Telematics software is software, most notably used in vehicles, which allows for the communication between an electronic device and other devices (or human users) over a network. Telematics software merges telecommunications with informatics, thus the name telematics. A vehicle installed with telematics can relay data such as GPS location, vehicle performance and fuel efficiency.

In this article we examine what is telematics software and how it works. We will also look at the impact telematics software is having on the automotive industry, the value of the market and the history of car telematics. 


Exciting Times For The Automotive Industry and Telematics Software

In January of 2017, Henrik Christensen, the Director of the Contextual Robotics Institute in San Diego made a bold claim.

“My own prediction is that kids born today (2017) will never get to drive a car,” he said. “Autonomous, driverless cars are 10, 15 years out. All the automotive companies, Daimler, GM, Ford, are saying that within five years they will have autonomous, driverless cars on the road.”

The accuracy of these claims remains to be seen. However, one thing is for certain – the automotive industry is going through a major transformational period. A world of connected cars, shared driving, electric cars and autonomous vehicles is upon us. This world, that might have seemed like the stuff of sci-fi a few years ago, is now a reality.

A report published by PWC regarding ‘Five Trends Transforming the Automotive Industry’ followed on in the same vein. In it, the company’s forecasts suggested that by 2030, more than one in three kilometres driven could involve sharing concepts. Think Uber, Lyft and MyTaxi. The report also stated that the share of autonomous driving in Europe (overall traffic) may rise to as much as 40%.

During this revolutionary period, there are many technological advancements that you may have become familiar with, without fully appreciating their significance. One such term is “telematics”. Although we are coming to terms with concepts such as connected cars and driverless vehicles, the word “telematics” won’t mean a whole lot to most people. However, in the overall scheme of the automotive revolution, it plays a major role.

Telematics Software Rentalmatics

What is Telematics?

Broadly speaking, telematics software is any device which merges telecommunications and informatics, thus the name. In other words, telematics solutions are where an electronic device communicates with other devices, or human users, over a network. Over the years, the term “telematics” has become heavily linked to the use of communication devices in automobiles.

Telematics software encapsulates a broad range of technologies. For instance, telematic solutions are behind navigation and GPS systems, handsfree calling, driving sensors, wireless communications, in-car multimedia use, and other modern vehicular technologies that involve the transfer of data over a network.

Due to the incredible degree of real-time management and vehicle connectivity, telematics solutions are perfect for fleet management. Fleet management in this case includes car rental companies for example. Vehicles fitted with telematics software can be tracked for key information such as speed, erratic driving, fuel usage and efficiency. This all represents a major advancement in vehicle monitoring and reporting.

How It All Works

What is telematics software

Infographic explaining exactly how telematics software works

We live in a connected world where “sharing” has become an established business model. Top performing car-sharing companies include Evo, GoCar, Car2go and Zipcar. These systems are steeped in cutting edge technology. You may have already used these services. The overall “transaction” is awe-inspiring. When you step into a car-sharing vehicle, there are maps that know your exact location, a dashboard that recognises your own individual account, a buzzer that notifies you when are swerving dangerously, fuel and tire pressure monitors. There is even a help button that connects you with a customer service member over the car’s intercom. But how does it all work?

Telematics software works through a combination of GPS tracking and onboard diagnostic systems. The most common method by which telematics works is through the installation of a small telematics device in each vehicle, sometimes referred to as the ‘black box’. This box does not alter the vehicle in any way but records all aspects of the car’s location and performance. The black box is fitted with a sim card and modem. This allows information to be transferred over a network to a central user interface. In the earlier example of fleet management, this central interface would be the fleet management software dashboard.

History of Telematics and Future Projections

In one sense, telematics solutions are nothing new and have been around for years. It was in 1983 that the first GPS was made available for public use. Although the origin of the first car navigation system is debated, it is generally agreed that it was debuted in the ‘80s, over thirty years ago. However, it is only in the last decade, as we enter a new era of connectivity that we see huge leaps in the evolution of telematics software. A fascinating historic overview, put together by TomTom, noted some major milestones commencing with the launch of the first smartphone applications that combine telematics software in 2010. Since then, the world of connected cars has been advancing significantly.

A report published by EY illustrated the rise of telematics solutions from what they called telematics 1.0 to telematics 4.0. This concept identified telematics 1.0 as hands-free calling and screen-based navigation. Telematics 4.0 is the seamless integration of mobility and the web. This integration was beautifully summarised in the report by the president of a global telecommunications company “when we look at the car, we see another smartphone”.

“A Projected Global Market Size of USD 231.63 Billion”

The rise of telematics solutions was further compounded by a report published by Reuters in October 2018. In the report it was noted that in 2017, the global vehicle telematics market size was valued at USD 41.66 billion. The report went on to say that by 2025, the market size is projected to hit USD 231.63 billion.

This meteoric rise is driven by the rising demand for smart connectivity coupled with increased penetration of Internet of Things (IoT). At present, North America is dominating the global telematics market. The Reuters report suggests that theme will continue as North America is expected to account for more than a third of the telematics market share.

The Future Impact of Telematics Software

The fascinating future of telematics software is something that we want to explore in greater detail in a future blog post. Suffice to say, the impact of telematics will be heard worldwide.

There was a time, not long ago, that having sensors in your vehicle was considered to be new-age and groundbreaking. Now sensors are fitted as standard. Overall car connectivity is following suit. The future of the automotive industry is heading in a fascinating, exhilarating and enticing direction. Telematics will be a key driver behind the evolution.


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