A milestone on the journey toward autonomous driving

This flexibility makes SDVs the perfect bridge to the autonomous vehicles of the future. Every autonomous vehicle will need a central computing unit to process the vast amounts of data from onboard sensors and external data streams – the latter still being a major challenge.

While manufacturers can equip their vehicles with all necessary sensors, building the corresponding infrastructure will take more time. For instance, road markings optimised for sensor recognition are required. Drivers using lane assist systems (mandatory in new vehicles since 2024) will be familiar with situations where double white-yellow markings in construction zones confuse the sensors. In an SDV, a software update could quickly address such issues – something that’s not possible in conventional vehicles.

SDVs give manufacturers time to gradually build out various assistance systems and only roll out features for which the necessary infrastructure already exists. At the same time, they’re not losing ground in the race to fully autonomous vehicles, as these remain the end goal of SDV development.

Challenges and Opportunities for Car Manufacturers

Developing SDVs presents new challenges for automotive companies but also offers opportunities to future-proof their business. The biggest challenge is likely the underlying operating system. Rather than relying on decades of experience, manufacturers must first develop the expertise needed for software development, requiring entirely new teams, workflows, and mindsets.

This shift also involves moving away from traditional business models and manufacturing processes. Car makers must start thinking like mobile device providers. Instead of seven-year product cycles, they need to embrace agile processes – especially as SDVs, being connected vehicles, are more susceptible to cyberattacks and software bugs. Many software updates will therefore address security vulnerabilities and minor glitches – a clear parallel to smartphones.

But SDVs also offer manufacturers significant opportunities. They can establish ongoing relationships with customers throughout the vehicle’s life, enabling entirely new revenue models, such as subscriptions for new features or “features on demand” delivered via software upgrades. These may not necessarily be brand new features but could also include unlocking existing ones that weren’t purchased at the time of sale.

Production also stands to benefit. Using a central computing unit allows for more efficient manufacturing, as fewer variants are needed. Just as with core vehicle components (chassis, powertrain, E/E architecture), manufacturers can pursue a platform strategy, developing different models using a modular approach. This saves development time and takes advantage of economies of scale.

What Changes for Drivers?

The biggest benefit for drivers is being able to use a vehicle that stays technically up-to-date for much longer. Instead of simply depreciating after purchase, regular over-the-air updates can even add value over time.

SDVs are also highly customisable. User profiles can store personal preferences such as seat and steering wheel positions, suspension settings, or climate controls, all accessible at the touch of a button – especially useful for vehicles shared by multiple users.

SDV owners will also appreciate not having to visit a garage for every minor issue. In traditional vehicles, separate control units often need to be replaced or updated at an authorised service centre. With an SDV, such fixes can be applied overnight, with owners notified via their smartphone once everything is sorted.

Of course, there are downsides. The ability to offer new features via software updates will be seen by manufacturers as a new revenue stream. Any potential increase in a vehicle’s value over its lifespan is unlikely to come for free. Consumers should be especially cautious with subscription and pay-per-use models, as these could lead to significant ongoing costs. Data protection is another important consideration. The advantage of software-based features can quickly become a disadvantage if the software fails to work correctly – a major software bug could theoretically disable the entire vehicle.

Conclusion: Cars Become Mobile Devices

There’s every reason to believe that future cars will be defined by their software. The opportunities and advantages seem to far outweigh the challenges and drawbacks. For consumers, the big question is: can established car manufacturers successfully make this sweeping transformation, or will they be overtaken by tech companies for whom software is already the core product? The latter may well have an edge if customers start prioritising processing power and update guarantees over horsepower and engine displacement.

Text: Falk Hedemann