AI, personalization, connectivity, improved safety, and increased usage of data are just some of the trends transforming the automotive industry. Digital upends old models. And two tech companies undertook a similar approach with smartphones over the past decade, acquiring handset players and leveraging their hardware to stimulate market demand for new operating systems and applications. The shift in software perspective, from discrete modules tailored for specific functions to a common architecture capable of effectively hosting code for each major system, has already occurred in other industries. Security could greatly expand, enabling one overarching solution to monitor the full code base—not just at a handful of interfaces. Even if a leading technology company develops an innovative end-to-end software platform, OEMs might be reluctant to deploy it across their fleets. They can also unlock doors remotely via their mobile devices. The transition from formerly hardware-based products to a software-based, service-driven world is particularly challenging for traditional automotive manufacturers. Since 2003, they have been working on the development and introduction of an open, standardized software architecture for the automotive industry. our use of cookies, and For ADAS, companies originally borrowed early software from aerospace applications and manufacturing automation; today, real-time operating systems from semiconductor players and embedded-software companies have become popular. It looks like 3D-printed cars may be heading into the mainstream market, and license plate recognition (LPR) software has the potential to improve security and the flow of traffic. For instance, more resources could be allocated to ADAS during “edge cases” for which complexity is high and response speed is paramount. Software development providers are also honing features that personalize the driving experience, from remembering frequented routes to adapting to a driver’s comfort, meaning that automobiles will become more responsive to the user’s needs. It is also difficult to align updates and patches across modules, particularly since the number of potential “attack surfaces” rises as the number of connected and autonomous driving systems increases. Changes to any one software module often require extensive rework. Automotive players could enhance safety, with real-time notifications triggering immediate visual, auditory, and tactile feedback, throughout the cockpit, that alerts drivers to act. The key driver for the automotive software industry in this region is the rapid development of intelligent transport systems and connected mobility in countries such as China and Japan. Software development has become one of the key areas in the automotive industry. Developers working on different software stacks across a vehicle seldom coordinate their activities, however. For instance, they should allow multiple developers to contribute simultaneously and make rapid improvements. And that’s only the beginning. What trends, devices, and products are shaping the automotive industry today and in the future? Drivers can control their environments through voice-activated navigation systems. We are beginning to see similar shifts in the automotive industry, with a few tech-focused players recently taking the first steps at integrating software elements into combined platforms (Exhibit 3). Such a construct would provide a solution to many of the pain points present in today’s fragmented ecosystem. First, this construct would allow automotive players to address the performance issues stemming from disparate operating systems and disjointed sets of code. Due to personalized automotivesoftware, automotive dealerships and shops are working seamlessly. This change is happening so rapidly that automotive OEMs and other industry stakeholders are now struggling to keep pace. “Our vehicles were once our cocoons, insulating us from the world outside, but now we demand vehicles that include a host of new experiences and connectivity features — and we’re all along for the ride.”. Toby Clarence-Smith. Automotive Dealerships and auto shops are streamlining their working with custom automotive management software. cookies, McKinsey_Website_Accessibility@mckinsey.com. An OEM’s in-house team may build some; others are purchased from suppliers or come out of strategic partnerships or joint ventures. Fundamental readjustments to the whole automotive value chain seem inevitable. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. If you would like information about this content we will be happy to work with you. Consolidation of Electronic Control Unit (ECU) functionality. And you can’t even call the automobile industry a community because everybody is frightened of being outperformed by a competitor if they share anything about how they develop software … Companies are working towards high (Level 4) and full (Level 5) automation. Please try again later. With the gap between complexity and productivity widening, OEMs and tier-one suppliers will soon face a massive talent shortage and a huge increase in development costs. “Today, you’ll find an intense focus on how we stay connected with the world outside when we’re behind the wheel — that is, while we still need steering wheels,” a Wired article entitled “How Connectivity Is Driving the Future of the Car” notes. Automotive embedded E/E and software development with codeBeamer ALM . The latest automotive innovations, including intuitive infotainment, self-driving abilities, and electrification, depend less on mechanical ingenuity than on software quality, execution, and integration.