Emerging Car Producers Shaping Entire Automotive Sector: Expert Insights from AutoTech 25
The global automotive industry is experiencing a significant transformation, with software-defined vehicles (SDVs) leading the charge. This shift, which intertwines connectivity, AI-powered user interfaces, and advanced driver assistance systems (ADAS), is reshaping the sector towards software-centric vehicle architectures.
By 2028, it is expected that the market will consolidate around 3 to 5 dominant SDV software platforms, mirroring the smartphone OS ecosystems. High-end and premium vehicles are already adopting near-complete SDV architectures, with mass-market segments following suit in a few years.
Advanced connectivity is a key component of SDVs, enabling real-time communication with cloud services, infrastructure, other vehicles, and mobile devices. This connectivity supports live navigation, remote diagnostics, intelligent routing, and over-the-air updates. Artificial Intelligence (AI) technologies are also being integrated, with 76% of OEM executives anticipating AI playing a pivotal role in SDV functionality improvements.
Vehicles are shifting towards flexible feature subscriptions post-sale, contributing to a rising share of digital/software-related revenue in the automotive industry. From 15% today, this share is projected to reach 51% by 2035.
However, this revolution brings challenges. The complexity and scalability of semiconductor technologies required for ADAS devices pose integration difficulties. Cybersecurity risks are also a concern, with the high degree of connectivity making SDVs vulnerable to cyber threats. Standardization and interoperability issues also arise, especially for global automakers and suppliers.
Meanwhile, a retaliatory tariff cycle is expected to impact global automotive markets starting from April 2025. This could cause market volatility, disrupt the global supply chain, and potentially increase costs for automakers. The tariff cycle could also influence the decision-making process for automotive investments in global markets.
The industry is striving to optimize the combination of sensors, computing platforms, and software toolchains essential for efficiently processing extensive sensor data and generating actionable driving outputs. This demands breaking down entrenched silos, establishing standardized interfaces, and implementing blockchain-secured consent mechanisms.
Connectivity is the beating heart of this revolution, with telecommunications leaders demonstrating how their virtualization expertise can accelerate automakers' digital journey. It is a core SDV architectural element, enabling over-the-air updates, digital twins, feedback loops, and expanded processing capabilities through cloud computing.
Tier 1 suppliers are demonstrating how their learnings from working with disruptor OEMs and in the Chinese market are more important than ever for incumbent OEMs. The convergence of 5G networks, edge computing, precision geolocation, and satellite integration is enabling lifesaving safety alerts and frictionless payment solutions.
Over 80% of consumers are interested in advanced V2X features like road hazard warnings and pedestrian detection in their next vehicle purchase. The automotive industry is also leveraging open-source software, with a growing industry appetite for its use.
In summary, the global automotive industry is navigating a profound transformation driven by software-defined architectures. This evolution promises enhanced vehicle performance, safety, and customer experience but demands overcoming technical challenges around cybersecurity, standardization, semiconductor integration, and UI design to realize its full potential. The impact of the retaliatory tariff cycle on global automotive markets is a topic of discussion among industry analysts.
- By 2028, the global automotive industry could see consolidation to 3 to 5 dominant software platforms in electric vehicles (EVs), mirroring the smartphone OS ecosystems, as SDVs become more prevalent.
- The aerospace industry's virtualization expertise is being harnessed to accelerate the digital journey of the automotive industry, with connectivity being a core architectural element of SDVs, enabling features such as over-the-air updates.
- In the finance sphere, the share of digital/software-related revenue in the automotive industry is anticipated to increase dramatically, as vehicles shift towards flexible feature subscriptions post-sale - rising from 15% today to 51% by 2035.
- The technology sector plays a critical role in integrating AI technologies, as 76% of OEM executives anticipate AI playing a pivotal role in improving the functionality of electric vehicles, including real-time communication and live navigation.
