Hyundai's SDV Strategy Has Promise But Faces Challenges

Buried below the Hyundai Motor group’s new forward production strategy, Hyundai Way, is its medium-term vision of the opportunities presented by the software-defined vehicle (SDV).

And it’s clear the automaker is targeting the low-hanging fruit presented by the connected car’s increasingly sophisticated infotainment systems.

The automaker says its core of SDV development includes the creation of hardware devices that can collect data from both inside and outside the vehicle aiming to connect them with fleets, logistics and urban transportation infrastructure. It hopes this will build a data infrastructure that can generate, collect and deploy large amounts of data in various fields.

That said, Hyundai's initial target is the user experience within the cabin space centered on the infotainment system. Hyundai says it is building a next-generation infotainment system and an open ecosystem introducing Android Automotive OS (AAOS) and developing a center display of various ratios to meet customer needs.

It is also developing its own Android-based open OS and car app market, employing a conversational artificial intelligence-powered language model the company says it is developing, and enhancing features to aid safety and convenience in the car.

Maite Bezerra, Informa’s principal analyst at Integrated Tech, comments: “Regarding infotainment, the open-source software strategy is not groundbreaking. Many OEMs have already adopted AAOS and are developing app ecosystems for monetization and success has been limited.

“The primary issue is that the installed base of vehicles is too small to attract substantial developer interest. The same has happened to companies in the Smart TV industry. Another common misstep is the tendency to replicate smartphone apps instead of creating services tailored to vehicle-specific functions; Google and Apple will always be ahead here, meaning Android Auto and Car Play would likely offer a better experience.

"It remains to be seen how Hyundai will navigate these challenges. It is important to highlight that although it sounds like Hyundai will build its own app store, it has not explicitly specified whether it will use Google Play or not.”

Bezerra believes the more interesting approach with the SDV is Hyundai’s commitment to build a data infrastructure that third-party developers and mobility service providers can access.

She explains: “By opening up its data, Hyundai could, potentially, foster an ecosystem of services around its vehicles. If executed well, this could lead to lucrative monetization agreements with infrastructure players, public transportation authorities and ride-sharing companies.

"It could also pave the way for valuable services that connect vehicles with infrastructure, such as parking and battery-electric-vehicle charging solutions, enhancing customer value and mitigating the potential pitfalls of its app store strategy.”

Hyundai says it will be offering a third-party software developer kit (SDK) and app market, enabling numerous IT developers and mobility service providers to develop various services using its data infrastructure. This could help create an SDV mobility ecosystem, based on 42dot’s SW technology platform.

The company is also developing a Zonal Electric-Electronic (E/E) architecture based on a high-performance vehicle computer (HPVC) for optimized SDV devices in terms of power, control and communication. It hopes to simplify the existing complex vehicle structure, reducing development time and cost and increasing the flexibility and speed of software changes.

Yet, there are significant challenges facing this strategy including the legacy automaker’s existing siloed infrastructure which must be replaced by an integrated, centralized platform. Then there is also the need to standardize data to provide seamless access to third-party stakeholders.

Bezerra adds: “Privacy concerns are another major hurdle. General Motors recently faced backlash for monetizing vehicle data without user consent (where the State of Texas sued GM for selling vehicle data to third-party companies without owners’ consent).

"Finally, the question remains as to how much value Hyundai can add to its fleet data. The market for vehicle data has been available for some time but has not met expectations, as evidenced by Wejo's bankruptcy. For me, the real opportunity lies in the services that could be built on this aggregated fleet and mobility data infrastructure. However, Hyundai must first successfully establish this data infrastructure.”

In conclusion, she says much of Hyundai’s SDV strategy mirrors that of several other automakers but there is one key difference that needs consideration. Bezerra explains: “The key differentiator could be 42dot, which has the potential to play a pivotal role in helping Hyundai successfully deliver the SDV software platform necessary to realize their envisioned SDV ecosystem.

"However, the success of this initiative will largely depend on the level of autonomy and influence 42dot is granted over the group's overall strategy and standard operating procedure goals. Without sufficient independence, they risk becoming another CARIAD.”