In the move towards new mobility, software has become more than just a means to an end. It is a valuable asset in its own right and needs to be recognised as such. This shift represents a radical change from traditional automotive industry approaches, and one that is posing headwinds for incumbents.
“There has been a massive explosion in the number of new players over the past few decades,” says Michael Plagge, Vice President of Ecosystem Development at the Eclipse Foundation, an open-source software non-profit. “If 30 years ago someone predicted there would be 100 new OEMs on the market by 2025, nobody would have believed them.” Pivotally, these start-ups are coming to market in a new way, with a new sort of product. “Their key value-add has totally changed,” he tells Automotive World. “Fifteen years ago it was safety, which has since become foundational to all cars. Now it’s all about services and the customer experience. It’s a completely new development paradigm, and the established players are under pressure.”
A pivotal difference between the newer players and the traditional automakers stems from the point at which they begin their design journey. “The traditional OEMs plan a car from the hardware side, then consider software as something required to make the hardware do what they want it to,” suggests Ansgar Linwedel, Director of Software-Defined Vehicle (SDV) Ecosystem Development at Eclipse. “It’s a completely different approach to the challengers—the BYDs and Teslas—which start by considering the customer experience they want to provide, the features, and the lifecycle of the car. That makes them come into software from a completely different angle.”
Changing strategies also poses challenges for traditional cost models. As Plagge explains: “OEMs have a very good way of forecasting hardware costs for ECUs. They know exactly what the supplier needs to spend.” Anecdotally, one major German OEM can forecast the price of an ECU’s hardware parts with a precision of 99%. Software is another matter. “OEMs still struggle with the cost model for generating software and don’t have a precise way of estimating how much effort something requires,” adds Plagge. “With the current focus on the bill of materials, they regard software as a means to an end and not an asset in itself.”
100 brands, 100 software stacks
Within the software stack there are layers that contribute to brand differentiation and more fundamental layers that enable the vehicle to be software-defined. The trouble is that suppliers and automakers have been developing their own bespoke systems. “If we have roughly 100 automakers on the market, we could end up with 100 different SDV stacks,” observes Linwedel. “BMW is building its stack into all BMWs, Mercedes is building its version into all Mercedes models, and so on. Where will it end?”
The Eclipse SDV Working Group believes interoperability could go far in realising a truly software-defined ecosystem. Described as a code-first initiative, it aims to build open-source software stacks and associated tooling for SDVs’ core functionality. “Each player has been building underlying software where there is no competitive edge,” Linwedel states. “Everyone needs it, but there’s no need for everyone to develop it individually. Let’s develop that stack once and deploy it in all the different brands, then everybody can work on the functions where they believe they can stand out in the market.”
The SDV Working Group intends to offer open-source solutions, starting with the Safe Open Vehicle Core project’s software stack. A growing number of automakers and Tier 1s have been publishing open-source manifestos, but that doesn’t mean the industry has fully embraced the approach yet.
“Most of these companies are happy to share their source code, but that’s not enough,” says Lindwedel. “They also need the willingness to change themselves and adapt what has been generated by the community. Organisations are proud of the architecture they spent years developing, but nobody can survive with such a specific architecture. For collaboration to work, there needs to be willingness to change internally.” On this front he sees gradual progress and expects the wider transition to take time.
A community where OEMs meet Big Tech
The automotive sector has already proven it can embrace collaboration, and has been doing so successfully on the hardware side for decades. Pretty much all of the incumbents have platform sharing agreements with at least one other partner, with many more recent arrangements springing up around shared battery technology. “The industry is already used to collaborating on hardware, and organisations are slowly adapting to do the same with software,” Lindwedel notes. He specifically flags AUTOSAR (Automotive Open System Architecture) as a case in point. “We have examples where the car industry started collaborating on software, but in those instances, the OEMs are not part of the development yet.”
It’s a completely new development paradigm, and the established players are under pressure
Ford Chief Executive Jim Farley noted in a 2023 episode of the Fully Charged Show podcast that most of a vehicle’s software comes from a vast number of different suppliers—150 in Ford’s case—that don’t talk to each other. “If an OEM wants to change the software, it’s hell,” adds Lindwedel. It also puts all the software competency in the hands of the suppliers.
The Eclipse SDV Working Group is promoting collaboration at the code level, bringing together a wide range of automakers, Tier 1 and 2 suppliers, and Big Tech. Microsoft was one of its founding members. For Plagge, Big Tech’s involvement is particularly valuable. “In the SDV Working Group framework, every member has the same rights and obligations, but that does not mean we replace the traditional strong dependency across the different tier levels. These tech players not only have technology capabilities that the traditional automotive industry lacks, they are also much more independent.” Saying ‘no’ to an automaker could be difficult for a supplier that relies heavily on that company as a source of revenue. Microsoft won’t be so dependent on BMW for business as Bosch or Continental would be, for example. “We see more independent thinking and a more experienced approach when it comes to software-based systems,” emphasises Plagge.
Big Tech also brings experience in developing an open-source ecosystem and fostering community. “Around 30% of what we do is about technology, with 70% about people and bringing them together,” notes Lindwedel. “We are really focusing on how to overcome big egos, habits of tradition, and the ‘not invented here’ mentality. These guys don’t just have the hard skills like coding but also the soft skills like how to build governance and develop communities.”
Plagge echoes this sentiment, adding that the success of the SDV Working Group will not be decided by technology alone: “We can have amazing technology and still fail. We try to support our community with a change of mindset. Companies are coming together because of the external pressure; they see the need to collaborate to reduce costs and increase efficiency. Those challenges will not be solved by brilliant technology alone. We need to have a management community, and that’s what we are building.”
