2024: A Tough Year for Electrification...and the Software Defined Vehicle

When the term "software-defined vehicle" was first coined in the late 2010s, those in the automotive industry expected that creating a vehicle that is continuously fresh and up-to-date, knows and adapts to its users and somewhere along the line generates a new revenue stream for the automaker was going to extremely complex to deliver.

One pre-requisite that the industry believed it could count on to enable this vision was the steady and hoped-for linear transition to electric vehicles - which have greater amounts of in-cabin software integrated within them. Instead, the industry's meandering move away from internal-combustion engines has put the benefits of increased software (for the consumer and the OEM) on the back-burner. In 2024, we have not made as much progress towards the target of software-defined vehicles because of a consistent stream of announcements telling us that automaker’s plans for electrification are slowing.

So where does this leave us? Clearly the end goal has not and will not change. It would take a brave person to bet against the software-defined vehicle becoming a reality. The industry is completely aligned on the direction of travel, something well-demonstrated by how suppliers are re-positioning themselves – e.g. by 2030, Continental aims to generate up to 25% of additional revenue from software and Bosch expects the amount of software used in vehicles to triple by the same date.

The challenge (and the key) is to get consumers to buy into this movement. Today, they are by no means aligned with this vision. From our analysis of vehicle users in Europe, the US and China, and as shown by the graphic, a large cohort of consumers are not asking for what the SDV is offering.

With all this said, the industry is now firmly in "delivery” and “advocacy” mode for the SDV. Frost & Sullivan 's global mobility advisory team is on hand to assist in both areas (and beyond).

Please let me know if you need assistance on this topic in any of the areas below:

• Due Diligence & Partner Identification – evaluating potential partners’ capabilities to support goals and strategic initiatives for automotive partners
• Regulatory Analysis & Monitoring - tracking and interpreting automotive regulations to ensure technology compliance and support decision-making
• Benchmarking – Technical & Commercial - comparing competitors' technologies and market strategies to identify strengths, gaps, and opportunities
• Go-to-Market Strategy - creating product launch, positioning and distribution plans to optimize market entry in the technology side of automotive
• Voice of the Customer - gathering insights on consumer preferences and behaviors to guide automotive technology development and enhance products