Trending Articles
Trending Topics
Trending
The era of software-defined cars is on its way, according to IBM – and it’s going to be an expensive one for consumers.
A survey of over 1,200 auto execs, carried out by IBM’s Institute for Business Value, has found that car companies are expecting consumers to pay out hundreds of dollars a month for software-defined vehicle (SDV) services within the next ten years and are stepping up their research efforts accordingly.
“Executives expect multiple recurring revenue streams from SDV-related features, including autonomous driving, immersive in-car entertainment, and remote diagnostics,” the research said.
It also found that 65% of the execs believe customers will grow to expect autonomous driving as standard and will be willing to pay handsomely for the privilege. According to IBM, the automakers believe that consumers will be prepared to pay $269 every month for autonomous driving features within a decade.
However, the report warned that “the auto industry has seen limited success with radical business model changes in the past. Think of the subscription model, which has fared better in some geographies than in others.”
Accordingly, over the ten years, car makers expect to be boosting their R&D spend on software and digital services. The report notes that currently, 21% of carmakers’ R&D investment is going digital; it expects that figure to rise to 58% by 2035.
At the same time, auto execs are expecting digital and software-related services to start paying those investments back in the near future: IBM’s research found that around 15% of revenues are coming from digital and software services currently, but by 2035, that could rise to 51%.
As a result, the importance of data security and privacy is expected to grow. This gives brands a way to stand out from rivals. In 2035, auto execs predict data security and privacy will rank second only to safety and reliability as a competitive differentiator.
The move to software-defined vehicles will bring a significant revamp to the way cars are designed in the future. The report highlights that car makers, rather than using separate electronic control units for each of the vehicle’s subsystems as they do now, will need to adopt a more centralised approach with domain control units that separate the hardware and software layers. Some 79% of those surveyed described engineering that separation as “challenging”, however.
Despite the difficulties of moving towards software-defined vehicles, car makers remain upbeat. 74% of the execs surveyed said that vehicles will be software-defined and AI-powered by 2035, while 68% described their progress towards software-defined vehicles as “on track”.
