Software defined vehicles: Global manufacturer readiness study

Executive summary

The transition to software-defined vehicles (SDVs) is revolutionizing the automotive industry by decoupling software from hardware and enabling rapid, ongoing development. Vehicles are increasingly becoming extensions of the digital space, integrating features and capabilities that align with evolving customer needs. Cloud-based operating platforms and over-the-air (OTA) updates are becoming standard, pushing companies to leverage strategic alliances and robust architectures to manage the growing complexity of mobility data.

Successfully navigating this shift offers original equipment manufacturers (OEMs) significant opportunities to enhance efficiency and unlock new revenue streams through data monetization. Deloitte’s 2023 SDV study, Engineering the Mobility Revolution, identified key trends shaping the SDV landscape. In 2024, Deloitte conducted interviews with over 160 executives from OEMs in Germany, France, Italy, the United Kingdom, Spain, the United States, Japan, and South Korea. This new study offers valuable insights into the rapid evolution of SDVs and their transformative impact on automotive manufacturing worldwide.

Key findings

• Strategic shift toward SDVs: OEMs are significantly investing in SDVs, with up to US$3 billion allocated per company for R&D, reflecting the industry's commitment to digital competitiveness. AI, machine learning, and connectivity are prioritized to enhance vehicle intelligence, personalization, and autonomous driving capabilities.
• Centralized decision-making: 69% of OEMs adopt a centralized decision-making approach for SDV strategies, aiming for consistency, cost efficiency, and faster response times. Balancing this with local flexibility remains essential for adapting to regional market conditions.
• Partnerships and collaboration: Strategic partnerships, particularly in cybersecurity, autonomous driving, and operating systems, are increasingly vital. These collaborations help OEMs reduce R&D expenditures while driving innovation and gaining a competitive edge.
• Disparity between technical and business departments: A gap in SDV readiness perception exists between technical and business executives. While nearly 90% of technical leaders feel confident in their company’s SDV leadership, only 45% of business executives share this view, signaling a need for better cross-departmental collaboration.