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What is telematics?

Last updated on June 8, 2023 in Most Popular by Geotab Team |  4 minute read

What is telematics and how does it work?

Telematics is a method of monitoring cars, trucks, equipment and other assets by using GPS technology and on-board diagnostics (OBD) to plot the asset’s movements on a computerised map. Also known as fleet tracking or GPS vehicle tracking, telematics is now an essential management tool for many commercial and government fleets.

What are telematics systems?

Imagine a highly intelligent computer in your vehicle that is able to report on nearly every detail — from speed and idling, to fuel use, low tire pressure, and more. This information can mean saving on fleet maintenance costs by better monitoring vehicles or improving fuel efficiency by learning more about driving habits. All of this describes the universe of telematics, also known as GPS fleet tracking.


To track assets, information from the vehicle is recorded via a small telematics device — also called a black box —  that plugs into the OBD II or CAN-BUS port. A SIM card and modem in the device enables communication on the cellular network.


There are several key components of a telematics device:

  • GPS receiver
  • Engine interface
  • Input/output interface (expander port)
  • SIM card
  • Accelerometer
  • Buzzer

In addition to the hardware, the algorithm used for GPS logging is another critical factor because it impacts the quality and accuracy of the data. Read more about curve logging here.


See also: Debunking the Top 10 Vehicle Tracking Myths

How telematics works

The telematics device retrieves data generated by the vehicle, like GPS position, speed, engine light information and faults. G-force measured by a built-in accelerometer in the device. Then the telematics device sends the data up to the cloud.


A vast amount of data can be processed and analysed with a telematics device and other connected hardware or sensors, such as:

  • Position
  • Vehicle speed
  • Trip distance/time
  • Idling time
  • Harsh braking and driving
  • Seat belt use
  • Fuel consumption
  • Vehicle faults
  • Battery voltage, and other engine data.

Finally, the data is decoded and brought into the fleet management software app for reporting and analysis. With the software, users can view and export reports and gain business intelligence such as the top 10 drivers with the highest number of speeding incidents or vehicles that are due for scheduled maintenance.


Data analytics and machine learning offer a way to get further use from telematics data. For example, fleets can use fleet benchmarking reports to see how their fleet performs on safety as compared to other similar fleets or understand if routes are structured in the best way.

Telematics data is sent from the vehicle to the fleet management software portal.

Open platform telematics

As technology has evolved, telematics has moved from a closed system to an open platform. Through open platform telematics, companies can integrate other types of hardware accessories, software, and mobile apps for greater efficiency and insight into business operations.


Popular telematics integrations include fleet dash cameraselectronic logging (ELDs), dispatching and route optimisation, mobile forms, remote diagnostics, or weather alerts.

The different ways businesses use telematics

History of telematics

The word “telematics” is a blend of two terms: “telecommunication” and “informatics.” Telecommunication is the exchange of information using technology. Informatics refers to the use of computers to gather and analyse data and manage real-world systems.


In the 1960s, these two sciences (telematics and informatics) merged when the U.S. Department of Defense developed the Global Positioning System (GPS) to track the movements of U.S. assets and improve military communication.


Telematics owes its existence to three unique breakthroughs of modern technology: the internet, GPS, and machine-to-machine communication (M2M). The field of vehicle telematics also includes wireless safety communications, GPS navigation, integrated hands-free cell phones, and automatic driving assistance systems.

The benefits of telematics

Telematics assists in six core areas of fleet management: productivity, safety, fleet optimisation, compliance, integration and sustainability.

  1. Productivity — Improving customer service by using real-time GPS tracking, trip reporting, and dispatching and routing tools (read a productivity success story here)
  2. Safety Increasing safety with in-vehicle driver coaching, risk and driver behaviour reporting, collision notifications and reconstruction, and the ability to locate a stolen vehicle (read a safety success story here)
  3. Fleet Optimisation — Streamlining vehicle maintenance with predictive maintenance abilities and remote diagnostics, and fuel management by tracking idling and other fuel-guzzling habits (read an optimisation success story here)
  4. Compliance Electronic logging and Hours of Service, IFTA reporting, and vehicle inspections (read a compliance success story here)
  5. Integration Combining other software systems with telematics such as onboard camera technology or CRM software, and even building new applications (read an optimisation success story here)
  6. Sustainability — Reducing the fleet’s environmental impact and carbon emissions, plus managing electric vehicles (learn more about fleet sustainability)

In insurance telematics, vehicle owners share safety data with their insurance company to help lower the cost of premiums, if they can prove safe driving habits. Essentially, telematics can help insurance companies better pinpoint levels of risk. (While not all insurance agencies are offering this telematics-based insurance, it’s worth discussing with your provider if you’re not self-insured.)


Another area gaining in popularity is the ability to increase vehicle security by integrating identification sensors into vehicles. This allows fleets to authenticate a driver’s identity before they can start the vehicle.

Telematics in fleet management

These days, telematics is an essential technology for fleet management.


Telematics helps fleet managers answer questions such as:

  • How can we reduce fuel consumption?
  • Are my drivers speeding?
  • Would switching to electric vehicles be cost-effective for our business?
  • Is idling costing my fleet time and money?

Many types of companies use telematics, from small businesses to large corporations, not-for-profit organisations and government agencies. Allied Market Research values the global automotive telematics market at $50.4 billion in 2018 and estimates it will reach $320 billion by 2026.


Industries using telematics and fleet tracking (sample list):

The future of telematics and fleet tracking

The future of telematics is likely to achieve the unimaginable. Whether driving your personal vehicle or managing a fleet, constant communication with nearby vehicles is already achievable through telematics.


Exciting areas of telematics innovation include:

GPS tracking systems will continue to become better integrated with other operational systems and will continue to improve while M2M technology expands. The emergence of the Internet of Things (IoT), smart home and smart city technologies are great examples of the rapid evolution happening in this space. 

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Geotab's blog posts are intended to provide information and encourage discussion on topics of interest to the telematics community at large. Geotab is not providing technical, professional or legal advice through these blog posts. While every effort has been made to ensure the information in this blog post is timely and accurate, errors and omissions may occur, and the information presented here may become out-of-date with the passage of time.

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