Five trends that will transform auto in the next five years

How consumers experience mobility in their cars is changing. A number of exciting innovations in automotive software are set to radically transform the driving experience, from how we access and operate a vehicle, to how it interacts with its users and the environment. Over the next five years, five key trends will gain momentum.

The software in a vehicle will be as important as its logo

Tomorrow’s cars will be software-defined vehicles (SDVs), with their features and functions controlled by software. SDVs will be known more for their user experience than their physical attributes. Software will create a direct connection between the car manufacturer and the customer, enabling platform-driven auto businesses which seamlessly deliver personalised services to customers via their vehicles.

Crowd data from millions of vehicles can be used to provide more intelligent mobility services across an entire automotive ecosystem. For example Gaia-X 4 Future Mobility is a European initiative to enable close interconnectivity among car users, service providers, manufacturers and suppliers. Applications that will result from this broad data exchange include smart traffic infrastructure, vehicle lifecycle management and digital twins for autonomous vehicles.

As cars become more software-defined and interconnected, their value transcends their physical attributes to encompass the increasingly rich web of services available to users.

The car will renew itself and offer on-demand upgrades

A phone’s software is regularly updated, with new features, apps, security updates and bug fixes. SDVs that are connected to the web will evolve in the same direction, though they may have some way to go before they become as self-healing, self-renewing and flexible as a phone.

Most of the world’s automakers are already experimenting with on-demand services that flow as software to users. BMW delivers downloadable upgrades via the My BMW App or the SIM card built into the vehicle. Volvo offers customers over-the-air (OTA) software updates sent directly to its vehicles in two phases: a download phase while the car is in use and an installation phase when the car is not in use.

Some car companies are looking at monetising software upgrades. Mercedes recently introduced an annual subscription service to unlock enhanced performance in some of its cars. BMW has experimented with a heated seat subscription service. In a recent interview with Bloomberg, the Chief Executive of Cariad, the automotive software company of Volkswagen Group, even suggested that pay-as-you-go autonomous driving could be in scope.

For Gen Z, owning a car may be a thing of the past

How people live and work is changing. Hybrid working reduces the need for many employees to commute by car every day. Many younger people may want the convenience of a car but not the traditional ownership model, which is typically expensive, high-responsibility and inflexible. A different approach to getting on the road is paying for a vehicle only when you need one, perhaps through a subscription-based, car-sharing or peer-to-peer rental service. With their on-demand and remote-control features, SDVs lend themselves to this type of service.

Car leasing has existed for years as an option for avoiding personal ownership, but car subscriptions are different. Terms are generally shorter, more flexible, and often include insurance and maintenance. Several car manufacturers are experimenting with car subscription models, including Audi, Lexus, Nissan, Porsche and Volvo. Many third parties also offer subscription services, including car rental companies for which this is a logical service extension to existing services. Start-ups like Borrow plan to focus on electric vehicle (EV) subscriptions.

An innovative example of a mixed mobility subscription model is GetTransfer.com, which offers customers a plethora of vehicle hire, rental and transfer services across cars, helicopters and planes.

The car will arrange an appointment with a mechanic before you know you have a problem

As part of the Internet of Things (IoT), the connectivity built into cars will be used to transmit real-time vehicle diagnostics, which will be used to plan increasingly sophisticated, and convenient, predictive maintenance schedules. Feedback from advanced analytics powered by artificial intelligence (AI) will enable the car to flag imminent issues to the garage, dealership, or direct to the manufacturer. The diagnostic information will be shared with mechanics ahead of time so they can order the necessary components. This technology will lift some of the responsibility off the driver to spot car maintenance issues while enhancing road safety.

For example, US electric car manufacturer Rivian, which offers at-home car servicing, states that  it has the capabilities to perform “comprehensive diagnostics from afar through our connected vehicle platform. Most issues can be identified proactively, thanks to our suite of onboard sensors and associated predictive algorithms. We can often notify you before you even sense a problem.”

Furthermore, data from individual cars will be aggregated into a manufacturer’s errors and maintenance log. As the body of data grows, manufacturers will be able to more accurately spot trends and identify issues earlier in the lifecycle of a vehicle and its component parts.

Future EVs may be fuelled by hydrogen

Global EV sales are surging. In China, the world’s largest automotive market, EVs already represent 21% of the market. According to consultancy AutoForecast Solutions, EVs could account for a third of the North American market, and about 26% of vehicles produced worldwide by 2029.

In the new SDV world, automakers need to pivot to become software companies

That said, the rising cost of EV batteries, long waiting times for cars and parts, and issues with scaling recharging infrastructure in line with growing demand, are already impacting adoption. In many cities around the world, today’s drivers have to wait for over an hour to charge their vehicle at public charging points.

With their smart routing and energy optimisation capabilities, SDVs can mitigate many of these issues; however, the hunt is on for viable fuel alternatives to power them. Initial tests of hydrogen fuel cells at Germany’s DLR Institute for Vehicle Concepts in Stuttgart show that, with a tank capacity of 6.3 kg of hydrogen, a vehicle can generate somewhere in the region of 100kWh of electricity. That’s equivalent to around the average monthly consumption of a one-person household. As vehicles become more software-defined, further development of alternative fuel sources are likely across the automotive industry.

In the new SDV world, automakers need to pivot to become software companies. While they are eager to add skilled software engineers to their ranks, there is a global shortage of such talent. One way for them to overcome that challenge is by partnering with others who have years of experience in the field. For example, Cariad is partnering witg Luxoft, a DXC Company, to train thousands of software engineers to ensure a best-in-class automotive customer experience for all Volkswagen brands.

With the evolution of the software-defined vehicle, exciting changes are coming, from how cars are designed and built, to how individuals use and service them, and how they interact with the ever-expanding automotive ecosystem.

About the authors: Matthias Bauhammer is Global Lead, Robotic Drive Offering at DXC Technology and John Makin is  Automotive Strategist at Luxoft