How are software-defined vehicles disrupting the automotive industry?

April 4, 2023 by John Makin

Software-defined vehicles transforming automotive industry / Luxoft blog


The automotive industry is evolving faster than ever. New technology and innovations are changing how we drive and interact with our vehicles. One of the most fundamental trends in the industry is the move toward software-defined vehicles that rely on software to control and manage their various systems and functions, define the driving experience, and update automatically.

This shift toward software-defined vehicles is transforming the automotive industry in so many ways that it's hard to keep track — from the design and manufacturing process to the driving experience itself, everything is being turned on its head. This blog will explore how the push toward software-defined vehicles is transforming the automotive industry.

What is a software-defined vehicle? Software-defined vehicles — also called SDVs — are vehicles that are controlled and managed primarily through software. This means that the vehicle's various systems, including the engine, transmission, brakes, steering, vehicle infotainment, etc., are all controlled and defined by automotive software rather than just mechanical components.

So why the shift toward SDVs, you ask? Well, several factors are driving this trend, including the increasing demand for advanced safety features, advanced driver assistance systems, convenience features, the rise of autonomous driving technology, and the need for vehicles to be more connected and integrated with other devices and systems.


Vehicle manufacturers' change in focus and culture


The new focus on SDVs is profoundly impacting the automotive industry as a whole. With software playing such a central role in core functional capabilities, vehicle dynamics, design, manufacturing and vehicle functions, traditional automakers are now competing with technology companies and startups for talent and resources. Tesla is the most well-known example of a company that has embraced the shift toward SDVs, but it isn’t the only company embracing the change. Traditional automakers such as Ford, Volkswagen, Stellantis, Mercedes Benz and BMW are also investing heavily in software and technology, with many introducing their own departments focused entirely on software and creating new business models.


Fundamental change in development approach


The shift toward SDVs also drives changes in the development process as automakers and their suppliers adapt to new software development methodologies and practices. One of the most significant changes is the adoption of the Agile development model, which is designed to be more flexible and adaptable than traditional waterfall development processes.

Shorter development cycles, frequent releases, and a focus on collaboration and continuous improvement characterize agile development processes. This approach is well-suited to software development, as it allows teams to respond quickly to changing requirements and market conditions, and to incorporate feedback from users and stakeholders.

However, the move toward Agile software development cycles can clash with traditional development methodologies for hardware, such as the V model. This clash between the Agile development model and traditional hardware development methodologies can create a culture clash within the automotive industry. For example, teams that are used to working in a structured and sequential manner on mechanical features may struggle to adapt to Agile development's more flexible and collaborative approach. Conversely, teams used to working in an Agile development environment may struggle to fit into the more structured and hierarchical environment of traditional, hardware development.

Automakers and their suppliers are adopting new development methodologies that blend the best of both worlds to address this cultural difference. For example, some companies are adopting a hybrid approach that combines agile software development cycles with elements of the V model. This approach allows teams to take advantage of the flexibility and collaboration of Agile development while still ensuring that the hardware development process is well-structured and sequential.

Another approach is to create separate software and hardware development teams, each with methodologies and processes. This approach allows each team to focus on their respective areas of expertise and work in a way best suited to their strengths.


Over-the-air updates


One of the most significant advantages of SDVs is their ability to adapt and evolve. With traditional mechanical systems, changing or updating a vehicle's functionality requires physical modifications, which can be costly and time-consuming. In contrast, SDVs can be updated and improved through over-the-air software updates, allowing manufacturers to improve and enhance the vehicle's capabilities continually.

These updates can cover security patches, bug fixes, software upgrades, performance enhancements and new vehicle functions — making it possible for drivers to enjoy a continually improving vehicle (and opening up new revenue generating features and business models to automakers). In addition, SDVs can receive these updates directly from the manufacturer without the need to visit a dealership or service center.

This ability to receive over-the-air software updates has also increased cybersecurity for SDVs. Automakers can send security patches and updates directly to the vehicle, making it easier to address security vulnerabilities, protect against cyber threats and maintain compliance with changing regulations.


Reduced costs for automakers and consumers


Reduced costs are a significant benefit of the shift toward SDVs. With software controlling many of the vehicle's systems, the mechanical systems become less complex and disparate. This can lead to a reduction in the overall cost of the vehicle, as well as a reduction in the cost of maintenance and repairs. When combined with over-the-air updates, this can reduce the number of vehicle recalls.

Software-defined vehicles can also reduce costs through the use of predictive maintenance. By collecting data from sensors and other sources, the software can analyze the condition of the vehicle's various components and anticipate when maintenance will be required. This can help reduce the likelihood of unexpected breakdowns and repairs, and optimize the vehicle's maintenance schedule to minimize downtime and maximize efficiency.

Finally, software-defined vehicles can reduce costs through improved fuel efficiency. By optimizing the vehicle's various systems and functions, software can help reduce fuel consumption and improve the vehicle's overall efficiency. This can lead to significant savings over the life of the vehicle, particularly for fleet operators and other high-mileage users.


Transformed driving experience


The driving experience itself is also being transformed by SDVs. With software controlling many of the vehicle's systems and functions, drivers can expect a more streamlined and integrated driving experience with greater levels of safety, convenience, personalization and comfort. Advanced safety features, such as lane departure warnings, automatic emergency braking and adaptive cruise control, are now standard in many SDVs. These features can help drivers stay safe on the road and avoid accidents — making the driving experience more enjoyable and less stressful.

SDVs are also driving changes in the way we interact with our vehicles. With software playing such a central role, many vehicles now come equipped with advanced infotainment systems that allow drivers and passengers to access a range of digital content, such as music, movies and navigation. In addition, these systems are often voice-activated, making it easier and safer for drivers to stay connected while on the road.


Increased connectivity


SDVs are known for increased connectivity and data-driven insights. With advanced communication systems and a wealth of sensors and other data-gathering devices on board, these vehicles are able to generate vast amounts of data that can be used to improve everything from the driving experience to overall vehicle performance. Predictive maintenance systems are one example of the increased connectivity and data-driven insights made possible by SDVs. These systems use data from sensors and other sources to monitor a vehicle's performance and identify any potential issues before they become problems.


Automotive industry software solutions


The drive toward SDVs is set to accelerate, with software and technology playing an ever-greater role in the automotive industry in the years to come. Luxoft helps automakers accelerate the development of software-defined vehicles and overcome the challenges and concerns they bring; the opportunities presented by SDVs are simply too exciting to ignore. As this trend continues, we can expect to see a range of exciting new features and capabilities emerge that will transform how we drive and interact with our vehicles. So, fasten your seatbelts and get ready for a thrilling ride into the future of the automotive industry.



John Makin , Business Strategy and GTM lead, Luxoft Automotive

John Makin author linkedin

Business Strategy and GTM lead, Luxoft Automotive

As Senior Director in Luxoft Automotive, John is responsible for creating and implementing GTM and business strategies. He’s established Luxoft’s vision as “accelerating the transformation to software-defined vehicles.” Previously, John held the role of chief technology officer for a large organization involved in complex IT outsourcing; here he gained insights and in-depth experience in the automotive, government, utilities and financial services industries. He is married with two children and when time allows, he enjoys power kiting, fly fishing, shooting and flying model stunt helicopters.

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