Software is becoming the defining vehicle technology

The times are changing, and so is the industry.

Not that long ago, what was under the hood was the primary consideration in selecting a new car.

Now, not so much, apart from whether it’s an internal-combustion engine (ICE) or electric motor.

Beyond some minimal level of performance and an acceptable level of fuel consumption, the nuts-and-bolts of how the power is made seems of little consequence to the masses, if not the true gear-heads.

What’s more important for many customers, it seems, is what’s on the screen, or behind it. The electronics, not the mechanics, largely define their perceived image of the vehicle and their level of satisfaction with it.

The dramatic impact of electronics on J.D. Power’s most recent Initial Quality Study illustrates this point. Almost one-fourth of all problems cited by new-vehicle owners is related to infotainment, with key complaints focused on voice recognition systems, Android Auto/Apple CarPlay connectivity, touchscreens, built-in navigation systems, and Bluetooth connectivity.

That situation will become further exacerbated in the future, according to a recent assessment by the McKinsey Center for Future Mobility, which says: “Software will be the key differentiator in the automotive industry within a few years.”

The electronics, not the mechanics, largely define their perceived image of the vehicle and their level of satisfaction with it.

One of the most significant challenges faced by the industry, from OEMs and suppliers right down to those who sell and service them, will be adapting to what McKinsey calls a “software-enabled ecosystem.”

The term ACES, which stands for Autonomous, Connected, Electric and Shared, has been widely touted in the media as representing the future of the automobile. The relative degree to which each of those components may be adopted, and their respective timelines, are open to question. But what is common to them all, and therefore to the automobile itself, is their absolute dependence on electricity and electronics (E/E), and more specifically, on software.

According to McKinsey, major technology leaps in these ACES features will transform vehicle electronics and software-architecture requirements over the next 10 years.

Software requirements for ever-increasing levels of advanced driver-assistance systems (ADAS), potentially right up to full Level 4 or 5 autonomy, will necessarily become much more complex.

Brand competition will drive newer and more differentiated user experiences (UX) and connectivity services, while the ability to update systems over-the-air (OTA)—already in wide use—will become the norm.

In addition, the transition to electric vehicles by most major manufacturers, accelerated by announced mandates in multiple markets, including Canada, is already under way.

That transition necessitates the development and application of complex battery management and thermal control software, as well as that for charging processes and infrastructure. New battery developments, which are occurring rapidly, will multiply the demand.

Add in the need for shared mobility management systems, including robo-taxi services if they materialize, and the ubiquitous role of software in every aspect of the automobile—from design to end-usage—cannot be denied.

That ubiquity has been highlighted lately by the related global shortage of microchips, which has brought multiple auto manufacturing facilities to a slowdown, if not a complete standstill.

All of which adds impetus to not just the disruption, but redefinition of traditional OEM-supplier relationships, which is now seeing software co-developed by teams that include OEM and tier-one suppliers, as well as software providers and chip makers. Something unheard of in past build-to-spec supplier relationships.

The hardware itself will change too, the McKinsey report predicts, as electrical and electronic (E/E) technology becomes more centralized and consolidated within the vehicle, with fewer but more powerful and capable ECUs, called domain control units (DCUs) that combine control of multiple related functions.

Key to all this software control proliferation is an effective level of cybersecurity—a factor acknowledged only in the realm of science fiction not many years ago. It’s a very real concern now.

As we’ve discussed in this column previously, OTA will play a major role not only in delivering security updates, but in remotely fixing problems in various systems and installing new features and functions—all without any absolute need for dealership involvement.

That is not the only impact this software-induced tsunami will have on the dealership. In addition to potentially reducing direct customer-contact opportunities, the product changes themselves will warrant extensive personnel training at almost every level of the organization—for none more so than the service technician.

That role may require a whole new definition as traditional mechanical repairs become less frequently required, and more importance is placed on functions such as diagnostics.

Even different personnel may be required for some functions, with a background and training in consumer electronics, not cars.

Not yet, perhaps, but the times are changing—quickly!

About Gerry Malloy

Gerry Malloy is one of Canada's best known, award-winning automotive journalists.

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