The Dilemmas OEMs Face in the Transition to Software-Defined Vehicles

As it becomes widely recognized that wireless updates, upgrades, and the introduction of new features are key components of Software-Defined Vehicles (SDVs), automakers are facing an urgent dilemma: how much processing capacity should they integrate into future platforms?

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A survey conducted by chip manufacturer NXP Semiconductors and Wards Intelligence, targeting executives from global automotive industry OEMs, Tier 1 and Tier 2 suppliers, and other automotive ecosystem participants, revealed that around 73% of industry insiders expect that by 2030, automotive OEMs will cap hardware configurations for entry-level vehicles at 50% or less. Among them, 48% predict a cap of 30%.

This trend is likely driven by the cost sensitivity typically associated with such models. While customers of these vehicles may want some level of upgrade potential, they tend to avoid options or enhancements that significantly drive the vehicle price beyond its base value.

In contrast, approximately 60% of respondents expect that by 2030, the margin for mid-range vehicles will be between 31% and 70%.

For high-end vehicles, 60% of respondents anticipate that the processing capacity margin will exceed 51%, with 44% predicting a margin of at least 71%.

This underscores the expectation that continuous improvements throughout a vehicle’s lifecycle will become a major avenue for value creation and monetization in SDVs.

An interesting regional contrast emerged from the survey data: European respondents adopted a more conservative stance compared to other regions.

About 65% of European respondents expect the headroom for entry-level vehicles to be 30% or less, while 71% predict that for mid-range vehicles, the margin will be between 31%-50%. For high-end vehicles, 36% expect a margin of 31%-50%, and 43% predict the margin will exceed 51%.

This regional difference may be attributed to the dominance of smaller, relatively inexpensive cars in the European market, especially compared to North America. Additionally, European OEMs have been slower to implement SDV technologies in mass-produced vehicles compared to their Chinese and American counterparts, who have made significant strides with BEV disruptors. This may also contribute to the difference.

Another notable aspect is that, compared to the overall survey results, a substantial proportion of OEM respondents expressed uncertainty: 30% for entry-level vehicles, 25% for mid-range vehicles, and 20% for high-end vehicles.

This highlights the challenge OEMs face in transitioning from cost-focused automotive design to an SDV model, which is expected to generate new post-sale revenue streams. It also underscores the inherent difficulty in designing vehicles capable of accommodating yet-to-be-developed applications.

There is a clear trend toward consolidating vehicle electronic control units (ECUs) to simplify complexity, integrate vehicle systems, decouple hardware from software, and enhance computational capacity.

This consolidation expands the scope and complexity of vehicle functions, ultimately unlocking the potential of SDVs. However, ECU consolidation can be achieved through various architectural approaches, presenting OEMs with a second dilemma: which approach to adopt?

Approximately 32% of OEM respondents expect that by 2030, the zonal architecture will become the primary E/E architecture in mass-produced vehicles, requiring about two to three platform cycles. Slightly over 27% of respondents expect cross-domain central architecture to prevail. Finally, 27% of OEM respondents remain undecided or unclear about the direction of E/E architecture adoption.

The divergent survey results reflect automakers' diverse strategies, suggesting that a definitive mainstream architecture may not emerge until the 2020s. Moreover, the results emphasize that automakers are still evaluating the optimal vehicle architecture configurations for their upcoming models.

The third dilemma for OEMs, particularly incumbent ones, revolves around which platforms should be upgraded to SDVs.

Since the shift toward SDVs has been primarily driven by BEV disruptors like Tesla, and BEV platforms are the initial candidates for transitioning to the SDV concept, there is a widespread perception that SDVs apply only to electric vehicles.

However, the survey results refute this assumption. Some 87% of respondents expect internal combustion engine (ICE) vehicles to transition into SDVs. Moreover, 80% agree that SDVs will not be limited to luxury vehicles.

That said, the survey reveals a lack of consensus on the preferred ICE platform for SDV integration. About 30% of respondents favor focusing on luxury and mid-range vehicles, while the rest are divided between upgrading all ICE platforms (25%) and selectively upgrading a few strategic models (25%).

Interestingly, global OEM respondents and European respondents were more decisive than the overall trend, with 41% and 43%, respectively, believing that only strategic models would undergo SDV upgrades.

Meanwhile, Tier 1 and Tier 2 suppliers were split between two choices: upgrading luxury and mid-range models (32%) or upgrading all ICE models (27%). This view was echoed by North American respondents, with 30% and 24%, respectively, favoring these two approaches.

Overall, these findings confirm the common belief among 44% of respondents that adopting new platforms to support SDVs will not be limited to BEV disruptors, high-end, or mid-range OEMs but will encompass all OEMs by 2030.

This article is reposted from WeChat Official Account: qicheyanjiuyuanauto