Telematics

Telematics is a system that features the integrated use of telecommunications and information technology. It allows for the transmission, storage, and reception of information from various telecommunication devices to remote objects over a network. Though it has applications in many fields, the concept is most commonly associated with the automotive industry. Vehicular telematics involves the use of a special device that uses cellular networks to transmit data about the vehicle to a remotely located server. The data transmitted may include information such as the vehicle’s location, speed, or time spent on the road. Some telematics systems also allow for two-way communication between a vehicle and the owner of the server as part of on-demand driver services. One of the best-known examples of modern telematics is the popular OnStar in-vehicle safety and security system. Devices that transmit driving data to the operator’s insurance company are also an increasing common form of telematics.

Background

The idea of telematics dates back to the 1970s. The term itself—taken from the French word télématique—was coined by authors Simon Nora and Alain Minc in their 1978 report “L’informatisation de la Societe.” In this landmark work, Nor and Minc predicted the influence that technology would eventually have on human society. That same year, the world’s first Global Positioning System (GPS) satellite was successfully launched. As it happened, GPS would become one of the most important technologies involved in telematics.

The road to telematics began when GPS was first developed by the US Department of Defense in the 1960s. At the time, GPS was designed to provide the military with a means of tracking asset movements and improving battlefield communication. GPS was eventually made available for public use in 1983. Just two years later, the first GPS-powered in-car navigation system was launched; however, it took more than a decade for this concept to become truly viable. The breakthrough moment came when President Bill Clinton signed an executive order that made GPS an international utility in 1996. In effect, the order made GPS accessible to private citizens at no charge. This led to the development of in-car GPS navigation systems that could be included as pre-installed features in vehicles or purchased and used by consumers as standalone devices. Such systems represented the earliest practical form of telematics.

Telematics systems proliferated at an especially prodigious rate in the early twenty-first century. In 2010, the first smartphone applications that incorporated telematics systems began to appear. By 2024, 78 million cars were connected to GPS and experts predicted that within a few years, 98 percent of new cars would be equipped with GPS. In addition, according to Global Newswire, in 2023, the global telematics market was worth an estimated $83.45 billion. The market was expected to grow to $236.40 billion by 2032.

Telematics continues to be a rapidly developing field. As adjacent technological innovations like the Internet of Things (IoT) and 5G cellular networks evolve, new forms of telematics are likely to develop and become even more integrated into consumers’ everyday lives.

Overview

Telematics involves telecommunications, wireless communications, electrical engineering, computer science, and other technologies. With the help of various communications devices, telematics systems send, receive, and store information that can be used for a variety of purposes.

In commercial applications, telematics is all but universally identified with vehicle telematics. Vehicle telematics refers to the onboard communication services and applications used in automobiles equipped with telematics and GPS devices. Vehicle telematics includes an array of features like GPS navigation, convenience services, hands-free calling and search, smartphone apps, and more.

GPS navigation is the most widely used form of telematics. With the help of GPS-connected devices, drivers can view a real time map of their location or receive step-by-step instructions on how to reach their intended destination. While many modern vehicles are now equipped with built-in GPS systems, freestanding GPS systems and GPS smartphone apps are also available.

Many telematics systems also offer a range of convenience features. These helpful features are designed to assist drivers by doing things like remotely unlocking car doors when the keys are left inside, flashing the lights or sounding the horn to make finding a parked car easier, providing information on nearby amenities, or delivering important diagnostic information. The first major telematics system of this kind was OnStar. First appearing in 1995, OnStar offers services like turn-by-turn navigation, remote door unlock, and automatic crash notification (ACN). ACN is perhaps OnStar’s most notable feature. When an OnStar-equipped car’s sensors detect that the vehicle has been in a serious accident, the ACN system automatically sends an alert with all pertinent information to the OnStar call center. From there, emergency services can be immediately dispatched. The OnStar system also allows operators at the call center to establish a voice link with the disabled car to directly communicate with the car’s occupants. Other telematics systems also offer convenience features such as text message dictation or fuel economy tracking.

Some telematics systems also include embedded cellular modems that allow for features like hands-free calling or internet search, applications that can help users arrange taxi or ride-share service, or access to information on weather, traffic, or stock market indices. Many of these features are unique to high-end telematics systems and may require additional subscriptions.

Another feature of some telematics systems is connectivity with smartphone apps. This connectivity allows users to remotely control their car’s features. Among other things, such apps provide users the ability to start their car remotely or locate their car via GPS.

Some car insurance companies use telematics systems to gather data from drivers’ vehicles. Such devices record and transmit data on speed, acceleration, braking, and cornering. Insurance companies then use this data to determine how safely a person is driving and adjust their coverage rate accordingly. By 2024, LexisNexis was partnering with original equipment manufacturers (OEMs) to gather specific data on drivers' behavior to send directly to insurance companies, often without the drivers' knowledge.

Another type of telematics called fleet telematics is utilized by companies that operate fleets of trucks or other vehicles. With the aid of telematics devices, a company can monitor the location, fuel usage, and other important information regarding their fleet of vehicles at all times. This type of monitoring can reduce fuel costs and operating expenses and improve both safety and customer service.

Analysts predicted a surge in the future use of telematics in vehicles, which could be used along with artificial intelligence (AI). For example, telematics could track lost and stolen vehicles and provide information about vehicle health, including engine diagnostics and maintenance needs.

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