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Fuel for Thought: Software-Defined Vehicles - Bridging the union between digital experience and the automotive industry

26 October 2021 Mark Boyadjis Tawhid Khan

Automotive Monthly Newsletter and Podcast
This month's theme: Software-Defined Vehicles - Bridging the union between digital experience and the automotive industry

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The software-defined vehicle promises a far more rewarding experience of vehicle ownership experience for drivers and passengers of the future. Consumers have seen how easily their mobile and digital devices are upgraded, apps updated, and faults fixed with over-the-air software and they are demanding a smartphone-like in-vehicle experience. From an automaker's perspective, the idea of updating vehicle software and settings at service centers is becoming increasingly primitive.

To realize the vision of a software-defined vehicle, the global automotive industry is increasing their research effort and spending to create portable software that can be migrated into a wide range of hardware platforms. To supplement, the industry is also investing in capable hardware for the long haul and building cloud-native software infrastructure for seamless application integration. The growth of CASE (connected, automated, shared and electrified) vehicles, along with the supporting electrical architecture evolution, fuels growth in the automotive software market. While the global automotive market is expected to grow to USD 3,152 billion, the software content size will grow at a rate of 7.26%, with total cumulative market size of USD 389 billion between 2019 and 2030.

While the rapid investment in automotive software is industry-wide, the strategies and tactics each OEM and supplier deploy will vary widely. Tesla, by far, sets the benchmark here. It was founded in 2009 as a software company, that built EVs. Today, Tesla's ability to flexibly deploy OTA, services, and software feature updates mirrors that of Tech Giants, not traditional OEMs.

Volkswagen AG, for example, is working hard to pivot the whole company toward a software-first culture, in an attempt to defend itself against disruptors like Tesla. Back in June 2019, the OEM created the Car.Software organization, destined to build a VW Car.OS for the whole enterprise. It has partnered with AWS and Microsoft for varying purposes and has now spun off the whole group into the CARIAD subsidiary, named after an acronym for "CAR I Am Digital." By 2025, VW claims, this investment will bring 60 percent of its software development in-house and provide the foundation to shift 20 percent of its group-wide revenues into subscription and mobility services.

Meanwhile, Toyota is attempting to do the same thing with its Woven Planet Holdings initiative, which has gradually taken over nearly every advanced technology R&D organization across the enterprise from the TRI-AD autonomous driving organization and linkages to the broad Toyota Connected Corporation which manages everything from current subscription connected services to future mobility service business models.

Other OEMs like GM, Renault, Ford, and Hyundai have all been active in hiring, funding, developing, and operationalizing software teams, talent, and platforms. The ultimate goal for automakers is to build the software-defined car - either in-house or outsourced - and to provide that ultimate flexibility for the customer going forward. Because, simply put, in the future each of these company's differentiation will be tied to its software more so than anything else.

IHS Markit is introducing a new automotive software service on their AutoTechInsight platform, to track software-defined vehicle's in-depth insight, context data, reports, and analytics developments. Plan your future software development strategy & evaluate technology cost growth paths with AutoTechInsight's Software Service. Learn more.

Dive Deeper

Register for our Dec. 1 Webinar: From horsepower to computing power - the new software vehicle age

Tune in to our software podcast - From seats to software: Defining the premium vehicle

Imagining the 'Apple Car' - download the report

Major revision to the global light vehicle production forecast. Read more.

Have a question on software-defined vehicles? Ask Tawhid Khan

Have a question on UX, ADAS, connectivity, or autonomy? Ask Mark Boyadjis


Subscribe to our monthly Fuel for Thought newsletter & podcast to stay connected with the latest automotive insight

Posted 26 October 2021 by Mark Boyadjis, Global Technology Lead, Automotive Advisory Team, IHS Markit and

Tawhid Khan, Research Director, Automotive Supply Chain & Technology, IHS Markit

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