We have mentioned on several occasions that with new technologies erupting almost every day, cars and twowheelers are increasingly becoming softwaredriven electronic devices on wheels. Most automotive organizations anticipate that software will be the single biggest source of competitive advantage over the next five years.
According to a new report from the Capgemini Research Institute, 92 percent of all automotive organizations predict that every automotive company will transition to a software company to support Software Defined Vehicles (SDVs) and softwaredriven mobility (SDM) services.
The report titled ‘The softwaredriven mobility era: Beyond vehicles’, reveals that over eight in ten manufacturers believe that softwaredefined products and services, not just the physical vehicle, will become their core value proposition. However, only a few manufacturers have been able to scale their developments to their fullest capacity in this direction.
It has come to light that in 2025, fewer than half of automotive organizations had scaled their SDM initiatives — with 34 percent partially scaling at least one use case and only 14 percent reaching fullscale deployment. “For decades, automotive leadership was driven by hardware but today consumers demand connected, digitally enhanced experiences. This calls for adoption of a software first approach across the value chain to enable holistic mobility solutions,” said Laurence Noël, Global Head of Automotive at Capgemini.
Artificial intelligence (AI) will be the new area of innovation for auto OEMs across the world. The Capgemini report highlights a staggering 85 percent of manufacturers believe that AI is increasingly becoming an integral part of automotive software. Soon, AI will be directly integrated into software features and functions that will help improve invehicle experiences, power advanced safety features and cybersecurity, etc.
Around 77 percent automakers feel that AI integration into software development, invehicle functions, and mobility services will give them a critical competitive advantage that will reshape the automotive value chain. This will also help OEMs reduce costs, boost productivity and efficiency, and enhance product quality, and therefore, scale profitability.
Most of the organizations surveyed for this report, view AI integration for ADAS (Advanced Driver Assistance System) and autonomous driving capabilities as extremely significant in their organization’s softwaredriven strategy. This suggests the industry will help develop more advanced autonomous driving technologies in the coming years.
According to the survey, 86 percent manufacturers believe implementation of SDM demands an overhaul of the organizational model, leading to significant changes in processes, and the need to build new skill sets. Besides structural transformations, organizations encounter significant challenges in areas such as software engineering, compliance, safety, cybersecurity, leadership, and talent acquisition.
Notably, 83% of organizations consider the development of a unified software platform to be a critical element of their softwaredriven mobility strategy. Softwaredefined products and mobility services are also expected to become significant revenue contributors for OEMs.The report concludes that total revenue for OEMs is projected to double, with SDMs contributing to over 50 percent by 2035.
