Dive Brief:
- Only 1 in 4 automakers and Tier 1 automotive suppliers are “fully prepared” for software-defined vehicles, but are looking to boost their capabilities, according to an AlixPartners survey published Wednesday.
- Over half of automakers preferred a proprietary software model, while suppliers and tech firms preferred a mix of open-source and proprietary software.
- About 2 in 3 Tier 1 suppliers plan to collaborate with tech companies to boost their software-defined vehicle capabilities.
Dive Insight:
Modern vehicles are gradually transforming into smartphones on wheels as software — rather than hardware like engines — increasingly defines and differentiates new cars and trucks. A growing number of automakers are adopting software-based vehicle architectures and adding more connectivity, features and software-based subscription services.
However, the survey found most automakers and suppliers are ill-prepared for software-defined vehicles in several key areas, with many focused on short-term improvements such as “improving existing features, security and user-experience” instead of long-term strategy. Tech companies, meanwhile, are more interested in personalization, real-time data processing and other emerging technologies.
Himanshu Khandelwal, a partner and managing director in the automotive and industrial practice at AlixPartners, said in a statement that automakers must prioritize their investments and “strike a better balance between relying on in-house expertise, tech-industry partnerships, and the expertise of their suppliers to establish an edge.”
That would, in part, require merging traditional industry know-how with modern approaches, Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, said in a statement. Automakers and tech firms mostly plan to partner with Tier 1 suppliers on software-defined vehicles, the survey found.
“Automotive has long been a complex business – only those who adopt best practices will be able to minimize risk during vehicle launches, address interoperability concerns, and leverage modern integration approaches,” Wakefield said. “However, the opportunities are enormous, including reducing time-to-market and process efficiency.”
AlixPartners also said suppliers must adapt to automakers’ rapidly changing needs and invest in software to survive.
“In particular, auto suppliers, at risk of being squeezed by both automakers and tech companies, need to relentlessly focus on their potential role as innovators in areas that extend beyond hardware,” Khandelwal said.
