The Impact of Software-Defined Vehicles on the Automotive Industry

The automotive industry is at the point where it is merging with software, the cloud, and communication industries. Software will play a critical role in future automotive products, as vehicles begin relying on software components. If we look at all the automotive OEMs right now, they have defined an architecture against software-defined vehicles (SDVs). We are very much in the implementation phase right now. The software-defined vehicle will drastically change the whole automotive industry, impacting the way vehicles are produced, how value is provided to the customers, and the vast number of new opportunities that will be created for OEMs, Tier-1s, Tier-2s, and other providers.

With this in mind, Automotive IQ spoke with Frank Ghenassia, Executive Chief Architect at General Motors, to discuss why the SDV is important for the OEM, what they are trying to achieve, and how the wider ecosystem will play into the space as software becomes a critical part of the automotive future.

Q: As the automotive industry converges with the software, cloud, and communication sectors, how do you envision software’s pivotal role in shaping the future of automotive products?

Frank

The term software-defined vehicles refers to a fundamental trend in how vehicles are designed. For decades, software has been playing a key role in vehicle design, so it is not new for the automotive industry. A fundamental shift however occurred a few years ago; until that shift, software was developed to “serve” a hardware function (engine, airbags, etc.) and that hardware function was really the perceived customer value. With the development of advanced infotainment and driver assistance systems, we started developing software-driven content that meets customer value and is fundamentally delivered by software. The underlying needed hardware is now serving the software enabler, creating a shift in the profile of developed software that in turn drives new hardware requirements, but also connectivity.

Q: Could you discuss the architectural strategies that various OEMs have defined to embrace SDVs? How would you characterise the current phase of implementation within the industry?

Frank

The industry is organised around the idea that OEMs break down vehicle design into subsystems that are then outsourced to suppliers/Tier-1s who themselves rely on Tiers-2s. This approach has led to a high fragmentation of electrical architectures and therefore software architectures, and OEMs ended up defining one new subsystem for each new feature they want to add into their vehicles. While this approach defines clear responsibilities in the supply chain, it also spreads the know-how across many companies, and optimising the vehicles that involve restructuring software, for example, becomes very hard.

The fragmentation itself leads to significant hardware redundancy that ends up impacting the overall cost of the vehicles. Acknowledging these issues, the industry overall has initiated a consolidation process aimed at reducing the total number of ECUs integrated into vehicles.

Q: SDVs are poised to bring about transformative changes in the automotive sector. How do you foresee these changes influencing the production of vehicles, the delivery of value to customers, and the emergence of novel opportunities for various stakeholders like OEMs, Tier-1s, and Tier-2s?

Frank

The automotive industry is going through a transformation that is similar to the dramatic revolution that happened in the mobile industry 20 years ago. This journey will ultimately change our landscape of reputation and perceived leadership amongst OEMs, create changes in the value chain, reshape the role of OEMs and their suppliers, and finally where most automotive investments are channels (likely software-centric and related hardware).

Q: In this landscape where software becomes integral, can you shed light on the specific applications within vehicles that OEMs are most concerned about or prioritising for software integration?

Frank

The two main application domains leading SDV development are user experience (i.e., how drivers and passengers interact with vehicles, within vehicles but also with their mobile devices) and driver assistance systems. With the emergence of electric vehicles, energy management also become a major area of software development. But with the shift to SDVs, new usage models, and new applications will likely be invented, driving software development as well.

Q: Maintaining competitiveness is crucial, especially with technology giants entering the automotive arena. What strategies are OEMs, including General Motors, adopting to stay on par with these tech giants and their advancements in the automotive space?

Frank

OEMs recognise the importance of software and are reorganising accordingly. Two examples are the creation of CARIAD; consolidating software efforts of the Volkswagen Group into a single external entity, and General Motors; also consolidating its development and business strategy for software and services under a single roof headed by former Apple executive Mike Abbott. So we are looking to learn and combine expertise with the tech giants you mention implicitly in the question. Reorgs are what companies do when they understand that they need to transform, and this is what we are witnessing. It is however not enough, OEMs need to embrace a new culture that has developed in recent decades in other industries such as mobile and cloud, while also adapting them to the specific needs of the automotive industry, and in particular its safety requirements.

So, a successful strategy involves hiring talents coming from these other industries to accelerate the transition, while also learning what adaptations are required, and doing that while maintaining excellence in their existing culture that enabled their success as car manufacturers (yes, OEMs will still manufacture vehicles at the end of the day…).

Q: Partnerships and collaboration often play a pivotal role in driving innovation. Could you share your perspective on whether OEMs are considering internal development or actively engaging with technology companies to realise the vision of SDVs?

Frank

Each OEM has its own culture when it comes to make versus buy. Defining what is core competence, what to outsource, in what areas to partner with, and who are the questions being answered by at each OEM. Leading OEMs have acknowledged the need for tight integration of vehicles with the cloud and have announced partnerships with cloud providers. GM, for example, has announced collaborative work with RedHat, intended to help adopt and adapt known software ecosystems and expertise to accelerate vehicle software expected in the coming decade. We also announced a cooperation with Microsoft to deepen the integration between vehicle and Cloud services

Q: As an industry leader at General Motors, can you provide a glimpse into your organisation’s timelines and expectations regarding software-defined vehicles? How does GM envision the adoption and integration of SDVs in the context of your operations?

Frank

General Motors has ambitious SDV goals but at the same time, we adopted a pragmatic approach. Rather than waiting for the next generation of electrical architectures to drive the deployment of new technologies required by SDVs, we embarked on an incremental approach, with a dual focus: we developed our first set of technologies in a way that they can be integrated into current electrical architecture, while we also work on defining a software-first next-generation electrical architecture. The result is that we have SDVs (branded Ultifi) shipping as we speak, and we will gradually improve and enrich the feature set on current vehicles, while also preparing the next major update with the new hardware upgrade.

Q: Could you outline some of the insights and strategies that you believe are essential for successfully navigating the transition to SDVs, not only for General Motors but for the industry as a whole?

Frank

For any company with major legacy assets such as all existing OEMs, going through this revolution will require finding the fine line between re-starting from scratch (on the one hand), which is not realistic and also not leveraging its strengths, and on the other hand being too cautious, too conservative, and consequently missing the train and ultimately disappearing. Thought leaders must define that delicate path and help the company execute on it.

Automotive IQ invites you to the 2nd Software-Defined Vehicles USA 2024 as we delve into the latest proven use cases from OEM experts, address the biggest real-time challenges and take a look at capabilities of future-looking technologies that will be enabler software-defined vehicles.