In recent months, the automotive industry has faced intensified scrutiny over its handling of software-related vehicle recalls, an issue underscored by a personal experience shared by Brooke Masters in the Financial Times. This situation highlights broader trends in the integration of advanced technology within vehicles, particularly with the rising prominence of electric vehicles (EVs) and their reliance on sophisticated software systems.
Last month, Masters experienced her SUV's third software-related recall within six months, culminating in an extensive four-day delay while the vehicle awaited attention from experts at BMW headquarters. This challenge illustrates the growing complexity that automakers face in managing software updates, which have become vital as software fixes made up 15 per cent of US recalls last year, a notable increase from just 6 per cent five years prior, according to data from the National Highway Traffic Safety Administration (NHTSA).
The data reveals that BMW is not alone; in fact, the company recorded the highest number of software recalls among its competitors, with Ford leading overall with 19 recalls and Tesla following closely at 16—half of which were software-related. This scenario is reflective of the increasing reliance on digital systems in vehicles, particularly in electric models that rely more heavily on software than traditional combustion engine vehicles.
As these automotive updates have grown in importance, the methods employed by manufacturers to implement them have also shifted. Automakers have moved from a model where cars were produced and sold without post-production updates to treating vehicles as "living platforms". Kevin Mixer, a senior analyst at consultancy Gartner, noted, “It used to be, you could build a car, shrink wrap it and sell it. Now the car is a living platform . . . Companies are learning on the fly.”
However, the transition has not been seamless, particularly for legacy automakers. Traditional car manufacturers are often encumbered by outdated electrical systems and production lines, making updates more complicated. This struggle has led to delays in product launches for companies like Volvo and General Motors and frustration over internal software development at Volkswagen, which resulted in a significant partnership worth $5 billion with Rivian.
The disparity in digital performance is pronounced, with Gartner's rankings revealing that the top-performing automakers in terms of digital capability include all Chinese and American EV makers, such as Rivian, Tesla, and Nio, while legacy companies averaged a disappointing score of 33 out of 100.
Despite these challenges, the potential rewards for effectively managing software updates are substantial. As vehicles increasingly feature advanced infotainment systems, manufacturers are aware that innovative digital services could differentiate them from competitors, a factor that luxury brands have already leveraged. Juergen Reers, global automotive lead at Accenture, remarked, “The user experience and the styling of the vehicles are becoming once more the front and centre of what can differentiate cars.”
In addition to enhancing customer experience, such digital services also represent lucrative revenue opportunities. Accenture estimates that digital services could generate up to $3.5 trillion annually for automakers by the 2040s, contributing to as much as 40 per cent of total revenue. This would be a significant increase from the 3 per cent reported today. Services may include anything from heated seat upgrades, self-parking features, to direct purchases of food, fuel, or entertainment from within the vehicle.
However, to realise this promising future, auto manufacturers must first navigate the complexities of delivering reliable and seamless software updates. As Masters’ experience with her BMW demonstrates, these challenges are pressing and multifaceted, reflecting the rapidly evolving nature of technology in the automotive sector.
Source: Noah Wire Services