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Is Near Field Communication (NFC) finally coming to cars?

26 February 2016 IHS Markit Automotive Expert

The automotive Near Field Communication (NFC) market is rapidly emerging, driven by combined forces of the NFC-enabled mobile device growth and new automotive service trends such as car sharing, corporate fleet management, Bluetooth and Wi-Fi pairing, and the demand for personalization inside cars. All of these can potentially make good use of NFC-enabled mobile devices.

How NFC can be used in automotive

In a recent interview with IHS, the NFC Forum states that it expects to see NFC adoption for multiple automotive uses poised for a breakout of new products and services in 2016-17. It believes that combining the automobiles' electronic platform with powerful NFC-enabled mobile devices is the catalyst leading to multiple innovations.

NFC services and implementations continue to be prototyped and tested. NFC can connect vehicles and car keys to portable devices and infrastructure, opening up the possibility for a broad range of innovations in the field of connected car solutions. The following list of the NFC-enabled applications is most likely to make it to the market over the next few years, according to the NFC Forum:

  • Car access: use NFC-enabled phones or wearables as a car key to unlock doors
  • Engine start
  • Create personalized settings: Climate control settings; Automatic seat and mirror adjustments
  • Pair and connect hands-free interface or entertainment systems with Bluetooth
  • Set up Wi-Fi or WLAN connections
  • Acquire vehicle information
  • Make in-car payment for videos, tolls, drive-through, etc.
  • Vehicle management:
    • Vehicle diagnostics can be handed over to Wi-Fi for transmission to dealerships
    • Alert the owner of pending service requirements

Current uses cases of NFC by OEMs

Luxury OEMs are pioneers in integrating NFC technology into their cars. BMW is the first OEM to bring the NFC functionality inside the car. The BMW Car Hotspot LTE was first introduced in 2012 with NFC to facilitate mobile device paring. The Wi-Fi connection of the BMW Car Hotspot LTE can be automatically established simply by briefly placing a NFC-capable device on top of the Hotspot.

In addition to Bluetooth and Wi-Fi pairing, BMW shared with IHS that it is now mainly focusing on using NFC for Smart Access. Smart Access allows users to use smart devices to open the vehicle and to start the engine. The OEM just presented NFC smartphone access for its DriveNow car sharing service at the Mobile World Congress 2016 in Barcelona. At present, after a one-time registration and ID check via a smartphone application or an ID card, the user can drive away and be billed automatically for usage of the car.

During this year's CES, Mercedes-Benz announced that its new E-Class is enabled with capacitive aerial coupling. By simply placing the device on the charging area on the front part of the center console, the smartphone connects to the multimedia system via NFC. Moreover, while using NFC, the customer's smartphone becomes the digital vehicle key with which the car can be locked and unlocked as well as started.

Why OEMs need NFC?

To ensure security, NFC often establishes a secure channel and uses encryption when sending sensitive data such as credit card information. Users can further protect their private data by keeping anti-virus software on their smartphones and adding a password to the phone so a thief cannot use it in the event that the smartphone is lost or stolen.

NFC technology has emerged as a strong contender for replacement of the current transaction and mobile payment techniques owing to its improved security and connectivity features. Similarly, the hardware architecture with considerable security promised by NFC is also very attractive to the automotive industry. The car industry has very high security requirements, whether it is to unlock the car door or start the car. In a recent interview with IHS, BMW noted that the security element is the main reason that it favors NFC technology over the other options. Other German OEMs including Daimler, Volkswagen and Audi also follow the same NFC strategy.

A major benefit of NFC technology over Bluetooth and Wi-Fi - two typical wireless communication technologies already adopted by automotive OEMs, comes in its ease of use. Bluetooth and Wi-Fi require users to manually set up connections between smartphones and takes several seconds. NFC connects automatically in a fraction of a second, so fast it seems instantaneous. Its contactless "tap-and-go" function is simple and intuitive. Another benefit of NFC technology over Bluetooth is regarding power consumption. NFC typically consumes much less.

In addition to Bluetooth and Wi-Fi, the cloud is another comparable solution that many OEMs, such as GM OnStar and BMW ConnectedDrive, have already put in use for the same purposes of using NFC, such as car access, engine start, or door unlock. However, a cloud solution without local interaction between the phone and the car requires both the car and the phone to always be online, which cannot always be guaranteed. Moreover, not all cars will have an embedded cellular modem that can be used beyond emergency calls.

But Bluetooth, Wi-Fi and Cloud will always be relevant in cars for various aspects, and NFC should only be treated as a complementary technology. For example, the Cloud is vital for emergency services. While NFC works at close range and only when the user initiates action using its simple tap interface, Bluetooth and Wi-Fi work over greater distances, enabling different functionalities, such as a location generator, or communication via peer-to-peer connections.


NFC has taken over 10 years to finally gain some traction in the mobile device sector. IHS Technology projects that NFC-enabled mobile handsets will grow significantly in the next five years. However, such fast growth has yet to be seen in the automotive industry, given that the product life cycle within the car industry is much longer than the consumer electronics industry. Plus, except for a few early adopters, many automotive OEMs are still reluctant to take on NFC solution and are still in favor of other alternatives. For instance, Volvo this month announced that beginning in 2017 it will start selling its new cars with Bluetooth-enabled digital car keys only to lock, unlock and start the car. Volvo's position on adopting Bluetooth indicates that the incorporation of NFC inside the vehicles will take time.

Celina Li is Senior Analyst, Automotive Technology, IHS Automotive
Posted 26 February 2016


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