Lead Players in Software-Defined Vehicles

Over the course of 2023 there has been much hype about software-defined vehicles.

Jeff Chou, co-founder and CEO of Sonatus, suggests that Hyundai is showing leadership and commitment to making SDVs a differentiator.

“They are doing fantastically well. They have done some great work around data management, data collection, connectivity, networking and over-the-air (OTA) updates”, he argues. However, he suggests Tesla really is ahead of the rest because the company has been able to start from scratch. Unlike the traditional automakers, it has no legacy structure to deal with.

He elaborates: “One of the other enabling technologies for SDVs to be realized is a new electronics architecture – the infrastructure of the vehicle needs to be laid before you can build the software on top of it. An OEM that is trying to build on legacy infrastructure has to go through an evolution. This is why Tesla is ahead; they don’t have legacy infrastructure. Many of the EV initiatives have the same kind of advantages. The existing incumbents have an opportunity to deliver on their SDV vision.”

Automakers: Catching Up

Traditional automakers have some catching up to do, and yet Nigel Tracey, vice president and head of real-time applications solutions at German software systems company ETAS, finds there is growing consensus that no one can develop software-defined vehicles alone.

He says this has led to intensified collaboration between automakers, and Tier 1 and Tier 2 software providers. This will most probably involve the development of new collaboration models around joint and open-source development. He explains: “If the software content of vehicles is going to increase by a factor of five to 10 to deliver on the vision of an SDV, then we need radical new ways of working with automated build and validation pipelines, increased virtual development and validation and solid platform software to underpin the software innovations. We will not solve this problem with software engineering capacity as there are not simply 10 times more people to hire. We have to become radically more productive to manage this complexity and transition.”

High Anticipation

Maite Bezerra, principal analyst of software-defined vehicles for Wards Intedlligence, agrees there has been a period of high anticipation and some bold statements featuring aggressive timeliness and ambitious software revenue projections. In fact, she considers 2023 to have been a year of recalibration – largely of expectations with regard to the journey toward SDVs:

“This is largely owing to the realization that the SDV is a more complex and far-reaching transformation than initially anticipated, especially for traditional car manufacturers that are deeply rooted in legacy practices," she says. "While 2021 and 2022 were marked by partnership announcements and optimistic views, late 2022 and 2023 were marked by SOP (start of production) postponements, most blamed on software development challenges and too-ambitious goals, and restructuring, often involving layoffs.”

Volvo’s EX90 and Polestar 3 were, for example, “postponed to 2024 owing to software complications and Volvo started an all-encompassing restructuring initiative (called CORE+) to guarantee an all-EV future.” Bezerra adds that the Volkswagen Group is restructuring Cariad once again and it is planning to cut jobs. Toyota’s software subsidiary, Woven, has also had to restructure itself. Bezerra comments that this is due to “slower than expected progress and far-reaching software goals while postponing Arene.

“We also cannot forget (Ford CEO) Jim Farley’s viral video explaining the challenges OEMs face in updating software in their vehicles. These are just a few examples of the several struggles that became public this year. While Incumbent OEMs have been struggling to get their path right with software, competition from new players, especially Chinese BEV OEMs, is intensifying, with many of these companies already commercializing SDV or very close to it.”

More Realistic Development

Bezerra hopes that in 2024 there will be more realistic SDV development goals and expectations. In her view, this will lead to a more balanced and progressive journey toward software-defined vehicles.

However, Jack Palmer, senior consultant, European mobility and transportation at Frost & Sullivan, argues that the course of a year is too short a spectrum of time. In his opinion, the evolution of SDVs requires a “decade shift” because the ultimate goal is to have software that controls the entire vehicle, from the powertrain to the ADAS functions, not just the infotainment screen in the car.

He explains: “The software-defined vehicle is a reinvention of the connected vehicle. It's like AI became extremely trendy but we’ve hit peak hype with the SDV and now it's about delivering on both the promises and technology.

Before the goal can be achieved, Palmer believes there needs to be a clear definition of what makes an SDV. It involves a centralized computing system and fewer electronic control units.