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The Journey to Software-Defined Vehicles

April 12, 2023
For electric and autonomous vehicles today, the transition from hardware- to software-centric development—called the software-defined vehicle—starts now. What are the implications of such radical transformation?

What you’ll learn:

  • The next era of vehicles will require a complete redesign of the architecture with software at the center.
  • The impacts that this transition will have on vehicle design, the supply chain, legal framework, and business model.
  • What OEMs can learn from other industries’ successful transitions to software-driven architecture.

Across the world, OEMs are investing heavily in the race to launch electric, connected, and autonomous vehicles. Yet despite their efforts, there’s a general feeling that the market is not progressing as expected. As manufacturers are learning, simply adding in-house capacity doesn’t necessarily accelerate progress. Instead, a complete revolution is required, centered on the concept of the software-defined vehicle (SDV).

The market has realized that the next era will not manifest simply by changing the vehicle engine from combustion to electric, but instead requires a complete redesign of the vehicle architecture where software is at the center of it all. In an industry as stable and process-driven as automotive, where legacy architectures remain through several vehicle generations, this change would impact not only the technical aspects of the design, but ancillary aspects such as the supply chain, legal framework, and the business model. 

Impacts on the Traditional Supply Chain

Beginning with the supply chain, automotive manufacturers seek to maintain control over the aspects that provide the greatest potential for differentiation, and software is at the core. This would impact the function of the traditional supply chain.

As vehicle functionality is separated and abstracted to software, there’s a need to evolve from a traditional automotive product supply chain to a multi-tier collaborative development. This translates into new purchasing and supply strategies for automakers. It also justifies the current trend where several Tier-1s have made large investments and acquisitions in software solution companies.

The level of cooperation requires changes in the traditional supply chain that aren’t simple. This may look like the application ecosystem of today’s mobile-phone industry. However, the reality is that the automotive industry would require far higher standards due to the safety and cybersecurity requirements for electric and autonomous vehicles.

Developing a Legal Framework

Derived from the supply-chain challenges and implications from autonomy comes another complication: developing a legal framework. This framework must encapsulate two of the most important legal aspects of the design: liability and IP ownership.

Traditionally, the multi-tier supply chain focused on high standards of qualification and certification to simplify liabilities and contractual agreements. Environmental testing and qualification such as ACQ-100 provided hardware vendors and Tier-1s a framework to operate under known conditions. While challenging, the hardware-centric design had a clear liability allocation, and even small vendors could approach relatively large programs.

The industry is starting to realize that an agile collaborative software development environment for the SDV changes the legal paradigm. Vehicle manufacturers must simply determine who will own the IP and therefore be responsible for the liabilities, warranty, and reliability. Understanding how to architect an efficient and realistic liability chain will be as important as the vehicle design itself. If this wasn’t the case, vehicle manufacturers would be risking their own supply capabilities.

The Transformation of Business Models

Another reason the industry isn’t progressing as fast as expected is the stabilization of new business models. This challenge is heavily influenced by the supply chain and legal changes. The SDV will have far-reaching consequences for the automotive industry—they will drive fundamental changes in the business models and the organizational and operational structures of major industry players.

Vehicle manufacturers face strategic decisions regarding their response to digital disruption. This shift redefines how value is derived from a vehicle, both for the consumer and the manufacturer. But are the customers perceiving this value? Are they willing to pay for it?

The reality is that most drivers don’t see a clear value in software yet. Autonomy is available under minimum circumstances and the cost of such software packages comes at a high price.  Enabling a software architecture that eases the manufacturing process and differentiates the brand positioning of the individual programs is essential. However, just as important will be demonstrating value to the end users. 

Addressing Safety and Cybersecurity Requirements

The functional-safety and cybersecurity requirement represents one of the biggest challenges for software-defined vehicles. Often, the terms functional safety and cybersecurity aren’t well understood. These terms aren’t checkboxes on a design cycle; rather they represent fundamental transformation in the vehicle industry and its supply chain.

Complying with the automotive safety and cybersecurity regulations doesn’t happen at a design level—the complete organization needs to embrace it. The stakes are high for autonomous and electric-vehicle production to integrate functional-safety standard ISO 26262 and cybersecurity standard ISO 21434.

Currently, automotive quality, safety, and cybersecurity applies to most of the software vehicle development process, from system design to vehicle design to vehicle production. This is a major challenge in terms of contextualization and overall cost of production.

Such challenges are the consequence of one of the most aggressive revolutions the vehicle industry has ever seen. For automakers building the vehicles of tomorrow, the race to market is already on. The next two years will mark which players can effectively transition toward the SDV, having overcome the aforementioned challenges and limitations. But, could they look at other industries where this transition is already successful?

Navigating the Software-Defined Shift

There are successful examples on how to transition to software-driven architectures from other industries such as avionics or defense. These industries benefit from a well-structured software-driven architecture based on open standards such as Data Distribution Service (DDS). From that, a lot could be leveraged by the automotive manufacturers despite the differences in their supply chains, safety, and business models. 

Then, what can the automotive industry leverage from these successful shifts? The common success factor in these industries is that each one starts with a strong ecosystem that has been standardized on the hardware interfaces, which can then be used as a standard approach to information flow to enable safety and performance throughout the system.

Providing a common, proven architecture with standard communication models that can be shared across platforms and suppliers is critical to accelerated development and cost optimization. This use of standard communication models and hardware interfaces enables rapid and reliable sharing of data. It would ultimately solve the problem of access to critical interfaces and interoperability between technologies and suppliers while addressing safety and cybersecurity architectural challenges.

Software-defined vehicles represent the automotive future. In this uncharted territory, OEMs can look to other industries for some of the learnings, technologies, and best practice approaches to mitigate risk.

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