Tackling OEMs' Dilemmas in Software-Defined Vehicle Transition

Amidst widespread recognition of over-the-air updates, upgrades and introduction of new features as crucial components of software-defined vehicles (SDVs), automakers are confronted with a pressing dilemma: How much processing headroom should they integrate into their future platforms?

A survey conducted by chipmaker NXP Semiconductors and Wards Intelligence with global automotive executives from OEMs, Tier 1 & 2 suppliers and other automotive ecosystem players reveals that approximately 73% of the industry anticipate auto OEMs will cap hardware provisioning at a maximum of 50% headroom in entry-level vehicles by 2030, with 48% of these respondents anticipating a maximum of 30% cap.

This trend is likely driven by the prevailing cost sensitivity observed in this vehicle category. While customers within this vehicle segment may expect some degree of upgrade potential, they are inclined to avoid options or enhancements that significantly inflate the vehicle’s price beyond its base value.

In contrast, roughly 60% of respondents foresee midrange vehicles providing headroom between 31% and 70% in 2030.

As for premium vehicles, 60% expect headroom provision to surpass 51%, with 44% of these respondents anticipating a minimum of 71% processing headroom.

This underscores the expectation that continuous enhancements throughout the vehicle lifecycle will emerge as the primary avenue for value creation and monetization in SDVs.

An intriguing regional contrast emerges upon analyzing the survey data, as respondents in  Europe take a more conservative stance than their counterparts in other regions.

Roughly 65% of respondents in Europe anticipate 30% or less headroom in entry-level vehicles, while 71% foresee 31%- 50% headroom in midrange vehicles. For premium vehicles, 36% anticipate headroom of 31%-50%, and 43% expect it to exceed 51%.

This regional variation may be attributed to the prevalence of smaller and relatively less costly vehicles in the European automotive market, especially compared to North America. Additionally, the slower implementation of SDV technologies in production vehicles by European OEMs compared to automakers in China and the U.S., where successful battery-electric vehicle (BEV) disruptors have made significant advancements, also may contribute to this disparity.

Another noteworthy aspect is the substantial percentage of OEM respondents expressing uncertainty compared to the overall survey results: 30% for entry-level vehicles, 25% for midrange vehicles and 20% for premium vehicles.

This underscores OEMs’ challenges in transitioning from a cost-centric vehicle-design approach to embracing the SDV paradigm, which promises new revenue streams post-sale. It also highlights the inherent difficulties in designing vehicles capable of accommodating applications that have yet to be developed.

Vehicle Electrical/Electronic Architectures

There is a noticeable inclination towards consolidating vehicle electronic control units (ECUs) to streamline complexity, integrate vehicle systems, decouple hardware from software and enhance computational capabilities.

This consolidation broadens the scope and sophistication of vehicle functionalities, ultimately unlocking the potential of SDVs. However, ECU consolidation can be achieved through various architectural approaches, leading to a second dilemma for OEMs: which approach to adopt?

Roughly 32% of OEM respondents foresee a body zonal architecture as the primary E/E architecture in production vehicles by 2030, approximately two to three platform cycles away. Slightly over 27% anticipate the prevalence of cross-domain-centric zonal architectures. Lastly, 27% of OEM respondents remain undecided or lack clarity on the direction of E/E architecture adoption.

The split survey results reflect OEMs’ varied strategies, suggesting that a definitive prevailing architecture might not emerge until the decade’s end. Moreover, they underscore that OEMs are still evaluating the most optimal vehicle architecture configuration for their forthcoming models.

A BEV-Only Trend?

The third dilemma confronting OEMs, particularly incumbent ones, revolves around which platforms to upgrade into SDV.

Because the shift toward SDV primarily has been driven by BEV disruptors such as Tesla, and BEV platforms are the initial candidates for transitioning into SDV concepts, there has been a prevailing perception that SDV is solely about electric vehicles.

However, the survey findings refute this assumption. A significant 87% of respondents anticipate internal-combustion-engine (ICE) vehicles transitioning into SDVs. Furthermore, 80% agree that the scope of SDVs extends beyond luxury vehicles.

Yet, the results unveil a lack of consensus regarding the preferred ICE platforms for SDV integration. Roughly 30% of those surveyed lean toward the industry exclusively targeting luxury and midrange vehicles, while the remaining views are divided between updating all ICE platforms (25%) and selective upgrading of a few strategic models (25%).

Interestingly, OEM respondents globally and respondents based in Europe show more decisiveness than the general survey trend, with 41% and 43%, respectively, sharing the belief that only strategic models will undergo SDV upgrades.

Meanwhile, Tier 1 and Tier 2 suppliers are divided between two alternatives: updating luxury and midrange vehicles (32%) or upgrading all ICE models (27%) into SDVs. This perspective resonates with respondents in North America, where the percentages align at 30% and 24%, respectively.

Overall, these findings validate the widespread belief among 44% of respondents that adopting new platforms for supporting SDVs will not be limited to BEV disruptors, premium or mid-tier OEMs, but will encompass the entirety of OEMs by 2030.

The full report on the NXP Semiconductors-Wards Intelligence survey, “Unveiling Tomorrow’s Ride: A Deep Dive Into Software-Defined Vehicles,” is available HERE.