Google has just announced the Open Automotive Alliance, which is formed mainly of some car partners but also component suppliers like Nvidia (and of course, Google). It's meant to do what the Open Handset Alliance has done for the mobile market, and that is to bring manufacturers with different goals and opinions under the same roof, and instead of each one of them supporting different incompatible dashboards or other advanced car systems, Google wants them to all use Android.
This should reduce fragmentation in the car market by orders of magnitude, because contrary to what many continue to believe, Android managed to actually standardize the mobile market, too. It used to be that every smartphone OEM would want to build its own operating system. Now, that was real fragmentation. Android unified things a lot more, but it may not seem that way compared to one other operating system which only runs one device (or a few).
But as far as running on thousands of different configurations goes, Android has helped bring many improvements to the mobile market, and helped standardize a lot of things, which ultimately helped create a platform that is now becoming bigger than iOS will ever be. This would've never been possible with just one company standing against Apple on its own. Apple had too much momentum back then, it still does, and it would be even greater now, if it wasn't for all smartphone OEMs deciding to use Android.
Google hopes the history will repeat itself in the auto industry, and that many more car makers will soon be part of the Open Automotive Alliance. For innovation to exist in the car industry, as well as in any other industry, there has to be chaos. But even that chaos needs a standardized platform in order to reach millions or hundreds of millions of people, to make it a lot more viable for developers to create all sorts of new innovations, and know that no matter how niche they could be, there would be a significant market for them.
If there's a standard platform in cars, it will be much easier to see new crazy apps that help improve your driving, or at least make your life easier while in the car (music, movies, integration with dashcams, navigation, audiobooks, etc). It's really hard to imagine what sorts of things and app innovations we'll see for cars in the next few years, but the true innovations will only arrive once Android dominates a big part of the car market.