Following the previous posts on the background and core technologies of SDV (Software Defined Vehicles).
This post will discuss the strategic changes for manufacturers and conclude with implications.
Manufacturers’ Strategic Changes
- New business models and partnership opportunities
- Changes in the competitive landscape and new entrants
- Social and economic impacts of SDVs
- Challenges and future outlook
Conclusion
- Social and Economic Impact
- Challenges Towards a Sustainable Future
- The Need for Industry Collaboration
1. Manufacturers’ SDV Strategic Changes
The era of satisfying customers merely with car performance, design, and brand has passed. Going forward, OEMs must correctly respond to rapidly changing “customer targets” to survive. An article by BCG, “Chasing the Software-Defined Dream Car,” emphasizes that automotive manufacturers (OEMs) need to overhaul operations across various fronts to keep pace with the rapidly changing industry. (https://www.bcg.com/publications/2021/software-transformation-in-the-automotive-industry) As autonomous driving advances, OEMs must provide suitable services. Cars will become not just a means of transport but a space in their own right.
The collaboration between Red Hat and General Motors (GM) shows how cooperation between tech companies and automotive manufacturers can spur innovation. This partnership leverages Red Hat’s cloud-native, enterprise-grade open-source operating system to support the evolution of GM’s Ultifi software platform. This allows both companies to deliver more valuable features to customers in much shorter development times. (https://techhq.com/2022/05/red-hat-and-general-motors-collaborate-on-software-defined-vehicles/)
Hyundai and Kia have signed a multilateral memorandum of understanding (MOU) with 17 leading industry companies to accelerate the transition to Software Defined Vehicles (SDVs). This agreement aims to form the Hyundai Motor Group Model-Based Development (MBD) Consortium to enhance the competitiveness of vehicle control system development. (https://www.autocarpro.in/news-international/hyundai-and-kia-partner-17-companies-to-accelerate-transition-to-sdvs-114697)
Renault is jointly developing SDVs with Qualcomm. This partnership is creating a new SDV ecosystem based on customer focus on enhanced vehicle safety features and is driving innovation in areas such as usage-based insurance, vehicle data, telematics, and cybersecurity. (https://www.frost.com/frost-perspectives/partnership-based-ecosystem-emerges-as-automakers-and-automotive-technology-providers-collaborate-to-fast-track-a-future-of-software-defined-vehicles/)
Moreover, the aftermarket must also evolve. BCG’s “Software-Defined Cars: Boon or Bust?” explores the impact of software-defined vehicles on key segments of the U.S. automotive aftermarket. Especially in areas such as diagnostics and updates, new services and business models, operational optimization, data monetization, and maintenance scheduling, aftermarket players can build new capabilities to secure profit pools. (https://www.bcg.com/publications/2023/software-defined-cars-boon-or-bust)
2. SDV Conclusion
2-1. Social and Economic Impact: SDVs play a crucial role in breaking down industry barriers through business partnerships, bringing new efficiencies. They can positively impact society through improved traffic safety, increased mobility access, and enhanced transportation efficiency.
2-2. Challenges Towards a Sustainable Future: The development of SDVs presents new challenges. Cybersecurity, data privacy, and ethical considerations must be prioritized in driving technological advancements. Continuous efforts are necessary to secure technological and social acceptance.
2-3. The Need for Industry Collaboration: For the successful development and implementation of SDVs, extensive collaboration between car manufacturers, tech companies, policymakers, and customers is essential. New business models and partnership opportunities play a crucial role in breaking down industry barriers and seeking creative solutions.
3. Implications
SDVs are a catalyst for change not only in the automotive industry but across society. Leading these changes requires continuous innovation, open collaboration, and a strategic vision for the future. We should view these challenges as opportunities to create a safer, more efficient, and sustainable mobility future. Collaboration across various industries is needed. Not just companies related to automobiles but also those in design, seating, entertainment, audio, security, IT, gaming, and business space rentals have new opportunities to enter the automotive industry through SDVs.
