Over-the-air updates, AI assistants, autonomous driving or sophisticated infotainment: digital functions are now more important as a selling point for cars than horsepower and brand image. In the new comparison of digital performance, behind the series winner Tesla it is mainly Chinese manufacturers such as Xpeng and BYD as well as the American providers Rivian and Lucid. The biggest loser is the Volkswagen Group, which slipped six places to 13th position compared to the previous year. The Wolfsburg-based company can at least console themselves with the fact that after the disaster they chose two software partners for their software division Cariad – Xpeng and Rivian – which are among the top 5 in the new world rankings. Other traditional manufacturers such as Toyota cannot currently keep up with the pace of development, so that only three classic providers from the old combustion engine world, Ford, General Motors and BMW, are represented in the top 10 of the Gartner rankings. The latest example of the difficulties The traditional provider of the software is Volvo. The first examples of the XC90, which cost a good 80,000 euros, were delivered without functions such as Smart Charging, Apple Carplay and some safety functions. The missing functions will be delivered later via an update. Such challenges in software development are typical of traditional car manufacturers, who are increasingly trying to reduce their costs and develop additional sources of income through software-controlled vehicles – which currently rarely works. Renault’s electrical and software division Ampere also had to revise its lofty plans . The stock market debut originally planned for early 2024 has been postponed indefinitely. Renault boss Luca de Meo cited unfavorable market conditions as the reason. In fact, many companies in the automotive industry have lost a lot of value since the beginning of the year: Intel subsidiary Mobileye has lost 71 percent, while Rivian has lost around half of its stock market value. Digital luxury from China: BYD Yangwang U8Picture AllianceAmpere was supposed to be Renault’s answer to the growing competition in the electric car market. The division brings together Renault’s ambitions in the areas of electromobility, software and autonomous driving. Renault had hoped to raise up to ten billion euros through the IPO. Now the group has to find alternative financing methods in order to cover the planned investments in electric cars and software. Toyota is also struggling with problems at its software subsidiary Woven, which has made losses of almost $900 million in the past two years. Although Toyota plans to launch its new Arene software platform next year, the company remains under fire. Analysts warn that Toyota could lose significant market share if it doesn’t quickly get its software problems under control. Pedro Pacheco, an analyst at Gartner, was critical of major automakers’ progress in software development so far. Despite large budgets and resources, companies have not managed to use them efficiently because top management often underestimates the importance of software. Pacheco said companies need to rethink their entire approach because without a software-first mentality, it’s difficult to catch up. Read moreIn addition to optimizing vehicle performance, automakers have discovered the potential of software, new revenue streams through user data and subscription-based services to develop. Such services are expected to account for a significant portion of sales in the future, especially given the rising development costs and declining margins for electric vehicles. Digital services currently only generate around three percent of automobile sales worldwide. But the manufacturers are sticking to big plans: Stellantis, the company behind brands such as Jeep, Peugeot and Fiat, is targeting annual software sales of 20 billion euros by 2030. However, traditional manufacturers’ steady decline in Gartner’s rankings could be a warning that they may not be able to capitalize on this growth potential. Goldman Sachs estimates the cost of developing an operating system for vehicles to be at least $11 billion per manufacturer.
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