At CES, the software battle is fought in the automotive sector

Posted on January 7, 2023, 7:35 pmUpdated January 7, 2023 at 8:18 pm

“Software is eating the world. Software is eating the world. Although he recognizes that it is a cliché, at CES in Las Vegas this year, Carlos Tavares’ speech points to the new priorities of the automotive sector. Under the cockpit of cars, the software is indeed of crucial importance, even if the strategies are different.

In Las Vegas, Stellantis announced its intention to create an independent software division called Mobilisights. The latter will distribute your data under license to many customers, including Stellantis’ competitors. “By building our own software suite, we can use data more effectively,” Carlos Tavares told a packed house. This division could generate part of the 20 billion euros of revenue that the group expects to obtain from software activities in 2030.

Cars operated by Google

Other manufacturers have opted for an opposite strategy to that of Stellantis. In the Google pavilion, entirely dedicated to the Android operating system, two cars stand out. These are a BMW i7, which uses Google apps including Maps and Assistant, and a Volvo EX90, which still relies a bit more on Google for its software.

“What Volvo does is use the Android platform and build its own entertainment and information system on top of it,” said a spokeswoman. Volvo customers can log into their Google account from their car’s tablet. Which gives them access to your saved locations, voice assistant, contacts, music playlists and more.

For the California tech giant, that means getting more and more access to consumer data. “We want to be where our users are, where they spend their time, and the car is becoming an increasingly connected object,” says “Echos” Eric Kay, vice president of engineering for Mountain View Group.

Google isn’t the only tech giant with a keen interest in the automotive sector. Amazon is also present at the part of CES dedicated to transport. Its Alexa voice recognition software notably powers electric cars from Lucid, a Tesla competitor that has so far produced only a few thousand vehicles.

a historic choice

With the rise of new manufacturers, including Tesla, which integrated software into its strategy early on, automakers face a fundamental choice: retain control over their software or turn to the tech giants.

“Historically, some companies are more integrated than others,” said BCG automotive expert Thomas Weber. “They want to maintain control of these technologies, even if it takes a lot of internal resources and a lot of time. »

Other builders “want to be fast, first to market”, continues the consultant. This is the case with Volvo, for example. In this case, “it’s impossible to develop everything alone, so they turn to Android, Google Play or Apple CarPlay. »

Compromise solutions are also possible. “There are companies that choose to retain ownership of their operating system, but hand over application management to large technology companies,” such as BMW. Whichever solution is chosen, “these are really strategic choices for car manufacturers,” says Thomas Weber.

Vendors and startups get involved

Manufacturers and Gafam aren’t the only ones grappling with this lucrative market. Vendors and several startups are also honing their guns to sell their software. French equipment manufacturer Valeo, for example, already offers driver assistance systems that include a software component.

But he doesn’t intend to stop there: he wants to increase his sales in information and entertainment software – the part of the car that is in direct contact with the driver. “Our goal is to increase sales in this segment from 1.2 billion in 2021 to more than 2 billion in 2025”, recalls the French equipment manufacturer in a press release.

“We are in an ecosystem that is changing a lot with the arrival of software”, explains Karine Paulini, who heads the business development at Sonatus, a startup specialized in the sector. “There are manufacturers that are recruiting developers, pure players like us and suppliers that are looking for their place in all of this. »

The picture is complicated by the fact that there are several layers of software on the same vehicle, which manufacturers sometimes entrust to different partners. “Nothing is fixed, it moves a lot”, continues the latter. For manufacturers, the rise of software means they can continue to sell customer enhancements after the sale anyway. A golden business model that justifies this fierce struggle.

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