Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

General Motors Company (GM): A Future Look at the Connected Automobile

Imagine the scene from Will Smith’s I, Robot movie — minus the killer robots — where cars drive themselves and their artificial intelligence talks to you and knows you as well as anyone else does. It’s a scene that might not be as far from real life off as you think. According to AutoNews, when General Motors Company (NYSE:GM) CEO Dan Akerson came onboard, moving over from the telecom industry, he asked how soon the company could get 4G incorporated into its vehicles. He saw a fresh opportunity a few years in advance, along with the profits it would generate.

He hasn’t revealed exactly what GM has in mind, but a webinar from AutoNews that included spokespeople from International Business Machines Corp. (NYSE:IBM) and Sprint Nextel Corporation (NYSE:S) may give us a better idea. After watching it myself, I believe that the connected vehicle is the next battleground for premium options and could revolutionize the auto industry. All the major players, including General Motors Company (NYSE:GM) rivals Ford Motor Company (NYSE:F), Toyota Motor Corporation (ADR) (NYSE:TM), Honda Motor Co Ltd (ADR) (NYSE:HMC), and Chrysler, will be competing to be the fastest to innovate the best-connected vehicle.

2013 North American International Auto Show in Detroit. Source: NAIAS Media Photos.

The year of the connected car
In case there’s any question, a “connected” car is simply a vehicle that has the ability to connect to the Internet, and the outside world, through Wi-Fi or 4G — and that ability is expected to increase in demand dramatically.

Intel told that the connected car is the third-fastest growing technological device after phones and tablets. ABI Research noted that “the installed base of embedded and hybrid connected car systems is expected to grow from 45 million at the end of 2011 to 210 million by 2016.” Machina Research notes that by 2020, up to 20% of a vehicle’s value will be attributed to “connected life” — a staggering amount that’s estimated to equal roughly $600 billion. That’s more than Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM)’s total revenues from 2012 combined.

This type of premium option in vehicles could boost margins well above anything the auto industry has seen in its history — blurring the line between products and services. But what does that mean for automakers such as Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM)? Moreover, what’s driving this trend?

Put simply: technological innovation and the millennials. My generation was born into the digital age, is accustomed to multitasking, and has a constant multimedia connection. Most people tend to underestimate our spending power, but it’s clear that at least corporations aren’t. The millennial generation represents almost 80 million consumers, with an estimated purchasing power of $170 billion — dwarfing Generation X in size and representing the largest generation since the baby boomers.

What can we expect?
We’ve all seen the Peyton Manning commercials where he audible-calls his father with his vehicle in the midst of a construction zone. Or Blake Griffin’s commercial, where he goes back through time to give himself important advice — like how jean shorts are a no-no. As much as I’d love to tell my vehicle to take me back and save me from a few mistakes — like investing in Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) instead of in my first-big screen TV — that won’t be an option. Let’s get back to that AutoNews webinar and see what we can expect.

General Motors Company (NYSE:GM)Things are happening fast on this technological front, and it won’t be too far into the future before we can imagine a scene like this: Your child is suddenly sick or hurt and needs emergency attention. Immediately getting into the car, you can hands-free connect to the hospital, explaining the symptoms and sending vital patient info stored in your phone or car to help the doctor determine in advance what’s needed. No spending time checking in, no time paying, no wasted time on anything other than the drive.

As handy as that could be, it will also be used for less dire situations. Most of us already have interactive displays for MPG and such, but in the future we’ll also probably be able to see specifics like how well your brake pads are holding up, leading to alerts on how to drive better for less vehicle wear and tear. Maybe the connected car will tell us to speed up 2 miles an hour to avoid running a yellow light — or to beat the annoying train that got there seconds before you did.

We already have systems that can start our engine in an airport parking lot while we’re arriving in the plane, but pretty soon the vehicles might know us better than we do. In a tense driving situation, the steering wheel could read your heart rate — much like equipment at the gym already does — and adjust the A/C during a stressful phone call with the boss.

Imagine Apple’s Siri on steroids, detecting who you are and offering your preferred industry or company news before you get to work, while on the way home it automatically recaps local events with soothing background music as an accompaniment. Or imagine that your vehicle recognizes it isn’t you behind the wheel, and rather a thief, and the car tracks itself to its new location and alerts authorities. Pretty handy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.