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The union of Silicon Valley & the automotive industry

In about 4.5 billion years, our Milky Way galaxy will likely collide with the twice-as-large Andromeda galaxy, possibly creating a new supergalaxy that would contain a majority of the stars from both. The idea of two massive objects colliding and forming a wholly new object is analogous to what is happening to the automotive industry. If the Milky Way represents the automotive industry, Andromeda represents a significant portion of Silicon Valley. Some of the most difficult engineering challenges in the world lie at the intersection of mobility and technology. This collision is practically inevitable.

While the previous decade of collaboration between the tech industry and automotive has focused on digital services such as CarPlay and Android Auto, the next decade will be largely driven by non-consumer technologies: machine learning, artificial intelligence, cloud computing, edge computing, containerization, and big data all play a significant role in how vehicles will be designed and developed for the foreseeable future.

The current wave of auto-tech partnership is all about the software-defined vehicle

The industry has come to refer to this convergence of technology as the software-defined vehicle. Its essence is that the vehicle is not bound principally by the hardware components that comprise its physical bill of materials; rather, the experiences, performance, and functionality are largely defined in software that runs on top of, but not deeply tied to, the hardware. Automakers are currently addressing the core technological and organizational challenges of designing vehicle platforms that support such ambitions, but in order to successfully design something that will still be relevant in a decade, they must also consider how they will be updating and interacting with these platforms well after launch.

SBD Automotive’s Six Principles of Software-Defined Vehicles

The challenge of bridging these various requirements requires a diverse array of skills. One pathway is through the OEM’s supply chain, and this is where we see some of the most recent activity from the technology industry. Just this week, AWS announced a deep partnership with Continental to develop an integrated platform called Continental Automotive Edge (CAEdge) for automated driving, data localization, remote updating, and other software-oriented tools for OEMs. The ambition is summarized nicely in the press release: “CAEdge…features a virtual workbench offering numerous options to develop, supply and maintain software-intensive functions.” Essentially, Continental and AWS aren’t providing the actual vehicle software – the OEM can develop this software using whichever resources it sees fit – but are providing the toolsets that are required to achieve software definition. The partnership goes beyond toolsets as well: AWS is providing training to over 1,000 Continental engineers as a means to optimize how AWS technology is used within the solution, particularly in the domain of machine learning.

Continental and AWS aren’t the first to market with such a vision. In February, Microsoft and Bosch, primary competitors to AWS and Continental respectively, announced a similar partnership. While the exact vision for the capability of the jointly developed toolchain is not as well-defined as Continental and AWS’s, the Bosch-Microsoft tie-up more explicitly targets the domain of DevOps – the framework for providing continuous updates to vehicle software. Microsoft and Bosch have announced end of year 2021 as the initial target for prototype vehicles equipped with the jointly developed toolchain.

Tech partnerships are about organization and process just as much as technology

Automotive manufacturers struggle with agile development. It’s just not in their DNA – everything that has been deeply codified into the automotive development process, generally for the purposes of safety compliance and quality management, runs counter to the principles that make agile work. At the same time, they understand that the competitiveness of their products over the coming decade will be judged in large part based on how flexible they can be in enabling new features, resolving customer issues, and improving branded experiences as a direct result of the digitalization and integration of the in-vehicle user experience. In addition to building the technology enablers to support agile development on top of a platform that also meets all regulatory requirements, automakers also require significant transformation to achieve the processes and relationships required to build products iteratively. Going from a business that focuses its attention on 3-4 year development cycles, switching to a new one after the delivery of an active cycle, is like trying to turn a massive cargo ship 180 degrees in a narrow canal. It can’t happen fast (or at least fast enough) and is rife with hazards. One of the bets that tech companies are making is that automakers will want to use their experience in subscription business models, agile development, and software-defined functionality to help them accelerate the course adjustment. While the need for platforms and technologies that aid software definition is clear, the ability of these companies to materially affect OEM processes and culture is much less clear.

Having a material impact in this context requires a much deeper partnership, similar to how Google is working with Ford in Team Upstream. Combining and co-locating resources while co-investing in mutually beneficial technology will likely have the biggest overall impact in helping automakers achieve higher levels of agility. While Microsoft and AWS have professional services capabilities, a much deeper level of integration between these companies and their automotive development customers or partners is required for their software to reach 'disruptive' level.

Production is the next step

For all of this activity, very few automakers have actually launched platforms which provide the technology toolchain necessary for software-defined functionality in the vehicle. The true litmus test of the industry’s ability to adapt to faster product development cycles while maintaining high levels of safety will be tested over the next five years. This adjustment will be balanced against other disruptive factors in the industry, including electrification and its supply chain challenges, the Schrödinger’s cat that is shared mobility, and more stringent regulations on security and software updates. Automakers must carefully balance its investments to ensure technological readiness to achieve the appropriate product portfolio for its addressable market. Building a portfolio of experienced partners and platforms, such as those developed by Tier 1s and cloud vendors, is only one piece of the puzzle. Looking to the future, the ongoing collision of automotive and the tech sector will continue to create new opportunities for differentiation amongst OEMs while simultaneously forcing less capable OEMs to combine or abandon markets altogether as their products lose competitiveness. Like the much larger Andromeda colliding with the Milky Way, the massive technology sector will continue to subsume a sizeable portion of the automotive value chain, but much like it isn’t a guarantee that the Milky Way and Andromeda will congeal into one supergalaxy, it also isn’t a given that the automotive industry will be swallowed by the tech sector. While companies like Google and Amazon invest heavily in autonomous driving and mobility capabilities, automotive manufacturers must adapt their technology strategy to compete where needed but remain focused on providing unique brand differentiators to grow market share in the face of a brand new type of competitor.

A deeper dive into the software-defined vehicle

SBD Automotive has created a report that will deeply establish the core requirements and facets of software-defined vehicles, describe each technology layer and its interdependencies, detail and assess OEM-specific software-defined vehicle strategies, and profile key players in the software-defined vehicle supply chain, including Tier 1s/Tier 0.5s, cloud service providers, and software vendors. If you are an OEM looking to understand the state of the art in software-defined vehicle technology, this report can serve as a specifically engineered baseline from which to assess your current product portfolio and begin planning for future generations.

The Software-Defined Vehicle Technology Stack (SBD Automotive)

If you are part of the automotive technology supply chain, this report can detail the core opportunities for products and services that can serve as the baseline from which automakers can differentiate. From the vehicle’s hardware and E/E architecture to the upstream cloud services, this report exhaustively details the software-defined vehicle end-to-end technology stack while clearly defining the value chain for the different layers, establishing the target from which suppliers can formulate the target product strategy and business model for software-defined vehicle technology.


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