With connectivity very much at the forefront of vehicle technology these days, it’s no surprise to see more tech companies being involved in providing software and solutions for the growing trend. However, all this comes at a cost, something automakers are being reminded of.
The latest to be involved are a trio of Japanese automakers, the Nikkei reports. A total of 48 telecommunications technology providers, including Nokia, American chipmaker Qualcomm and Japan’s NTT, have demanded that Toyota, Honda and Nissan pay them patent fees for components used to connect cars to the internet.
The three automakers are being asked to pay US$15 per car in exchange for comprehensive use of related patents, and this sum will be charged whether car owners use the communication function or not. American firm Avanci is in charge of negotiating patent fees for the LTE (4G) communication standard, and is doing so by bringing together related patents known as “patent pools” to carry out joint negotiations. The company is also preparing for similar negotiations on 5G-related patents.
In addition to Nokia and NTT, other companies in the group include Ericsson and Philips as well as a number of Japanese companies, including Sony Group, Panasonic and Sharp. The 48 companies hold about 70% of the standard essential patents that form the basis of 4G.
Considered indispensable to the development of connected cars, the technologies to be licensed include methods for transmitting and receiving radio waves with in-vehicle communication devices, and the order of operations for devices.
Each of the tech players brings something of need to the table – Nokia is strong in communication infrastructure such as base stations, Qualcomm holds key semiconductor-related patents and Sharp has strengths in connection technology.
The publication said it was unclear whether the three automakers will agree to pay for the patents, including sharing the cost with parts makers. If they do, the royalty is expected to range from billions of yen to nearly 20 billion yen (RM726 million) per year.
How much this would equate to is provided by this example. Toyota aims to sell 10.29 million vehicles across the group in the fiscal year ending March 2022, and if all of its cars were equipped with communication devices and utilised the patents, it will have to pay about 18 billion yen (RM653 million), or 0.7% of its expected consolidated net profit for the same period.
It’s not the first run-automakers have had with tech companies. Last year, Toyota and Honda were sued by a US-based patent management company for alleged infringement on patents covering in-vehicle communications technologies.
Similarly, Daimler – prior to its recent name change – lost patent cases against Sharp and Nokia in 2020. With tech companies pushing back for what’s due in terms of royalties, the development highlights the possibility of higher costs for carmakers as they develop next-generation vehicles.
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remove all the tech from the car. its pointless.