WionDrive News Desk 
The automotive industry is witnessing a profound transformation as it converges with the tech sector. This convergence, marked by a shift from internal combustion engines to electric vehicles (EVs) and a transition from mechanical vehicles to complex software-defined systems, is presenting the industry with its most significant challenge in over a century.
Envisioning a USD 650 Billion Value Potential
The emergence of software-defined vehicles (SDVs) is at its nascent stage, set to evolve over the next decade. Projections indicate that by 2030, SDVs will create a substantial value potential of over $650 billion within the automotive sector, constituting 15% to 20% of its total worth. Original equipment manufacturer (OEM) revenues, driven by automotive software and electronics, are expected to surge nearly three-fold from $87 billion to $248 billion during this period. This forecast is based on an analysis of SDV growth by Boston Consulting Group (BCG). The supplier market for automotive software and electronics is also poised to nearly double, increasing from $236 billion to $411 billion.
Insights from the World Economic Forum and BCG Report
A report, titled “Rewriting the Rules of Software-Defined Vehicles,” jointly prepared by Boston Consulting Group (BCG) in collaboration with the World Economic Forum, presents these findings. The report stems from insights gathered through the “Automotive in the Software-Driven Era Initiative,” initiated by the World Economic Forum and BCG. This initiative aims to unlock the potential of cross-industry and public-private collaboration. Over 30 leading companies from the automotive, new mobility, and tech sectors worldwide have engaged in this effort.
The Transformative Power of Software
Alex Koster, a BCG managing director and senior partner, and global lead for the firm’s automotive technology business, emphasized the monumental impact of software-defined vehicles. He highlighted how software alters the source of competitive advantage within the product, the pace and nature of innovation, the roles of companies and entire industries in vehicle manufacturing, and the relationship with end-users. Koster stressed that successful realization of SDVs, along with essential functionalities like advanced driver assistance, requires a harmonious blend of automotive and technology companies’ expertise.
Collaboration: The Key to Future Success
Historically, companies predominantly pursued individual solutions to secure control points. However, the complexity of technology and evolving ecosystems necessitates collaboration and cross-industry cooperation. Such partnerships are vital for scaling operations, enhancing safety, and meeting customer expectations.
Five Vital Insights for Industry Players
The transformation to software-defined vehicles is intricate, underlining the importance of cross-industry collaboration to regain scalability. Collaboration should commence with a shared, cross-industry technology stack taxonomy. Industry alignment is advancing with the development of interoperable platforms, enhancing industry profitability. Regional disparities in innovation pace, user preferences, and regulations call for regional collaboration clusters. In preparation for a partnering-centric environment, organizations must cultivate internal and external collaboration capabilities, anchored in their operating model.
Towards Industry-Wide Interoperable Platforms
As the industry advances towards the more mature stages of software-defined vehicles, the development of industry-wide, interoperable platforms becomes paramount. Establishing alliances and partnerships across all vehicle layers will be pivotal. In this new era of collaboration, transcending organizational and industry boundaries becomes a critical super-skill.
Maya Ben Dror, Practice Manager, Automotive and New Mobility at the World Economic Forum, emphasized the necessity for new partnerships between the automotive and technology sectors. These collaborations are essential for fully harnessing the benefits offered by software-defined vehicles, with a focus on enhancing safety, inclusivity, sustainability, and overall system resilience. The “Automotive in the Software-Driven Era” initiative, created by industry leaders in Davos, serves as a platform for cross-industry and public-private collaboration to achieve these goals.
