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The Risks and Rewards of Automakers’ Bet on Software-Defined Vehicles (SDVs)
Software-defined vehicles (SDVs) are poised to become the cornerstone of the automotive industry. As consumer preferences shift and technology giants reshape market dynamics, OEMs have strong reasons to embrace this trend.
What Are Software-Defined Vehicles?
Software-Defined Vehicles (SDVs) are cars that utilize software to control and manage their functions, features, and performance. Unlike traditional vehicles, where hardware components largely dictate performance and features, SDVs are connected to the cloud and utilize advanced software to control various functions enhancing flexibility and customization.
This software-centric approach allows manufacturers to integrate features that can be updated or modified remotely through over-the-air (OTA) updates, ensuring vehicles remain current with the latest technology and consumer preferences.
The Key Components of an SDV
At the heart of SDVs are three critical components: software, hardware, and connectivity.
Software
At the core of software-defined vehicles (SDVs) is the software setup. To fully realize an SDV, a Service-Oriented Architecture (SOA) is needed. This includes a unified operating system, middleware standards, and strong cybersecurity measures, which help determine the best hardware solutions and how to manage software, whether using hypervisors or containerization. This separation of hardware and software makes it easier to adjust hardware needs and update vehicle features.
Hardware
SDVs will generate and process a lot of data, so the vehicle's hardware, including the electronic systems and backbone connections, must be up to the task. Automakers are moving from using many separate electronic control units (ECUs) to more centralized or zonal architectures to manage complex systems more effectively.
Connectivity
Connectivity is a key part of SDVs, allowing vehicles to communicate with each other and with the vehicle's architecture. Over-the-air (OTA) updates across various areas, like infotainment, autonomous driving, safety, and comfort, are important for keeping software up-to-date and improving vehicle performance, which enhances user experience. This connectivity also fosters an ecosystem where vehicles can share data, paving the way for smarter transportation systems.
Consumer Expectations Increasingly Favor Software in Vehicles
Today's car buyers are increasingly tech-savvy and demand vehicles that offer seamless connectivity and personalization. They expect features such as advanced driver-assistance systems, infotainment options, and the ability to customize their driving experience. As a result, OEMs must adapt to these changing expectations by embracing SDV technology to stay competitive in the market.
SDVs are reshaping the automotive landscape; download our whitepaper today to get a glimpse into the impact of SDVs on the automotive landscape in 3 major areas:
- Cost savings for automakers
- Paid Over the Air (OTA) updates
- Risks in the SDV landscape
Embracing Opportunities for Growth with Software-Defined Vehicles
Despite challenges, the opportunities presented by SDVs are significant. By leveraging software, OEMs can unlock new revenue streams through subscriptions and feature enhancements while providing customers with a more personalized driving experience. Additionally, SDVs can facilitate innovations in mobility, paving the way for advancements such as autonomous driving and smart city integration.
S&P Global Mobility's recent whitepaper, The Risks and Rewards of Automakers' Bet on Software-Defined Vehicles, offers an important breakdown on what OEMs need to know before investing in SDV development.
The whitepaper covers in detail:
- The components of an SDV - software, hardware, and connectivity
- Top risks - including cost, cybersecurity and competition
- Top rewards - including new revenue streams
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.