can be on-top of maintenance issues before they cause a breakdown or other urgent vehicle issues. Fleets lose millions of dollars over broken-down trucks, whether the costs are associated with towing, repair, housing the driver, or sourcing a new driver. Sniffing out the issue before it becomes apparent is critical to the future of fleet management.

Fleets are also not operationally efficient as they stand today. A truck idles on average anywhere between 20-40% of the time, wasting valuable potential uptime and fuel. As well, not all drivers conduct themselves behind the wheel in a cost-efficient manner. Fast drivers burn gas at a higher rate than those that drive the speed limit, especially with quick accelerations. Fleet managers can use IoT to direct drivers’ behaviors to save money and ensure the safety of their people behind the wheel.

Auto Insurance

Have you ever noticed a little black box on your friend’s dashboard? In the late 2000s, the auto insurance industry saw the first rollout of pay-as-you-drive solutions, creating the usage-based insurance category. Drivers can install an OBD or other official equipment manufacturer (OEM) device to monitor their driving habits, times, and accidents. This allows for auto insurance agencies to better price coverage suited for the individual. This can enable savings for safe drivers as well as shed light on causation in the case of an accident.

These devices have improved dramatically over the past decade. This allows for most effective cost and time savings for both insurers and drivers. As an example, when a driver gets in an accident in a car with a monitoring device, the insurance company can be alerted in real-time to ensure that they get in contact with the driver first. Drivers can be informed of Direct Repair programs through in-network ships, which could prevent bleed to independent mechanics and repair shops and give the customer a streamlined payment and reporting process.

It’s estimated that 70% of car insurance agencies will offer usage-based insurance by 2020. Customers can gain more than just low rates and emergency alerting – with better devices, they can also monitor their driving habits to save money on fuel, coverage, and car wear.

Transit Fleets (or Mobility-as-a-Service)

As people are leaning more and more on ride sharing services to get around (creating the Mobility-as-a-Service model), the more important it will be that companies effectively manage their fleets. Currently, we have fleets of cars, bikes, and scooters. These services rely on the user to use the asset responsibly as they move from Point A to Point B. By implementing telematics, these companies can better track driver behavior, wear and tear, as well as customer-caused issues that require attention (such as accidents or mishandling.)

Ride sharing companies, such as Uber and Lyft, have a different need to fill with telematics. These companies do not own their fleets. Rather, they have to manage steering drivers to high-traffic areas at the correct times to account for supply and demand. For example, Uber creates heatmaps based on customer usage data to help guide drivers to areas with potential higher tips (i.e. higher revenue.)

They also need to curate their drivers constantly to remove dangerous and poorly-rated drivers from their system. Telematics can determine which drivers perform poorly behind the wheel and remove them before it becomes a larger safety hazard. On the other hand, telematics help identify safe, highly-rated drivers who then can be rewarded for their great service. This helps maintain a great customer experience by focusing on consumer safety and comfort, which translates to more recurring revenue.

Countless Opportunities for IoT-enabled Telematics

Rental car companies – Similar to that of transit fleets, rental car companies can capitalize on IoT to help manage the status of their fleet (report accidents, cosmetic issues from impact, and smoking in cars) in addition to manage inventory flow between branches.

Shipping and delivery companies – Telematics can enable route optimization strategies for delivery drivers to avoid congestion and cut down on time per delivery item, as well as give the recipient insight to the status of their delivery.

Utility companies – Much like fleet management and shipping/delivery, utilities companies manage a fleet of vehicles. Telematics can improve on-time percentage for house-call appointments, avoid traffic congestion, as well as monitor for car operational status and driving behaviors.