Moving into the

software-defined vehicle
fast lane
Why transformed products and services hold the key
to OEMs’ new digital profit pools
 Personalized As consumers re-evaluate what they expect from a driving
experience, the automotive industry is at an inflection

entertainment, point. For decades, consumers have cared most about

the performance, reliability and safety of their vehicles.

features and
The industry fulfilled those needs by optimizing machines
and hardware. Today, consumers are starting to think

services.
about vehicles in much the same way they do about
smartphones: the ultimate connected device. It provides
real-time responses across channels, personalized features
and services. And that shift in consumer needs is forcing
the industry to move into a new world of software-defined,
service-driven digital mobility.

2
Moving into the software-defined vehicle fast lane
 The industry has seen several inflections in the
past. So why is this one so critical? With the move
to software-defined mobility, a new race for Automotive revenues in US$bn
automotive revenue pools is on. The competitors
facing established original equipment manufacturers Digital: Mobility services Digital: Sales & Finance

(OEMs)? Tech giants and new automotive players. Autonomy Traditional: Mobility services US$3.5tn
Connected ecosystem Traditional: Vehicle operation
And the race will be especially intense for new
Digital: Car features Traditional: Sales & Finance
9,154
revenue from digitally-enabled services. Analysis by Car sales
Digital: Vehicle operation
1,480
Accenture Research estimates (see page 23 for full
690
workings) these are set to rise more than tenfold by
1,500 6,471 662 15
2040, totaling US$3.5tn or 40% of all revenues in the 525
627 132
automotive industry (see figure 1). 255 183
4,869 399 1,130
159 7
Digitally- 214 67
88 374 377
3,804 176
Our authors and researchers enabled 76
23
177
3
44 957
revenues 100 94 750
interviewed senior automotive 1 32 305
560 10 284 3,960
industry executives with deep 231 8
Traditional
experience in software-defined auto 3,122 3,300
2,700
vehicles, totaling 25 hours of revenues
interviews between March and
April 2022. Extensive secondary 2021 2025 2030 2040
research and financial modeling
was also conducted. See page
23 for the full methodology. Source: Accenture Research (2022)

Figure 1: Revenues are increasingly shifting toward digital business models across the entire automotive industry.
3
Moving into the software-defined vehicle fast lane
 Evolving from vehicles into platforms
Established OEMs are at a particularly critical moment. They need to
decide how they want to act in this new competitive landscape and
how to capitalize on these new profit pools. The key decision they
have to make is selecting the control points to secure the position they
aspire to. OEMs increasingly understand that the vehicle-centricity of
the past is no longer enough to excite consumers. Instead, vehicles will
become a part of software and service platforms that span all aspects
of consumer mobility. OEMs are clear about the need to transform. But
our interviews with senior automotive industry executives show that
OEMs see their R&D governance models (the way they drive, qualify
and execute product engineering) as ill-prepared to build and deliver
services enabled by software. In other words, they are struggling to
establish a strong competitive position.

The aim of this paper is to provide guidance and discuss the key
steps for OEMs to handle transformation successfully. In analogy to
the entry of Apple into the cellphone market in 2007, we believe that
— if managed smartly — OEMs don’t need to wait until 2040 to see
additional revenue from digitally-enabled services, but can benefit from
these new pools earlier.

4
Moving into the software-defined vehicle fast lane
 The big bet
OEMs are investing billions of dollars in software-defined
vehicles and new service-oriented architectures.

5
Moving into the software-defined vehicle fast lane
 Such investments come with three major promises:

Customer experiences to rival the digital tech giants New profit pools and annuity revenue streams
Today’s consumers compare the Apple CarPlay). With software-defined Software also becomes a source of new Additionally, there is significant potential
experience of a car with its most vehicles, however, vehicles promise premium services with potentially high for monetization from new mobility
important digital companion — the to behave more like smartphones. profit margins, comparable to what we services such as ride-hailing and
smartphone. Seamlessly integrated into That’s either by converging cars with have seen in the smartphone industry. autonomous driving (see figure 2 and the
all parts of professional and personal life, smartphones, as with the “digital key” OEMs can build those services on the full methodology on page 23). OEMs have
it entertains us; orders food for us; lets feature that enables the driver to connected ecosystem, as with music not yet taken advantage of these. But they
us participate in social communities and open and run the vehicle. Or through streaming, parking or tolling. offer the chance for monetization — via
it even provides access to our homes. connected features of the car itself, over-the-air subscriptions — throughout
such as paying at charging spots the vehicle’s lifecycle.
Traditionally, cars don’t provide a
automatically or streaming games
similar experience, which is why the
on the screen. Incumbent OEM
s
smartphone has taken over as the user er
s
lay
p
interface in the vehicle (for example, w

Ne
43%
18%
2021 2040
Scalable, reusable, efficient and fast software platforms Total revenue
8%
Total revenue
US$ 3.8tn US$ 9.2tn
To survive in the new connected models and generations of vehicles.
era, it is crucial for OEMs to reduce Platforms offer standardization and 7%
software development costs and over-the-air updates that can help OEMs 6%
increase software quality. The new era accelerate development timelines and
Au
to
mo 18%
t i ve
I oT p la
yground
of software-defined vehicles promises enhance final product quality.
software platforms for use across
Vehicle Sales & Finance Vehicle operations

Connected ecosystem Autonomy Mobility

Figure 2: Digital revenue streams projected to rise in mobility/automotive 6

Moving into the software-defined vehicle fast lane
 But how well prepared are OEMs to realize the promises In particular, incumbent OEMs are struggling to forge the
that come with software-defined vehicles? Shareholders’ connection between R&D decisions and value creation with
assessments of ambitions and roadmaps reveals a clear software-driven vehicles. These executives see plenty of room
picture. Over the last five years, new players such as Tesla, for improvement, especially in their R&D governance models.
NIO and BYD sustained stronger revenue growth and market
capitalization compared to incumbent OEMs (see figure 3).
OEMs are finding it hard to match the operational performance
Top 15 OEMs by market capitalization and revenue growth
X Axis median => +8%
and speed of these new players. Our interviews with senior 55

5-year revenue CAGR (FY 2017-FY2021)

automotive industry executives — along with extensive NIO
50
secondary research — confirm this.
30
Tesla
25
VW
"The readiness of the engineering 20

functions within OEMs right now 15

to adjust to the business model
BMW
associated with software-defined Volkswagen
Ferrari
Great Wall Motor BYD
0
vehicles, is quite low. They are just Toyota Hyundai
Honda
not used to it.” -5 SAIC
Maruti Suzuki
GM Ford
Mercedes Benz Group
India market cap
-10 22 June 2022
VP, Autonomous Driving MaaS strategy
-16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 24 26 28 30 32 34 36 38 40 42 76 78 80 82
division, a leading European OEM
5-year market capitalization CAGR (2018 — 2022)

Sources: Accenture Research (2022), CapitalIQ (2022)

Figure 3: New automotive players' revenue and market capitalization outpacing incumbent OEMs 7
Moving into the software-defined vehicle fast lane
 Redefining
the product
So, what should OEMs do? A key task to handle the software-
defined vehicle involves the vehicle itself. On this point, it is worth
taking a look at China’s auto market, where connected features
and digital services have become essential for local consumers.
The winner is no longer who offers the “best car”, but who
delivers the best total experience to a target group. Achieving
that requires a perfect fit between the business model and a
performant technology stack. Together, these create an exciting
customer journey — something that Chinese brands like NIO have
successfully pursued.

8
Moving into the software-defined vehicle fast lane
 To achieve the same outcomes, OEMs need to think
beyond the car as simply “the vehicle plus x”, where the
software is fitted to the vehicle. Instead, they need to think Customer journey
along the lines of a system of systems, i.e., an interplay
of standalone systems that, as a collection, enable new
and unique capabilities. These systems include the front-
end, cloud back-end, interfaces to infrastructure and
ecosystems — and the vehicle platform (see figure 4). Big Loop

In essence, it needs a service-platform, an approach

thought through end-to-end, reaching beyond the vehicle.

Front-end Vehicle system Data Cloud / back-end

"Customer expectations are changing,

Infrastructure & ecosystems
as today’s vehicle users are much more
digitally-native and accustomed to
making software updates to enhance
the experience of a product or service.”
Source: Accenture (2022)
Director of connected car services,
a leading OEM in Asia

Figure 4: A system of systems enabling new and unique capabilities

9
Moving into the software-defined vehicle fast lane
 Spotlight #1

NIO builds its fan base

NIO is a great example of a new player in auto that is combining a customer-first mindset
with that of a software company. The Chinese startup launched a new series of vehicles with
an emphasis on creating a unique user experience.1 It begins with the sense of a community
where people connect through the app and then meet in NIO Spaces and NIO houses,
destinations where some have even sought to get married.2

Customers are targeted as fans, not simply as buyers, with a special focus on user feedback,
which includes direct communication to NIO executives and rapid implementation of
product upgrades. Inside the vehicle, the personal assistant, NOMI, is designed to add an
emotional and personal character to the vehicle.3 And during ownership, the company
addresses very real customer pain-points, such as long waiting times for the vehicle to
recharge or even finding an available charging station by swapping the entire battery4
or addressing parking headaches with a valet service5 that can be directly ordered from
the vehicle. Future vehicles will join AR/VR glasses, sound and a cutting-edge motion
technology to create an immersive, 3D cinema experience in the vehicle6 — providing an
even better experience for their fans and help ensure new revenue streams for NIO.

10
Moving into the software-defined vehicle fast lane
 Owning the right
control points
A service platform needs to be understood as an enabler for the
business model(s) that an OEM has identified to realize future revenues.
But not all elements are equally important or differentiating. The key
is to pick the right ones in which it makes most sense to invest scare
resources, time and money.

Take, for instance, Amazon and its intention to be the number one
marketplace in the world,7 with the best customer experience. Through
events like Black Friday, Amazon very quickly realized that just offering
the best selection of goods was not enough; they also needed to offer it
24/7 through every peak demand period.

The most critical element to achieving this was the backbone of the
marketplace. And what better way than to control it directly. With their
business model in mind, Amazon identified the control points — the
critical layers of the technology stack — that they needed to own.

11
Moving into the software-defined vehicle fast lane
 Automotive OEMs need to ask the same question:
which control points do they need to own in Infrastructure/
order to create a user experience that fits their ecosystem
V2X (charging, parking, V2V, V2I)
targeted business model? This question is complex Intermodal mobility
Communication (5G, satellites)
because today’s automotive technology stacks are Backend/cloud
comprehensive, extending beyond the vehicle itself Ecosystem integration,
analytics, security, SW OTA
to encompass everything that’s required to deliver
User interface
connected, digital experiences and services
UX, HMI, voice control,
(see figure 5). gesture control

Services/
applications
In this context, Tesla has pursued the path of owning Infotainment/connectivity,
ADAS/AD, Driving/charging
and controlling many more layers than the industry Software
has traditionally dealt with. Established OEMs will platform
follow. For instance, many are creating their own Middleware
AutoSAR classic/adaptive, OS,
Vehicle
operating systems (OS): Volkswagen with its vw.os, hypervisor, container
platform
planned for launch in 20258 and Toyota with Arene9 Domain controllers,
sensors, actuators, battery,
also in 2025. Each follows the same narrative of powertrain, vehicle

scalability beyond the OEM.

Legend: vehicle-to-everything (V2X); vehicle-to-vehicle (V2V); vehicle-to-infrastructure (V2I); user experience (UX); human
machine interface (HMI); automotive open system architecture (AutoSAR); software over-the-air (SW OTA); advanced driver
assistance systems & autonomous driving (ADAS/AD).

Figure 5: Today's automotive technology stack encompasses everything needed to deliver digital experiences and services

12
Moving into the software-defined vehicle fast lane
 Spotlight #2

Tesla is going for the

full-stack approach
Tesla, with no prior footprint in automotive manufacturing and R&D, has
nonetheless brought striking innovation into the core domains of automotive
excellence, such as battery cooling10 and its own sensors.11 But much of Tesla’s
significantly higher market capitalization is based on the promise of future
digital services, and the profits that will flow from them — a promise that capital
markets trust Tesla will be able to fulfill.

Much like its technology counterparts, Tesla has quickly diversified its revenue
streams not only beyond the core automotive value chain but has created and
monetized a whole ecosystem around the electric vehicle, with much upside
for future growth. Tesla now offers its own insurance12 and is working toward
converting the vehicle interiors to an entertainment platform.13 Manufacturing
and selling home chargers or solar panels14 sounds like a good add-on for any
homeowner, yet once those homes and vehicles connect to the electric grid,
generate, buffer and broker energy, Tesla has the potential to create a whole
new (and widely anticipated15) parallel energy market.

13
Moving into the software-defined vehicle fast lane
 So, will we see a future with twenty OEM operating Moreover, the competitive landscape is more In this new landscape, OEMs need
systems co-existing in the market? Probably not. The fragmented. New players from the tech industry have
to get to the bottom of some key
content required to keep each platform engaging, entered the market trying to dominate and own specific
questions that include:
combined with a very limited number of customers, areas of the technology stack. For example, with
will not be attractive enough to create a sustainable Android Automotive OS, Google’s operating system
developer community. And the OS is only one example. has been optimized for use in automotive infotainment What are the R&D layers now
Each OEM has its own culture, processes, R&D traditions systems and has already been integrated in vehicles involved in making
and expertise that have evolved over many years — such as those from Volvo and Polestar. Huawei positions software-defined vehicles?
and been very successful in doing so. There is no merit its OS as an alternative to Android. The company and
in dismantling all this to try and imitate Tesla’s model. its partners have launched a vehicle with Huawei’s
Should they develop an
Instead, it's important that OEMs use their heritage to Harmony Cockpit operating system. Multiple other
their advantage and play to their core R&D strengths, open-source initiatives, such as the Eclipse Foundation,
operating system in-house
to build customer-centric and competitive software- are aiming to join forces and create software assets for or collaborate with others?
defined vehicles. reuse by OEMs and suppliers.

What proprietary technologies

do they need to own, and
which can they buy?

14
Moving into the software-defined vehicle fast lane
 These considerations introduce an option
beyond the traditional binary of make or buy.
OEMs now need to think about how they can
collaborate, compose, configure and contribute
to platforms that could be open-source, Full-stack In-vehicle Domain White-label
control services control stacks platform
alliance-driven or offered by tech players. Four
distinct and valid archetypes arise from these
considerations (see figure 6). Each requires
specific capabilities, and each has its clear
Infrastructure/ Infrastructure/ Infrastructure/ Infrastructure/
advantages and disadvantages. ecosystems ecosystems ecosystems ecosystems

Engineering layers
Back-end/cloud Back-end/cloud Back-end/cloud Back-end/cloud

User interface User interface User interface User interface

Service/applications Service/applications Service/applications Service/applications

Software platform Software platform Software platform Software platform

Vehicle platform Vehicle platform Vehicle platform Vehicle platform

Figure 6: Each archetype comprises different elements of the automotive technology stack

15
Moving into the software-defined vehicle fast lane
 Full-stack control In-vehicle services control
Advantages: Advantages:
Full-stack control offers the highest potential revenues It does not have to be the all-or-nothing play. In-vehicle services control
and significant customer loyalty, as well as total ownership means that a few layers are addressed through partnerships and outsourcing,
of customer data. It does this by building and owning while the OEM remains in control of most. OEMs like Mercedes-Benz
everything. That means the complete product, services and BMW are pursuing this route.17 For them, there is no value in building
and experience, as well as everything that delivers it, from their own operating system or cloud framework (e.g. for scaling reasons).
hardware to the cloud back-end. Instead, they are partnering with external providers like Google for Android
Automotive or relying completely on open source.
Disadvantages:
At the same time, this approach — exemplified today by Tesla, Disadvantages:
— requires major investment in infrastructure and technology Of course, use of open-source software may be liable to misuse, which
capabilities. There are considerable challenges, too, such as could create security issues. And this is a model that requires extensive
managing a complex ecosystem over lifetime — e.g., if the supporting infrastructure. If they choose to participate in new alliances
charging infrastructure is also part of the stack, as is the case and ecosystems, companies need to carefully consider trade-offs between
with Tesla — or limiting the addressable market to only the complete control and the costs and capabilities required to develop and
vehicles in operation of the own brand.16 operate a specific layer.

16
Moving into the software-defined vehicle fast lane
 Domain stacks White-label platforms
Advantages: Advantages:
This model targets engineering efforts toward developing highly specialized services Providing a platform for others to build on is another distinct archetype
that can also operate with hardware and near-hardware software from a third-party approach we see emerging. The platform could be hardware or software
manufacturer. Processing and analyzing the data that drivers need requires advanced or, indeed, a combination of the two. Unbranded "white-label" offerings are
data management capabilities, as well as artificial intelligence (AI) and machine learning. sold to others, who, in turn, market them under their own label. There are
Waymo and Pony.AI are examples of this approach. Each offers an advanced software many different variants of this archetype, including those from providers
stack using AI and machine learning to enable autonomous driving.18 As does Baidu’s such as Flextronics20 and Qualcomm21 to self-driving stacks. And some
Apollo, which aims to become the equivalent of a device OS such as Android, but for OEMs may even extend their own platforms to others.
software-defined vehicles.19 This model offers ownership of the customer experience
and therefore enables access to valuable end-consumer data. Disadvantages:
However, while bi- or trilateral vehicle projects have enjoyed significant
Disadvantages:
success in the past, the long-term platform play will require new
But it may also limit control over hardware quality and the experience that it provides.
capabilities. Success here rests on managing the complexities of
Core services experience providers may also run the risk of becoming de facto
architecture alignment, process governance and providing extensive
software suppliers to other industry players. Traditional OEMs that choose to become
maintenance and support to third parties.
customers of such a platform would restrict their potential to create value. They would
be left with shaping the brand, design and user interaction as well as integrating the
complete experience.

17
Moving into the software-defined vehicle fast lane
 OEMs must now chart their The targeted profit pools and The maturity of standard solutions
own course and identify business models in the market
the right archetype for
The choice of whether to self-develop stacks depends on which Modular approaches of modern software architectures and
their business — a strategic business model the OEM targets. Brand identity, customer base, the progressive decoupling of hardware and software are
decision that will determine price positions and other factors are affecting the according facilitating the integration of external software building blocks.
the services it can own and OEM strategy. To monetize services, features and data, OEMs To safeguard their software development resources, OEMs must
monetize in the future. need to first create value for the customer — which requires them shift their focus from self-developed architectural elements to
Making that decision needs to control the customer experience. Our research highlights the customer differentiation and business models. The integration
an evaluation of how well the complexity of integrating external solutions without losing the of mature standard solutions like Android, in all its different
respective option aligns with: customer interface and access to data. From the tech players’ flavors, can boost time-to-market and efficiency, but needs a
perspective, it is essential to gain access to relevant data of the reversal of mindset: the OEM must adopt the standard solution
vehicle, driver, other passengers and infrastructure. Giving access to realize the benefits. As scalability can be hindered easily,
to those data streams needs to be balanced with the aspired the R&D function needs to find new ways of working with
positioning of the OEM and a realistic view on the feasibility. Most alliances, standard solutions and open source. However, where
OEMs will have to combine a mix of self-developed elements with external solutions are not yet ready to implement or where
close partnering and use of external tech stacks, but always with differentiation is key, proprietary innovations will win the day.
a clear strategy on how to share data and customer access.

4
Realistic future capabilities The financial resources and willingness
In-house development of software requires significant for long-term investment
engineering capacity and capabilities. Should OEMs foresee Developing and maintaining in-house technology stacks also
constraints here, they will need to evaluate the criticality of requires enormous financial investments. We estimate for
control points. If the importance of a technology layer prevents instance, the development of a car operating system can cost
outsourcing, partnering via joint ventures could be an option to an OEM around US$4bn and its lifetime maintenance another
maintain ownership of the respective control points. US$6bn.22 Looking at potential sales volumes, only a few OEMs
appear to have the financial backing to establish a full-stack
approach themselves.
18
Moving into the software-defined vehicle fast lane
 Changing the
corporate culture
and architecture
Along with the transformation to software-defined
vehicles, OEMs also need to transform their organizations.
Today, they are perfectly built to deliver vehicle projects at
a predefined start of production (SOP) date. However, they
need to become organizations that continuously deliver
hardware and software platforms — no longer halting
development once production starts.

19
Moving into the software-defined vehicle fast lane
 and Model-Based development (MBSE) approaches etc.) that ensure a high level of agility and innovation. Both
To continuously improve the driving
will help provide greater organizational agility, as will of which are essential in creating a superior customer
experience for the end-consumer,
adopting consistent processes and tool chains including experience through continuously released features and
a step-change is needed to enable
integration, testing and operations. services.
the regular deployment of software
updates and upgrades to vehicles 3. Bring the business and technology views to an To foster agility, management philosophies at OEMs also
over-the-air, throughout their lifetime. optimum by managed end-to-end architectures. need reorganization. Traditionally, R&D defines the vehicle,
In addition, OEMs need to address Prioritize architecture over everything else and reduce IT defines the backend, and marketing and sales defines
three main imperatives to future-proof silos by adopting an integrated framework that brings the user services. The only way to guarantee a unique and
their business: together end-to-end functional architecture, software seamless user experience is by integrating all of these core
architecture, vehicle architectures and ecosystem areas. Doing so requires executive leadership skills to lead
interfaces. Aligning the functional portfolio with multi-disciplinary and diverse teams, including analytics
1. Manage the ownership of business models and
architecture generations and vehicular project roadmaps and customer experience talent, as well as teams for cloud,
market access. At the business layer, OEMs need to have
will allow for greater innovation. edge and on-board.
clear ownership of their business models (i.e., vehicle
sales, digital sales, B2B) including budgets and bundling At most OEMs, these organizational layers require Finally, OEMs need to increase their attractiveness to
requirements, guiding the technology development. This an overhaul to fit to future product roadmaps and to software and computer engineering talent. Becoming
is especially important as new types of digital business overcome historical restrictions and legacy requirements. a magnet to talent will become more important as the
models don't easily integrate with vehicle lifecycles, However, the increased complexity of vehicle software transition to software-defined vehicles gains momentum.
calculation schemes and technology domains. makes it difficult for OEMs on their own to fully implement It is therefore essential to drive the cultural changes that
quicker development cycles. Instead, they need to will enable OEMs to compete against tech companies that
2. Deliver innovation roadmaps by scalable
work with partners in an ecosystem approach that benefit from a better perceived image among young IT
technology building blocks. To ensure the speed and
brings together software and automotive know-how. professionals. Achieving this will require dedicated career
quality required in a software business at scale with much
Partnerships like these create common standards using paths and offices in vibrant, modern urban locations.
shorter cycle times, OEMs need to orchestrate decoupled
open source and task allocation (via tools, interfaces,
and scalable building blocks. Systems Engineering

20
Moving into the software-defined vehicle fast lane
 Conclusion: Automotive OEMs are at a crossroads. They must
carefully consider their next move and the strategic

the road control points they want to own within the SDV platform
technology stack. This is mission-critical to creating new

ahead. business models that will enable OEMs to monetize new

digital opportunities and future-proof their businesses.

OEMs are under no illusion that they face bumps in the

road ahead, but now is not the time to standstill. Success
will be rewarded to OEMs who drive change—not only
in the products they make, but throughout their entire
organization—and become agile, digital enterprises,
steely focused on creating and delivering unique user
experiences, ready for the imminent future.

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Moving into the software-defined vehicle fast lane
 Authors Contributors Contacts

Christof Horn Gabriel Seiberth Fay Cranmer

Managing Director, Automotive Managing Director, Automotive Growth Markets Lead, Industry X
Europe Lead, Industry X Germany Lead, Industry X

Götz Erhardt
Axel Schmidt Raghav Narsalay Europe Lead, Industry X
Senior Managing Director, Global Managing Director, Accenture
Automotive Industry Sector Lead Research Lead for the Metaverse
Continuum Business Group Aaron Saint
North America Lead, Industry X
Juergen Reers
Managing Director, Shiva Kumar Adari
Global Mobility X Lead Research Specialist, Thought Sef Tuma
Leadership Engineering and Manufacturing
Lead, Industry X
Hans Loes
Principal Director,
Global Strategy and Growth
Mobility X Lead

Stefan Hattula
Senior Principal, Global
Automotive Research Lead

22
Moving into the software-defined vehicle fast lane
 Research methodology
We interviewed 15 senior automotive industry executives from companies with deep experience in the
area of software-defined vehicles. Interviews took place between March and April 2022.

The executives we interviewed belonged to one of the following four categories...

... with revenue of over US$1bn: We also interviewed 10 client-facing Managing Directors from Accenture’s Automotive practice working closely with OEMs
Executives we interviewed in China, Europe and North America between January and February 2022. We asked the executives to share their point of
represented some of the biggest view on the ongoing transition towards software-defined vehicles and what it means for the engineering and manufacturing
Incumbent OEMs incumbent OEMs headquartered in functions of incumbent OEMs. They also shared their views on the challenges incumbent OEMs are facing and what is holding
China, Germany, Japan and the US. them back on their journey to building value with software-defined vehicles. We combined these discussions with our
extensive secondary research to help shape the research narrative. We also used the discussion with external senior
... with revenue of over US$1bn: executives to validate our hypotheses in the realm of software defined vehicles..
Our executives pool included some
Tier-1 suppliers of the largest Tier-1 automotive Our projections on current and future Automotive revenue pool values (as shown in figure 1) are estimations based on
suppliers from Europe. economic modeling compiled by experienced analysts within our in-house Accenture Research team. The model is
underpinned by quantitative secondary data from more than 40 sources (including investor reports, auto intelligence etc.)
... with revenue of over US$1bn: that provide information on sales development, market financial performance, feature-level market forecasts and price
We interviewed some of the largest estimations. All compiled data was validated, categorized, and duplicative entries suppressed (e.g., ensuring features are only
new automotive suppliers from the accounted for under a single category and do not appear across multiple categories) and our assumptions were verified
New-age suppliers
US, involved in supplying advanced based on discussions with automotive industry experts and Accenture leadership. To identify the size of current and future
computing platforms to the OEMs. digital revenue streams (as shown in figure 2), we aggregated the projected values of features within each respective
category.
... with valuations of over
US$500m: We interviewed new Lastly, we used publicly-available financial data to validate our findings about the incumbent OEMs. We collated revenue and
New auto players auto players based out of China. market capitalization figures for the top 15 OEMs globally for the period 2017 to 2021 and calculated the 5-year compounded
annual growth rate (CAGR) for each of the players. The CAGR, along with the size of the market capitalization (as on 31 March
2022) were then mapped as shown in figure 3 of this report.
23
Moving into the software-defined vehicle fast lane
 References
1 Technode (2017), “NIO is putting users first, selling cars second”, 8 Automotive News (2022), “Unity game software to power new 15 Smart Energy International, “Tesla eyes energy trading market
accessed on October 5, 2022 and viewable at: Mercedes-Benz infotainment domain”, accessed on October 5, opportunity”, accessed on November 1, 2022 and viewable at:
https://technode.com/2017/11/28/techcrunch-shanghai-nio 2022 and viewable at: https://www.autonews.com/automakers- https://www.smart-energy.com/storage/tesla-eyes-energy-trading-
suppliers/unity-game-software-power-new-mercedes-benz- market-opportunity/
2 NIO (2021), “NIO Spaces: Continuing to Grow Our Community”, infotainment-domain
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Moving into the software-defined vehicle fast lane