As the automotive industry approaches a crucial turning point in the transition from “hype” to implementation phase, EY has published a study on the occasion of the IAA Mobility in Munich, Germany. The study reveals that the market for automotive-related software is expected to grow to a value of $118 billion by 2030, though falling short of the industry’s existing expectations. The study also estimates that the average investment required per OEM for SDV programs will be between one and five billion U.S. dollars.
“The automotive industry is at a crossroads. After the hype phase, it is now a matter of actually building an ecosystem – and a lot of money,” explains Constantin M. Gall, Automotive Industry Practice Leader and Managing Partner Europe West at EY Strategy and Transaction. “Car manufacturers need to review their strategies, rely more on partnerships as well as coopetition – and consider standardization in certain areas. Keeping the transformation manageable in terms of customer expectations, speed, cost and quality will certainly be the main difference between winners and losers.”
The software transformation of suppliers and automotive manufacturers must happen holistically and within the framework of three steps, according to the study. Companies need to review their overall software business readiness, prepare the organization for transformation, and monitor and adapt the process agilely.
“Developing a working business model is a challenge for OEMs and Tier 1 suppliers because they have little experience in selling software or hardware-software bundles. They also need experience with product prototyping and pricing, as well as a roadmap for both monetization and quality assurance,” notes Jan Sieper, Partner Automotive Strategy at EY.
“As part of the SDV transformation, companies must constantly monitor all developments and factors and adjust their activities and systems as necessary,” concludes Gall. “Most importantly, however, anyone who wants to emerge from this transformation as a winner must keep it manageable in terms of customer expectations, speed, costs, and quality.”
EY, one of the largest German auditing and consulting organisations, has released a study to mark the occasion of IAA Mobility in Munich, Germany. According to the study, the automotive software market is expected to reach a value of $118 billion by 2030, though this is slightly lower than the industry’s initial expectations. The study also estimates that the average investment required per OEM for SDV programs will be between one and five billion US dollars.
“The automotive industry is at a crossroads,” explains Constantin M. Gall, Automotive Industry Practice Leader and Managing Partner Europe West at EY Strategy and Transaction. “Car manufacturers need to review their strategies, rely more on partnerships as well as coopetition – and consider standardization in certain areas. Keeping the transformation manageable in terms of customer expectations, speed, cost and quality will certainly be the main difference between winners and losers.”
For a successful transition, the study suggests three steps: review overall software business readiness, prepare the organization for transformation, and monitor and adapt the process agilely.
“Developing a working business model is a challenge for OEMs and Tier 1 suppliers because they have little experience in selling software or hardware-software bundles,” adds Jan Sieper, Partner Automotive Strategy at EY. “They also need experience with product prototyping and pricing, as well as a roadmap for both monetization and quality assurance.”
“As part of the SDV transformation, companies must constantly monitor all developments and factors and adjust their activities and systems as necessary,” concludes Gall. “Most importantly, anyone who wants to emerge from this transformation as a winner must keep it manageable in terms of customer expectations, speed, costs, and quality.”
As the automotive industry transitions from “hype” to implementation phase, EY has released a study on the occasion of the IAA Mobility in Munich, Germany. The study reveals that the market for automotive-related software is expected to grow to a value of $118 billion by 2030, though falling short of the industry’s existing expectations. According to EY, the average investment required per OEM for Software Defined Vehicle (SDV) programs will be between one and five billion U.S. dollars.
“The automotive industry is at a crossroads. After the hype phase, it is now a matter of actually building an ecosystem – and a lot of money,” explains Constantin M. Gall, Automotive Industry Practice Leader and Managing Partner Europe West at EY Strategy and Transaction. “Car manufacturers need to review their strategies, rely more on partnerships as well as coopetition – and consider standardization in certain areas. Keeping the transformation manageable in terms of customer expectations, speed, cost and quality will certainly be the main difference between winners and losers.”
The software transformation of suppliers and automotive manufacturers must happen holistically and within the framework of three steps. Companies need to review
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.