The biggest roadblocks facing the future of mobility - and how to tackle them

Mike Thoeny

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Technological advancements in electrification and software-defined vehicles are reshaping mobility, creating opportunities for industry, consumers, and society.

The automotive software market will be valued at over $80 billion by 2030.

Collaboration between automakers and a range of partners, including semiconductor companies and tech startups, is essential to scale software-defined vehicles and meet consumer demands.

From electrification to software-defined vehicles, rapid technological advancements are reshaping the way people move from point A to B. Innovations underpinning electric vehicles (EVs), advanced driver-assistance systems (ADAS), and the path to autonomous driving is creating transformational opportunities for industry, consumers, and society alike.

Yet the road to achieving the promise of next-generation mobility is fraught with societal and business challenges and enormous technological complexities. Against this backdrop, the automotive industry is recovering from several years of significant global supply chain disruptions alongside other macroeconomic headwinds.

Automakers and their networks of suppliers must work together to overcome the biggest roadblocks facing mobility’s future. Now is the time for the industry to develop a next-generation ecosystem that enables deeper collaboration between both traditional and non-traditional ecosystem partners.

Scaling software-defined vehicles quickly to meet consumer demand

From new features and capabilities to predictive maintenance, today’s consumers increasingly expect real-time software updates to improve safety, enhance their driving experience and reduce repair costs. With the automotive software market expected to grow to over $80 billion by 2030, it’s clear the stakes and opportunities are higher than ever for automakers.

The automotive software market is expected to grow at 9.4 percent per year through 2030. Image: McKinsey Center for Future Mobility

As automakers morph into mobility companies delivering technology, software, and content to meet consumer demands, they are creating their own intellectual property to differentiate products and services. This requires taking a page from the tech industry playbook and working closely with new partners to develop and scale complete mobility systems and solutions.

Historically, automakers leaned on a handful of full-service tier-one suppliers to design and manufacture their vehicles’ components and to deliver the software and hardware that enable the car’s features. In recent years, this pyramid has evolved into an ecosystem. With so many discrete, specialized systems powering software-defined vehicles, automakers must work with a range of experts to develop and produce high-touch, innovative features and functions. This has opened the door for semiconductor companies, software innovators, tech startups, and design and manufacturing partners to join the expanding mobility ecosystem.

While automakers have begun collaborating directly with new partners, the industry has yet to adopt the degree of “co-opetition” and cross-industry partnership required to scale software-defined vehicles. Automakers must identify synergies and begin collaborating on non-differentiating features such as middleware platforms to accelerate innovation and optimise engineering resources.

With software R&D spending forecasted to grow to $47 billion by 2028 – and less than half of spending today allocated to true differentiating features such as over-the-air software and AI software frameworks – it’s imperative that the industry accelerates the openness of the ecosystem. This will enable automakers to move faster and focus their investments on unique, brand-defining customer experiences.

The ecosystem of the future must embrace deep, ongoing collaboration where automakers and partners contribute their respective strengths and collaborate earlier in the development cycle. This focus on partnership will enable automakers to respond faster to shifting market conditions while launching next-generation mobility products with greater reliability, resilience, and speed.

Conquering complexity to develop and deliver complete systems

Designing and manufacturing EVs and software-defined vehicles is complex and requires powerful yet affordable scalable computing platforms. With EVs set to make up 60% of new cars sold globally by 2030 and the underlying automotive ECU market forecasted to grow to approximately $150 billion by 2028, solving this challenge is a priority.

To realize the full potential of software-defined vehicles, we must balance optimizing computing capabilities while providing a buffer for their inevitable expansion. These computers must factor in cost-effectiveness, as well as power consumption and weight to improve energy efficiency. In the future, this could even include the potential for upgradeable computing hardware. This requires a new, closer-knit relationship with semiconductor partners to develop the right solutions, avoiding potentially overpriced chips that are not optimized for purpose.

While automakers may not write every line of code themselves, owning the software defines their brand experience. This means ecosystem partners must be flexible and ready to tap the continuum of their expertise to deliver a range of services. If an automaker wants to design a particular piece of hardware, we must ensure its manufacturability. At the same time, we must be ready to produce turnkey solutions that incorporate both hardware and software so OEMs can outsource mainstream systems like DC/DC converters and onboard chargers that are critical to EVs.

One example of how the next-generation ecosystem accelerates innovation is Flex’s collaboration with NVIDIA to develop an automotive computing platform that makes ADAS and the path to autonomous driving more accessible. During the project design process, we engaged a diverse subset of automakers that jointly invested in the development effort. While these automakers were aware they were part of a cohort, the identities of their peers were not disclosed, enabling true open collaboration. The pooled investment from these automakers helped fund development, while their feedback accelerated the validation of the solution. Such an innovative, collaborative setup showcases how to lower investment hurdles and enable automakers to accelerate time-to-market and reduce costs without sacrificing safety or quality.

Mitigating shocks and imbalances across the global supply chain

The mobility industry has been inordinately impacted by global supply chain shocks of the past few years, with more than three million vehicles lost to supply shortages in 2022. With this shift to software-defined vehicles and EVs, the mobility industry has begun using Industry 4.0 manufacturing best practices from consumer electronics and other high-tech industries. As a result, improvements to the overall system must be cross-industry as supply chains become more intertwined.

One solution is the ‘True Demand’ concept to improve supply chain visibility with transparent data sharing and collaboration across industries. The True Demand Coalition is a collaborative effort among manufacturers, component makers, distributors, and other stakeholders in the electronics supply chain to solve the demand forecast challenge. By engaging with an independent third-party (ITP) organization that can receive and analyze data from various stakeholders, traditional forecasting silos will be removed so that the ITP can make more accurate recommendations about future demand.

Safe, inclusive, and sustainable innovations will continue to steer mobility’s future. In equal measure, the deep collaboration between partners in the mobility ecosystem must seize the industry’s momentum as technologies advance and vehicles become more complex. The winners will be those who innovate and adapt together to develop flexible, market-ready solutions that go beyond what a single provider could create on its own accord. As a collective ecosystem, we can overcome today’s challenges and write mobility’s next chapter.