At CES 2017, Google and Fiat-Chrysler Automobiles (FCA) are demoing a concept infotainment system based on Android 7.0 Nougat. This isn't the first time Android has been twisted into a car infotainment OS, but it is one of the first times Google is heavily involved in the process. The project is the next step of Google's "Android Automotive" initiative—a version of Android built as a car infotainment OS.
Remember "Android Automotive" is a different product from "Android Auto." Android Auto isn't an operating system. Like Apple's CarPlay, it's a "projected" car interface—the software runs on the phone and uses the car screen as an external monitor. "Android Automotive" is Google's plan to make Android into a fully-fledged car operating system.
Google's plan would be to sell Android to car OEMs exactly the same way it sells Android to phone OEMs. Google gives away the base operating system for free and entices OEMs with killer Google apps like Google Maps and the Play Store. The catch is that the Google apps are proprietary, and licensing them from Google means signing a contract to follow Google's compatibility rules and bundle all applicable Google services with the device. Phone OEMs that do this are part of the Open Handset Alliance, and Google is hoping that automakers will want to be active members of the Open Automotive Alliance.