Savings and efficiency gains through SDV transformation for carmakers

By moving from hardware- to software-defined vehicles, automakers realize savings and efficiencies, particularly in terms of reduced complexity, increased deliverability of software-intensive vehicles and enhanced software quality across their fleets.

Address increasing complexity through a rigorous review of the status quo and a long-term software platform and architecture roadmap

A key challenge for established automotive companies is their long history of vehicle evolution creating a wide variety of software-enhanced subsystems; from advanced driver-assistance systems (ADAS) to infotainment. These subsystems are all complex in their own right, have historically been provided by different vendors and are increasingly difficult to get to function as a cohesive whole. Traditionally, more than 100 million lines of code and more than 100 electronic control units (ECUs) are required. This complexity often exceeds the capabilities of OEMs, while adding engineering resources only increases costs and fails to accelerate development.

To escape the complexity trap, OEMs need to take a step back and consider where the allocation of additional development resources might lead to progress and where a fresh start and a ‘blank slate’ approach might make more sense. The basis for this is a consistent platform architecture subdivided into hardware, software and middleware. This layered architecture needs to enable flexible software deployment and updates. In parallel, it’s critical to address organizational legacy, complexity and lack of SW experience and establish a systematic cultural and organizational shift towards a software-centric approach. The amount of time and effort all this takes cannot be underestimated. Adding to the challenge, the relationship between OEMs and suppliers needs to shift from project-based development to scalable platforms (including open-source components) that can be reused across different makes and models. To guide this paradigm shift, OEMs and suppliers must have a stable and long-term architecture roadmap. The roadmap must focus on differentiating functions, software and system integration, as well as integration of open-source solutions for the non-differentiating parts of the SDV.

An end-to-end hardware and software decoupling strategy is the basis for OEMs and suppliers to deliver software-centric features and vehicles on time

When we look at today’s SDV efforts at different OEMs, we find that vehicle launches are delayed due to software issues or mismatches between platform maturity and planned start of production (SOP). SOP delays cause serious financial and reputation damage to OEMs. Therefore, it’s of utmost importance to focus on a reliable and robust ability to deliver software-centric vehicles on time. Challenges we observe include over-emphasizing feature-first thinking, late testing, little virtualization and automation, and under-estimating interdependencies.

OEMs need to strictly decouple hardware and software across the SDV stack and make this part of the top management agenda and portfolio steering processes (no new services without platform compliance). Hardware-related functions must have high stability to be future-proof. Independent upgrade cycles and speeds must be possible, even after SOP. This means that it’s better to bring a well-functioning, well-tested vehicle to market on time and on budget, even if some features are not available yet (or limited) at the time of SOP, knowing that those features can be reliably added or improved later through software updates.

Updateability across the entire SDV stack is crucial to maintaining fleet quality

The transition to SDVs offers OEMs the opportunity to improve the quality of their fleets — this means fewer recalls, complaints and rework. A look at today’s recalls shows that in Germany alone, more than 8.5 million cars were recalled between 2018 and 2022. Over 40 percent of these recalls were partially or fully due to software problems.1 This imposes significant costs on OEMs and their suppliers. Furthermore, the corresponding reputation damage leads to dropping sales and profit margins.

Establishing a permanent connection from the fleet to development teams — the ability to collect data on the use of features, KPIs, etc. — allows OEMs to respond much faster to quality issues, functional update needs, and to enhance the user experience. Customer-facing features — usually complex end-to-end chains of many system parts — can be improved faster over time and be visible to the end user, while updates ‘under-the-hood’ can happen more quietly. Therefore, OEMs and their suppliers need to focus on setting up clear DevSecOps processes in parallel to a clean hardware/software architecture that enables both remote monitor and remote updates.

1 EY Analysis