Monday, June 24, 2024

What On Earth Is A Software Defined Car?

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What aspects of your vehicle will be governed by software? How will that impact you? James Falkiner, Technology Analyst at IDTechEx and author of the report ‘Connected and Software-Defined Vehicles 2024-2034: Markets, Forecasts, Technologies,’ shares his insights on the rapidly evolving landscape of software-defined vehicles and their impact on the automotive industry.

The concept of a software-defined vehicle (SDV) is emerging as a transformative buzzword in the automotive industry. At its core, an SDV is defined by the significant role software plays in enhancing the user experience. This definition is broad, encompassing a spectrum from basic software like navigation and infotainment systems to advanced AI algorithms powering autonomous vehicles. As vehicles evolve from mere transportation tools to integrated, software-centric experiences, the SDV category becomes increasingly relevant.

In exploring the realm of SDVs, several key aspects come into focus. These include the level of connectivity, the power and performance of onboard computing, and the extent of vehicle autonomy. Additional factors such as the number and type of displays, the nature of the onboard software, and the vehicle’s level of autonomy also play crucial roles in defining a vehicle’s software capabilities.

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The transition from traditional vehicles to SDVs reflects an evolving automotive landscape, where design and functionality are increasingly intertwined with the user experience. This evolution is marked by a shift from focusing solely on driving performance to enhancing the interactive features such as screens, buttons, and software-based controls. As a result, being in a car has transformed from a simple means of transportation to an immersive, software-driven experience.

SDVs are classified from level zero to level five, representing the varying degrees of software integration in modern vehicles. At the base, level zero represents vehicles with minimal software influence, such as basic radio functionality. Progressing up the scale, levels one and two feature enhanced software capabilities like basic connectivity and infotainment systems. Level three and four SDVs, like the latest BMW models, showcase advanced software integration with features like 5G connectivity and extensive app capabilities, significantly influencing the driving experience. Level five SDVs are at the cutting edge, potentially featuring full autonomous driving capabilities and transformative software integration. This spectrum vividly illustrates the evolving landscape of automotive technology and the varied approaches manufacturers take in integrating software into the driving experience.

Over-the-air updates spark vehicle tech revolution

Tesla showcased a significant shift in vehicle maintenance by demonstrating the power and convenience of over-the-air (OTA) updates for managing vehicle recalls. A notable instance involved nearly 2 million Tesla vehicles in the United States. Traditionally, such a recall would require physical return of the vehicles to dealerships for repairs. However, Tesla circumvented the majority of these logistical and financial burdens by deploying an OTA software update, negating the need for most vehicles to visit a dealership.

This vehicle maintenance approach, similar to updating a smartphone, marks a pivotal moment in automotive technology. For consumers, it translates to unparalleled convenience; rather than being deprived of their vehicle for days or weeks during repairs, issues are resolved through a simple software update. This method not only enhances the consumer experience but also has broader implications for the automotive industry.

The potential of OTA updates extends beyond mere convenience. They could significantly shorten the development cycle of vehicles, currently spanning two to five years. This acceleration in development means that newer, more advanced vehicles could reach the market quicker, continually improving in terms of quality, intelligence, and safety. Automakers can leverage OTA updates to enhance vehicle capabilities post-release, whether it’s upgrading autonomous driving features, sensor functionalities, or other aspects.

However, this advancement raises questions about the cost of such updates. Will they be offered free of charge, or will consumers have to pay for them? This decision rests with individual automakers and their respective strategies.

The dynamic ecosystem of software-defined vehicles
SDVs represent a complex interplay of hardware and software components, reshaping the automotive industry. At the core are semiconductors, crucial for various functions like display technology and central computing, which powers autonomous systems, infotainment graphics, and general computing tasks. The supply chain for these components is diverse, ranging from in-house development to external sourcing. Key aspects:
Semiconductor dependency. SDVs rely heavily on semiconductors for essential functions, from displays to central processors.
Software sourcing. While some companies like Tesla develop both software and hardware in-house, others source software externally, moving towards unified ecosystems like Android Automotive.
• Industry impact. Beyond automotive, SDVs influence industries like telecommunications, as vehicles increasingly use network connectivity, and the display industry, due to the trend of multiple screens in vehicles.
Internal vs external development. Companies like Volkswagen are investing heavily in developing internal software, highlighting a trend towards self-sufficiency in software creation.
The rise of SDVs is revolutionising the automotive industry, requiring automakers to adapt their supply chains and strategies. This shift extends beyond automotive, benefiting sectors like telecommunications and software, and promises a more efficient, safer driving experience.

Car becomes your wallet

In-vehicle payments represent an exciting and emerging aspect of software-defined vehicles, pointing towards a transformative future in automotive technology. This concept essentially turns the car into a payment device, akin to a credit or debit card, much like how smartphones function with Apple Pay or Google Pay.

Imagine driving into a fuel station with a level four software-defined vehicle. The car facilitates the payment for the fuel automatically, offering a seamless, no-fuss experience without the need for physical credit cards or manual authentication. The same principle applies to electric vehicles at charging stations, where the vehicle handles the transaction directly with your bank, eliminating the hassle of manual payment processes.

Yet, the convenience of in-vehicle payments raises valid safety and security concerns. Ensuring that only authorised users can make transactions is crucial. To address this, industry leaders are exploring biometric identification technologies within vehicles. Imagine a system where a fingerprint sensor or a facial recognition camera, similar to iPhone’s Face ID, is integrated into the car. Each user could have a personalised account linked to their payment methods, ensuring that all transactions are secure and authorised.

Mercedes-Benz is at the forefront of this innovation, partnering with MasterCard in Germany to trial in-vehicle payments using biometric authentication. This system allows for automatic payments at partnered fuel stations, utilising the vehicle as a virtual credit card.

Apart from fuel and charging payments, this technology extends to other areas like paying for parking or even grabbing a coffee. The versatility of in-vehicle payments signifies a shift towards more integrated and convenient automotive experiences.

Additionally, some automakers are combining mobile apps with in-vehicle systems to streamline this process. The app, linked to the vehicle, acts as an extension, ensuring secure transactions. Others, like BMW, are exploring subscription-based models within their vehicles, allowing customers to subscribe or buy upgrades, such as a heated steering wheel or enhanced connectivity features. This concept, often referred to as ‘hardware as a service,’ represents a significant advancement in how we interact with and utilise our vehicles.

Emerging trends in India’s automotive industry
India’s automotive future hinges on two potential developments. First, there’s the evolution of Indian-made vehicles into more software-defined models, leveraging the country’s robust 4G network for enhanced technological appeal. Alternatively, the government may relax import restrictions, leading to an influx of foreign vehicles from global markets and significantly diversifying the range of options available to Indian consumers. Key points to consider are:
Growth of software-defined vehicles. A potential increase in Indian-produced vehicles incorporating advanced software and technology.
Relaxation of import regulations. Possible easing of tariffs and barriers, leading to a rise in foreign vehicle imports.
Market diversification. An influx of Chinese, American, and European vehicles, offering more options to Indian consumers.
This scenario suggests a significant growth trajectory for the Indian automotive sector. While immediate changes might not be readily apparent, the landscape is expected to undergo a dramatic transformation over the next 5-10 years. Features currently regarded as premium could become standard in new vehicles within the Indian market, heralding a new era marked by enhanced technological integration and a broader diversity in automotive options.

Driving made easy with your personal assistant

In the realm of automotive technology, the integration of digital assistants within vehicles is not a new concept. For the past decade, renowned manufacturers like Mercedes and BMW have been embedding voice control systems into their cars. Initially, these systems operated on a set of pre-defined phrases and commands. This rudimentary form of interaction often led to a frustrating experience for users. The primary challenge was the need for precise wording; any deviation from the exact keywords or phrases would result in the vehicle failing to comprehend the user’s request. Such limitations highlighted the need for a more intuitive and user-friendly approach to voice interaction in vehicles.

Recent advancements in AI and deep learning models have transformed this domain. The key development is the integration of natural language processing (NLP) within vehicular systems, enabling a more fluid and natural conversation between the vehicle and its occupants. Unlike the past, users no longer need to memorise specific commands to control basic functions like adjusting the volume, managing seat heaters, or making phone calls. Modern systems, powered by AI, are capable of understanding and processing conversational language. This improvement is further enhanced by the vehicle’s ability to connect to cloud services through 4G or 5G networks, allowing for more complex data processing and a smoother user experience.

Moreover, AI-driven digital assistants in vehicles are branching out beyond mere voice commands. Qualcomm, for instance, has showcased the potential for AI to offer personalised recommendations based on the driver’s habits and preferences. Imagine a scenario where the AI recognises your routine, such as driving to work every Tuesday at 8 AM. It could automatically set your work location in the navigation system and even suggest actions based on your habits, like ordering your regular coffee in advance. When you arrive at the coffee shop, your order is ready, streamlining your morning routine. These advancements not only enhance the convenience factor but also mark a significant shift towards a software-centric experience in vehicles. The future of automotive technology, heavily influenced by AI and digital assistants, promises a more intelligent, responsive, and user-centric approach, redefining our interaction with our vehicles.

How vehicles talk to each other

One development that has been making waves in the automotive technology sector is the vehicle-to-vehicle (V2V) communication technology. While the concept itself has been around since the 1990s, recent advancements have propelled it into the spotlight, reshaping the way vehicles interact and enhancing safety on the road.

V2V technology comes in two primary forms: ITS-G5 or DSRC, predominantly used in the European Union, and cellular V2X (vehicle-to-everything), favoured in countries such as South Korea, China, and the USA. These systems enable vehicles to communicate critical safety information directly to one another, using a dedicated part of the electromagnetic spectrum at 5.9GHz. This dedicated frequency ensures reliable and uncongested communication, setting the stage for a safer driving experience.

The key advantage of V2V communication over traditional cellular networks lies in its reliability, particularly in densely populated areas or during events that strain cellular networks. This dedicated communication channel guarantees the swift and consistent transmission of safety messages, making it an invaluable asset in emergency situations.

The scope of V2X technology extends beyond V2V communication; it encompasses various facets, including vehicle-to-infrastructure (V2I), vehicle-to-network (V2N), and the pivotal vehicle-to-vehicle (V2V) communication. What sets these systems apart is their ability to function independently of local cellular networks. Even in areas with limited or no 4G or 5G coverage, such as tunnels or remote locations, V2X technology remains operational. It empowers vehicles to ‘see’ through physical obstructions, enhancing reaction times and overall situational awareness, a boon for the emerging field of autonomous vehicles.

However, the adoption and protocols of V2V communication differ across the globe. Europe initially favoured DSRC, a Wi-Fi-based technology. Still, there is a noticeable shift worldwide towards the newer CV2X technology, which employs the language of cellular networks for communication. The United States, China, and South Korea have already embraced CV2X, and Europe is expected to follow suit due to economic considerations and the availability of compatible hardware.

In regions like India and Japan, regulations and preferences surrounding V2V technology are still evolving. India displays a growing inclination towards CV2X. Meanwhile, Japan presents a unique scenario, with diverse technologies utilising different segments of the electromagnetic spectrum for emergency services.

How software In cars helps making money

The SDV market is rapidly transforming, with automakers increasingly integrating SDV features for monetisation. This growth is expected to contribute one-fifth of automotive revenue by 2034, driven by shifts towards ‘autonomy as a service’ and changing vehicle ownership models, favouring leasing and monthly software subscriptions. The industry anticipates average subscription revenue of about $70 per month per vehicle, potentially generating $700 billion annually, although hardware sales still constitute 80% of total revenue.

Globally, automakers are moving towards uniform pricing for software features. This consistency ensures standardised pricing across regions. Additionally, the ongoing revenue potential from subscriptions over a vehicle’s lifespan, typically 12 years, presents a lucrative opportunity for automakers.

India, with its rapidly expanding 4G network coverage, presents an intriguing market for software defined vehicles. Approximately 90% of India’s population enjoys 4G connectivity, laying a strong foundation for the adoption of software-defined features. However, barriers such as import tariffs for electric vehicles have hindered the entry of cutting-edge technology. Nevertheless, if these obstacles are overcome, India could witness significant growth in the realm of software-defined vehicles, capitalising on its robust 4G network infrastructure.

Consumer sentiment plays a pivotal role in the success of subscription-based software services in vehicles. The way OEMs package these services will determine their attractiveness to consumers. Recent examples, like BMW’s trial of heated steering wheel subscriptions, demonstrate the potential impact of negative consumer sentiment. When handled poorly, such subscription models can backfire, prompting automakers to rethink their strategies.

The automotive industry is undergoing a profound shift as SDVs become increasingly prevalent, reshaping the way we interact with cars. From basic navigation to advanced AI for autonomous driving, software plays a pivotal role in enhancing user experiences. Over-the-air updates offer convenience and faster innovation, while in-vehicle payments turn cars into payment devices, and AI-driven digital assistants make interactions more natural. V2V communication technology enhances safety, and the SDV market is poised to contribute significantly to automotive revenue. As the industry adapts to these changes, it promises safer, more convenient, and personalised driving experiences for consumers.


James Falkiner is a Technology Analyst at IDTechEx, working in the field of semiconductors with a particular interest in 5G/6G, connected vehicles, and silicon photonic integrated circuits

The co-author, Nidhi Agarwal, works as a Technology Journalist at EFY

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