Deutsche Telekom forms connected car venture with China Mobile

Deutsche Telekom and China Mobile have signed an agreement on the creation of a 50:50 joint venture in China that will focus on the development of connected car services and technology.

The deal was signed on Friday in Berlin, on the occasion of the state visit of Chinese Prime Minister Li Keqiang. Ahead of the signing, Sueddeutsche Zeitung quoted Deutsche Telekom management board member Reinhard Clemens as saying that the company's investment in the China joint venture would be in the double-digit millions.

In a statement on Friday, Clemens said the connected car is a strategic initiative within the Deutsche Telekom group, while China is of strategic importance for its connected car business. "The partnership with China Mobile is therefore strategically of utmost importance to Deutsche Telekom," Clemens commented.

The two operators plan to combine their expertise in related areas in order to create new development opportunities and broaden their respective abilities to bring connected car and telematics services to market. According to Sueddeutsche Zeitung, around 200 employees will be based in Shanghai in the medium term.

China Mobile will provide its wide-reaching LTE network as well as access to its customer and service resources. Deutsche Telekom said it will provide telematics expertise, the connected car platform technology and customer insights.

The ultimate aim of the joint venture, which will start operations at the beginning of 2015, is to provide LTE-based vehicle information services as a leading telematics service provider. In its release, Deutsche Telekom added that there will be a predicted 68 million connected cars in China in 2018.

Deutsche Telekom is certainly far from the only European telecoms operator that is keen to exploit the connected car market as part of wider telematics opportunities in homes, public spaces, government and more.

Just this week, Orange became the second operator in Europe to sign a direct connectivity supply deal with electric carmaker Tesla, with an agreement covering wireless services in France. In April, the carmaker signed up Telefónica as its main connectivity provider in the market, with a deal covering the UK, Netherlands, Germany, Spain and Belgium.

In June, Analysys Mason predicted that 8 per cent of cars in use in the world will have embedded connectivity and 48 per cent of car owners will be able to pair their smartphone with their vehicle's in-vehicle infotainment (IVI) system by 2024.

Connected cars are also expected to have such a disruptive force in the automotive industry they could make or break car manufacturers: Magnus Lundgren, the vice president of Ericsson's Connected Vehicle Cloud division said at the Connected Cars trade conference in Amsterdam in June that the automotive industry is one of the earliest industries facing disruption from growing use of mobile broadband networks and cloud services. He predicted the disturbance would spread to other industries as machine-to-machine (M2M) services begin to take off.

For more:
- see this Deutsche Telekom release
- see this Sueddeutsche Zeitung article (in German)

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