INDUSTRY WATCH
A study by the IBM Institute for Business Value highlights that over the next decade , 80 % of new cars will have a powertrain that will be electrified to some extent , according to respondents .
The findings also reveal that :
• 74 % of executives surveyed believe that by 2035 vehicles will be software defined and AI powered
• 75 % of respondents say the software-defined experience will be the core of the brand value
• The auto industry is trying to shift its business model from one-time car sales to a recurring revenue model for digital services and products
The study is a data-led analysis of automotive and mobility industries developments over the next 10 years and is based on 1,230 interviews with senior executives from automotive OEMs , suppliers and surrounding industries across nine countries .
Study methodology
The IBM Institute for Business Value ( IBM IBV ), in cooperation with Oxford Economics , surveyed 1,230 C-level automotive executives in nine countries in Q3 2024 .
Forty per cent of the sample represented automotive OEM and EV companies , 40 % auto suppliers and 20 % ecosystem players .
Participants were asked a range of questions in various formats about their organization ’ s expectations , results , concerns and barriers for transition to software-defined , electrified future .
" The shift to software-defined vehicles ( SDVs ) was cited by the majority of industry executives as the key to future brand developments ," said Jeff Schlageter , Automotive Industry General Manager IBM .
" It is indicated that vehicle value may no longer be limited to initial features and functionality – it would be earned over the life of the vehicle by continuously providing superior customer experiences with new applications and subscription-based services for drivers ."
The study highlights that the industry is preparing to offer deeper , more personalized user experiences that are enabled by digital capabilities . Currently just 21 % of research and development budgets are currently allocated to software and digital developments – but respondents expect this to nearly triple to 58 % by 2035 .
The research also reveals gridlock at the heart of SDV developments . The traditional approach to vehicle architecture – where software for a single domain ( such as brakes ) is delivered separately from another domain ( such as airbags ) through individual electronic control units ( ECUs ) – is no longer sustainable for the SDV era .
To reach a future where cars are truly digital products , automakers need a sweeping overhaul of current electrical and software architectures .
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