Telematics devices have been around for decades and have powered a multitude of use cases—from vehicle mechanics to fleet management and auto insurance. Today, as 80 percent of vehicles sold in the United States are connected, car APIs are replacing telematics devices in some of these industries. The following post explains what telematics devices are and how they are increasingly replaced by hardware-free car API technology.
To understand what a telematics device is, it is useful to first talk about on-board diagnostics.
On-board diagnostics (OBD) is a computer system that is built into most vehicles. It allows cars to self-diagnose problems and report data regarding those problems to another device. For example, a car mechanic can plug an OBD scanner into a vehicle’s OBD port to read out error codes and find out what is wrong without taking the car apart.
Most of today’s cars follow the OBD2 or OBD-II standard. This standard has been mandatory for internal combustion engine (ICE) cars in the United States since 1996 and in the European Union since 2003.
Similarly to an OBD scanner, a telematics device is a piece of hardware that plugs into a car’s OBD port. The telematics device can then read data from the car—such as the mileage, fuel tank level, and tire pressure—and send that data to an app on your phone, for example.
Telematics devices are used for a multitude of use cases. For example, fleet management companies use them to track the GPS location, mileage, and fuel consumption of their fleet vehicles. Predictive maintenance software relies on telematics devices to monitor the tire pressure, engine oil life, and other vehicle health data. Even auto insurance companies use telematics devices to offer pay-per-mile or usage-based insurance (UBI) programs, which charge drivers based on their monthly mileage or their driving behavior.
With the emergence of connected cars, there is now a new way of retrieving telematics data from vehicles: car APIs. An API (application programming interface) is a set of computer programs that allows two software applications to talk to each other. A car API is hence an intermediary that allows apps and cars to talk to each other.
For example, a fleet management app can make a simple API request to a car API to obtain the vehicle’s last known location. When using the Smartcar API, a request to retrieve a car’s location looks like this:
When comparing car APIs and telematics devices, car APIs have a number of advantages for certain use cases. First, car APIs don’t require plugging a hardware device into a car’s OBD port. Instead, they communicate directly with the embedded cellular modem that is already built into a connected vehicle. As there is no hardware involved, car APIs don’t require any upfront purchases, any installations, or any replacement of broken devices. Car APIs are thus more cost-efficient and easier to use than telematics devices.
Second, car APIs are a future-proof technology and might soon be the most common way to retrieve telematics data from vehicles. In the United States, 80 percent of vehicles sold in 2020 were connected, compared to only 47 percent three years prior. Soon, all vehicles will be connected and thus compatible with car APIs, regardless of the make or model.
Unfortunately, telematics devices are experiencing an opposite trend. As the OBD2 standard is only required for ICE vehicles and the software in electric vehicles is much more complex, many car manufacturers have started using their own proprietary OBD standards in their EV models. This poses problems for telematics devices, which struggle to update their technology to stay compatible with different EVs. Some EV models, like the Tesla Model 3, don’t have an OBD port at all, making it impossible for telematics devices to become compatible with them. With the increasing popularity of EVs, this trend will only get larger over time.
This is why car APIs have already partly replaced telematics devices, and they will continue to do so. Even if telematics devices manage to overcome the mentioned challenges, car APIs will still be better suited for specific use cases and will continue to gain popularity in those industries, while telematics devices might stay the preferred solution for other use cases.
This brings us to the “how” of car APIs replacing telematics devices. As mentioned above, car APIs are replacing telematics devices for certain use cases.
Fleet management software providers use car APIs to offer lightweight, hardware-free solutions that are perfect for small fleet with low budgets. With the Smartcar API, fleet management software providers are able to track the last known location, mileage, fuel tank level or EV state of charge, tire pressure, and engine oil life from vehicles.
Predictive maintenance software providers use car APIs to retrieve similar data points from fleet vehicles.
Auto insurance providers, which previously used telematics devices or smartphone telemetry for their pay-per-mile and usage-based insurance products, increasingly use car APIs for mileage and location tracking.
Car sharing companies use car APIs to provide keyless rentals, allowing customers to unlock cars directly from their phones.
Finally, EV managed charging, EV route planning, and EV battery health are important use cases for which car APIs are the perfect solution.
Electric utility providers use car APIs to offer basic controlled smart charging programs for residential customers that automatically charge EVs when electricity rates are lowest.
Fleet management and EV charging apps use car APIs for EV route planning. Based on a vehicle’s location, state of charge, and range, these apps can recommend drivers the best route for their trip, which charging stations are along the way, and how long it will take them to charge at each station.
Businesses can even use car APIs to better inform EV battery health reports by factoring the mileage, state of charge, and charging status of a vehicle into their battery health algorithms.
Unlike the mentioned use cases, there are also areas for which telematics devices are still the more suitable choice. For example, vehicle mechanic shops still use OBD scanners to detect problems in vehicles with an OBD port. Similarly, certain fleet management and predictive maintenance use cases rely on OBD data that car APIs can not yet provide.
In the end, only time will show whether car APIs will one day completely replace telematics devices, or whether there will always be use cases for both.
If your business is looking to learn more about car APIs, feel free to schedule a chat with our team!
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