Automotive News Europe — 2024-01-24
Automotive Industry
Automakers are already changing their strategic course but still have a lot of ground to gain to complete the transition to software-defined vehicles (SDVs).
They are racing to make the transition because the move is essential to helping automakers address overcapacity and boost efficiency at a time when the passenger car segment has reached a state of slow growth.
Five years ago, the industry appeared headed toward having annual global new car sales of 100 m, but this is currently stagnating at about 80 m cars, said Deloitte consultant Elmar Pritsch said.
Efficiency is essential
Overcapacity in the system means that efficiency is key. If automakers cannot increase sales growth, then they need to make more money with each vehicle over its life cycle.
Automakers can earn revenue if car owners willingly pay for additional functionalities, such as connectivity and in-car subscription-based services.
Essentially, a shift toward SDVs also makes good business sense, experts say. Automakers recognize that economics is driving the need toward a higher degree of standardization and a simpler, more easily managed architecture model.
"We are coming to the end of today's complexity, and we need to replace it with a new architecture over the coming decades," Pritsch said.
More brands want to take advantage of these additional revenue streams.
And while some legacy automakers might see the wave of software-focused companies entering the market as a threat, Pritsche said a wiser move would be to partner with them to marry traditional automotive knowledge with the latest tech capabilities.