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Volvo will start selling new cars with digital keys that are stored on your smartphone

Feb 19, 2016, 18:41 IST

Volvo Car Group

Remember car keys?

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That's probably what we'll be saying soon, because carmakers have caught the tech bug, and now they're working nonstop to reinvent everything we know about transportation.

As more vehicles hit the streets with advanced safety and connectivity features, it's natural to expect that certain artifacts of the car-ownership experience will one day disappear.

Volvo has announced that beginning in 2017, it will start selling its new cars with digital keys only.

The service is part of a Volvo mobile app that does everything a physical car key can do, plus something extra.

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The Bluetooth-enabled digital car key lives on the user's smartphone - which they can use to lock, unlock, start, and drive their Volvo cars.

There are still lots of questions to ask about the security of this technology, but Volvo says people can still opt for physical keys if they want them.

The "something extra" is a sharing feature that allows users to send a copy of their own digital key to other people's phones, giving them access to unlock and drive that user's car.

"Apart from this, you can also receive a key," Volvo's new car director Martin Rosenqvist explained, "so for car-sharing or rental services, you can now book, find, and access the car" through the app.

Bryan Logan/Business Insider

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Cars as a service

That's the other big news here. Volvo is getting into the car-sharing business with its company, Sunfleet.

A trial-run begins at Gothenburg Airport in Sweden this spring.

So, Volvo is joining GM and Audi, among others, in diversifying its business outside of the traditional dealer-sales model.

It's a venture automakers are taking quite seriously, after witnessing the success of ride-hailing giant, Uber and car-sharing services like Zipcar.

One automaker, multiple strategies

GM launched it's own car-sharing service called Maven last month, and announced a $500 million investment in Lyft. And last year, Audi started Audi on Demand, a car-sharing service that delivers its brand-new vehicles to customers.

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Audi also led a $28 million Series C fundraise for the rental startup, Silvercar earlier this year. Silvercar maintains a fleet of silver Audi A4 sedans - the only car you can rent from the company's major airport hubs around the country.

The moves Volvo is making in this space show that the company has a comprehensive strategy to help it regain market share in the US. These latest initiatives come at a time when Volvo is just beginning to see the fruits of a multibillion-dollar turnaround that's already underway.

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