Decoding the Software-Defined Vehicle: What Happens Next?
What the three words that are changing the auto industry really mean, according to Alex Koster of Boston Consulting Group.
"It is hard to overstate the importance of the transformation related to the software-defined vehicle." Alex Koster, who leads the global automotive technology business at Boston Consulting Group, a strategic management consulting firm, is in no doubt about how software will change the vehicles we drive, the way we use them, and how automakers create them.
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Koster's clients include automakers and suppliers, and tech firms. His recent assignments have included helping accelerate the transition to software-defined vehicles and autonomous driving technologies, as well as defining the operating model for large-scale automotive software organizations. He's about as close to the revolution underway inside the auto industry as anyone but enjoys the luxury of an outsider's overview.
Koster spoke recently at theFinancial Times'Future of the Car: The Shift to Software-Defined Vehicles' event in London. Here's some of what he had to say (edited for clarity).
Defining the software-defined vehicle:
"The key element is that you separate hardware from software. What does this mean? It means for the automaker that you can manage, develop, and deploy software and functionality in a much better way than you could ever before. And for drivers and passengers, it means all kinds of new functionality being upgradable and updatable on a regular basis so the car will always feel fresh.
"It also means we get new functionalities into the vehicle: autonomy, connectivity, and intelligence that come to the car over lifetime. All of this makes up the software-defined vehicle and it changes the product from the ground up."
Software-defined vehicles will be marketed differently:
"The auto industry has been used to monetizing individual functionalities, as it has bought hardware from a supplier [such as heated seats] and then charges consumers for that hardware. But if you look at what the tech industry has been doing, particularly with smartphones, it's all about providing continuous functionality. You pay an entry price by buying the device, and then that includes all the future updates and extensions and new functionality that comes on top. And customers love to come back to the same device because they know that it works, they have gotten accustomed to it.
"So the business model is selling [the vehicle] on a recurring basis, and locking in customers [who benefit from continuous software upgrades] as they get accustomed to the way that software works and interacts. It's a journey like it has been for the smartphone over many years to get the population to understand those trends. And then eventually, automakers can think about on-top monetization of software."
Software must be engineered for the life of the vehicle:
"Very few people own a new car for 10 years, and you have typically very different demographics and interests among the following owners. Whereas the first owners are probably the ones that want to use the broadest set of functionalities, the newest things, maybe the third group is the one that is most cost-conscious and super interested in preventative maintenance and easy access to after-sales services. So, the software technology requirement is going to be different in years one and two than in year 10.
"The other thought among automakers now is hardware can also be replaceable. You might not need to replace many elements of the vehicle, but you might want to replace the computer. I think this is what we will see coming to the market."
Software-defined vehicles may be redesigned or restyled more often:
"Chinese startups, especially the pure battery electric players, are already driving down [new model] release cycles to three years. A lot of that is because they have a software-defined vehicle, and they own the software platform end-to-end. They can build new cars that just look different from a hardware perspective, but they share a lot of components, and they share the same software. They can basically introduce new models all the time, so the vehicle life cycle has become shorter [than the usual six or seven years] and I think this a trend we will see with Western automakers as well."
AI capabilities will become pervasive on software-defined vehicles, and automakers and regulators must be prepared:
"AI is a very strategic issue because you have AI platform players from the technology industry coming into the auto industry with huge capabilities, but they also own a lot of the intelligence and the models behind their AI systems. So, will automakers be able to have their own AI models? Should they customize existing models? How do they collaborate with AI platform players and ensure that they get the benefits of understanding their own customers? Do they share data or not?
"AI is central to advanced driver assistance systems (ADAS) and autonomous driving, but it's also very important to augmented reality and immersive entertainment systems. It's also about preventative capabilities across the entire vehicle. You already have literally hundreds of sensors in the vehicle where you can employ AI to make the car become smarter, more intelligent, and make the right decision before something doesn't work.
"So, it becomes essential automakers own that capability, understand it in the right way, deploy it quickly, and make it relevant for consumers. And that will drive new complexity in homologation because the regulators are not yet keeping pace with the technology revolution."
I can’t remember a time when I wasn’t fascinated by cars. My father was a mechanic, and some of my earliest memories are of handing him wrenches as he worked to turn a succession of down-at-heel secondhand cars into reliable family transportation. Later, when I was about 12, I’d be allowed to back the Valiant station wagon out onto the street and drive it around to the front of the house to wash it. We had the cleanest Valiant in the world.
I got my driver’s license exactly three months after my 16th birthday in a Series II Land Rover, ex-Australian Army with no synchro on first or second and about a million miles on the clock. “Pass your test in that,” said Dad, “and you’ll be able to drive anything.” He was right. Nearly four decades later I’ve driven everything from a Bugatti Veyron to a Volvo 18-wheeler, on roads and tracks all over the world. Very few people get the opportunity to parlay their passion into a career. I’m one of those fortunate few.
I started editing my local car club magazine, partly because no-one else would do it, and partly because I’d sold my rally car to get the deposit for my first house, and wanted to stay involved in the sport. Then one day someone handed me a free local sports paper and said they might want car stuff in it. I rang the editor and to my surprise she said yes. There was no pay, but I did get press passes, which meant I got into the races for free. And meet real automotive journalists in the pressroom. And watch and learn.
It’s been a helluva ride ever since. I’ve written about everything from Formula 1 to Sprint Car racing; from new cars and trucks to wild street machines and multi-million dollar classics; from global industry trends to secondhand car dealers. I’ve done automotive TV shows and radio shows, and helped create automotive websites, iMags and mobile apps. I’ve been the editor-in-chief of leading automotive media brands in Australia, Great Britain, and the United States. And I’ve enjoyed every minute of it. The longer I’m in this business the more astonished I am these fiendishly complicated devices we call automobiles get made at all, and how accomplished they have become at doing what they’re designed to do. I believe all new cars should be great, and I’m disappointed when they’re not. Over the years I’ve come to realize cars are the result of a complex interaction of people, politics and process, which is why they’re all different. And why they continue to fascinate me.Read More
